We were expecting MongoDB (NASDAQ:MDB) to produce an excellent report simply because the adoption of tech is going so strongly. We were not expecting revenue and earnings to accelerate as fast as they did or for the company to raise guidance for the year.
The bottom line is that MongoDB’s all-purpose database platform is in high demand, and we expect to see it continue to grow and gain market share.
MongoDB Blows Past The Market Consensus
MongoDB didn’t just have a good quarter it had a quarter that gives evidence not only to the strength of trends within tech but the quality and efficacy of its offerings. The company reported $226.89 million in consolidated revenue, which is suitable for a gain of 50% over last year and beat the consensus by 1060 basis points.
While you may think this comp is an easy one, don’t, it delivered 37% growth in the quarter, and this year’s results are the 5th quarter of consecutive acceleration and the fastest growth in 8. On a segment basis, Services revenue grew by 35%, while Subscriptions to the database rose by 51%. Within that, Atlas revenue, the company’s multi-cloud offering, increased by 84% to account for 58% of the net.
Moving on to margin and earnings, the company reported an increase in GAAP and adjusted margin at 70% and 72%, respectively. However, there was a loss on the bottom line, but it is much better than expected and a dramatic improvement versus last year.
The guidance is just as good, with revenue expected in a range between $239 to $242 million versus the Marketbeat.com consensus of $227 million. That is compounded by the outlook for EPS which is also in a range well above the consensus. The only negative is that GAAP and adjusted losses are expected to continue. The mitigating factor is that growth efforts and share-based compensation are the blame.
As far as the balance sheet goes, the company is net-cash with over $1.8 billion on the books, but leverage is high and should be noted.
The Analysts Are Buying What MongoDB Has To Offer
The analysts are pushing MongoDB shares higher if nothing else is. The Marketbeat.com consensus rating of $533 is up 13.8% in the last 30 days, 18.7% over the previous 90 days, and more than double from a year earlier and still going higher. The consensus assumes about 6% of upside from the $500 level, but it lags the market and recent activity among the analysts.
There have been at least seven target updates in the wake of the report and all higher. The consensus among them is $570, which does not include the high price target. The high price target of $700 was set by Credit Suisse just days before the release. It suggests a 40% of upside for this stock.
The Technical Outlook
Shares of MongoDB have been in a strong uptrend and recently entered consolidation. Price action leading into the report had shares down at the low of the range, while price action post-release is much different. Post-release action has shares up more than 15% and trading near the short-term moving average.
This may be related to the 7% short interest, but we don’t think it accounts for all advances. Regardless, this action confirms the long-term uptrend and support at the bottom of the range. Price action may continue to range in the near to mid-term, but we expect to see it break out to the upside and trend higher over the long term.
