What Happened?

Shares of database software company MongoDB (MDB) jumped 17.5% in the afternoon session after fellow data analytics software provider Snowflake reported impressive third-quarter results, which surpassed analysts' revenue and earnings expectations. Customer retention also normalized, suggesting some of the demand headwinds that hindered the growth of some enterprise software businesses are fading, especially those with more exposure to small and mid-sized businesses. The improved trends are also supported by Snowflake's strong sales outlook, which exceeded consensus estimates. Overall, the results revealed signs of improved demand within the data analytics segment.

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What The Market Is Telling Us

MongoDB’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for MongoDB and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 3 months ago when the stock gained 17.9% on the news that the company reported a "beat and raise" quarter. Second quarter results blew past analysts' billing expectations. The top-line benefitted from the strong performance of its Atlas cloud offering, which recorded 27% y/y sales growth while driving 71% of overall revenue. Next quarter's revenue guidance also came in higher than Wall Street's estimates. 

While AI isn't yet a significant revenue driver for the business, MDB launched the MongoDB AI Applications Program (MAAP) to accelerate demand for its AI solutions. That the company raised full year guidance across the board is icing on the cake. However, the quarter wasn't without challenges, as the business observed light deceleration in the consumption of existing workloads due to macro headwinds. Overall, this was a great quarter.

MongoDB is down 17.1% since the beginning of the year, and at $318.42 per share, it is trading 36.4% below its 52-week high of $500.90 from February 2024. Investors who bought $1,000 worth of MongoDB’s shares 5 years ago would now be looking at an investment worth $2,175.

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