The stock market did not have a good week after the Memorial Day holiday, but investors seemed a little more comfortable with market conditions on Thursday. At close, the Nasdaq Composite (NASDAQ shares) was up more than 2,5%, helping to reverse some of the losses seen earlier in the week.
Much of Nasdaq's success in 2020 and 2021, as well as the market decline in 2022, has come from software-as-a-service (SaaS) securities. Fears of rising interest rates and a potential slowdown in growth weighed on the sentiment of the group's investors, with the stocks often losing ground even after promising financial relationships. However, SaaS stocks reasserted their strength on Thursday and MongoDB (MDB 18,56%) was the main driver of the industry rally.
MongoDB makes its move
MongoDB shares were up more than 18% on Thursday. The cloud database platform specialist reported first quarter results for the period ended April 30, reassuring shareholders that its growth story is still intact.
MongoDB's numbers have been extremely strong. Total revenue increased 57% from the previous year to $ 285 million. The growth of the cloud-based Atlas platform was even stronger, with an 82% increase in sales. Atlas now accounts for 60% of the company's total revenue, demonstrating the successful transition to the cloud. Adjusted net income more than tripled, reaching $ 15,2 million and producing an earnings of $ 0,20 per share.
More and more customers continued to flock to MongoDB's platform. The company cited 35.200 customers at the end of the quarter, an increase of 8.400 units over the past 12 months. Of these, 1.379 customers generated at least $ 100.000 in annual revenue for MongoDB, an increase of more than 30% from a year ago.
Furthermore, MongoDB predicts that the best times will continue. For the full fiscal year 2023, MongoDB expects revenue to be between $ 1,172 and $ 1,192 billion, with adjusted losses between $ 0,16 and $ 0,31 per share. This would represent approximately 35% revenue growth, and with the company approaching profitability, investors are increasingly excited about MongoDB's future.
More SaaS stocks on the rise
MongoDB has sparked interest in SaaS titles around the world. In addition to Nasdaq, UiPath (PATH 16,70%) also gained ground, climbing 16% after a favorable quarterly financial report.
UiPath's fiscal first quarter results for the period ended April 30 showed considerable growth. Revenue increased 32% from the prior year to $ 245 million, with a 50% surge in annualized recurring revenue to nearly $ 138 billion. UiPath boasted a dollar-based net retention rate of XNUMX%, demonstrating that existing customers make better use of the company's automation platform. The company continues to lose money, but losses have dropped significantly from last year's levels.
Also, UiPath expects the rest of the year to be fine. Projections for the full fiscal year 2023 are forecasting revenue of between $ 1,085 and $ 1,09 billion, with annualized recurring revenues that will exceed $ 1,22 billion by January 2023. Most importantly, the company expects to produce operating income positive on an adjusted basis for the current year, which would represent an important milestone in the history of the tech stock.
Given the decline in SaaS stocks in recent months, it's good to see MongoDB and UiPath among the winners in today's stock market. It is clear that most of the stocks in this sector still have a long way to go before they can recover all their losses and there is no guarantee that everyone will. However, investors like what they are seeing from MongoDB and UiPath, and both companies have great potential to generate long-term earnings.
