Strong earnings reports can't offset AI anxiety! MongoDB(MDB.US) issues weak guidance, causing a 25% plunge in after-hours stock price

According to Cailian Press Finance APP, despite MongoDB (MDB.US) reporting strong Q4 earnings, the company’s quarterly guidance fell short of market expectations, causing further concern among investors already worried about the potential disruption AI (Artificial Intelligence) could bring to their business.

Following this news, the company’s stock price dropped more than 25% in after-hours trading. As of Monday’s close, the stock has declined a total of 19% over the past three months.

MongoDB expects that for the fiscal first quarter ending in April, revenue will be between $659 million and $664 million, with adjusted earnings per share of $1.15 to $1.19. Both median forecasts are below Wall Street expectations—analysts previously anticipated revenue of $662.5 million and adjusted EPS of $1.20.

At the time of this earnings guidance release, investors are increasingly worried that as AI models become more advanced, the software industry may face disruptive shocks.

Looking back, MongoDB’s stock price surged 96% from mid-August last year to the end of the year. The strong second-quarter performance was the main driver of this rally. However, since the beginning of this year, as investor sentiment toward software stocks cooled, the stock has pulled back. Market concerns center on AI agents potentially disrupting the existing subscription-based software model.

However, CEO CJ Desai stated that as customers seek to expand AI capabilities, MongoDB is well-positioned to be a winner. He pointed out that the company’s database platform is increasingly recognized as the infrastructure backbone of leading digital enterprises and continues to gain recognition among rapidly growing AI companies. The company mainly provides database software that stores unstructured data in flexible, independent “document” units.

“Over the past 60 years, the database layer has withstood multiple technological transformations, and in this AI revolution, its importance is even greater,” Desai said during a conference call with analysts. He added that AI applications and agents require high-speed, high-quality retrieval capabilities, which are the native strengths of the MongoDB platform.

For the entire fiscal year, the company projects revenue of $2.86 billion to $2.9 billion, with adjusted EPS of $5.75 to $5.93. Analysts previously expected full-year revenue of $2.9 billion and adjusted EPS of $5.69.

Regarding Q4 earnings, the company reported a net profit of $15.5 million, or 18 cents per share, compared to $15.8 million, or 19 cents per share, in the same period last year. Both marketing and R&D costs increased compared to the previous year.

Adjusted EPS was $1.65, beating analysts’ expectations of $1.48. Quarterly revenue grew 27% year-over-year to $695.1 million, surpassing the expected $670.1 million.

Investors are particularly focused on the cloud database software business Atlas, which also performed well, with revenue up 29% year-over-year and 2,700 new customers added during the quarter, bringing the total number of customers to 65,200 by the end of the period.

Desai stated that the overall performance was driven by strong demand across all business segments, as customers actively adopt more of the company’s product lines. He also noted that AI has not yet become a significant driver of the company’s performance.

In addition to financial results, MongoDB announced leadership changes. Erica Violini will become Chief Customer Officer; she previously worked with current CEO Desai at ServiceNow (NOW.US). Meanwhile, former Chief Operating Officer Cedric Pech and Chief Revenue Officer Paul Capombasis will be leaving the company.