MongoDB earnings announcement

[rdutt]

I believe revenue growth for MongoDB was expected to be 26% YoY, so the announcement of being up 38% YoY looks like a significant beat to me. Atlas is still growing strong, up 61% YoY. Gross margin slightly down, though. We’ll see what the market thinks.

https://investors.mongodb.com/news-and-events/news-releases/…

Third Quarter Fiscal 2021 Total Revenue of $150.8 million, up 38% Year-over-Year
Continued Strong Growth with Over 22,600 Customers as of October 31, 2020
MongoDB Atlas Revenue 47% of Total Q3 Revenue, up 61% Year-over-Year
NEW YORK, Dec. 8, 2020 /PRNewswire/ – MongoDB, Inc. (NASDAQ: MDB), the leading, modern general purpose database platform, today announced its financial results for the third quarter ended October 31, 2020.

“MongoDB continued to perform at a high level in the third quarter, highlighted by revenue growth that was well ahead of our expectations. The strength of our product platform and go-to-market execution has established MongoDB as a key strategic partner for any organization looking to innovate quickly to seize new opportunities or to respond to new threats,” said Dev Ittycheria, President and Chief Executive Officer of MongoDB.

“COVID-19 has further elevated the importance enterprises are placing on moving quickly to the cloud. With the recent announcement of multi-cloud clusters, MongoDB Atlas is the first cloud database to enable an application to run simultaneously across multiple cloud providers. By using MongoDB, customers not only get an easy migration path to the cloud but also the ability to leverage the best capabilities of the major cloud providers and enable true platform independence.”

Third Quarter Fiscal 2021 Financial Highlights

Revenue: Total revenue was $150.8 million in the third quarter fiscal 2021, an increase of 38% year-over-year. Subscription revenue was $144.1 million, an increase of 39% year-over-year, and services revenue was $6.7 million, an increase of 19% year-over-year.
Gross Profit: Gross profit was $104.7 million in the third quarter fiscal 2021, representing a 69% gross margin, compared to 71% in the year-ago period. Non-GAAP gross profit was $108.6 million, representing a 72% non-GAAP gross margin.
Loss from Operations: Loss from operations was $58.1 million in the third quarter fiscal 2021, compared to $38.7 million in the year-ago period. Non-GAAP loss from operations was $16.0 million, compared to $14.3 million in the year-ago period.
Net Loss: Net loss was $72.7 million, or $1.22 per share, based on 59.4 million weighted-average shares outstanding in the third quarter fiscal 2021. This compares to $42.4 million, or $0.75 per share, based on 56.4 million weighted-average shares outstanding, in the year-ago period. Non-GAAP net loss was $18.2 million or $0.31 per share. This compares to $14.6 million, or $0.26 per share, in the year-ago period.
Cash Flow: As of October 31, 2020, MongoDB had $966.8 million in cash, cash equivalents, short-term investments and restricted cash. During the three months ended October 31, 2020, MongoDB used $8.1 million of cash from operations, $5.6 million in capital expenditures and $1.2 million in principal repayments of finance leases, leading to negative free cash flow of $14.9 million, compared to negative free cash flow of $13.1 million in the year-ago period.

[mekong22]

Overall, I’d say this quarter was “steady as she goes”, in line with what I was expecting. No major concerns or red flags for me after reading the announcement and listening to the earnings call.

As noted in the OP above, the guidance was for 26%, but management’s comments during last quarter’s earnings call revealed that they felt they were being very conservative, and the strong stock recently was indicative of the street expecting something more. Ultimately they came in right in line with the mid-to-upper 30%'s that I had predicted in my Smartsheets writeup last night, at 38%, which I, as an owner of MDB, am pretty happy with.

I listened to the conference call. Overall, management seemed excited about customer growth, as well as expansion of NRR this quarter.

They say that existing Atlas customers’ expansion slowed considerably in Q1, picked up a bit in Q2, and has now returned to pre-COVID levels during Q3. Atlas self serve is also doing well, helping them sign new customers with limited effort, and they explained that, especially during the slow COVID months, they have been making an effort to reach out to the contacts that signed up via self serve, and have often been able to expand the sale into additional products too.

They gave one example of a large foreign telecom company that moved from a legacy Oracle database onto MongoDB this past quarter.

They also raised the Q4 guidance which previously was only about +15%, is now +26%, similar to what they guided three months ago for the quarter just ended. Some of the comments on the conference call again made it sound like management feels the guidance is conservative. They said something along the lines of assuming that existing atlas customers growth would still be slower in Q4 compared to how it is currently trending, essentially saying they used the expansion rate from the very end of Q3 to guide Q4, rather than how it is looking now, five weeks later, which appears to be improved.

