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MongoDB (NASDAQ:MDB) Share fell more than 10% in premarket trading on Thursday, when the developer platform company reported fourth-quarter results and guidance that left many on Wall Street worried about slowing growth.
Barclays analyst Raimo Lenschow, who is overweight rating in MongoDB (MDB), noted that guidance “only” implies 16% growth and a “significant” slowdown in the company’s Atlas and Enterprise Advanced segments.
“Management has a tendency to be ultra-conservative with guidance…and now the outlook looks less risky,” Lenschow wrote in a note to investors. “However, we can see that investors will probably want to see evidence that consumer trends are improving and that unused credit is not becoming the new norm.”
Lenschow, who lowered his target price per share to $257 from $264 following the results, added that MongoDB (MDB) is “clearly making changes” in light of the changing global economy, which should help boost profitability, but ” Ultimately, the (MongoDB) is still focused on growth.”
Looking ahead, MongoDB (MDB) expects first-quarter sales to be between $344 million and $348 million, with adjusted earnings between 17 and 20 cents per share.
William Blair analyst Jason Ader, who is also rated higher on MongoDB (MDB), noted that Atlas consumption took a bigger-than-expected hit in December and January, even accounting for the holidays. As such, Atlas revenue is expected to remain flat to low in the first quarter, even factoring in some “modest improvements” in February.
“Despite some potential volatility around consumer revenue in a more challenging macro environment, we see a multi-year growth track as MongoDB establishes itself as the leading independent database for modern applications,” Ader explained.
Citi analyst Tyler Radke was also concerned about weaker-than-expected consumption, adding that there are “mixed signals” coming from the company, as the company had near-record direct sales and continues to focus on improving profitability.
“There are definitely some mixed signals after the results, but we like the setup as we see the numbers now coming down,” Radke wrote in an investor note.
Before reporting fourth-quarter results, investment firm Monness, Crespi, Hardt said MongoDB (MDB) had a “low target” to beat.
