MongoDB has been on somewhat of a tear this year. I’m really happy about this as it’s my second largest position (TTD is #1). But I am wondering why the stock has almost doubled year to date.
Revenue growth is slowing down quite a bit, especially the last two quarters.
| Rev | Apr | Jul | Oct | Jan | Tot |
|---|---|---|---|---|---|
| FY2018 | 34.7 | 38.4 | 42.9 | 50.1 | 166 |
| FY2019 | 50.1 | 59.6 | 70.2 | 85.5 | 265 |
| FY2020 | 89.3 | 99.4 | 109.4 | 123.5 | 422 |
| FY2021 | 130.3 | 138.3 | 150.8 | 171.0 | 590 |
| FY2022 | 181.6 | 198.7 | 226.9 | 266.5 | 874 |
| FY2023 | 285.4 | 303.7 | 333.6 | 361.3 | 1,284 |
| FY2024 | 368.3 | ||||
| Grth | Apr | Jul | Oct | Jan | Tot |
| FY2018 | |||||
| FY2019 | 44.3% | 55.4% | 63.7% | 70.8% | 59.9% |
| FY2020 | 78.2% | 66.7% | 56.0% | 44.5% | 58.9% |
| FY2021 | 45.9% | 39.2% | 37.8% | 38.4% | 40.0% |
| FY2022 | 39.4% | 43.7% | 50.5% | 55.8% | 48.0% |
| FY2023 | 57.1% | 52.8% | 47.0% | 35.6% | 47.0% |
| FY2024 | 29.0% |
Naturally, we’ve seen this in just about all of our SaaS companies, and especially so with those that license their products based upon consumption. With workload optimizations affecting the hyperscalers and virtually all companies related to them, it shouldn’t be so surprising that MDB’s business growth is hitting the brakes a bit.
However, there are some financial metrics that may provide the primary reason for the appreciation in the share price. The following guidance numbers are the midpoints for the range provided.
Here is the company’s quarterly adjusted operating income guidance:
| Adjusted Operating Income Guidance | ||||
|---|---|---|---|---|
| Qtr | Apr | Jul | Oct | Jan |
| FY2018 | -21.3 | |||
| FY2019 | -21.8 | -23.3 | -20.5 | -0.5 |
| FY2020 | -13.5 | -16.0 | -16.0 | -16.0 |
| FY2021 | -13.0 | -23.0 | -26.0 | -22.0 |
| FY2022 | -20.0 | -23.0 | -24.0 | -12.0 |
| FY2023 | -3.5 | -17.0 | -9.0 | 7.0 |
| FY2024 | 11.5 | 37.5 |
Here is are the actuals:
| AdjOI | Apr | Jul | Oct | Jan |
|---|---|---|---|---|
| FY2018 | 14.5 | |||
| FY2019 | -18.9 | -17.9 | -7.8 | -9.7 |
| FY2020 | -12.6 | -14.8 | -14.3 | -12.0 |
| FY2021 | -7.4 | -10.2 | -16.0 | -16.0 |
| FY2022 | -8.4 | -11.5 | -3.5 | -1.3 |
| FY2023 | 17.5 | -12.4 | 19.8 | 37.2 |
| FY2024 | 43.7 |
This has turned positive for this fiscal year and is growing nicely.
One can see this from the annual guide:
| Adjusted Operating Income Guidance | ||||
|---|---|---|---|---|
| Year | Apr | Jul | Oct | Jan |
| FY2018 | -76.3 | -83.0 | ||
| FY2019 | -83.0 | -83.0 | -80.6 | -57.0 |
| FY2020 | -61.0 | -60.5 | -57.7 | -73.0 |
| FY2021 | -74.0 | -68.5 | -55.6 | -79.0 |
| FY2022 | -72.0 | -64.5 | -35.4 | -14.5 |
| FY2023 | -4.0 | -10.5 | 31.8 | 76.5 |
| FY2024 | 117.5 |
Last quarter’s guide of $76.5 MM increased by almost 54% to $117.5 MM.
