Date: 2026-03-31 Analyst: Saul Rosenthal Market cap: ~3.8B|Stock: 66 | Net cash: 1.67B|EV: 2.1B EV/TTM Revenue: ~1.7x | Revenue growth: 24.6% YoY (Q4 FY25) Atlas baseline: Read and incorporated. I agree on valuation dislocation but diverge on conviction.
I know this company. I owned it. I built it to 18.4% of my portfolio in early 2023 when they were growing 57% with 90% gross margins and I was telling everyone on the board that "Monday is not in the same category as those other companies that don't succeed in this field." I trimmed it to 4.4% in mid-2024 because sequential revenue growth was stuck at $13-14M per quarter for eleven quarters running. I rebuilt it to 16% by November 2024, and then I closed the entire position by year-end 2024.
And now here we are. Revenue growth has decelerated for five straight quarters — 32.3% to 30.1% to 26.6% to 26.2% to 24.6% — and they're guiding to 18-19% for FY26. NDR is 110% and declining. They withdrew their 2027 targets. They're guiding margins DOWN. This is a company I understand deeply, and while the valuation is screaming "buy me!", the numbers are not screaming anything of the sort.
At 18-19% guided growth with declining NDR and margin compression, this simply does not fit my criteria. Period. I don't invest in companies growing 18-19%, no matter how cheap the stock is. "Cheap" is not a reason to buy a stock on my board.
BUT — and this is a big but — the RPO divergence is real. RPO growing 37% YoY against 25% revenue growth is the kind of leading indicator I pay attention to. The enterprise motion is genuinely accelerating: $100K+ customers up 45%, $500K+ up 74%. There is a legitimate argument that the blended number is masking a very healthy business underneath a structurally impaired SMB channel.
I would not buy it today for my portfolio. But I am putting it on my watch list for the first time since I sold it. If RPO conversion drives a beat-and-raise in Q1-Q2 FY26 and revenue reaccelerates above 22-23%, I would seriously reconsider. At this valuation, you don't need heroic assumptions — you just need the enterprise math to overwhelm the SMB drag.
Conviction: 2/5 (Watch, not own. Would upgrade to 3/5 on evidence of reacceleration.)
This is a SaaS company, so I apply my SaaS criteria:
| Criterion | Threshold | Actual | Pass/Fail |
|---|---|---|---|
| Revenue growth YoY | >30-40% | 24.6% Q4, guided 18-19% FY26 | FAIL |
| Recurring/subscription | Yes | Yes — 100% subscription | PASS |
| Gross margins | >70% | 89% GAAP, 90% Non-GAAP | PASS |
| FCF positive/improving | Yes | $323M FY25 (26% margin) | PASS |
| NRR/NDR >120% | >120% | 110% overall, declining | FAIL |
| Little/no debt | Yes | Zero debt, $1.67B net cash | PASS |
| Something special — moat | Yes | Multi-product platform, enterprise penetration | PASS |
| Not dependent on single customer | Yes | 250K+ customers, diversified | PASS |
| Master of own fate | Yes | Platform company, own distribution | PASS |
Two critical failures: growth and NDR. These are the two most important metrics for a SaaS company. I don't care how good the gross margins are or how much cash they have — if revenue is decelerating and customers are expanding less, the engine is slowing down.
Here's the table. This is the analysis. Everything else is commentary.
