MongoDB, Inc. — Form 10-Q Summary
Reporting period: Fiscal second quarter and six months ended July 31, 2021. Financial statements are unaudited. MongoDB sells database subscriptions, including its hosted MongoDB Atlas service, and support, consulting and training services.
Financial performance
| Metric | Three months ended July 31, 2021 | Year-over-year change | Six months ended July 31, 2021 | Year-over-year change |
|---|---|---|---|---|
| Total revenue | $198.7 million | +44% | $380.4 million | +42% |
| Subscription revenue | $191.4 million | +44% | $366.0 million | +42% |
| Services revenue | $7.4 million | +27% | $14.4 million | +28% |
| Gross profit / margin | $138.0 million / 69% | Margin flat | $265.2 million / 70% | Margin flat |
| Operating loss | $72.5 million | Loss increased from $49.8 million | $134.0 million | Loss increased from $91.8 million |
| Net loss | $77.1 million; $1.22 per share | Loss increased from $64.5 million | $141.1 million; $2.26 per share | Loss increased from $118.5 million |
Atlas-related revenue was $111.8 million for the quarter, up from $61.1 million, and represented 56% of total revenue versus 44% a year earlier. Management attributed growth primarily to Direct Sales Customers, including Atlas self-serve customers converting to direct sales. The quarter’s subscription gross margin was 73%, down from 74%; services gross margin remained negative at 32%, versus negative 44%. Higher cloud infrastructure costs associated with Atlas growth and services personnel costs contributed to pressure.
Operating expenses grew substantially: quarterly sales and marketing rose 46% to $109.4 million, research and development rose 47% to $72.4 million, and general and administrative rose 34% to $28.8 million. Headcount increased to 2,934 from 2,169 a year earlier. Stock-based compensation was $57.7 million for the quarter and $108.6 million for the six-month period.
Cash, liquidity and debt
- At July 31, 2021, cash and cash equivalents were $1.161 billion and short-term investments were $653.8 million; the company reported approximately $1.8 billion in cash, cash equivalents, short-term investments and restricted cash. Management said these resources should fund operating and capital needs for at least 12 months.
- Six-month operating cash flow was negative $9.5 million, versus negative $15.9 million. Free cash flow, a non-GAAP measure, was negative $14.3 million versus negative $23.5 million.
- Convertible senior notes had a net carrying value of $1.137 billion. The 2024 and 2026 notes became convertible at holders’ option from August 1 through October 31, 2021. Depending on settlement elections, conversions could require cash payments or issue shares.
- The company raised $889.2 million net through a July 2021 sale of 2.5 million shares at $365 per share. Financing cash flow was $878.3 million for the six months.
Changes, outlook and notable items
- Revenue accelerated while net and operating losses widened, mainly as the company increased sales, marketing and R&D investment. Management said it intends to keep investing heavily in growth rather than prioritizing near-term profitability or cash flow; it expects operating losses and negative operating cash flow to continue.
- Management expects COVID-19-related slowdown, uncertainty and other challenges to negatively affect near-term revenue. Travel costs remained below pre-pandemic levels; employees could continue working remotely, with a hybrid work environment contemplated. No specific numerical guidance is provided in this filing.
- MongoDB early adopted ASU 2020-06 for convertible debt accounting on February 1, 2021. The change eliminated separation of the conversion feature and reduced reported interest expense versus the prior-year comparison; prior periods were not restated. The company recorded a $261.5 million increase in notes’ carrying value at adoption.
- On August 23, 2021, a court granted MongoDB’s motion to dismiss Realtime Data’s patent complaint; the plaintiff filed an appeal on August 25. The company recorded no accrual for legal contingencies, stating it did not believe a material loss was reasonably possible as of July 31.
- Remaining performance obligations were $280.6 million at quarter-end, with approximately 58% expected to be recognized over the next 12 months. The company completed an immaterial acquisition in April for $9.0 million cash consideration, including $4.5 million treated as post-combination compensation expense.
Key facts for investors to verify
- Whether Atlas growth and customer expansion can sustain revenue momentum while cloud infrastructure costs constrain subscription margins.
- Whether rising operating expenses and stock-based compensation translate into improved growth and, over time, a path to profitability and positive cash flow.
- Potential cash or share dilution from conversion of the $1.15 billion principal amount of 2026 notes and remaining 2024 notes; note conversion windows and settlement terms.
- How COVID-19, remote/hybrid work, economic conditions, competition, customer spending and reliance on third-party cloud providers affect demand, costs and service delivery.
- Progress of the Realtime Data appeal and any other legal, security, privacy, tax or open-source licensing developments that could materially affect results.