Monday.com plans to cut 20% of its workforce, affecting around 620 people, and the reason is explicitly tied to AI. In a securities filing, the project management platform said the layoffs are meant to align with its “strategic focus on the AI Work Platform,” and later, cofounder and co-CEO Eran Zinman framed the decision as part of “a new era where AI is transforming the role of software.”

That is the key twist: Zinman directly argues the layoffs are not about cost reduction or swapping humans for AI. “Improving margins was not the purpose of this decision,” he wrote, and he added that the organization they built for the previous chapter does not fit “the new AI era,” so the company is restructuring to “go all in on what monday.com can become.”

The timing lands in a broader wave of “AI + layoffs” disclosures that has been rattling investors for months. Monday.com joins the growing group of companies citing AI while announcing layoffs, like Snap and Block. The reason the market cares is not just the headcount itself, it is what the framing implies about the software business model. If AI tools reduce the need for traditional implementation, support, and configuration work, then enterprise software workflows could shift faster than organizations that rely on them have planned for.

Monday.com’s own business sits right in the crosshairs of those fears. The company provides project management software to enterprises, a category investors and analysts have linked to growing “SaaSpocalypse” worries. The concern is that AI and “vibe coding” could weaken how companies lean on these tools. In that context, a public commitment to an “AI Work Platform” is effectively a bet on the opposite outcome: that teams will not just keep using Monday.com, but expand what they ask it to do, as AI agents and people work together in one workspace.

Zinman’s note explains the operational “how,” and it is not subtle. He says the shift over the past nine months moved the company’s core vision from “managing work to doing the work for our customers,” with “people and AI agents working together in one workspace.” But he argues product and strategy change was not enough. According to the note, the company must also change how it is organized, and that is where the 20% comes in.

He lays out three structural changes: a flatter organization by reducing management layers to enable faster decision-making; more autonomous teams by moving away from dependencies and toward smaller groups with broader ownership; and a new go-to-market model because customers increasingly expect deeper implementation support as they adopt AI. That last point matters because it suggests the company sees new demand in deployment and on-site work, even as it trims roles elsewhere. The note also says Monday.com will reinvest the “vast majority of the savings in our people, our products, AI, and future growth,” which is a direct rebuttal to a common investor assumption that layoffs are a pure margin play.

There are also boardroom-style questions hiding under the narrative, and Monday.com tries to answer them in advance. The company says the decision was not made to reduce costs or replace people with AI. It adds that it plans to continue hiring in areas of focus, though it is “not immediately clear exactly how many workers will be affected.” That matters for how executives model the next-quarter story: layoffs are visible now, but hiring patterns may decide whether the company is genuinely re-allocating capacity toward AI work or simply resetting the cost base.

If you zoom out, the company’s stock performance and employee scale set the emotional stakes. Monday.com said it had 3,155 employees in its 2025 annual report, and the stock has slumped roughly 75% in the last year. The stock rose throughout the morning after the announcement, though it later ticked back down. That volatility is a reminder that markets are not just asking “are you laying people off?” They are asking “are you laying people off because AI will make you better, or because you are losing control of the operating plan?” Monday.com is clearly trying to steer the interpretation toward the first.

Finally, there is an immediate human and execution timeline. Zinman says the company will send all employees an email message within the next hour, followed by a personal call from one of the managers. He also tells managers they will need to handle it with care, clarity, and respect. For employees staying, the message is that the change is not “asking fewer people to do the same amount of work,” but making “real choices about what we will stop doing,” simplifying how they work, removing friction, and giving teams more authority. For leaders watching the playbook, the second-order implication is clear: when a company claims an AI platform shift, the hardest part is often not the roadmap, it is the org chart.

For peers in enterprise software, Monday.com is signaling a high-stakes posture. If the AI Work Platform bet is right, the company expects adoption of its AI products to accelerate and momentum to stay strong. If it is wrong, the risk is that the workforce cut becomes the only visible proof of change, while the product shift takes longer than the market can tolerate. Either way, the message for executives is consistent: in the AI era, “strategy” is not a slide deck. It is headcount, decision speed, and where the company chooses to spend its next chapter.