Monday.com (NASDAQ:MNDY) stock fell Monday after the work management software company issued third-quarter revenue guidance below Wall Street expectations, overshadowing a second-quarter earnings and revenue beat.
The company reported second-quarter revenue of $364.62 million, up 22% year over year and above the analyst consensus estimate of $355.22 million.
Adjusted earnings of $1.48 per share topped the consensus estimate of $1.11.
Monday.com generates revenue primarily through subscriptions to its cloud-based Work OS platform.
Net dollar retention was 109% overall and 113% among customers with more than 10 users. The number of paid customers generating more than $50,000 in annual recurring revenue rose 31% year over year to 4,834.
Adjusted operating margin improved to 17% from 15% a year earlier despite an approximately 210-basis-point foreign exchange headwind.
Operating cash flow fell to $55.35 million from $66.84 million a year earlier. Adjusted free cash flow declined to $52.34 million from $64.09 million. The company ended the quarter with about $1.07 billion in cash, cash equivalents and marketable securities.
Monday.com executives said the company’s next phase of growth will center on artificial intelligence adoption, larger enterprise customers, focused product investments and deeper customer support.
AI, Enterprise Customers Drive Growth
Co-CEO Roy Mann said Monday.com is evolving from software that helps people manage work to software that “does the work,” with employees and AI agents operating in the same workspace. He said larger customers remain an important growth driver.
Co-CEO Eran Zinman said AI annual recurring revenue doubled from the first quarter and accounted for 17% of net new ARR added during the second quarter.
Zinman said customers have started paying beyond the default AI package under Monday.com’s new seat-and-credit pricing model, creating another potential growth driver beyond adding seats.
Monday.com Sharpens Product, Enterprise Focus
Zinman said Monday.com is concentrating investment on monday service and monday CRM, with each product receiving dedicated development, go-to-market execution and investment plans.
The company plans to focus on fewer categories where it believes it can establish leadership rather than spread resources across a broader range of products.
Chief Revenue Officer Casey George said Monday.com continues to gain traction with larger customers, supported by vendor consolidation, AI adoption and stronger execution in the enterprise market.
George said the company is deploying forward-deployed engineers to help customers implement AI applications and agents, a strategy that could support larger deals and deeper enterprise relationships.
CFO Eliran Glazer said Monday.com plans to use its partner ecosystem more efficiently for smaller customers while continuing to invest in midmarket and enterprise sales resources.
Q3 Revenue Outlook Falls Short Of Wall Street Estimates
Monday.com said the 20% workforce reduction could cause short-term disruption as the company restructures its operations and shifts resources toward AI and larger enterprise customers.
Glazer said the company factored potential disruption from the restructuring into its outlook and chose not to carry its second-quarter revenue upside through the rest of the year.
Monday.com expects third-quarter 2026 revenue of $368 million to $370 million, below the analyst consensus estimate of $372.73 million. The company expects an adjusted operating margin of approximately 16%.
For 2026, Monday.com reiterated revenue guidance of $1.466 billion to $1.474 billion, compared with the consensus estimate of $1.471 billion.
The company raised its full-year adjusted operating margin outlook to approximately 16% from its previous forecast of approximately 13%. The guidance assumes a foreign exchange headwind of 100 to 200 basis points.
MNDY Price Action: Monday.com shares were down 6.10% at $87.45 at the time of publication Monday, according to Benzinga Pro data.
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