MongoDB, Inc. Form 10-K Summary
Reporting period: Fiscal year ended January 31, 2019. This is an annual filing, not a standalone fiscal fourth-quarter report; quarterly figures below are included for context. Financial comparisons for prior years were recast for ASC 606 revenue recognition.
Business context
MongoDB sells a general-purpose database platform through subscriptions, including its hosted MongoDB Atlas service, and provides consulting and training. Subscription revenue represented 93% of fiscal 2019 revenue. The company reported more than 13,400 customers at year-end, including approximately 4,200 acquired with mLab. It describes growth as driven by new customer acquisition, Atlas adoption, and expansion within existing customers.
Key financial metrics
| Metric | FY2019 | FY2018, ASC 606 adjusted |
|---|---|---|
| Total revenue | $267.0 million | $166.0 million |
| Subscription revenue | $248.4 million | $151.9 million |
| Services revenue | $18.6 million | $14.2 million |
| Gross profit / margin | $193.4 million / 72% | $123.2 million / 74% |
| Operating loss | $(97.8) million | $(84.9) million |
| Net loss | $(99.0) million | $(84.0) million |
| Operating cash flow | $(42.0) million | $(44.9) million |
| Free cash flow, non-GAAP | $(48.8) million | $(47.0) million |
Revenue grew 61% year over year, while net loss increased by $15.0 million. Gross margin declined from 74% to 72%, principally as third-party cloud infrastructure costs rose with Atlas growth. Sales and marketing expense was $148.3 million, or 56% of revenue, versus $109.1 million, or 66%, in FY2018; total operating expenses remained above revenue at $291.2 million.
In the three months ended January 31, 2019, revenue was $85.5 million, compared with $50.1 million in the year-earlier quarter; net loss was $22.2 million, compared with $20.0 million.
Liquidity, debt, and cash flow
At January 31, 2019, cash, cash equivalents, and short-term investments totaled $466.0 million; working capital was $401.6 million. Cash used in operations was $42.0 million and capital expenditures were $6.8 million. Management said existing cash and investments were expected to fund operating and capital needs for at least 12 months, while also expecting continued operating losses and negative operating cash flow.
The company issued $300 million principal amount of 0.75% convertible senior notes due 2024. The balance-sheet carrying value was $216.9 million after accounting discounts and costs; the notes’ estimated fair value at year-end was approximately $433.1 million. In March 2019, MongoDB disclosed a new non-cancelable cloud-provider commitment of $219 million over five years, replacing a prior $36 million, three-year arrangement.
Material changes, outlook, and risks
- Atlas-related revenue, including mLab, increased to $60.2 million from $11.3 million in FY2018. Atlas represented 23% of total FY2019 revenue, versus 7% a year earlier.
- Net ARR expansion remained above 120% for 16 consecutive fiscal quarters. The company reported 557 customers with at least $100,000 in ARR or annualized monthly recurring revenue, versus 354 in FY2018.
- MongoDB acquired mLab on November 1, 2018. The purchase price allocated was $70.0 million, excluding $11.4 million in founder payments treated as post-acquisition compensation; the acquisition’s post-close results were not material to FY2019 operations.
- ASC 606 adoption changed revenue timing, especially for term licenses, and increased FY2018 adjusted revenue by $11.5 million versus previously reported amounts. Management cautioned that the standard may increase quarterly variability and reduce comparability.
- Management intends to keep investing in sales, marketing, research and development, and international expansion rather than prioritize near-term profitability or cash flow. The filing gives no numerical revenue or earnings guidance.
- Key risks include ongoing losses, cloud hosting costs and capacity commitments, competition from established database and cloud providers, and uncertainty about adoption effects of the new SSPL license. The filing also describes reported ransomware attacks on more than 80,000 MongoDB instances, which the company attributed primarily to users failing to enable recommended security settings.
- After year-end, Realtime Data filed a patent infringement suit alleging infringement of three patents related to data compression, storage, and retrieval and seeking damages and injunctive relief. The company said it had not accrued a material litigation loss as of year-end.
- Unusual items included a $1.5 million office-relocation charge and a $3.3 million income tax benefit, principally associated with the mLab acquisition. Stock-based compensation was $37.4 million.
Management and the independent auditor concluded that internal control over financial reporting was effective as of January 31, 2019. The auditor excluded mLab from its internal-control audit because of the timing of the acquisition.
Investor facts to verify
- How much of Atlas growth is recurring and profitable after cloud infrastructure costs and the new $219 million commitment?
- Whether revenue and quarterly growth remain comparable after ASC 606, particularly for term-license contracts.
- Progress toward reducing operating losses and free cash flow usage while maintaining growth investments.
- Conversion and retention trends, including the effect of the SSPL license and mLab customer integration.
- Developments in the Realtime Data patent litigation and any resulting financial exposure.
- Potential dilution, cash-settlement obligations, and conversion terms of the 2024 notes, alongside the dual-class voting structure.