MongoDB, Inc. — Q1 FY2024 Form 10-Q
Reporting period: Three months ended April 30, 2023; comparisons are with the three months ended April 30, 2022. MongoDB provides a developer data platform, with subscriptions—including its cloud-hosted MongoDB Atlas offering—as its primary revenue source. Amounts below are in U.S. dollars.
Financial and operating performance
| Metric | Q1 FY2024 | Prior-year quarter | Change |
|---|---|---|---|
| Total revenue | $368.3 million | $285.4 million | +29% |
| Subscription revenue | $354.7 million | $274.6 million | +29% |
| Services revenue | $13.6 million | $10.9 million | +25% |
| Gross profit / margin | $270.8 million / 74% | $207.2 million / 73% | Margin up about 1 point |
| Operating loss | $(68.5) million | $(75.9) million | Loss narrowed |
| Net loss | $(54.2) million | $(77.3) million | Loss narrowed |
| Diluted net loss per share | $(0.77) | $(1.14) | Improved |
| Cash from operating activities | $53.7 million | $11.6 million | Increased |
Atlas-related revenue was $237.8 million, approximately 65% of total revenue, compared with $170.0 million and 60% a year earlier. Subscription gross margin was 78%, up from 76%; services gross margin was negative 42%, compared with negative 26%. Operating expenses rose 20% to $339.4 million. Stock-based compensation was $104.0 million, up from $83.6 million.
Operating cash flow benefited from higher customer collections and a $73.4 million decrease in accounts receivable, but was partly offset by a $47.3 million decline in deferred revenue and lower accrued liabilities. Investing cash flow was $211.3 million, primarily reflecting net maturities of marketable securities; financing cash flow was $0.1 million.
At April 30, 2023, cash and cash equivalents were $721.8 million and short-term investments were $1.182 billion. Including restricted cash, liquidity totaled approximately $1.9 billion. Total liabilities were $1.788 billion. Convertible senior notes had a $1.150 billion principal balance and $1.141 billion net carrying amount; the notes bear 0.25% interest and mature in January 2026. The company reported an accumulated deficit of $1.589 billion.
Changes versus the prior comparable period
- Revenue growth was primarily attributable to subscription growth from direct sales customers; management cited a $72.7 million increase from those customers.
- Gross margin improved overall as subscription infrastructure efficiencies more than offset higher cloud costs. Third-party cloud infrastructure costs increased $9.6 million; services costs rose faster than services revenue, worsening its negative gross margin.
- Operating and net losses narrowed despite higher sales and marketing, research and development, and general and administrative expenses. Higher interest income and unrealized gains on non-marketable securities also improved other income.
- Cash from operations rose year over year. Deferred revenue, current and non-current combined, declined to $412.8 million from $460.3 million at January 31, 2023.
- Customer count exceeded 43,100, versus 35,200 a year earlier; Atlas customers exceeded 41,600, versus 33,700. Customers with at least $100,000 in ARR and annualized MRR numbered 1,761, compared with 1,379.
Outlook, commentary and risks
- The filing provides no specific numeric financial guidance. Management said macroeconomic conditions were slowing growth in existing Atlas applications and expected those headwinds to continue for the remainder of the year. It also expects continued operating losses and investment in the business.
- Management reported a net ARR expansion rate consistently above 120%. Remaining performance obligations were $470.7 million at quarter-end; approximately 59% was expected to be recognized over the next 12 months. These measures are not guarantees of future revenue.
- Key uncertainties include customer usage and renewal patterns, IT spending and macroeconomic conditions, competition, the cost and availability of third-party cloud infrastructure, and the company’s ability to manage growth and achieve profitability. Atlas usage-based revenue and seasonality can make results less predictable.
- The company stated that its existing cash and investments should fund operating and capital needs for at least 12 months, while noting possible future financing needs and that financing may not be available on acceptable terms.
- The 2026 notes’ conversion condition was not triggered in the quarter; holders could not convert them from May 1 through July 31, 2023. Future convertibility depends on specified conditions.
- Realtime Data’s patent lawsuit was on appeal, with oral argument held in February 2023. Management did not believe pending legal matters would have a material adverse effect, while acknowledging litigation costs and uncertainty.
- Short-term Treasury investments had approximately $1.6 million of unrealized losses; the company said it did not intend to sell them and did not expect to realize those losses. Non-marketable securities were $13.3 million and may expose results to valuation changes or loss of invested capital.
Important facts for investors to verify
- Whether Atlas usage growth and customer expansion withstand the macroeconomic headwinds management identified.
- Whether subscription margin gains persist as Atlas grows, and whether negative services margins improve.
- How operating cash flow, deferred revenue, and remaining performance obligations develop; quarterly cash flow is affected by collections and billing timing.
- The effect of substantial stock-based compensation on expenses and shareholder dilution, alongside the company’s path to profitability.
- Liquidity and potential cash or dilution consequences if the 2026 notes become convertible, and developments in the Realtime Data appeal.