Monday.com has initiated a significant restructuring, cutting approximately 20% of its global workforce, a move that will affect around 630 employees. The company cited a strategic pivot toward its AI Work Platform as the primary driver for this decision. This workforce reduction is intended to create a leaner operational model and reallocate resources toward its AI-driven growth strategy.
In a letter to employees, co-founders Roy Mann and Eran Zinman described the layoffs as the "most painful decision" since the company's founding. They emphasized that the restructuring is not a cost-cutting measure or a direct replacement of employees with artificial intelligence. Instead, the company views this as a necessary adaptation to a new era where AI is reshaping the software industry. "The organization we built for our previous chapter is not the organization that fits the new AI era," the founders wrote.
The company's strategic shift involves transforming its platform from one focused on managing work to one that enables people and AI agents to collaborate and perform work together. This evolution of the AI Work Platform includes tools such as a no-code application builder, customizable AI agents, workflow automation, and chatbots designed to generate complex reports. Monday.com believes that corporate clients increasingly desire AI agents to function as integrated team members.
These layoffs follow a period of internal restructuring over the past nine months as the company has increasingly adopted autonomous teams and focused on its AI strategy. Monday.com joins a growing number of technology companies that have cited AI as a reason for workforce reductions, as the industry reevaluates its operational structures in light of rapid AI adoption.
The estimated costs associated with these layoffs and structural changes are expected to range between $45 million and $55 million. This includes severance packages, employee benefits, and impairments related to office space. Despite these costs, Monday.com stated that the majority of the savings generated will be reinvested into its people, products, AI development, and future growth. The company also clarified that internal AI adoption is seen as an accelerator for growth, not a driver for these layoffs.
Financially, Monday.com has provided updated guidance for 2026. The company expects full-year revenue growth of 19% to 20%, with an adjusted free cash flow margin of 19% to 20%. The company has raised its non-GAAP operating margin outlook to approximately 15%, an increase from its previous projection of 13%. This updated outlook reflects the company's strategic focus and anticipated efficiencies from its restructuring. Monday.com is scheduled to announce its second quarter 2026 financial results on August 10, 2026.
While the company is reducing its headcount in some areas, it plans to continue hiring in key strategic roles throughout 2026 to support its AI-driven growth. This indicates a targeted approach to workforce development, emphasizing talent acquisition in areas critical to its future AI initiatives.