Monday.com Cuts Growth Outlook to 18–19% as AI Investment, FX Costs Rise
Monday.com built a persistent no-touch SMB channel weakness and 100–200 basis points FX headwind into its 2026 guidance without prior disclosure, and forecast gross margins falling from 90% to mid-high 80s due to AI infrastructure costs. The company cut growth outlook from 27% to 18–19%, sending shares down 13–14%.
1. Guidance Revisions and Disclosures
On the February 9 earnings call, management revealed two headwinds—structural no-touch SMB channel weakness and a 100–200 basis point drag from Israeli shekel appreciation—were already built into 2026 guidance. This disclosure prompted questions about when leadership first recognized these issues and whether earlier forecasts understated ongoing challenges.
2. AI Investment Impact
The company plans mid-teens headcount growth concentrated in R&D and sales, pushing gross margins down from 90% to the mid-high 80s to fund AI products like Monday Vibe, Sidekick and Agents. R&D spend rose from 17% to 19% of revenue in FY2025, while early AI offerings like Monday Vibe have reached only $1 million in ARR against a $1.2 billion revenue base.
3. Share Price Reaction and Legal Inquiry
Shares dropped 13–14% on February 9, extending a nearly 70% decline from 52-week highs, as investors digested the revised outlook and margin pressures. A securities firm launched an investigation to determine if known headwinds were inadequately disclosed, raising potential legal risks for the company.