Monday.com is the most mispriced quality SaaS company I can find. At 1.4x EV/S with 90% gross margins, 26% FCF margins, and enterprise customer growth accelerating at 34-74% across tiers — while the stock is down ~70% from highs — the market is pricing permanent destruction. The leading indicators say otherwise. This is a textbook WSM divergence setup.
Atlas scores MNDY 4/5 conviction and identifies the core tension correctly: growth fails the 30% gate but the valuation dislocation is extraordinary. I agree with Atlas on three critical points:
Where I add nuance:
| FY24 | FY25 | Δ | |
|---|---|---|---|
| Q1 | 7.1% | 5.3% | -1.8pp |
| Q2 | 8.8% | 5.9% | -2.9pp |
| Q3 | 6.3% | 6.0% | -0.3pp |
| Q4 | 6.8% | 5.4% | -1.4pp |
| Avg | 7.3% | 5.7% | -1.6pp |
QoQ has compressed ~1.6pp YoY on average. At 5.7% QoQ average, that annualises to ~25%. FY26 guidance ($1,452-1,462M vs $1,232M FY25) implies 18-19% — a further ~7pp YoY deceleration. This is the headline the market is pricing.
But look at incremental revenue:
| Quarter | Incr Rev ($M) |
|---|---|
| Q1 FY24 | 14.3 |
| Q2 FY24 | 19.2 |
| Q3 FY24 | 14.9 |
| Q4 FY24 | 17.0 |
| Q1 FY25 | 14.3 |
| Q2 FY25 | 16.8 |
| Q3 FY25 | 17.8 |
| Q4 FY25 | 17.0 |
**14 − 19Mperquarterfor8consecutivequarters. * *Thisisacompanyaddingthesameabsolutedollarseachquarteronagrowingbase—mechanicalpercentagedeceleration, notabusinessintrouble.TheFY26guideimplies 55M incremental per quarter (220Mtotal), whichisactuallya * step − up * fromthe 65M per half seen in FY25. The guide is achievable.
| Quarter | Revenue ($M) | QoQ % | YoY % |
|---|---|---|---|
| Q4 FY23 | 202.6 | — | — |
| Q1 FY24 | 216.9 | 7.1% | — |
| Q2 FY24 | 236.1 | 8.8% | — |
| Q3 FY24 | 251.0 | 6.3% | — |
| Q4 FY24 | 268.0 | 6.8% | 32.3% |
| Q1 FY25 | 282.2 | 5.3% | 30.1% |
| Q2 FY25 | 299.0 | 5.9% | 26.6% |
| Q3 FY25 | 316.9 | 6.0% | 26.2% |
| Q4 FY25 | 333.9 | 5.4% | 24.6% |
Five consecutive quarters of YoY deceleration: 32% → 30% → 27% → 26% → 25%. This is the surface-level bear case. Guided to 18-19% for FY26. On a growth screen, this stock fails. On a value + leading indicator screen, it screams.
| Quarter | GM % | Op % | Net % | FCF % |
|---|---|---|---|---|
| Q1 FY24 | 89.8 | 9.9 | 14.6 | 41.4 |
| Q2 FY24 | 90.7 | 16.3 | 20.9 | 21.5 |
| Q3 FY24 | — | 12.8 | — | 32.8 |
| Q4 FY24 | 89.2 | 15.0 | 21.4 | 27.1 |
| Q1 FY25 | 90.2 | 14.4 | 20.7 | 38.8 |
| Q2 FY25 | 90.3 | 15.1 | 19.5 | 21.4 |
| Q3 FY25 | 90.0 | 15.0 | 19.5 | 29.1 |
| Q4 FY25 | 89.5 | 12.6 | 16.5 | 17.0 |
| FY25 Full Year | 90.0 | 14.2 | 19.0 | 26.2 |
Gross margin: 89-90% — world-class and stable. Non-GAAP operating margin: 13-15% — consistent operating leverage. FCF margin seasonal (Q1 strongest, Q4 weakest — typical for annual renewal cycles). FY25 FCF margin: 26%.
FY26 guidance implies deliberate margin compression: Non-GAAP Op margin guided to 11-12% (from 14%), FCF margin to 19-20% (from 26%), gross margin to "mid-to-high 80s" (from 90%). Eliran was explicit: this is AI infrastructure investment + SLG motion + FX (100-200bp). Investment cycles should not be confused with structural margin deterioration. When I wrote about Monday in August 2023, operating margin was 9% — it expanded to 14% in two years. They know how to pull the lever.
| Metric | Q4 FY24 | Q4 FY25 | YoY Growth |
|---|---|---|---|
| Total RPO | $614M | $839M | +37% |
| cRPO | $516M | $676M | +31% |
| Revenue | $268M | $334M | +25% |
RPO growing 37% vs revenue growing 25%. That's a 12pp gap. cRPO growing 31% — still a 6pp gap. The backlog is building faster than it's converting to revenue. This is textbook bullish divergence, the same pattern I identified in AXON in July 2023 when RPO was growing 61% vs revenue 34%. Revenue subsequently accelerated.
