MongoDB (MDB) Increased Revenue Contributor From Altas Would Propel MDB Shares Post Earnings

Market is expecting MDB to report quarterly earnings at 68 cents per share on revenue of $497.76 million. MongoDB shares gained 0.86% to $346.36 in the pre-market at time of this writing.

MongoDB (MDB) has a 44.50% market share in the NoSQL databases market. MongoDB is a database management system (DBMS) that offers a general-purpose database platform. It is a leading NoSQL platform that's known for its flexible, scalable solutions for handling different data types.

The top three of MongoDB’s competitors in the NoSQL Databases category are NoSQL with 23.70%, Amazon DynamoDB with 10.45%, Apache Cassandra with 4.91% market share.

If you are in the AI space or your companies are developing AI model and also deploying solutions, what is important is where and how to develop and deploy easier, to save both time and resources.

In 2023, MongoDB launched two new tools this week designed to help customers develop generative AI applications.

Atlas Vector Search -- first unveiled in public preview in June and updated in September -- and Atlas Search Nodes were made generally available in September.

Atlas Vector Search is designed to enable MongoDB customers to use their own data in concert with generative AI (GenAI) platforms to aid decision-making. Atlas Search Nodes enable customers to run large generative AI workloads without affecting performance.

Actually, relational databases were first developed in the 1970s. But as the volume and complexity of the data organizations now collect continues to increase, relational databases are often unable to handle modern demands.

As a result alternatives have been developed, including graph databases such as TigerGraph and Neo4j and document-based databases such as MongoDB and Couchbase.

Atlas is MongoDB's developer platform where much of MongoDB's recent focus has been on enabling developers to build GenAI applications.

In May 2024, MongoDB launches tools for developing generative AI apps. The database vendor's new capabilities include Atlas Stream Processing to enable real-time model updates and Atlas Search Nodes to handle advanced analytics workloads.

But we need to also be aware of some risks associated with MongoDB include intense competition from SQL and NoSQL providers, potential scalability challenges, and a high valuation.

MongoDB has been a partner to hyperscalers globally, including Amazon Web Services (AWS) and Microsoft.

MongoDB Atlas is a cloud developer data platform that integrates data services like vector databases, full-text search, and stream data processing. It also offers:

Automated patching and single-click upgrades

Access to Atlas App Services

Native time-series support

The Atlas Search service

Live migration

A stable API

With these features, according to a report by Research and Markets, the big data market is projected to grow from $220.2 billion in 2023 to $401.2 billion by 2028, at a compound annual growth rate of 12.7% during the forecast period. Region-wise, North America holds the largest market share, driven by early adoption of big data solutions, a mature IT infrastructure, and a strong focus on innovation.

Simultaneously, Asia Pacific serves as the fastest-growing segment in the market as a result of rapid digitization, proactive government support for technological advancements, and growing internet connectivity.

So I am expecting MongoDB to ride on this wave for its earnings especially on the revenue for the DBaaS.

Based on 10 Wall Street analysts offering 12 month price targets for MongoDB in the last 3 months. The average price target is $372.78 with a high forecast of $425.00 and a low forecast of $320.00. The average price target represents a 8.56% change from the last price of $343.40.

If we looked at the current price target for MDB, it looks like there are some potential for more stock price upside if MDB earnings surprise with an increased revenue contribution from Altas.

Though MDB investors have lost more than 15% in terms of returns year-to-date, this might create an opportunity if there is a price surge after MDB earnings.

With the market share leading the NoSQL databases market, I believe that the revenue contribution for this reporting quarter should be able to exceed 71%.

I am expecting MDB to be trading upwards towards $360 if earnings surprise.

If we looked at how MDB have been trading last week, we could see that it did a breakout from consolidation, but failed to create any gap up, but it is still trading comfortably above the short-term and long-term MA.

There is a potential golden cross forming as well from the chart, and MACD is also building into either a bullish crossover or bearish crossover, chances of a bullish crossover seems possible. But MTF did not give a much clearer signal of an upward trend.

So I would be monitoring the price action for MDB in today’s pre-market and actual trading hours, I might take a position.

Looking at the demand for AI, especially generative AI, MongoDB as a NoSQL would be a preferred choice due to its comprehensive features to allow development and deployment to save time and money.

But the competition from NoSQL cannot be ignored either, so whether MongoDB could perform better than 71% contribution from Altas remain key for this earnings, this is what I would be looking out for.

Appreciate if you could share your thoughts in the comment section whether you think MongoDB could produce a surprise on its earnings with better Altas revenue contribution.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.