Monday.com drops 19% as AI disruption fears mount in software
Monday.comIts shares fell more than 19% following the release of its project management platform on Monday poor guidance grappling with growing concerns that artificial intelligence is disrupting the software business model.
The Israel-based company reported that it will generate revenue between $338 million and $340 million in the current quarter, below the $343 million expected by analysts participating in the FactSet survey. For the full year, Monday.com forecast revenue of $1.452 billion to $1.462 billion, as opposed to FactSet’s estimate of $1.48 billion.
Software stocks have sold off in recent weeks amid growing fears of AI disruption and concerns that new intermediary tools could replace them.
So far this year, Monday.com shares have already lost half their value, while the iShares Expanded Technology-Software Sector ETF (IGV) is down 22%.
During an earnings call with analysts, management defended the company’s market position and emphasized the implementation of new AI features, such as agents and a vibration feature, to increase conversion and engagement.
“We’re not seeing any impact from any AI companies right now, and regardless, we’re changing our product to be more AI-specific,” said co-CEO and co-founder Eran Zinman.
He said the company is changing messaging on ads and the homepage to be more AI-focused.
However, management said it expects market volatility to continue this year due to short-term margin pressure from exchange rates.
The software company reported fourth-quarter earnings of $1.04 per share, excluding items, beating LSEG expectations of 92 cents per share. Revenue increased 25% year over year to $333.9 million; this was above the $329.6 million analysts expected.
Monday.com predicted operating income for the year would be $165 million and $175 million, as opposed to FactSet’s estimate of $220.2 million.
