Financials

Financials — monday.com Ltd (MNDY)

monday.com is a rare thing in software: a sub-scale company that already behaves like a mature compounder. It grew revenue to $1.23 billion in FY2025, up 26.7% year-over-year [1], holds a ~89% gross margin [2], converts that revenue into a ~26% free-cash-flow margin [3], and carries zero debt against roughly $1.67 billion of cash and investments [4]. And yet the stock has been cut roughly in half over the last six months and far more from its 2025 peak. The entire investment debate is the gap between that business and that tape.

This page reads monday.com the way you read a SaaS compounder: growth durability first, then the quality of the cash, then the fortress balance sheet, then capital allocation, and finally — where the case now actually lives — valuation after a violent de-rating.

Source: FY2025 Annual Report (Form 20-F), Statements of Operations [5] and Liquidity and Adjusted Free Cash Flow [6].

1. Size and shape: a decelerating — but still durable — compounder

What kind of business this is. monday.com sells subscriptions to a cloud "Work OS" — a no-code/low-code platform on which customers build work-management, CRM, dev, and service applications. Revenue is recurring subscription revenue, recognized over the contract term [7]; it reports as a single operating segment with revenue split only by geography [8]. The economics are textbook best-in-class SaaS: very high gross margin, heavy sales-and-marketing intensity, and — increasingly — real operating leverage as the revenue base scales.

The single most important chart on this page is the growth trajectory. monday.com is not slowing down because it is broken; it is slowing down because the law of large numbers is doing its work. But the rate of deceleration is exactly what a buyer must underwrite.

Source: revenue per FY2025 20-F geographic note (FY2023–FY2025) [9]; earlier years per company filings, as reported; FY2026E is the midpoint of management guidance [10].

Source: derived from reported revenue (FY2025 20-F geographic note [11]) and FY2026 guidance [12].

Growth has fallen every single year — 91% → 68% → 41% → 33% → 27% — and management's FY2026 outlook of $1.466–1.475 billion, or 19–20% growth [13] would mark the first year below the 20% line. The deceleration is orderly, not a cliff, and the underlying enterprise engine is still strong: customers with more than $50,000 in ARR grew 34% to 4,281, those above $100,000 grew 45% to 1,756, and those above $500,000 grew 74% to 87 [14]. The company is successfully trading up-market even as the overall growth rate normalizes.

Net dollar retention is the tell. For a seat-and-expansion model, net dollar retention (NDR) — how much an existing cohort spends a year later, including upsell, contraction, and churn — is the leading indicator of durable growth. monday.com's overall NDR was 110% in Q4 2025 (116% for customers above $50k ARR) [15], and management has guided it to "slightly decline" through FY2026 as 2024–25 price increases anniversary out [16]. A 110% NDR that drifts lower is the mathematical root of why the growth rate keeps stepping down — and why this is the metric the whole thesis turns on.

Geographic mix

Source: FY2025 Annual Report (Form 20-F), Geographic Revenue note [17].

The US is just over half of revenue and the fastest-growing major region; the business is genuinely global, with roughly half of revenue earned outside the US. That international weighting matters for a reason that recurs below: monday.com's cost base is heavily Israeli-shekel-denominated, so a strong shekel is a real headwind to reported margins.

2. Earnings quality: the GAAP profit is real, but read the cash, not the net income line

This is the section a beginner most needs and a pro most scrutinizes, because monday.com's FY2025 income statement contains three very different kinds of "profit," and only one of them is the durable one.

Source: GAAP operating loss and non-GAAP operating income from FY2025 20-F non-GAAP reconciliation [18]; free cash flow derived from reported cash flows [19].

Layer 1 — GAAP operating result: essentially breakeven. FY2025 operating income was a loss of just $1.7 million on $1.23 billion of revenue — a -0.1% operating margin, but a dramatic improvement from a -29% margin in FY2022 [20]. The Q1 2026 quarter actually flipped GAAP operating income positive. So the operating model has reached scale; it is not yet a margin story, but it is no longer a loss story.

Layer 2 — Net income of $118.7M is heavily flattered. Reported net income jumped from $32.4M to $118.7M [21], but almost none of that came from operations. Two non-operating items did the work: $61.1 million of financial income (interest earned on the ~$1.6B cash pile) turned the operating loss into pre-tax income, and a $59.4 million income-tax benefit — a one-time, non-cash reversal of a deferred-tax valuation allowance as the company concluded it will use up its loss carryforwards in 2026 — more than doubled the bottom line [22] [23]. The practical takeaways: GAAP EPS of $2.24 will not recur at that level (the tax benefit was a one-off, and a normalizing tax rate is a future headwind), and the interest-income tailwind shrinks if rates fall or the cash is spent on buybacks.

