monday.com (NASDAQ: MNDY) reported Q2 FY2026 revenue of $364.6 million, up 22% year over year, while GAAP diluted EPS rose to $0.08 from $0.03. Non-GAAP operating margin expanded to 17%, but operating cash flow and adjusted free cash flow declined, creating a split between stronger adjusted profitability and weaker cash generation. AI-product ARR doubled from Q1 as large-customer adoption continued to outpace overall customer growth.

Core earnings data

Revenue growth included an approximately 110-basis-point benefit from foreign exchange. GAAP gross margin declined by two percentage points, but the GAAP operating loss narrowed despite a $21.4 million restructuring charge, while non-GAAP operating income increased by approximately 36%.

The following table uses quarterly figures for the three months ended June 30.

The non-GAAP figures exclude items including share-based compensation and restructuring costs. Adjusted free cash flow is defined as free cash flow plus costs associated with building out the company’s corporate headquarters.

Customer, AI, and recurring-revenue trends

AI-product ARR doubled sequentially and generated 17% of net new ARR during the quarter. monday.com did not disclose the dollar amount of AI-product ARR, but the contribution to new ARR indicates that AI products are becoming a more meaningful part of incremental recurring revenue.

Growth remained concentrated among larger customers. Accounts generating more than $100,000 and $500,000 in ARR increased substantially faster than the broader group of customers with more than 10 users, and those larger cohorts represented a greater share of company ARR.

Overall net dollar retention was 109%, compared with 115% for customers generating more than $50,000 or $100,000 in ARR. Total remaining performance obligations reached $937 million, up 34%, while current RPO—which covers obligations expected to be recognized over the next 12 months—rose 27% to $750 million.

Profitability, cash flow, and the balance sheet

GAAP gross margin declined to 88% because cost of revenue grew faster than sales. At the operating level, higher gross profit helped narrow the GAAP loss even after the company recorded $21.4 million of restructuring charges.

The difference between GAAP and non-GAAP operating results remained material. Non-GAAP operating income excluded $41.2 million of share-based compensation and the restructuring charge, compared with $56.6 million of share-based compensation and no restructuring charge in the prior-year quarter.

Cash generation moved in the opposite direction from reported earnings. Operating cash flow declined to $55.4 million, partly reflecting a $30.8 million outflow from prepaid expenses and other assets, compared with $17.0 million a year earlier. Deferred revenue was a $3.5 million use of cash, versus an $18.4 million source of cash in Q2 FY2025.

Cash and cash equivalents fell to $853.4 million from $1.50 billion at the end of 2025, while marketable securities totaled $219.4 million. Share repurchases used $182.4 million in Q2 and $735.0 million during the first six months of 2026. The company said the entire $870 million authorization had been used, leaving no shares available for additional repurchases under that program.

Guidance

monday.com expects Q3 revenue growth to moderate to 16%–17%, below the 22% reported in Q2. Full-year guidance calls for 19%–20% revenue growth and an approximately 16% non-GAAP operating margin.

For the full year, adjusted free cash flow is expected to be $280 million–$290 million, representing a margin of 19%–20%. Both the Q3 and full-year outlooks assume a negative foreign-exchange impact of 100–200 basis points.

Management perspective

Co-CEOs Roy Mann and Eran Zinman said monday.com had restructured the organization, narrowed its product priorities, and increased its commitment to an AI-focused work platform. Management described the intended organization as faster and flatter, while CFO Eliran Glazer attributed the record non-GAAP operating income to a more focused cost structure.

Recent insider transactions

Over the latest six-month period in the supplied insider data, insiders purchased 7,755 shares and sold 2,611, resulting in net purchases of 5,144 shares. The net amount represented 0.10% of the 7.55 million shares reported as held by insiders.

Two recent records contained a clear transaction direction and value, both involving sales by officer George James Case. Together, the reported sales totaled approximately $223,000; the transactions alone do not establish an insider view of the company’s prospects.

Risks investors should monitor

• Slower near-term revenue growth: Q3 guidance implies 16%–17% growth, compared with 22% in Q2, making the pace of customer expansion and AI-related ARR increasingly important.
• Weaker cash conversion: Operating cash flow and adjusted free cash flow declined even as net income and non-GAAP operating income increased.
• A substantial GAAP-to-non-GAAP gap: Share-based compensation and restructuring costs totaled approximately $62.7 million, leaving GAAP operations near break-even despite a 17% non-GAAP margin.
• Foreign-exchange exposure: FX added approximately 110 basis points to Q2 revenue growth but reduced non-GAAP operating margin by approximately 210 basis points. The outlook assumes another 100–200 basis points of negative impact.
• Restructuring execution: Future results depend in part on whether the organizational changes deliver the intended focus and efficiency without costs exceeding the expected benefits.

Summary

monday.com’s Q2 FY2026 results combined 22% revenue growth, expanding large-customer adoption, and early AI-product traction with a higher non-GAAP operating margin. However, gross margin and cash flow weakened, GAAP profitability remained close to break-even, and Q3 guidance points to slower year-over-year growth. The main follow-up indicators are AI’s contribution to new ARR, continued expansion among large customers, cash-flow conversion, and the financial effects of the restructuring.

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