Here’s what you need to know about MongoDB’s latest earnings report, hot off the press. Our analysis reveals a mixed bag this quarter for MDB, the database software giant. While we saw solid revenue growth, a significant miss on earnings per share has certainly caught Wall Street’s attention.
The company continues to expand its top line, primarily driven by its cloud database service, MongoDB Atlas. However, the unexpected swing to a much larger loss per share than anticipated raises some immediate questions about profitability and efficiency.
As your trusted advisor, let’s dive into the specifics of what happened and what it means for your investment decisions. We’ll break down the numbers and give you our candid assessment of where MDB stands today.
What Happened This Quarter: The Big Picture
MongoDB reported its Q3 Fiscal Year 2025 results, and the headlines are dominated by two main points. First, revenue grew by a healthy 23.7% year-over-year, hitting nearly $591.4 million. This indicates continued strong demand for their database solutions, especially in the cloud.
However, the big story is the earnings per share (EPS). MDB reported a loss of -$0.93 per share, which was a massive miss compared to analyst expectations of a positive $3.24 per share. This significant deviation from consensus estimates is a clear red flag that we need to investigate further.
Despite the revenue strength, the company’s path to consistent profitability remains a key concern for investors. We’ll explore the factors contributing to this earnings miss and what it tells us about the business’s underlying health.
Breaking Down the Financial Results
Now let’s walk through the numbers together. Here’s what the results tell us about MongoDB’s performance this quarter.
Revenue: Where the Money Came From
MongoDB’s total revenue for the quarter reached $591.4 million, marking a robust 23.7% increase compared to the same period last year. This growth primarily stems from the continued adoption of MongoDB Atlas, their cloud-based database-as-a-service offering.
We see this as a positive sign that businesses are increasingly relying on MongoDB’s flexible and scalable database solutions. The shift to cloud services often brings higher margins and more predictable recurring revenue streams, which is good for long-term stability.
Compared to many software peers, a 23.7% growth rate is still quite strong, suggesting MDB is effectively capturing market share in the competitive database landscape. Our analysis suggests this growth is sustainable, especially with the ongoing digital transformation initiatives across industries.
Profit and Margins: Is the Company Making Money Efficiently?
Here’s where the picture gets a bit more complicated. MDB reported a gross profit of $419.97 million, translating to a strong gross margin of 71.01%. This tells us that the core business of delivering database services is quite profitable before operating expenses.
However, once we factor in operating expenses, the story changes dramatically. The company posted an operating loss of -$65.29 million, resulting in a negative operating margin of -11.04%. This indicates that their spending on research, sales, and administration outweighs their gross profits.
A major contributor to this operating loss is stock-based compensation, which amounted to a substantial $140.4 million this quarter. While this is a non-cash expense, it significantly impacts reported profitability and diluted EPS, leading to the net loss of -$47.05 million and the EPS of -$0.93 we discussed.
Cash and Debt: Financial Health Check
Assessing the balance sheet, MongoDB appears to be in a reasonably healthy financial position. The company holds a solid cash and equivalents balance of $647.14 million, which provides a good cushion for operations and future investments.
Total current assets stand at nearly $2.9 billion, significantly outpacing current liabilities of about $509.8 million. This gives MDB a strong current ratio of 5.70, indicating excellent short-term liquidity and the ability to cover immediate obligations.
On the debt front, the company has approximately $1.14 billion in long-term debt, primarily from convertible notes. While this is a notable figure, it appears manageable relative to its cash position and substantial stockholders’ equity of $2.94 billion. Our verdict is that MDB’s financial health remains sound, despite the current unprofitability.
Cash Flow: Follow the Money
This is where we see if the company is generating real cash, even if reported profits are negative. We’re pleased to see that MongoDB generated $72.11 million in cash from its operations this quarter. This is a crucial metric, as it shows the core business is indeed producing cash.
After accounting for capital expenditures of only $0.54 million, MDB reported a positive free cash flow of $71.57 million. This indicates that the company is self-sufficient in funding its operations and even has cash left over for other strategic initiatives.
Positive free cash flow, despite negative net income, often means that non-cash expenses like stock-based compensation are heavily influencing the net income figure. This tells us the business model is fundamentally sound in terms of cash generation, even as it invests heavily in growth.
Comparing to Last Year: Growth Trends
Let’s put this quarter in context by comparing it to the same period last year. This helps us understand the underlying trends in MongoDB’s business.
| Metric | This Quarter (Q3 FY25) | Last Year (Q3 FY24) | Change | What It Means |
|---|---|---|---|---|
| Revenue | $591.4M | $478.1M* | +23.7% | Strong, consistent top-line expansion |
| EPS (Basic) | -$0.93 | -$0.93 | 0% | Profitability challenge persists |
*Calculated based on 23.7% YOY growth from current quarter’s revenue.
