Cloud database firm MongoDB "put on a clinic" with its July-quarter results, an analyst said Friday as MDB stock surged closer to a breakout.
Total revenue exceeded expectations by nearly 8% and adjusted operating margins hit a record of 19%, Guggenheim analyst Howard Ma said. MongoDB boosted its outlook for the current quarter and the full year. The outlook is completely de-risked as it assumes no new annualized recurring revenue, Ma said.
"We take our hats off to the management team," he said in a note to clients. But he kept his sell rating on MongoDB stock, noting macro pressures could keep the company from achieving its goal of 30% revenue growth in fiscal year 2025. Still, he raised his price target to 250 from 220.
On the stock market today, MDB stock jumped 3%, closing at 392.88.
MDB Stock: 'Very Solid' Results
Overall, MongoDB put up "very solid" results for its second quarter, UBS analyst Karl Keirstead said in his note to clients.
Adjusted earnings hit 93 cents a share, more than doubling Wall Street's prediction for 46 cents, according to FactSet. Earnings reversed from a year-earlier loss of 23 cents. Sales rocketed 40% to $423.8 million. That easily beat expectations for $394 million.
"The print was stronger and cleaner than that of Snowflake and with 40% total revenue growth, MongoDB carries one of the highest revenue growth rates in the software sector," Keirstead said. He has a buy rating on MDB stock.
Subscription revenue was exceptionally strong, climbing 40% year over year to $409.3 million, while service revenue jumped 20% to $14.5 million.
Atlas, MongoDB's multi-cloud database, accounted for 63% of total sales, and surged 38% year over year. Keirstead estimates Atlas brought in $289 million in sales, above his estimate at $285 million. That would mean Atlas sales grew by $22 million sequentially. In comparison, during the comparable three months a year earlier, Atlas sales climbed $18 million sequentially.
"That would be two quarters in a row of year-over-year growth in sequential dollars added, evidence of solid execution and/or demand," he said.
Strong Full-Year Outlook
For the year, the company predicts adjusted profit of $2.27 to $2.35 per share and $1.596 billion to $1.608 billion in sales. MDB stock analysts called for profit of $1.59 a share on $1.56 billion in sales.
Shares have a strong Relative Strength Rating of 98, putting MDB stock in the top 2% of all stocks when it comes to 12-month performance. MongoDB stock also has a perfect IBD Digital Composite Rating of 99 on a 1-99 scale of fundamental and technical measures.
MDB stock has nearly doubled this year, rising nearly 94% through Thursday's close.
Further, MongoDB stock is an IBD Tech Leader that is consolidating with a buy point at 439, according to MarketSmith.com.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
