monday.com Ltd. (Nasdaq: MNDY) told the Securities and Exchange Commission on Wednesday that it has adopted a restructuring plan eliminating roughly 20 percent of its current workforce, a reduction the Israeli software company said is meant to align its organizational structure with a strategic shift toward what it calls an AI Work Platform. The filing describes the plan as reflecting an ongoing transformation of the company’s product, marketing and go-to-market strategy, intended to support a leaner, more focused operating model while the company continues investing in AI-driven growth.

The cut amounts to about 620 employees worldwide. An estimated 350 of them are in Israel — roughly half the staff at the company’s Tel Aviv development center on Yitzhak Sadeh Street.

The company’s explanation

In its announcement, monday.com tied the reduction to a product overhaul it describes as the largest in its history: a redesign of the platform around artificial intelligence. The company said AI is fundamentally changing what customers expect from software and creating a market in which customer behavior shifts in real time, with advantage moving toward firms that act faster and stay closer to their customers.

To get that speed, the company said it is flattening its organizational structure, reducing management layers and building smaller, more autonomous teams intended to make decisions and execute faster.

Management was direct about what it says the move is not. monday.com stated that this is neither a short-term cost cut nor the product of AI-driven efficiency, and that the goal is to refocus resources into people, product development, AI engines and future growth. In materials shared with employees, management wrote that improving margins was not the purpose of the decision and that it intends to reinvest the large majority of the savings into people, products, AI and growth.

The founders’ letter

Co-founders and co-CEOs Roy Mann and Eran Zinman delivered the news to staff in a letter. They wrote that over the past nine months the company changed its core vision — from managing work to doing the work for customers, with people and AI agents operating together in a single workspace — and that changing strategy and product alone was not enough, because the organization built previously is not the one suited to the new AI era.

The letter called the reduction the most painful decision made since monday’s founding while asserting confidence that it is the right one, and said the departing staff are colleagues and friends who helped build the company and its culture. Mann and Zinman also framed the moment in expansive terms, writing that the industry has entered a new era in which AI is transforming the role of software.

The company pledged support for departing employees, including help connecting them with organizations that are hiring.

Numbers behind the plan

The SEC filing puts a price on the restructuring. monday.com expects net restructuring charges of roughly $45 million to $55 million, including $30 million to $35 million for severance, employee benefits and related costs, and $30 million to $35 million for office space impairments, partially offset by about $15 million in non-cash share-based compensation credits. Most of those charges are expected to land in the second half of 2026, when the restructuring is also expected to be substantially finished.

Guidance moved in the company’s favor. monday.com reaffirmed full-year 2026 revenue growth of 19 to 20 percent and adjusted free cash flow margin of 19 to 20 percent, while raising its non-GAAP operating margin outlook to about 15 percent from roughly 13 percent. The company also said it plans to keep hiring in key strategic areas through the rest of 2026.

Context

The restructuring follows a punishing stretch for the stock. Shares have fallen about 50 percent since the start of the year and are down more than 80 percent from their peak. The slide mirrors sharp declines across the software sector as investors reassess the industry’s prospects amid the rise of generative AI. The stock rose close to 2 percent following Wednesday’s announcement.

monday.com went public on the Nasdaq in June 2021 at a $6.8 billion valuation, making it one of Israel’s largest publicly traded software companies, with customers including Philips, McDonald’s and Uber. The layoffs come roughly a month after the company launched Monday Ventures, an investment arm targeting AI startups, with up to $200 million allocated and an initial $50 million commitment aimed at AI agents, workflow automation, enterprise data infrastructure and cybersecurity.

The company said its AI-focused products demand closer customer engagement — deeper implementation support and more on-site presence — meaning some existing roles will change while new ones are created.

JBiz News Desk | Tel Aviv

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