Monday.com Beats Q4 Estimates but Weak 2026 Outlook Spurs Analyst Downgrades

What happened

Monday.com delivered better-than-expected fourth-quarter 2025 earnings, continuing its streak of revenue beats with robust enterprise expansion and high net dollar retention. However, the company issued a disappointing outlook for 2026, signaling potential growth deceleration amid macro headwinds and SMB softness from search algorithm changes. Analysts have slashed their forecasts in response, reflecting eroding confidence in the company's ability to sustain over 20% revenue growth and margin expansion. This follows a pattern where the stock has sold off post-earnings due to guidance misses, despite solid current performance and a cash-rich balance sheet. The weak outlook raises the risk that Monday.com's growth could dip below the threshold needed to support its valuation multiple, challenging the investment thesis.

Implication

The weak 2026 outlook increases the likelihood of Monday.com's Bear case scenario, where revenue growth slows to 14-16% and margins stagnate, undermining the base assumption of sustainable >20% growth. Analyst downgrades highlight growing skepticism about the company's ability to offset SMB funnel degradation with enterprise and AI-driven expansion, which could delay margin improvements and rerating. Persistent guidance volatility may keep the stock under pressure until management demonstrates more predictable growth trajectories, especially in net dollar retention and large-customer cohorts. However, the strong balance sheet with $1.3 billion net cash provides downside protection, allowing continued investment in AI and upmarket initiatives during this turbulent period. Long-term investors might consider this a potential entry point if the stock dips further, but only if upcoming quarters show stabilization in key metrics, otherwise, the risk of permanent multiple compression rises.

Thesis delta

The weak 2026 outlook shifts the investment thesis toward a higher probability of the Bear case, challenging the assumption that Monday.com can sustain over 20% revenue growth and achieve high-teens non-GAAP operating margins in the near term. This introduces increased execution risk from macro headwinds and SMB softness, potentially delaying the path to valuation rerating despite strong enterprise metrics and cash flow generation. However, the core thesis of enterprise expansion and balance sheet strength remains intact, but with a more cautious outlook on growth durability and margin trajectory.