Profit growth did not stop the decline
Monday.com was down about 6% by midafternoon Monday, even after reporting second-quarter adjusted earnings of $1.48 a share. Adjusted earnings rose 36% from a year earlier.
The move leaves a harder question for MNDY holders: can its shift toward AI-based, consumption pricing keep revenue growing at a rate investors will accept?
The earnings figure is real progress. But earnings are a backward-looking measure, and a company can improve profit while investors focus on the next source of sales growth. Monday.com is moving beyond its older seat-based subscription model toward an AI Work Platform that charges customers based on usage.
That can expand spending from a customer that uses more AI tools over time. It can also make quarterly revenue less predictable. A fixed number of software seats creates a steady bill. Usage can rise quickly, but it can also slow when a customer delays a project or limits its AI rollout.
The known revenue base was already slowing
Monday.com reported first-quarter revenue of $351.3 million, up 24% from a year earlier. Management's revenue outlook for the second quarter was $354 million to $356 million.
Those figures show the scale of the task. The company needs customers to spend more on AI-driven work over time while keeping its existing subscription base productive. The new model may create a larger opportunity per customer, but it removes some of the certainty that comes from charging by the seat.
A 500-seat customer gives a software company a rough floor for recurring revenue. A consumption plan depends more on how often that customer uses the product. That can be attractive when demand is strong, yet it also means reported growth may react faster to cautious corporate spending.
The share decline does not prove what investors were focused on Monday. It does show that a strong adjusted-profit figure did not settle the revenue question.
Cash flow gives management room
Before the second quarter, Monday.com's full-year revenue outlook was $1.466 billion to $1.474 billion. Its adjusted free-cash-flow outlook was $280 million to $290 million.
Free cash flow is the cash left after running the business and covering capital spending. The prior range suggests Monday.com expected to generate meaningful cash while it invested in the AI platform and adjusted its pricing model.
That financial cushion is the strongest countercase to a harsh reading of Monday's decline. A company producing cash has more room to invest through an uneven product transition. It is less dependent on outside funding if customer adoption takes longer than planned.
Cash flow alone cannot tell investors whether consumption pricing will replace the revenue stability of a seat-based plan.
There is also a limit to how much protection cash provides. If usage-based revenue grows more slowly than the subscriptions it is meant to supplement, a healthy cash-flow forecast may buy time without fixing the growth issue. The core risk is not that AI tools have no demand. It is whether the billing model converts that demand into durable customer spending.
Third-quarter guidance is the next proof point
The next third-quarter revenue outlook will carry more weight than Monday's adjusted earnings result. Investors will be looking for signs that revenue growth is stabilizing as customers adopt AI features, while free cash flow remains near the company's prior expectations.
A stronger outlook would support the case that the current transition is a timing issue. Continued slowing would leave MNDY with a tougher valuation question: how much revenue visibility did it give up when it moved away from the seat-based model?
