MongoDB Stock Plunges on Weak FY26 Guidance Despite Q4 Beat

MongoDB (NASDAQ: MDB) delivered a strong fiscal fourth-quarter performance, exceeding analyst expectations on both earnings and revenue. The company reported adjusted EPS of $1.28, well above the $0.66 consensus estimate, while revenue came in at $548.4 million, surpassing expectations of $519.6 million. This represented 20 percent year-over-year growth, with the company highlighting strong consumption growth in its cloud-based Atlas database, which grew 24 percent year over year. However, despite the solid quarter, shares tumbled 18 percent as investors reacted negatively to weaker-than-expected fiscal 2026 guidance, which implies the slowest revenue growth since MongoDB went public in 2017.

Strong Q4 Performance but Slowing Growth in Atlas and Non-Atlas Segments

MongoDB’s subscription revenue reached $531 million, with Atlas contributing 71 percent of total revenue. While Atlas revenue growth was strong at 24 percent year over year, it did decelerate slightly from 26 percent in Q3. The company’s non-Atlas revenue also performed well, partially driven by multi-year term license outperformance, but management warned that this tailwind would not continue into FY26, resulting in a $50 million revenue headwind.

Key financial highlights for the quarter included:

- Total revenue of $548.4 million, a 20 percent year-over-year increase

- Adjusted operating income of $112.5 million, well above estimates of $58.3 million

- Net income of $108.4 million, translating to $1.28 per share

- Customer count surpassing 54,500, with over 7,500 direct sales customers

- Gross margin of 75 percent, slightly down from 77 percent a year ago

Despite a strong Q4 beat, the company’s fiscal 2026 outlook disappointed investors, causing a sharp selloff in the stock.

Fiscal 2026 Guidance Falls Short of Expectations

MongoDB issued full-year revenue guidance of $2.24 billion to $2.28 billion, implying 12.7 percent revenue growth, significantly below Wall Street’s estimate of 18 percent. The company also guided for adjusted EPS between $2.44 and $2.62, well below the $3.34 analyst consensus.

Management attributed the weaker guidance to a decline in multi-year license renewals, which had artificially boosted revenue over the past two years. The company also noted a high-single-digit decline in non-Atlas revenue, adding to the overall slowdown. While MongoDB expects Atlas consumption to remain stable, the lower non-Atlas contributions weighed on the full-year outlook.

For Q1 FY26, the company guided:

- Revenue between $524 million and $529 million, in line with estimates of $527.1 million

- Adjusted EPS of $0.63 to $0.67, slightly ahead of the $0.62 consensus

Analysts were particularly disappointed by the 500 basis points contraction in operating margins, driven by higher R&D and enterprise expansion costs.

AI Strategy and the Acquisition of Voyage AI

MongoDB is betting on artificial intelligence as a long-term growth driver, positioning itself to capitalize on the shift from AI infrastructure to AI-driven applications. During the quarter, the company acquired AI startup Voyage AI, which specializes in embedding and re-ranking models to improve AI application trustworthiness.

CEO Dev Ittycheria emphasized that the integration of AI features into MongoDB’s platform would enhance its appeal for enterprise AI workloads, particularly in regulated industries where trust and accuracy are critical. The company is also investing in enterprise sales efforts to capture larger deals and shift away from mid-market customers. However, analysts were skeptical about near-term revenue impact, with Mizuho noting that AI workloads will contribute only modest incremental revenue in FY26.

Analyst Reactions: Price Targets Cut Across the Board

Following the weak guidance, several firms lowered their price targets, though most maintained a long-term bullish stance:

- DA Davi cut its price target from $360 to $275 but maintained a Buy rating, citing a strong Atlas revenue beat and stable consumption trends.

- Goldman Sachs reduced its price target from $390 to $335, noting investor frustration over the 500 basis points cut to FY26 revenue growth expectations.

- Needham slashed its target from $415 to $270, highlighting the $50 million non-Atlas headwind as a major concern.

- Canaccord lowered its target from $385 to $320 but remains bullish, stating that MongoDB is well-positioned to benefit from AI’s evolution.

- Mizuho cut its target from $320 to $250, maintaining a Neutral rating and emphasizing concerns about declining operating margins and slower enterprise adoption of AI.

Despite the across-the-board reductions in price targets, most analysts still view MongoDB as a long-term AI play, with Canaccord calling it a "generational asset."

Stock Reaction and Technical Support Levels

MongoDB shares plunged 18 percent following the report, falling to $212, testing key support levels last seen in early August. The stock had rallied 13 percent year-to-date, but the post-earnings selloff has erased much of those gains.

From a technical standpoint, analysts are watching the $212 level closely, as a break below could signal further downside. Meanwhile, the stock’s relative strength rating has fallen to 22 out of 99, indicating significant underperformance compared to the broader market.

Conclusion: A Strong Business Facing Short-Term Headwinds

MongoDB remains a high-growth software company, but near-term challenges in non-Atlas revenue and operating margins have created a difficult setup for FY26. While Atlas continues to show stable consumption trends, the lack of significant AI-driven revenue acceleration disappointed investors.

The company’s AI ambitions remain promising, particularly with the acquisition of Voyage AI, but analysts do not expect meaningful revenue contributions in the near term. With the stock testing key technical support levels, the long-term growth story remains intact, but MongoDB must prove it can reaccelerate growth and improve margins to regain investor confidence.