Monday beats forecasts as growth slows and AI transition reshapes business
Revenue rose 19% to $377.5 million in the third quarter, but the company expects growth to slow to 14% in the final quarter.
Monday.com reported better-than-expected third-quarter results, but its outlook points to a further deceleration in growth as the software company undertakes a broad strategic shift toward artificial intelligence. Revenue rose 19% year over year to $377.5 million, while the company forecast growth of approximately 14% in the final quarter of 2026.
The results exceeded the roughly $370 million in revenue the company had projected at the end of the previous quarter. Revenue in the third quarter of 2025 was $316.9 million.
Operating income under generally accepted accounting principles (GAAP) reached $31.2 million, compared with an operating loss of $2.4 million a year earlier. Non-GAAP operating income, which excludes share-based compensation, restructuring charges and certain other items, rose to $89.4 million from $47.5 million. The adjusted operating margin expanded to 24%, up from 15% a year earlier.
For the fourth quarter, monday.com expects revenue of $380 million to $382 million, representing year-over-year growth of approximately 14%. Non-GAAP operating income is projected at $68 million to $70 million, with an operating margin of approximately 18%. For the full year, the company expects revenue of $1.473 billion to $1.475 billion, an increase of approximately 20% over 2025.
The company is undergoing a major strategic transformation as it seeks to reposition itself as an AI-first business. The process has included a restructuring plan, 600 job cuts and the departure of several senior executives. Management acknowledged that the transition is creating near-term operational headwinds, even as it remains confident in the strategy.
"Our third quarter showed both the strength of our foundation and the work ahead," said co-founders and co-CEOs Roy Mann and Eran Zinman. "Our business is undergoing a fundamental evolution, and we took significant steps this quarter to become an AI-first company. While we remain highly confident in this strategic path, an initiative of this scope introduces near-term operational headwinds, and we are committed to executing with discipline as we work through them."
The company's AI annual recurring revenue reached $36 million in the third quarter. Its monday agents, which allow users to deploy AI agents across workflows, passed 6 million interactions in less than two quarters, according to the company.
There are also signs that monday.com is becoming more dependent on larger corporate customers. The number of customers generating more than $100,000 in annual recurring revenue rose 33% year over year to 2,127, while the number generating more than $500,000 increased 58% to 123. Customers with more than $50,000 in annual recurring revenue reached 5,038, up 26%.
Remaining performance obligations, a measure of contracted revenue that has yet to be recognized, increased 27% to $946 million. The portion expected to be recognized over the next 12 months rose 22% to $759 million.
Cash generation, however, was weaker than a year earlier. Net cash provided by operating activities fell to $20.4 million from $95.1 million in the third quarter of 2025. Adjusted free cash flow reached $63 million, compared with $92.3 million a year earlier. The company's adjusted figure excludes $47.2 million in restructuring-related cash payments made during the quarter.
