Unlike some other technology vendors in the market, MongoDB so far appears to remain unscathed but the current macro headwinds and has delivered a solid set of Q3 2023 results. CEO Dev Ittycheria isn’t complacent about the current market conditions, but all indicators suggest Mongo is set for continued growth as we enter the New Year.
MongoDB is a NoSQL document model database vendor, which has seen success with its database-as-a-service offering (Atlas) and its multi-cloud strategy.
The company is also doubling down on its developer productivity focus, as it believes that this is the key to broad uptake. Ittycheria said:
Our Q3 results are an indication that our value proposition resonates with customers even in a difficult macro environment.
The more productive developers are, the faster the organizations can innovate. The document model, which underpins MongoDB, has proven to be the best way for developers to work with data because it aligns well with how developers think and code.
The key numbers from the quarter include:
- Total revenue was $333.6 million for the third quarter of fiscal 2023, an increase of 47% year-over-year. Subscription revenue was $320.8 million, an increase of 47% year-over-year, and services revenue was $12.9 million, an increase of 43% year-over-year.
Gross profit was $240.0 million for the third quarter of fiscal 2023, representing a 72% gross margin compared to 70% in the year-ago period. Non-GAAP gross profit was $247.8 million, representing a 74% non-GAAP gross margin, compared to a non-GAAP gross margin of 73% in the year-ago period.
Loss from operations was $82.9 million for the third quarter of fiscal 2023, compared to a loss of $76.8 million in the year-ago period. Non-GAAP income from operations was $19.8 million, compared to a non-GAAP income of $6.3 million in the year-ago period.
Full year guidance for 2023 has been updated to achieve between $1.257 billion and $1.260 billion in revenue. MongoDB’s shares were up close to 30% on the Q3 results this week.
MongoDB is also seeing strong uptake with its larger customers, announcing that in Q3 it ended the quarter with 1,545 customers with at least $100,000 in ARR, which is up from 1,201 in the same period last year. The company’s Enterprise Advanced offering, which caters to larger organizations, also saw success this year. Ittycheria said:
Let me give you a bit more context on what we saw in Q3. We had another strong quarter of new business. We added over 500 direct sales customers, and we keep winning new workloads in existing accounts from start-ups to Fortune 500 companies.
Our new business from Enterprise Advanced also significantly exceeds our expectations, which is particularly notable in this environment given that EA requires an upfront commitment.
I think what we saw in EA is just evidence that customers are really viewing MongoDB to be an important part, if not a standard, in their tech stack. And once you are viewed as a critical element of the tech stack, people are more comfortable investing more aggressively, especially in this environment where people do need to modernize their legacy platforms to drive more efficiency and lower cost as well as drive more agility.
However, the company’s Atlas offering has plateaued somewhat. Ittycheria added:
Turning to Atlas consumption trends. We have seen an improvement in Q3 versus Q2, albeit still below historical levels.
But the company insists that it is continuing to see scale. The CEO said:
In the last 12 months alone, our open source community server has been downloaded more than 115 million times from our website, which is more than in our entire company history through the beginning of 2020.
And in Q3 alone, we had over 300,000 sign-ups for Atlas free tier, which is up 15x over the last five years. We also see growing evidence for how our value proposition resonates with IT decision-makers who are known for their focus on ROI, especially in economic environments, such as the one we're in today.
Customers who are moving to the cloud at scale such as companies in the financial services industry are increasingly choosing MongoDB as their underlying data platform to modernize their application portfolio.
Ittycheria added that customers appreciate MongoDB’s multi-cloud approach, as they resist vendor lock-in as part of their digital strategies. He said that MongoDB is continuing to ‘gain mind share’ with its partners too, as they lean into co-selling with Mongo as part of their go-to-market strategies. Ittycheria said:
All three hyperscalers now showcase MongoDB Atlas on their consoles to make it easier for the customers to sign up for Atlas given the increasing popularity of using MongoDB in the cloud. A number of large systems integrators are in the process of setting up business units focused on MongoDB given the size of the growing MongoDB practice.
A growing number of ISVs continue to build their products in MongoDB. We currently have close to 200 ISVs co-selling relationships, which is up more than 2x compared to two years ago.
Our growing popularity has tangible benefits for our business, especially in periods of economic uncertainty. In times like these, customers typically default to vendors they know and trust and with whom they can consolidate spend while reducing overall costs.
We see the current environment as an opportunity to establish ourselves as an enterprise standard with more of our customers.
On the customer front, Ittycheria referenced a number of notable brands. He said:
Customers are running mission-critical apps in MongoDB Atlas, leveraging the full power of the developer data platform, incorporating services such as search, in-app analytics and mobile services. These include Toyota Financial Services, Ulta Beauty, Mediastream and Vodafone.
Vodafone is creating hundreds of new cloud-native apps. Underpinning these apps is MongoDB Atlas, which provides a scalable, resilient and flexible data platform. Atlas also supports Vodafone's IoT ecosystem of 140 million-plus devices.
Several MongoDB customers are embarking on their digital transformation journey by choosing MongoDB Atlas and migrating from on-premise to the cloud, including American Tire Distributors, Schwarz IT and Volvo Group.
MongoDB will no doubt be pleased with these results and the markets’ reaction, given the lackluster performance of some other vendors. This economic turbulence is certainly giving observers a clear indication of which B2B tech vendors are proving critical to buyers during uncertain times.