Been a lot of talk about mongodb so I figured I would quickly compare them to some of our other
stocks for this last year
projected EV/S
MongoDB AYX OKTA SHOP
7ish 9.5ish 11ish 13.5ish
efficiency of capital (how much they have needed to spend to create their revenue. Ideally is above
0.6 but can be lower if your dollar revenue retention rate is really high
MongoDB AYX OKTA SHOP
0.45 0.45 0.7 0.6(a bit lower than normal because they just raised capital)
Efficiency score (how well they are creating revenue account for free cash flow). Good companies
are 0.3 or higher.
<b> I don't have recent efficiency scores for ayx, okta and shop yet but I will
get the info and post it later. Old data for shop was >0.6 </b>
MongoDB AYX OKTA SHOP
0.21 (2018)
0.32 (q4 so improving)
You can see why their EV/S is lower than our other companies. Mongodb hasn't created as much
growth with their invested money,their efficiency score is lower than "good" SaaS companies.
Having said that I think we will see much better numbers over the coming years as mongodb's atlas
product is pretty exciting. It is basically a fully managed database that they run with best
practices so you don't have to. They upgrade, backup, secure etc the database. All you need to do
is use it. Revenue from atlas grew 500% last year up to a total of 10% of mongo's revenue. The
majority of customers are a pay as you go model with very large enterprise customers in a monthly
contract. I think they may have a higher churn with that model but I also think databases are
relatively sticky and this model provides a very lower barrier to entry way to try out their
service. All in all pretty cool stuff.
-Ethan
16 Likes
Ethan,
Excellent analysis. I did notice a pointed question by one analyst at earnings regarding the return on their investments with sals. The transcript was not always clear to read due to poor transcription, but I found it an unusual question.
But of note, MDB is early in building their sales force. Most of their sales people are new, and their former sales head just left the company to become a CEO at another company. However, they seem to have some very experienced and successful sales managers in the company, including one director and the CEO himself.
So this will certainly improve their efficiency by a material amount. Atlas certainly is an exciting product with unknown potential.
There are also some other issues that may be relevant to the lower efficiency, but for future posts.
Tinker
3 Likes
tinker i noticed that question too. For the rest of you an analyst basically asked about dollar revenue retention rate (the cloud companies all follow some version of this, call it something different, and calculate it differently.) Their CEO hinted that their ratio is very attractive which I took to mean >100%.
-ethan
1 Like
I would also say that if they are upselling Atlas to their existing clients that is good in terms of efficiency though the value may be much lower so the ratio does not show up well
any one know the insider holdings as yahoo does not have any data on tham
Rajesh
Hello Rajesh,
According to a 13G filing in February, as of 12/31/17, the CEO has (including options) 2,500,000
shares.
Best regards,
Mike
I think Ethan you are using the table setting for your raves and that causes them to spread way off my smart phone screen to the right.
1 Like
wow they have 9.3 m outstanding shares and teh CEO owns 1/4th of that I will try and validate but looks good if that is the case for an investment case.
Rajesh
Hello Rajesh,
Your source for share count is only counting the 9+million of Class A shares; there are roughly 42million of class be shares for a total of about 50.5 mil. outstanding; In addition to the CEO, three co-founders have substantial holdings;
Kevin Ryan, chairman 2,983,905; Dwight Merriman 3,190,155 and Ethan Horowitz, CTO 2,411,324.
There is certainly ample insider holding. It will be interesting to see who holds after the lockup expires in mid-April.
Best regards,
Mike
2 Likes
By using the market cap, I figure the CEO owns ~ 5% of the company. That is a good $100 million on paper. Dang, my ex was a CEO…never worked out quite as well for her. What you gonna do.
But clearly there is enough insider ownership. Some of which, like Kevin Ryan, is a pre-existing self made billionaire. Though the good people at Arista came into the business even wealthier - so it was not just about the money. I doubt it is just about the money for these people either. They want to win.
Btw/ the conclusions that most of us reached in these long threads was reached by the analyst at Canaccord:
MongoDB’s earnings report shows that its aggressive go-to-market strategy continues to drive scale, which in turn fuels more growth and “exponential separation” from its competition, Davis said in a research report. The company does operate in a business where there is no “winner take all,” as the market itself is growing at more than 40 percent, the analyst said. Instead, the market is one where a “winner takes most business” — and MongoDB will scale to become a substantial business, he said.
Buying MongoDB’s stock at current levels is a “very wise” investment decision, even though it appears to already be “highly valued in an expensive sector,” Davis said.
A business where ether winner takes most, Mongo is aggressively driving the scale of its business to “exponentially” separate itself from its competition.
Difficult to say this, given they only did $150 million last year, but you can sense that is exactly what is happening and Mongo is hitting the accelerator.
This said, even though they have dramatically lowered cash burn, they may decide they need to ratchet it up again. But for now I believe they are projecting using only $10 million in cash in the coming year, but watch out for the stock option grants to all these new sales and IT people. It will be necessary. But for future discussion at future earnings conferences.
Tinker
1 Like