| | Q4 FY23 | Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | | | Dec-23 | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 | |---|---|---|---|---|---|---|---|---|---| | Revenue ($M) | 202.6 | 216.9 | 236.1 | 251.0 | 268.0 | 282.2 | 299.0 | 316.9 | 333.9 | | YoY % | — | — | — | — | 32.3% | 30.1% | 26.6% | 26.2% | 24.6% | | QoQ % | — | 7.1% | 8.8% | 6.3% | 6.8% | 5.3% | 5.9% | 6.0% | 5.4% | | Incr Rev ($M) | — | 14.3 | 19.2 | 14.9 | 17.0 | 14.3 | 16.8 | 17.8 | 17.0 | | GM % [GAAP] | 88.9% | 89.2% | 89.9% | 89.7% | 88.6% | 89.8% | 89.6% | 88.7% | 88.8% | | Op % [Non-GAAP] | — | 9.9% | 16.3% | 12.8% | 15.0% | 14.4% | 15.1% | 15.0% | 12.6% | | FCF ($M) | 55.4 | 89.9 | 50.8 | 82.4 | 72.7 | 109.5 | 64.1 | 92.3 | 56.7 | | FCF % | 27.4% | 41.4% | 21.5% | 32.8% | 27.1% | 38.8% | 21.4% | 29.1% | 17.0% | | NDR Overall | — | — | — | — | — | 112% | 111% | 111% | 110% | | $50K+ Cust | — | 2,491 | 2,713 | — | 3,201 | 3,444 | 3,702 | — | 4,281 | | $100K+ Cust | — | 911 | 1,009 | — | 1,207 | 1,328 | 1,472 | — | 1,756 | | 500K + Cust|—|—|—|—|50|—|—|—|87||SBC(M) | — | 26.5 | 36.6 | — | 30.7 | 31.0 | 56.6 | 49.9 | 39.5 | | Non-GAAP EPS | — | — | — | — | $1.08 | — | — | — | 1.04||RPO(M) | — | — | — | — | 614 | — | — | — | 839 | | cRPO ($M) | — | — | — | — | 516 | — | — | — | 676 |
FY25 Full Year: $1,232M (+27% YoY). Non-GAAP Op Income: $175.3M (14% margin). FCF: $322.7M (26% margin). Non-GAAP EPS: $4.40.
Look at that table. Look at the YoY revenue growth line: 32.3% to 30.1% to 26.6% to 26.2% to 24.6%. That's five consecutive quarters of deceleration. Five! And they're guiding to 18-19% for FY26. That's not a blip. That's a trend.
Now look at the incremental revenue line: $14.3M, $19.2M, $14.9M, $17.0M, $14.3M, $16.8M, $17.8M, $17.0M. That's the same story I was telling on the board back in May 2024 when I started trimming! The sequential dollar adds are remarkably stable — hovering around $14-18M per quarter — but because the base keeps growing, the percentage growth keeps falling. This is a classic deceleration pattern. I wrote about this exact problem: "a sequential revenue increase of $12.4 million was enormous 11 quarters ago, when the previous quarter was $71 million (up 17.5% sequentially), but up $14 million is piddling this quarter when the previous quarter was $203 million."
The only way out of this pattern is for the incremental dollars to start GROWING meaningfully. They need to add $20M+, then $22M+, then $25M+ per quarter. Otherwise, at $17M/Q additions, you're looking at 20% growth on a $1.3B base, sliding to 17-18% a year from now. Which is exactly what guidance implies.
NDR: 112% to 111% to 111% to 110%. Declining. Every quarter. And management guided it STABLE at 110% for FY26 — they're not even trying to say it will improve! This is below my 120% floor, and the direction is wrong.
FCF: $323M FY25 (26% margin) is excellent — but guided DOWN to $275-290M (19-20% margin). FCF going down in absolute dollars while revenue grows??? That's margin compression, driven by AI infrastructure investment and FX (55% of workforce in Israel, ILS appreciating). They're asking me to accept slower growth AND lower margins. That's just the opposite of what I want to see.
Let me give credit where it's due, because this management team has executed a remarkable enterprise pivot:
RPO growing 37% vs revenue growing 25% is exactly the kind of leading indicator divergence that has preceded reaccelerations in other companies I've owned. When contracted revenue builds faster than recognized revenue, that's money in the bank that hasn't shown up in the income statement yet. This is the single most bullish data point in the entire analysis.
And the AI products are interesting. Monday Vibe hit $1M ARR faster than any product in company history. Sidekick processed 500K+ user messages. AI Agents are in beta. These are early, but they're real products with real usage.
Here's the other side. Management was remarkably transparent on the Q4 call — maybe too transparent. They said the no-touch/self-serve SMB channel is "choppy" and they do NOT expect improvement through 2026. Let me repeat that: they do NOT expect it to improve this year.
Why does this matter? Because the SMB/PLG channel is how Monday was built. That bottom-up viral adoption — the Super Bowl ads, the YouTube campaigns, the word-of-mouth — that's what drove Monday from $13M quarterly revenue to $200M+ quarterly revenue. If that channel is structurally impaired, the growth engine that made Monday great is broken.
