MongoDB Earnings: A Standout Quarter for the Database Powerhouse Brings Shares to 3-Star Territory

History repeated itself, as no-moat MongoDB MDB started its fiscal 2024 with outstanding results—similar to last year’s start. Year-over-year revenue growth was a whopping 8 points above our initial projections as consumption in MongoDB’s cloud platform, Atlas, far surpassed our and management’s expectations in the quarter. We believe this quarter’s results were solid evidence of MongoDB’s increasing grab of the database management software market, which we believe MongoDB will be able to continue, all while further expanding operating margins (reaching GAAP profitability by fiscal 2027, in our view). Because of the stellar quarter, outlook was upped. However, management is modeling a sharp sequential deceleration after the second quarter, which has us taking pause of adjusting our fair value estimate. Nonetheless, we remain very confident in MongoDB’s hearty growth trajectory—as we think the company can surpass $8 billion in revenue by fiscal 2033. As a result, we are maintaining our fair value estimate of $335 per share. With the stock popping by 23% upon results, MongoDB shares have now crossed into 3-star territory from once undervalued territory. For investors still looking for attractive entry points into the database management software market and the players that we believe will thrive from the exponentially growing datasphere, or data in total existence, we recommend Snowflake shares.

First-quarter revenue increased 29% year over year, to $368 million. Atlas, MongoDB’s cloud offering, grew 40% year over year, with consumption levels positively surprising management. First-quarter non-GAAP gross margins were 74%, up by 100 basis points from the prior year period, which we find very impressive given Atlas’ increasing mix in MongoDB’s total revenues paired with the fact that Atlas is still margin dilutive. Non-GAAP earnings per share of $0.56 is well above management’s guide ($0.19 per share) and our forecast ($0.18 per share).