MongoDB announced their quarterly results this afternoon and it was another pretty outstanding quarter.
https://investors.mongodb.com/news-and-events/news-releases/…
They beat the +47% revenue growth guidance significantly, coming in at +57% in Q1.
Atlas revenue increased +82% and is now 60% of total revenue.
Here’s an update of some of the trending numbers that I posted last quarter.
(reminder that the quarter just ended April 30, 2022 was the first quarter of fiscal 2023)
YOY revenue growth for the past few quarters
Q3 21 +38%
Q4 21 +38%
Q1 22 +39%
Q2 22 +44%
Q3 22 +50%
Q4 22 +56%
Q1 23 +57%
Their guide for Q2 is for +42% on the top end, so it’s unlikely that they’ll continue this growth rate higher again next Q, but I’d certainly be very happy with around +50% quarter in Q2.
and revenue growth sequentially:
Q3 21 +9%
Q4 21 +13%
Q1 22 +6%
Q2 22 +9%
Q3 22 +14%
Q4 22 +17%
Q1 23 +7%
Last year, their sequential growth was lower in Q1 and Q2 as well (actually, the same thing in Q1 and Q2 of fiscal 2021 not shown above but sequential was only +5% and +6% then too, so I believe it is related to some seasonality in the business and could very well trend upward again in Q3 and Q4 later this year, as it has in recent years.
and sequential revenue dollars increases:
Q3 21 +$12m
Q4 21 +$20m
Q1 22 +$10m
Q2 22 +$17m
Q3 22 +$28m
Q4 22 +$39m
Q1 23 +$19m
Again, some seasonaility may be contributing to this trend in Q1
Gross margins are also increasing:
Q3 21 69.4%
Q4 21 70.2%
Q1 22 70.0%
Q2 22 69.5%
Q3 22 69.8%
Q4 22 71.6%
Q1 23 72.6%
This has resulted in a nice trend in gross margin dollars growth YOY vs the same quarter of the previous year:
Q3 21 +18%
Q4 21 +30%
Q1 22 +32%
Q2 22 +32%
Q3 22 +32%
Q4 22 +50%
Q1 23 +50%
Although still not profitable (I believe they expect to turn the corner on profitability next year), they certainly are not bleeding cash, as they again has positive cash flow from operations in Q1.
One of the questions on the analyst calls was about possible M&A. MDB has $1.8 billion of cash on their balance sheet. Management gave a typical response about how they feel they have a long runway of organic growth ahead, but they they proceeded to detail three types of situations where they would consider an acquisition (as a means to bring over strong talent, to move ahead a roadmap project much faster than building in house, etc) but something about the way they answered the question made me think they might be considering potential target(s) already, especially with valuations where they are today. MDB’s raising $900 million in June 2021 when the stock price was around $390/share, while not at the peak, is still looking like a shrewd move to shore up the balance sheet especially given some of the economic uncertainties ahead, and potential to deploy a portion of it an in opportunistic manner if there is a smaller candidate that isn’t in the same kind of liquidity position today.
One thing that has me tempering my enthusiasm slightly for the near term, is I know that MDB seemed to have more headwinds, than tailwinds, during the pandemic, so the possibilty of a weak economy in coming quarters, or possible recession, could slow down their progress a bit again, but with the strong balance sheet, they shouldn’t have any trouble navigating it in the long run. They mentioned on the call one division (I forget which) that saw some weakness specifically in Europe in April (but they later commented that it didn’t decline further in May), but they also said that there was a similar weakness in the same area in the U.S. in May. Despite this, they still were confident enough to guide for +42% growth next quarter, which I suspect they will beat once again.
I really can’t recall the last time I came away from a MongoDB call without enthusiasm about the future and where this company is likely to be 5 years from now (not unlike how I walk away from Trade Desk’s calls). I’m pretty comfortable continuing to keep MDB as an outsized holding in my portfolio.
-mekong