| Customer Tier | Q4 FY24 | Q4 FY25 | YoY Growth | Sequential Adds |
|---|---|---|---|---|
| 10+ users | 59,214 | 63,914 | +8% | +2,111 H2 |
| $50K+ ARR | 3,201 | 4,281 | +34% | +579 H2 |
| $100K+ ARR | 1,207 | 1,756 | +45% | Record net adds |
| $500K+ ARR | 50 | 87 | +74% | +37 |
The bigger the customer, the faster the growth. $500K+ growing 74%. Record net adds at $100K+. In my August 2023 analysis, I tracked 50K + customeraddsperquarter—theywereatrecordlevelsthenat 209perquarter.Nowthey′readding 270perhalf(50K+ went from 3,702 to 4,281 = +579 in H2 FY25). The upmarket engine is not just running — it's accelerating.
| Segment | FY24 | FY25 | Δ |
|---|---|---|---|
| $50K+ as % of ARR | 36% | 41% | +5pp |
| $100K+ as % of ARR | 24% | 28% | +4pp |
| $500K+ as % of ARR | 4% | 6% | +2pp |
Enterprise is eating the pie. These are the customers with higher NDR (116%), better gross retention (91%, improving), renewal rates in the high-90s, and multi-product adoption. Every quarter that passes, the business becomes more enterprise and more durable. The SMB tail wagging the dog narrative gets weaker with every data point.
| Quarter | Overall | 10+ | $50K+ | $100K+ |
|---|---|---|---|---|
| Q1 FY25 | 112% | 115% | 116% | 117% |
| Q2 FY25 | 111% | 115% | 116% | 117% |
| Q3 FY25 | 111% | — | — | — |
| Q4 FY25 | 110% | 114% | 116% | 116% |
Overall NDR drifting from 112% to 110%. But I wrote about Monday's NDR definition in January 2022 — they publish a 4-quarter trailing weighted average. This means the headline lags reality. The $50K+ cohort is rock-stable at 116%. The decline in blended NDR is driven entirely by SMB/no-touch weakness, which management explicitly called out and embedded in guidance. Guided to maintain 110% through FY26.
Management was brutally honest on the call. Roy Mann:
"The cost to acquire and expand self-serve customers has increased over the past year, and the returns on those investments have been below historical levels. We do not see the same dynamic in our touch business, which has continued to accelerate."
And:
"We expect '26 to not be different than what we've seen so far. With the choppiness in the performance marketing."
This is the bear case: Monday's PLG engine is sputtering. Performance marketing ROI is deteriorating. They "do NOT expect improvement through 2026." They withdrew 2027 targets.
But let me quantify this. If enterprise ($50K+) is 41% of ARR and growing ~30%, and SMB/no-touch is 59% growing ~5%:
Management guides 18-19%. That implies enterprise growing faster than 30%, or SMB performing better than ~5%, or both. Given RPO +37% and the enterprise customer acceleration, the guide looks conservative. Monday has beaten every quarterly guide in FY25 — consistently by 1.5-2.0% at the low end.
5 of 5 checked. This is a strong divergence setup.
Using $66.47 stock price (Mar 27, 2026 close), ~53M shares outstanding.
| Metric | Value |
|---|---|
| Market Cap | $3.52B |
| Cash + Securities | $1,665M |
| Debt | $0 |
| Enterprise Value | $1.86B |
| Run-Rate Revenue (Q4 × 4) | $1.34B |
| FY25 FCF | $323M |
| FY25 Non-GAAP Net Income | $234M |
| Multiple | Value | Context |
|---|---|---|
| EV/S (run-rate) | 1.39x | SaaS companies at 20% growth + 90% GM: 5-8x median |
| EV/FCF (FY25) | 5.8x | 17.3% FCF yield on EV. Distressed-level pricing. |
| P/S (run-rate) | 2.63x | Net cash = 47% of market cap |
| P/FCF | 10.9x | For a 25% grower — deep value |
| P/E Non-GAAP (FY25) | 15.0x | Cheaper than the S&P 500. PEG = 0.6x. |
Forward (FY26 guide):
| Multiple | Value |
|---|---|
| EV / FY26 Revenue (guide mid) | 1.28x |
| EV / FY26 FCF (guide mid) | 6.6x |
| Market Cap / FY26 FCF | 12.5x |
For context: the Jamin Ball SaaS scatter has no company with 90% gross margins and 20%+ growth trading below 5x EV/S. Monday is at 1.4x. The market is pricing this as if it were a declining, low-margin, commoditised business. It is none of those things.
What does fair value look like? Even at a conservative 5x EV/S (half the median for its quality cohort), EV = $6.7B → Market cap = 8.4B → ** 158/share**. That's a 2.4x from here. At 7x EV/S (more appropriate for 90% GM, 20% grower), the stock is $200+.
Capital allocation is excellent. 135MofbuybacksinQ4aloneat 66/share. Remaining authorization of $735M would retire 11M shares (21% of float) at current prices. The share count has been flat at ~53M for 18 months despite $177M annual SBC. Management is buying back stock at a 17% FCF yield — this is the highest-ROI capital allocation possible.
