Monetizing MongDB

Hi

There’s been a lot of talk about the difficulty of monetizing open-source products like MongoDB.

I work for a large European company that have been partnering with MongoDB for some time. Our logo is on this page https://www.mongodb.com/who-uses-mongodb so I guess they see us as a fairly big deal.

We’re basically an Oracle shop, but we have bits of everything … Couchbase, MySQL, Splunk, you name it. If there’s a datastore technology, we have a use-case for it.

We like cheap, and we like free even better.

We really liked MongoDb as a cheap alternative to Oracle though, and for the last few years that has been our official strategic direction. Even if it wasn’t a realistic goal to migrate completely to MongoDB the fact that we could do so in theory, and were making some effort towards it, was in itself nice leverage to have with Oracle.

Now though. We just negotiated a new contract with MongoDB and they are now actually more expensive in pure dollar terms than Oracle, despite still having a much smaller footprint.

This is partly because Oracle has become cheaper for us but mostly because MongoDB are suddenly charging an awful lot. Obviously, I can’t go into contract details (and I’ve not seen the details anyway) but open-source or not … monetize they can and monetize they have.

MongoDB stock is my biggest holding (~25%) and I still don’t know how I feel about this really. I guess in the short-term it will be good for them to open the money-taps. If they are doing this right across their customer base then hopefully we can expect some blowout earnings coming up.

But long-term …? I just don’t know. I hope they haven’t killed the golden goose. Our strategic direction will be getting a very speedy review, that’s certain.

76 Likes

This is partly because Oracle has become cheaper for us but mostly because MongoDB are suddenly charging an awful lot. Obviously, I can’t go into contract details (and I’ve not seen the details anyway) but open-source or not … monetize they can and monetize they have.

For practical purposes there are two MongoDB offerings, Freemium and Atlas. One important difference (correct me if I’m wrong) is that with Freemium the customer provides the server and associated services while with Atlas they are bundled in the price.

I would ask if your company went from Freemium to Atlas in which case the higher price would be amply justified.

Maybe I’m totally off-base but it’s an idea worth following up on. I started investing in MBD only after seeing Atlas growth figures because I too believe that monetizing open source is difficult.

Denny Schlesinger

13 Likes

MongoDB stock is my biggest holding (~25%) and I still don’t know how I feel about this really. I guess in the short-term it will be good for them to open the money-taps. If they are doing this right across their customer base then hopefully we can expect some blowout earnings coming up.

Historically…a “blow out earnings” would very much surprise me. Remember, they warned us of pressure on their gross margins related to growth of Atlas with higher non-Gaap losses in this quarter vs last. So despite growth in revenue, hard to imagine earnings being blowout when they are warning us otherwise.

In these early high growth companies that forego earnings for the sake of market share growth, it is important to confirm that they are in fact growing revenue at a very fast clip. But if we look back over the preceding 3 quarters, they have beat the upper end of their guidance by 6% in EACH of last 3 quarters. (note in the preceding year their beats were 4%, 11%, 9% and 13%).

They guided for $111 million this quarter so a 6% beat would put then at $118 million vs year ago 4th quarter revenue of $84 million.

That would be YoY revenue growth rate of 40%…its lowest revenue growth rate since becoming a public company.

Its last 3 quarters revenue growth rates have been 78%, 67%, 53%…….and then now at 40%…not an encouraging trend in a company that still has a relatively low revenue run rate IMO.

So your anecdotal experience did pique some intrigue as to whether they have changed their financial model in some way to harvest more revenue that could make the above historical beat modeling obsolete.

Can you add more color as to what and why the pricing went up and whether this would seem unique to your company’s needs or would this same dynamic apply to other companies as well.

Also, could you clarify in the context of rising prices, just how costly and labor intensive would a switch out of Mongo be?..and what functionality would you lose in the process. Are the switching costs high or not?

Thanks in advance.
Duma

27 Likes

Hi Denny
I would ask if your company went from Freemium to Atlas in which case the higher price would be amply justified.
No, we are fully on-prem, no cloud.

Hi Duma
Historically…a “blow out earnings” would very much surprise me. Remember, they warned us of pressure on their gross margins related to growth of Atlas with higher non-Gaap losses in this quarter vs last. So despite growth in revenue, hard to imagine earnings being blowout when they are warning us otherwise.

Not sure if I am picking you up correctly … I wasn’t thinking of the next earnings report if that’s what you mean, but maybe a couple down the line.

Can you add more color as to what and why the pricing went up and whether this would seem unique to your company’s needs or would this same dynamic apply to other companies as well.

Not really. Sorry.

A fair bit is for support and consultancy. We absolutely need to run supported in order to comply with various standards so it’s traditionally one area where vendors (inc Oracle) cream us.

We also heavily utilize Mongo’s Ops Manager API.

Other than that I guess we must be pretty conventional.

Also, could you clarify in the context of rising prices, just how costly and labor intensive would a switch out of Mongo be?..and what functionality would you lose in the process. Are the switching costs high or not?

We have a few applications developed around MongoDB (especially the aggregation pipeline) that might be hard to shift. Yes, it would cost a lot to migrate but we are paying millions to MongoDB and a migration would be amortizable (our management have an EBITDA fetish).

Ideally, I suppose, we would want to switch to a cheaper distro if one emerges.

17 Likes

…we are paying millions to MongoDB

MongoDB Enterprise Advanced is around $12k per node per year. So do you have 100+ nodes? Or Atlas?

Oracle charges per CPU core, and should be much more expensive that MDB.

2 Likes

Hi 5761796E65
MongoDB Enterprise Advanced is around $12k per node per year. So do you have 100+ nodes?
Yes, and then some

Or Atlas?
No, all on-prem

Oracle charges per CPU core, and should be much more expensive that MDB.
We have a site-license so we pay them a flat rate.

5 Likes

EU2Banks, I really appreciate the numbers. If we go with $1.5m/year, your one company is 1/200th of MDB’s revenues. Looks like MDB relies on fewer clients, but more revenue per client, than OKTA, for example. I suppose there are positives and negatives for this.

2 Likes

I wonder if they are raising on-prem prices as a way of pushing customers towards Atlas?

3 Likes