Revenue growth reached a multi-year high, and the full-year guidance was raised across the board, yet MongoDB (MDB.US) plummeted 14% in after-hours trading: Atlas's growth fell short of invisible expectations, triggering profit-taking.

After the U.S. stock market closed on Tuesday, document database company MongoDB (MDB.US) announced its second-quarter earnings for the fiscal year 2027, ending July 31. Despite achieving the highest revenue growth rate in years and raising its full-year performance guidance, MongoDB's stock price plummeted in after-hours trading. This drop was attributed to the slower-than-expected growth of its Atlas cloud database business, which failed to meet some investors' higher expectations, coupled with the fact that the stock had already surged significantly over the previous month, leaving little room for market tolerance. The earnings report showed that MongoDB's second-quarter revenue increased by 30% year-over-year to $771.8 million, surpassing analyst expectations of $735 million, marking the highest quarterly revenue growth rate for the company since fiscal year 2024. In terms of profitability, MongoDB reported a non-GAAP operating profit of $186 million in the second quarter, corresponding to an operating margin of 24%, compared to just 15% for the same period last year. The non-GAAP net profit was $163 million, translating to a diluted earnings per share of $1.90, up from $87 million or $1.00 per share a year prior, far exceeding the market expectation of $1.62. Cash flow performance was also strong. In the second quarter, MongoDB reported operational cash flow of $142 million and free cash flow of $138 million, nearly doubling from the same period last year. By the end of the quarter, the company held a total of $2.4 billion in cash, cash equivalents, and short-term investments. In terms of customer metrics, the total number of MongoDB customers reached 70,600 by the end of the second quarter, with a net increase of 2,900 customers in the quarter, setting a new record. The number of customers generating at least $100,000 in annual recurring revenue (ARR) approached 3,000, a year-over-year increase of 17%. The overall net ARR expansion rate rose to 122%, up from 119% in the same period last year and 121% in the previous quarter. Among high-value customers using Atlas, the proportion of customers utilizing two or more platform features increased from 42% in the same quarter last year to 48%, primarily driven by the adoption of vector search and text search. Atlas and Enterprise Advanced: Two Engines Powering Simultaneous Growth As MongoDB's core cloud database product, Atlas showed a year-over-year revenue growth of approximately 29% in the second quarter, maintaining this growth rate for the fifth consecutive quarter. The revenue growth from Atlas reached a record $127 million in this quarter, surpassing the company's internal guidance by about 300 basis points. Chief Financial Officer Mike Berry stated that growth in Atlas was largely driven by large enterprise customers in North America, particularly those with annual ARR exceeding $100,000. Currently, Atlas accounts for about 74% of total revenue, and the company expects this percentage to continue rising in the future. Berry mentioned during the earnings call: "Looking ahead, we remain optimistic about strong growth from large enterprise customers, particularly in the U.S." He also noted that while AI-related demand is still a relatively minor contributor, the momentum is encouraging. Revenue from Enterprise Advanced and other businesses increased by 36% year-over-year in the second quarter, marking the strongest quarterly performance in three years. On an ARR basis, Enterprise Advanced and other business ARR grew by approximately 11% year-over-year. MongoDB emphasized that the growth of Enterprise Advanced has not come at the expense of Atlas, but rather reflects a deployment choice of "and, not an or." Some customers use both to meet needs such as hybrid cloud, regulatory compliance, and operational resilience. MongoDB provided an example of a major U.S. bank using Enterprise Advanced across more than 100 production applications, extending into generative AI and semantic search scenarios; additionally, the British insurance company Nationwide simultaneously employs Enterprise Advanced and Atlas to support its speed layer applications, processing over 24 million application logins weekly. Progress in AI Business: Increased Adoption, But Small Revenue Contribution Although AI has not yet become a major source of revenue, MongoDB's management highlighted the adoption progress of AI-related products during the earnings call. Atlas Vector Search and the Voyage AI embedding and re-ranking models continue to see customer adoption. The number of Voyage customers nearly doubled quarter-over-quarter for the second consecutive quarter, with most new Voyage customers previously having no prior relationship with MongoDB. Coding agents have become an important source of referral traffic for Voyage. MongoDB President and CEO CJ Desai noted that coding agents such as Anthropic's Claude and OpenAI's Codex are bringing significant referral traffic to Voyage. MongoDB also launched a managed-model context protocol server, enabling developers and AI agents to connect with MongoDB through tools like Claude Code, Codex, Grok Build, Cursor, and Devin. In terms of AI customer cases, the Financial Times in the UK uses Atlas Vector Search and Voyage models to support AI-driven content discovery, processing over 100,000 queries daily, reducing retrieval costs and shrinking manual indexing monitoring work from weeks to a single day. The AI meeting assistant platform Fireflies adopted Atlas from the outset and currently operates over 40 microservices on this platform. Legal tech company Eve utilizes MongoDB's embedding and re-ranking capabilities to retrieve evidence from case files in support of its AI products. Desai pointed out that the most favored AI application scenarios are often customer-facing, large-scale production applications rather than smaller internal intelligent assistants. For instance, scenarios include semantic search and chat tools used by wealth management advisors, as well as employee knowledge retrieval. Full-Year Guidance Raised: Revenue, Profit, and Atlas Growth Adjusted Upward Looking ahead, MongoDB raised its full-year performance guidance for fiscal year 2027. The company adjusted its full-year revenue guidance from the previous range of $2.92 billion to $2.96 billion to $2.99 billion to $3.03 billion, with a midpoint of $3.01 billion surpassing the analyst consensus of $2.96 billion. The adjusted full-year earnings per share guidance was raised from a previous range of $5.95 to $6.14 to $6.39 to $6.58, with a midpoint of $6.485 also exceeding the market consensus of $6.13. The company anticipates a full-year revenue growth of 21% to 23% for fiscal year 2027. Among this, Atlas revenue is expected to grow approximately 27% for the year, which is a 300 basis point increase compared to the previous outlook; Enterprise Advanced and other revenue is expected to grow approximately 11%, above the previously guided single-digit growth. In terms of operating margin, the company expects an expansion of about 250 basis points for the year while continuing to increase investments in AI, product development, market expansion capabilities, and developer ecosystem building. For the third quarter, MongoDB expects revenue of $756 million to $761 million, representing a year-over-year growth of 20% to 21%; non-GAAP operating profit is expected to be between $152 million and $156 million; and adjusted earnings per share is projected to be between $1.57 and $1.61. Despite the second-quarter results and full-year guidance exceeding market consensus, MongoDB's stock price reacted negatively. During regular trading on Tuesday, the stock had already fallen 4.2%, closing at $434.21; it further dropped over 14% in after-hours trading. In August, MongoDB's stock price rose approximately 34%, and after the significant increase, market expectations for the earnings report were pushed to very high levels. Mizuho Securities analyst Jordan Klein had previously stated in a report that large hedge funds privately anticipated that Atlas revenue growth would reach 30.5% to 31%, while the actual growth was around 29%, falling short of these more optimistic expectations. Klein wrote that after the recent stock price increase, the stock's "margin for error is minimal."