Monday.com cuts 20% of workforce as it restructures for the AI era
The Israeli software company says it is replacing a structure built around managing work with one designed for AI agents and human collaboration, cutting about 620 jobs while redirecting resources toward its new strategy.
Monday.com is cutting approximately 20% of its global workforce as the Israeli workplace software company restructures around its transition from a platform for managing work to one designed to allow employees and AI agents to perform work together.
In a letter sent to employees, co-founders Roy Mann and Eran Zinman said the company had made the “most painful decision” since its founding, reducing its workforce by about 620 employees worldwide.
The layoffs, according to management, are not intended as a cost-cutting measure or a direct replacement of employees with artificial intelligence. Instead, the company said the restructuring reflects a broader change in how it believes software companies must operate as AI reshapes the industry.
“We entered a new era where AI is transforming the role of software, creating the greatest opportunity our industry has ever seen,” Mann and Zinman wrote in the letter. “We have a new market to capture. Without a fundamental change in how we operate, we will not be able to compete and win that market.”
The move highlights a growing challenge facing software companies: adapting organizational structures built during the SaaS boom to a market where AI is changing how products are developed, sold and used.
“Over the past nine months, we have shifted our core vision moving from managing work to doing the work for our customers, with people and AI agents working together in one workspace,” the founders wrote.
That shift, they said, required more than new products. It required changing the company’s internal structure.
“It became clear that changing our strategy and product is not enough,” the letter stated. “The organization we built for our previous chapter is not the organization that fits the new AI era.”
The restructuring will include reducing management layers, creating smaller autonomous teams and changing the company’s approach to selling and supporting customers.
Monday.com said its new AI-focused products require closer customer engagement, including deeper implementation support and increased on-site presence. As a result, some existing roles will change while new positions will be created.
The company emphasized that the layoffs were not driven by a goal of reducing costs or replacing workers with AI.
“Improving margins was not the purpose of this decision,” management wrote. “We intend to reinvest the vast majority of the savings in our people, our products, AI, and future growth.”
In follow-up questions shared with employees, the company also rejected the idea that the layoffs were caused by internal AI adoption.
“No. While we are seeing significant value from AI internally, this decision was not made to reduce costs or replace people with AI,” the company wrote. “We see internal AI adoption as an accelerator of our growth.”
Instead, management framed the move as an attempt to remove organizational complexity that had accumulated as the company expanded.
“We had many situations where work that could have been done in a few days took many months with multiple meetings and endless friction,” the company said. “This wasn't people’s fault and everyone was frustrated by this.”
The layoffs come as investors reassess the future of software companies amid the rapid adoption of AI.
Last week, monday.com disclosed that its board had canceled 10.875 million unissued shares previously reserved for employee incentives. The company said the move was intended to reduce unnecessary dilution for shareholders and would not affect existing employee stock options or restricted stock units.
The decision came amid broader questions about whether software companies will need to maintain the same level of hiring and employee equity incentives that characterized the previous technology growth cycle.
Monday.com’s stock has declined sharply over the past year as investors have questioned the long-term impact of AI on software business models, despite the company continuing to report growth and improving profitability.
In its first-quarter results, monday.com reported revenue of $351.3 million, up 24% year-over-year, and operating profit of $20 million, double the previous year. The company maintained its full-year revenue forecast of approximately $1.46 billion.
The company has also adjusted its own expansion plans, deciding not to proceed at this stage with a planned 1,000-square-meter office expansion at the EcoTower complex and instead temporarily adding three floors at the nearby Sonol Tower.
Management said internal adoption of AI tools has increased productivity and allowed the company to continue growing without expanding its workforce at the same pace.
“The company that comes out of this change will have clearer priorities, fewer layers, faster decisions, and greater ownership,” Mann and Zinman wrote.
The founders said they remain confident in the strategy, pointing to growing customer adoption of its AI products.
“Our momentum is strong, and we believe we are on the right path to success on a massive market opportunity,” they wrote.
