Great results with revenue increasing 61% and subscription revenue up 63%. The negatives for me are that gross profit margin is flat at 71% from last year and they are cash flow negative using $17M for operations or 29% of revenue, which is really high from my perspective. Earnings are even worse with them losing 31.2M or 54% of total revenue. Luckily, running out of cash is not really a concern given that they have $523M in cash, which was bolstered by their recent $254M issuance of convertible notes.
Great to see the number of customers grow 72% to 7,400 and Atlas growing at 400% and now making up 18%! Also, happy to see these quotes from the CEO:
We are seeing strong demand from both new and existing customers across a growing number of use cases, as evidenced by our 63% subscription revenue growth, demonstrating that MongoDB is quickly becoming the modern database platform of choice.
We pushed the pace of innovation with the release of MongoDB 4.0 and are excited about the introduction of new enterprise security features into MongoDB Atlas, our fully managed cloud database service, and the general availability of MongoDB Stitch, our serverless platform. Our investments in expanding engineering and go-to-market capabilities have positioned MongoDB to continue delivering high levels of growth as we disrupt the massive database market
I also like that even though cost of sales is growing as quickly as revenue, at least other expenses are not growing as quickly. With revenue growing 61%, sales expenses are only up 41%, R&D expenses are only up 36% and G&A is only up 37%.
Guidance appear to be higher than analysts expected:
Q3 guidance has upside revenue of $59M to $60M (consensus: $57.57M) and in-line EPS of -$0.40 to -$0.38 (consensus: -$0.39).
FY guidance has upside revenue from $228M to $230M (consensus: $219.68M; was: $217M to $220M) and downside EPS of -$1.66 to -$1.62 (consensus: -$1.62).
The stock is not overly expensive at 13.6 EV/Sales (market cap of 3.647B minus 523M in cash over projected revenue of 230M) considering the over 60% revenue growth and compared to other high growth software companies (SQ, ZS, SHOP).
MDB looks strong as I consider revenue growth to be by far the most importance factor (see my post on the importance of sales growth here: http://discussion.fool.com/sales-growth-33108276.aspx and see how MDB does on the checklist here: http://discussion.fool.com/mdb-checklist-33113296.aspx)
In closing I am quite bullish on MDB because I can see revenue growth continue at 60% and higher due to Atlas becoming a larger percentage of overall revenue. Right now, it’s 18% of total revenue and growing at 400%. As this becomes a larger percentage of total revenue, revenue growth may increase further.