5 MongoDB Analysts Break Down Q3 Earnings: 'Atlas Consumption Explodes'

Mongodb Inc MDB shares jumped 17.5% on Tuesday after the company reported accelerating revenue growth in the third quarter.

On Monday, MongoDB reported a third-quarter adjusted EPS loss of 11 cents, beating consensus analyst estimates of a 38-cent loss. Third-quarter revenue of $226.9 million also topped analyst expectations of $205.2 million. Revenue was up 50% from a year ago.

MongoDB is an open source NoSQL database management program. NoSQL is used as an alternative to traditional relational databases. Revenue from the company’s Atlas cloud database service was up 84% in the quarter. However, sales and marketing expenses also increased in the quarter and account for more than half the company’s total revenue.

Looking ahead, MongoDB raised its fiscal 2022 EPS guidance. The company is now expecting a full-year per-share loss of between 74 cents and 71 cents, up from its previous guidance of a per-share loss of between $1.20 and $1.13. MongoDB also raised its full-year revenue guidance to between $846.3 million and $849.3 million, exceeding analyst estimates of $813 million.

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Rare Re-Acceleration: Morgan Stanley analyst Sanjit Singh said MongoDB’s revenue growth re-acceleration is a rare event for a company four years removed from its IPO.

“A return to 50% overall rev growth on the back of 84% growth in Atlas which accelerated for the 4th qtr in a row suggests that MDB is not just riding a powerful cloud wave but is also winning the argument on why enterprise customers should standardize on its platform,” Singh wrote.

Oppenheimer analyst Ittai Kidron said MongoDB’s technical leadership has the company well-positioned to maintain its recent growth momentum.

“While we expect some margin pressure as Atlas continues to scale, we believe MongoDB has a leading solution with a strong technical moat that is favorably positioned to capture share as customers look to consolidate workloads with fewer vendors,” Kidron wrote.

Needham analyst Jack Andrews said MongoDB reported “accelerating growth at scale as Atlas consumption explodes.”

“MDB remains one of our favorite ideas, given our belief that several quarters of strong customer adds and the faster-growing Atlas have set a flywheel in motion for MDB to achieve high levels of sustained growth,” Andrews wrote.

Long-Term Growth Opportunity: Piper Sandler analyst Brent Bracelin said the third quarter numbers give him more confidence in MongoDB’s trajectory toward more than $5 billion in annual revenue.

“We continue to view MDB as a core franchise cloud stock to own based on strong leadership, consistent execution, differentiated technology, and a compelling growth trajectory with the potential to expand revenue at least 5x over the next six years to $5B+,” Bracelin wrote.

JMP analyst Patrick Walravens said MongoDB’s impressive numbers are fully priced into the stock after the big post-earnings pop.

“We believe MongoDB's current valuation fairly captures the impressive growth in this business, as at the aftermarket price of $506.25, the stock trades at a CY23E EV/revenue multiple of 25.6x, versus 18.7x for a peer group of high-growth infrastructure software companies,” Walravens wrote.

Ratings And Price Targets:

• Morgan Stanley has an Overweight rating and $525 target.
• JMP has a Market Perform rating.
• Oppenheimer has an Outperform rating and $510 target.
• Needham has a Buy rating and $626 target.
• Piper Sandler has an Overweight rating and $585 target.
• Related Link: Why MongoDB Shares Are Surging Today

Photo: Courtesy of mongodb.com