And then CNBC went and built a working Monday.com clone in under an hour for $5-15 using AI coding tools. Now, was it a real product? No. It didn't have the integrations, the security, the scale, the ecosystem. But that's precisely the point — for a small team of 5-10 people who just need basic task management, maybe a $15 AI-built tool IS good enough. The enterprise is defensible. The SMB bottom-up is not.
The 10+ user customer base grew only 8% YoY (59,214 to 63,914). That used to be a much faster number. The base of the pyramid is barely growing.
This one bothers me. Management previously endorsed a $1.5B FY26 revenue consensus, and then guided to $1.452-1.462B — a 38 − 48Mshortfallfromwhattheyhadsignaled.Multipleanalystdowngradesfollowed : JefferiesBuytoHold(260 to 80), LoopBuytoHold(80), Baird cut target from $175 to $90. And then they withdrew their 2027 targets entirely.
I've said it many times on the board: I watch management promises like a hawk. When management tells me something and then falls short — especially when they're the ones who set the expectation — that's a trust issue. It takes several quarters of beating-and-raising to rebuild. We haven't seen that yet.
The FY26 guide itself may be conservative — their beat history in FY25 was 1.5-2% beats on next-quarter revenue — but the philosophical pivot to "high-confidence numbers only" feels like they're trying to lower the bar rather than raise their game.
Atlas highlighted this and I have to acknowledge it because the numbers are extraordinary:
| Metric | Current | Assessment |
|---|---|---|
| EV/TTM Revenue | ~1.7x | SaaS companies growing 15-20% trade at 5-8x. This is absurdly cheap. |
| EV/TTM FCF | ~6.5x | 15% FCF yield on EV. Pricing in permanent decline. |
| P/E (Non-GAAP) | ~15x | On $4.40 EPS. Growing 25% at 15x earnings. PEG of 0.6x. |
| Net cash / Market cap | 48% | Nearly half the company's value is cash sitting in the bank. |
| Rule of 40 (Q4) | 41.6 | Passing, but declining from 59 two quarters ago. Guided ~38 for FY26. |
Forward (FY26 guide):
| Metric | Value |
|---|---|
| EV/FY26 Revenue | ~1.4x |
| EV/FY26 FCF | ~7.5x |
| Market cap/FY26 FCF | ~13.5x |
Now, I know myself. I don't invest based on valuation. I've said that a hundred times on the board. "I follow the money, the results." I don't buy cheap stocks that are cheap for a reason. But I have to be honest here — 1.7x EV/revenue for an 89% gross margin software company growing 25% with $1.67B in net cash is... well, it's the kind of number that makes even me pause.
The buyback program is also significant: $735M remaining authorization, which is 21% of market cap. At $66/share, they could retire 11 million shares. Already bought back $135M in Q4 alone. That's enormously accretive.
But I keep coming back to the same principle: if the business is decelerating, a cheap price doesn't change that. I've seen this movie before. Deceleration is deceleration. I'd rather pay 15x revenue for a company accelerating than 1.5x for a company decelerating.
No position. I closed MNDY in December 2024. Conviction 2 out of 5.
I would consider reopening a starter position (2-3%) if:
The valuation provides an enormous margin of safety — nearly half the market cap is cash, EV/revenue is sub-2x, FCF yield is 15%. If the enterprise motor keeps accelerating and RPO converts, this stock doesn't need much to re-rate significantly. A move from 1.7x to even 4x EV/revenue (still cheap for SaaS) would be a double from here.
But I don't buy hope. I buy results. And right now, the results say: decelerating revenue, declining NDR, margin compression, credibility damage. The enterprise story is real, but it hasn't yet overwhelmed the SMB headwind in the aggregate numbers. When it does — and it might — I'll be ready.
Watch list. Not portfolio. Not yet.
Best,
Saul
Atlas scored this 4/5 conviction, primarily on the extreme valuation dislocation. I respect that analysis — it's thorough and the valuation argument is compelling. But I diverge on conviction because:
Where I agree with Atlas: the RPO divergence is the strongest bullish signal, the enterprise pivot is working, and the valuation is genuinely extraordinary. If growth reaccelerates, this will look like one of those opportunities I should have taken. That's the risk of waiting. But I'd rather miss the first 30% of a reacceleration than catch the last 30% of a deceleration.