MongoDB has recently issued a disappointing annual financial outlook, citing considerable headwinds stemming from challenging year-over-year comparisons, as highlighted by Oppenheimer. The database software maker provided guidance for fiscal 2026, projecting adjusted earnings in the range of $2.44 to $2.62 per share, with revenue expectations set between $2.24 billion and $2.28 billion.
Analysts surveyed by FactSet had estimated earnings of $2.71 and revenue of $2.29 billion respectively. According to MongoDB's Chief Executive Dev Ittycheria, fiscal 2026 is viewed as a transition year as the company undertakes a strategic shift in its go-to-market efforts while simultaneously investing in infrastructure to harness the forthcoming opportunities presented by artificial intelligence (AI).
During an earnings conference call, as quoted in a FactSet transcript, Ittycheria emphasized the significance of these investments to the company’s future growth trajectory. While MongoDB reported a solid performance in the fourth quarter, market analysts from Oppenheimer, Ittai Kidron and George Iwanyc, suggested that the company's shares might remain 'range-bound' until year-over-year comparisons begin to ease, alongside a marked improvement in traction with AI initiatives.
Consequently, Oppenheimer revised its price target for MongoDB, reducing it to $330 from its previous target of $400, whilst maintaining an outperform rating on the stock. Following this announcement, shares of MongoDB experienced a steep decline, dropping 24% in trading on Thursday. The firm anticipates a downturn in full-year non-Atlas subscription sales, predicting a decline in the high-single digits driven by approximately a $50 million headwind impacting multiyear license revenue, as interim Chief Financial Officer Srdjan Tanjga conveyed during the earnings call.
MongoDB Atlas, recognized as a cloud database service, remains a pivotal area of focus for the company. Tanjga elaborated on the expected performance, noting, 'After two years of exceptionally strong multiyear performance, we foresee a shift in the mix of multiyear non-Atlas revenue that will not only fall short of the previous two years but also under historical trends.' This anticipated decline stems from the projected limited number of large non-Atlas customers capable of signing multiyear contracts in fiscal 2026. Furthermore, the analysts from Oppenheimer pointed out that MongoDB is contending with tough year-over-year comparisons after two successful years when multiple customers engaged in multiyear agreements for its Enterprise Advanced offering.
'This boosted revenue and profitability in 2024 and 2025, but also left a smaller pool of customers available for new business in 2026,' they noted in their analysis. The Voyage AI division is propelling the company’s research and development, although it necessitates extensive upfront investments, which may be impacting margins.
In their note, Kidron and Iwanyc conveyed, 'While we retain a positive outlook on the overarching platform and new product opportunities, we anticipate that investors will be looking for improved visibility regarding AI traction and progress in overcoming transition challenges in 2026.' Current stock price stands at $198.98, reflecting a change of -65.15 or a percent change of -24.67..