Shares of Monday.com (MNDY 3.22%) got slammed earlier this week after the software company pulled its 2027 targets due to volatility in demand from small businesses and rapid changes in the AI industry. As investors grow increasingly concerned that AI poses a major threat to the software industry, Monday.com's shares are being severely punished.
While there's a lot of uncertainty about Monday.com's future, the company's recently launched AI vibe coding tool is putting up some incredible numbers. AI is still a threat, but it's also a clear opportunity for the project management and workflow automation platform.
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Providing real value to customers
Nearly every software company is trying to jam AI-powered features into their products, but they're not always useful, and customers aren't always willing to pay for them. Microsoft, for example, has sold its Copilot AI add-on to just 3% of its commercial productivity suite customers.
With its Monday Vibe product, Monday.com is having more success. Monday Vibe enables customers to build custom work apps within their Monday.com workspaces by describing what they need in plain language. Examples of what could be built include a marketing campaign tracker, a time tracking app, an organizational chart, and countless other apps.
All these custom apps could be built without AI on Monday.com's platform, but the process would take much longer and require more user expertise. With Monday Vibe, someone in an organization can build a custom app without knowing much about the nitty-gritty details.
Monday Vibe is an add-on that charges customers a monthly fee based on the number of Vibe apps they publish. The 10-app plan costs $100 per month, while the 25-app plan tacks on $250 per month.
While deploying these custom apps is pricey, Monday.com is seeing solid adoption. Co-CEO Eran Zinman noted during the fourth-quarter earnings call that Monday Vibe is the fastest product in company history to surpass $1 million in annual recurring revenue. Faster than Monday CRM, which went on to reach $100 million in ARR after three years.
A race to beat back the AI threat
AI tools are quickly becoming good enough to build custom applications and workflows without relying on any platform. That's an existential threat for Monday.com. In the past, an enterprise would choose between project management and CRM solutions. In the near future, another option emerges: Use AI to build custom software exactly tailored to a business's needs.
NASDAQ: MNDY
Key Data Points
Monday.com is trying to get ahead of this with its Monday Vibe product, giving customers an easy way to build custom apps on its platform. The more deeply a customer integrates with Monday.com, the more painful it would be to drop the platform. Monday Vibe is a source of additional revenue, but it may also raise switching costs for customers. With AI advancing so quickly, that's critical for Monday.com's long-term growth.
