MongoDB Inc., a prominent player in the database technology sphere, adopted a cautious stance in its latest financial report, which had a notable impact on its stock performance during Thursday’s extended trading session.
CEO Dev Ittycheria highlighted concerns regarding the company’s performance, specifically citing a “slower-than-expected start to the year for both Atlas consumption growth and new workload wins.” This reference to Atlas, MongoDB’s cloud-based database service, indicated a less-than-ideal trajectory for key business metrics, setting a cautious tone for the remainder of fiscal 2025.
These remarks, made in MongoDB’s fiscal first-quarter earnings report released after Thursday’s market close, were further compounded by a downbeat outlook for the future. MongoDB projected revenue figures of $460 million to $464 million for the upcoming period, coupled with adjusted earnings per share estimates ranging from 46 cents to 49 cents. These forecasts fell short of analyst expectations, with consensus estimates pegging revenue at $473 million and adjusted earnings per share at 58 cents.
The market reaction was swift and significant, with MongoDB’s stock plummeting by 26% during Thursday’s extended trading session, reflecting investor concerns over the company’s growth trajectory and future profitability.
Looking ahead to the full fiscal year, MongoDB’s forecast of revenue in the range of $1.88 billion to $1.90 billion, with adjusted earnings per share between $2.15 and $2.30, also failed to meet analyst expectations. FactSet consensus estimates had projected higher revenue figures of $1.94 billion and adjusted earnings per share of $2.43.
Despite the disappointing outlook, MongoDB did report some positive financial metrics for the latest quarter. Total revenue saw a respectable 22% growth, reaching $450.6 million, while subscription revenue increased by 23% to $436.9 million. The company’s net loss of $80.6 million, or $1.10 per share, was higher than the previous year, but adjusted earnings per share exceeded expectations at 51 cents, compared to the consensus estimate of 38 cents.
While the financial results may have fallen short of expectations, MongoDB’s management remains optimistic about the company’s long-term prospects, particularly in light of the growing trend towards artificial intelligence (AI). Ittycheria emphasized MongoDB’s position as a beneficiary of the AI-driven application development wave, citing the company’s document-based architecture as well-suited for the data requirements of such applications.
The market’s response to MongoDB’s cautious outlook also had a ripple effect on other consumption-based software stocks, with companies like Snowflake Inc. and Datadog Inc. experiencing declines of 3% and 4%, respectively, in late trading. This broader market reaction underscores the significance of MongoDB’s performance and outlook within the software industry landscape.