MongoDB Q3 Earnings: Accelerating Atlas Growth and is this the AI Platform Play

MongoDB Q3 FY26 Earnings

MongoDB, Inc. (NASDAQ: MDB) reported its financial results yesterday, delivering a strong beat against market expectations and raising its full-year guidance. This was CEO’s CJ Desai first call as he just took the helm a few weeks ago and now leads a company that is aggressively positioning itself as the foundational data platform for the modern AI era.

Understanding MongoDB: The Modern Data Platform

MongoDB is a leading modern database platform designed to handle the massive volumes of diverse, rapidly changing data generated by today’s applications. Unlike traditional relational databases that use rigid rows and columns, MongoDB utilizes a flexible document model (storing data in JSON-like documents). This architecture allows developers to build applications faster and handle unstructured data more efficiently—a critical capability for modern software and AI workloads.

The company’s flagship offering is MongoDB Atlas, a fully managed, multi-cloud database-as-a-service. Atlas allows enterprises to run MongoDB seamlessly across major cloud providers like AWS, Google Cloud, and Microsoft Azure, providing elasticity and global reach.

MongoDB’s customer base is extensive, serving over 62,500 customers across nearly every industry, including more than 70% of the Fortune 100. Major banks, healthcare organizations, and manufacturers rely on MongoDB for mission-critical workloads. The company competes against legacy incumbent relational databases like Oracle and IBM, open-source alternatives like PostgreSQL, and cloud-native database offerings from hyperscalers.

Q3 FY26 Earnings Overview: Beating Expectations

The Q3 released was marked by significant operational outperformance and an acceleration in key growth metrics. It’s no surprise that the stock was up 20% pre-market and if that holds, the stock will be up about 20% in the last year after being volatile during the year. In the past 5 years, the stock hasn’t really done a lot oscillating between $150 and $550 multiple times. In fact, as recently as April of this year the stock traded in the $160s again having fallen from a $500 price point in 2024 and is now back in the 400s. This is a stock that has a lot of volatility so you have to be comfortable with that if you’re a buyer or holder. 

Key Financial Metrics:

• Total Revenue: Generated $628.3 million, a 19% year-over-year increase, exceeding the high end of management’s previous guidance.

• Atlas Revenue: The crown jewel, Atlas, saw revenue growth accelerate to 30% year-over-year, up from 29% in Q2 and 26% in Q1. Atlas now represents 75% of total company revenue. 

• Profitability: MongoDB delivered decent profitability alongside growth. Non-GAAP income from operations was $123 million, representing a 20% non-GAAP operating margin, up from 19% in the year-ago period. Non-GAAP net income was $1.32 per diluted share. You do have to remember that on a GAAP basis, this company still has a negative EPS due to the fact that they issue about half a billion in stock-based compensation every single year. That’s a real cost so it’s still a company that’s not quite there in terms of true profitability. 

• Cash Flow: Operating cash flow was a robust $144 million, and free cash flow came in at $140 million, significantly up from the previous year. Free cash flow is expected to come in north of $250m for the year but keep in mind that stock based compensation and the dilution that comes with it. 

Based on these strong results and healthy underlying fundamentals, MongoDB raised its financial guidance for the full fiscal year 2026. The company now expects full-year revenue between $2.434 billion and $2.439 billion.

What is Going Well: The AI and Atlas Tailwinds

The most significant positive development is the re-acceleration of MongoDB Atlas. CFO Mike Berry noted that Atlas consumption growth remained relatively consistent, driven by strength in large customers in the U.S. and broad-based strength in EMEA, both from new and existing workloads.

Furthermore, the company is successfully executing a strategic pivot toward AI. New CEO CJ Desai emphasized that MongoDB is uniquely positioned at the center of the AI platform shift because AI applications require real-time, proprietary data context that rigid legacy systems cannot provide efficiently.

The company is already seeing results from its AI investments. Features like Atlas Vector Search and embeddings from its recent Voyage AI acquisition are gaining traction. Management highlighted examples of AI-native companies choosing MongoDB because alternatives like PostgreSQL could not scale to meet their unstructured data needs. Enterprises are also re-architecting on Atlas to support AI initiatives, cutting latency and operational costs in the process. There does seem to be some truth due this as evidenced by the re-acceleration in growth but we’ll have to make sure that holds true in the coming quarters as well. 

