The Six Five team discusses the MongoDB earnings.
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Patrick Moorhead: Now, let’s move on to MongoDB and earnings. Absolutely an incredible run here. Dan, why don’t you keep the love coming?
Daniel Newman: All right, buddy. We love to give you the ground truth and earnings are always that ground truth moment. I learned that from you, Pat. I call it the ground truth now, when people ask why do you always talk about earnings? I always say, well, it’s the actual moment to see if everything these companies are telling us is actually true. People want their products and are using them. Mongo, a little different than some of the transactional databases and the insights that we think about, it is really all about the developer. So this is the company that’s built the developer data platform. If you think about apps that you use on your mobile device for transportation or for streaming or for content, Mongo is the database that a lot of these companies are using to build upon.
Now, this company now has over 39,000 customers in 100 countries and their platform has been downloaded over 325 million times. Just a few stats because Mongo’s not a company we talk about as frequently as some of these other. Great news this quarter, so while a lot of SaaS and software companies have been getting routed this quarter, Mongo had a wonderful performance. Ended up driving double digit after hour market reaction because they beat, they actually showed a profit while everyone was expecting a loss, which by the way makes the street very happy in this current market. They delivered 10% above on what was expected for their revenue, which was a 47% growth on a year-over-year basis. This also means the adoption and the spend of the platform is growing. Then finally they actually pushed that margins path. They pushed margins up, which means they’re able to drive higher pricing or they have price elasticity and they’re able to keep their costs under control. Really important during this current market condition that we’re dealing with.
Finally, Pat, and I just want to say, 63% of their Q3 revenue came from the cloud. This is a really big thing is we’re seeing the ability for companies to build apps on a cloud-based data platform like MongoDB. This is going to be a big driver of margin, big driver of recurring revenue, and it’s a big driver of growth for the company long term because it’s sticky. As the apps grow, the use grows, the spend grows and Mongo benefits from that consumption model. Atlas revenue, their cloud offering of the MongoDB platform is 61% up year-over-year. So, the company’s been very actively working with AWS, so that companies that are building an AWS can burn credits through the AWS platform. They work with Azure and they’re seeing their customers that are spending money grow. Finally, Pat, they actually push up guidance, which again, a beat on [inaudible] and arrays is pretty much the exception, not the rule during this current market condition that we’re dealing with. You got to feel good about that, good quarter from MongoDB.
Patrick Moorhead: Yeah, and a beat in arrays when you beat by 236% on EPS and nearly a 10% beat on revenue, truly outstanding. I see this as an inflection point for the company in that it was one thing to do certain, I would say, non-strategic things in the public cloud, but I think what we’re seeing with Atlas, and then you look at MongoDB’s sweet spot, which is an operational database, as opposed to let’s say a less strategic database. This means that companies are moving the most important things to the public cloud and they’re using MongoDB as a vehicle to do that. The other cool thing is I think MongoDB has a lot of room to grow.
So first off, where’s the Azure? Where’s the Google Cloud? Where is the true hybrid capability? They do have on-prem capability, but I wouldn’t necessarily call it hybrid because it’s not a tissue, a sinew, that you can let’s say run the same databases in two places. You can do backup and stuff like that, but it’s not by definition hybrid. It’s very much a multi-cloud type of opportunity here. So an outstanding showing, particularly in this economy. Again, I think it’s a milestone that we need to be looking at, that more strategic workloads are moving to the public cloud.
Daniel Newman: I’m optimistic about it, Pat. I think that these successful pivots, not to boomerang, we can keep moving, but the successful pivots you see with companies like this, Splunk had a similar result this quarter where they turned the tide after moving to these consumption and cloud models. These are good inflection points. We always like to point out the bad ones. So, it’s also worthwhile to note when something good like this is happening.
Daniel Newman is the Chief Analyst of Futurum Research and the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio