Monday’s AI business surges, but investors send shares down
AI ARR doubled from Q1 and accounted for 17% of net new ARR, but the company forecast conservative growth for the third quarter and did not raise its annual guidance.
Software company monday.com ended the second quarter of 2026 with revenue of $364.6 million, up 22% from the same quarter a year earlier and above analysts’ expectations of $355 million. Despite the beat and strong growth in its AI business, the Israeli software company's shares fell around 10% in pre-market trading.
The results come after a turbulent period for monday, which recently laid off about 20% of its workforce and faced a contentious shareholder vote over the compensation packages of co-founders and co-CEOs Roy Mann and Eran Zinman. The uproar over their pay, which could reach $14 million each in 2029, has put additional scrutiny on the company's leadership as it attempts to reposition itself around AI.
But the more consequential question for investors is whether monday can turn AI from a disruptive force into a competitive advantage. The second-quarter results were never likely to provide a definitive answer, but they offered the first important test of management's strategy following the restructuring.
The company reiterated its full-year revenue forecast of $1.46 billion to $1.47 billion, implying growth of roughly 20% for 2026. For the third quarter, monday issued a relatively conservative forecast of $368 million to $370 million in revenue.
One of the strongest developments was the rapid growth of the company's AI business. Monday said its annual recurring revenue (ARR) from AI products doubled compared with the previous quarter and now accounts for 17% of net new ARR.
Profitability also improved. Adjusted operating profit, excluding one-time items, rose to $61 million from $45 million a year earlier, while the adjusted operating margin increased to 17%.
Including one-time items, monday reported an operating loss of $1.5 million, a significant improvement from an operating loss of $11.5 million in the second quarter of 2025.
“Q2 reinforced our conviction that our strategy is working and that it was time to move faster. We made the difficult decision to restructure our organization, sharpen our product portfolio, and commit fully to the AI Work Platform in order to capture the largest opportunity we have ever seen in software,” said monday.com co-founders and co-CEOs Roy Mann and Eran Zinman. “The early results reinforce our conviction. ARR from AI products doubled from Q1, representing 17% of net new ARR in Q2, and customer response to our new direction continues to exceed our expectations. We are building a faster, flatter company with clearer priorities, and we are just getting started.”
