MongoDB (NASDAQ: MDB) saw its shares plunge 13% in Wednesday trading, settling near $375.72, even after the database company reported fiscal second-quarter results that topped analyst expectations. The sharp selloff underscores a market fixated on the growth trajectory of its flagship Atlas cloud database, which remained unchanged for the fifth consecutive quarter.
Atlas growth disappoints despite beat
Revenue from Atlas, MongoDB's multi-cloud database-as-a-service offering, grew 29% year over year in the quarter, exceeding the company's own guidance of 26%. However, investors had been hoping for an acceleration to 30% or higher, especially after the stock had rallied 29% in the month leading up to the earnings release. Morgan Stanley analysts led by Sanjit Singh noted that the flat growth rate was the primary concern in an otherwise solid report.
The lack of acceleration in Atlas, which now accounts for 73% of total revenue and has surpassed a $2 billion run rate, suggests that MongoDB may be facing maturation in its core cloud business. This has left some investors questioning whether the company can reignite faster expansion in the near term.
Strong Q2 numbers and raised guidance
Despite the market's negative reaction, MongoDB's financial performance was robust. Total revenue for the quarter reached $771.8 million, up 30% from the same period last year and well above the FactSet consensus of $735 million. CEO CJ Desai highlighted the 30% growth as the company's highest in several years, alongside continued profitability.
MongoDB also raised its full-year fiscal 2027 revenue outlook to a range of $3.0 billion to $3.0 billion, up from its prior forecast of $2.9 billion to $3.0 billion. Adjusted earnings per share guidance was increased to $6.39–$6.58, compared with the previous $5.95–$6.14. The company added a record 2,900 net new customers during the quarter, and its Voyage customer count nearly doubled sequentially.
Non-Atlas on-premise revenue grew 36% year over year, and operating margins reached 24% in the quarter, reflecting improved operational efficiency.
Analysts remain bullish on AI potential
Despite the selloff, several Wall Street firms raised their price targets, citing MongoDB's positioning in AI-driven application development. Morgan Stanley lifted its target to $430 from $380, while Cantor increased its to $540 from $434.21. Canaccord raised its to $480 from $400, with analyst David Hynes noting that MongoDB now has two durable growth engines where previously only one was evident.
Rosenblatt maintained a Buy rating and raised its target to $445 from $395. The firm pointed to Atlas's scale and the company's expanding customer base as key positives. MongoDB's net revenue retention rate stood at 122%, and 48% of customers spending at least $100,000 annually now use two or more MongoDB products, up from 42% a year earlier.
Analysts acknowledge that AI's direct revenue contribution remains small but see the pipeline shifting from narrative to observable data. Canaccord expects enterprise agreement growth expectations to be revised at MongoDB's upcoming investor day.
Outlook and investor considerations
MongoDB projects Atlas revenue to grow 27% in fiscal 2027, though growth in the second half is expected to moderate from first-half levels. This guidance, while solid, may not satisfy investors seeking a return to faster expansion.
The wide dispersion in price targets—ranging from $380 to $540—reflects the ongoing debate over Atlas's growth ceiling. As the company prepares for its investor day, market participants will be watching for any signals on new product catalysts or strategic initiatives that could reaccelerate growth.
For context on broader market movements, investors might also consider how other tech names are faring, such as Autodesk's recent slip on soft guidance or CoreWeave's bearish chart signals. Meanwhile, Nio's shares hit a 7-month low despite strong revenue growth, illustrating that market reactions can diverge from fundamentals.
This article is for informational purposes only and does not constitute financial advice.
