MongoDB & the Digital Tranformation

Listening to the earnings calls last quarter, 6 of the 10 SaaS companies I follow explained that the digital transformation had been accelerated by 3-5 years or more in the past 2-3 months. I expect this trend to continue in the coming earnings calls for those fortunate companies benefiting from the global pandemic that has forced the entire world to hunker down, work from home, and exercise social distancing.

MongoDB is often the first company I reference when I am explaining the Digital Transformation to friends or family who don’t understand what is going on. Full disclosure: I have owned MDB stock over 2 years now and enjoyed over 300% returns on my investment. I still have a 7% position.

The Bigger story I tell: Three years ago, the world digitized more information in one year than in all prior years combined. Two years ago, they repeated that feat, INCLUDING the prior year. Last year they did it again, including the prior 2 years: Pictures, books, video, audio and all data is being digitized at a rate not even fathomed just a few years ago… Exponential vs linear growth is happening now, as we build upon the digital revolution that started 80-100 years ago and is only now reaching the hockey stick trajectory . The mass of information now available causes a virtual “firehose” of information and data that we are impossibly trying to drink from…and it is those SaaS companies that allow us to efficiently 1) harness, 2) store, 3) analyze, 4) access 5) secure and protect and 6) use that digitized data which are not just surviving now, but thriving and accelerating in this era of massive confusion, chaos and inevitable change.

MDB is and has been fulfilling several of these mandates not just for the past three years since they went public in October 2017, but for the past 13 years since they started the company in 2007 and have added new functionality, drivers, security and other feathers along the way. Straight from the company website: “First and foremost in MongoDB Cloud is a foundation for working with data. MongoDB Atlas, Search, and Data Lake serve different workloads through a common API, while Realm Database extends the data foundation to the edge.”

Many on this board will no doubt point first to MDB’s subscription revenue growth rate as a reason they may no longer be in this name: a paltry (dripping with sarcasm) 45.8% last q/q (48.6% Subscription revenue growth). That kind of growth still puts this company in the top .1% of all public companies (and probably the top .01%) with a market cap of roughly $12B now and a massive TAM remaining to capture. I will grant, as can be seen in their last 9 quarters of total revenue growth rate below, that their revenue growth % (not actual dollars) has slowly decellerated over the past 5 quarters, but 45.8% total revenue and 48.6% subscription revenue growth last quarter is a slight increase over the prior sequential quarter and I anticipate that the growth to start to reaccelerate again in this environment (and also would argue that at least some of the deceleration was due to growing pains, difficult prior years quarterly comparisons, and additions of new features and offerings). By the way, their Atlas DB growth was 76% last quarter~~ Regardless, this kind of continued revenue growth as they have scaled and built their company is incredible and nothing to simply disregard as a flash in the pan:

44.3% Q1 2019
78.3% Q1 2020
45.8% Q1 2021 (Most recent quarterly revenue growth ended April 30, 2020)

48.6%. Q1 2021 (Most recent quarterly revenue growth ended April 30, 2020)

I will maintain my bet on MDB and “let it ride” that with the acceleration being caused by Covid-19, MDB will continue its fantastic growth and is even likely to see a re-accelleration in the coming quarters as they continue to thrive and benefit from this transformation that has become a requirement, not a need based transformation. I believe they are one of the critical “picks & shovels” of this digital revolution and one that every company, government, and individual now needs and requires as part of their growing business infrastructure. Their Atlas DB offering is one of those critical components and is available on all three major cloud platforms provided by Google, Microsoft, and AWS! (I also will reiterate that Atlas showed re-accellerated 76% growth last quarter!)

What is NOSQL? It does NOT mean “no” SQL (or “not” Structured Query Language)…it means “Not Only” SQL. It offers “not only” Oracles traditional and rather antiquated SQL, but everything else now required in this digital transformation to the cloud and on the edge…a database which gives you a way to manage the data which is in a non-relational form, i.e. which is not structured in a tabular manner and does not possess tabular relationships. NoSQL is increasingly gaining popularity as it is being employed in big data and real-time applications. Their data structures are completely different from those of relational databases like Oracle’s back in the day (where I used to work a long time ago). NoSQL is an alternative to conventional relational databases in which data is put in tables and the data structure is carefully designed before the database is created. It is mainly helpful for working with huge sets of distributed data…the kind we are encountering now!! NoSQL databases are scalable, high performance and flexible in nature. This is, for lack of a better metaphor, allowing MDB to eat Oracle’s lunch right now!

