On Wednesday morning, roughly 620 people at monday.com learned they no longer had jobs. About 350 of them are in Israel; the rest are spread across offices from New York to Sydney. They have mortgages and rent, kids and car payments, and by lunchtime they were updating résumés and running the math on how many months of severance stand between them and real trouble.
Here is the part that should stop you cold. monday.com is not a company in trouble. By almost every measure that matters, it is the healthiest it has ever been.
A company that has never been more profitable
Start with the numbers, because the numbers are the whole argument. In 2025 monday.com booked about $1.23 billion in revenue and roughly $118 million in net income. In the first quarter of 2026 alone it did about $351 million in revenue, and its trailing-twelve-month net income sits near $119 million. Gross margin runs around 89 percent — the kind of figure that makes hardware executives weep into their bill of materials. Trailing operating cash flow is north of $325 million. On the company’s own first-quarter 2025 call, co-CEO Roy Mann described the period as delivering record operating profit and the highest single-quarter cash flow in the company’s history. That was not a fluke. That was the trajectory.
When management announced the layoffs, it did not cut its revenue outlook. It reaffirmed full-year 2026 revenue growth of 19 to 20 percent. And then it did something quietly revealing: in the same filing, it raised its non-GAAP operating margin guidance from roughly 13 percent to roughly 15 percent.
Read that sequence again, because it is the whole story compressed into a single move. The company cut a fifth of its workforce, left its growth forecast untouched, and lifted its profit-margin target — while telling employees, in writing, that “improving margins was not the purpose of this decision.” You do not get to say both. Either the cuts lift margins, in which case lifting margins is exactly what they do, or they don’t, in which case why raise the margin guide the same morning you announce them? Raising that line is the tell. It is the card the company turned face-up while insisting it was holding something else.
A fair objection: monday.com’s 2025 operating income on a strict GAAP basis is roughly breakeven, weighed down by stock-based compensation. But stock comp is a non-cash expense, and cash is exactly what this company produces in volume. A business throwing off a third of a billion dollars in operating cash flow at 89 percent gross margins does not need to send 620 families to the unemployment office to survive. It is choosing to.
The promise they made this year
To see how cynical the framing is, look at what monday.com’s own founders were saying about headcount — in public, on the record, months ago.
In April 2025, announcing a new chief revenue officer, the company stated flatly that it expected to grow headcount by 30 percent that year, “with heavier investments to build out the sales teams.” Thirty percent. Not steady state — expansion. Heading into 2026, at its analyst day, management projected roughly 20 percent headcount growth for the year. On the following earnings call, co-CEO Eran Zinman walked that down to the mid-teens.
Then, in March 2026, Zinman sat for a strikingly candid interview on Harry Stebbings’ 20VC podcast. The stock was around $72. The company had pulled its 2027 targets and watched Wall Street slash its growth forecast. Zinman said that some days it felt like getting hit by a truck, then a plane, then getting roasted — and it was only 11 in the morning. Pressed on the contradiction between preaching AI efficiency and planning to hire more people, he allowed that the headcount number might slip lower still.
But here is the line that matters most, four months on. Zinman said, on that podcast, that layoffs would not change how investors saw the company. He had spoken with every major investor, he said, and the message was consistent: what they wanted was revenue acceleration — not a smaller payroll, but faster growth. If you have effectively infinite AI demand and cannot convert it into accelerating revenue, he reasoned, your problem is not the number of people you employ. It is your product’s ability to seize the moment.
He was right. And then, in July, the company ran the layoffs anyway.
So we are asked to accept that a fifth of the workforce had to be cut to win a race the company’s own co-CEO said, out loud, cannot be won by cutting people. That is not a strategy. That is a ritual.
They already had the AI
The official justification is that monday.com must remake itself for the AI era — that, in the founders’ telling, the organization built for the previous chapter is not the one the new chapter demands. It is a tidy story. It is also revisionist.
monday.com was early to this. Genuinely early. In February 2025 — when plenty of companies still could not confidently define “agentic AI” — it laid out a full AI vision anchored by a “Digital Workforce” of agents built to do work, not merely organize it. It shipped its first agent, monday Expert, the next month. By its Elevate conference that September it had released a no-code agent builder, three further AI capabilities under the monday magic, monday vibe, and monday sidekick names, and a new AI-powered CRM product. By the first quarter of 2025, users had already run more than 26 million AI actions, up over 150 percent year on year, across a base that has since passed 250,000 customers.
