MongoDB Affirms Outlook and Accelerates Stock Price Reversal
MongoDB's (NASDAQ: MDB) stock price surged following its FQ1 earnings release, as the results and guidance affirmed the analysts’ outlook, prompting them to lift their stock price targets. After a year of waiting for the second wave of AI, the application wave is gaining traction.
The results include a multi-year high in client acquisitions, up 4.75% sequentially and 16% year-over-year (YOY), and strength in all operating metrics that point to accelerating business momentum in 2025.
To be fair, the analysts’ response is mixed. The first dozen or so revisions tracked by MarketBeat include a single price target reduction. However, the reduction is to $290, above the consensus, which is forecasting a 25% upside in addition to the 15% price surge sparked by the earnings news.
Other mitigating factors include an overwhelmingly bullish response in the remainder of the revisions, including several reiterated price targets, numerous price target increases, and an upgrade to Buy from Hold by Moness, Crespi & Hart.
They see this stock trading near $295, and the trends indicate a move to the high-end range. They include increasing coverage, firming sentiment verging on a Strong Buy, and an increasing price target with the high end about 90% above the early June price action.
MongoDB Accelerates Its Share Repurchase Program
MongoDB’s share repurchase program is a critical factor driving the stock price reversal. The company initiated a repurchase program earlier in 2025, driven by growth and improving profitability, and is now accelerating the plan. The company reduced its share count by 4.35% sequentially in Q1 and added another $800 million to the remaining allotment.
The resulting total is approximately 6% of the market cap and is likely to be sustained as the years progress. The share count is up YOY at the end of Q1 but should begin to fall by year’s end or in early F2027.
The company’s cash flow is rapidly improving despite the GAAP losses. GAAP losses are primarily non-cash in nature; they are quickly narrowing, and the adjusted profits are growing. The net result in FQ1 2026 is that adjusted profits more than doubled and free cash flow increased by 60%, sustaining balance sheet health and improving shareholder equity.
Balance sheet highlights include increased cash, equivalents, current, and total assets, compounded by reduced liabilities. The company remains net cash with very low liabilities, and equity is rising, up 9% for the quarter.
MongoDB Outperforms in Q1 and Raises Guidance for 2025
MongoDB had a strong first quarter. The company’s $549.01 million in net revenue is up 21.9% YOY and outpaced the consensus estimate by 400 basis points. Strength was evident in subscriptions, which increased by 22%, and services, which saw a 28% gain.
Atlas, the fully-managed cloud database service operating on a database-as-a-service model, also excelled, experiencing a 26% growth and representing 72% of the revenue.
There was some margin contraction at the gross level, but far less than expected, and SG&A held steady, leaving the earnings up nearly 100% and 5000 basis points above MarketBeat’s reported consensus. Likewise, guidance is strong. The company set strong Q2 targets and raised its outlook for the year, and is likely to improve the outlook again at the end of the next quarter. The rise of AI applications is in its earliest phases and gaining momentum daily.
Institutional and short-selling data suggest the recovery in this technology stock is real. The short interest dropped noticeably to long-term lows in January 2025 and is trending at those levels now. Conversely, the institutions, which own approximately 90% of the stock, sold in Q1 but reverted to buying in Q2, providing a strong tailwind for the market. Quarter-to-date activity in early June had buyers outpacing sellers by nearly three to one.
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