Analysts Weigh In On MongoDB's Slowing Growth

Mongodb Inc MDB shares sank more than 9% on Thursday after the company reported a mixed second quarter on Wednesday afternoon.

MongoDB’s adjusted EPS in the quarter was a loss of 26 cents, missing consensus estimates by 2 cents. Revenue for the quarter was $99.37, beating analyst expectations by $7.67 million.

MongoDB said subscription revenue was up 71% and services revenue was up 15% compared to a year ago. The company guided for a third-quarter non-GAAP EPS loss of between 27 cents and 29 cents and third-quarter revenue of between $98 million and $100 million.

Several analysts have weighed in on MongoDB since the report. Here’s a sampling of what they had to say.

Growth Deceleration

JMP Securities analyst Patrick Walravens said the weakness is due to revenue growth deceleration from 78% in the first quarter to just 67% in the second quarter.

“The biggest positive in this remarkable story is MongoDB Atlas, the cloud-hosted offering that was started three years ago, now represents ~$150M in revenue and grew a staggering 243% year over year, while the area investors are likely to have questions about it the big deceleration in the Q3 revenue guidance,” Walravens wrote in a note.

He attributes the third-quarter slowdown to a conservative forecast, tougher comps and the timing of customer transitions from mLab to Atlas.

Short Squeeze Potential

Barclays analyst Raimo Lenschow said solid second-quarter numbers and conservative guidance have MongoDG shares set up for a short squeeze.

“Eventually this will create a short squeeze, which should help shares,” Lenschow wrote.

Leschow said the rise of Atlas is creating a more positive revenue mix effect that should help boost growth in coming years.

Early Stages

KeyBanc analyst Brent Bracelin said 67% revenue growth and a $400 million run rate make for an impressive quarter from MongoDB.

“We raise estimates on increasing confidence in the sustainability of high growth into the 2H despite tough compares,” Bracelin wrote.

Bracelin said MongoDB remains in the early stages of monetizing a database market worth more than $60 billion.

Ratings And Price Targets

• JMP has a Market Perform rating and no target.
• Barclays has an Overweight rating and $179 target.
• KeyBanc has an Overweight rating and $188 target.

The stock traded down 8% to $145.83 at time of publication.

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