Monday.com is reducing its workforce by 20 percent as it shifts towards an AI-focused work platform.

      **Summary**: Monday.com is set to reduce its workforce by around 620 employees, approximately 20 percent of its total staff, as it realigns its operations to focus on its AI Work Platform. This decision was shared in a Form 6-K submitted to the US Securities and Exchange Commission, indicating a need for a more streamlined operational model in line with its AI-focused growth strategy. Co-founder and co-CEO Eran Zinman described this layoff as the toughest decision in the company's history in a LinkedIn message to employees.

      The layoffs come after a significant decline in Monday.com’s stock value, which has dropped over half in 2026 and about 75 percent from its highest point in the last year. The company is part of a broader downturn in the software-as-a-service (SaaS) sector, where concerns about AI advancements potentially rendering traditional SaaS tools obsolete have led to a selloff. Its market capitalization has fallen to approximately $3 billion, a stark contrast to its pandemic-era highs.

      Zinman characterized the restructuring as a proactive strategy rather than a defensive measure, emphasizing that the company aims not just to maintain its current standing but to innovate and achieve future potential. He mentioned a shift in the company’s focus from merely managing tasks to actively performing them for customers, integrating human staff and AI agents in a collaborative workspace. He argued that the old organizational structure was not suited for this new AI-focused direction.

      The company anticipates facing restructuring costs between $45 million and $55 million, which includes $30 million to $35 million for severance and employee benefits, as well as similar amounts for office space impairments, partially offset by around $15 million in credits for share-based compensation. Most of these costs are expected to occur in the latter half of 2026. Despite the layoffs, Monday.com plans to continue hiring in key strategic areas.

      This restructuring is reflective of a trend among other SaaS companies navigating robust revenue growth amid investor concerns about potential AI-related disruptions. For instance, Wix laid off 20 percent of its workforce in May for similar reasons, and Atlassian eliminated 1,600 positions in March while making changes to focus more on AI.

      Zinman also addressed common concerns in a FAQ attached to his note, clarifying that the layoffs were not primarily aimed at cost-cutting or replacing personnel with AI. He outlined three key structural changes: creating a flatter hierarchy with fewer managerial levels, fostering autonomous teams with expanded responsibilities, and initiating a new sales approach that brings staff closer to customers utilizing AI technology. The company intends to reinvest most of the savings into its workforce, product development, and future growth initiatives.

      Whether the market will accept this narrative remains uncertain. Monday.com reported a first-quarter revenue of $351 million, reflecting a 24 percent increase year-over-year — a growth rate that would have excited investors a couple of years ago. However, in a landscape where AI serves as both a rationale for workforce reductions and a focus for business strategy, it is debatable whether announcements like this signal genuine strategic changes or what OpenAI's CEO Sam Altman refers to as "AI washing," where AI is invoked to justify decisions driven by other factors.

      Published July 22, 2026 - 6:22 pm UTC