MDB • 10-Q • Q4 2021 • Positive

MongoDB's Cloud Revenue Surges 84% YoY as Atlas Adoption Accelerates Enterprise Migration

December 08, 2021 • 1 min read

TL;DR

MongoDB delivered exceptional Q3 FY22 results with revenue growing 50% YoY to $226.9M, driven by Atlas cloud revenue surging 84% YoY to reach 58% of total revenue. Customer count grew 31% YoY to over 31,000 with enterprise customers increasing 34%. Gross margins improved 100bps to 70.8% despite rapid Atlas growth, demonstrating strong operational leverage. The company's multi-cloud strategy and developer-centric approach continues gaining enterprise adoption, positioning MongoDB for sustained gr

Financial Performance Overview: Revenue accelerated to 50% YoY growth reaching $226.9M, with Atlas cloud revenue growing 84% YoY to represent 58% of total revenue vs 47% a year ago. Enterprise Advanced revenue grew 15% YoY showing continued on-premises demand. Operating margin improved 600bps YoY to -7.9% while maintaining 85%+ gross margins on Enterprise Advanced. Customer count surpassed 31,000 with net adds accelerating for the fourth straight quarter. Forward revenue visibility improved with remaining performance obligations up 68% YoY to $291.5M.
Strategic Initiatives and Operational Changes: MongoDB expanded its serverless offering Atlas Serverless to all major cloud providers while launching new capabilities in Atlas Search and Atlas Data Lake. The company deepened its partnership with Amazon Web Services through the AWS Marketplace and expanded its Google Cloud partnership globally. Management increased R&D investment by 42% YoY focused on serverless, search, and analytics capabilities. These initiatives aim to capture more enterprise workloads as customers accelerate their cloud adoption.
Market Position and Competitive Dynamics: MongoDB continues gaining share in the $82B database market, with Atlas growing 2.5x faster than the overall cloud database segment. Enterprise customer count grew 34% YoY with average spend increasing 27%. Direct sales productivity improved 31% YoY while the partner ecosystem drove 25% of new business. Key competitive wins came against legacy vendors Oracle and Microsoft, particularly in financial services and retail verticals. The company maintained its leadership position in the document database category according to Gartner.
Operational Efficiency and Profitability: Gross margins expanded 100bps YoY to 70.8% despite Atlas representing a larger revenue mix. Sales efficiency improved with magic number reaching 1.2 vs 0.9 last year. Operating expenses as a percentage of revenue declined 500bps YoY demonstrating improving operational leverage. The company generated positive free cash flow of $3.8M vs -$14.9M last year while maintaining aggressive growth investments. Cloud infrastructure optimization initiatives delivered 200bps of gross margin improvement in Atlas.
Growth Catalysts and Material Risks: Near-term growth drivers include expanded cloud partnerships, increasing enterprise adoption of Atlas, and new product capabilities in search and analytics. The $82B database market continues shifting to cloud-native architectures, expanding MongoDB's addressable opportunity. Key risks include cloud provider competition, potential macro headwinds impacting customer spending, and cybersecurity threats. Management is investing heavily in security and compliance while diversifying cloud partnerships to mitigate platform risk.

Revenue

$226.9M ( YoY, QoQ) with Atlas at of revenue

↑ +50%

Gross Margin

(+100bps YoY) with Atlas optimization driving improvement

↑ 70.8%

Free Cash Flow

$3.8M vs -$14.9M last year (1.7% FCF margin)

Operating Margin

(+600bps YoY) showing operational leverage

↓ -7.9%

Growth Indicators

$131.6M ( YoY, of total revenue)

↑ +84%

Customer Count ↑31,000 total (+31% YoY), 1,201 >$100K (+34% YoY)

Retention Rate ↑>120% net expansion rate

Key Risks

Cloud provider competition in database market
Macro headwinds impacting enterprise spending
Cybersecurity and data privacy threats
Cloud platform concentration risk

Key Opportunities

$82B database market shifting to cloud-native architectures
Serverless adoption reducing friction for new workloads
Analytics and search capabilities expanding use cases
International expansion with 62% growth outside NA

Bottom Line

MongoDB delivered exceptional Q3 results demonstrating strong execution and improving unit economics despite rapid growth. Atlas adoption continues accelerating as enterprises embrace cloud-native architectures, while operational leverage improves despite aggressive growth investments. The company appears well positioned to capture a growing share of database workloads through product innovation and expanded partnerships. Key metrics to watch include Atlas revenue mix, enterprise customer growth, and gross margin trends. The combination of strong product-market fit, improving efficiency, and large market opportunity suggests sustained growth potential ahead.