The following interview last month with the CEO, Dev Ittycheria, is also worth a read to get a flavor of their management and trajectory:

I admit I’m just a finance guy and prefer to focus on the numbers and am hopelessly naive with most of the technology, but MDB fits very neatly into my larger thesis of where we are headed globally. I took one of the first SaaS companies public in the Valley in 2000, so I focus on investing in SaaS companies. While some of my information is anecdotal and based on simplistic conversations with companies, individuals and IT professionals in Silicon Valley where I live, work, and invest, those that I have spoken with tell me that MDB (a NY based company) is the “go to” platform for NOSQL, the “no brainer” choice, and also that the only viable competitor to them right now is open source. But “open source” does NOT provide the security, scalability, search-ability, flexibility, or “plug and play” out of the box capabilities. MDB just works, is safe, and is super-scalable…and that is what is required right now.

Until such time as I see a change in MDB’s story or a viable competitor who can challenge them and their growth trajectory (ORCL is too big and can’t grow fast enough at this point for me to consider them anything but a potential acquirer of MDB), I am very optimistic MDB can continue to grow and thrive in this accelerated digital transformation. Regardless, I am super grateful for the phenomenal returns I’ve enjoyed as Wall Street recognizes this company for their unique position, growth, first mover advantage and excellent management in this space.

As always, very grateful for your constructive feedback and to the many intelligent, gifted and generous individuals that regularly contribute to this awesome board. And of course, a big shout out to Saul for creating it and sharing his own wisdom and years of experience!



Hi Poleeko, and thanks for the excellent write-up.

Here’s my problem. Every time I read an excellent write-up on Mongo, like Ron’s (rdutt) take on the April quarter results, or yours just now, I think I should buy it, but then I think “It’s a great company, but it lost a dollar a share last year, and its revenue growth is really slowing down, so why should I replace one of my sparkling companies with this one which, granted, will probably keep growing forever, but slower?”

Let’s be clear also about the revenue growth “re-acceleration”. Sure in the April quarter it grew 2% sequentially from 44% to 46%, but that 46% was down 32 percentage points year-over-year from last year’s April quarter when they grew 78%. That’s considerable. And they didn’t talk about a tailwind from Covid like many of our companies, but guided down because of it.

So I wouldn’t place it in my top tier, like Crowdstrike, Datadog, or Zoom, or even between top tier and second tier, like Fastly and Okta, but more in my second tier for now, along with Alteryx and Cloudflare. But the problem is that it doesn’t replace any of them. (Sure Alteryx saw revenue drop also, but they made almost a dollar per share last year, instead of losing one). And while Mongo was up 300% for you in a little over two years, even Alteryx and Okta were 600% and 700% of what I paid for them two and a half years ago.

So Mongo’s still sitting on my mental watch list.





Nice post. MDB, SHOP, OKTA, TWLO. They all fall into the category of companies that meet three criteria:

  1. Very dominant position in their respective markets. In fact, they are the clear leaders, by far.

  2. Benefiting from the digital transformation and using a subscription model to capitalize on this mega trend.

  3. Deceleration in revenue growth from 80-90% to the 40-50% range.

Yet, despite the deceleration of revenue growth, each of their stock prices have continued to go up and up and up. What gives? Why? Is the stock price rise a temporary anomaly that will eventually reverse or is the dominant market position enough to keep outsized gains in stock price appreciation?

I don’t know the answer for sure, and, Poleeko, your post was timely as I have been pondering these questions these past few weeks and months. Yes, I had previous sold out of SHOP, then TWLO, then MDB. And I am now in the process of also selling out of OKTA (over the past months I have reduced OKTA from about 11% to a 2.5% allocation currently). I have recently wondered if these sales were/are a mistake and if I am missing something. It makes sense to me that selling a company with decelerating growth and moving the funds into a company that is still growing faster will lead me to greater portfolio returns. For example, I moved most of the proceeds from my OKTA share sales to ZM and FSLY.

