The AI Disruption in SaaS: How Google's Overviews Are Reshaping Customer Acquisition for Monday.com (MNDY)

The SaaS industry is at a crossroads. Google's AI Overviews, introduced in 2025, have upended traditional SEO-driven customer acquisition models, forcing companies like Monday.com (NASDAQ: MNDY) to rethink their strategies. For investors, the question is no longer whether AI will reshape search—it has. The challenge now is whether self-serve SaaS models, which rely heavily on organic traffic, can survive in an ecosystem where AI-generated summaries dominate user interactions.

The AI Overviews Dilemma

Google's AI Overviews, powered by Gemini 2.5, now appear in 1.5 billion monthly searches across 200 countries. By synthesizing information from multiple sources into a single, AI-generated answer at the top of search results, these overviews reduce the need for users to click through to external websites. For SaaS companies like Monday.com, which built its growth on content-driven SEO, this shift has been catastrophic.

Data in Focus:

According to Similarweb, Monday.com's SEO-driven website visits fell by 23.5% year-on-year in Q2 2025, accelerating to 25.3% in July. This erosion directly impacts its self-serve business model, which historically accounted for 30% of its gross ARR. Bank of America (BofA) estimates that if this trend persists, self-serve ARR could contract by over 5% in 2026—a reversal of its 29% growth in 2024.

The problem is compounded by AI Mode, Google's default search interface in the U.S., which prioritizes conversational, AI-generated answers and often links to Google's own services (e.g., Google Shopping) instead of external websites. For SaaS companies, this means not only lost traffic but also a lack of visibility in analytics tools like Google Analytics 4, where AI Mode traffic is currently misclassified as “Direct” or “Other.”

Monday.com's AI-Driven Counteroffensive

Faced with this existential threat, Monday.com has launched a multi-pronged AI strategy to reclaim visibility in the new search landscape. At the core of its 2025 initiatives are AI Blocks, Product Power-ups, and the Digital Workforce—modular AI tools designed to embed intelligence into workflows and attract users through functionality rather than content.

1. AI Blocks: These customizable AI actions (e.g., “Categorize,” “Extract”) allow users to perform data analysis and decision-making within Monday.com's platform. By offering 500 free AI credits per month, the company aims to lower the barrier to adoption while encouraging users to engage with its platform for AI-driven tasks.
2. Product Power-ups: AI is being integrated into core workflows, such as predictive risk management in project planning and CRM data automation. These features position Monday.com as a solution for complex, enterprise-level problems that AI Overviews cannot fully address.
3. Digital Workforce: The company's first AI agent, monday Expert, is set to launch in March 2025. This agent will assist with onboarding, task automation, and even proactive problem-solving, reducing the need for users to seek external resources.

Data in Focus:

The company reported 46 million AI-driven actions since the launch of these tools, indicating strong user engagement. However, the real test lies in whether these features can offset the SEO-driven traffic loss.

Financial Resilience Amid Disruption

Despite the SEO headwinds, Monday.com's Q2 2025 financials remain robust. Revenue grew 27% year-on-year to $299 million, driven by enterprise expansion. Non-GAAP operating income rose 19% to $45.1 million, and adjusted free cash flow hit $64.1 million. The company's enterprise segment, which generates 70% of its ARR, remains resilient, with a net dollar retention rate of 117% for customers with over $100,000 in ARR.

However, the self-serve segment is under pressure. To mitigate this, Monday.com has increased pay-per-click (PPC) spending by 46% from Q2 levels, shifting to higher-cost acquisition channels. While this strategy preserves short-term growth, it risks margin compression and long-term profitability.

BofA's Downgrade and Market Sentiment

BofA's downgrade of Monday.com to “Neutral” from “Buy” reflects skepticism about the company's ability to adapt. The bank cut its price target from $240 to $205, citing the risk of a 5.2% decline in self-serve gross ARR in 2026. This move has rattled investors, with Monday.com's stock dropping 37% post-earnings, despite strong enterprise performance.

Yet the market remains bullish on AI-driven transformation. Monday.com's stock has rebounded slightly since the selloff, trading at a forward P/S ratio of 5.5x, a discount to its 2024 peak. The company's focus on AI-driven product innovation and enterprise expansion could position it as a winner in the long term, provided it can balance short-term costs with sustainable growth.

Investment Implications

For investors, the key is to assess whether Monday.com's AI strategies can evolve from a defensive play to a growth engine. The company's ability to:
- Monetize AI features (e.g., AI Blocks pricing tiers)
- Maintain enterprise momentum (e.g., monday CRM's $100M ARR milestone)
- Reduce reliance on SEO (e.g., cross-platform visibility in YouTube, podcasts)

will determine its long-term success. While the self-serve model faces existential risks, the enterprise segment offers a buffer. If Monday.com can replicate its enterprise success in the mid-market and scale its AI agents, it could outperform BofA's conservative estimates.

Data in Focus:

Conclusion: A High-Risk, High-Reward Play

Monday.com is navigating a seismic shift in the SaaS landscape. The decline of SEO-driven traffic is a structural challenge, but the company's AI-first strategy and enterprise focus offer a path forward. For investors, the stock's current valuation and strong cash flow generation make it an intriguing opportunity—if the company can prove its AI initiatives can drive growth in a post-SEO world.

In the end, the self-serve SaaS model is not dead—but it must evolve. Monday.com's ability to adapt will define not just its ARR, but the future of SaaS in an AI-driven era.