Monday.com cuts 20% of workforce in AI-focused restructuring

Monday.com is cutting about 20% of its workforce as the workplace software company pivots its strategy toward its AI Work Platform, the company said Wednesday.

"This restructuring allows us to sharpen our focus on the initiatives that matter most for our customers and accelerate our AI-driven growth," the company said in a regulatory filing. The Tel Aviv-based firm, which trades on the Nasdaq under ticker MNDY, employs about 2,000 people, meaning roughly 400 positions will be eliminated.

The restructuring plan involves reducing headcount by approximately 20% as Monday.com realigns operations around its AI Work Platform and broader artificial intelligence strategy. The stock, which has a market capitalization of about $3.13 billion, closed at $73.26 on Tuesday, snapping a six-day losing streak. The company reported revenue growth of 25.42% year-over-year in its most recent quarter, with a forward price-to-earnings ratio of 16.36.

The layoffs place Monday.com among a growing list of enterprise software companies restructuring to prioritize AI investments. The company faces competition from larger players including Microsoft, whose Teams platform competes in workplace collaboration, and Asana, a direct rival in project management software. Monday.com's short interest of 16.79% suggests significant bearish positioning ahead of the restructuring announcement.

The move mirrors a broader industry trend as SaaS companies reallocate resources from traditional development toward AI capabilities. Microsoft has embedded its Copilot AI assistant across its productivity suite, while Asana introduced its own AI features called Asana Intelligence. Monday.com launched its AI Work Platform earlier this year, offering features such as automated workflow generation and smart project recommendations.

For investors, the restructuring raises questions about Monday.com's growth trajectory. The company's 25.42% revenue growth, while strong, trails the hypergrowth rates of earlier years when the pandemic drove demand for collaboration software. The forward P/E of 16.36 represents a discount to the broader SaaS sector, reflecting market skepticism about the company's ability to monetize AI features at scale.

The restructuring is expected to generate cost savings that Monday.com can reinvest into AI research and development. The company did not disclose the expected charges related to the workforce reduction or the timeline for completion. Monday.com shares rose 0.58% in early trading Wednesday to $73.26 as investors weighed the strategic shift against the operational disruption of the layoffs.

This article is for informational purposes only and does not constitute investment advice.