Shares of database company MongoDB Inc. fell in after-hours trading today, even as the company beat Wall Street’s profit and revenue forecasts and gave strong guidance in its latest financial report.
The company has been surging in recent months as investors bet on the growth of cloud computing and artificial intelligence, and today’s after-hours stock action shows the stock market had even bigger expectations.
Prior to today’s report, MongoDB stock was up more than 120% year to date. However, it fell more than 5% in extended trading today.
The company reported third-quarter profit before certain costs such as stock compensation of 96 cents per share, beating its own forecast range of 47 cents to 50 cents and the Street’s consensus estimate of 51 cents. Revenue rose 30% to $432.9 million, comfortably beating the company’s forecast of $400 million to $404 million. Wall Street had only expected sales of $406 million.
These were impressive numbers, and they helped MongoDB move closer to profitability. All told, the company posted a net loss of $29.3 million for the quarter, compared to a loss of $84.8 million a year ago.
MongoDB is the developer of the document-oriented MongoDB database used for a variety of data-intensive applications. In addition to the on-premises database, there is a cloud-native version called MongoDB Atlas, which grew 36% in the quarter and now accounts for 66% of the company’s total revenue. There is also a mobile version of the database called MongoDB Realm. The company’s products are popular among developers because they are easy to use and can store data in many different formats.
MongoDB President and Chief Executive Dev Ittycheria (pictured) said the company has now established itself as an essential part of the technology stack for hundreds of organizations. “The latest general availability release of MongoDB Vector Search is the latest example of the strength of our innovation flywheel and strengthens our competitive advantage in winning AI workloads,” he added.
One of the reasons for MongoDB’s growth this year is the increase in sophisticated generative AI workloads that require an underlying database that gives them seamless access to unstructured data such as images, written notes and audio. Vector search is critical to generative AI because it allows this information to be stored as numerical representations that the underlying large language models can easily access.
In a recent update, MongoDB has expanded its vector search capabilities by improving the way it filters and aggregates unstructured data, making it even easier to access.
Holger Mueller of Constellation Research Inc. said the company is in full swing in terms of both its growth and pace of innovation, with new vector capabilities critical to its AI endeavors. “MongoDB is also making progress toward profitability, and another quarter like this could see it finally become profitable,” the analyst added. “If that happens, it would be a good sign that MongoDB has evolved into an enterprise software provider with long-term viability, both on the technology and product side as well as on the business side.”
While the company is clearly heading in the right direction, it may not be making progress as quickly as some investors had hoped. Guggenheim analyst Howard Ma said in a research note ahead of the report that he expects the company to easily beat the Street consensus, but he also forecast fourth-quarter revenue growth of 21% to 22%. The outlook was optimistic, but not quite as optimistic as Ma had expected. For the current quarter, the company expects revenue between $429 million and $433 million, up 19% at the midpoint of the range. That’s less than Ma’s forecast, but well above Wall Street’s target of $418 million.
As for earnings, the company is targeting a range of 44 cents to 46 cents per share, above the consensus estimate of 37 cents.
Additionally, MongoDB announced that it is raising its full-year revenue target to $1.654 billion to $1.658 billion from $1.596 billion to $1.608 billion. The company now forecasts full-year earnings of $2.89 to $2.91 per share, up sharply from its previous forecast of $2.27 to $2.35 per share and well above the Street’s target of $2.34.
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