The stock market hasn't had a good week to follow the Memorial Day holiday, but investors seemed to get a little bit more comfortable with market conditions on Thursday. By the close, the Nasdaq Composite (^IXIC 1.59%) was up more than 2.5%, helping to reverse some of the losses from earlier in the week.
Much of the Nasdaq's success in 2020 and 2021 as well as its bear market drop in 2022 has come from software-as-a-service (SaaS) stocks. Fears of higher interest rates and potential slowing growth have weighed on investor sentiment among the group, with stocks often losing ground even after promising financial reports. However, SaaS stocks reasserted their strength on Thursday, and MongoDB (MDB 7.69%) was the primary contributor to the upsurge in the space.
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MongoDB makes its move
Shares of MongoDB climbed more than 18% on Thursday. The cloud database platform specialist reported first-quarter results for the period ending April 30 that reassured shareholders that its growth story is still intact.
MongoDB's numbers were extremely strong. Overall revenue rose 57% year over year to $285 million. Growth from its cloud-based Atlas platform was even stronger, as it saw an 82% rise in sales. Atlas now makes up fully 60% of total revenue for the company, showing the success of its cloud transition. Adjusted net income more than tripled to $15.2 million, producing earnings of $0.20 per share.
More customers kept flocking to MongoDB's platform. The company cited 35,200 customers at the end of the quarter, up by 8,400 in just the past 12 months. Of those, 1,379 clients generated at least $100,000 in annual revenue for MongoDB, and that number's up more than 30% from where it was a year ago.
Moreover, MongoDB sees the good times continuing. For the full 2023 fiscal year, MongoDB sees revenue coming in at $1.172 billion to $1.192 billion, with adjusted losses of between $0.16 and $0.31 per share. That would represent revenue growth of around 35%, and with the company edging closer to profitability, investors are getting more and more excited about MongoDB's future.
Other SaaS stocks on the rise
MongoDB spurred interest in SaaS stocks across the spectrum. Beyond the Nasdaq, UiPath (PATH 3.49%) also gained ground, rising 16% after a favorable quarterly financial report.
UiPath's fiscal first-quarter results for the period ending April 30 showed considerable growth as well. Revenue rose 32% year over year to $245 million, with annualized recurring revenue soaring 50% to approach the $1 billion mark. UiPath boasted a dollar-based net retention rate of 138%, showing that existing clients are making better use of the company's automation platform. The company is still losing money, but those losses narrowed considerably from year-ago levels.
Moreover, UiPath expects the rest of the year to go well. Its full-year projections for fiscal 2023 include sales of between $1.085 billion and $1.09 billion, with annualized recurring revenue jumping above $1.22 billion by January 2023. Best of all, the company sees itself producing positive operating income on an adjusted basis for the year, and that would be an important milestone in the tech stock's history.
Given how badly SaaS stocks have fallen in recent months, it's good to see MongoDB and UiPath among the winners in today's stock market. Clearly, most of the stocks in this sector have a long way to go before they can come close to recovering all of their losses, and there's no guarantee that all of them will do so. However, investors like what they're seeing from MongoDB and UiPath, and both businesses have a ton of potential to generate gains in the long haul.
