Will MongoDB's diluted share count decline quarter-over-quarter in any quarter during FY2027?

The math is structurally unfavorable: $345M in FY2026 buybacks retired ~1.44M shares while SBC generated ~3.74M new dilutive shares (net increase of 2.3M). At ~$655M remaining authorization and current buyback pace (~$115M/quarter at ~$250-280/share), the company retires ~400-500K shares/quarter while SBC adds ~900K+ shares/quarter. The 4 quarterly chances help marginally, but the structural deficit runs ~2:1 against achieving even a single quarter of decline. Cash-based RSU tax settlement and potential buyback acceleration provide non-zero but small probability of a favorable quarter.

The 'any quarter' framing gives 4 independent shots, which matters for edge cases. Key considerations: (a) convertible note cap call shares were a one-time FY2026 addition that won't recur in FY2027, removing a discrete dilution source; (b) RSU vesting is lumpy — some quarters have lighter vesting schedules; (c) management could theoretically concentrate $300M+ of buybacks in a single quarter to create a share count decline optic. With $655M remaining and $2.3B cash, a concentrated buyback quarter is financially feasible. However, management has not signaled intent to time buybacks this way, and the committee found the crossing point 'may be years away.'

The committee's finding is definitive: buybacks offset only 27% of dilution, meaning effectiveness needs to increase nearly 4x for share count to decline in any quarter. SBC at ~2.9x non-GAAP operating income means the company would need to spend approximately 2.9x its operating income on buybacks just to keep share count flat — economically irrational. The cash-based RSU tax settlement helps at the margin but doesn't fundamentally change the arithmetic. The new CEO's additional RSU grants (44,096 shares vesting quarterly) add incremental dilution. Revenue growth outpacing SBC growth narrows the gap over time but the committee notes the crossing point may be years away, not quarters away.

The numbers are devastating for YES: SBC at $1.27B annually generates far more dilutive shares than the buyback program can retire. In FY2026, shares rose from 84.6M to 86.9M (+2.7%) despite $345M in buybacks. For a QoQ decline, buybacks would need to run at roughly 3.7x their current rate or SBC would need to drop by ~73% — neither is remotely plausible in FY2027. The committee's unanimous finding (E2, 2/2) that 'buybacks are mathematically insufficient to offset dilution at current SBC levels' directly answers this question. Four chances don't matter when the structural gap is this wide.

Even under generous assumptions — buyback pace doubles to ~$230M/quarter and SBC growth moderates to 5% — the company would still only offset roughly 54% of dilution, well short of the >100% needed for a QoQ share count decline. The only realistic scenario for YES involves a massive stock price decline making buybacks dramatically more efficient (at $150/share, the same $150M buys 1M shares vs. 535K at $280). But even in that downside scenario, SBC dilution continues at full pace since grants are denominated in dollars. The committee's finding that 'the crossing point where buybacks can offset dilution may be years away' is definitive for this time horizon.

Considering the full possibility space more carefully across 4 quarters. The convertible note cap call shares were a one-time FY2026 event that inflated the diluted count; their absence in FY2027 removes a discrete dilution source. If management concentrated remaining buyback capacity ($655M) heavily in one quarter — say $400M at $250/share = 1.6M shares retired — and that coincided with a lighter SBC vesting quarter of ~600K net new shares, the net effect would be -1.0M shares, achieving a decline. This is theoretically possible but requires deliberate concentration that management hasn't signaled, and assumes a favorably light SBC quarter that may not exist. Non-zero but requires multiple low-probability conditions to align.

Core math is clear: buybacks offset 27% of dilution, need >100% for decline. The structural deficit is overwhelming — SBC generates roughly 3.7x more shares than buybacks retire. Four quarters don't meaningfully change the probability when the gap is this wide. The committee finding that SBC at 2.9x operating income makes offset 'economically irrational' is the key fact.

Annual SBC of ~$1.27B creates roughly $317M/quarter of dilutive impact. Quarterly buybacks at ~$115M/quarter retire far fewer shares, especially at elevated stock prices (~$250-280). The remaining $655M authorization spread across FY2027 would be ~$164M/quarter — still well below the SBC dilution rate. Cash-based RSU tax settlement is directionally positive but marginal. Probability very low even with four chances.

The 'any quarter' framing and $655M remaining buyback capacity provide some non-zero probability of a concentrated buyback quarter beating a lighter SBC vesting quarter. The absence of cap call share dilution in FY2027 also helps at the margin. However, the structural deficit where SBC generates ~3.7x more shares than buybacks can retire makes this a low-probability event even with 4 opportunities. Management would need to deliberately time buyback concentration, which they haven't signaled.