A strong end to 2019 for MongoDB on Wall Street as the firm turned in strong Q3 revenue growth and narrower than expected losses, sending the company’s share price up on Wall Street.
Revenues were up 52% year-on-year to $109.4 million, comfortably beating expectations of $97.5 million. Subscription revenue was $103.8 million, up 56% year-on-year. Net loss for the quarter was $42.4 million, below consensus expectations.
Of particular note was a 185% rise in revenue from the Atlas managed database offering. Now 3 years old, Atlas accounts for 40% of total revenues and boasts 14,200 customers, up from 6,200 at this point last year. CEO Dev Ittycheria pointed to Atlas now being a $175 million revenue run rate business, citing a number of use case examples:
Axiata, one of the leading telecom groups in Asia, selected MongoDB Atlas and Enterprise Advanced to power Axiata's digital key fintech application. MongoDB was chosen for its flexibility and how cost-effective it was compared to the company's legacy Oracle database. MongoDB provides the high performance, availability and scalability that the application needs to bring cashless convenience to the fingertips of both consumers and merchants throughout Malaysia.
The Washington Post has chosen MongoDB to provide mission-critical support for its primary digital content management platform, Arc Publishing. MongoDB Enterprise Advanced serves as the backbone for its more than 750 million unique visitors a month and helps content teams power their businesses through innovation, better customer experiences and storytelling on an integrated suite of tools. MongoDB gives them the flexibility to run both on-premises and in the cloud.
Foursquare, a location technology platform dedicated to powering business solutions and consumer products through a deep understanding of locations, chose MongoDB Atlas to power all of its B2B enterprise location services. These services, which include tools for developers, location analytics, advertising, targeting, measurement and more, have been chosen by more than 50% of the Fortune 100. As Foursquare completes the digital transformation, MongoDB will continue to scale with them in the cloud.
Keller Williams Realty, one of the world's largest real estate franchises, selected MongoDB Atlas as the core database to power its new game-changing real estate mobile app. The app gives Keller Williams' real estate brokers a competitive advantage by using AI to reveal the most relevant information to potential buyers at the right time.
Netskope is a next-generation cloud security platform that helps customers manage evolving security needs driven by digital transformation. They chose MongoDB to provide security and scale they needed to expand internationally. MongoDB gives Netskope the critical data ingestion and visualization capabilities to provide unrivalled visibility, real-time data and threat protection when accessing cloud services, websites and private applications.
Ittycheria argued that as the wider industry is going through what he calls “the early stages of a once-in-a-generation shift in database technology”, Atlas is changing MongoDB as a company:
As our business shifts towards the cloud, we are able to increase our pace of innovation with new products, features and capabilities. Cloud services give us better insight into how customers use our products, and cloud services enable us to expand the different ways we go to market, increasing our ability to pursue a larger variety of customers around the world. All three together create a flywheel effect for our business.
First, since we deliver MongoDB as a cloud service through Atlas, we can deploy new features continuously rather than on an annual release cadence of an on-premise product. Furthermore, since new products are initially built for the cloud, our product teams can work quickly and independently to introduce new products and features, increasing the pace of innovation and providing more value to our customers more quickly. A great example of our continuous innovation is the recent introduction of auto scaling on Atlas, which we announced in September. This feature brings automated capacity management to Atlas.
When enabled, Atlas will now attract key resource utilization metrics in real time and autonomously adjust instant sizes, up or down, as needed by using predictive modeling and proven management practices developed from matching tens of thousands of MongoDB deployments. With this feature, Atlas now efficiently and elastically scales the customers' deployment to match their business needs without the need for manual intensive monitoring, analysis and intervention. Early customer feedback provides a great validation for this feature, and in the future, it will influence how we introduce this capability for private clouds.
The company also has greater and more granular visibility into usage and future trends, added Ittycheria:
This continuous and data-driven feedback loop allows us to understand what features customers find most valuable, where in the product they may get stuck or where they're not taking advantage of all the capabilities available. This enables us to iterate more often and more intelligently, ensuring that our product teams are focused on the most important opportunities. As a result, we can identify in real time ways we can help customers optimize their MongoDB deployments with more timely and relevant assistance.
He cited a case in point with a global financial institution to make his point:
[The user] was running an internal HR application without mission-critical scalability and security features, which negatively impacted the application performance and created significant risk. By proactively identifying these issues and sharing best practices, we developed a deep and trusted relationship with this large customer. As another example, through database usage metrics, such as increased IO throughput or turning on backup, we can infer when an application is likely to go into production. These types of insights allow us to scalably engage with our customers at key moments when they are likely to increase the complexity and criticality of their MongoDB deployment.
And Atlas is also enabling greater global reach for MongoDB, he noted, assisted by its availability on Amazon Web Services, Microsoft Azure and Google Cloud Platform. To that list of platform providers, the latest addition is Alibaba Cloud which has resulted in the first authorized MongoDB-as-a-service offering in mainland China.
Of those relationships, the alliance with AWS is perhaps the most interesting since Amazon’s formal launch this year of its own DocumentDB. Ittycheria remains confident that MongoDB is protected from any impact from this rival offering., stating bullishly:
Unlike lot of other open source technologies, we have a strong moat around our business, especially our own IP. So it's very difficult., actually it's illegal, for a cloud provider to take our native code and wrap it into their platform and offer it as a service. So what Amazon did was basically try to emulate MongoDB through a different architecture, which has severe performance and feature trade-offs.
Last count DocumentDB failed about 65% of the correctives, the test, compatibility test against MongoDB. So for those customers who have primitive requirements, DocumentDB could work. But for most customers, who have mission-critical requirements and want the breadth of use cases that MongoDB supports, MongoDB is by far the best choice.
Looking ahead to Q4, MongoDB is predicting total revenue of between $109 million and $111 million with a net loss of $16 million, while full-year 2020 revenue expectations have been raised to between $407 million and $409 million, up from previous guidance of $390 million to $395 million - all of which made Wall Street pretty happy yesterday.
That’s a nicely candid take from CEO Ittycheria on the Amazon offering, which reminds me of the ‘take-no-prisoners' tough talking that echoed around the relational database wars of the 1990s. Is a new front set to break out for the next generation? For those of us long-in-the-tooth enough to have lived through the original conflicts, that’s an interesting prospect for 2020 and beyond…