Shares of MongoDB (NASDAQ: MDB) were soaring today after the cloud software company delivered a better-than-expected second-quarter earnings report, beating estimates on the top and bottom lines and raising guidance for the year.
As of 10:11 a.m. ET, the stock was up 14% on the news.
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MongoDB bounces back
After plunging after its first-quarter earnings report in the spring, the NoSQL database software specialist redeemed itself with its results on Friday.
Revenue in the quarter rose 13% to $478.1 million, beating estimates at $464.1 million, and the company showed off strong growth in its cloud-based Atlas segment, where revenue rose 27% and now makes up 71% of revenue. The on-premises business, meanwhile, continued to decline as customers switched to the cloud version.
Customers grew from more than 49,200 in the first quarter to more than 50,700, and the company added 52 customers with at least $100,000 in annual spending.
Gross margin slipped from 75% to 73%, and operating loss widened on a generally accepted accounting principles (GAAP) basis as operating expenses also grew faster than revenue. On the bottom line, the company's adjusted earnings per share fell from $0.93 to $0.70, though that topped the consensus at $0.49. The decline in profits seems to be related to increased investments in artificial intelligence (AI).
CEO Dev Ittycheria said the company saw "strong new workload acquisition and better-than-expected Atlas consumption trends."
The company also made strides in product, launching the MongoDB AI Applications Program, which offers an end-to-end AI technology stack, including generative AI companies like Anthropic and the major cloud infrastructure platforms.
What's next for MongoDB
Looking ahead, MongoDB called for $493 million to $497 million in revenue in the third quarter, up 17% at the midpoint, which would represent an acceleration from the third quarter. On the bottom line, it called for adjusted earnings per share of $0.65 to $0.68, down from $0.96 in the quarter a year ago.
It also raised its full-year revenue forecast to between $1.92 billion and $1.93 billion, and it now sees adjusted EPS of $2.33 to $2.47, above the analyst consensus.
While the decline in earnings is concerning, MongoDB should soon return to bottom-line growth in the coming quarters as it moves past the investment cycle. In that context, today's gains seem to be a relief rally after the earlier plunge as the company makes progress faster than expected.
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Jeremy Bowman has positions in MongoDB. The Motley Fool has positions in and recommends MongoDB. The Motley Fool has a disclosure policy.
