Quick Summary
MongoDB provides "NoSQL" database software solutions. NoSQL databases are modern alternatives to the traditional relational database software offered by companies like Oracle. The primary advantages are: handling a wider variety and higher volume of data; more flexible data queries; greater transaction rates; and much easier scalability as they can be distributed across multiple servers. MongoDB offers its software using a "freemium" model - free to download and try, with paid offerings for enterprise-level features; and Atlas, its fully-hosted cloud-based solution. MongoDB counts such large-data online firms as Google, Facebook, eBay, and Expedia as customers. The firm has also established business partnerships with the largest cloud platform providers in the U.S. and China. About 44% of revenue is generated outside of the U.S.
Does The Company Have Rising and Recurring Revenues?
YES. MongoDB's 3-year annual revenue growth rate of 56% is extremely strong, and the company continues to deliver over 35% growth rates at present. Customer count has been growing rapidly, up 46% in 2020. The database software market is enormous, expected to reach nearly $100 billion by 2022 and growing at 10% annually. This leaves a lot of growth potential for Mongo, who's 2020 revenues were just shy of $600 million. This is a recurring revenue story as well. 96% of revenues are subscription-based. The company has been successfully moving customers to its cloud Atlas solution, a true SaaS model which now accounts for 49% of revenue, up from 23% just 2 years ago.
Does The Company Have Durable Competitive Advantages?
YES. Database software has HIGH SWITCHING COSTS for its users. Migrating large databases is time-consuming, error prone, and can be highly disruptive to down-stream software that integrates with it. This large effort is only undertaken if the cost-benefit analysis overwhelmingly supports it - and costs are extremely high. Customer captivity is clear in MongoDB's sustained 120%+ net revenue retention rate, which indicates that not only does the company not lose customers year-to-year, those customers actually increase their spend. While MongoDB will face competition for new customers from large, established players (including Oracle and Amazon), customers should be quite captive once committing to Mongo, protecting revenues and cash flows.
GreenDot Rating: GREEN
MongoDB has all the characteristics of a GREEN (highly attractive) business model. NoSQL is a real breakthrough in database technology that is causing major disruption in the age of cloud-deployed software and "agile" development techniques. MongoDB is a leader in the space, with rapid growth into an enormous and growing market, and high switching costs to existing customers.