The revenue growth of 23.7% is a testament to the continued demand for MDB’s offerings. While not as explosive as in previous years, it’s still a very respectable growth rate for a company of this size in the software infrastructure space.
What’s particularly striking is that the basic EPS remained at -$0.93, exactly the same as last year’s Q3. This suggests that while revenue is growing, the underlying profitability challenges, particularly due to high operating expenses and stock-based compensation, haven’t improved on a per-share basis. This is a trend we believe investors should watch closely.
Quarter-to-Quarter Momentum
Looking at the quarter-over-quarter momentum, the 23.7% year-over-year revenue growth suggests a steady, albeit maturing, growth trajectory. We don’t have explicit sequential data for the previous quarter in this report, but the consistent growth rate indicates ongoing customer adoption.
The business is clearly still expanding, driven by the increasing shift to cloud-native applications and the need for modern database solutions. Our take on momentum is that it remains positive on the revenue front, but the profitability momentum is not yet heading in the right direction.
We’ll need to see if MDB can start to leverage its scale to improve operating efficiency in upcoming quarters. This will be key to translating strong revenue growth into bottom-line improvements.
Business Segments: What’s Working and What’s Not
While MDB doesn’t break down its revenue into highly detailed segments in this report, it’s widely known that their flagship cloud offering is the primary growth engine.
MongoDB Atlas
MongoDB Atlas, the company’s multi-cloud database-as-a-service, continues to be the star performer. This platform allows developers to build and run applications across major cloud providers like AWS, Azure, and Google Cloud, offering flexibility and scalability.
The strong revenue growth we’re seeing is largely attributable to the expanding customer base and increased usage of Atlas. This segment is a significant growth driver because it represents the future of database management – easy to deploy, highly available, and fully managed.
Our outlook for Atlas remains very positive; it’s a sticky product with high switching costs, which bodes well for recurring revenue. The challenge will be to grow this segment efficiently and convert that gross profit into net income.
What Management Is Saying: Forward Guidance
In this report, specific explicit guidance ranges for EPS and revenue were not provided. However, management typically emphasizes continued investment in product innovation and expanding their global sales footprint. They aim to capitalize on the massive market opportunity for modern databases.
While not quantified, we anticipate management remains optimistic about the long-term growth prospects for MongoDB Atlas. They likely expect to continue growing revenue at a healthy clip, albeit possibly at a slightly slower pace than in hyper-growth years.
Do we believe this implied optimism? Yes, on the revenue side. The market for cloud databases is still expanding significantly. However, we’ll need to hear more specifics about their path to profitability and how they plan to rein in operating expenses to convert that revenue into meaningful earnings.
What Wall Street Thinks: Analyst Views
Wall Street’s reaction to this report has been mixed, focusing heavily on the significant EPS miss. Before the report, analysts were largely bullish, with 30 out of 37 recommending a “Buy” and a mean target price of $371.66. This implied a decent upside from the current price of $332.37.
However, the actual EPS of -$0.93 compared to the estimated $3.24 represents a staggering -128.70% surprise. This kind of miss typically leads to re-evaluations, and we could see some downgrades or price target adjustments in the coming days as analysts digest the full implications.
While the long-term thesis for MDB’s technology remains strong, the short-term earnings miss will likely introduce caution. We believe analysts might be forced to temper their earnings expectations for future quarters, even if revenue forecasts remain relatively stable. The focus will shift to when MDB can demonstrate operating leverage.
Valuation: Is the Stock Cheap or Expensive?
Let’s talk about price. Despite the recent earnings miss, MongoDB’s stock trades at a premium valuation, reflecting its strong growth prospects and leading position in the NoSQL database market. The company’s market capitalization stands at approximately $27.16 billion, with the stock currently trading around $332.37.
Key valuation metrics highlight this premium. MDB’s forward Price-to-Earnings (P/E) ratio is a high 102.58, based on next year’s earnings estimates. Its Price-to-Sales (P/S) ratio is 12.24, and its Enterprise Value to Revenue (EV/Revenue) is 11.16. These figures are significantly higher than many mature software companies.
Based on current market data from Yahoo Finance, this valuation suggests that investors are paying a high price for future growth. While MDB operates in a high-growth sector, the earnings miss could pressure this premium. Our verdict is that the stock is currently expensive, and further downside could occur if profitability doesn’t improve faster than expected.
My Bottom Line: What This Means for Investors
Here’s my analysis summary – the key takeaways you should remember from this MongoDB earnings report:
- Strong Revenue Growth Continues: MDB delivered a solid 23.7% year-over-year revenue increase, driven by MongoDB Atlas. This confirms the ongoing demand for their modern database solutions and their leadership in the space.
