MongoDB Faces Challenges but Eyes a Bright Future
MongoDB (MDB) has experienced a significant drop, with shares losing 37.6% over the past year. This decline stands in stark contrast to the Zacks Computer and Technology sector, which has grown by 27.8%, and the Zacks Internet – Software industry, which saw a return of 30.7% during the same period.
Furthermore, MDB’s performance has not matched that of industry competitors such as Bill Holdings (BILL) and Domo. While BILL shares have risen by 18.4%, Domo has witnessed a 26.6% decrease over the same timeframe.
The tough market conditions can be linked to macroeconomic challenges, a slower-than-expected shift towards AI modernization, and limited progress in updating older systems. Additionally, increased competition in the database market has hindered customer acquisition efforts.
Annual Performance Overview
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MDB shares currently trade at a premium price/sales ratio of 8.18X compared to the industry average of 2.97X, indicating that the stock may not be a bargain, as reflected by its Value Score of F.
Price/Sales Ratio (Forward 12 Months)
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Despite these hurdles, MongoDB is making calculated investments in expanding its enterprise channels and innovating AI technologies to strengthen its long-term growth potential.
Do these efforts make the stock a good investment? Let’s explore further.
Positive Revenue Expectations for FY25
Looking ahead to the fourth quarter of fiscal 2025, MDB forecasts revenues between $515 million and $519 million. Expected non-GAAP operating income ranges from $55 million to $58 million, while non-GAAP earnings should fall between 62 and 65 cents per share.
For the full fiscal year, projected revenues lie between $1.973 billion and $1.977 billion, with non-GAAP operating income likely between $242 million and $245 million. Non-GAAP earnings for the year are expected to fall between $3.01 and $3.03 per share.
The Zacks Consensus Estimate for MDB’s fourth-quarter fiscal 2025 revenues is set at $517.5 million, reflecting a 13.01% year-over-year growth.
Additionally, the consensus anticipation for earnings stands at 64 cents per share, equivalent to a 25.58% decline year-over-year.
Overall, the Zacks Consensus Estimate for MDB’s fiscal 2025 revenues is projected at $1.98 billion, indicating a 17.39% growth compared to the previous year.
The anticipated earnings are pegged at $3.03 per share, representing a 9.01% year-over-year decline despite a 2.02% increase over the past month.
Notably, MDB has consistently exceeded Zacks Consensus Estimates for earnings in the last four quarters, with an average surprise of 58.78%.
MongoDB, Inc. Price and Consensus
MongoDB, Inc. price-consensus-chart | MongoDB, Inc. Quote
For the latest EPS estimates and updates, visit the Zacks Earnings Calendar.
Strong Product Line Boosts Outlook
MongoDB’s future is bolstered by significant product innovations, strategic investments, and the increasing adoption of its platform for modern workloads. The growth of its Atlas product, which contributed 68% of total revenues in the third quarter of fiscal 2025, highlights this success.
Atlas’s user-friendly design, combined with capabilities like Atlas Vector Search, has made it an attractive option for contemporary data management.
With the recent launch of MongoDB 8.0—claimed to be the fastest and most efficient version to date—in addition to introducing Atlas Flex, the company continues to enhance performance and scalability, meeting the evolving demands of its customers.
Strategic Partnerships and Client Growth Underpin Potential
MongoDB’s robust partner network highlights its competitive advantages and market strength. Collaborations with industry leaders such as McKinsey, Capgemini, and Meta Platforms (META) are pivotal in driving market adoption.
Customers from various sectors, including major brands like Victoria’s Secret, Paylocity Holding (PCTY), and Tealbook, exemplify MongoDB’s diverse client base. Victoria’s Secret has successfully modernized its e-commerce platform using MongoDB Atlas to enhance performance and customer experience.
Paylocity’s switch from a traditional SQL-based solution to MongoDB has significantly cut costs and shortened development timelines from weeks to mere minutes.
Tealbook utilized MongoDB to optimize its technology stack, addressing issues with scalability and search consistency in its supplier intelligence platform. These cases illustrate how MDB empowers organizations with effective, scalable, and high-performance solutions that meet specific business needs.
Reasons to Consider Buying MongoDB Stock
To enhance its market stance, MDB is focusing on enterprise accounts and nurturing relationships through targeted investments. Plans for developer education and expanded professional services aim to speed up legacy application modernization, which should positively impact revenue growth.
Given its innovative approach, strategic partnerships, and increasing client roster, MongoDB is well-positioned to navigate current challenges and create long-term value.
The strong growth outlook justifies MDB’s premium valuation. Currently, MongoDB holds a Zacks Rank #2 (Buy) and a Growth Score of A, suggesting it presents a compelling investment opportunity based on Zacks’ criteria.
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The views and opinions expressed herein are those of the author and do not necessarily represent those of Nasdaq, Inc.
