The Motley Fool on $MNDY (Nov 9, 2026)

I love that monday.com loves to stay true to its branding and always release its earning reports on a Monday morning. But this is a software as a service company that is focused on enterprise.

The stock is down today. We it we care about this company more about what it can tell us in enterprise software as a service but kind of looking like things are slowing down.

yeah, I mean they posted about 378 million in revenue was a roughly 20% year-over-year increase. Operating margins are stable, profits are positive. I mean what we're really seeing is corporate IT buyers are kind of tightening their software budgets and this is an ongoing problem within the software industry.

The software as a service business model it's not dead. It's just changing but it's also we're seeing that there's the this way in which businesses are no longer relying entirely on selling individual user seats.

You know we're seeing that a lot of their clients have stopped aggressive hiring in some cases are flattening headcounts. And so that old seed expansion growth model has hit something of a wall.

Now what Monday.com is trying to do is they're building AI features into a what is now over $36 million annual recurring revenue run rate. And the idea is that corporate clients will pay good money for autonomous AI agents that can do complex multi-step work like answering an IT ticket for example.

um they're not abandoning the seatbased model completely. They're pushing kind of a hybrid model where people and agents work as one team as they call it.

And they have a new feature called the AI cost center where companies can set strict budget limits and they can track AI usage spend alongside the regular, you know, human-based seat licenses.

I think this is something we might continue to see more of um for Monday.com I guess as I look at this I mean some of the forward indicators are not great either so you have your remaining performance obligations only up 1% from the second quarter. Deferred revenue actually down.

Is Monday just being out competed here? Maybe it's maturing or or maybe AI is really replacing this. I mean, some of this is maturing. Uh I mean, you're seeing kind of a textbook deceleration.

I could just read you the past five uh growth rates they've reported. uh fourth quarter of 2025 it was 25% since then it was 24 then 22 then 19 and now 14% is guided for the fourth quarter um so clear slowdown

one metric to watch is the net dollar retention um so it's not just that they're having a more difficult time getting enterprise clients to sign up they're they're having a more difficult time getting enterprise clients to spend more on the platform over time

uh their net dollar retention is currently at about 108% that means that if a customer has been with monday.com for at least a year, they're spending on average 8% more than they were a year ago.

That's expected to slip a little bit to 107% uh in the next quarter. So, some of this is maturity. Uh the small business, the easy growth is gone is is kind of the best way I would put it.

the worry is how are they adapting to, you know, the rise of agentic AI? Rachel mentioned their AI revenue stream, which is is growing nicely. It's still a relatively small part of the the total,

but that's really the question. Uh, can they turn that into the next big growth engine? Uh, and if if the answer's yes, that, you know, five quarter decline in growth rates could could reverse, but it it's still a big question mark for the time being.

And Monday.com was having a lot of fun repurchasing shares during the quarter.

The share count down 18% year-over-year. The company spending 735 million in the quarter to repurchase shares. Final question to each of you. Is this the right move for Monday.com to make this bold bet on itself or is this premature?

Um, you know, I would say when you look at a company like this that's in sort of a a transition phase, using cash for buybacks can look more like an admission that the hyperrowth phase is over.

You're trying to maybe support the stock price rather than spending that cash to acquire new tech or IP.

That's my concern and and that's probably my biggest uh critique of what we're seeing here.

But do I, you know, do I think the business can recover? Probably. Do I think the stock buyback is a bullish sign for investors? I think given all the factors we've discussed, I wouldn't say so at this point.

For me, you know, they have over a billion dollars of cash. They have no debt. They have positive free cash flow. That's a company that's doing buybacks responsibly. Monday is sending a signal that the stock is trading below its intrinsic value.

I think I think it's fair to say that this is a you know a big signal. They used up their entire authorization during the quarter.

it's a very very you know compelling signal from management that that they're very confident in that they're going to be able to turn things around. So I I'm I'm a fan of this if they have the money.

Um so I'm I'm a fan of what they're doing if if they really believe in it especially with how the price is compared to its high.