Guidance misses analyst targets
For the current quarter, management projected revenue in a range of $338 million to $340 million. Analysts surveyed by FactSet had anticipated approximately $343 million, making the midpoint of the forecast about $3.5 million below consensus. Full-year revenue is now expected to land between $1.452 billion and $1.462 billion, under the $1.48 billion average estimate compiled by FactSet.
Operating income guidance also disappointed. Executives told analysts to expect between $165 million and $175 million in operating profit for 2024. By comparison, FactSet’s consensus prediction had stood at $220.2 million. Management attributed part of the margin pressure to unfavorable currency movements, noting that a stronger shekel against the U.S. dollar could weigh on near-term results.
Earnings top fourth-quarter expectations
The cautious outlook contrasted with solid results for the three months ended Dec. 31. Excluding special items, earnings came in at $1.04 per share, exceeding the 92-cent figure compiled by LSEG. Revenue rose 25% year over year to $333.9 million, ahead of the $329.6 million consensus. The quarter marked the fifteenth consecutive period of double-digit percentage top-line growth, underscoring continued customer adoption even as macroeconomic conditions remain mixed.
Company positions platform as “AI-native”
During a conference call with analysts, co-chief executive officer and co-founder Eran Zinman emphasized that Monday.com has not yet seen a measurable business impact from standalone AI vendors. Nonetheless, the company is accelerating the integration of machine-learning features across its product suite. Recent additions include autonomous agents designed to automate repetitive workflows and a “vibe” option that adjusts the tone of status updates to improve user engagement.
“We are refocusing all external messaging and on-site content to highlight AI capabilities,” Zinman said on the call. He added that the shift is aimed at reinforcing the platform’s relevance at a time when potential customers are experimenting with generative-AI chatbots and developer tools that can write code, draft documents or orchestrate simple projects.
Monday.com is not alone in making such moves. Large platform providers such as Microsoft and Salesforce are embedding generative models into their offerings, while upstarts are marketing purpose-built agents that can plan, delegate and report on tasks without human intervention. The rapid pace of innovation has fueled investor concern that entrenched subscription services may face pricing pressure or churn if alternative solutions prove more cost-effective.
Broader software sector faces valuation reset
The decline in Monday.com’s share price mirrors a wider reassessment of growth expectations across the software landscape. Rising interest rates have already pushed investors to favor near-term profitability over long-duration revenue expansion. AI has added another layer of uncertainty: if generative models commoditize certain features, established vendors may need to invest heavily to maintain differentiation.
Imagem: Internet
According to a recent filing with the U.S. Securities and Exchange Commission, Monday.com ended 2023 with more than 225,000 customers and continued to expand its partner ecosystem. However, the filing also noted that the company’s average revenue per user may fluctuate as it adjusts pricing structures to reflect new AI capabilities and as currency volatility persists.
Management expects choppy conditions
Looking ahead, executives cautioned that foreign-exchange headwinds could persist throughout 2024, compressing gross margin even if demand remains stable. The company reports the majority of its costs in Israeli shekels while generating most revenue in U.S. dollars, making profitability sensitive to currency swings.
Leadership reiterated plans to balance investment in product innovation with disciplined expense control. While research and development spending will rise as AI features move from pilot to general availability, the company intends to moderate hiring and focus on upselling larger customers rather than pursuing lower-margin tiers.
Investor response and market context
Analysts quickly adjusted models following the guidance cut, with several lowering price targets but maintaining neutral or outperform ratings based on the company’s consistent growth record. The steeper-than-expected decline in the stock suggests that some market participants had positioned for a beat-and-raise quarter rather than a conservative outlook.
Market strategists noted that earnings season has been unforgiving toward high-growth software issuers that offer any hint of slowing momentum. A similar pattern emerged earlier this month when other collaboration-tool providers reported mixed results, triggering double-digit percentage drops even when headline numbers topped estimates.
Key figures at a glance
- Fourth-quarter revenue: $333.9 million, up 25% year over year
- Fourth-quarter adjusted earnings per share: $1.04
- Current-quarter revenue outlook: $338 million–$340 million
- Full-year 2024 revenue outlook: $1.452 billion–$1.462 billion
- Full-year 2024 operating income outlook: $165 million–$175 million
- Year-to-date stock performance: –50%
- Market capitalization decline since November 2021 peak: –75%+
- IGV Software ETF year-to-date performance: –22%
The next scheduled catalyst for Monday.com is its first-quarter earnings release, expected in May. Until then, investor sentiment is likely to be driven by developments in generative-AI adoption across the industry and by foreign-exchange trends that could either amplify or mitigate the margin pressures highlighted by management.
Crédito da imagem: Cheng Xin | Getty Images
