Monday.com tops revenue forecasts but expects slower growth during its AI shift

Monday.com brought in $377.5 million in third-quarter revenue, beating its forecast, but expects annual growth to slow from 19% to about 14% next quarter. Its latest results put a price on the transition toward AI: management says the overhaul is disrupting operations, even as AI products attract paying customers.

The third-quarter sales total cleared the roughly $370 million the company had projected at the end of the previous quarter. It also exceeded the $369 million Zacks consensus estimate. The fourth-quarter outlook calls for revenue of $380 million to $382 million—slightly above the latest quarter in dollars, but growing more slowly against the prior year.

Profitability improved sharply. Under generally accepted accounting principles, operating income reached $31.2 million, reversing a $2.4 million loss a year earlier. Adjusted operating income rose to $89.4 million from $47.5 million. That adjusted measure excludes share-based compensation, restructuring charges and certain other items; it is not the same as the company’s accounting profit.

Chief financial officer Eliran Glazer attributed part of the strong profitability to restructuring savings, lower discretionary spending and seasonal cost benefits. Management expects expenses to normalize as it reinvests in AI, compensation and customer services. Its fourth-quarter forecast puts the adjusted operating margin at about 18%, below the third quarter’s 24%.

Cash generation was weaker. Operating cash flow fell to $20.4 million from $95.1 million a year earlier. Adjusted free cash flow was $63 million, down from $92.3 million. The adjusted figure excludes $47.2 million in restructuring-related cash payments made during the quarter, an important distinction when assessing the cash cost of the overhaul.

Co-CEO Eran Zinman said AI annual recurring revenue reached $36 million during the quarter. That is an annualized recurring-revenue measure, not $36 million in revenue earned over those three months. The company also said its AI agents passed 6 million interactions in less than two quarters, providing a separate measure of activity rather than sales.

Management is gradually introducing hybrid pricing: subscriptions combined with usage-based AI credits. On the earnings call, Zinman said more than 30% of accounts generating at least $50,000 annually were purchasing and using those credits. The pricing change gives Monday.com a way to charge for AI consumption alongside its traditional subscriptions.

The customer base is shifting toward larger accounts, too. Customers generating more than $50,000 in annual recurring revenue increased 26% to 5,038. Those above $100,000 grew 33% to 2,127, while the group above $500,000 grew 58% to 123. These are company-wide customer categories, not counts of customers buying AI.

The transition has included 600 job cuts and the departure of several senior executives. Chief revenue officer Casey George acknowledged that restructuring-related disruption lasted longer than anticipated. Management also pointed to continued small-business weakness and longer enterprise purchasing cycles, with customers taking additional time to evaluate AI investments and their business applications.

Monday.com is adding hands-on implementation support through monday Frontier, which sends engineers to help enterprises put AI into business workflows. Zinman said the offering is intended to increase AI adoption and consumption, rather than serve primarily as a standalone services business. He acknowledged possible margin pressure from that investment, while anticipating benefits from more subscriptions and AI use.

Glazer said revenue growth could take several quarters into 2027 to stabilize. Zinman likewise described changes to products, sales operations and service delivery as work extending into next year, not a single-quarter exercise. For 2026, management expects total revenue of $1.473 billion to $1.475 billion, about 20% above 2025.