MongoDB MDB Q3 quick hit

Revenue up 52% YOY (crushed guidance as expected, @where you guys thought they would be)
Net loss increasing on both a GAAP and non-GAAP basis
Cash Flow increasingly negative over Q3 last year.

Third Quarter Fiscal 2020 Financial Highlights

Revenue: Total revenue was $109.4 million in the third quarter fiscal 2020, an increase of 52% year-over-year. Subscription revenue was $103.8 million, an increase of 56% year-over-year, and services revenue was $5.6 million, an increase of 8% year-over-year.
Gross Profit: Gross profit was $77.3 million in the third quarter fiscal 2020, representing a 71% gross margin, compared to 75% in the year-ago period. Non-GAAP gross profit was $79.3 million, representing a 72% non-GAAP gross margin.
Loss from Operations: Loss from operations was $38.7 million in the third quarter fiscal 2020, compared to $20.2 million in the year-ago period. Non-GAAP loss from operations was $14.3 million, compared to $7.8 million in the year-ago period.
Net Loss: Net loss was $42.4 million, or $0.75 per share, based on 56.4 million weighted-average shares outstanding in the third quarter fiscal 2020. This compares to $22.5 million, or $0.43 per share, based on 52.7 million weighted-average shares outstanding, in the year-ago period. Non-GAAP net loss was $14.6 million or $0.26 per share. This compares to $6.9 million or $0.13 per share in the year-ago period.
Cash Flow: As of October 31, 2019, MongoDB had $426.4 million in cash, cash equivalents, short-term investments and restricted cash. During the three months ended October 31, 2019, MongoDB used $11.5 million of cash from operations, $0.8 million in capital expenditures and $0.8 million in principal repayments of finance leases, leading to negative free cash flow of $13.1 million, compared to negative free cash flow of $9.7 million in the year-ago period.

(no position going into earnings)


Keep on keeping on…

I just continue to pay attention. They continue to do well and I plan to continue to hold my shares (currently about 6% of our total investable assets). I need to read the conference call transcript. I’m interested to hear details about the progress of Atlas.

I wonder what another five years of hypergrowth will give us… they’re still a small company from a revenue standpoint. (I’d like to see some substantial positive cash flow by then!)

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He is no fool who gives what he cannot keep to gain what he cannot lose.


MongoDB is about an 8% position for me, and this report isn’t giving me any reason to sell shares. Their guidance can’t really be taken seriously, and I’m confident they will beat that handily next quarter, but there is a slowdown in revenues likely coming. However, scenarios of them posting mid to high 40s growth next quarter certainly aren’t out of the picture based on historical beats.

Is growth slowing to the mid to high 40s reason to sell the shares? I don’t think so.

Mongo’s competitive positioning hasn’t changed and there don’t seem to be serious threats lurking. Compare this to Elastic and I think you can see the reason for the discrepancy in the market’s reaction. I own Elastic as well FWIW. Mongo’s competitive position seems pretty clear. Elastic’s is more questionable. Another example of a great CAP is Shopify and the market sees that clearly as well. Mongo seems to be the clear winner in NoSQL and that space is growing rapidly.

Finally, the transition to Atlas is dampening growth as Atlas doesn’t recognize nearly as much revenue upfront as Enterprise term license deals. So this is having an optics effect on the business, but that will remain the case for some time until Atlas and Enterprise begin growing at similar rates. Is that something that investors should be concerned about? Probably not unless their competitive position changes as could be seen in growth declining significantly further. That seems unlikely to me.



I sold my shares in the after hours, and will consider buying back if the price comes down. I’m concerned about the growing losses combined with slower growth. I don’t take it as a given that growth is slowing to the mid to high 40s. It could be worse. Mongo reported 85.5m rev in Q4 last year. If Mongo beats high end of guidance by 7% next quarter, which is a pretty normal size beat for them, they will reach 118.77m in revenue. That’s 38.9% growth over the year ago period. If they beat by 15%, they hit 127.65m, which is 49.2% growth. I think it’s fair to say that we’re looking at a slowdown to anywhere between high 30s to high 40s growth - not mid to high forties. If they are 50% growth next quarter, the stock should go gangbusters.

How will the market react if Mongo’s growth dips below 40%? I have a lot of conviction in this company becoming a dominant force in a huge market. I really wonder if I made the right decision to sell my shares, and will probably buy back on a dip. But it makes more sense to me to put my investment dollars in hypergrowth companies that have accelerating revenue and/or are closer to profitability.