Business Context and Reporting Period
Company: monday.com Ltd.
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal Year ended December 31, 2025
Business Overview: monday.com operates an AI cloud-based work platform (Work OS) consisting of modular building blocks for work management, CRM, development, and service. The company is incorporated in Israel and listed on the Nasdaq Global Market. In 2025, the company significantly expanded its AI capabilities, introducing features like "monday agents" and "monday workflows" to execute work autonomously.
Key Financial Metrics
| Metric | FY 2025 | FY 2024 | YoY Change |
|---|---|---|---|
| Revenue | $1,232.0 million | $972.0 million | +27% |
| Gross Profit | $1,098.9 million | $868.3 million | +27% |
| Gross Margin | 89% | 89% | 0% |
| Operating Loss | ($1.7 million) | ($21.0 million) | Improvement |
| Net Income | $118.7 million | $32.4 million | +266% |
| Diluted EPS | $2.24 | $0.62 | +261% |
| Operating Cash Flow | $333.6 million | $311.1 million | +7% |
| Adjusted Free Cash Flow | $322.7 million | $295.8 million | +9% |
| Cash & Equivalents | $1,503.1 million | $1,411.6 million | +7% |
| Net Dollar Retention Rate | 110% | 112% | -2 pts |
Note: Net Income for FY 2025 includes a one-time non-cash income tax benefit of $61.1 million due to the reversal of a valuation allowance on deferred tax assets.
Material Changes vs. Prior Period
- Profitability Surge: The company transitioned from a net income of $32.4 million in 2024 to $118.7 million in 2025. This was primarily driven by the reversal of a $61.1 million valuation allowance on deferred tax assets, as management concluded it was more likely than not that these assets would be realized based on cumulative pre-tax income over the last three years.
- Revenue Growth: Revenue grew 27% year-over-year, driven by strong retention, upselling, and new client acquisitions. Approximately $516 million of 2025 revenue was associated with performance obligations from prior periods.
- Expense Increases:
- R&D Expenses: Increased 50% to $320.8 million, driven by higher salaries and share-based compensation to support AI development.
- Sales & Marketing: Increased 18% to $630.9 million, reflecting investments in enterprise sales and global events.
- Share Repurchases: In September 2025, the board authorized an $870 million share repurchase program. By year-end, the company had repurchased 883,913 shares for $135.0 million.
- Enterprise Growth: The number of enterprise customers (ARR >$50k) grew 34% to 4,281, now accounting for 41% of total ARR.
Guidance, Outlook, and Risks
Management Commentary & Outlook
- AI Strategy: Management emphasizes a shift from "managing work" to "doing work" via embedded AI. The company expects AI infrastructure and compute costs to increase, potentially causing a modest decline in gross margins in the mid-term before stabilizing.
- Go-to-Market: The company is rebalancing investments from online marketing toward enterprise sales and brand marketing to support long-term customer relationships.
- Liquidity: With $1.5 billion in cash and cash equivalents, management believes current resources are sufficient for at least the next 12 months, including funding the share repurchase program.
Risks and Contingencies
- Geopolitical Risk: As an Israeli company, operations are exposed to regional conflicts (e.g., war between Israel and Iran), which could disrupt facilities, infrastructure, or employee availability.
- Legal Proceedings: A putative class action lawsuit was filed on March 10, 2026, regarding forward-looking earnings guidance. The company intends to vigorously defend against these claims.
- AI Regulation: Evolving regulations regarding AI (e.g., EU AI Act) may impose additional compliance costs and operational constraints.
- Foreign Currency: Approximately 25% of expenses are denominated in New Israeli Shekels (NIS). A 5% decrease in the USD/NIS exchange rate would increase costs by approximately 1%.
Investor Verification Checklist
- Tax Benefit Sustainability: Verify the assumptions regarding the realization of deferred tax assets and the sustainability of the "Preferred Technological Enterprise" tax status in Israel.
- AI Cost Impact: Monitor future gross margin trends to assess the impact of rising AI compute and infrastructure costs.
- Enterprise Retention: Track the Net Dollar Retention Rate specifically for enterprise customers (> $50k ARR) to ensure the upmarket strategy remains effective.
- Share Repurchase Execution: Review the pace and pricing of the remaining $735 million authorized for share repurchases.
- Geopolitical Exposure: Assess the potential operational impact of ongoing regional conflicts on the Tel Aviv headquarters and workforce.