Mongo DB: King Under the Atlas Mountains

 
Q2 2021 Edition

14th July 2021

Key takeaways

  • By 2022, 75% of all databases will be deployed or migrated to a cloud platform, according to Gartner
  • MongoDB’s ‘start-up within a start-up’ business, Atlas, now accounts for over half the company’s earnings
  • We think the company has plenty of room to grow, with management estimates that MongoDB’s market opportunity will reach $97 billion by 2023.
By 2022, 75% of all databases will be deployed or migrated to a cloud platform’ according to Gartner's prediction in its recent IT market intelligence report. MongoDB, widely considered one of the database industry leaders, continues to outpace the competition with innovations in this space. It’s a fully managed database-as-a-service solution, named MongoDB Atlas – and it’s growing at an extraordinary rate.

The problem: traditionally, between 80 to 90 percent of data generated and collected by organisations is unstructured, meaning either developers have to spend their time reformatting it, or it can’t be stored (in a traditional relational database). This is a big problem as many business documents are unstructured (think emails, videos, photos, webpages, and audio files). Add to the fact that many of today’s most popular websites and apps (think social media) produce an incredible amount of unstructured data.

The solution: MongoDB Atlas. Atlas is a database-as-a-service, hosting and managing a client’s database for them. This dramatically reduces complexity, allowing businesses to focus on creating, not managing. Also, MongoDB Atlas is cloud-based, cutting ownership costs by removing the need for costly on-premise hardware. It also benefits from the trend towards multi-cloud offerings, as a multi-cloud platform it allows unique data distribution and mobility across AWS, Azure, and Google Cloud. As a document database, it allows developers to quickly store large amounts of unstructured data, improving operational efficiency and database performance,  and crucially, helping businesses to launch applications faster. 

 


START UP WITHIN A START UP?

Atlas launched around five years ago, and in that time has generated an impressive $400m in revenue (from $0). The company’s recent earnings reported Atlas now represents more than 50% of MongoDB’s earnings, a huge milestone. Revenue contribution is also currently growing at 73%. Atlas customers are typically billed monthly in arrears (as opposed to annually in advance) thus the “deferred revenue” metric of the balance sheet is becoming obsolete as the leading indicator of MDB’s expected top-line growth.

ATLAS' LAST FIVE YEARS OF REVENUE CONTRIBUTION 

Source: MongoDB FY21 Earnings Results

MongoDB is open-source software (i.e. made freely available to everyone), which is both a blessing and a curse, but essentially means it’s free. To monetize it, the company either sell subscription tools to clients or host & manage the database part of Atlas. Fundamentally, Atlas is being used to convert those free users into paying customers. When it comes to catching and retaining customers, it’s a pure numbers game for MongoDB. This idiom sums it up well: get enough through the door and it should lead to high customer retention. And it certainly seems to be paying off so far: subscription revenue was up 40% YoY, and the MongoDB database platform has been downloaded over 155 million times, with customers in more than 100 countries. Some high profile customers include Adobe, AstraZeneca, Bosch Software Innovations, Capital One, Cisco, eBay, Expedia, Experian Health, Live Nation, MetLife, OTTO, Staples, Thermo Fisher Scientific, and T-Mobile. The company reported continued strong customer growth in its FY22 results, with over 26,800 customers.

The “King of Databases” has plenty of room to grow, with management estimates that the company’s market opportunity will reach $97 billion by 2023. In other words, we believe that MongoDB has hardly scratched the surface of its true potential.On the 3rd June, MongoDB revealed 39% top-line growth (73% for its Atlas business). The market’s reaction? The stock was up 16% on four times the average trading volume.

References to specific companies should not be construed as a recommendation to buy or sell shares or other financial instruments issued by those companies, and neither should they be assumed profitable.

"MAJOR DISTURBANCES AND UNUSUAL OCCURANCES" ON US GRID
2000 to 2021

Source: Gartner, 2020 1
Source: MongoDB FY21 Earnings Results 2 
Source: As above 3 
MongoDB Company Website 4

“I believe we will look back at 2020 as the year that put an exclamation point on the need for businesses to re-invent themselves using software and data.”

Dev Ittycheria, CEO of MongoDB


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