MongoDB: Revenue beats expectations | The Motley Fool

MongoDB (MDB 4.40%)a leading provider of modern database platforms, published its financial results for the second quarter of fiscal year 2025 on August 29, showing strong revenue results.

The company reported revenue of $478.1 million, beating the prior forecast of $460.0 million to $464.0 million. Non-GAAP (generally accepted accounting principles) income was $52.5 million, well above the forecast range of $35.0 million to $38.0 million.

Still, the company reported a wider net loss of $54.5 million, compared to $37.6 million in the same quarter last year. Overall, MongoDB’s quarter reflected solid revenue growth but also highlighted rising costs.

Source: SEC filings. Expectations based on management guidance as reported in the 2024-05-30 earnings call. PPT = percentage points.

Company overview and recent events

MongoDB is known for its innovative database solutions that integrate both relational and non-relational database capabilities. The company’s core product, a cloud-based database service called MongoDB Atlas, a cloud database service, has been a key driver of growth. More recently, MongoDB has focused on expanding its presence in the artificial intelligence (AI) space with products such as the MongoDB AI Applications Program (MAAP) and MongoDB Atlas Vector Search, which are designed to increase its technological advantage and product differentiation.

Key factors in MongoDB’s success include its ability to differentiate its product by combining the best of both relational and non-relational databases, its ability to operate in multi-cloud environments, and its strategic investment in AI capabilities. The company is also focused on deepening customer relationships and expanding its existing customer base, which now includes more than 50,700 customers.

Quarterly highlights

In Q2, MongoDB achieved several significant milestones, but also faced some challenges:

The company’s revenue grew 13% year over year to $478.1 million. MongoDB Atlas was a significant contributor, representing 71% of total revenue and growing 27% year over year. MongoDB also announced the general availability of its MAAP, enhancing its AI capabilities in partnership with leading cloud providers such as Amazon Network Services (AWS) AlphabetGoogle Cloud and Microsoft Azure. Additionally, the company’s Atlas Vector Search was named the most loved and second most used vector database for the second year in a row.

Despite these achievements, MongoDB’s net loss widened to $54.5 million from $37.6 million the previous year, due to rising operating expenses. Sales and marketing expenses rose to $221.5 million from $195.9 million a year earlier, and general and administrative expenses rose to $50.8 million from $46.1 million. Gross margins also fell slightly to 73% from 75% year over year.

The large difference between GAAP and non-GAAP results is the result of MongoDB’s extensive use of stock-based compensation instead of cash compensation expense. Stock-based compensation accounted for $123.8 million of net income, compared to $125.8 million in the same period a year earlier.

MongoDB’s customer base continued to grow, to more than 50,700 customers by quarter-end, up from 45,000 a year earlier. The number of customers with annual recurring revenue (ARR) above $100,000 increased to 2,189, reflecting deeper customer engagement.

The company has also faced challenges, including increased competition from open-source alternatives and cloud giants like Amazon, Alphabet, and Microsoft. This competition has caused a decline in market share in database usage, although the company continues to focus on its strategic initiatives to counteract these pressures.

Perspectives and tips for the future

Looking ahead, MongoDB management provided optimistic guidance for the third quarter and full year fiscal 2025. For the third quarter, management expects revenue in the range of $493.0 million to $497.0 million and non-GAAP income in the range of $57.0 million to $60.0 million. Non-GAAP net income per share is expected to be in the range of $0.65 to $0.68.

For the full fiscal year, MongoDB raised its revenue guidance to a range of $1.92 billion to $1.93 billion, compared to the previous range of $1.88 billion to $1.90 billion. Non-GAAP revenue guidance was also raised to a range of $187.0 million to $195.0 million, compared to the previous range of $168.0 million to $183.0 million. In addition, non-GAAP net income per share was increased to a range of $2.33 to $2.47, from $2.15 to $2.30 in the full-year guidance for the last quarter.

Investors should monitor MongoDB’s continued investment in AI and data management technologies, as well as its ability to manage rising costs while maintaining growth. The company’s updated guidance reflects its confidence in maintaining revenue growth despite competitive pressures and cost containment.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. JesterAI is a Foolish AI powered by a variety of large language models (LLMs) and Motley Fool’s proprietary systems. All articles published by JesterAI are peer-reviewed by our editorial team, and The Motley Fool is ultimately responsible for the content of this article. JesterAI cannot own stocks, so it has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and MongoDB. The Motley Fool recommends the following options: long January 2026 $395 call options on Microsoft and short January 2026 $405 call options on Microsoft. The Motley Fool has a disclosure policy.