What happened
Shares of database software company MongoDB (MDB +2.28%) pulled back on Thursday after the company reported financial results for the fourth quarter of its fiscal 2023. It appears investors are more concerned with forward guidance than completed financial results, leading to an 8% drop for MongoDB stock today, as of 12:45 p.m. ET.
So what
Last quarter, MongoDB's management said to expect Q4 revenue of $334 million to $337 million and to expect adjusted income from operations of $6 million to $8 million. In Q4, the company outperformed guidance on both counts. Its revenue was over $361 million, which was up 36% year over year. And its adjusted income from operations was $37.2 million, nearly triple what it was in the prior-year period.
NASDAQ: MDB
Key Data Points
Now what
Wall Street appears divided about MongoDB stock right now, with some raising price targets today while others were lowering price targets. On one hand, the company just beat expectations. On the other hand, management is guiding for significantly slower growth in its fiscal 2024.
In the first quarter of fiscal 2024, MongoDB's management believes it will generate revenue of $344 million to $348 million, which would be about 21% to 22% year-over-year growth. And for the full year, it expects to generate revenue of $1.48 billion to $1.51 billion, about 15% to 18% growth compared to its growth of 47% in fiscal 2023.
Some investors want to avoid MongDB stock now because of its slowing growth. However, there's another side to the argument. According to the company's management, it's still retaining and gaining customers. And it expects to continue hiring in the coming year, albeit at a slower pace, to accommodate its growing customer base.
MongoDB has a consumption-based revenue model and its customers aren't increasing their usage as much right now. Therefore, if it's simply being caused by macroeconomic conditions, then the company's revenue growth should be in a position to rebound when the economy improves, assuming it can continue to grow its customer base like it is now.
However, consumption growth has slowed more than MongoDB's management anticipated, which should give investors pause. It's something to keep in mind at least when researching this stock further.