But they also warned that Q4 last year was a very strong quarter and a tough comp. Last year in Q4, you may recall, there was one particularly large deal with a Fortune 50 Enterprise Advanced customer, which under the new ASC 606 revenue recognition rules added $3.5 million to Q4 last year that they think of as somewhat nonrecurring. If they are able to get to high 30%'s again next quarter, similar to how they outperformed the guidance this Q, I’d be very happy with that, especially against the tough comp.

They are excited about the progress with Realm, which was acquired in mid 2019. The recently announced feature Realm Sync, which will be released soon, should help with one of their customers’ biggest pain points.

https://www.mongodb.com/realm/mobile/sync

They say they are looking to pull forward some new hiring into Q4 that originally was expected to not be added until next year. They say due to some cost savings they’ve had this year (less travel etc.) and the strong business trends recently, it makes sense to bring on more staff sooner, which I interpret as a positive for the business going forward.

They made a few big picture descriptive comments about the business, that they reiterated a couple times.

They said they don’t consider themselves to be a NoSQL database (that’s how I always decribed them), but instead they feel they should be considered a “modern general purpose data platform”. They want to become the “premier place to build applications”

Now that could be just colorful fluffy talk to appeal to the wall street audience. I’m certainly not tech savvy enough to know how much of a real transformation this really is. But management certainly sounds persuasive. They feel like they are building the platform of the future and there is a very long way to go.

Overall, I’m still comfortable holding my pretty big position in MDB. I expect I’ll continue to own them for years to come. It will certainly be interesting to see how next year goes once the pandemic is behind us.

-mekong

[PoleekoCowboy]

Hear, hear! Thank you for the recap, @rdutt!

When I penned the following post describing MDB and its virtues…

https://discussion.fool.com/mongodb-the-digital-tranformation-34…

…and explained my 7% position on July 27, 2020, MDB was trading around $200 per share. It has surged another 40% over the past 4.5 short months…nothing to sneeze at; but certainly not the returns of my ZM, CRWD or NET investments. That is what you get when you hang around such a tough crowd! [pun intended]

That said, there are a couple things I would update in my last post above, though the overall thesis largely remains in tact, albeit at a slower rate for at least the next two quarters. MDB remains a critical part of this digital transformation long-term and I am encouraged by their relatively robust performance through Covid-19 and the continued performance and execution announced in their quarterly release today (39% subscription revenue growth; Atlas continuing to gain significant traction and showing 61% revenue growth yoy, and they are continuing to displace Oracle in large deals…all very encouraging), but is it enough?

Perhaps, but I fear NOT in the short-term. MDB certainly does not deserve a tier one 15-20% portfolio allocation in my portfolio (reserved for CRWD, NET and DOCU all growing significantly faster and leaders in their respective segments). I will however retain a small 4-5% allocation and trim 2-3% of my position tomorrow, based on todays earnings report and quarterly call. Note: I have held MDB for almost three years now and enjoyed more than a 500% return on this investment (yep…put your hand out Uncle Sam) and while I believe MDB is still well positioned and will continued to “truck on down the road” and recover their growth in a few quarters, their trajectory is in a lull. I don’t believe they have been a huge beneficiary of Covid, and I do expect they can re-accelerate into the mid-40% growth AFTER we get through Covid in the summer; however, in the short-term they have an admittedly very tough comp…next quarter in particular:

Next quarter: If they add their customary $7-12m in sequential quarterly revenue, they will only achieve ~28% to 32% yoy revenue growth for next quarter (Q4). They would need to have a massive, unprecedented quarter (the size of which MDB has not had in at least 12 quarters, if ever) and would need to add double or more their highest sequential revenue add just to barely achieve 40% next quarter. With a resurgence of the economy and the increased spending that will no doubt resume when this pesky virus has been extinguished (or is at the least has been brought to bay), I could see some acceleration a couple quarters down the road, but not for 6 months. I see headwinds for at least two quarters for MDB, and so will trim my position to add to others that are managing this pandemonius pandemic far better and maintaining their superior growth.

Thank you again to those who recapped the earnings release and quarterly call.

Cheers!

Poleeko

[nilvest]

Good summary here.

I dont have position in MDB due to relatively lower growth rate and higher valuation… but I thought the results showed some acceleration. Becoming a candidate to consider.