Why MongoDB Stock Is Down After Its Beat-And-Raise Quarter

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MongoDB (MDB) stock is sinking Tuesday even after the document database platform beat top- and bottom-line expectations for its fiscal 2025 third quarter and raised its full-year outlook.

In the three months ended October 31, MongoDB's revenue increased 22.2% year over year to $529.4 million. Its earnings per share (EPS) rose 20.8% from the year-ago period to $1.16.

"MongoDB's third-quarter results were significantly ahead of expectations on the top and bottom line, driven by better-than-expected EA performance and 26% Atlas revenue growth," said CEO Dev Ittycheria in a statement. "We continue to see success winning new business due to the superiority of MongoDB's developer data platform in addressing a wide variety of mission-critical use cases."

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The results handily beat analysts' expectations. Wall Street was anticipating revenue of $498 million and earnings of 67 cents per share, according to Investor's Business Daily.

As a result of its strong performance, MongoDB raised its full-year outlook. The company now anticipates fiscal 2025 revenue in the range of $1.973 billion to $1.977 billion and earnings per share of $3.01 to $3.03. This is up from its previous forecast for revenue of $1.92 billion to $1.93 billion and EPS of $2.33 to $2.47.

For its fiscal fourth quarter, MongoDB expects to achieve revenue between $515 million and $519 million, well ahead of analysts' expectations of $509 million.

"MongoDB is in a great position to be a central pillar of the emerging artificial intelligence (AI) tech stack and benefit from the next wave of application development in the years ahead," Ittycheria said.

However, the positive sentiment around the earnings beat faded when MongoDB announced that Michael Gordon, its chief operating officer and chief financial officer, will be stepping down on January 31, 2025. Executive departures can be seen as a loss of expertise or signal uncertainty about the future of a company.

Is MongoDB stock a buy, sell or hold?

It's been a rough year on the price charts for MongoDB, down nearly 26% since the start of 2024. Yet, Wall Street remains bullish on the tech stock.

According to S&P Global Market Intelligence, the average analyst target price for MDB stock is $376.92, representing implied upside of nearly 25% to current levels. Additionally, the consensus recommendation is Buy.

Needham is one of those with a Buy rating on the large-cap stock and the financial services firm raised its price target on MDB to $415 from $335 following the earnings beat.

"MongoDB reported solid fiscal third-quarter results, with the majority of revenue upside from better than expected multi-year upfront license contribution," says Needham analyst Mike Cikos. "We believe the company is leading the pack in addressing the next-generation database market, which MongoDB calibrates at around $85 billion today growing to $138 billion in calendar year 2026."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.