MongoDB's shares plunged by over 20% following the company's recent announcement of disappointing growth projections. The database software maker, known for its cloud-based Atlas database service, reported earnings that exceeded expectations, yet its future outlook has raised concerns about slowing growth. The company forecasted adjusted earnings ranging between 63 cents to 67 cents per share on $524 million to $529 million in revenue for the fiscal first quarter, a projection overshadowed by cautious investor sentiment.
The company revealed that its revenues increased by 20% from the previous year, reporting earnings of $1.28 per share, excluding specific items, and a total revenue of $548 million. These figures surpassed analyst predictions, with those polled by LSEG expecting earnings of 62 cents per share on $526.8 million in revenue. Despite these stronger-than-expected earnings, the guidance provided for upcoming quarters signaled a slowdown, particularly due to slower growth in new applications leveraging the Atlas service.
Finance Chief Srdjan Tanjga highlighted the issue during an earnings call, noting that the anticipated growth in new applications had not met expectations. This stagnation in the Atlas segment contributed significantly to the dampened outlook. The guidance implies a revenue growth of 12.7%, marking the slowest pace since MongoDB's initial public offering in 2017.
For the fiscal year 2026, MongoDB expects adjusted earnings to range from $2.44 to $2.62 per share, with revenues projected between $2.24 billion and $2.28 billion. These figures fall short of analyst expectations, which predicted earnings of $3.34 per share and $2.32 billion in revenue. The conservative forecast has drawn critical responses from analysts, including Wells Fargo's Andrew Nowinski, who downgraded MongoDB shares to an equal weight rating while lowering his price target due to the weak outlook and perceived growth deceleration.
"With a smaller pool of multi-year deals, we believe it will be difficult to significantly outperform expectations in FY26 and therefore expect shares to remain range-bound," stated Andrew Nowinski.
Despite the headwinds, MongoDB did report an increase in its customer base, adding 1,900 customers in the quarter and reaching a total of 54,500.