MongoDB MDB shares have declined 20.4% year to date (YTD), underperforming the broader Zacks Computer and Technology sector’s appreciation of 27.2%.

MDB shares have also lagged the Zacks Internet Software industry and its peers like Samsara IOT, Fortinet FTNT and Cognyte Software CGNT.

Over the same time frame, shares of Samsara, Fortinet and Cognyte Software have returned 60.9%, 60.7% and 23.8%, respectively. The industry has appreciated 31.9% YTD.

MDB stock’s underperformance can be attributed to sluggish macroeconomic conditions, a slowdown in spending in the software sector and intense competition in the Internet software market.

However, MongoDB’s expanding clientele and product offering bodes well for investors.

Will Expanding Clientele Drive MDB’s Top Line?

MongoDB recently announced its partnership with Microsoft to integrate AI and data analytics to provide extended capabilities for users. 

MongoDB’s collaboration aims to aid customers in building applications driven by retrieval-augmented generation and to select MDB Atlas’s vector store in Microsoft Azure AI Foundry. This will allow users to leverage MongoDB Atlas’ vector capabilities and AI offerings from Azure and Azure Open AI. 

Further, users will be provided with insights from operational data in real-time, utilizing Open Mirroring in Microsoft Fabric from MDB Atlas. 

MongoDB will also launch its Enterprise Advanced on Azure Marketplace for Kubernetes applications, allowing organizations functioning on-premise, cloud or edge Kubernetes to opt for MDB. 

MongoDB’s partnership will expand product offerings by enhancing proprietary data LLMs in MDB Atlas, driving top-line growth.

MongoDB 8.0 to Aid Prospects?

MongoDB recently announced the general availability of MongoDB 8.0, which will enable users to utilize database offerings with ease and enterprise-grade security. MDB 8.0 will be available for various applications, enhancing throughput by 32% and accelerating time series data aggregations by over 200%.

MongoDB 8.0 will not only allow 50 times faster data distribution but also increase scalability efficiently.

MDB’s Near-Term Prospect Dull

MDB expects non-GAAP earnings to be in the range of $2.33-$2.47 per share and non-GAAP income from operations to be in the range of $187-$195 million. 

The consensus mark for fiscal 2025 earnings is pegged at $2.43 per share, unchanged in the past 30 days. However, the figure indicates a 27.03% year-over-year decline. 

The Zacks Consensus Estimate for third-quarter fiscal 2025 earnings is pegged at 69 cents per share, unchanged in the past 30 days but indicating a year-over-year decline of 28.13%.

MongoDB’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 65.73%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

For fiscal 2025, MongoDB expects revenues to be in the range of $1.9 billion-$1.93 billion.  

The Zacks Consensus Estimate for revenues is pegged at $1.93 billion, indicating year-over-year growth of 14.52%.

The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $495.48 million, indicating year-over-year growth of 14.44%.

MDB’s Stretched Valuation Concern for Investors

MDB shares are trading at a premium, as suggested by a Value Score of F.

In terms of the forward 12-month Price/Sales (P/S) ratio, MDB is trading at 10.91X, higher than the Zacks Computer and Technology sector’s 6.1X.

However, MongoDB’s expanding clientele and increasing portfolio offering bodes well for investors.

MDB currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a better time to enter MDB shares. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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