MongoDB Inc., an open-source database company with aspirations to make it big on the marketplace, is preparing to launch its initial public offering. The company isn’t quite ready to reveal its intentions to the world, however; MongoDB’s S1-filing, the first step in going public, was done confidentially.
A mysterious entrance
MongoDB is aiming to go public by the end of 2017, and has already raised an impressive financial cohort for its initial foray into the marketplace. While it’s confidential filing will leave many investors panging for more information, enough is known about the company already to appraise its most basic prospects. Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) have been brought on as underwriters for the aspiring firm, for instance, and it’s equity financing to date has been quite impressive.
Changes to the SEC’s regulations, which occurred earlier this summer, have allowed MongoDB to confidentially file its initial IPO ambitions. As of now, it remains unclear whether the gamble to remain mysterious to potential investors will pay off, but should MongoDB follow through with its plans and go public by years end it would be the 7th unicorn of 2017.
MongoDB’s confidential filing will help it get to the market starting line while avoiding some intense investor scrutiny, as the move buys them more time before they have to release some financial information that would-be shareholders may be eager to see. The company likely isn’t sweating over its finances, however; MongoDB raised more than $300 million in equity financing from 2008 to 2017, and recent valuations led by EquityZen have pegged the company at a hefty $1.6 billion valuation.
While MongoDB’s focus on producing high quality open-source software could lure in some tech-minded investors, it could also serve as an albatross around its neck. Investors aren’t necessarily keen on an open-source based business operation, with previous companies who relied on them like Hortonworks (HDP:NASDAQ) largely floundering in the marketplace.
If it hopes to survive and thrive in the market in the long-term, not to mention woe investors in the short-term for its upcoming IPO, MongoDB will need to put to rest the rumors that it’s incapable of generating serious profits. One analysis pegged the company’s 2014 revenue at a paltry $46 million, for instance, a figure that will need a strong boost if it’s to lure in investors anytime soon.
A trailblazing IPO
MongoDB’s IPO would establish itself as a trailblazer in its industry, however, and surely attract bold betters hoping that the field will take off. Dev Ittycheria, the CEO of MongoDB, recently reported to Crain’s New York that the company was enjoying “double digit” growth. While it’s recent filing may leave hungry investors pawing for confirmation of that fact, it’s unlikely the company would make an IPO plan if it was truly struggling.
Perhaps the most important question, then, is whether MongoDB’s popular products and services can hook in enough customers to buoy it in the marketplace. Earlier this year the company launched an ambitious plan to expand beyond databases, a diversification of its business operations that’s likely to please investors hoping to see a little more from the company.
MongoDB also recently made a change and decided to offer a part of its most popular services, Atlas, to the public for free. While paying customers can still purchase a higher-quality version of the service, the move, led by one of the company’s co-founders who also serves as its CTO, could stand to bring in a broader customer base to foster heightened growth just as its market ambitions heat up.
MongoDB’s attempts to offer flexible data models that reimagine how our gadgets store their information could stand to make it one of the most dazzling IPOs of 2017. The company’s decision to go confidential in its S-1 filing, however, could still signal to investors that it has some skeletons in its closet that it may not be ready to deal with.
As MongoDB aims to compete against the well-established likes of Oracle (NYSE:ORCL), often doing so through bold initiatives like its semi-free Atlas service, it could still show that it’s non-traditional approach is the perfect fit for today’s innovative, tech-orientated market. The company claims it’s nearly ready to go public; what remains to be seen is whether it can really handle the heat of the marketplace.