What Happened: Shares of database software company MongoDB (NASDAQ:MDB) jumped 8.81% in the morning session after the company reported an impressive "beat and raise" quarter. Second quarter results blew past analysts' revenue and non-GAAP operating profit expectations, driven first by a beat on total customers. We were also glad that next quarter's revenue guidance exceeded Wall Street's estimates. Full year guidance was also raised across the board.
On the other hand, billings and free cash flow came in below expectations as customers continued to shift from making large upfront payments to a consumption-based model, which provides more app usage flexibility but is often harder to model. Management provided some insights into how this trend will play out, saying, "We are intentionally collecting less cash upfront in order to win more workloads more quickly." Therefore, the expectation is for lower upfront commitments to only impact the timing of when customers pay us, not the total payment.
MongoDB highlighted some of its new products and capabilities to participate in the growing AI market. These include Atlas (NYSE:ATCO) Vector Search, which makes it easier to search data. For example, we could use vector search to find all of the images that are similar to a given image, even if the images are not tagged with the same keywords, and this could potentially be a prized asset for analysts and researchers handling millions of unstructured big data. MongoDB also partnered with Google (NASDAQ:GOOGL) Cloud to give developers better access to AI models.
Overall, this was a really good quarter that should please shareholders.
Is now the time to buy MongoDB? Find out by reading the original article on StockStory.
What is the market telling us: MongoDB's shares are very volatile and over the last year have had 43 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was three months ago, when the stock gained 16.5% on the news that the company reported a "beat and raise" quarter. First quarter results beat analysts' expectations for revenue, gross margin, free cash flow, and earnings per share. Guidance was also strong. Revenue guidance for the next quarter exceeded expectations. The full year guidance was raised and also came in ahead of consensus.
The profitability guidance was similarly impressive as operating income guidance for the next quarter and full year came in ahead. The company touched on the current AI trend noting that "...MongoDB's developer data platform is well positioned to benefit from the next wave of AI applications in the years to come".
Overall it was a strong quarter for the company with solid results and impressive guidance.
MongoDB is up 112% since the beginning of the year, and at $403.83 per share it is trading close to its 52-week high of $431.21 from July 2023. Investors who bought $1,000 worth of MongoDB's shares 5 years ago would now be looking at an investment worth $5,490.