monday.com Ltd. (MNDY): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at monday.com Ltd. as it pushes toward a \$1.228 billion revenue guidance for fiscal year 2025, and you need to know if the market structure supports that growth. Honestly, the Work OS space is brutal; the competitive rivalry is very high, battling giants like Microsoft and Atlassian while spending nearly 48% of revenue on sales and marketing just to keep up. But here's the kicker: for your enterprise clients, those workflows are so deeply embedded that switching costs are high, which is why their Net Dollar Retention is still strong at 111%. We need to break down all five forces-from supplier leverage (low, thanks to gross margins around 90%) to the threat of new players-to see where the real risk and opportunity lie for monday.com Ltd. right now.

monday.com Ltd. (MNDY) - Porter's Five Forces: Bargaining power of suppliers

When we look at monday.com Ltd.'s supplier landscape, the power held by their key vendors is definitely on the lower end of the spectrum. You see, for a modern SaaS player like monday.com Ltd., the primary suppliers aren't raw material vendors; they are the major cloud infrastructure providers-think Amazon Web Services (AWS), Microsoft Azure, and Google Cloud. While these giants hold significant market power in general, monday.com Ltd.'s financial structure suggests they have managed to keep that power in check, at least for now.

Here's the quick math: the adjusted gross margin for monday.com Ltd. in the third quarter of fiscal year 2025 was reported at 89.6%. That figure is right around the 90% mark you mentioned, which is fantastic for a high-growth software company. What this high margin tells us is that the Cost of Goods Sold (COGS)-which primarily includes hosting, data center costs, and direct support for the platform-is relatively low compared to the revenue they bring in. If hosting costs were escalating rapidly due to supplier leverage, we would see that margin compress, but it remains robust.

This strength is further buttressed by the company's balance sheet. As of September 30, 2025, monday.com Ltd. held cash, cash equivalents, and marketable securities totaling \$1.74 billion. That war chest gives them serious optionality. They aren't beholden to a single cloud provider or forced into unfavorable terms because they have the capital to potentially diversify infrastructure or, more importantly, invest heavily in their own proprietary technology stack.

The platform's very nature also acts as a buffer against one specific type of supplier: specialized developer talent. monday.com Ltd. is fundamentally a low-code/no-code Work OS. This design philosophy means that the end-user-the customer-can build complex workflows, automations, and even custom applications using visual interfaces, not necessarily requiring deep, expensive, specialized external developer resources to implement or maintain the core system. This democratizes the building process, reducing reliance on a scarce and costly external talent pool as a critical 'supplier' of customization.

The investment in proprietary tech directly counters potential future supplier risk. The ongoing development and rollout of mondayDB, their new underlying data architecture, is a prime example. This is technology built from the ground up to support massive scale for boards and dashboards, and to extend their public API. By owning more of the core data engine, monday.com Ltd. reduces the dependency on hyperscalers for performance tuning at scale, giving them more control over their destiny.

Let's summarize the key data points supporting this low supplier power assessment:

• Q3 2025 Adjusted Gross Margin: 89.6%.
• Implied COGS (Q3 2025): Approximately 10.4% of revenue.
• Cash Position (Sept 30, 2025): \$1.74 billion.
• Full Year 2025 Adjusted Free Cash Flow Guidance: \$330 million to \$334 million.
• Platform Strategy: Low-code/no-code reduces reliance on specialized external coders.

Here is a snapshot of the financial strength underpinning this position:

The low-code/no-code approach, coupled with the internal development of core infrastructure like mondayDB, means that while they must pay the cloud providers, their ability to negotiate or switch is enhanced by their high profitability and proprietary technology moat. It's a strong position to be in. Finance: draft a sensitivity analysis on a 100 basis point increase in cloud hosting costs by next Tuesday.

monday.com Ltd. (MNDY) - Porter's Five Forces: Bargaining power of customers

The bargaining power of customers for monday.com Ltd. (MNDY) presents a dual reality, heavily dependent on the customer segment you are analyzing. For the small-to-midsize business (SMB) segment, the power leans toward medium because the market is saturated with alternatives, giving these buyers leverage to negotiate or switch based on price or feature parity.

Conversely, for enterprise customers, the power is significantly lower due to high internal friction associated with migration. Once monday.com Ltd. (MNDY) is deeply embedded, with workflows, data, and integrations customized across core business functions like CRM, development, or service management, the cost and disruption of switching become prohibitive. This stickiness is reflected in strong retention metrics.

