MongoDB shares fell sharply on Wednesday despite a strong fiscal second-quarter report, as investors focused on unchanged Atlas growth and softer third-quarter guidance. The stock dropped about 14% in after-hours trading and was changing hands near $373–$375 on Wednesday, down from Tuesday’s close of $434.21. The decline followed a 4.2% drop during regular trading on Tuesday amid a broader tech selloff.
The database software company posted Q2 revenue of $771.8 million, up 30% year over year and above analyst estimates of about $735 million. Adjusted earnings per share reached $1.90, up 90% from a year earlier and well ahead of the $1.62 consensus. Adjusted net income climbed 86% to $163 million, while gross margin expanded to 74% from 71% a year earlier.
Atlas, MongoDB’s fully managed multi-cloud database service, grew revenue 29% year over year and accounted for 73% of total revenue. However, that growth rate was unchanged from recent quarters, disappointing investors who had expected acceleration toward 30% or more. Morgan Stanley analysts said the Atlas result was the key issue in an otherwise solid report. The company added a record 2,900 net new customers, bringing total customers to 70,600, while customers spending at least $100,000 in annual recurring revenue grew 17% to 2,999.
For the third quarter, MongoDB guided for revenue of $759 million and adjusted EPS of $1.59, implying growth of roughly 20–21% and a step down from recent 30% quarters. Full-year guidance was raised to $2.99 billion to $3.03 billion in revenue and adjusted EPS of $6.39 to $6.58, both above prior expectations. CEO CJ Desai said: “We delivered strong second quarter results, highlighted by 30% year-over-year revenue growth, the highest level of growth in several years, and continued strong profitability.”
Other metrics showed momentum: non-Atlas on-premise business grew 36% year over year, operating margins reached 24%, net revenue retention stood at 122%, and the Voyage customer count nearly doubled from the previous quarter. Customers using AI on Atlas represented 30% of annual recurring revenue, while 48% of customers spending at least $100,000 used two or more MongoDB products, up from 42% a year earlier.
Several Wall Street firms raised price targets despite the selloff. Morgan Stanley lifted its target to $430 from $380, Cantor to $540 from $434.21, Canaccord to $480 from $400, and Rosenblatt to $445 from $395. Analysts pointed to MongoDB’s position in AI-enabled application development as a long-term growth driver, though AI’s direct revenue contribution remains small. Still, with the stock trading at roughly 59 times next year’s expected earnings after a strong pre-earnings rally, the unchanged Atlas trajectory and modest Q3 outlook were enough to trigger the sharp selloff.
