Stock Split Watch: Is MongoDB Next?

Core Viewpoint - MongoDB's stock has experienced significant volatility, with a notable increase of 1,100% since its IPO in October 2017, despite a year-to-date decline of nearly 30% [1][3]. Financial Performance - For Q2 of fiscal 2025, MongoDB reported a revenue increase of 13% year-over-year to $463.8 million, surpassing analysts' expectations by $13.9 million [1]. - The adjusted EPS for the same quarter declined by 25% year-over-year to $0.70, but still exceeded the consensus forecast by $0.22 [1]. - For the full fiscal year, MongoDB anticipates revenue growth of 14%-15% and a decline in adjusted EPS of 26%-30%, an improvement from previous forecasts [2]. Business Model and Market Position - MongoDB's platform allows companies to store large amounts of unstructured data in a non-relational database, offering more flexibility compared to traditional relational databases [3]. - The company provides a cloud-based service, Atlas, which supports data analysis through recurring subscriptions and serves over 50,000 customers globally [4]. - Unlike larger cloud providers, MongoDB offers a more flexible integration into various cloud platforms, making it an attractive option for companies using multiple services [5]. Historical Growth Metrics - From fiscal 2018 to fiscal 2024, MongoDB's revenue grew at a compound annual growth rate (CAGR) of 40%, with adjusted gross margins increasing from 72% to 77% and adjusted operating margins improving from negative 49% to positive 16% [6]. - Revenue growth rates have shown a gradual decline, with fiscal 2024 growth at 31%, the slowest since its IPO [7]. Future Outlook - The company expects its adjusted operating margin to decrease to about 10% in fiscal 2025 due to expansion of sales teams and a slowdown in its higher-margin Atlas business [8]. - MongoDB's current stock valuation appears high at 121 times this year's adjusted earnings and 11 times this year's sales, especially as growth rates decline [9]. Stock Dynamics - MongoDB has increased its number of outstanding shares by nearly 50% since its IPO, which may contribute to elevated valuations [10]. - A potential stock split would not fundamentally change the stock's value but could make trading options more accessible [11][12].