monday.com Ltd. (MNDY)

By both methods, the value today (DCF $176 · Multiples $176) exceeds the market price ($91).

Today — with margin of safety: at $91 trades ~48.2% below its value discounted to today (~$176) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.

At 5 years — Muy infravalorado: the target price ($219) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($91) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (12.1%/year) than we project (35.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$0.1 bn of owner earnings in year 5 (vs ~$0.4 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). Cash accumulates the retained surplus —what is not returned as dividend or buyback—, so that EV falls and multiples compress going forward. The valuation is done on EV/NOPAT. In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

monday.com reports as a foreign private issuer (annual Form 20-F); its quarters travel via 6-K without XBRL, so year-0 is the last closed fiscal year (Dec 31, 2025), not a manufactured TTM. Year-0 GAAP operating income is essentially nil (US$(1.7)M on US$1,232.0M of revenue) because stock-based compensation (US$177.0M, 14.4% of revenue) is expensed in full under GAAP; non-GAAP operating income (which only adds back SBC, with no other adjustments: US$175.3M) is the metric the company uses to guide, but it gives away exactly the cost the method requires to be charged (§3). That is why the GAAP operating margin path is built by separately modeling the trajectory of SBC as a % of revenue (14.4% today → ~8% by year 5, operating leverage following the July 2026 workforce reduction) and that of the non-GAAP operating margin (14.2% today → 24% by year 5, guided at 16% for year +1). GAAP income crosses into positive territory as early as year +1 (~3%), so the metric ladder of §5 bis does not apply: it is valued by EV/NOPAT on year 5. The tax rate (2.8%) is derived from the tax note in the Form 20-F: excluding the non-recurring US$61.1M valuation allowance reversal (from the exhaustion of tax loss carryforwards the company states will end in 2026), the adjusted tax for the year is an expense of ~US$1.7M on pretax income of US$59.3M. Net working capital is a source of cash (deferred-revenue float from annual subscriptions paid in advance): US$87.1M of cash generated in year-0 per the statement of cash flows. The company does not net-dilute at a modelable pace despite repurchasing shares (the diluted share count rose from 45.8M to 53.1M between 2022 and 2025 because of SBC), so it does not carry a share path: the cost of SBC is already expensed in the metric, and additionally modeling dilution would double-count it (§6). It accumulates cash (asset-light, no debt, no dividend).

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (EV falls as cash increases). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $219 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $91, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $219 in 5 years and a required return of 4.5% annually, the maximum to pay today is $176. Against the current market price ($91), the margin of safety is 48.2% (trades below the maximum → there is margin) and the total return at that price would be 19.2% annually.

• Discount to the 52-week high. The stock trades 58% below its high, with an identifiable cause (quarterly guidance cut and restructuring) rather than a structural deterioration.
• Valuation metric. EV/NOPAT on year 5, within the [20,30] band of the enterprise software archetype, in the lower half because of the narrow moat.
• Margin sensitivity. Value depends centrally on stock-based compensation falling as a % of revenue; if it does not, GAAP operating income stays close to breakeven.
• Net cash. US$1,665.5M in net cash represents a material portion of market value (US$4,834.5M), a value backstop that does not depend on operating execution.
• Sector comparables. The multiple compression across high-growth SaaS software during 2026 weighs on the entire category, not just this company.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✕ ROIC exceeds the cost of capital (~10%)
• ✕ CFROIC backs up the ROIC (0%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Cash generation. US$333.6M of operating cash flow in 2025 (27.1% of revenue), with minimal capex (1.7% of revenue).
• GAAP profitability. GAAP operating income only just approaches breakeven in 2025 because of the weight of stock-based compensation; the 10% bar for return on capital is not yet met.
• Stock-based compensation. 14.4% of revenue and 56.5% of reported free cash flow; the decline of this proportion is the central assumption of the profitability thesis.
• Working capital. Net source of cash (US$87.1M in 2025) from the deferred-revenue float of annual subscriptions paid in advance.
• Balance sheet. No financial debt and US$1,665.5M in cash and short-term investments.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

monday.com's growth is best read as a combination of expansion within the installed base (110% net dollar retention, meaning the average already-subscribed customer spends 10% more per year) and acquisition of new accounts, with a growing mix toward the enterprise segment: customers with more than US$50,000 in ARR grew 34% in 2025 and those with more than US$500,000 in ARR grew 74% — much faster than total revenue, suggesting the long tail of small accounts is growing slower than the enterprise core. Stock-based compensation is the second driver to watch: it represents 14.4% of revenue and 56.5% of reported free cash flow, so the entire profitability thesis depends on that proportion falling with scale, not on revenue growing faster.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (31-dic-2025): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Consolidated growth. 26.7% in 2025, decelerating to guidance of 19-20% for 2026.
• Net dollar retention. 110% (all customers), stable over the past three reported years.
• Enterprise accounts. Customers >US$100,000 in ARR +45% and >US$500,000 in ARR +74% in 2025.
• RPO / cRPO. RPO of US$937M (+34%) and cRPO of US$750M (+27%) as of the second quarter of 2026, validating full-year guidance.
• Near-term guidance. Growth guided for the third quarter of 2026 (16-17%) decelerates from the 22% reported in the second.

