Digital Transformation, Multi-Cloud, And AI Will Unlock New Horizons

Key Takeaways

• Strong customer and workload growth, integrated AI capabilities, and modernization efforts position MongoDB for outsized gains in revenue, margin expansion, and legacy market displacement.
  
• Expansion across industries, geographies, and developer segments drives long-term high growth, diversified revenues, reduced cyclicality, and durable earnings improvement.
  
• Heightened regulatory, competitive, and technological pressures risk raising costs, eroding pricing power, and constraining MongoDB's ability to grow profitably and expand its market share.

Catalysts

Provides general purpose database platform worldwide.

• Analyst consensus expects strong new workload acquisition and Atlas growth, but this likely underestimates the potential for sustained re-acceleration, as MongoDB just posted six-year highs in net new customers and has demonstrated a robust bump in self-serve channel adoption, suggesting customer and workload growth could compound faster than forecast, driving revenue growth above current expectations.
  
• While analysts broadly anticipate AI-driven incremental opportunities, they may be materially underestimating the pace at which MongoDB's deep integration of real-time data, native vector search, embeddings (accelerated by Voyage AI), and unified developer tooling positions it to capture outsized share of the emerging AI-powered application market, translating into both higher revenue and superior long-term gross margin expansion as AI scales.
  
• MongoDB's architecture, built from the ground up for cloud-native, multi-cloud, and hybrid environments, is likely to see accelerating enterprise displacement of legacy relational systems as digital transformation efforts and workloads intensify, supporting a secular uplift in both average contract value and retention rates that flows directly to higher recurring revenue and margin durability.
  
• Recent momentum and strategic hires in application modernization-especially the investments in automation and tooling-could unleash a large-scale wave of legacy database migrations starting in fiscal '27, increasing MongoDB's addressable market and creating a multi-year uplift in platform revenues and upsell activity.
  
• The rapid internationalization and expansion into underpenetrated verticals (such as financial services, healthcare, and telecom), combined with developer-first go-to-market wins, set the stage for a prolonged period of high growth and increasing diversification of the revenue base, which should reduce cyclicality and incrementally boost long-term operating margins and earnings.

MongoDB Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on MongoDB compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming MongoDB's revenue will grow by 20.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -4.1% today to 3.4% in 3 years time.
• The bullish analysts expect earnings to reach $123.9 million (and earnings per share of $1.33) by about August 2028, up from $-86.1 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 358.2x on those 2028 earnings, up from -209.7x today. This future PE is greater than the current PE for the US IT industry at 26.5x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.12%, as per the Simply Wall St company report.

MongoDB Future Earnings Per Share Growth

Risks

• The global trend toward data localization and stricter data sovereignty requirements could force MongoDB to increase investments in compliance and regional infrastructure, which may inflate operating expenses and limit its ability to grow revenue efficiently in international markets.
  
• Intensifying competition from open-source database options and the rapid adoption of alternatives like Postgres, especially as hyperscale cloud providers and major data platforms increase their Postgres offerings, could commoditize database technologies and erode MongoDB's pricing power, leading to downwards pressure on revenue growth and average deal size.
  
• The movement of large enterprises toward "cloud repatriation"-shifting workloads from public cloud to on-premises infrastructure for cost control-may limit the expansion potential of MongoDB Atlas, which now represents the majority of MongoDB's revenue, ultimately reducing annual recurring revenue growth opportunities over the long run.
  
• Sustained high levels of spending on R&D and sales and marketing to defend market share and win enterprise customers in a crowded, fast-evolving database sector risk compressing MongoDB's operating margins and could restrict future improvement in net margins.
  
• Increased competition from cloud-native multi-model databases and proprietary offerings from hyperscalers (such as AWS, Google Cloud, and Microsoft Azure), as well as advances in AI-driven database automation, could marginalize MongoDB's relevance and limit its market share expansion, directly impacting long-term revenue and earnings growth prospects.

Valuation

• The assumed bullish price target for MongoDB is $351.24, which represents two standard deviations above the consensus price target of $272.26. This valuation is based on what can be assumed as the expectations of MongoDB's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $395.0, and the most bearish reporting a price target of just $170.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $3.6 billion, earnings will come to $123.9 million, and it would be trading on a PE ratio of 358.2x, assuming you use a discount rate of 8.1%.
  
• Given the current share price of $220.97, the bullish analyst price target of $351.24 is 37.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.