MongoDB plummets 20% as weak outlook overshadows strong quarterly results
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MongoDB
shares cratered more than 20% after the database software maker shared weak guidance that signaled a slowdown in growth.
For fiscal 2026, the company said it expects adjusted earnings to range between $2.44 to $2.62 per share and revenue of $2.24 billion to $2.28. Analysts were expecting EPS of $3.34 and $2.32 billion in revenue.
The weak guidance stems from slower growth in the company’s Atlas cloud-based database service. The revenue projection would imply 12.7% growth, the slowest for the company going back to its 2017 stock market debut.
Finance chief Srdjan Tanjga said during an earnings call that the company is seeing slower-than-expected growth in new applications harnessing its Atlas cloud-based database service. However, MongoDB is beefing up hiring and going after deals with larger companies.
For the fiscal first quarter, MongoDB forecasted 63 cents to 67 cents in adjusted earnings per share on $524 million to $529 million in revenue. Analysts polled by LSEG had expected EPS of 62 cents and revenue of $526.8 million.
Citing MongoDB’s weak outlook and slowdown in growth, Wells Fargo analyst Andrew Nowinski downgraded shares to equal weight and lowered his price target.
“With a smaller pool of multi-year deals, we believe it will be difficult to significantly outperform expectations in FY26 and therefore expect shares to remain range-bound,” he wrote.
Read more of Nowinski’s analysis here.
MongoDB’s outlook offset stronger-than-expected fourth-quarter earnings. The company reported earnings of $1.28 per share, excluding items, on $548 million in revenue. Analysts polled by LSEG had anticipated EPS of 66 cents and $520 million in sales. Revenues rose 20% from a year ago.
MongoDB gained 1,900 customers in the quarter, reflecting a total of 54,500.
— CNBC’s Jordan Novet contributed reporting.
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Total Revenue: $548.4 million, a 20% year-over-year increase.
Atlas Revenue: Grew 24% year-over-year, representing 71% of total revenue.
Non-GAAP Operating Income: $112.5 million, with a 21% operating margin.
Net Income: $108.4 million or $1.28 per share.
Customer Count: Over 54,500 customers, with over 7,500 direct sales customers.
Gross Margin: 75%, down from 77% in the previous year.
Free Cash Flow: $22.9 million for the quarter.
Cash and Cash Equivalents: $2.3 billion, with a debt-free balance sheet.
Fiscal Year 2026 Revenue Guidance: $2.24 billion to $2.28 billion.
Fiscal Year 2026 Non-GAAP Operating Income Guidance: $210 million to $230 million.
Fiscal Year 2026 Non-GAAP Net Income Per Share Guidance: $2.44 to $2.62.
Warning! GuruFocus has detected 4 Warning Sign with THNCF.
Release Date: March 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
MongoDB Inc (NASDAQ:MDB) reported a 20% year-over-year revenue increase, surpassing the high end of their guidance.
Atlas revenue grew 24% year over year, now representing 71% of total revenue.
The company achieved a non-GAAP operating income of $112.5 million, resulting in a 21% non-GAAP operating margin.
MongoDB Inc (NASDAQ:MDB) ended the quarter with over 54,500 customers, indicating strong customer growth.
The company is optimistic about the long-term opportunity in AI, particularly with the acquisition of Voyage AI to enhance AI application trustworthiness.
Non-Atlas business is expected to be a headwind in fiscal ’26 due to fewer multi-year deals and a shift of workloads to Atlas.
Operating margin guidance for fiscal ’26 is lower at 10%, down from 15% in fiscal ’25, due to reduced multi-year license revenue and increased R&D investments.
The company anticipates a high-single-digit decline in non-Atlas subscription revenue for the year.
MongoDB Inc (NASDAQ:MDB) expects only modest incremental revenue growth from AI in fiscal ’26 as enterprises are still developing AI skills.
The company faces challenges in modernizing legacy applications, which is a complex and resource-intensive process.
Q: Can you explain the impact of the multi-year deals on your fiscal year ’26 guidance? Is it just a mechanical issue or a change in customer behavior? A: Serge Tanjga, Interim CFO, explained that the fiscal year ’24 had exceptionally strong multi-year performance, which led to a lower renewal base for fiscal year ’26. This is not a change in trends but rather a result of having fewer opportunities for multi-year deals due to the strong performance in previous years.
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