monday.com is cutting about one-fifth of its workforce even as it maintains a 19% to 20% revenue growth outlook for FY2026.
The workplace software company said on July 22 that the restructuring, expected to affect approximately 20% of employees, is designed to create a leaner organisation as it shifts towards an AI-centric business model.
The company expects $45 million to $55 million in net restructuring charges, while simultaneously raising its FY2026 non-GAAP operating margin outlook from approximately 13% to 15%.
The contradiction is revealing: AI is increasingly changing not only the products software companies sell, but also how those companies are built and staffed.
Monday.com Layoffs
The restructuring follows monday.com’s broader strategic shift towards artificial intelligence. In May 2026, the company repositioned itself as an “AI Work Platform”, moving beyond its traditional identity as a work management software provider.
The distinction is important. Traditional workplace software largely helps employees organise tasks, manage projects and collaborate. The AI Work Platform model aims to give AI agents a more active role in executing work, alongside human employees.
That strategic change provides the context for the latest restructuring. monday.com said the new organisational structure is intended to make the company leaner and more focused, with greater autonomy for teams and stronger emphasis on customers and AI-led product execution.
The company has not described the restructuring simply as a programme to replace employees with AI. It has instead presented the move as a broader redesign of its operating model. That distinction matters because workforce reductions can result from multiple factors, including organisational simplification, changes in business priorities and productivity improvements.
Growth Outlook Remains Intact
The most notable feature of monday.com’s announcement is that it does not coincide with a collapse in its growth expectations.
The company maintained its FY2026 revenue growth outlook at approximately 19% to 20% year over year. At the same time, it raised its non-GAAP operating margin outlook from approximately 13% to approximately 15%.
That combination suggests management is betting that a smaller organisational structure can support continued growth while improving operating efficiency. It also means the layoffs cannot be interpreted solely through the conventional lens of a company cutting costs because demand has weakened.
The restructuring comes with significant near-term expenses. monday.com expects net restructuring charges of between $45 million and $55 million, with most of those costs expected in the second half of 2026.
Why The Margin Matters
The increase in the operating-margin outlook is one of the most important numbers in the announcement.
Moving from approximately 13% to approximately 15% represents a two-percentage-point improvement in the company’s non-GAAP operating margin outlook. In practical terms, it indicates that monday.com expects to generate more operating profit relative to revenue, even while undertaking a costly restructuring.
The company also maintained its FY2026 adjusted free cash flow margin outlook at approximately 19% to 20%.
Together, the figures point to a broader financial objective. monday.com appears to be attempting to make its organisation more productive and scalable, allowing revenue to expand without employee costs rising at the same pace.
That is a critical issue for the software industry as AI becomes embedded in both products and internal operations. The long-term question is no longer simply whether AI can automate a task. It is whether companies can redesign entire workflows and organisational structures around that automation.
Software Jobs Face Reset
monday.com’s decision reflects a wider shift across the technology industry, although it would be misleading to attribute every technology layoff directly to AI.
Companies are reassessing layers of management, duplicated functions and roles that may change as AI tools become more capable. At the same time, organisations are creating demand for new skills in AI engineering, product development, data and AI governance.
This explains why monday.com’s restructuring is accompanied by an indication that it will continue hiring in key strategic areas. The change is therefore not necessarily about eliminating human work altogether. It is about changing where human expertise is deployed.
The implications extend beyond monday.com. If the company can maintain 19% to 20% revenue growth while operating with a substantially smaller workforce, other software businesses may face pressure to examine their own employee-to-revenue ratios.
But the opposite risk also exists. Aggressive workforce reductions can create pressure on product development, customer service and innovation if productivity gains from AI fail to match expectations.
Execution Will Decide The Bet
The real test for monday.com begins after the restructuring.
The company is making a substantial organisational bet while maintaining its growth outlook and raising its operating-margin expectations. It will need to demonstrate that a leaner structure can support product innovation, customer acquisition and the development of its AI platform without weakening execution.
The outcome will also provide an important signal for the broader software industry. If monday.com delivers its growth targets while improving profitability, the restructuring could become a model for how AI-era software companies operate with fewer layers and greater automation.
If execution suffers, however, the decision may raise questions about whether workforce reductions moved faster than AI productivity gains.
For now, the numbers show a company trying to do two things simultaneously: grow at nearly 20% and fundamentally change the way it operates. The 20% workforce reduction is therefore not just another technology layoff. It is a test of whether AI can reshape the economics of a software company from the inside out.
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