Key Takeaways
- Q2 revenue reached $771.8 million, marking a 30% year-over-year increase and surpassing the $735 million analyst consensus.
- Earnings per share (adjusted) totaled $1.90, significantly outperforming the $1.62 Wall Street expectation.
- Atlas platform revenue increased 29% year over year, accounting for 73% of overall revenue.
- Full-year revenue projections were elevated to a range of $2.99 billion to $3.03 billion.
- Shares plummeted approximately 14% in extended trading on disappointing Q3 outlook and valuation worries.
MongoDB (MDB) delivered what should have been a winning quarter on Tuesday, yet investors punished the stock mercilessly. Shares crashed roughly 14% during after-hours trading, settling at $373.13 in Wednesday’s premarket session, as third-quarter projections fell short of market expectations.
During Tuesday’s regular session, MDB had already declined 4.2% to close at $434.21, swept up in a wider technology sector downturn.
The database software company reported Q2 revenue of $771.8 million, representing a robust 30% surge compared to the year-ago period and marking the company’s strongest growth velocity in multiple years. This figure easily exceeded Wall Street’s $735 million projection.
On the bottom line, adjusted earnings per share reached $1.90, soaring 90% from the previous year and handily beating the $1.62 analyst consensus. Adjusted net income jumped 86% to $163 million.
Atlas Platform Shows Flat Growth Trajectory
Atlas, MongoDB’s managed cloud database platform, generated revenue growth of 29% year over year and currently represents 73% of the company’s total revenue stream. The concern lies in the fact that this 29% expansion rate mirrors the exact same performance Atlas has delivered for the past three consecutive quarters.
According to Mizuho Securities analyst Jordan Klein, hedge fund investors he tracks had privately anticipated Atlas growth ranging from 30.5% to 31%. Though the shortfall appears modest, it proved significant enough to trigger disappointment.
The platform attracted 2,900 net new customers throughout the quarter, pushing the total customer base to 70,600, reflecting 18% year-over-year growth. The company’s most valuable customersāthose generating $100,000 or more in annual recurring revenueāexpanded 17% to reach 2,999.
Customers leveraging AI capabilities on Atlas now account for 30% of annual recurring revenue.
Third Quarter Outlook Disappoints
Looking ahead to Q3, MongoDB projected revenue of $759 million and adjusted earnings per share of $1.59. These figures translate to approximately 21% and 20% growth rates, respectively, at the midpoint. Following two consecutive quarters of 30% revenue expansion, this deceleration alarmed market participants.
The company did lift its full-year outlook, guiding for approximately $3 billion in revenue and roughly $6.49 in adjusted EPS at the midpoint. Both metrics exceeded analyst expectations of $2.96 billion in revenue and $6.13 in adjusted earnings per share.
CEO CJ Desai highlighted the quarter’s performance: “We delivered strong second quarter results, highlighted by 30% year-over-year revenue growth, the highest level of growth in several years, and continued strong profitability.”
Gross profit margin improved to 74%, climbing from 71% in the comparable year-ago quarter.
Despite the after-hours selloff, MDB still commands a valuation of approximately 59 times forward earnings estimates. With Q3 growth guidance hovering around 20%, many investors find that multiple difficult to defend.
The stock had surged 21.3% during the month preceding the earnings announcement, establishing an elevated bar that proved impossible to clear.
In Wednesday’s premarket session, shares were changing hands at $373.13, marking a steep drop from Tuesday’s $434.21 closing price.
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