MongoDB Hits $1 Billion Run Rate. What's Next?

Hint: AWS, Google, Microsoft, Oracle, and Snowflake are moving in the same direction

John Foley Mar 10

MongoDB reported revenue of $266.5 million for Q4 FY22, putting it for the first time on a $1 billion annual run rate. Now that MongoDB has crossed that key financial threshold, how does it get to $2 billion?

That’s not a rhetorical question. It’s exactly what Morgan Stanley analyst Sanjit Singh wanted to know during Q&A with MongoDB CEO Dev Ittycheria and COO/CFO Mike Gordon on the March 8 earnings call.

“As this business crosses $1 billion,” asked Singh, “how do you feel about your ability to scale to $2 billion and beyond over time?”

Ittycheria’s response boiled down to two things. One, that MongoDB has “the best sales organization in enterprise software.” He talked about the company’s transition from direct sales to inside sales to self-serve to large-account sales.

Then Ittycheria pointed to MongoDB’s next big thing—a focus on vertical industries.

“We're going to be focused increasing on verticalization,” Ittycheria said. “As I mentioned in the prepared remarks, we are seeing a lot of traction in key vertical industries. We’re developing a deep degree of confidence around those industries. We’ve been having a team focused on solutions marketing for a number of years to particular industries, and you’re going to see us organize our sales teams more over time with a vertical orientation.”

Here’s what Ittycheria said during his prepared remarks, as referenced above:

“Businesses across all industries will continue to invest heavily in software as a means to differentiate themselves to seize new opportunities and to respond to new threats. While this has been happening aggressively over the past decade, we are still only in the early stage of this movement. As infrastructure becomes more advanced, with chips getting more powerful, algorithms getting smarter and networks getting faster, the capability for innovation only increases. Powerful software powered by real-time data will empower experiences and business models we cannot even conceive us today.”

It should be noted that MongoDB isn’t alone in developing deeper industry know-how as a way of providing value. As I recently reported, Snowflake CEO Frank Slootman said that his conversations with customers have shifted from workloads and data architecture to industry-specific requirements.

“Nine out of 10 conversations are industry-specific, very, very industry-specific, oftentimes not necessarily with IT types but with businesspeople and data science types,” Slootman said.

At the same time, database competitors AWS, Google Cloud, Microsoft, and Oracle are all rallying around industries as well, as evidenced by AWS’s partnership with Goldman Sachs and Google Cloud’s 10-year deal with CME Group. And in healthcare, Oracle plans to acquire Cerner for $28.3 billion.

On its website, MongoDB highlights eight industries: finance, telecom, healthcare, public sector, retail, gaming, payments, and manufacturing. So MongoDB is smart to move in this direction, but it has a lot of big-time company in the database market.

The Numbers

MongoDB’s financial results for Q4 and FY22 were generally well received. MDB stock bounced from about $280 to $320, a 14% increase, after the earnings were released.

In a nutshell, Q4 revenue of $266.5 million was up 56% over the previous year. Total FY22 revenue was $873.8 million, a 48% increase. And revenue from the company’s cloud database service, Atlas, grew 85% in Q4, amounting to 58% of revenue.

All that said, MongoDB still reported a net loss of $306.9 million for the year.

Other Highlights

A few other talking points worth review.

• MongoDB had more than 33,000 customers at the end of FY22, including 1,300+ representing $100,000 or more in revenue and 164 that are million-dollar accounts. Those $1M accounts grew almost 70% during the year. Much of the customer growth is attributed to Atlas, which accounted for some 31,500 customers.

• MongoDB noted an uptick in demand for its Enterprise Advanced edition, which is the commercial version of MongoDB for deployment on premises, with enterprise capabilities beyond what’s available in the no-cost community edition. So, even while Atlas is growing at 85%, demand for the on-prem database is holding its own.

• On the product front, a serverless version of MongoDB’s cloud service is in preview mode. “The early feedback has been incredibly positive,” said Ittycheria. “We're seeing a lot of interest.” MongoDB serverless as a managed service on AWS, Google Cloud, or MS Azure could prove to be a popular option when it’s GA.

• MongoDB’s CEO cited success partnering with the hyperscalers—AWS, Google Cloud, and Microsoft Azure—for joint business. MongoDB is available in more than 80 regions across AWS, Google Cloud, and Azure. Ittycheria characterized the relationship with AWS as being “very healthy,” despite the fact that AWS has its own competing document database, DocumentDB. “We’re also doing a lot of business with Azure,” he said. Each of the Big 3 cloud providers has its own document database. Despite the peace & love tone, Ittycheria knocked the hyperscalers for their “back of tricks” approach with point solutions, and added, “I would say our win rates are still very high against them when we go head-to-head against them.” (You can see MongoDB’s competitive comparison chart here.)

• MongoDB needs to amplify its messaging as it continues to target more customers. “In Marketing, we see a great opportunity to elevate our brand and our value proposition,” Ittycheria said. Having worked on the Marketing team at MongoDB myself in the second half of 2020, I would suggest that MongoDB is not doing itself any favors by positioning its platform as a “general purpose” database, as that’s just too vague and over-reaching. More to the point is “application data platform,” which is another term it uses to describe its NoSQL document database. Also, MongoDB could learn from Snowflake CEO Slootman in how he talks about the wider world of stakeholders (i.e. businesspeople and data scientists).

Congrats to MongoDB on a good quarter. However, Ittycheria & Co. still have work to do as the 15-year-old company continues its steady climb into the enterprise.

Final note: MongoDB is included in the Cloud Database Report Top 20. You can download the full report and Top 20 below.

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a month ago · John Foley

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