What Happened: Shares of database software company MongoDB (NASDAQ:MDB) jumped 5.4% in the morning session following the earnings announcement from another prominent cloud provider, Datadog (NASDAQ:DDOG). Importantly, both Datadog and MongoDB feature consumption-based models where customers are not locked into long-term contracts but instead can scale their consumption of the products and features almost real-time. This means that during good times when demand is high, revenue can grow faster than if the company goes to market with a contract model.
On the other hand though, if times are tough or if competition is increasing, customers can scale down usage and revenue will see headwinds faster than if the company goes to market with a contract model.
Datadog reported third-quarter earnings that blew past Wall Street's expectations, highlighting the growing demand. It also shows that enterprise customers are not pulling back on spend due to reasons such as cost cuts or workforce reductions. Notably, Datadog recorded a significant improvement in new large contract wins, illustrating that even some of the largest corporations are still early in their cloud adoption journey.
Is now the time to buy MongoDB? Find out by reading the original article on StockStory.
What is the market telling us: MongoDB's shares are very volatile and over the last year have had 38 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago, when the company gained 16.5% on the news that the company reported a "beat and raise" quarter. First quarter results beat analysts' expectations for revenue, gross margin, free cash flow, and earnings per share. Guidance was also strong. Revenue guidance for the next quarter exceeded expectations. The full year guidance was raised and also came in ahead of Consensus. The profitability guidance was similarly impressive as operating income guidance for the next quarter and full year came in ahead. The company touched on the current AI trend noting that "...MongoDB's developer data platform is well positioned to benefit from the next wave of AI applications in the years to come". Overall it was a strong quarter for the company with solid results and impressive guidance.
MongoDB is up 99.2% since the beginning of the year, but at $378.64 per share it is still trading 12.2% below its 52-week high of $431.21 from July 2023. Investors who bought $1,000 worth of MongoDB's shares 5 years ago would now be looking at an investment worth $4,628.
