MongoDB's (MDB) execution challenges over the last few quarters have reduced confidence in significant margin improvement and revenue growth beyond fiscal year 2026, KeyBanc Capital Markets said in a note Thursday.

Analysts, including Eric Heath, said that while the company's fiscal Q4 results were "fairly strong," there were positive trends with Atlas, and some factors explain the expected drop in non-Atlas areas.

However, its outlook points to a larger-than-expected slowdown in revenue and margin decline for fiscal year 2026. The analysts added they have concerns about MongoDB's differentiation in Generative Artificial Intelligence, competition with cloud service providers and relational databases, its "run anywhere" strategy with lower annual recurring revenue growth in non-Atlas, and the level of investment needed to increase market and developer awareness.

The analysts said the company's revenue guidance fell short of expectations due to lower-than-expected growth in its non-Atlas segment and a weaker renewal base for multi-year deals. Management anticipates slower growth in non-Atlas revenue and expects Atlas to grow at a slightly lower rate than previously forecasted. The earnings guidance reflects weaker-than-expected margins, which management attributes to a combination of lower non-Atlas revenue, significant investments in research and development, and marketing efforts to boost awareness.

The analysts said they expect fiscal Q1 revenue of $524 million and $529 million, which is in line with expectations. The earnings before interest and taxes guidance is between $54 million and $58 million, which is higher than the expected $52 million. The earnings per share guidance is between $0.63 and $0.67, beating the expected $0.02.

KeyBanc downgraded MongoDB to sector weight from overweight and removed its $395 price target.

Shares of the company fell past 20% in recent trading activity.

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