December 4, 2018 | 12:00 PM by Jay Kunstman |

Earnings Preview – MongoDB (MDB)

MongoDB, which offers a general-purpose, document-oriented database designed to ingest large volumes and varieties of real-time data, is set to report earnings after the close today.

Back on September 5th, the company reported Q2 earnings that saw all financial metrics come in ahead of consensus estimates:

-EPS of ($0.41) vs ($0.45) estimate – Beat
-Revenue of $57.5M vs $51.7M estimate – Beat
-Subscription Revenue of $52.9M vs $48.1M estimate – Beat
-Services Revenue of $4.6M vs $3.6M estimate – Beat
-Billings of $61.5M vs $59.3M estimate – Beat
-Total Customer Count of over 7,400 vs 6,600 Q/Q and 4,300 Y/Y
-Net Annual Recurring Revenue (ARR) Above 120%
-Ended Q2 with 438 Customers generating at least $100K in ARR, up from 394 Q/Q and 296 Y/Y

The company’s cloud-based Atlas service was also a very bright side in an already bright quarter as customer count increased 1,000 sequentially for the second consecutive quarter to 5,400. This helped drive Atlas to reach $10.3M (or 18% of total revenue, up from 14% Q/Q and 5% Y/Y) in revenue in the quarter, which represented over 400% growth Y/Y and ~53% growth from the prior quarter. Stifel analyst Brad Reback noted that quarterly revenue/Atlas customer (~$1,900) continues to improve sequentially, which is particularly impressive given the strong net adds the company has posted (1,000, 1,000, 800, 660) over the last 4 quarters, respectively.

Recent Checks

Stifel analyst Brad Reback was out with a preview note saying that they believe the solid momentum across MongoDB’s business throughout the last several quarters, as well as positive secular trends within the database market suggest a growing interest in NoSQL-based technologies, and would not be surprised to see the company once again report upside to top-line estimates.

However, the analyst does point out that while still growing a healthy 45.3% Y/Y, their subscription revenue estimate does imply a deceleration from the 59.1% and 62.7% growth rate posted in F3Q18 and F2Q19, respectively. This dynamic is the function of $1.3M and $1.5M in unexpected revenue being pulled into the year ago period and prior quarter, respectively, due to bundled services agreements being delivered a quarter ahead of expectations. In addition, he is also forecasting gross margins to decline on a Y/Y basis given the ramping momentum in MongoDB Atlas, which management noted is still expected to remain a modest headwind to the company’s overall gross margins despite tracking well relative to their original expectations.

Needham analyst Jack Andrews was out yesterday with a preview note saying they expect a strong quarter as their bottoms-up indicator of developer activity on StackOverflow (More on this Below) points to accelerating interest. Moreover, their work suggests that MDB’s recent licensing changes to control misuse of its technology by certain IaaS vendors have had virtually no impact on the developer community. Two specific checks they highlight were:

Database Popularity – According to DBEngines, a popularity aggregator for databases based on search engine results, technical discussions on IT websites, and job postings, MongoDB ended the quarter up in popularity, moving from 350.3 in July to 363.2 in October.

StackOverflow – This is a heavily trafficked website that developers use to post questions about their software projects. The website has a strict reputation policy that has resulted in an exclusive developer following. Needham queried the website’s database for activity relating to MongoDB and form a time series of results to gauge momentum. They noted that developers have increased their activity on the website by 23.1% Y/Y for 3QFY19 and 12.6% for the TTM.

Option Flow (Long-Term Bullish)

-On 11/1, 500 February 60/75 Call Spreads were closed for $9.50 Credit and 300 January (2020) 80/105 Call Spreads were bought for $8.50 Debit.

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