MongoDB (NASDAQ:MDB) Exceeds Q3 Expectations But Stock Drops

Anthony Lee /
2023/12/05 4:09 pm EST

Database software company MongoDB (MDB) reported results ahead of analysts' expectations in Q3 FY2024, with revenue up 29.8% year on year to $432.9 million. On top of that, next quarter's revenue guidance ($431 million at the midpoint) was surprisingly good and 4.1% above what analysts were expecting. It made a non-GAAP profit of $0.96 per share, improving from its profit of $0.23 per share in the same quarter last year.

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MongoDB (MDB) Q3 FY2024 Highlights:

  • Revenue: $432.9 million vs analyst estimates of $404 million (7.2% beat)
  • Calculated Billings: $385,5 million vs. analyst estimates of $442.3 million (12.8% miss)
  • EPS (non-GAAP): $0.96 vs analyst estimates of $0.50 (93.5% beat)
  • Revenue Guidance for Q4 2024 is $431 million at the midpoint, above analyst estimates of $414.1 million
  • Free Cash Flow of $34.96 million is up from -$27.3 million in the previous quarter
  • Customers: 46,400, up from 45,000 in the previous quarter (miss vs. estimates of ~46,870)
  • Gross Margin (GAAP): 75.3%, up from 71.9% in the same quarter last year

"MongoDB continued to perform at a high level in the third quarter, as evidenced by 30% revenue growth and better-than-expected profitability. We are pleased by our success in winning new workloads from both new and existing customers across verticals, geographies, and customer segments," 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 Storage

Data is the lifeblood of the internet and software in general, and the amount of data created is accelerating. As a result, the importance of storing the data in scalable and efficient formats continues to rise, especially as its diversity and associated use cases expand from analyzing simple, structured datasets to high-scale processing of unstructured data such as 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 $226.9 million in Q3 FY2022 to $432.9 million this quarter.

MongoDB Total Revenue

This quarter, MongoDB's quarterly revenue was once again up a very solid 29.8% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $9.15 million in Q3 compared to $55.51 million in Q2 2024. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter, MongoDB is guiding for a 16.2% year-on-year revenue decline to $431 million, a further deceleration from the 35.6% year-on-year decrease it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 16.3% over the next 12 months before the earnings results announcement.

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Customer Growth

MongoDB reported 46,400 customers at the end of the quarter, an increase of 1,400 from the previous quarter. That's a little slower customer growth than what we've observed in past quarters, suggesting that the company's customer acquisition momentum is slowing.

MongoDB Customers

Key Takeaways from MongoDB's Q3 Results

Sporting a market capitalization of $30.18 billion, more than $1.92 billion in cash on hand, and positive free cash flow over the last 12 months, we believe that MongoDB is attractively positioned to invest in growth.

We enjoyed seeing MongoDB exceed analysts' revenue expectations this quarter. However, calculated billings (revenue + change in deferred revenue) missed. Customer count also missed and growth of this key metric slowed. Next quarter and full year revenue and non-GAAP operating income guidance came in higher than Wall Street's estimates. Overall, we think this was a mixed quarter. The market was likely expecting more, and the stock is down 7.6% after reporting, trading at $400.94 per share.

So should you invest in MongoDB right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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