Shares of MongoDB were falling in after-hours trading on Tuesday, despite the cloud-based database software provider reporting stronger-than-expected results for the October quarter.
High Expectations Not Met
MongoDB, a highflying bet on the growth of cloud computing, had raised expectations with investors. Heading into Tuesday's earnings report, the stock was up over 120% for the year. However, shares dipped 3.5% in after-hours trading, reaching $418.
Impressive Quarterly Performance
In the recent quarter, MongoDB reported revenue of $432.9 million, a 30% increase from the same period last year. This surpassed the company's guidance range of $400 million to $404 million and the Wall Street consensus of $406 million, as tracked by FactSet.
On an adjusted basis, MongoDB posted profits of 96 cents per share, greatly exceeding the guidance range of 47 to 50 cents and the consensus of 51 cents. However, adhering to generally accepted accounting principles, the company suffered a loss of 41 cents per share during the quarter.
Encouraging Guidance
Despite the slight disappointment in quarterly revenue growth, MongoDB's guidance for future periods seems promising. The company projects January quarter revenue of $429 million to $433 million, reflecting a 19% increase, with adjusted profits of 44 to 46 cents per share. This surpasses Wall Street's expectations of $418 million in revenue and 37 cents per share in profits.
Furthermore, MongoDB has raised its revenue target for the fiscal year ending January 2024 to a range of $1.654 billion to $1.658 billion, compared to the previous range of $1.596 billion to $1.608 billion. The company also expects adjusted profits for the full year to be between $2.89 and $2.91 per share, demonstrating significant growth from the earlier forecast of $2.27 to $2.35 per share and surpassing Wall Street's estimate of $2.34.
Investor Disappointment
Despite the positive earnings beat, MongoDB's shares didn't meet the highest expectations of investors. Guggenheim analyst Howard Ma had anticipated that the company would comfortably exceed the Street consensus; however, he believed that fourth-quarter revenue guidance could have shown growth as high as 21% to 22%, which wasn't the case.
Ma also noted that MongoDB remains one of the most expensive enterprise software stocks globally, which may have contributed to the market's reaction.
Although the stock may have fallen in after-hours trading, MongoDB's strong quarterly results and encouraging guidance serve as a promising sign for its future prospects in the cloud computing industry.
