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MongoDB (MDB) Q1 Loss Narrows, Revenues Up on Atlas Growth

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MongoDB (MDB - Free Report) reported first-quarter fiscal 2020 adjusted loss of 22 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 24 cents and the year-ago quarter’s loss of 37 cents.

Revenues of $89.4 million surged 73.8% year over year and comfortably surpassed the consensus mark of $83 million.

MongoDB added 800 customers to reach 14,200 at the end of first-quarter fiscal 2020.

The company’s Atlas revenues skyrocketed more than 340% year over year and accounted for 35% of revenues. Atlas had more than 12,300 customers at the end of the quarter compared with more than 11,400 at the end of fourth-quarter 2018.

On Apr 24, 2019, MongoDB announced the acquisition of Realm for $39 million in cash, subject to certain adjustments. The acquisition is expected to close in the second quarter of fiscal 2020. The deal is expected to strengthen the company’s relationship with developers. There are more than 100,000 active developers using Realm.

Quarter Details

The year-over-year growth in revenues was driven by 82.3% jump in subscription revenues (94% of revenues) that totaled almost $84 million. Moreover, services revenues (6% of revenues) rallied 32.5% year over year to $5.4 million.
 

MongoDB, Inc. Price, Consensus and EPS Surprise

MongoDB, Inc. Price, Consensus and EPS Surprise

MongoDB, Inc. price-consensus-eps-surprise-chart | MongoDB, Inc. Quote

 

Net AR expansion rate remained above 120% for the 17th consecutive quarter. The company had 598 customers in the quarter, with at least $100,000 in ARR and annualized MRR, up from 394 reported in the year-ago quarter.

During the quarter, MongoDB Announced a new partnership with Alphabet (GOOGL - Free Report) division Google Cloud Platform (GCP) that will provide deeper product integration and unified billing for joint customers. Per the agreement, Atlas will be integrated directly within the GCP Console.

In the reported quarter, gross margin contracted 340 basis points (bps) to 70.3%. Gross margin was negatively impacted by higher percentage of Atlas revenues in the mix and inclusion of mLab revenues, which is a lower margin business compared to Atlas.

While research and development (R&D) expenses jumped 65.6% to $30.9 million, sales and marketing (S&M) expenses increased 38.9% to $46.1 million. Moreover, general and administrative (G&A) expenses rallied 31.9% to $14.8 million.

However, as percentage of revenues, S&M was 51.6% compared with 66.2% in the year-ago quarter. Also, as percentage of revenues, R&D and G&A expenses declined 270 bps and 580 bps, respectively.

Loss from operations narrowed to $12.6 million from the year-ago quarter’s loss of $18.9 million.

Balance Sheet & Cash Flow

As of Apr 30, 2019, MongoDB had $476.9 million in cash, cash equivalents, short-term investments and restricted cash.

In the reported quarter, the company generated $3.2 million of cash in operations and $0.4 million in capital expenditures. Free cash flow was $2.8 million.

Guidance

For second-quarter fiscal 2020, MongoDB expects revenues between $90 million and $92 million.

Higher percentage of Atlas in revenue mix is expected to negatively impact gross margin, at least in the near term.

Non-GAAP loss from operations is expected to be $16.5-$15.5 million. Non-GAAP net loss is expected between 29 cents and 27 cents per share.

For fiscal 2020, MongoDB expects revenues between $375 million and $381 million.

Non-GAAP loss from operations is expected to be $63-$59 million. Non-GAAP net loss is expected between $1.11 and $1.04 per share.

However, MongoDB expects to burn cash in fiscal 2020 due to higher level of investment.

Zacks Rank & Other Stocks to Consider

Currently, MongoDB carries a Zacks Rank #2 (Buy).

eGain Corporation (EGAN - Free Report) and j2 Global (JCOM - Free Report) are stocks worth considering in the same industry. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for eGain and j2 Global is currently pegged at 30% and 8%, respectively.

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