Summary
MongoDB's FY2021 second quarter, ended July 31, 2020, delivered strong revenue growth but wider losses. Total revenue was $138.28 million, up 39.2% from the prior-year quarter. Gross profit was $95.98 million, up 38.8%. Gross margin was 69.4%, down 0.2 percentage points, as services gross margin weakened. Operating loss widened to $49.78 million, while operating margin was negative 36.0%, up 1.9 percentage points from the prior-year quarter. Net loss widened to $64.52 million, and diluted net loss per share widened to $1.10. The company continued to invest heavily in sales, marketing and research and development, which drove operating expenses higher.
Customer metrics point to healthy expansion. MongoDB ended the quarter with over 20,200 customers, compared with over 15,000 a year earlier. Direct sales customers rose to over 2,500 from over 1,850. Customers with at least $100,000 in annualized recurring revenue or annualized monthly recurring revenue reached 819, up from 622 a year earlier. MongoDB Atlas customers exceeded 18,800, compared with over 13,200 a year earlier. Total headcount was 2,169 as of July 31, 2020, up from 1,491 as of July 31, 2019. The company described a record number of direct sales and total customer adds in the quarter. These KPIs suggest MongoDB is converting free users and expanding within existing accounts, though the mix shift toward Atlas carries third-party cloud hosting costs.
Cash flow and backlog metrics were mixed. Net cash used in operating activities was $10.03 million, up 20.4% from the prior-year quarter. Capital expenditures were $3.79 million, up 214.1%. Deferred revenue was $195.00 million at July 31, 2020, up 29.8% from a year earlier. Remaining performance obligations were $221.20 million, up 25.9%. Free cash flow was negative $15.0 million, compared with negative $13.8 million in the prior-year quarter. The quarter's operating loss and net loss reflect higher stock-based compensation and other costs, even as revenue and deferred revenue grew.
Guidance points to continued growth with losses. For the third quarter of fiscal 2021, MongoDB guided revenue of $137.0 million to $139.0 million, non-GAAP loss from operations of $(27.0) million to $(25.0) million, and non-GAAP net loss per share of $(0.48) to $(0.45). For the full fiscal year 2021, the company guided revenue of $549.0 million to $554.0 million, non-GAAP loss from operations of $(71.0) million to $(66.0) million, and non-GAAP net loss per share of $(1.29) to $(1.21). Management said it is significantly increasing its revenue outlook for fiscal 2021. The guidance assumes continued COVID-19 impact, and the company did not provide a full reconciliation to GAAP because of stock-based compensation variability.
Risks remain centered on the pandemic and the cost of growth. Management expects revenue to be negatively impacted by COVID-19 and global uncertainty at least through fiscal 2021. MongoDB recorded a higher allowance for credit losses during the six months ended July 31, 2020 due to potential customer financial difficulties. Travel costs are lower, but the company plans to invest a portion of those savings in marketing programs and research and development headcount. Services gross margin fell because of lower utilization of services personnel during the pandemic, which weighed on overall gross margin. A rising Atlas mix could pressure gross margin because of hosting costs. Other risks include a history of losses, competition, the need to add new customers and expand existing subscriptions, and possible additional capital needs. The company also faces execution risk as it expands its sales and marketing organization and navigates an uncertain macroeconomic environment.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $138.3M | $130.3M | +6.1% | $99.4M | +39.2% |
| Gross profit | $96.0M | $92.7M | +3.6% | $69.2M | +38.8% |
| Gross margin | 69.4% | 71.1% | -1.7 pp | 69.6% | -0.2 pp |
| Research & development | $49.3M | $45.6M | +7.9% | $37.1M | +32.6% |
| Sales & marketing | $75.1M | $69.1M | +8.6% | $53.5M | +40.3% |
| General & administrative | $21.4M | $19.9M | +7.5% | $16.2M | +32.5% |
| Total operating expenses | $145.8M | $134.7M | +8.2% | $106.8M | +36.4% |
| Operating income (loss) | -$49.8M | -$42.0M | -18.4% | -$37.7M | -32.1% |
| Operating margin | -36.0% | -32.3% | -3.7 pp | -37.9% | +1.9 pp |
| Net income (loss) | -$64.5M | -$54.0M | -19.6% | -$37.3M | -72.8% |
| Net margin | -46.7% | -41.4% | -5.3 pp | -37.6% | -9.1 pp |
| Customers | 188,756 | 89,388 | +111.2% | 109,750 | +72.0% |
Risks
The COVID-19 pandemic and associated global economic uncertainty could continue to harm business activity, and the company expects revenue to be negatively impacted at least through fiscal 2021. It recorded a higher allowance for credit losses during the six months ended July 31, 2020 due to possible customer financial difficulties.