The company's ability to retain and expand revenue from its existing base acts as a strong countermeasure to customer bargaining power:

• Net Dollar Retention Rate (NDR) for Q3 Fiscal Year 2025 stood at 111%.
• NDR for the highest-value clients, those with Annual Recurring Revenue (ARR) over $100,000, was even stronger at 117% as of Q3 2025.
• The number of paid customers with over $100,000 in ARR grew 48% year-over-year to reach 1,603 in Q3 2025.

To mitigate the power of smaller customers who might be price-sensitive or exploring competitors, monday.com Ltd. (MNDY) employs strategies to lower the barrier to entry and provide financial safety nets. The platform offers a free-forever tier and has a clear refund policy for new paid commitments. This structure helps reduce the perceived risk for initial adoption.

Key elements influencing customer power and monday.com Ltd. (MNDY)'s response include:

Furthermore, the company is actively evolving its monetization strategy, which directly impacts customer price sensitivity. monday.com Ltd. (MNDY) is introducing usage-based pricing for its AI features, moving away from a purely seat-based model for that component. For example, the company is pioneering a pay-per-use model for AI features, having observed usage reaching 10 million AI-powered actions in the last quarter of 2024. This shift means that while basic platform access remains sticky, the cost of advanced, value-added features is now directly tied to consumption, which can be a lever for both revenue growth and, potentially, negotiation leverage for high-volume users.

monday.com Ltd. (MNDY) - Porter's Five Forces: Competitive rivalry

The Work OS and collaborative work management market exhibits very high rivalry. The global collaborative work management software market is projected to reach $12.2 billion by 2025. The broader Collaboration Tools Market is estimated to be valued at USD 48.9 billion in 2025. The top five vendors in the CWM space account for 50% of the market share.

Major competitors actively contest this space. Key players identified include Microsoft Corporation, Atlassian (Jira), Smartsheet Inc., and Asana. Asana reports relying on over 170,000 customers.

Fierce pricing pressure necessitates continuous feature innovation and substantial go-to-market spending. For the fourth quarter of 2024, monday.com Ltd.'s Sales and marketing expenses were 48% of Q4 revenue, a reduction from 54% in the prior year. Full-year 2025 total revenue is projected to range between $1,208 million and $1,221 million, or $1,224 million to $1,229 million.

Differentiation for monday.com Ltd. is being driven by its AI capabilities and multi-product platform expansion. The introduction of monday magic, monday vibe, and monday sidekick marked a platform-wide AI shift. Since implementing its AI strategy, monday.com Ltd. has seen over 150% growth in adoption quarter over quarter, with customers completing over 26 million AI-driven actions across the platform as of the end of Q1 2025. The product suite includes monday work management, monday CRM, monday dev, and monday service. monday CRM was recognized in the 2025 Gartner® Magic Quadrant™ for Sales Force Automation for the first time.

Here are some key operational and financial metrics for monday.com Ltd. as of the first half of 2025:

The competitive landscape is further characterized by the following:

• The Team Collaboration Tools Market is forecast to expand to USD 42.20 billion by 2030.
• Cloud deployment held 65% of the Team Collaboration Tools market share in 2024.
• Large enterprises commanded 60% of the Team Collaboration Tools market size in 2024.
• Project/task management suites are advancing at a 15.2% CAGR between 2025-2030.
• monday.com Ltd. supports over 200 use cases in 190 different industries.

monday.com Ltd. (MNDY) - Porter's Five Forces: Threat of substitutes

You're analyzing the competitive landscape for monday.com Ltd., and the threat of substitution is a key area where their Work OS (Work Operating System) architecture really shows its value. Honestly, the biggest threat comes from inertia-the simple fact that many teams are still using tools they already know.

Medium threat from non-specialized, generic tools like spreadsheets and email.

• 75% of companies still rely on tools like Excel or paper-based methods for project tracking, indicating a massive pool of potential substitutes.
• Spreadsheets are adequate for small teams with simple projects due to low direct cost and familiarity, but they quickly become constraining as complexity grows.
• The limitations of these generic tools-manual reporting, limited real-time collaboration, and high risk of errors-are what monday.com Ltd. is designed to overcome.

Threat from specialized software (e.g., Adobe Workfront for marketing) is high in specific niches.

