Monday.com's Non-GAAP Margins Masked a Sharp Decline in GAAP Profitability as the Company Increased Spending

(NASDAQ: MNDY)

NEW YORK, March 4, 2026 /PRNewswire/ -- Levi & Korsinsky, LLP is investigating monday.com Ltd. (NASDAQ: MNDY) following the company's February 9, 2026 earnings release and the accompanying 20% decline in its share price. Investors who held MNDY shares and incurred losses may obtain more information about their rights.

SEC Regulation G and Item 10(e) of Regulation S-K require that companies presenting non-GAAP financial measures reconcile those figures to the nearest GAAP equivalent and ensure that non-GAAP presentations are not given undue prominence over GAAP results. In monday.com's case, the divergence between its GAAP and non-GAAP profitability metrics warrants scrutiny.

For fiscal year 2025, monday.com reported non-GAAP operating income of $175.3 million, representing a 14% non-GAAP operating margin. However, on a GAAP basis, the company's operating loss narrowed only to near breakeven. The gap between these two figures is driven primarily by stock-based compensation, which is excluded from the non-GAAP calculation. Q4 non-GAAP net income was $55 million ($1.04 per share), while the GAAP figure was materially lower.

The 2026 guidance further illustrates the gap. Management projected non-GAAP operating income of $165–$175 million, representing an 11–12% margin – a decline from the 14% margin achieved in FY2025. At the same time, the company guided for mid-teens percentage headcount growth with "incremental investment primarily directed towards sales and R&D." R&D spending already increased from 17% to 19% of revenue in FY2025, reaching $238.5 million. The combination of rising operating expenses and declining non-GAAP margins raises questions about whether the non-GAAP presentation adequately communicated the trajectory of the company's profitability.

Additionally, monday.com guided gross margins to decline from 90% in FY2025 to the "mid-to-high 80s" in FY2026, a contraction that management attributed to increased investment in AI infrastructure. Adjusted free cash flow guidance of $275–$290 million implies a 19–20% margin, down from the 26% achieved in FY2025. The simultaneous compression of gross margins, operating margins, and free-cash-flow margins – while revenue growth decelerates from 27% to 18–19% – represents a meaningful shift in the company's financial profile that the non-GAAP headline figures may not fully convey.

MNDY shares fell in excess of 20% on February 9, 2026, with analysts citing the guidance disappointment as the primary catalyst.

Shareholders who purchased MNDY stock and want to learn about their legal options may contact Joseph E. Levi, Esq. for further details.

Levi & Korsinsky, LLP is a nationally recognized firm with offices in New York, California, Connecticut, and Washington, D.C. that prosecutes securities, merger, and consumer class actions on behalf of investors and consumers; more information is available at www.zlk.com.

CONTACT:
Joseph E. Levi, Esq.
Levi & Korsinsky, LLP
33 Whitehall Street, 27th Floor
New York, NY 10004
Tel: (212) 363-7500
Fax: (212) 363-7171
Email: [email protected]
www.zlk.com

SOURCE Levi & Korsinsky, LLP