MongoDB: Revenue Exceeds Expectations | The Pied Fool

MongoDB (MDB 4.40%)a leading provider of modern database platforms, released its earnings for the second quarter of fiscal year 2025 on August 29, showing a strong revenue performance.

The company reported revenue of $478.1 million, beating previous guidance of $460.0 million to $464.0 million. Non-GAAP (generally accepted accounting principles) operating income came in at $52.5 million, well above the guidance range of $35.0 million to $38.0 million.

Despite this, the company reported a higher net loss of $54.5 million, compared to $37.6 million in the same quarter last year. Overall, MongoDB’s quarter reflected robust revenue growth, but also highlighted rising costs.

Source: SEC documents. Expectations based on management guidance as provided in the 2024-05-30 earnings report. PPT = percentage points.

Company overview and recent focus

MongoDB is known for its innovative database solutions that integrate both relational and non-relational features. The company’s flagship product, a cloud-based database service called MongoDB Atlas, a cloud database service, was a key driver of growth. Recently, MongoDB has focused on expanding its presence in the artificial intelligence (AI) space with products such as MongoDB AI Applications Program (MAAP) and MongoDB Atlas Vector Search. These efforts are aimed at enhancing its technological superiority and product differentiation.

Key success factors for MongoDB include its ability to differentiate its product by combining the best of relational and non-relational databases, its ability to operate in multi-cloud environments, and its strategic investments in AI capabilities. The company is also focused on deepening customer relationships and expanding its existing customer base, which now includes more than 50,700 customers.

Quarterly highlights

During the second quarter, MongoDB hit some notable milestones and encountered some challenges:

The company’s revenue rose 13% year over year to $478.1 million. MongoDB Atlas was a significant contributor, accounting for 71% of total revenue and up 27% year over year. MongoDB also announced the general availability of MAAP, enhancing its AI capabilities in collaboration with leading vendors such as Amazon Web Services (AWS), AlphabetGoogle Cloud of and Microsoft Azure. In addition, the company’s Atlas Vector Search was recognized as the most loved and used vector database for the second year in a row.

Despite these achievements, MongoDB’s net loss widened to $54.5 million from $37.6 million in the prior year due to rising operating costs. Selling and marketing expenses rose to $221.5 million, up from $195.9 million a year ago, and general and administrative expenses rose to $50.8 million from $46.1 millions of dollars. Gross margins also fell slightly to 73% from 75% year-over-year.

The wide separation between GAAP and non-GAAP results is the result of MongoDB’s heavy use of stock-based compensation instead of cash-based salary expense. Stock-based compensation accounted for $123.8 million of the bottom line, down from $125.8 million in the year-ago period.

MongoDB’s customer base continued to expand, with more than 50,700 customers at the end of the quarter, up from 45,000 a year earlier. The number of customers with annualized recurring revenue (ARR) over $100,000 increased to 2,189, demonstrating deeper customer engagement.

The company has also faced challenges, including increased competition from open-source alternatives and cloud giants such as Amazon, Alphabet and Microsoft. This competition has reduced its market share in database usage, although the company remains focused on its strategic initiatives to counter these pressures.

Perspective and forward orientation

Looking ahead, MongoDB’s management provided bullish guidance for the third quarter and full fiscal year 2025. For the third quarter, management expects revenue to be between $493.0 million and $497.0 million, and non- GAAP from operations to range from $57.0 million to $60.0 million. million. Non-GAAP net income per share is expected to be between $0.65 and $0.68.

For the full fiscal year, MongoDB raised its revenue guidance to between $1.92 billion and $1.93 billion, up from the previous range of $1.88 billion to $1.90 billion. Non-GAAP income from operating guidance was also increased to a range of $187.0 million to $195.0 million, compared to the prior range of $168.0 million to $183.0 million. Additionally, expected non-GAAP net income per share was raised to a range of $2.33 to $2.47, from $2.15 to $2.30 in last quarter’s full-year guidance.

Investors should monitor MongoDB’s continued investments in AI and data management technologies, as well as its ability to manage rising costs while maintaining growth. The company’s updated guidance reflects its confidence in sustaining revenue growth despite competitive pressures and the need to contain costs.