What happened

Shares of MongoDB (MDB 0.81%) were down 21% as of 10:14 a.m. ET on Thursday after the company reported results for the fiscal second quarter. 

Revenue growth for the quarter met expectations, but the company's outlook for profitability disappointed investors, sending the shares sharply lower.

It's been a tough year for tech stocks, especially for high price-to-sales software stocks. MongoDB shares are now down 52% year to date. 

So what

Revenue grew 53% over the year-ago quarter. Management was pleased with this amid a challenging macroeconomic backdrop. Most notably, Mongo added over 37,000 new customers, and management noted there has been no change in deal activity and sales cycles so far.

This level of growth is higher than the year-ago quarter's 44% year-over-year increase and is only a small deceleration over the previous quarter's 57% increase.  

Demand for Mongo's Atlas platform remains robust, with Atlas revenue clocking in with a 73% gain, although this is down from the 82% increase in the previous quarter.  

These numbers reflect a strong tailwind for cloud computing solutions. MongoDB continues to gain market share against legacy database-service providers like Oracle. Management emphasized this on the earnings call with a few examples of large corporations recently moving their applications over to Atlas. 

Now what

Mongo is experiencing some softness from the economic uncertainty, as noted by the revenue deceleration. But what got overlooked in the post-earnings mayhem was the increase in full-year revenue guidance.

The company now expects revenue to be between $1.196 billion and $1.206 billion, which is slightly up from the previous expectation of $1.172 billion to $1.192 billion. Management is forecasting demand for Atlas to remain strong through the end of the year.

The market was more concerned about the wider adjusted operating loss for the full year, which is going to cause volatility for expensive growth stocks. But management said it plans to continue investing responsibly toward the long-term opportunity. Overall, the drop after earnings appears to be an overreaction by the market.