The database market is highly competitive, with legacy providers such as IBM, Microsoft and Oracle and cloud providers such as AWS, GCP and Microsoft Azure. Larger competitors can bundle competing products, lower prices or devote greater resources, which could harm pricing, customer acquisition and retention.
MongoDB Atlas revenue represented 44% and 43% of total revenue for the three and six months ended July 31, 2020, up from 37% and 36% in the prior-year periods. The company has invested significantly in Atlas, and if it fails to achieve market adoption or if increased Atlas mix lowers gross margin due to hosting costs, results could be harmed.
A majority of subscription contracts were one year in duration in fiscal year 2020, and customers have no obligation to renew. Failure to renew on same or more favorable terms, or failure to expand customer usage, would harm business and results of operations.
The conditional conversion feature of the 2024 Notes was triggered during the three months ended July 31, 2020, as the stock price was at least 130% of the conversion price for at least 20 of 30 consecutive trading days. The 2024 Notes are convertible from August 1, 2020 through October 31, 2020, which could affect liquidity; other expense, net increased 358% for the quarter and 338% for six months ended July 31, 2020 due to interest and amortization from the 2026 Notes.
Net loss widened to $64.5 million for the three months ended July 31, 2020 from $37.3 million in the prior-year quarter, and to $118.5 million for the six months ended July 31, 2020 from $70.6 million. Operating cash flow for the six months ended July 31, 2020 was negative $15.9 million, down 69.6% from negative $9.4 million, and the company expects continued losses and negative cash flows.
Industry publications have reported ransomware attacks on MongoDB instances, which the company believes resulted from Community Server users failing to enable recommended security settings. It also saw increased phishing and social engineering attempts during the COVID-19 pandemic; a breach could lead to litigation, regulatory action and reputational harm.
The sales cycle is generally three to nine months but can exceed a year for some customers, and a large portion of sales occurs toward the end of each quarter. COVID-19 remote work and travel restrictions could delay contract execution, renewals and revenue recognition.
Privacy and data protection rules such as the CCPA, CPRA and GDPR impose compliance costs and potential fines. The July 16, 2020 invalidation of the EU-US Privacy Shield creates uncertainty for EU-US and UK-US data transfers, which could impede customer acquisition and retention.
The company plans to expand its sales and marketing organization and faces significant competition for experienced sales professionals. COVID-19 remote work arrangements may slow training and productivity of recent and planned hires; sales and marketing headcount grew to 988 as of July 31, 2020 from 615 a year earlier.
Community Server is licensed under the SSPL or AGPL, and the SSPL has not been approved by the Open Source Initiative. Developers may hesitate to adopt Community Server due to uncertainty, and a court could hold either license unenforceable, which could harm adoption and the ability to monetize or protect intellectual property.
Realtime Data filed a lawsuit in March 2019 alleging infringement of three U.S. patents related to data compression, decompression, storage and retrieval; the action is currently stayed. Intellectual property claims could be costly, divert management attention and require significant damages or technology changes.
SaaS KPIs
All quarters →Total Customers
MongoDB Atlas Customers
Direct Sales Customers
Free Cash Flow
Customers over $100K ARR
Non-GAAP Gross Margin
MongoDB Atlas Revenue % of Total Revenue
Direct Sales Customers Revenue % of Subscription Revenue
MongoDB Enterprise Advanced % of Subscription Revenue
Non-GAAP Loss from Operations
Summary, forecast, risks and KPIs are extracted from MongoDB, Inc.'s SEC filings for Q2 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.