Pomegra
Monday.com delivered strong fourth-quarter results with revenue of $333.9 million, representing 25% year-over-year growth and exceeding analyst estimates of $329.6 million. The project management platform also posted adjusted earnings per share of $1.04, significantly beating the consensus estimate of $0.92 per share.
Disappointing Guidance Triggers Massive Selloff
Despite the earnings beat, Monday.com's conservative 2026 outlook sent shares tumbling in Monday trading. The Israel-based company projected first-quarter revenue between $338 million and $340 million, falling short of analyst expectations of $343 million. For the full year 2026, Monday.com forecasted revenue between $1.452 billion and $1.462 billion, compared to the FactSet estimate of $1.48 billion.
The company also provided lower operating income guidance of $165 million to $175 million for 2026, well below the FactSet estimate of $220.2 million. Management cited near-term margin pressure from foreign exchange rates and ongoing market choppiness as factors contributing to the cautious outlook.
AI Disruption Fears Hammer Software Sector
Monday.com's stock decline reflects broader software industry concerns about artificial intelligence disruption. The iShares Expanded Tech-Software Sector ETF has plummeted 22% year-to-date, with investors increasingly worried that new agentic AI tools could replace traditional software platforms.
Monday.com shares have lost approximately 50% of their value this year and shed over three-quarters of their market capitalization from their November 2021 peak. The company joins a growing list of software stocks experiencing significant declines as the market reassesses the impact of AI on traditional business models.
Management Defends Market Position Despite AI Concerns
During the earnings call, co-CEO and co-founder Eran Zinman attempted to reassure investors about the company's competitive positioning. "We don't see any impact currently from any AI company, and we're shifting our product, regardless, to be more AI native," Zinman stated.
The company has implemented new AI-powered features including agents and a "vibe" feature designed to improve conversion and engagement. Management highlighted that Monday.com has pivoted its messaging and advertising strategy to become more AI-focused, updating its homepage and marketing materials to emphasize artificial intelligence capabilities.
Strong Operational Metrics Overshadowed by Market Fears
Monday.com reported record customer additions during the fourth quarter, demonstrating continued demand for its work management platform. The company's adjusted operating income of $41.93 million exceeded estimates of $37.43 million, reflecting operational efficiency gains.
For fiscal year 2025, Monday.com achieved total revenue of $1.232 billion, representing 27% year-over-year growth. The company maintained strong gross margins and continued expanding its enterprise customer base, with significant growth in larger deal sizes.
Broader Software Selloff Continues
The Monday.com decline extends the "software-mageddon" that has gripped technology markets in recent weeks. Investors have grown increasingly concerned that artificial intelligence tools, particularly agentic AI systems, could fundamentally disrupt traditional software-as-a-service business models.
This selling pressure has created a challenging environment for software companies, even those reporting strong financial results. Monday.com's experience demonstrates how market sentiment around AI disruption can override positive earnings performance and solid operational metrics.
Mentioned tickers: MNDY, IGV
