MongoDB Q420

MDB - Q420

PR: https://investors.mongodb.com/file/Index?KeyFile=403323280
Fool take (Vena): https://www.fool.com/premium/coverage/investing/2020/03/17/m…
Bear out: https://discussion.fool.com/sold-mdb-34441638.aspx
sarksnz notes: https://discussion.fool.com/mdb-q4-2020-cc-notes-34442836.aspx
mekong thoughts: https://discussion.fool.com/mdb-thougths-and-recent-moves-344424…
gmcnatt on COVID comments: https://discussion.fool.com/a-few-comments-during-the-call-i-fou…
mekong tidbit on CTO leaving: https://discussion.fool.com/i-sold-due-to-the-co-founder-steppin…
Diablito take: https://discussion.fool.com/mdb-a-little-perspective-34444154.as…
CC transcript: https://www.fool.com/earnings/call-transcripts/2020/03/17/mo…
CC recap (Starrob): https://discussion.fool.com/4056/mongodb-q4-2020-prepared-remark…

Revenue 123.5M +44%

  • Sub Rev 117.8M +46%
    – Atlas +80%
    … 41% of total +900bps, +100bps seq
  • Svcs 5.7M
    Adj Op Loss -12M (vs -9.7M)
    … margin -9.7% (vs -11.3%)
    Adj Loss -14.5M (vs -9.1M)
    Adj EPS -0.25 (vs -0.17)
    Gross Margin 74% +300bps, +200bps seq
    Opex 129.6M +55%
    CFFO -8.6M
    FCF -10.9M (vs -12.6M)
    … margin -8.8% (vs -14.7%)
    Cash 987M
    Empl ~2000
    Custs 17k +27% +7% seq
  • Custs >100K 751 +35%
  • Custs >1M 62 +59%
  • Atlas custs 15.4k +35%
    ARR >120%

FY20:
Revenue 421.7M +58%

  • Sub Rev 399.8M +61%
    Adj Op Loss -53.7M
    Adj Loss -55.9M (vs -52.2M)
    FCF -35M (vs -48.8M)
  • one large multi-year deal for Enterprise Advanced from Fortune 50 cust drove $3.5M of out-performance
  • CTO/co-founder is leaving role and board in July, for “a new challenge” – see his goodbye blog post https://www.mongodb.com/blog/post/hasta-la-vista
  • CTO duties had already been distributed to underlings, likely hiring replacement from within
  • Atlas now over $200M run rate
  • new “Modernization Toolkit” w/ SI partners (Informatica and Hitachi), in order to help enterprises migrate off legacy databases
  • added new BoD member, CTO of Grab (SE Asia Uber+Eats like app), ex-AWS Databases & ex-Oracle
  • no impact seen yet, but are anticipating a 15-25M impact in FY21 from pandemic

My stance: We’ve gone from sub rev of +71% to +56% to +46% in 3Qs, so the deceleration trend continues. It’s also clear in comparing FY20 to just Q4 (+61% slowing to +46%). I am concerned about the massive deceleration of Atlas growth, which went from +250% to +185% to now just +85% this Q, more than halving! Cust growth has seemingly dropped from +92% to +27% seq, but that is due to lapping when mLab customers got folded in. On the plus side, customers continue to spend more, and margins are slowly creeping the right direction, but it’s too slow – Opex growth remains high and now overwhelms top-line growth, and will remain high as they build out sales around Atlas, esp globally. CTO/Co-founder leaving is also not good news, as it seems he’s ready for something new. However, as mekong highlighted, his critical duties had already been distributed amongst his underlings and sounds like mgmt knew this this change was coming and have planned appropriately.

I had previously decreased my position in MDB and TTD earlier this year, by >50% on each, to invest into NET (Cloudflare) and have some cash. I am likely to decrease these positions further as we continue to navigate these choppy waters due to pandemic and its effects. I still really like this company and it will assuredly continue to growth and get to profitability, but think there are better, more immediate rebound plays out there after the massive market drop, that are still at hypergrowth stage in the near term. Like ESTC and ZS, I will continue to have MDB on watchlist to see how it plays out, and possibly re-enter if Atlas growth ramps back up post-pandemic, or we start seeing an uptick due to their new search products (Atlas Data Lake & Search) and their edge computing platform using Realm/Stitch over Atlas.

-muji
long MDB 5%

49 Likes

My stance: We’ve gone from sub rev of +71% to +56% to +46% in 3Qs, so the deceleration trend continues. It’s also clear in comparing FY20 to just Q4 (+61% slowing to +46%). I am concerned about the massive deceleration of Atlas growth, which went from +250% to +185% to now just +85% this Q, more than halving! Cust growth has seemingly dropped from +92% to +27% seq, but that is due to lapping when mLab customers got folded in. On the plus side, customers continue to spend more, and margins are slowly creeping the right direction, but it’s too slow – Opex growth remains high and now overwhelms top-line growth, and will remain high as they build out sales around Atlas, esp globally. CTO/Co-founder leaving is also not good news, as it seems he’s ready for something new. However, as mekong highlighted, his critical duties had already been distributed amongst his underlings and sounds like mgmt knew this this change was coming and have planned appropriately.

I had previously decreased my position in MDB and TTD earlier this year, by >50% on each, to invest into NET (Cloudflare) and have some cash. I am likely to decrease these positions further as we continue to navigate these choppy waters due to pandemic and its effects. I still really like this company and it will assuredly continue to growth and get to profitability, but think there are better, more immediate rebound plays out there after the massive market drop, that are still at hypergrowth stage in the near term. Like ESTC and ZS, I will continue to have MDB on watchlist to see how it plays out, and possibly re-enter if Atlas growth ramps back up post-pandemic, or we start seeing an uptick due to their new search products (Atlas Data Lake & Search) and their edge computing platform using Realm/Stitch over Atlas.

I recently sold out of MDB (at 106) after reading similar perspectives on the recent report. Unfortunately, it was just before it had this huge bounce back to 130. I still find the bounce inexplicable given your analysis. I don’t know what the market is seeing right now that we aren’t. Perhaps it is confidence in MDB’s strong competitive position and still strong longer term prospects or maybe it’s just this extreme random volatility. I gives me some humility on trying to trade in and out of some of these growth stocks.

Personally, I will keep MDB on my watch list as well and likely reenter with a smaller position if the price drifts lower again . Given the market’s recent short term volatility, it’s better to look at the longer term picture and not overthink the short term numbers. Just my two cents.

3 Likes

remmdawg,

I think you nailed it with this statement.

Perhaps it is confidence in MDB’s strong competitive position and still strong longer term prospects…

Full disclosure, I still have my full MDB position and it’s usually a top 5 holding depending on what other stocks are doing in my portfolio.

I think that MDB has the potential to “pull a SHOP” and have some tremendous SP appreciation even with the slowing growth because of the tremendous opportunity ahead of it. And I don’t see the current health crisis affecting them that much (like most of our stocks).

8 Likes