Layer 3 — Free cash flow is the honest number, but adjust it for stock comp. Operating cash flow was $333.6 million and adjusted free cash flow $322.7 million in FY2025 — the fifth consecutive year of positive operating cash flow since the 2021 IPO [24]. Capex is minimal (under 2% of revenue), so cash conversion is excellent. The honest caveat is share-based compensation of $177.0 million — about 14% of revenue and larger than the entire GAAP-to-non-GAAP operating bridge [25]. SBC is a non-cash expense that flatters free cash flow while diluting shareholders, so a conservative investor reads FCF net of it: roughly $323M of FCF less $177M of SBC is closer to ~$145M of "owner" cash — still positive, but the gap between headline FCF and economic FCF is the single biggest quality adjustment on this name.

Source: derived from the FY2025 Annual Report Consolidated Statements of Cash Flows and Operations [26] [27].

The story this chart tells is the most bullish one on the page: cash generation inflected in FY2023 and has compounded since, while GAAP net income only recently caught up. monday.com became a cash machine well before it became an accounting-profit machine — the hallmark of a genuinely high-quality subscription business.

3. The balance sheet: a fortress, and half the market value is cash

There is essentially no balance-sheet risk here, which is why this section is short. monday.com ended FY2025 with $1,503.1 million of cash and equivalents plus $162.3 million of marketable securities — roughly $1.67 billion — and no debt [28]. The only material obligations are operating leases on offices — $189.5 million of fixed lease payments plus $73.2 million of other purchase obligations (largely hosting/cloud) [29]. Working capital is a source of cash, not a drain: the business is funded by $411.6 million of deferred revenue — customers paying in advance — which is why operating cash flow runs well ahead of reported profit [30].

Source: derived from FY2025 20-F Consolidated Balance Sheets and Liquidity disclosure [31].

The strategic point: with net cash equal to roughly half the current market capitalization, the balance sheet is a weapon, not a constraint — it funds buybacks, an AI acquisition (One AI), and any downturn without recourse to capital markets. The accumulated deficit of $433.3 million [32] is a legacy of the cash-burning growth years and is now shrinking, not a solvency concern.

4. Returns and capital allocation: the pivot from dilution to buyback

For most of its public life monday.com's "capital allocation" was simply reinvestment plus shareholder dilution via stock comp. FY2025 marks a genuine inflection: in September 2025 the board authorized an $870 million share-repurchase program, and the company bought back $135.0 million (883,913 shares) in Q4 2025, leaving $735.0 million remaining [33]. That authorization is roughly a quarter of the entire market cap — an unusually large program — and management accelerated repurchases into Q1 2026, which it flagged will trim FY2026 adjusted free cash flow by about $20 million [34].

This is the right move at this price: with the stock down sharply and ~14%-of-revenue SBC to offset, buying back stock both mops up dilution and signals that management views the shares as cheap. Returns on capital are now positive and improving — FY2025 return on equity was ~9.5% and return on assets ~5.6% — though both are flattered by the same one-time tax benefit that flattered net income, so the underlying return on capital is still modest and is a margin-expansion story yet to be proven.

Source: FY2025 Annual Report (Form 20-F), Non-GAAP Operating Income reconciliation [35].

Note the scale: stock comp ($177M) is roughly equal to the entire non-GAAP operating income ($175M). In other words, monday.com's reported "profit" before stock comp is almost exactly offset by the cost of that stock comp — a reminder that the buyback is not extra capital return so much as it is the company paying cash to neutralize a non-cash expense. This is the central reason to anchor on cash flow net of SBC rather than headline non-GAAP figures.

5. The standard year-wise statements

All figures in $ millions except EPS and shares. Source: FY2025 Annual Report (Form 20-F), Statements of Operations [36], non-GAAP reconciliation [37] and Liquidity and Cash Flow [38]. FY2021 full statements predate the structured series; FY2021 revenue was $308.2M.

The arc is clear in one table: revenue 2.4x'd in three years, gross margin held at ~89%, the operating loss shrank toward zero, FCF margin stabilized in the mid-to-high 20s, and the cash pile and equity base roughly doubled — all with zero debt and only modest share-count creep (now reversing via buyback).

6. Where the case lives: valuation after a ~78% de-rating

This is the crux, and it deserves the most space. monday.com's fundamentals improved through FY2025 while its stock did the opposite. The shares trade near $67 (June 2026), down from roughly $145 at the end of 2025 and roughly $300 at the early-2025 peak — a de-rating of around 78% from the high. The market is not arguing with the cash flows; it is re-pricing the growth and worrying about AI.