Time will tell if my portfolio tinkering in favor of the fastest growers was a better decision than holding on to the likes of SHOP, TWLO, MBD, and OKTA. I guess the market (i.e. collectively the other market investors) is willing to pay up for the certainty of market dominance that SHOP, TWLO, MDB, and OKTA have established. The question is how dominant are CRWD, FSLY, LVGO, DDOG by comparison. Undoubtedly, the second group of companies is growing almost twice as fast but will they maintain their market position and will they continue to grow fast. I suppose if members of the second group start to falter then we can quickly change horses again. I will be watching closely to see how this all plays out.



Yet, despite the deceleration of revenue growth, each of their stock prices have continued to go up and up and up. What gives? Why?

I think the reason we’re asking this question (I’ve been asking it since 2017 or 2018) is because we’ve been in a multi-year trend (with bumps along the way, of course) of the market slowly catching on to the dominance of the kinds of companies we follow. We marvel at SHOP and OKTA which looked expensive at the start of 2020 and are up 134% and 78% respectively. You can live on that kind of growth!

But ZM is up 262% YTD.
FSLY is up 293%.
LVGO is up 336%.
Even DOCU is up 158%.

Make no mistake. All boats are being lifted, but the boats that were already up are being lifted less. But when “less” is 134% or even 78%, it doesn’t seem like it.

The problem is that this can’t last forever. Therefore, Chris, I strongly agree with you – we have to be ruthless in finding the best growers. That’s kind of what my post here was about:…

In my opinion the company growth for ZM, FSLY, and CRWD will outpace the market’s expectations for these stocks. In companies/stocks where I can’t say that, I’m unlikely to hold a position.



Make no mistake. All boats are being lifted, but the boats that were already up are being lifted less. But when “less” is 134% or even 78%, it doesn’t seem like it.

The problem is that this can’t last forever. Therefore, Chris, I strongly agree with you – we have to be ruthless in finding the best growers.

Yes, Bear, I agree. We need to be ruthless. What does that mean exactly? For me it means looking at A vs B rather than just thinking that A is good. Pairwise comparisons of companies to make a determination about which one will produce a better return going forward.

So I mentioned that I’ve been selling OKTA. The reason was that compared to OKTA’s mid-40%s revenue growth, alternatives like ZM and FSLY are doing better. The assumption/prediction that I am making is that OKTA will continue to grow more slowly that ZM and FSLY and therefore over time (going forward) I expect the stock price appreciation of FSLY and ZM to be greater than the stock price appreciation than OKTA. Perhaps I will be wrong but given the information that I have today, I have decided to make the switch.



So I mentioned that I’ve been selling OKTA. The reason was that compared to OKTA’s mid-40%s revenue growth, alternatives like ZM and FSLY are doing better. The assumption/prediction that I am making is that OKTA will continue to grow more slowly that ZM and FSLY and therefore over time (going forward) I expect the stock price appreciation of FSLY and ZM to be greater than the stock price appreciation than OKTA. Perhaps I will be wrong but given the information that I have today, I have decided to make the switch.


OK Logic is clear. I note that LVGO and even ZI have some better numbers than FSLY. How do they fit into current tactics? Blue Prism looks promising but I think they may be too new on the scene.





In my opinion the company growth for ZM, FSLY, and CRWD will outpace the market’s expectations for these stocks. In companies/stocks where I can’t say that, I’m unlikely to hold a position.

I took a look at your end of June portfolio post and noted that, at least at that point in time, in addition to the companies you mentioned in your post above, you also owned shares of AYX, ROKU, and LLNW.
Does that mean the you believe the company growth for these 3 companies as well will outpace the market’s expectations for these stocks?


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Saul, GauchoChris, Bear, et al:

Thank you for the lively discussion and your feedback. All three of you already know that I have a lot of respect for your thoughts and insights. I do feel a need to respond for the many others who read these posts, however, and beg you for your patience and understanding.

