The world's need for databases is changing. No longer used for just calculating and tabulating transactions, databases now are being asked to manage the information that comes from things like weblogs of internet traffic, free-form texts from customers, and sensor readings from Internet of Things devices.
MongoDB (NASDAQ: MDB) exists to help with this. Mongo's databases are not only more flexible, but are also open source -- meaning developers can contribute business-specific applications to support them.
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As the commercial world transitions its business and its data to the cloud, MongoDB's databases have been surging in popularity. The company's exponential growth rate also has attracted the attention of forward-looking investors, and its stock price is up nearly 150% so far in 2018.
The company recently reported its second-quarter results. Let's take a closer look to see if MongoDB's good times are likely to continue.
MongoDB results: The raw numbers
What happened with MongoDB this quarter?
MongoDB's strong customer growth again caused its top-line revenue to surge.
- Revenue increased by 61%, driven by a 63% increase in subscription revenue, to $52.9 million. The top-line growth rate is accelerating, as there was a 53% increase in subscription revenue last quarter.
- Gross margin was 71%, which is unchanged from last year.
- Atlas -- which is Mongo's database-as-a-service offering -- continued to shine. Atlas added 1,000 new customers and grew revenue 400% year over year. Atlas now accounts for 18% of total revenue, compared to only 5% a year ago.
- The company ended the quarter with 7,400 customers, which is 72% more than a year ago. New customer wins included Canon USA and cryptocurrency wallet Coinbase.
- Mongo issued $254 million in net proceeds from a convertible debt offering.
- The company's net annual recurring revenue-expansion rate, which compares subscription revenues today to those from the same customers one year ago, was above 120% for the 14th consecutive quarter.
What management had to say
President and CEO Dev Ittycheria elaborated on what exactly is driving Mongo's accelerated growth:
Customers are migrating their data and software applications to the cloud, which has been extremely beneficial to MongoDB and Atlas.
Atlas already provides elastic capacity, which means customers won't crash their sites if they see a spike in usage and traffic (as is often the case for internet-delivered software applications). The company continues to dedicate resources to Atlas, such as encryption key management for security and LDAP (Lightweight Directory Access Protocol) integration to simplify logins and automate simple tasks. Atlas also is now HIPAA-compliant, which should expand sales into the healthcare industry.
Management raised full-year revenue guidance to $229 million (up from $218.5 million last quarter) and reaffirmed an expected net loss of ($1.64) per share. MongoDB still is losing money, but it's general-purpose databases are gaining market adoption at full steam. Investors will watch for the business to scale and eventually capture profits.
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