I build agentic systems for a living. I ship MCP servers, orchestration loops, and RAG pipelines into production. So let me be plain about what I am looking at. A company that shipped AI agents eighteen months ago, that counts AI usage in the tens of millions of actions, that already runs a working digital-workforce product line, is not a company caught flat-footed by artificial intelligence. It is one of the ones that saw it coming. The claim that monday.com must fire 620 people in order to “become” an AI company is refuted by monday.com’s own press releases.
The disruption to per-seat SaaS pricing is real — I won’t pretend otherwise, and anyone selling you the notion that seat-based software is immortal is selling you something. When an agent does the work of a team, you sell fewer seats, and the revenue model bends. That is a genuine structural threat, and repricing around consumption is the right response. But it is a pricing-and-product problem, and you solve pricing-and-product problems with pricing and product. You do not solve them by shoving 620 human beings into the middle of the table as your ante.
Who actually sold
Because the pressure here did not come from the business. It came from the tape.
monday.com’s stock is down roughly 50 percent in 2026 and about 75 percent from its highs. That collapse did not happen because earnings fell — earnings grew. It happened because the entire per-seat SaaS category was repriced almost overnight on the fear that AI would consume it, a selloff that intensified after Anthropic’s Cowork launch rattled software investors across the board. monday.com’s forward earnings multiple compressed from something like 60 to 70 times down into the mid-teens. The company did not get worse. The market simply decided to pay far less for the same dollar of profit.
And who did the selling? Not the employees. The institutions. monday.com is roughly three-quarters owned by institutional investors, so a few hundred funds set the price — and in the first quarter of 2026 a conga line of them headed for the door. ShawSpring Partners liquidated its entire stake, 253,959 shares, about $24 million. Bienville Capital sold all 234,818 of its shares, roughly $22.5 million. Strategy Capital dumped its full 222,388-share position, around $21 million. The investment firm of William Oberndorf exited completely. ClearBridge Investments trimmed tens of thousands of shares. The Pennsylvania public-school teachers’ pension fund cut its holding by nearly 87 percent.
These are the “market forces” that supposedly compelled the cuts: rich, sophisticated, diversified investors who looked at a profitable, growing company, decided the category was out of fashion, and rotated their capital into whatever is in fashion this quarter. When they sold, they lost nothing but a line item — the position was a rounding error in their portfolios, a few percent at most — and they moved on that same afternoon. Not everyone panicked, for the record: Conifer Management opened a fresh 400,000-share stake, roughly $38 million, having apparently noticed that a company minting cash at a mid-teens multiple is a bargain, not a bonfire. Even the analysts documenting the exodus kept appending the same caveat — that none of the selling meant the company was in trouble. Far from it, as one put it.
The chips on the table
So assemble the tableau, because it deserves to be seen whole. On one side sits a company that has never been more profitable, led by two founders who became billionaires on this stock and who, even after a 75 percent drawdown, still hold shares worth hundreds of millions of dollars between them. On another side sit the institutions who sold, richer for having deployed their money elsewhere and fully insulated from the consequences of the trade. And in the center of the table, as the ante in a hand that no one seated will feel if it loses, sit 620 people and their families.
The founders told their staff they are going “all in” — doing this not to protect what they have but to chase everything the company could become. It is worth sitting with that metaphor, because they chose it, not me. Going all in means pushing your whole stack to the center. But the chips they are pushing are not theirs. They are the salaries, the health insurance, and the stability of 620 people — 350 of them in a single country — offered up to appease investors who, by the company’s own CEO’s own admission four months ago, will not actually be appeased by it.
That is the thing about a tribute. It does not have to work to be demanded. It only has to be paid.
The playbook, and why it fails
None of this is unique to monday.com, which is precisely why it is worth writing down. This has become the SaaS-pocalypse playbook, running in production across the industry: the multiple compresses, so you cut heads, raise the margin line, wrap the whole thing in the language of AI transformation, and pray the market rewards the discipline. Sprout Social ran a version. ZoomInfo ran a version. Block ran a version. Wix — the company monday.com was originally spun out of — cut a fifth of its own staff in May, and Amdocs has sunk to a six-year low. The names change; the script does not.