Challenges and Risks

Despite the bullish quarter, there are areas to monitor. While non-GAAP gross margins are healthy at 74%, they decreased from 77% in the year-ago period, primarily because Atlas—which has slightly lower margins than the legacy on-premise product—is becoming a larger percentage of overall revenue.

Additionally, while the AI narrative is strong, it is still early days. CEO CJ Desai noted that while many enterprises are piloting productivity applications, few have deployed at-scale AI agents in production that fundamentally transform their business. The company must also continue to invest heavily in R&D and sales capacity to capture this emerging market, which will continue to influence operating expenses moving forward.

Another part is the reliance on non-GAAP EPS and removal of significant SBC from those numbers. This is a company that’s still likely 3-4 years away from being GAAP profitable and having free cash flow be positive after accounting for stock-based compensation. That’s likely why the stock has been so volatile in the past few years. It’s a $27B market cap company before market open and likely north of $30B after so any sort of top line slow-downs or bottom line misses will hit the stock price heavily as investors are still banking on many years of double digits growth to get a decent return out of this.

Analyst Q&A Summary

During the earnings call, analysts probed management on the new CEO’s vision, the reality of AI adoption, and guidance methodologies.

The New CEO’s Agenda: Analysts asked CJ Desai, only 28 days into his tenure, about his immediate priorities. Desai stated his focus is on deepening relationships with Fortune 500 technology leaders to drive further penetration and spending time in Silicon Valley with AI-native startups to ensure MongoDB is their foundational infrastructure. He expressed conviction that MongoDB’s ability to handle unstructured data gives it a structural advantage over relational databases for AI workloads.

Defining the Core vs. AI Growth: Questioned on whether current strength was driven by core modernization or AI tailwinds, management explained it is a combination. The digital transformation trend of moving workloads to the cloud is ongoing and provides a massive Total Addressable Market (TAM) for at least the next 5 to 7 years. However, AI is also acting as a catalyst; modernizing core data is often a prerequisite for successful AI implementation. While MongoDB is certainly there, I think some of the hyperscalers can also have their own internal tools that can help with this and may compete with Atlas. 

Guidance Transparency: Analysts noted the company provided more specific revenue growth guidance for Atlas for the upcoming quarter. CFO Mike Berry explained this was intended to provide more visibility into the business now that Atlas is nearly a $2 billion run-rate business with more predictable forecasting models. However, he stressed they remain prudent regarding seasonal variability in Q4.

Valuation and Outlook

MongoDB has historically traded at a premium valuation due to its high growth rate and massive market opportunity in the database sector. The Q3 results, showing accelerating Atlas revenue and expanding operating margins, reinforce the bull case for the stock.

The company is effectively proving it is not just a pandemic darling but a durable infrastructure player that is critical to the next wave of technology: artificial intelligence. By integrating features like vector search directly into its operational database, MongoDB offers a unified platform that simplifies architecture for developers—a major competitive advantage.

While macroeconomic uncertainties and the need for continued investment remain, MongoDB’s raised guidance and commitment to its long-term financial model suggest strong management confidence. For investors looking for exposure to foundational data infrastructure essential for both cloud modernization and the burgeoning AI economy, MongoDB remains a compelling, albeit premium-priced, holding.

The stock has already had a good run in the past few months after a correction and this earnings just reinforces that with a sizable bump based on Atlas growth. However, adjusted for SBC, this stock trades at ~1.5% 2030E(!) free cash flow yields which is certainly very pricy and requires many years of growth beyond that to make this a compelling investment from a long term return perspective. To me that’s a bit too pricey but if this sucker drops into the 150s again, it’ll find its way into my portfolio. One of the things that worries me is that SBC which when combined with one share large issue in 2022 has taken their share count from 54m in 2019 to 81m today, that’s a lot of dilution. They do have a strong balance sheet with 2.3B in cash and short-term investments and no debt so could certainly start a buyback soon enough but at best that would just offset their SBC and not start reducing their share count anytime soon.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The author is not a registered financial advisor. All investment strategies and investments involve risk of loss. The content is based on data available as of December 2, 2025, and references potential valuation scenarios created by the author. Always perform your own due diligence before making any investment decisions.