Database software company MongoDB (MDB) reported Q2 FY2023 results topping analyst expectations, with revenue up 52.7% year on year to $303.6 million. Guidance for next quarter's revenue was $301.5 million at the midpoint, 2.34% above the average of analyst estimates. MongoDB made a GAAP loss of $118.8 million, down on its loss of $77.1 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) Q2 FY2023 Highlights:
- Revenue: $303.6 million vs analyst estimates of $282.3 million (7.56% beat)
- EPS (non-GAAP): -$1.74 vs analyst estimates of -$0.28 (-$1.46 miss)
- Revenue guidance for Q3 2023 is $301.5 million at the midpoint, above analyst estimates of $294.5 million
- The company lifted revenue guidance for the full year, from $1.18 billion to $1.2 billion at the midpoint, a 1.6% increase
- Free cash flow was negative $48.5 million, down from positive free cash flow of $8.44 million in previous quarter
- Customers: 37,000, up from 35,200 in previous quarter
- Gross Margin (GAAP): 70.9%, up from 69.4% same quarter last year
"MongoDB delivered strong second quarter results, highlighted by 73% Atlas revenue growth and a record number of net additions of direct sales customers. We are seeing robust growth in new workloads being deployed on our platform, which is indicative of the critical role we play in enabling customers to build and run mission critical applications that transform 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 exceptional over the last year, growing from quarterly revenue of $198.7 million, to $303.6 million.
This was another standout quarter with the revenue up a splendid 52.7% year on year. Quarter on quarter the revenue increased by $18.2 million in Q2, which was roughly in line with the Q1 2023 increase. 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 32.8% year on year to $301.5 million, slowing down from the 50.4% 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 24.9% 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 37,000 customers at the end of the quarter, an increase of 1,800 on last quarter. That is a fair bit slower customer growth than what we are used to seeing lately, suggesting that the customer acquisition momentum is slowing a little bit.
Key Takeaways from MongoDB's Q2 Results
With a market capitalization of $22.5 billion, more than $1.79 billion in cash and the fact it is operating close to free cash flow break-even the company is in a strong financial position to invest in growth.
We were impressed by the exceptional revenue growth MongoDB delivered this quarter. And we were also excited to see that the guidance outperformed Wall St’s revenue expectations. On the other hand, there was a deterioration in free cash flow and there was a slowdown in customer growth. Overall, this quarter's results still seemed pretty positive and shareholders can feel optimistic. The company is flat on the results and currently trades at $322.86 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.