Absolutely no argument here about being “ruthless” or about the faster growth rates of those much faster growing companies you have all pointed out. That was however not my point at all in the post and, indeed, I do also own larger positions in ZM, CRWD and FSLY (3 of my 10 companies). I was simply not trying to compare and contrast MDB to those three companies, which are impressive outliers that I’ve allocated a disproportionate amount of my investment because I also feel they will perform incredibly over the next couple quarters at least. But should I re-allocate ALL my investments into just those three? I have to answer “absolutely not”.

Each of us has to be comfortable with his own decisions and investments, and I’m very comfortably up over 100% YTD in my ten (10) company stock investments. My post was not meant as an “either/or” argument for MDB, but instead as an “and” argument in the larger thesis of owning a larger, full spectrum of companies providing the “picks and shovels” of the digital transformation; and while I fully agree we need to be “ruthless” and pick the best companies, one can take that argument way too far and end up owning only one (1)single company and be 100% in ZM or AYX, for example. That is fine for some people, but personally, I find that extremely dangerous and just not for me. If you can tell me a better NOSQL database company in the cloud doing what MDB is doing in their space, then I would be sitting on the edge of my seat!

I prefer and try to own 10 great companies that fit my long-term thesis. MDB fits those parameters well. One of the purposes of the post was to point out that I feel MDB may outperform the markets expectation in the next few quarters and re-accellerate their revenue growth again. They are well positioned and have done extremely well fundamentally, and as an investment since I bought them over 2 years ago.

I will purposefully omit the prohibited discussions on this board around the market or beta risk, significant tax ramifications when the company investments are not in retirement accounts, and the very real risk of owning only 1 or 2 companies…or perhaps 5-6 in your cases. That is each of your own decisions and I would never try to talk you in or out of it, anymore than I would try to talk you into buying MDB.

I sincerely hope you all prove to be 100% right about those three companies outperformance…if you are, I will benefit sufficiently and fantastically with my oversized positions in all three of them also;

But I am very reticent to simply sell my other 6 positions just to be “ruthless” and to buy those three incredible outliers that will concentrate my own risk unnecessarily…and of course it is also worth mentioning that each of us has a dozen other personal factors to consider from family, to education, to life circumstances, to retirement, to sheer size of your portfolio. I try to be very, very careful without knowing a persons specific situation (which is very, very difficult) before trying to argue or convince my friends, family or anyone else on this board that they should focus all their resources and ruthlessly only invest in a few companies…but that is just my personal, humble opinion on it…

Cheers, much respect, and many thanks again for the input and lively discussion…that is what makes a market and makes us all better investors!




I have a question about your presupposition that MDB will benefit from the compression on time to digitalization occurring due to COVID.
In addition to your mentioning:
Q1FY2021 Rev Growth Rate: 46% and Sub Rev Growth 49%
Q1 FY2021 Earnings Report released for MongoDB stated Atlas, their cloud offering, revenue was reported to have increased 75% year/year and now making up 42% of total revenue.
I also point out:
Non-GAAP gross margin 73% in Q1 FY2021. This compared to 70% in Q1 FY2020.
Q1 Non-GAAP operating loss being $7.4M, for an operating margin of -5.7%. This compared to an operating loss of $12.6M in the year-ago period, representing an operating margin of -14%. Q4 operating margin was -10%.

But, my question is: after listening to the call and noting:

On the MDB Q1 FY2021 earnings call, the CFO stating “if you actually back out the contraction or the drag from mLab, organic Atlas more than doubled.”

When do you see y/y comparables being favorable (compared to the mLab numbers bump, that has limited the revenue growth in recent past?

FYI, Below is my port:

Company %. YoY growth Gross Margin
ZM 17% 169% 69%
CRWD 15%. 78% 77%
DDOG 12%. 87% 80%
FSLY 9.5%. 38%.est 48%. 57%.
Okta 8%. 46% 78%
AYX 8.5% 43% 91%
ESTC 6% (Sub. 119%)53%. 76%. sub rev 24% of total
MDB. 6% (Sub49%) 46%. 72%. Sub rev 43% of total
NET. 7%. 47.8%. 77%
TWLO. 5%. 56.6%(48% w/o SG)54%
WORK. 5%. 49.6%. 87.3%
BPRM. 2%. 100? 70?

