MongoDB (MDB)

Database platform company MongoDB (NASDAQ:MDB) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 23.7% year on year to $591.4 million. Guidance for next quarter’s revenue was better than expected at $589.5 million at the midpoint, 1.2% above analysts’ estimates. Its non-GAAP profit of $1 per share was 52.4% above analysts’ consensus estimates.

Company Overview

Named after "humongous database," reflecting its ability to handle massive data loads, MongoDB (NASDAQ:MDB) provides a flexible document-based database platform that helps developers build, deploy, and maintain modern applications more efficiently.

Data is the lifeblood of the internet and software in general, and the amount of data created is accelerating. As a result, the importance of storing the data in scalable and efficient formats continues to rise, especially as its diversity and associated use cases expand from analyzing simple, structured datasets to high-scale processing of unstructured data such as images, audio, and video.

MongoDB competes with established legacy database providers like Oracle (NYSE:ORCL), Microsoft (NASDAQ:MSFT), and IBM (NYSE:IBM), as well as cloud providers offering database services including Amazon Web Services (NASDAQ:AMZN), Google Cloud (NASDAQ:GOOGL), and Microsoft Azure. Other competitors include specialized database vendors like Couchbase (NASDAQ:BASE) and Redis (NASDAQ:REDI).

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, MongoDB grew its sales at a solid 27% compounded annual growth rate. Its growth beat the average software company and shows its offerings resonate with customers.

This quarter, MongoDB reported robust year-on-year revenue growth of 23.7%, and its $591.4 million of revenue topped Wall Street estimates by 6.8%. Company management is currently guiding for a 11.4% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 10.6% over the next 12 months, a deceleration versus the last three years. Still, this projection is above average for the sector and suggests the market is baking in some success for its newer products and services.

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

MongoDB’s billings punched in at $581.5 million in Q2, and over the last four quarters, its growth was impressive as it averaged 24.9% year-on-year increases. This alternate topline metric grew faster than total sales, meaning the company collects cash upfront and then recognizes the revenue over the length of its contracts - a boost for its liquidity and future revenue prospects.

MongoDB reported 59,900 customers at the end of the quarter, a sequential increase of 2,800. That’s roughly in line with what we observed last quarter and quite a bit above what we’ve seen over the previous year, confirming that the company is maintaining its sales momentum.

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

It’s relatively expensive for MongoDB to acquire new customers as its CAC payback period checked in at 384.5 months this quarter. The company’s slow recovery of its sales and marketing expenses indicates it operates in a highly competitive market and must invest to stand out, even if the return on that investment is low.

For software companies like MongoDB, gross profit tells us how much money remains after paying for the base cost of products and services (typically servers, licenses, and certain personnel). These costs are usually low as a percentage of revenue, explaining why software is more lucrative than other sectors.

MongoDB’s gross margin is better than the broader software industry and signals it has solid unit economics and competitive products. As you can see below, it averaged a decent 72.3% gross margin over the last year. That means for every $100 in revenue, roughly $72.33 was left to spend on selling, marketing, and R&D.

MongoDB produced a 71% gross profit margin in Q2, marking a 2.2 percentage point decrease from 73.2% in the same quarter last year. MongoDB’s full-year margin has also been trending down over the past 12 months, decreasing by 1.7 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs.

MongoDB’s expensive cost structure has contributed to an average operating margin of negative 7.5% over the last year. Unprofitable, high-growth software companies require extra attention because they spend heaps of money to capture market share. As seen in its fast historical revenue growth, this strategy seems to have worked so far, but it’s unclear what would happen if MongoDB reeled back its investments. Wall Street seems to be optimistic about its growth, but we have some doubts.

Over the last year, MongoDB’s expanding sales gave it operating leverage as its margin rose by 8.3 percentage points. Still, it will take much more for the company to reach long-term profitability.

In Q2, MongoDB generated a negative 11% operating margin.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

MongoDB has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 10.5% over the last year, slightly better than the broader software sector.

MongoDB’s free cash flow clocked in at $69.88 million in Q2, equivalent to a 11.8% margin. This result was good as its margin was 12.7 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

Over the next year, analysts predict MongoDB’s cash conversion will slightly fall. Their consensus estimates imply its free cash flow margin of 10.5% for the last 12 months will decrease to 9.1%.

Businesses that maintain a cash surplus face reduced bankruptcy risk.

MongoDB is a well-capitalized company with $2.35 billion of cash and $35.74 million of debt on its balance sheet. This $2.31 billion net cash position is 9.6% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We were impressed by how significantly MongoDB blew past analysts’ billings expectations this quarter. We were also glad its EPS guidance for next quarter trumped Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 23.2% to $264.14 immediately following the results.

Updated: November 16, 2025 at 9:01 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in MongoDB.

MongoDB is a fine business. To kick things off, its revenue growth was exceptional over the last five years. And while its operating margins are low compared to other software companies, its surging ARR shows its fundamentals and revenue predictability are improving.

MongoDB’s price-to-sales ratio based on the next 12 months is 11.2x. Looking at the software landscape right now, MongoDB trades at a pretty interesting price. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $368.69 on the company (compared to the current share price of $355.37), implying they see 3.7% upside in buying MongoDB in the short term.