Monday Vibe hit $1M ARR faster than any product in the company's history — faster than CRM, which went from zero to $100M ARR in 3 years. As the Motley Fool piece noted, the more customers build on Vibe, the higher the switching costs. This is stickiness by design.
Sidekick has processed 500K+ messages. AI agents are in beta. Enterprise customers explicitly cited Monday's trusted, secure platform as why they prefer building agents on Monday vs standalone tools (Casey George on the call: "they're interested in having a trusted partner and a trusted platform").
I'm not underwriting AI revenue. But at this valuation, AI is free optionality. If Vibe follows the CRM trajectory ($100M ARR in 3 years), it could add $100M+ to the top line by FY28. That's 6-7% of current revenue as pure incremental. The gross margin guided to "mid-to-high 80s" partly reflects AI infrastructure investment — front-loaded cost for back-loaded revenue.
On the CNBC "clone" fear: Eran was direct on the call — "unlike the tools that exist today, which are more consumer SMB oriented, the way we build it is that we build it on top of the Monday platform... all the databases, all the data structure, are based within Monday. So you enjoy all the security." The enterprise moat is real. The SMB vulnerability is real too — but SMB is the shrinking, low-ROI part of the business they're already deprioritizing.
Roy Mann & Eran Zinman (co-CEOs, co-founders): I wrote about them in November 2021 after the Q3 report: "The team on the Q&A sounded exceptionally well aligned; no misunderstandings, seamlessly handing over questions to one another." That chemistry is still present 4+ years later. Founder-led. Aligned. Complementary (Roy = business/GTM, Eran = product/AI).
Eliran Glazer (CFO): Precise on guidance parameters. Honest about FX impact, margin investment timing, and the reasons for withdrawing 2027 targets. The $1.5B credibility issue is real — he previously blessed that number and then guided $1.46B. Mark Murphy from JPMorgan pressed him hard: "You did bless the $1.5 billion revenue consensus for 2026... could you explain what changed?" Eliran's response was straightforward: no-touch didn't improve as expected, macro volatility increased, they chose to reset with achievable numbers. I respect the correction more than I'd respect doubling down on a bad number.
Casey George (CRO): New addition to the call. Concrete on enterprise motion: vendor consolidation, AI differentiation, cross-retention trends. This is the SLG execution we're betting on.
Net assessment: The 2027 target withdrawal is a trust tax — management needs 2-3 quarters of beat-and-raise to rebuild credibility. But the underlying honesty (admitting SMB won't improve, resetting to achievable numbers) is what I want from leadership. When management hides problems, that's when you run. They're being transparent.
I've held MNDY at significant allocations before — 11.9% in November 2023. My historical writings on this company are consistently positive:
Every thesis point from those writings remains intact or has strengthened. Enterprise customer growth is stronger. Margins are higher. FCF generation is better. The only deterioration is SMB/no-touch and headline growth deceleration — but the stock is down 70% while the underlying business quality is objectively better than when I owned it.
Prior: Monday is a high-quality SaaS company with strong margins and improving profitability. Held at 11.9% in Nov 2023 when the stock was ~$175. Sold during the 2024 portfolio rotation to concentrate into AI infrastructure.
Updated: The business quality is the same or better — 90% GM, 14% Non-GAAP op margin, 26% FCF margin. Enterprise acceleration is genuinely impressive (RPO +37%, $100K+ customers +45%, $500K+ +74%). The SMB/no-touch weakness is real, persistent, and honestly communicated. The market has de-rated this from a growth premium to a distressed multiple (1.4x EV/S, 5.8x EV/FCF) — pricing in permanent deterioration that the leading indicators flatly contradict. This is the exact divergence pattern I identified in AXON mid-2023. At these multiples, you don't need acceleration — you just need the business to not collapse. And everything says it won't.
Buy. At 1.4x EV/S and 5.8x EV/FCF, the market is giving you an elite SaaS business (90% GM, 26% FCF margin, zero debt, $1.7B cash, 25% growth, accelerating enterprise traction) at a distressed valuation because of SMB headwinds and a growth deceleration narrative. Every leading indicator contradicts the bear case: RPO +37%, $100K+ customers +45%, $500K+ +74%, enterprise now 41% of ARR and growing 3-4x faster than the blend.
The risk is that SMB collapse overwhelms enterprise acceleration. The data doesn't support that — enterprise is already 41% of ARR, growing 3-4x faster, with 116% NDR and 91% gross retention. The mix shift math is working.
I would initiate a position here. This is the kind of setup where 1 percentage point of QoQ growth matters enormously — if FY26 comes in at 20%+ vs 18-19% guided, the re-rating will be violent to the upside. And even if growth lands at 18% as guided, at 1.4x EV/S the stock is still a double.
Action: Buy. Initiate position.
-wsm
(No current position. Previously held at 11.9%, Nov 2023.)
Analysis date: 2026-03-31 Data source: Scout brief (Q4 FY25 earnings, Feb 9 2026) Stock price: 66.47(Mar27, 2026)|Marketcap: 3.52B | EV: ~$1.86B Atlas baseline reviewed — 4/5 conviction, concur with core thesis, diverge on SBC weight and AI clone narrative.