MongoDB Puts 'On A Clinic' As Top 1% Software Maker Doubles Profit Expectations

Cloud database company MongoDB's stock surged after its impressive July-quarter results, which saw the firm double its profit expectations.

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Sep 25, 2023 • 2 min read

MongoDB (MDB), a cloud database company, delivered impressive results for the July quarter, causing its stock to rise significantly, according to an analyst's report on Friday.

The company's total revenue surpassed projections by nearly 8%, and adjusted operating margins reached a record 19%, stated Guggenheim analyst Howard Ma. MongoDB also increased its forecast for the current quarter and the entire year. The forecast is fully de-risked as it does not anticipate any new annualized recurring revenue, added Ma.

Ma praised the management team in a client note, but maintained his sell rating on MongoDB stock. He cited macroeconomic pressures that could prevent the company from achieving its target of 30% revenue growth in the fiscal year 2025. However, he increased his price target from 220 to 250.

MDB stock rose by 3% on the stock market today, closing at 392.88.

UBS analyst Karl Keirstead noted that MongoDB posted "very solid" results for its second quarter in his client note.

Adjusted earnings reached 93 cents per share, more than double Wall Street's forecast of 46 cents, according to FactSet. Earnings rebounded from a loss of 23 cents a year earlier. Sales soared 40% to $423.8 million, comfortably beating expectations of $394 million.

Keirstead compared MongoDB's performance favorably to Snowflake (SNOW), noting that with 40% total revenue growth, MongoDB has one of the highest growth rates in the software sector. He maintains a buy rating on MDB stock.

Subscription revenue saw a significant increase, rising 40% year over year to $409.3 million, while service revenue increased 20% to $14.5 million.

MongoDB's multi-cloud database, Atlas, made up 63% of total sales and grew 38% year over year. Keirstead estimated Atlas sales at $289 million, higher than his $285 million prediction. This implies that Atlas sales increased by $22 million sequentially, compared to a $18 million sequential increase in the same quarter last year.

He noted that this is the second consecutive quarter of year-over-year growth in sequential dollars added, indicating strong execution and/or demand.

For the year, the company forecasts an adjusted profit of $2.27 to $2.35 per share and sales between $1.596 billion and $1.608 billion. MDB stock analysts predicted a profit of $1.59 per share on sales of $1.56 billion.

MDB stock has a high Relative Strength Rating of 98, placing it in the top 2% of all stocks in terms of 12-month performance. It also has a perfect IBD Digital Composite Rating of 99 on a 1-99 scale of fundamental and technical measures.

MDB stock has almost doubled this year, increasing nearly 94% through Thursday's close.

Additionally, MongoDB stock is an IBD Tech Leader that is consolidating with a buy point at 439, according to MarketSmith.com.

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