MongoDB (NASDAQ:MDB) Beats Q4 Sales Targets But Stock Drops

Jabin Bastian /
2023/03/08 4:10 pm EST

Database software company MongoDB (MDB) reported Q4 FY2023 results beating Wall St's expectations, with revenue up 35.6% year on year to $361.3 million. However, guidance for the next quarter was less impressive, coming in at $346 million at the midpoint, being 1.87% below analyst estimates. MongoDB made a GAAP loss of $64.4 million, improving on its loss of $84.4 million, in the same quarter last year.

Is now the time to buy MongoDB? Access our full analysis of the earnings results here, it's free.

MongoDB (MDB) Q4 FY2023 Highlights:

  • Revenue: $361.3 million vs analyst estimates of $337.9 million (6.92% beat)
  • EPS (non-GAAP): $0.57 vs analyst estimates of $0.07 (0.69 thousand% beat)
  • Revenue guidance for Q1 2024 is $346 million at the midpoint, below analyst estimates of $352.6 million
  • Management's revenue guidance for upcoming financial year 2024 is $1.5 billion at the midpoint, missing analyst estimates by 5.41% and predicting 16.4% growth (vs 48.1% in FY2023)
  • Free cash flow of $23.8 million, up from negative free cash flow of $8.43 million in previous quarter
  • Customers: 40,800, up from 39,100 in previous quarter
  • Gross Margin (GAAP): 75.3%, up from 71.6% same quarter last year

"MongoDB delivered a strong finish to fiscal 2023, highlighted by 50% Atlas revenue growth and continued strength in winning new customers and workloads. Our continued new business momentum is driven in part by an increasing number of enterprise customers looking to standardize on MongoDB's developer data platform to accelerate innovation while driving greater operational efficiency in their business," said Dev Ittycheria, President and Chief Executive Officer of MongoDB.

Started in 2007 by the team behind Google’s ad platform DoubleClick, MongoDB offers database-as-a-service that helps companies store large volumes of semi-structured data.

Data is the lifeblood of the internet and software in general, and the amount of data created is growing at an accelerating pace. Likewise, the importance of storing the data in scalable and efficient formats continues to rise, especially as the diversity of the data and associated use cases expand from analyzing simple, structured data to high-scale processing of unstructured data, images, audio and video.

Sales Growth

As you can see below, MongoDB's revenue growth has been impressive over the last two years, growing from quarterly revenue of $171 million in Q4 FY2021, to $361.3 million.

MongoDB Total Revenue

And unsurprisingly, this was another great quarter for MongoDB with revenue up 35.6% year on year. Quarter on quarter the revenue increased by $27.7 million in Q4, which was in line with Q3 2023. This steady quarter-on-quarter growth shows the company is able to maintain a strong growth trajectory.

Guidance for the next quarter indicates MongoDB is expecting revenue to grow 21.2% year on year to $346 million, slowing down from the 57.1% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $1.5 billion at the midpoint, growing 16.4% compared to 47% increase in FY2023.

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Customer Growth

You can see below that MongoDB reported 40,800 customers at the end of the quarter, an increase of 1,700 on last quarter. That is a little slower customer growth than what we are used to seeing lately, suggesting that the customer acquisition momentum is slowing a little bit.

MongoDB Customers

Key Takeaways from MongoDB's Q4 Results

With a market capitalization of $15.5 billion, more than $1.84 billion in cash and the fact it is operating close to free cash flow break-even, we're confident that MongoDB has the resources it needs to pursue a high growth business strategy.

We were very impressed by the improvements in MongoDB’s gross margin this quarter. And we were also excited to see strong sales growth this quarter. On the other hand, it was unfortunate to see that MongoDB's revenue guidance for the full year missed analysts' expectations and it indicates quite a significant slowdown in growth. Overall, it seems to us that this was a complicated quarter for MongoDB. The company is down 9.15% on the results and currently trades at $208 per share.

MongoDB may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.