MongoDB Reports Strong Q3 Results Despite Stock Decline

MongoDB Inc (MDB) saw its shares drop on Tuesday, even after the company delivered promising results for its third quarter.

The results were released during a lively earnings season, prompting attention from key analysts. Below are some significant insights based on analyst reports.

Goldman Sachs Insights on MongoDB

Analyst Kash Rangan reaffirmed a Buy rating for MongoDB, raising the price target from $340 to $390. He noted that MongoDB's fiscal third-quarter results exceeded revenue expectations by 6.4%. Rangan highlighted "solid execution in a still choppy macro environment," with consistent growth in its Atlas service and improvements in Net Recurring Revenue (NRR).

Rangan expressed confidence in MongoDB's position within the $100 billion-plus database market, especially as the company aims to capitalize on the growing demand for AI applications.

Stifel Analysis of MongoDB Performance

Leading analyst Brad Reback also maintained a Buy rating, with an increased price target of $425 from $360. He described MongoDB's recent quarterly results as "solid," with operating margins improving by over 700 basis points. The quarter benefited from unexpected consumption growth and substantial multi-year contracts, contributing significantly to revenue.

Reback added that management’s new focus on expanding its Enterprise strategic account program is crucial, as it offers better returns compared to other direct sales initiatives. Although they expect a sequential revenue decline for the EA program, he views this as a conservative projection.

Truist Securities Breakdown

Analyst Miller Jump reiterated a Buy rating with a price target increase to $400 from $320. Jump emphasized that MongoDB's revenue boost stemmed from several multi-year deals in the EA segment, along with higher-than-expected Atlas consumption. He reported Atlas experienced a staggering 26% year-on-year growth, while EA revenues grew by 13%.

Moreover, non-GAAP operating margins of 19% were also reported as higher than anticipated, reflecting a favorable revenue mix. Management also raised their fiscal 2025 guidance, indicating optimism about their consumption model.

Needham’s Perspective on MongoDB

Analyst Mike Cikos maintained a Buy rating with a new price target of $415 from $335. He identified the EA program as a significant driver for revenue growth, noting a substantial rise in multi-year license deals. Cikos acknowledged management's guidance for a sequential drop in non-Atlas revenues, which departs from traditional seasonal patterns.

He believes EA serves as a long-term gateway for acquiring new clients, suggesting potential for growth through Atlas.

Oppenheimer Opinion on Earnings

Analyst Ittai Kidron confirmed an Outperform rating, increasing the price target to $400 from $350. He reported that MongoDB's revenue surged to $529.4 million for the quarter, outperforming estimates significantly due to strong subscription revenue and EA success.

While he anticipated a greater beat from Atlas, Kidron remained optimistic about overall growth trends as management guided for an increase in fourth-quarter revenues.

Scotiabank Evaluation on Growth

Analyst Patrick Colville maintained a Sector Perform rating while raising the price target to $350 from $295. Despite MongoDB achieving expected earnings results, Colville pointed out that most gains were due to multi-year EA deals, which may not recur. He stressed the need to monitor Atlas’s momentum moving forward.

Colville cautioned that investors should take a wait-and-see approach until there is more clarity on timing for AI benefits and competitive trends in database services.

RBC Capital's Take on Revenue Growth

Analyst Rishi Jaluria sustained an Outperform rating while raising the price target to $400 from $350. He noted MongoDB's total revenue growth accelerated to 22% year-on-year, propelled by a few large multi-year deals. While Atlas revenues grew by 26%, this represents a slight slowing compared to the prior quarter.

He also recognized an upgrade in guidance for the full year, indicating steady growth expectations.

Stock Performance: Despite the strong quarterly results, MongoDB’s shares had declined by 15.58%, trading at approximately $295.58 on Tuesday.

In Conclusion: MongoDB showcased solid performance in Q3, yet the market reaction was adverse. Analysts generally maintained positive outlooks, with many raising their price targets based on the company's execution and future prospects.

MongoDB, Earnings, Analysts