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MongoDB (MDB) Q3 Loss Narrows, Revenues Beat, View Raised

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MongoDB (MDB - Free Report) reported third-quarter fiscal 2020 adjusted loss of 26 cents per share, narrower than the Zacks Consensus Estimate of a loss of 28 cents, and the year-ago quarter’s loss of 30 cents.

Revenues of $109.4 million surged 52% year over year and comfortably surpassed the consensus mark of $99 million.

MongoDB’s customers grew to 15,900 at the end of the fiscal third quarter.

The company’s Atlas revenues skyrocketed more than 185% year over year and accounted for 40% of total revenues. Atlas had more than 14,200 customers at the end of the quarter compared with more than 13,200 at the end of second-quarter fiscal 2020.

MongoDB, Inc. Price, Consensus and EPS Surprise

MongoDB, Inc. Price, Consensus and EPS Surprise

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

Quarter Details

The year-over-year growth in revenues was driven by a 56% jump in subscription revenues (94.9% of total revenues) of $103.8 million. Moreover, services revenues (5.1%) increased 8% to $5.6 million.

Net AR expansion rate was above 120% for the 20th consecutive quarter. The company had 688 customers in the quarter, with at least $100,000 in ARR and annualized MRR, up from 490 a year ago.

The company witnessed strong growth in Enterprise Advanced and new Atlas customers.

In the reported quarter, gross margin contracted 500 basis points (bps) year over year to 72%. Gross margin was negatively impacted by the acquisition of mLab. Moreover, larger license mix from multiyear Enterprise Advanced transactions had benefited the year-ago quarter’s margins, making year-over-year comparison difficult.

While R&D expenses jumped 69.8% to $39.4 million, sales and marketing (S&M) expenses increased 57.9% to $57 million. Moreover, general and administrative (G&A) expenses rose 30.7% to $19.6 million.

As a percentage of revenues, S&M was 52.1% compared with 50.3% a year ago. Also, as a percentage of revenues, while R&D expenses increased 370 bps, G&A expenses declined 300 bps.

Loss from operations widened to $14.3 million from the year-ago quarter’s loss of $7.8 million.

Balance Sheet & Cash Flow

As of Oct 31, 2019, MongoDB had $426.4 million in cash, cash equivalents and short-term investments compared with $436.2 million as of Jun 31, 2019,

In the reported quarter, the company used $11.5 million of cash in operations and $1.6 million in capital expenditures. Free cash outflow was $13.1 million.

Guidance

For fourth-quarter fiscal 2020, MongoDB expects revenues between $109 million and $111 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 in the band of $16.5-$15.5 million. Non-GAAP net loss per share is projected between 27 cents and 29 cents.

For fiscal 2020, MongoDB raised its view. It now expects revenues between $407.2 million and $409.2 million, up from the previous guidance of $390-$395 million.

Non-GAAP loss from operations is expected to be within $58.2-$57.2 million, lower than previously expected $62-$59 million.

Moreover, non-GAAP net loss is projected to be within the $1.04-$1.02 range, narrower than $1.06-$1.11 per share expected earlier.

Percentage of customers paying monthly in arrears is expected to grow over time as the company raises its focus on driving adoption of Atlas.

Zacks Rank and Key Picks

MongoDB currently has a Zacks Rank #3 (Hold). Some top-ranked stocks in the broader technology sector are Keysight Technologies Inc. (KEYS - Free Report) , Marchex, Inc. (MCHX - Free Report) and Fortinet, Inc. (FTNT - Free Report) . All the three stocks flaunt 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 Keysight, Marchex and Fortinet is currently pegged at 9.1%, 15% and 14%, respectively.

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