MDB - MongoDB soars 27% as analysts praise customer growth Atlas strength

2023-06-02 14:10:44 ET

MongoDB ( NASDAQ: MDB ) was 27% higher at midday Friday, making its biggest move in years after a beat-and-raise in its first-quarter earnings , spurred in large part by solid gains in managed databases and strong customer additions.

The results were strong enough that peer companies rose in sympathy Friday: Datadog ( DDOG ) +4.7% ; Cloudflare ( NET ) +2.2% ; Snowflake ( SNOW ) +6% .

Revenues rose 29% to more than $368M and earnings per share of $0.56 easily topped expectations for $0.19. And the company now forecasts much better than expected financials for the current quarter and full year, seeing second-quarter revenue at $388M-$392M (vs. $361M) and EPS of $0.43-$0.46 (vs. $0.14).

And along with the beat-and-raise, it's almost a given that MongoDB highlighted its positioning in the burgeoning field of artificial intelligence.

The update led Goldman Sachs to reiterate its Buy rating and raise its price target to $420 from $280, implying another 13% upside on top of Friday's sharp gains.

"With an expected boost to developer productivity from tools such as GitHub Copilot, we anticipate MongoDB will be a direct beneficiary of accelerating app development/deployment," analyst Kash Rangan said. "Sitting at the intersection of rising cloud adoption, the shift to NoSQL and now the emergence of Generative AI, we reiterate our view that MongoDB is poised to scale to $6B-$8B in revenue longer-term," Rangan said.

Morgan Stanley was positive as well. "Aside from the potential AI tailwinds, we were particularly encouraged by the strength in the core business with customer acquisition and improved consumption behavior leading to growing conviction in our call that new workload growth will start to outweigh cloud headwinds later this year and into 2024," analyst Keith Weiss said.

The report " pulls forward profitability by 12 months ," Seeking Alpha analyst and investing group leader Michael Wiggins de Oliveira said. While the cloud-based Atlas platform is still growing fast, "for me, the best insight into the appeal of its platform lies in its customer adoption curve," pointing to Atlas customers up 23% year-over-year.

For more detail, dig into Seeking Alpha's transcript of MongoDB's earnings call .

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