monday.com's FY2025 Results: Revenue Growth Accelerates but Margins Slip, Testing the Profitability Thesis

What happened

monday.com announced fiscal year 2025 results with revenue growing 27% year-over-year, exceeding the 26% growth in Q3 2025 and aligning with the bull case scenario in the DeepValue report. However, the non-GAAP operating margin of 14% represents a decline from 15% in Q3 2025 and falls short of the high-teens target critical for valuation support. This margin compression occurs despite management's emphasis on disciplined execution and AI product adoption, suggesting that increased spending or operational inefficiencies may be eroding profitability gains. The results contrast with the master report's base case of 20-22% revenue growth and margins rising to 17-18%, highlighting persistent challenges in balancing growth with cost control. Investors must now scrutinize whether this margin dip is a temporary artifact of investment cycles or a sign of deeper issues in monetizing AI and enterprise expansion.

Implication

The 27% revenue growth demonstrates monday.com's ability to sustain high growth rates, supported by enterprise adoption and AI products, which aligns with the positive aspects of the investment thesis. However, the 14% non-GAAP operating margin, below the 15% in Q3 2025, indicates that cost discipline may be faltering, potentially due to heightened sales and R&D investments flagged in the master report. This margin shortfall could delay the path to higher profitability, affecting valuation multiples and challenging the scenario where margins reach ≥18% sustainably. If not addressed, it may signal that the company's transition to a more efficient, multi-product platform is slower than expected, increasing downside risks. Consequently, the focus shifts to upcoming FY2026 guidance for clarity on margin recovery and growth durability.

Thesis delta

The investment thesis is reinforced on the growth front, with 27% revenue growth exceeding the base case expectation of 20-22%, supporting the bullish outlook on enterprise and AI-driven expansion. However, the margin decline to 14% undermines the key assumption of non-GAAP operating margins gliding toward high-teens, suggesting that profitability improvements may be more elusive and requiring a recalibration of margin expectations. This shift emphasizes a more cautious stance on the path to sustainable earnings, though the robust top-line performance keeps the overall thesis intact pending further margin trends.