MongoDB, the renowned database software maker, recently reported its fiscal second-quarter results that exceeded market forecasts, leading to an upward revision of its full-year outlook. According to RBC Capital Markets, the company has raised its adjusted earnings guidance to a range of $2.33 to $2.47 per share for fiscal 2025, up from its prior estimate of $2.15 to $2.30.
This significant adjustment reflects not only MongoDB's robust performance but also an anticipated revenue increase, projecting figures between $1.92 billion and $1.93 billion for the fiscal year, compared to the previous range of $1.88 billion to $1.9 billion. Current consensus from Capital IQ indicates an expectation of normalized earnings per share (EPS) of $2.48 alongside revenue estimates of $1.93 billion. The improved outlook stems primarily from a notably "stronger pipeline" for the company's Enterprise Advanced business in the latter half of the fiscal year, as outlined by RBC in a client note this past Friday.
In the subsequent earnings call with analysts, Chief Financial Officer Michael Gordon indicated that the firm is "slightly increasing" its Enterprise Advanced assumptions for the remainder of the fiscal year to better reflect the segment's robust pipeline progress. The report highlights the fact that the new guidance for fiscal 2025 surpasses MongoDB's original outlook.
RBC emphasized that this adjustment should not be interpreted merely as higher expectations for the second half of the year but rather as a reflection of a strong performance during the second quarter. During the three-month period concluding in July, MongoDB's adjusted EPS saw a decline to $0.70 from $0.93 in the previous year, yet it surpassed the Wall Street consensus estimate of $0.48.
Additionally, the company's revenue increased by 13% year-over-year, amounting to $478.1 million, which also exceeded analysts' expectations of $464.2 million. In reaction to these results, MongoDB's stock surged by 15% during trading on Friday. The RBC report also indicates that the growth in workload consumption from existing customers improved beyond the expectations set by senior management.
Notably, business generation and sales efficiency showcased a positive shift when compared to the earlier consumption growth challenges faced in the first quarter, which had been worsened by shifts in sales compensation structures. MongoDB's cloud-based developer data platform, Atlas, reported a revenue increase of 27% year-over-year for the second quarter, representing a commendable outcome considering the challenges posed by reductions in unused credits.
Nonetheless, it was noted that the consumption growth for the Atlas platform still lags behind the initial forecasts established at the beginning of the fiscal year, as stated by Gordon during the earnings call. RBC has maintained its outperform rating on MongoDB's stock and reaffirmed the price target at $350.
They concluded their note by stating that the results from the second quarter were favorable and that fiscal 2025 appears to be back on course..