Like many growth stocks, MongoDB's (MDB -0.72%) shares have been hit hard this year. Fears of inflation -- and the uncertain effectiveness of the Federal Reserve's moves to tame it -- have made investors less willing to pay a premium for rapidly expanding businesses. That led to a brutal marketwide sell-off, and MongoDB's stock was caught up in the carnage.
But after shedding nearly 60% of its value by late last month, the software company's stock price has rebounded sharply in recent days. Is this a sign it's a good time to buy this beaten-down tech stock?
MongoDB's shares surged on Thursday after the database software leader delivered a surprise profit in its fiscal 2023 first quarter, which ended on April 30.
Management reported that revenue soared 57% year over year to $285.4 million. The gains were fueled by the torrid growth of its popular cloud data platform, Atlas. Revenue for this key business increased by a stunning 82%.
"MongoDB enables developers to build mission-critical applications that drive better user experiences, enable new capabilities, and improve operational efficiency," CEO Dev Ittycheria said in a press release.
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Better still, the cloud software provider is becoming more profitable as it scales its operations. Its adjusted gross margin improved to 75%, up from 72% in the prior-year quarter. That helped its adjusted operating income grow more than sixfold to $17.5 million.
All told, MongoDB's adjusted net income checked in at $15.2 million, or $0.20 per share, compared to a loss of $3.9 million, or $0.06 per share, in the year-ago period. This improved profitability was a pleasant surprise to investors. Analysts had expected the company to post a loss of $0.09 per share.
So, is MongoDB's stock a buy today?
Partnerships with major cloud computing platforms are helping to drive the database provider's expansion.
In March, MongoDB expanded its collaboration with Amazon.com (AMZN -1.67%). The two companies agreed to work together to help other companies shift their database workloads to the cloud. MongoDB and Amazon Web Services are now integrating some of their sales, marketing, and developer training efforts.
And in April, MongoDB launched an intriguing service on Alphabet's (GOOG -2.09%) (GOOGL -2.07%) Google Cloud. The pay-as-you-go subscription offering enables developers to build and scale their applications with MongoDB's Atlas platform on Google's cloud infrastructure more easily and cost-effectively.
These deals show that the major cloud platforms are embracing MongoDB as a key service provider. Partnering, rather than competing, with the database software leader appears to be their current strategy. Doing so should allow Amazon and Alphabet to pare back spending on unnecessary research and development costs, while still earning platform fees from MongoDB. It's a wise move and one that bodes well for MongoDB's growth prospects.
Add it all up and the message is clear: MongoDB is doing an outstanding job of satisfying its customers' database needs. That's a great position to be in, as more information flows to the cloud every day -- and more business processes are built upon this ever-growing stream of data.
It also makes MongoDB's stock a great buy today.