Source: derived from reported quarterly financials; latest quarter per Q1 FY2026 earnings call [39].

What is actually breaking the multiple. Four worries, in order of weight:

1. Growth deceleration. FY2026 is guided to 19–20%, and Q1 2026 revenue growth of 24% is already a step down from FY2025's 27% [40]. Management's own guidance implies further moderation in the second half.

2. NDR at 110% and guided lower [41] — the expansion flywheel is cooling as the 2024–25 price increases stop contributing.

3. AI is both the bull case and the bear case. Management says AI already drove ~3% of net new ARR in Q1 2026 and that AI lifted internal developer output ~32% [42] — but the same AI compute is expected to push gross margin from ~90% toward the mid-80s [43], and the bear case is that agentic AI erodes the per-seat pricing model itself.

4. FX. A strengthening Israeli shekel is knocking ~100–200 bps off the operating margin, since most costs are shekel-denominated [44].

What you pay for all of that. After the de-rating, the valuation looks more like a no-growth software company than a 20% grower with 26% FCF margins:

Source: derived from reported financials [45] [46], market price as reported, FY2026 guidance [47] and consensus non-GAAP estimates.

At roughly 1.1–1.3x EV/sales and ~5x EV/FCF, monday.com is being priced as if growth is about to stall and the FCF will be eroded. For context: at the 2025 peak the same business traded north of 10x sales. The de-rating is the entire story — the fundamentals barely changed. Two honest counterweights keep this from being a slam-dunk "cheap": (a) the headline FCF is flattered by ~14%-of-revenue SBC, so the SBC-adjusted FCF yield is a more pedestrian ~4%; and (b) if AI genuinely compresses both growth and the gross margin, today's multiple may be cheap on numbers that are themselves about to fall. But the balance sheet (net cash ≈ half the market cap) and the over-$700M of buyback firepower [48] give the downside a hard floor. Sell-side targets cluster well above the current price (mean near $108 versus ~$67), reflecting the same view: the de-rating has overshot the fundamental deceleration.

7. Peer comparison: best fundamentals in the pure-play pack

monday.com's truest comparables are the other independent work-management / collaboration SaaS names — Asana and Atlassian most directly, with Freshworks adjacent in SMB CRM/ITSM. Against that set, monday.com has the best combination of growth and profitability: it is the fastest-growing and one of only two that are GAAP-profitable, and it does it with the highest gross margin.

Source: latest annual reports (Form 10-K / 20-F) for each company, as reported. Freshworks' net income is flattered by a one-time tax benefit.

The read: Asana is growing in single digits and still loses ~25 cents on the operating dollar; Atlassian is far larger and grows faster than Asana but is still GAAP-unprofitable; Freshworks just reached profitability but grows slower. monday.com is the only name combining 25%+ growth, ~90% gross margin, and operating breakeven — yet it trades at a discount to where high-quality SaaS historically clears. On fundamentals, monday.com deserves a premium within this group, not a discount; that disconnect is the bull case in one sentence.

8. The bottom line

What the financials confirm: monday.com is a genuinely high-quality software business — ~89% gross margin, ~26% FCF margin, a fortress net-cash balance sheet, GAAP profitability now achieved, and the best growth-plus-profitability profile among its direct peers. The cash generation is real and has compounded for years.

What they contradict — or at least complicate — about the bull case: the FY2025 net-income surge is largely a one-time tax benefit plus interest income, not operating profit; headline free cash flow is meaningfully flattered by stock-based compensation equal to almost all of non-GAAP operating income; and growth, while still healthy, has decelerated every year and is now guided below 20% with net retention drifting lower and AI threatening both the gross margin and the seat-based model. The market has priced those concerns aggressively, leaving a high-quality compounder at roughly 1.1–1.3x EV/sales — cheap on today's numbers, but only if those numbers hold.

The whole debate reduces to one question: does growth stabilize around the high-teens/low-20s, or keep sliding? Everything else — the margin, the cash, the balance sheet — is already strong enough.

The first financial metric to watch is net dollar retention. At 110% and guided to "slightly decline," NDR is the mathematical engine of the revenue growth rate and the cleanest early read on whether AI is helping (expansion via new AI products and seats) or hurting (seat compression). If NDR stabilizes or re-accelerates back toward the mid-110s, the deceleration narrative breaks and the ~1.3x EV/sales multiple is far too low; if it keeps sliding, the de-rating is justified and growth follows it down.