Israeli work-management software company monday.com reported second-quarter revenue of $364.6 million, a 22% increase year‑on‑year and above Wall Street expectations, yet its shares fell in pre‑market trading after management left its full‑year outlook unchanged and issued a cautious third‑quarter forecast.
Results beat but guidance disappoints investors
The company reiterated its full‑year revenue range of $1.46 billion to $1.47 billion, implying roughly 20% growth for 2026, and gave a third‑quarter revenue projection of $368 million to $370 million. Despite beating analyst revenue estimates for the quarter, monday.com did not raise guidance — a move that appears to have unsettled investors and preceded a roughly 10% share decline in pre‑market trade.
Profitability metrics showed improvement. Adjusted operating profit, excluding one‑time items, rose to $61 million from $45 million a year earlier, lifting the adjusted operating margin to 17%. On a GAAP basis including one‑time items, the company recorded an operating loss of $1.5 million, an improvement from an operating loss of $11.5 million in Q2 2025.
AI momentum — rapid growth but early stage
One of the most notable developments was monday.com's AI business. The company said annual recurring revenue (ARR) from AI products doubled compared with the prior quarter and now represents 17% of net new ARR. That quick acceleration is central to management’s strategy to reposition the business after recent restructuring.
However, management stopped short of declaring AI a durable, margin‑expanding engine. The second quarter provided the first financially meaningful test of the company’s post‑restructuring direction, but the firm’s conservative near‑term outlook signalled that executives remain cautious about translating AI momentum into sustained, predictable revenue growth.
- Q2 revenue: $364.6 million (up 22% year‑on‑year)
- AI ARR growth: doubled from Q1; 17% of net new ARR
- Adjusted operating profit: $61 million (up from $45 million)
- Q3 revenue guidance: $368–370 million
- Full‑year guidance: $1.46–1.47 billion (unchanged)
| Metric | Q2 2026 | Q2 2025 |
|---|---|---|
| Revenue | $364.6m | Not reported in source |
| Adjusted operating profit | $61m | $45m |
| Operating loss (incl. one‑time) | $1.5m | $11.5m |
Restructuring and governance remain overhangs
The financials arrive after a turbulent period for the company. monday.com recently cut about 20% of its workforce as part of a restructuring, a move intended to reduce costs and sharpen focus on higher‑value product areas such as AI. At the same time, the company faced a contentious shareholder vote over compensation packages for its co‑founders and co‑CEOs, Roy Mann and Eran Zinman, which attracted scrutiny due to potential payouts that could reach $14 million each in 2029.
Those governance concerns intersect with the commercial question investors are pressing: can monday.com convert rapid AI ARR expansion into a sustainable competitive advantage that supports higher long‑term margins and justifies elevated executive pay? For now, management’s guarded guidance suggests the answer remains unresolved.
Implications for investors and the wider tech sector
For investors, monday.com’s update is a reminder that headline AI growth figures do not immediately translate into investor confidence. The market reaction highlights the importance of predictable guidance and clear pathways from product momentum to durable profits. For customers, the continued investment in AI may promise new productivity features, but corporate users will watch adoption, pricing and support closely.
For South African investors with offshore equity exposure — including retirement funds and private portfolios — the episode underscores two points. First, strong quarterly sales and rapid product‑area growth do not immunise a share price from disappointment if management’s outlook is conservative. Second, operational restructuring (including job cuts) can improve margins but raises near‑term execution risk that affects both employee livelihoods and service continuity.
monday.com’s second quarter showed meaningful progress on profitability and signalled that AI is a growing revenue component. Yet the company’s choice to maintain its full‑year guidance and issue a cautious Q3 forecast left the market wanting more clarity on how quickly AI will underpin sustainable earnings growth.
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