Mongo at Piper Sandler Conference

My impression was that Piper Sandler wanted to point to their recent research demonstrating ‘aggressive’ hiring for Mong DB engineers, among those that partner with Enterprises to assist with their Cloud migration. (point One).

Point One, To better understand what could go right in the business.

Point Two, how to think about Atlas. Point three, what makes Mongo’s competitive moat.

The quotes below are cut down a bit by me, but not otherwise edited. I left out the questions as they were unnecessary, IMO.

Michael Gordon
So if you think about winning new customers or new workloads from existing customers. That tends to be the biggest governor of our success over the medium- to long-term, right?… That’s a market that’s $85 billion in 2022, growing to $138 billion in 2026.

So the fact that we are at a $1.2 billion run rate is great, but we have kind of just crossed 1% market share. We have got a long way to go and so the medium to long term is much more dictated by the outcomes of how we are acquiring new customers and further penetrating our existing customers.

The good news is we are doing incredibly well there, right? Q2, we reported a record number of net customer adds in the direct sales channel. We have not experienced any of the sales cycle elongation, deal slippage, deals getting incremental scrutiny, those kinds of things that a lot of other companies talked about.

In addition, I think underscoring the mission criticality of our offering. We haven’t seen any upticks in churn or any of those kinds of things that might be associated with macroeconomic issues or concerns.

So all that’s going quite well and so when we think about the medium- to long-term in the future, we feel really quite optimistic and bullish and all those kind of leading indicators are flashing bright green. The good news is those are also the things that are within our control.

Me: Why the big spend on Sales and Marketing this last quarter?

Because, again, if you go back to the big markets that I talked about, $85 billion going to $138 billion, we have a quota carrying headcount measured in the hundreds of reps, right, versus thousands or tens of thousands for our competitors, right? So our big challenge in terms of capturing the market is footprint coverage, right? When we are in a dialogue, our win rates are exceptionally high.

Yeah. So that 300 million downloads, that just to our website alone. There are plenty of other repos and depots that you can also get it from 100 million just in the last year to your point to the sort of acceleration, right? That’s more than we had in the first 10 years or 11 years, to your point. It is absolutely about developer awareness. It works as kind of like an indirect top of funnel, because of the open source nature and everything else, we don’t heavily gate it.

And so you can’t perfectly recreate like a true funnel of like, okay, how many downloads per conversion or what are your conversion rates on some of those kinds of things in the way that you are sort of analytical marketing line, we want to reconstruct like a more perfect funnel. But it absolutely is an indication of the awareness, the relevance and effectively as a leading indicator of that.

Brent Bracelin, Piper Sandler
Last week we looked at some of the hiring trends of some of the global GSIs, PwC, Deloitte, Capgemini, it looks like they are aggressively hiring MongoDB engineers. Walk us through the global SI partner channel, is that a meaningful channel yet, is it becoming slightly more meaningful and how meaningful could it be looking out like three years to five years?

Michael Gordon
Yeah. To continue – they are all good partners. We have partnerships with all the folks you listed, more, Accenture and others, et cetera. The key thing is their businesses are such a size and scale that they need to feel confident that they can build big practices in order to move their own internal needle.

And so what we have seen is we have grown from $100 million roughly or at the time of the IPO to the $1.2 billion run rate that we have were more relevant and there’s an easier path for them to see how to build a business around MongoDB.

They are huge beneficiaries of the work that we do and we – especially in relational migrations, right? The sort of hands on keyboard work of re-platforming is their bread and butter.

Serge Tanjga
… elements of agile, elements of real-time analytics, all of those are incremental hooks for incremental workload. So both from a product perspective and from the go-to-market perspective, we have aligned and have been aligning for years around the idea of gaining share by acquisition of workloads, and back to Michael’s point, it’s frustrating that we have these near-term headwinds. But everything that we are seeing is showing us that we are at the front end of where we actually have control over the outcomes, things are progressing as planned and that gives us a lot of confidence for next year and into the future.

Me here: With my continuing to hold a 7.5% position in my portfolio, I did find reassurance that I’d made an accurate assessment of why I continue to hold: MongoDB is the leader in this cloud category. The business only needs to further ramp S&M to continue to get that 1:4 leverage in S&M:revenue growth.

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For your takeaway, it is very important what this means.

I did find reassurance that I’d made an accurate assessment of why I continue to hold: MongoDB is the leader in this cloud category.

this = NoSQL

The market TAM they are discussing here is not the NoSQL TAM of what they are currently the leader in. This TAM is the entire transactional database market. They are a tiny subset of this whole. See the below graph. The 4 above them are all transactional SQL databases. Mongo is leader in NoSQL.

When Mongo talks about increasing use cases and the like, they are trying to break thru on much more traditional transactional use cases that are dominated by SQL databases. Mongo is unfortunately way way way behind on many features. Especially in areas like security.

For a prime example, look no further than their recently touted being able to query encrypted data. First of its kind for NoSQL. SQL databases have had this feature for years.

If you’re a building a software application in this day and age, knowing that a SQL Server or Oracle is at least 6 years advanced in the security area might push you to use a more traditional database engine instead.

There are many use cases Mongo is much more ideal for than SQL databases and there is a large subset of applications that would be fine on Mongo even if its not the best platform for them. As Mongo management says though, their medium & long-term success depends on convincing companies that NoSQL can handle more workload types. They’re seemingly in a constant state of feature catch-up with their SQL counterparts. Their SQL competitors add on more and more innovations and features.

I was just reading today that SQL Server’s newest version, likely released later this month, will support on-prem data being migrated to Azure Data Lake storage WITHOUT ETL or pipelines!! Once data is in a data lake, it can then can be consumed by Snowflake or Azure Synapse Analytics or Databricks…

Again, Mongo will need to figure out how to play catch-up to get their data in a data lake or some easier way to combine their data with a customer’s other data in other sources.

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