LVGO 115% 74%

Coupa 47% 70%


Holy cow, really great thread. Poleeko, I wish we saw you more on the board. It was a pleasure to read your well constructed thesis and its responses. And I concur with all of it.

But as I have mentioned before in my prior Q earnings report for MDB, I eventually landed on the same conclusion as Saul, Gaucho and Bear on this, and moved out of MDB and in to other higher growers with better prospects.

Yet contrary to that move, I will point out that I still have a large slug of Okta. I view those two companies as taking a very similar path - growth has slowed into the 40s now, but both are now showing heavy signs of operational leverage. I really like both of these companies and their technical positioning. Yet I remain in Okta for how sticky it is and how much optionality it has from here. MDB has all these things too, but I settled on Okta > MDB ultimately. As Saul said, I too consider them both Tier 2. I personally place Okta higher in my list, and so it gets to occupy one of the few slots I reserve in my port for Tier 2. (The number allowed in my port has lessened due to having so many fantastic Tier 1 companies right now.)

One thing I want to mention on MDB is on the competitive front. Old database companies are not going to ever slow MDB down, I completely agree. However, new ones are emerging that you should be watching (both as a SaaS investor as well as an owner of MDB).

Snowflake (currently late stage private co) is a SaaS cloud-native database provider that operates across AWS, Azure and GCP. They are a fantastic platform for data warehouse & data lake needs, and are FedRAMP approved for gov use. They support structured relational data as well as the semi-structured data that MongoDB excels at, allowing a SQL and search interface over it all. This is a direct competitor to MongoDB, in particular Atlas hosting as well as its Search and Data Lake side-car products. In fact, I don’t see Atlas Data Lake really succeeding because Snowflake is doing it way better. Snowflake not only allows database storage but also has a compute engine that sits alongside that data, allowing distributed compute tasks to live next to the distributed data they are interfacing with (akin to Hadoop’s structure). Snowflake claims a massive improvement in compute tasks (like search and analytics) due to this locational proximity combined with the distributed nature of their platform, at cloud-scale.

They may be going public this year, and I plan on scouring its S-1 heavily. Very interesting company, and I will probably start coverage on their tech platform soon.

long OKTA


Hi muji,

could you maybe elaborate a bit more on the direct competition between MongoDB and Snowflake? As far as I understand it, MongoDB and Snowflake provide different core services (database program vs. data warehouse). Are you saying that Snowflake competes with MongoDB in important upsell markets for MongoDB? If so, how important are these markets for MongoDB? Or did you mean that Snowflake could disrupt MongoDB’s business entirely?

I had the feeling that the two companies are more complementary than competing, and also Gartner and Forrester don’t put them into the same competitive categories. But I’m no techie and don’t really understand these things.



I found the insider trading activity from a SeekingAlpha article. The author is a value investor and bearish on MDB and all SaaS stocks. I see this as a positive sign for MDB. From this and MDB price action, I’m pretty confident in MDB future.

Insiders Are Buying but Short Interest Is High

Over the past 12 months, insiders have bought 4.1 million shares and sold 2.5 million shares for a net effect of 1.6 million shares purchases. These purchases represent 3% of shares outstanding.

There are currently 8.2 million shares sold short, which equates to 14% of shares outstanding and just under eight days to cover. Short interest is down 5% from the prior month. Clearly, a portion of the market recognizes the firm’s deteriorating fundamentals and overvalued stock.…

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Replying to the post about the SA article referencing MDB insider purchases.

I just checked, and I don’t see any insider purchases in the last 2 years for MDB. The only thing I see is options being exercised and sales. Not sure where the author is getting his info. I use InsideArbitrage and OpenInsider websites.


…I settled on Okta > MDB ultimately.

Interestingly, both companies hit ATHs within the past two months. I started selling out of OKTA myself at $210, but trimmed only a small bit of my MDB.

That said, Gartner had OKTA as the top company in its “Magic Quadrant” last year, both in Completeness of Vision and Ability to Execute (… ).

Second place, and not too far behind, is Microsoft. Here’s a recent article on why OKTA thinks it can beat them:… “We want to connect everything, and it’s very different from Microsoft, which is thinking about getting customers from Windows 10 to Office 365 to Azure,” [CEO] McKinnon said. While McKinnon thinks that “App Diversity” will spur customers to OKTA over Microsoft, I’m not so sure.

