Karishma Vanjani
MongoDB’s stock was down after its earnings release as the data service provider shared a disappointing revenue and profit forecast. Many on Wall Street think it’s time to buy more of the stock.
MongoDB, founded in 2007, offers cloud-based database products widely used by developers to create applications. The pandemic accelerated MongoDB’s growth as businesses increasingly moved to the cloud. Shares soared 173% in 2020. This year, the stock is up 0.8%.
Late Thursday, the company said for the full fiscal year ending in January 2025, revenue could be between $1.9 billion and $1.93 billion and profits between $2.27 and $2.49 a share, short of the consensus for $2.04 billion in revenue and $3.27 a share in profits.
The stock is down 2.6% at $491.26 at 10:05 a.m. It was down 8.6% in premarket trading on Friday. Datadog, another cloud-related stock, had gained 1.1%.
The financial impact is partly because MongoDB won’t earn any revenue this year from customers who pay upfront for its Atlas product but don’t use the full amount, in contrast to a $40 million benefit in fiscal 2024. Customers often sign multiyear contracts, but MongoDB has been shifting to a pay-as-you-go model based on actual usage.
The company also made $40 million more last year from large multiyear licensing deals, most notably from a renewal by Chinese e-commerce company Alibaba. It was “unusual” in magnitude and “we don’t expect a similar performance” this year, the company said Thursday.
Wall Street still likes the stock, with 26 analysts, or 74% of the overall base, rating it a Buy.
“We are buyers on the weakness,” wrote D.A. Davidson’s Rudy Kessinger on Thursday, flipping his rating on the stock to Buy from Neutral. The analyst thinks the forecast for fiscal 2025 “is very conservative” and sees the stock reaching $430 in price.
MongoDB has traditionally offered cautious full-year estimates. In December, the management predicted up to $1.66 billion for fiscal 2024; it delivered $1.68 billion. The company posted $1.28 billion for 2023 when it forecast for as much as $1.26 billion.
William Blair’s Jason Ader also reiterated his Outperform rating, citing the “attractive” multiyear growth runway and management’s “notoriously” conservative financial outlooks. Ader has no price target.
To be sure, there’s pessimism on the Street. Guggenheim’s Howard Ma thinks the stock is “richly valued” at 15 times the next 12 months’ recurring revenue. He has a $272 target for price and a Sell rating.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com.