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MongoDB (MDB) Q4 Earnings: Will Strong Clientele Aid Growth?

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MongoDB (MDB - Free Report) is set to report fourth-quarter fiscal 2019 results on Mar 13.

In the third quarter of fiscal 2019, MongoDB reported non-GAAP loss of 30 cents per share that was narrower than the Zacks Consensus Estimate of a loss of 40 cents and the year-ago quarter’s loss of 44 cents.

Revenues of $65 million also topped the consensus mark of $60 million and improved 57% on a year-over-year basis. Strong top-line growth was primarily driven by robust subscription revenues.

For fourth-quarter fiscal 2019, revenues are expected between $73 million and $74 million. Non-GAAP loss is anticipated between 39 cents and 38 cents per share.

The Zacks Consensus Estimate is currently pegged at a loss of 38 cents, unchanged over the past 30 days. The consensus mark for revenues currently stands at $73.7 million, reflecting year-over-year growth of 63.7%.

Let’s see how things are shaping up for this announcement.

Factors to Watch Out

MongoDB’s upcoming quarterly results are expected to benefit from an expanding customer base, driven by core database strength.

Notably, in the last reported quarter, MongoDB added 900 customers that brought the total customer count to 8,300. Atlas customer base increased from 5,300 at the end of the second quarter to 6,200 at the end of the last reported quarter.

Moreover, Atlas accounted for 22% of total revenues compared with 8% in the year-ago quarter and 18% in the previous quarter. Availability of Atlas in 57 different regions, and the ability to run across Amazon’s (AMZN - Free Report) cloud division Amazon Web Services (AWS), Microsoft Azure and Google Cloud are attracting customers.

MongoDB has added new functionalities like graph database, enterprise key management, multi-document ACID support and Global clusters are expanding Atlas’ total addressable market (TAM). Additionally, the launch of MongoDB Mobile and addition of new features to the serverless platform, MongoDB Stitch are notable developments in the last quarter.

Further, the acquisition of San Francisco-based cloud database service provider, mLab will help MongoDB build deeper relationships with developer-centric startup communities. mLab is also known for providing exemplary customer support that is expected to benefit MongoDB in attracting new clients. Further, the acquisition strengthened MongoDB’s hosting capabilities.

However, intensifying competition from legacy and cloud-based database providers is a headwind. Google’s Cloud Firestore NoSQL database (launched in October 2017) and Oracle’s (ORCL - Free Report) initiatives to add new features present significant threat to MongoDB’s growth opportunities.

Also, launch of DocumentDB by Amazon intensifies competition for MongoDB.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

MongoDB has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

A Stock With Favorable Combination

Here is a stock you may want to consider as our model shows that it has the right combination of elements to post an earnings beat in the upcoming release.

Tencent Holding (TCEHY - Free Report) has an Earnings ESP of +3.57% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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