The cleanest parallel is Intuit, and it is worth dwelling on, because it is monday.com’s story told a few weeks earlier. In May 2026 Intuit announced it was cutting 17 percent of its workforce — more than 3,000 people — in the very same breath as an earnings beat and a raised full-year outlook. Its chief executive went on television and said the decision had nothing to do with AI, that it was simply about becoming more effective, and told another interviewer flatly that AI was not the cause. The market’s verdict was immediate: the stock fell 13 percent. And this was Intuit’s second pass through the same script. Back in July 2024 it had cut roughly 10 percent of its people in a reorganization it also draped in AI, with the same reassurance that it did not do layoffs to cut costs. Two rounds, two denials — and across the stretch that spanned them, the stock fell from around $800 at its 2025 peak to near $290 today. The layoffs did not rescue Intuit. They chaperoned its decline.
This is not an anecdote; it is the base rate. Event-study research on layoff announcements finds they tend to produce negative stock returns not only in the days around the news but over the following weeks, because the market reads a cost-cutting layoff for what it usually is — a company signaling that it has run out of better ideas for growth. The longer-run evidence is harsher. Wayne Cascio’s longitudinal work, comparing firms that cut deeply against those that did not, found the cutters routinely underperformed their peers on both profitability and share price for years afterward. Deepak Datta’s review of twenty separate studies found layoffs produced neutral-to-negative stock reactions and profitability declines that lingered as long as three years. A synthesis of two decades of downsizing research in the Harvard Business Review reached the same unglamorous verdict: most companies that conduct layoffs never see the improved profitability they promised — and the damage, the researchers noted, is heaviest at companies that depend on research and development. Read that last clause again with a software company in mind. monday.com is nothing but research and development. This is the precise category where cutting people costs the most, not the least.
The mechanism has a number attached to it. In one study of a Fortune 500 technology company, the researcher Teresa Amabile found that after a 15 percent workforce reduction, the rate of new inventions fell by nearly a quarter. That is the part the margin math never captures. Institutional knowledge walks out the door with the people who held it, and it does not return on the next hiring cycle, because the next hire has to learn from scratch what the last one already knew. And the attrition is not random. The most capable survivors — the ones with options, the ones any competitor would take a call from — tend to be the first to leave a company that has just shown them the floor can open beneath anyone. So you do not merely end up with fewer people. You end up with a thinner, more junior bench attempting the hardest maneuver in the company’s history. monday.com told its own staff that the point of all this was to go capture a new market. You do not capture a new market by shipping more slowly, and a company with 620 fewer people will ship more slowly, no matter how many of its own AI agents it points at the problem.
There is an honest caveat here, and it is the one every executive in this position reaches for. The research does allow that layoffs can help — when a company is genuinely in distress, or is making a real and disciplined strategic pivot. That is the escape hatch. It is also why the margin guidance matters so much. A company that raises its profit-margin target on the same morning it describes a painful, distress-driven transformation has quietly locked itself out of that hatch. You cannot at once be too imperiled to keep your people and healthy enough to promise Wall Street fatter margins. One of those two stories is for the employees and the other is for the tape, and only one of them can be true.
Which returns us, finally, to the tell. If monday.com truly believed, as it told its own people, that this was about transformation and not cost-cutting, it would not have raised its margin guidance in the same breath. It did. And that single act tells you which audience the decision was really for. Not the customers, who were already being served by a company shipping AI faster than most of its rivals. Not the 620, who were told a painful choice was being made for their company’s future even as it wrote them out of that future. It was for the tape — for the funds that already sold, and the ones the company hopes will buy back in.
They went all in to win back players who had already cashed out and walked away from the table. The weight of the evidence says the bet does not pay. The house always collects anyway — and the only thing that changed is the names of the people left sitting at the table when it did.
About the Author
Gal Ratner is the founder and CTO of Inverted Software and WhiteStar Labs and Chief Architect at Prana Entertainment, with nearly thirty years building production software on the Microsoft and .NET stack for clients including Microsoft, Sony, Rockstar Games, 2K Games, Best Buy, and Allegiant Air. He was employee number six at Break.com and a Los Angeles Business Journal CTO of the Year finalist. His current work is production agentic AI: MCP servers, the Microsoft Agent Framework, RAG pipelines, SQL Server 2025 vector search, and the PLogger observability framework. He writes about the AI industry from the vantage point of someone who actually ships it — skeptical of the hype, bullish on the utility, and allergic to layoffs dressed up as strategy. He is the .NET AI guy that ships.