MongoDB (MDB) Q2 Loss Narrows, Revenues Up On Atlas Growth

MongoDB (NASDAQ:MDB) reported second-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 34 cents.

Revenues of $99.4 million surged 66.7% year over year and comfortably surpassed the consensus mark of $91 million.

MongoDB added 800 customers to reach 15K at the end of second-quarter fiscal 2020.

The company’s Atlas revenues skyrocketed more than 240% year over year and accounted for 37% of revenues. Atlas had more than 13,200 customers at the end of the quarter compared with more than 12,300 at the end of first-quarter fiscal 2020.

Quarter Details

The year-over-year growth in revenues was driven by a 70.9% jump in subscription revenues (94.8% of revenues) that totaled almost $94.2 million. Moreover, services revenues (5.2%) increased 15.2% year over year to $5.2 million.

Net AR expansion rate remained above 120% for the 18th consecutive quarter. The company had 622 customers in the quarter, with at least $100,000 in ARR and annualized MRR, up from 438 reported in the year-ago quarter.

During the reported quarter, the company revealed MongoDB 4.2, which comprises features like distributed asset transactions and client-side field level encryption. The company also announced plans to integrate mobile database Realm (acquired in April) with its serverless platform Stitch.

In the reported quarter, gross margin contracted 210 basis points (bps) to 71.6%. Gross margin was negatively impacted by a 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 73.3% to $37.1 million, sales and marketing (S&M) expenses increased 46.5% to $53.5 million. Moreover, general and administrative (G&A) expenses rose 32% to $16.2 million.

However, as a percentage of revenues, S&M was 53.9% compared with 61.3% a year ago. Also, as a percentage of revenues, while R&D expenses increased 140 bps, G&A expenses declined 430 bps.

Loss from operations narrowed to $14.8 million from the year-ago quarter’s loss of $17.9 million.

Balance Sheet & Cash Flow

As of Jul 31, 2019, MongoDB had $436.2 million in cash, cash equivalents and short-term investments compared with $476.9 million as of Apr 30, 2019,

In the reported quarter, the company used $12.6 million of cash in operations and $1.2 million in capital expenditures. Free cash outflow was $13.8 million.

Guidance

For third-quarter fiscal 2020, MongoDB expects revenues between $98 million and $100 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 expects revenues between $390 million and $395 million (up from the previous guidance of $375-$381 million).

Non-GAAP loss from operations is expected to be $62-$59 million. Non-GAAP net loss is expected between $1.06 and $1.11 per share.

Zacks Rank & Stocks to Consider

Currently, MongoDB carries a Zacks Rank #3 (Hold).

Chegg (NYSE:CHGG) , HubSpot (NYSE:HUBS) and Paylocity Holding (NASDAQ:PCTY) are stocks worth considering in the same industry. All the three 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 Chegg, HubSpot and Paylocity Holding is currently pegged at 30%, 49.4 and 20%, respectively.

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