When you look at specific verticals, the threat from established, specialized players sharpens. For instance, in Marketing Work Management Platforms, monday.com Ltd. competes directly with Adobe Workfront. Here's a quick comparison of where these substitutes are positioned:

The Work OS platform's flexibility and app marketplace integrations lower substitution risk.

This is where monday.com Ltd. builds significant switching costs. By being a Work OS, it aims to be the single source of truth, making it harder to rip out than a single-purpose tool. The ecosystem is key to this stickiness. For example, the monday CRM product alone hit $100 million in ARR. Furthermore, new products launched in 2025 now account for more than 10% of total ARR.

• The platform's marketplace features 827 apps as of late October 2025, offering deep connectivity.
• The platform's flexibility is shown by the fact that more than 60,000 apps have been built on monday vibe in approximately 3 months as of Q3 2025.
• Customer retention remains high, with the overall Net Dollar Retention (NDR) rate expected to be stable at 111% for the full fiscal year 2025.

AI-driven automation capabilities reduce the need for manual, non-integrated internal processes.

The push into AI directly attacks the manual effort inherent in spreadsheet-based work. monday.com Ltd. is embedding intelligence directly into workflows, which is a major differentiator against static substitutes. Customers performed approximately 10 million AI actions as of the end of fiscal year 2024, showing rapid adoption.

The company offers a transparent model where every plan includes 500 free AI Credits per month, with options to scale up to 250,000 credits for larger needs. This focus on practical, embedded AI contrasts with the 'AI sprawl' reported elsewhere, where 76% of directors report constantly switching between multiple AI tools. By integrating AI blocks directly, monday.com Ltd. aims to keep users within its environment. To be fair, 94% of directors now use AI at work, so the overall market is adopting intelligence, but monday.com Ltd.'s strategy is to own that intelligence within its OS. Finance: draft the Q4 2025 cash flow projection incorporating AI monetization assumptions by next Tuesday.

monday.com Ltd. (MNDY) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for monday.com Ltd. remains a persistent consideration, though mitigated by several structural factors within the Work Operating System (Work OS) space. Barriers to entry are generally medium-to-high, stemming from the significant upfront investment required to compete effectively against an established player like monday.com Ltd.

New competitors face substantial hurdles related to capital requirements and the inherent network effects present in collaboration software. Building a platform that can handle enterprise-level scale, security, and integration demands a massive initial outlay. Furthermore, as more teams adopt monday.com Ltd., the value proposition for subsequent users increases, making it harder for a newcomer to gain initial traction without significant differentiation or funding.

Sustained innovation is non-negotiable in this segment. New entrants must commit significant resources to Research & Development (R&D) to match or leapfrog monday.com Ltd.'s feature set, especially in areas like Artificial Intelligence (AI) integration. For context, monday.com Ltd. reported Research and Development Expenses of $0.298B for the twelve months ending September 30, 2025. Considering monday.com Ltd.'s full-year 2025 revenue guidance is between $1,226 million and $1,228 million, this implies an R&D investment rate of approximately 24.3% of expected full-year revenue (using the midpoint of guidance and TTM R&D). That level of sustained investment sets a high bar.

A successful entrant needs more than just technology; they require a large, established customer base and a demonstrably robust, secure cloud infrastructure capable of supporting global enterprise operations. monday.com Ltd.'s scale provides a significant advantage here, as evidenced by their customer metrics.

The company's brand recognition, bolstered by industry validation, and its expanding multi-product suite create a substantial moat that deters casual entrants. Being recognized as a Leader in the 2025 Gartner Magic Quadrant for Collaborative Work Management for the third year running underscores this market position.

Here's a look at the scale monday.com Ltd. has achieved, which new entrants must overcome:

The expansion into specialized products like monday CRM, monday dev, monday service, and monday campaigns, which collectively account for more than 10% of total ARR as of Q3 2025, further raises the switching cost for customers looking to consolidate their Work OS stack.

The key challenges for any potential new entrant include:

• Securing funding to match the high R&D spend of incumbents.
• Overcoming established network effects within large organizations.
• Building trust for enterprise-grade security and uptime.
• Achieving brand awareness against a recognized Leader in the space.

If onboarding a new platform takes a team longer than a few weeks, churn risk rises for the new entrant. monday.com Ltd.'s established ecosystem makes migration a complex, multi-quarter project for large firms.