Shares of the database company MongoDB Inc. slid in after-hours trading today, even though the company crushed Wall Street’s forecasts on earnings and revenue and offered strong guidance in its latest financial report.

In recent months the company has been flying high as investors bet on the growth of cloud computing and artificial intelligence, and from today’s after-hours stock move it appears that the Street had even bigger expectations.

Prior to today’s report, MongoDB’s stock was up more than 120% in the year to date. However, it fell more than 5% in extended trading today. Update: On Wednesday, its stock fell almost 11%.

The company reported third-quarter earnings before certain costs such as stock compensation of 96 cents per share, crushing its own guidance range of 47 to 50 cents and also the Street’s consensus estimate of 51 cents. Revenue rose 30%, to $432.9 million, well ahead of the company’s guidance of $400 million to $404 million. Wall Street had been expecting just $406 million in sales.

They were impressive numbers, and they helped MongoDB edge closer to profitability. All told, it delivered a net loss of $29.3 million in the quarter, down from a loss of $84.8 million a year ago.

MongoDB is the creator of the document-oriented MongoDB database, which is used to power a wide range of data-intensive applications. In addition to the on-premises database, there’s a cloud-native version called MongoDB Atlas, which grew 36% in the quarter and now accounts for 66% of the company’s total revenue. There’s also a mobile version of the database, called MongoDB Realm. The company’s products have become wildly popular with developers, because they’re easy to use and can store data in many different formats.

MongoDB President and Chief Executive Dev Ittycheria (pictured) said the company has now established itself as an indispensable part of the technology stack for hundreds of organizations. “The recent general availability release of MongoDB Vector Search is the latest example of the strength of our innovation flywheel and reinforces our competitive advantage in winning AI workloads,” he added.

One of the reasons for MongoDB’s growth this year is the rise of sophisticated generative AI workloads, which require an underlying database that gives them seamless access to unstructured data such as images, written notes and audio. Vector search is vital for generative AI because it enables this information to be stored as numerical representations that can easily be accessed by the underlying large language models.

In a recent update, MongoDB boosted its vector search capabilities by improving the way it filters and aggregates unstructured data, making it even easier to access.

Holger Mueller of Constellation Research Inc. said the company is moving at full throttle, both in terms of its growth and its pace of innovation, with the new vector capabilities being essential to its aspirations for AI. “MongoDB is also making progress on the path toward profitability, and another quarter like this could see it finally become profitable,” the analyst added. “If that happens, it will be a good sign that MongoDB has grown up as an enterprise software player with long-term viability, both on the technology and product side, and on the business side.”

Although the company is clearly headed in the right direction, it may not be making progress as quickly as some investors had hoped.  Guggenheim analyst Howard Ma said in a research note prior to the report that he expected the company to easily beat the Street’s consensus, but he also forecast fourth-quarter revenue growth of 21% to 22%.

Its outlook was optimistic but not quite as bullish as Ma had expected. It said it sees revenue of between $429 million and $433 million for the current quarter, up 19% at the middle of the range. That’s lower than Ma’s forecast, but well ahead of Wall Street’s target of $418 million.

As for earnings, the company is targeting a range of 44 to 46 cents per share, ahead of the consensus estimate of 37 cents.

In addition, MongoDB said it’s raising its full-year revenue target to $1.654 billion to $1.658 billion, up from a previous range of $1.596 billion to $1.608 billion. The company now forecasts full-year earnings $2.89 to $2.91 a share, up sharply from the previous forecast of $2.27 to $2.35 a share, and well ahead of the Street’s target of $2.34.

Photo: MongoDB