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MongoDB (MDB) stock dives 25% on skinny revenue beat, underwhelming guidance

May 30, 2024 4:22 PM
(Updated - May 31, 2024 6:39 AM EDT)

MongoDB Inc. (NASDAQ: MDB) reported first-quarter earnings that surpassed analyst expectations, but the database platform provider's stock fell sharply due to its lower-than-expected guidance for the upcoming quarter and fiscal year.

The company's shares plummeted nearly 25% in premarket trading Friday as investors reacted to the cautious outlook.

For the first quarter of fiscal 2025, MongoDB posted adjusted earnings per share (EPS) of $0.51, beating the consensus estimate of $0.38. Revenue for the quarter was also higher than expected, coming in at $450.6 million against analysts' predictions of $440.8 million.

This represents a 22% increase in total revenue compared to the same quarter last year, with subscription revenue up 23% and services revenue seeing a modest 1% rise. MongoDB Atlas, the company's cloud database service, saw a notable 32% growth year-over-year (YoY), accounting for 70% of the total first-quarter revenue.

Despite the strong revenue performance, MongoDB's outlook for the second quarter and full fiscal year 2025 fell short of Wall Street estimates.

The company forecasts Q2 EPS in the range of $0.46 to $0.49, while analysts were expecting $0.58. Revenue projections for Q2 are set between $460 million and $464 million, below the consensus estimate of $470 million.

For the full year, MongoDB anticipates adjusted EPS between $2.15 and $2.30, with revenue expected to be between $1.88 billion and $1.9 billion, both of which are below the analyst consensus of $2.50 EPS and $1.93 billion in revenue.

President and CEO Dev Ittycheria cited a slower start to the year for Atlas consumption growth and new workload wins as factors that could impact performance for the remainder of fiscal 2025.

However, he expressed confidence in MongoDB's market opportunity and its potential to benefit from the next wave of AI-powered application development, thanks to the company's document-based architecture.

MongoDB's balance sheet remains strong, with $2.1 billion in cash and cash equivalents as of April 30, 2024. The company also reported an increase in free cash flow to $61.0 million, up from $51.8 million YoY.

Commenting on the report, RBC Capital Markets analysts said MDB's revenue beat was "the skinniest beat in a long time" and was "below the four-quarter average beat of ~6%."

"On the call at 5:00 PM ET, we would look for more details on consumption trends in the quarter (which clearly degraded), timing around the workload consolidation story (relational, search, vector, stream processing), and the near-term strategy of balancing growth versus margins," they added.

By Senad Karaahmetovic


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