Here is a table of the number of Atlas customers over time. It looks like the growth percentage may have bottomed out.
| Quarter | AtlasCus | QoQ Gr |
|---|---|---|
| Jan-17 | NA | NA |
| Apr-17 | 1,300 | NA |
| Jul-17 | 1,900 | 46.2% |
| Oct-17 | 2,600 | 36.8% |
| Jan-18 | 3,400 | 30.8% |
| Apr-18 | 4,400 | 29.4% |
| Jul-18 | 5,300 | 20.5% |
| Oct-18 | 6,200 | 17.0% |
| Jan-19 | 11,400 | 83.9% |
| Apr-19 | 12,300 | 7.9% |
| Jul-19 | 13,200 | 7.3% |
| Oct-19 | 14,200 | 7.6% |
| Jan-20 | 15,400 | 8.5% |
| Apr-20 | 16,800 | 9.1% |
| Jul-20 | 18,800 | 11.9% |
| Oct-20 | 21,100 | 12.2% |
| Jan-21 | 23,300 | 10.4% |
| Apr-21 | 25,300 | 8.6% |
| Jul-21 | 27,500 | 8.7% |
| Oct-21 | 29,500 | 7.3% |
| Jan-22 | 31,500 | 6.8% |
| Apr-22 | 33,700 | 7.0% |
| Jul-22 | 35,500 | 5.3% |
| Oct-22 | 37,800 | 6.5% |
| Jan-23 | 39,300 | 4.0% |
| Apr-23 | 41,600 | 5.9% |
Here are the trailing quarterly valuation numbers (Market Cap/TTM Sales) with the high, low and close for each quarter as well as today’s value using the most recent TTM Sales figures.
| Quarter | 1. Sales | Hi | LOW | EOP |
|---|---|---|---|---|
| Jan-18 | 166 | 9.4 | 7.5 | 8.2 |
| Apr-18 | 181 | 12.8 | 7.0 | 10.0 |
| Jul-18 | 203 | 15.7 | 8.9 | 13.7 |
| Oct-18 | 230 | 19.5 | 12.2 | 18.7 |
| Jan-19 | 265 | 18.9 | 13.3 | 18.7 |
| Apr-19 | 305 | 27.8 | 15.9 | 25.3 |
| Jul-19 | 344 | 29.9 | 20.5 | 23.1 |
| Oct-19 | 384 | 23.6 | 16.3 | 18.8 |
| Jan-20 | 422 | 22.8 | 16.4 | 22.1 |
| Apr-20 | 463 | 22.7 | 11.7 | 20.2 |
| Jul-20 | 502 | 28.4 | 17.9 | 26.7 |
| Oct-20 | 543 | 29.9 | 20.4 | 25.0 |
| Jan-21 | 590 | 40.9 | 22.5 | 37.9 |
| Apr-21 | 642 | 41.0 | 24.0 | 28.4 |
| Jul-21 | 702 | 35.6 | 21.5 | 32.4 |
| Oct-21 | 778 | 44.8 | 29.6 | 44.5 |
| Jan-22 | 874 | 45.2 | 26.1 | 31.1 |
| Apr-22 | 978 | 32.7 | 18.9 | 24.6 |
| Jul-22 | 1,082 | 23.2 | 13.5 | 19.7 |
| Oct-22 | 1,189 | 22.6 | 9.7 | 10.6 |
| Jan-23 | 1,284 | 12.2 | 7.3 | 11.6 |
| Apr-23 | 1,367 | 12.7 | 9.7 | 12.3 |
| Now | 1,367 | 21.1 |
MongoDB is now richly valued, even when compared to some of our other high-fliers. Looking forward, its multiple is now above 15X Sales.
Perhaps the serious appreciation we got with MongoDB will materialize with Snowflake and Datadog once increasing consumption trends become more evident/predictable. If I didn’t strongly believe in MongoDB’s long-term prospects, I’d probably move some money out of it and into Snowflake & Datadog right now.
Below are links to recent announcements that, in my opinion, will have meaningful effects on its long-term prospects. They are continually making it easier to develop new applications on its platform and are leveraging AI really well.
I look forward to the next earnings call.
DJ