Monday.com Shares Fall 7.3% Despite Q3 Earnings Beat as Revenue Outlook Signals Slower Growth

Monday.com (NASDAQ:MNDY) shares declined 7.3% after the AI workspace software company reported third-quarter 2026 earnings and revenue above analyst expectations but issued fourth-quarter guidance below market forecasts.

Quarterly revenue increased 19% year-on-year to $377.5 million, exceeding the consensus estimate of $369.18 million. Adjusted earnings per share reached $2.14, compared with analysts’ expectations of $1.37.

The company also reported record adjusted operating income of $89.4 million, up from $47.5 million a year earlier, while its adjusted operating margin expanded to 24% from 15%.

Fourth-Quarter Guidance Indicates Revenue Growth Deceleration

Monday.com forecast fourth-quarter revenue of between $380 million and $382 million, below analyst expectations.

The midpoint of $381 million represents approximately 14% year-on-year growth, compared with the 19% increase recorded during the third quarter.

For the full year 2026, the company expects revenue of $1.473 billion to $1.475 billion, representing approximately 20% annual growth.

Monday.com also anticipates an adjusted operating margin of approximately 18% for the year.

The guidance reflects ongoing investments in artificial intelligence and enterprise sales capabilities, alongside anticipated foreign exchange headwinds.

AI Annual Recurring Revenue Reaches $36 Million

Monday.com reported annual recurring revenue (ARR) from AI-related products of $36 million during the third quarter.

The company’s monday agents technology recorded more than six million interactions in less than two quarters.

Net dollar retention stood at 108%, while the number of customers generating more than $100,000 in annual recurring revenue increased 33% year-on-year to 2,127.

These figures reflect continued activity across the company’s enterprise customer base and AI product offerings.

Management Highlights AI Transition and Operational Changes

Co-founders and Co-Chief Executive Officers Roy Mann and Eran Zinman commented on the company’s transition towards AI-focused products and services.

“Our business is undergoing a fundamental evolution, and we took significant steps this quarter to become an AI-first company,” they said. “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.”

Chief Financial Officer Eliran Glazer said the company is “investing in enterprise go-to-market, product and AI.”

He added that the financial outlook reflects these investments alongside negative foreign exchange impacts estimated at 100 to 200 basis points.

Full-Year Outlook Maintains Approximately 20% Revenue Growth

Monday.com’s third-quarter results showed higher revenue, adjusted earnings and operating margins compared with the previous year.

However, the company’s fourth-quarter forecast indicates slower revenue growth as it continues investing in its AI strategy and enterprise operations.

The full-year revenue outlook of $1.473 billion to $1.475 billion and adjusted operating margin target of approximately 18% reflect management’s expectations for the remainder of 2026.

Monday.com stock price