For instance, my last company was an MS customer, not just for Office, but Azure. Our IT department was pushed hard to get every other group to use an MS product if one was available. When they couldn’t push one of my teams off of AWS, they insisted on an overnight cron job to copy data out of Amazon’s S3 into Azure. They had to admit that Alteryx was the best non-programmer analysis tool, but they pushed everyone else into Microsoft BI. This pressure came not so much from a top-down “thou shalt” (although that came down as questions from above), as much as it came from “Our company gets so many advantages from standardizing on Microsoft” and “We can try the MS product for 90 days for free so let’s try that first” (and of course, once you’re spent man-years programming to it you’re not going to rip it out unless it sucked), and “Microsoft gives us great support whenever we have questions or things aren’t working.” And even at a previous company, one manager there said, “Microsoft makes sure I don’t fail.”

So while OKTA is doing well, I think it has continued competition from Microsoft, and I’d be surprised if Microsoft’s product was only suitable for Microsoft’s other products. I feel that the company has reached peak growth, which will slow. Maybe MDB’s the same, but for some reason I had more confidence in it then MDB. I hate to disagree with Muji, because that means I’m probably wrong, but we’ll see.

And as for Mongo and Snowflake, I, too, am watching Snowflake. I know the CEO there, Frank Slootman, as he was CEO at another company I previously worked at (which he took public and then sold) and, frankly, he’s excellent both as a people manager and steering a company’s direction. The only gotcha with Snowflake is that everyone else is looking at them too, and I suspect their IPO is going to have a colossal valuation ($12+ Billion so far) from the get-go as expectations are sky-high.

You can see a recent interview with Slootman here:… I recommend it even if you’re not looking at Snowflake or MDB. He talks about how big the cloud software market is, saying that all software developed over the last century is moving to the cloud - it’s a bigger market than mobile, in his opinion.


Just checked Here is the info I found regarding MDB insider trading.

Number of Insider Trades
INSIDER TRADE	            3 MONTHS	        12 MONTHS
Number of **Open Market** Buys	19	         69
Number of Sells	                26	         102
Total Insider Trades	        45	         171

CEO Buy this year(automatic buy, not option exercise)

Date         # of shares
6/1          23,000
5/1          23,000
4/1          23,000
3/2          23,000
2/3          23,000
1/2          23,000


Sounds like for many IT people Microsoft is today’s IBM . “You never get fired for buying IBM” But I wonder if that self protecting approach paid off for these employees (or at least for the company) in the long run.
Microsoft has been invigorated since Balmer left, it’ still a powerful force. But OKTA vs MSFT, there is room for a duopoly. But I prefer “almost monopolies” just enough competition to keep leader on their toes

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I don’t get the insider buying info. I agree with Kevin that does indicate there were insider buys, but every other site I look at does not show any insider buys.

Can anyone explain this discrepancy?…

Here is a June 1 transaction for the CEO.

Looks like he converts his B class shares (extra voting weight) into A shares and then sells them on a program schedule. is being confused by some aspect of this activity, because when said and done, he has no more shares of class A than before and fewer class B?

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Very briefly regarding: Insider Trading

(which is probably WAY off topic here, gents)

FWIW: I don’t pay any attention to these things anymore, but from personal experience as an executive in several public companies, these trades are certainly all part of the SEC 10b5-1 rule, which allows insiders in publicly traded companies to set up an automatic trading plan (long in advance and not alterable) for selling shares they own on a periodic, regular basis (which are sometimes also options that get converted to shares and then sold).

No offense, but I really would not pay too much heed to this and I personally would not spend any time on it. Its a very standard and extremely regulated process and seldom has much impact long-term on a fundamentally sound company.

I’d encourage you to simply google: “10b5-1” if you really want to geek out on this and read the detailed SEC legal-eeze.




YES…very much looking forward to Snowflake IPO and expecting it will be a big one. Thank you for your commentary on the underlying tech. I too will be reading their S-1 with a keen interest and look forward to your coverage on their tech platform. We are fortunate to be so early to this game…an exciting time, no doubt.

Thanks again, Muji!