$MDB Q3 2022 Earnings Report
$MDB Long
MongoDB was created in 2009 as an open-source, highly scalable, and free database. It also has a commercial version. You can find MongoDB’s source code on GitHub. MongoDB has a reputation for being a versatile, flexible database and is currently used today as the backend data store of many high-profile businesses and organizations such as Forbes, Facebook, Google, IBM, Twitter, and many more. Most database companies have had an amazing quarter this time around as they haven't been affected much by inflation.
Above, is the list of Mongo’s top competitors. Amazingly all of them except three were able to beat all the revenue estimates and have good guidance which made some of their stocks go up by as much as 30%. Even the ones with a poor history of having good reports were able to beat everything.
Next, let’s take a look at their customer base. The graph above shows the number of customers who have spent 100k or more on their services which shows a steady increase since 2020 and as reported by the CEO in the last quarter, this trend is expected to continue. The company continued to add to its total customer base at a pace of around 2k per quarter, ending Q1 with 35.2k customers. The count of customers generating more than $100k in annual revenue also grew 30% as compared to last year to 1,379. Regarding survivability, the company has about $1.8 billion in cash and short-term investment of $1.1 billion which they will get the money back by 2026. Profit gross margins are also around 70% which means for every product they sell, they get a 70% profit on it. In today’s market, these gross margins are really good and they will definitely have the bigger advantage here. On the other hand, MongoDB should see a remarkable 34% growth this year taking revenues from $874 million in 2022 to $1,172 million in 2023.
Right now in this market, most investors don’t care whether the company has beat the estimates or not. The main thing everyone looks at is the guidance of the company for future quarters. The first thing that stands out is that revenue growth is accelerating. Most economies around the world have some problems right now and so any company that can show not just consistent but accelerating levels of growth attracts the attention of investors. MDB revenue growth was 52% compared to last year based on the April report. Their revenue has been increasing every quarter since the April 2021 quarter. The balance sheet is also solid with approximately $1.8bn of gross cash and $1.1bn of gross debt, leaving $700m net cash. Assuming the company moves into better cash flows, the cash reserves are more than good. So as far as operations go, MongoDB appears to have enough cash on hand to cover operations for years, and since the 2022 operations were cash positive, the expectation of growth into profitability should mean the company will be generating cash, not burning through it. Now let’s take a look at what the company had to say about inflation. During the last quarter, they delivered a +$20M revenue beat. However, management remained cautious for the full year, only increasing FY23 revenue guidance by +$16M. The guidance still provided a 41% year-over-year growth. MongoDB delivered +56% Y/Y growth for that quarter, showing that they could very easily beat the new estimate that they have set. As also mentioned by their COO: “We do anticipate that the current macro slowdown we’re seeing in self-serve and the mid-market and primarily in Europe will eventually impact all geographies and all channels. Simply put, it is our experience and our assumption that it would be inappropriate to think that a macro slowdown would be confined to the low end of the market. However, we also don’t expect that impact will be the same across all channels.” Their management has a track record of underpromising and overdelivering and a large beat combined with a soft raise is more than most investors could ask for in the current market. MongoDB also benefits from healthy relationships with its rivals. For example, AWS became a significant partner, actively co-selling Atlas to enterprise customers. In the G2 Grid for Document Databases, MongoDB and MongoDB Atlas are way ahead of everyone else, only second to AWS DynamoDB in market presence. One reason behind MongoDB’s recent growth is the fact that the company has leaned into its cloud partnerships to broaden its network of potential buyers.
In particular, in Q1 the company deepened its partnership with Amazon AWS, making a new multi-year contract that includes both joint sales pushes as well as additional technology integrations. The company also launched a new payment feature for MongoDB Atlas customers who are part of the Google Cloud ecosystem. Market Cap:22,818,520,310 P/E Ratio:-65.10 Initial reaction:Long Researched reaction:Long CEO: Time:After close Estimate:+20%