• Revenue recurrence. 100% subscription, recognized straight-line; a drop in new sales takes time to show up in the quarter's results.
• Product concentration. Most revenue depends on monday work management; the filing flags this as an explicit risk.
• Net dollar retention. 110% for all customers and 116% for accounts >US$50,000 in ARR, stable over the past three years.
• Mix shift toward enterprise. Customers >US$500,000 in ARR grew 74% in 2025, far above consolidated revenue.
• Competitive differentiation. Fragmented market with several broader-product-line rivals (Atlassian, HubSpot); no quantified market share.
• Dependence on external infrastructure. Service outages in 2025 linked to AWS and Cloudflare, providers the company does not control.
• Geopolitical exposure. Core operations in Israel, with disclosed risk from regional conflicts and data-access laws.

• ✓Leverage (net debt / EBITDA)Net cash $1.7 bn
• –Interest coverage (EBIT / interest)no data
• –Liquidity (current ratio)no data
• –Cash quality (CFROIC vs ROIC)ROIC ≤ 0 (see value creation)
• ✕Value creation (ROIC − 10% bar)-10pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 1.4x
• ✓Float / working capitalFrees up cash $0.1 bn (float / negative WC)
• ✕Dilution (SBC % of revenue + shares)SBC 14.4% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Debt. No financial debt reported.
• Liquidity. US$1,665.5M in cash and short-term investments at the close of 2025.
• Working capital. Negative and a source of cash through the deferred-revenue float, typical of SaaS billed annually in advance.

• Founder continuity. Co-led by its two co-founders (Roy Mann and Eran Zinman) since 2012; the filing states that success depends heavily on their continuity.
• Control structure. One of the co-founders holds a "founder share" with special veto rights over key decisions.
• Transparency on income tax. The filing explains in detail the US$61.1M valuation allowance reversal that distorts 2025 GAAP results.
• Restructuring decision. Reduced headcount by 20% in July 2026 with US$21.4M in charges, presented as part of a pivot toward artificial intelligence.
• Share ownership detail. No DEF 14A proxy available in SEC filings (foreign private issuer, Form 20-F); ownership detail remains pending from that source.

• motivated-sellers
• missing-buyers

The stock trades 58% below its 52-week high. The cause is identifiable and recent: in August 2026 the company beat second-quarter results (revenue of US$364.6M, +22% year over year) but guided third-quarter growth to 16-17% (US$368-370M), below consensus, and announced a 20% workforce reduction with US$21.4M in restructuring charges — a classic motivated seller (missing the growth expected by consensus, plus the noise of a restructuring that affects GAAP income without touching the value of the business). Added to this is the broad multiple compression across high-growth SaaS software during 2026, which acts as sector-wide "missing buyers" rather than a company-specific flaw. The full-year 2026 guidance (US$1,466-1,474M, 19-20% growth) was reaffirmed despite the quarterly cut, suggesting the market is discounting short-term noise more than a structural deterioration of the business.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at ~0%/year (-1% total): the margin of safety protects the downside. The bull (+31%/year, +283% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Product concentration. Most revenue depends on monday work management.
• Currency exposure. ~25% of expenses in Israeli shekels (2025) against revenue that is mostly in dollars; the Israeli shekel appreciated 12.5% against the US dollar in 2025.
• Geopolitical risk. Core operations in Israel, with disclosed risk from regional conflicts and government data-access laws.
• Deferred revenue recognition. A deterioration in new sales or renewals is not reflected immediately in the quarter's results.
• Dependence on third-party infrastructure. Service outages linked to AWS and Cloudflare during 2025.
• Broad-product-line competition. Rivals such as Atlassian and HubSpot can bundle platforms or sell at low margins to discourage switching providers.
• Deceleration in guided growth. Third-quarter 2026 guidance (16-17%) decelerates from the second quarter's 22%.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: ROIC -0% does not clear the 10% bar.

• Peter Lynch Growth at a reasonable price (GARP)

  A hyper-growth, growing 35% — no conclusive multiple/growth to judge the price.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  ROIC -0%; earnings yield not computable (EBIT or EV not positive).

• Howard Marks Perception vs reality + cycle

  The price discounts 12% vs our 35%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor -0%/yr, bull-scenario ceiling +31%/yr over 5y and a +48% margin → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, stable; sources: switching costs, network effects, efficient scale, intangibles → partially passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting 12%, within what we project (35%) — the story squares with the numbers.