- Significant EPS Miss is a Major Concern: The reported -$0.93 EPS, a massive miss against analyst estimates of $3.24, highlights persistent profitability challenges. High operating expenses, particularly stock-based compensation, are heavily impacting the bottom line.
- Positive Cash Flow is a Silver Lining: Despite negative net income, the company generated $72.11 million in operating cash flow and $71.57 million in free cash flow. This means the core business is producing cash, suggesting reported losses are heavily influenced by non-cash charges.
- Valuation Remains Stretched: MDB still trades at a premium valuation, with a forward P/E over 100 and a P/S above 12. This high valuation leaves little room for error, and the earnings miss could lead to price pressure until a clear path to profitability emerges.
- Overall Verdict: Exercise Caution. While the long-term growth story for MongoDB remains compelling, the severe earnings miss and ongoing profitability struggles warrant caution. We believe investors should monitor future reports closely for signs of operating leverage and improved bottom-line performance before considering new positions.
Risks You Should Watch
Every investment has risks, and MongoDB is no exception. Here’s what could go wrong and what you should keep an eye on:
- Profitability Path and Stock-Based Compensation: The biggest risk right now is MDB’s ability to achieve consistent profitability. If stock-based compensation remains high and operating expenses aren’t managed effectively, the earnings miss could become a recurring theme, impacting investor confidence.
- Intense Competition: The database market is highly competitive, with strong players like Amazon Web Services (AWS) with DynamoDB and Aurora, Microsoft Azure Cosmos DB, Google Cloud Firestore, and traditional players like Oracle. Aggressive pricing or new innovations from rivals could pressure MDB’s growth and margins.
- Macroeconomic Headwinds: A broader economic slowdown could lead companies to cut back on IT spending, including new database deployments or expanding existing ones. This could slow MDB’s revenue growth and further delay its path to profitability.
- High Valuation Correction: Given the premium valuation, any significant slowdown in growth or continued earnings disappointments could trigger a sharp correction in the stock price. Investors are paying for future growth and profitability, and if that doesn’t materialize, the stock could suffer.
Despite these risks, MDB’s core technology and market position are strong. Its flexible, developer-friendly database is well-suited for modern applications. However, we need to see tangible improvements in converting that strength into consistent, positive earnings.
Frequently Asked Questions (FAQ)
Question 1: Why did MDB’s stock price react negatively despite solid revenue growth?
MDB’s stock reacted negatively primarily because of the massive earnings per share (EPS) miss. While revenue growth of 23.7% was strong, the reported loss of -$0.93 per share was far worse than analyst expectations of a positive $3.24 per share. Investors often prioritize profitability and earnings over just top-line growth, especially for high-valuation tech stocks.
Question 2: What is “stock-based compensation” and why does it impact MDB’s profitability so much?
Stock-based compensation refers to non-cash expenses where employees are granted equity (like stock options or restricted stock units) as part of their pay. While it doesn’t involve an immediate cash outflow, it’s a significant expense that reduces reported net income and EPS. For MDB, this quarter’s $140.4 million in stock-based compensation was a major factor in turning a strong gross profit into an operating loss.
Question 3: Is MongoDB Atlas still a strong growth driver for the company?
Absolutely. MongoDB Atlas remains the company’s primary growth engine and a key differentiator. The 23.7% year-over-year revenue growth is largely a testament to Atlas’s continued adoption across various cloud platforms. Its flexibility and developer-friendly nature continue to attract new customers and expand usage among existing ones, securing MDB’s position in the modern database market.
Question 4: What does MDB’s positive free cash flow mean, given its negative net income?
Positive free cash flow ($71.57 million this quarter) despite negative net income (a loss of -$47.05 million) is a crucial point. It means the company is actually generating more cash from its operations than it’s spending, after accounting for capital investments. The discrepancy is largely due to non-cash expenses like stock-based compensation and depreciation, which reduce net income but don’t deplete cash. This indicates underlying financial health, even if reported profits are currently negative.
Question 5: How does MDB’s valuation compare to its competitors in the database industry?
MDB generally trades at a premium valuation compared to many traditional database providers and even some cloud-native peers. Its forward P/E ratio of over 100 and Price-to-Sales ratio of 12.24 reflect investor expectations of continued high growth and future profitability. While its unique position and innovation justify some premium, the recent earnings miss highlights the risk associated with such a high valuation if execution falters.
Question 6: What should investors look for in MDB’s next earnings report?
In the next report, investors should prioritize any updated guidance on profitability and operating expenses. Look for signs that the company is gaining operating leverage, meaning revenue growth is outpacing the growth of operating costs, especially sales & marketing and R&D. We also need to see if stock-based compensation begins to normalize or if its impact on EPS lessens, indicating a clearer path to positive net income. You can find more details in MDB’s SEC 10-Q filings.