MongoDB Inc. (MDB) stock plummeted 23.61% on Thursday after the database software company reported better-than-expected Q4 FY25 results but issued disappointing guidance for fiscal year 2026 (FY26).

For Q4 FY25, MongoDB's revenue of $548.4 million surpassed analysts' expectations, driven by a 24% year-over-year growth in its cloud database service, Atlas. The company also reported strong customer acquisition, with over 54,500 customers at the end of the quarter.

However, MongoDB's FY26 guidance fell short of Wall Street's projections. The company forecast revenue in the range of $2.24 billion to $2.28 billion, missing the consensus estimate of $2.32 billion. Additionally, adjusted earnings per share (EPS) guidance of $2.44 to $2.62 fell below the expected $3.34.

The weaker-than-expected guidance was primarily attributed to three factors:

• A projected $50 million revenue headwind due to fewer large multi-year deals for MongoDB's on-premise business, compared to the previous two years.
• Increased investments in research and development (R&D), including the recently announced acquisition of Voyage AI, a leader in embedding and reranking models for AI applications.
• Ramped-up marketing efforts to drive improved awareness and understanding of MongoDB's capabilities beyond its core database offering.

Despite the near-term headwinds, MongoDB remains optimistic about its long-term prospects, particularly in the rapidly evolving AI and generative AI space. The company believes its flexible data model, native vector search capabilities, and the integration of Voyage AI's embedding and reranking models position it as the go-to database platform for building trustworthy and accurate AI applications.