MongoDB (NASDAQ:MDB) Q3 Sales Beat Estimates, Stock Jumps 19.3%

Kayode Omotosho /
2022/12/06 4:11 pm EST

Database software company MongoDB (MDB) reported results ahead of analyst expectations in the Q3 FY2023 quarter, with revenue up 47% year on year to $333.6 million. The company expects that next quarter's revenue would be around $335.5 million, which is the midpoint of the guidance range. That was above analyst expectations. MongoDB made a GAAP loss of $84.8 million, down on its loss of $81.2 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) Q3 FY2023 Highlights:

  • Revenue: $333.6 million vs analyst estimates of $304.7 million (9.48% beat)
  • EPS (non-GAAP): $0.23 vs analyst estimates of -$0.17 ($0.40 beat)
  • Revenue guidance for Q4 2023 is $335.5 million at the midpoint, above analyst estimates of $314.8 million
  • Free cash flow was negative $8.43 million, compared to negative free cash flow of $48.5 million in previous quarter
  • Customers: 39,100, up from 37,000 in previous quarter
  • Gross Margin (GAAP): 71.9%, up from 69.8% same quarter last year

"MongoDB's third quarter results were highlighted by 61% Atlas revenue growth and $20 million of non-GAAP operating income. The strength in our business was driven by improved Atlas consumption trends and continued strength in new business activity. Our performance reinforces the strategic importance of MongoDB's developer data platform in enabling our customers to use software and data to transform their businesses," 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 $150.7 million in Q3 FY2021, to $333.6 million.

MongoDB Total Revenue

And unsurprisingly, this was another great quarter for MongoDB with revenue up 47% year on year. On top of that, revenue increased $29.9 million quarter on quarter, a very strong improvement on the $18.2 million increase in Q2 2023, and a sign of acceleration of growth.

Guidance for the next quarter indicates MongoDB is expecting revenue to grow 25.8% year on year to $335.5 million, slowing down from the 55.8% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 20.2% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Customer Growth

You can see below that MongoDB reported 39,100 customers at the end of the quarter, an increase of 2,100 on last quarter. That is a fair bit better customer growth than last quarter and in line with what we have seen in previous quarters, demonstrating the company has the sales momentum required to drive continued growth. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is running smoothly.

MongoDB Customers

Key Takeaways from MongoDB's Q3 Results

With a market capitalization of $10.2 billion, more than $1.78 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 impressed by the very optimistic revenue guidance MongoDB provided for the next quarter. And we were also excited to see that it outperformed Wall St’s revenue expectations. On the other hand, it was unfortunate to see that MongoDB's revenue guidance for the full year missed analysts' expectations . Overall, we think this was a strong quarter, that should leave shareholders feeling very positive. The company is up 19.3% on the results and currently trades at $173 per share.

Should you invest in MongoDB 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.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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