Monday stock drops despite earnings beat as SaaS era wobbles
Revenue tops forecasts, yet guidance suggests profit margins could slide to 11%-12%.
Monday.com reported its fourth-quarter 2025 results, beating market expectations but providing a disappointing outlook for the current year. Monday shares plunged more than 20% in early trading on Nasdaq, despite management’s efforts to convey optimism.
“We delivered another year of strong, disciplined execution in 2025, with 27% revenue growth and a 14% non-GAAP operating margin, while expanding our product portfolio and seeing strong adoption of our AI products,” said monday.com co-founders and co-CEOs Roy Mann and Eran Zinman. “At the same time, we continue to make progress upmarket, as larger customers increasingly adopt more solutions and standardize on monday.com for mission-critical workflows.”
Monday’s stock plunge deepened after investors concluded that their biggest concerns about the company’s ability to meet its 2027 guidance, set at the last investor day, had been confirmed.
“We will no longer discuss the targets we presented at the investor day for 2027, which included a revenue forecast of $1.8 billion, due to the nature of the changes in the software market and the development of AI. We will reexamine the long-term targets when there is more certainty,” said Eliran Glazer, Monday’s CFO, on a call with analysts, effectively acknowledging that the company had backed away from that forecast.
Monday ended the fourth quarter of 2025 with revenue of $333.9 million, up 25% compared to the corresponding quarter and above market forecasts of $329.5 million. Adjusted earnings were $1.04 per share, also above market expectations of 92 cents per share. Operating income fell to $2.4 million compared to $9.6 million a year earlier. However, excluding one-time and accounting items, operating income reached $42 million.
For the full year, monday recorded operating income of $175 million, compared to $132 million in 2024. Free cash flow reached $323 million, an improvement from $296 million a year earlier. Yet investors, increasingly concerned about the potential replacement of software solutions with AI agents, are focused on the future and fear that companies like monday may struggle to restore previous levels of growth and profitability. Monday’s forecast reflects an operating profit similar to that of 2025, implying that the profit margin is expected to decline to 11%-12%. Cash flow is also projected to fall to between $275 million and $290 million.
The Israeli company, which develops software for managing teams and projects in the workplace, ended 2025 with total revenue of $1.2 billion, an increase of 27% compared to the previous year and in line with market forecasts. However, the outlook for 2026 points to a slowdown in growth: an increase of only 18%, to revenue of approximately $1.45 billion. The results were released after a period of sharp declines in monday’s stock, part of a broader trend that has hit software companies operating under the SaaS model, cloud-based services provided by subscription without the need to download software.
The pattern is familiar. In November 2025, when third-quarter results were published, the company again exceeded expectations for the quarter but issued a weak forecast, sending the stock down 12.3% that day. A similar scenario unfolded in August, when the publication of second-quarter results triggered an even steeper 29.8% drop. This is now the second consecutive quarter in which Monday’s forward guidance, rather than its actual performance, has driven a sharp negative market reaction.
