Like many others, I also closed out my MDB position. My reasons were similar but also a tad different. I sold about 20% in the evening hours of the report and the rest before the bell opened. I thought I was taking big advantage of the market not seeing what’s going on with S and plowed most of it in there, only to get another shellacking!! haha I’m much more confident S will come back quicker though given what they reported.
My biggest concern with MDB is how quickly Atlas is slowing. We knew they’d be under 80% YoY but they came in at 75%, which in and of itself isn’t horrible. What really shook me was when I plugged in their guide then calculated the current % of overall revenue (64%). This indicates that either EA is going to fall off a cliff or that Atlas is going to slow to somewhere in the mid 60s. That’s quite significant and I don’t want to wait around to see which of these it is.
In addition, my previous conviction that MDB is mission critical seems to either be wrong or management is misleading. Companies have many many applications built across various technologies. For example, one of my clients is a hospital and there are applications for various units, applications like Epic that are hospital-wide, tech focused applications, such as VDI that allows remote connectivity to the network… Most of the databases are in SQL Server but there are also some MySQL, a little Mongo, and a few others. Some applications are more mission critical than others.
I didn’t like the color on the call about their sales staff calling clients trying to get clients to use their applications sitting on Mongo more… “Hi, Community Hospital. This is your MongoDB sales rep, can you please use the Mongo apps you’ve built more, thanks”
So, either applications with a Mongo database are in general less mission-critical, or there is another reason for the big Atlas slowdown that wasn’t mentioned on the call.
My personal opinion with ZERO information is that this bigger slowdown coincides with their SERVERLESS offering going GA. In my basic research of this offering, it seems more similar to the Snowflake serverless than the traditional cloud platform serverless offerings (Azure SQL Database Serverless, Aurora). This is GREAT for customers and for Atlas, however, the impact to Atlas of clients moving from the more traditional way to the serverless could have a much bigger revenue impact than the improvements we saw Snowflake do.
I also don’t like what they said on the call about their future being very dependent upon new clients and new workloads. The new workloads piece worries me. Especially when their “innovations” are not big deals in my opinion. Their two biggies they discussed, one is available in SQL databases everywhere and the other doesn’t focus on the biggest hurdle to migrating platforms to Mongo. Consider the innovations coming from Snowflake; much much much larger and potentially game-changing innovations; bigger vision and goals.
So… like I said, with the big slowdown, I don’t want to sit around hoping its one thing or another. Mongo is the only of my companies (so far, still have ZS coming) that talked on the call over and over and over about macro. macro macro macro… So I closed my position. Will continue to watch and hope that I’m wrong.