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MongoDB ripped 20% last week after the company reported a solid third quarter.
Revenues were up 47% year on year to 334 million. Gross margin increased 2 percentage points to 72% and total customers increased 26% to over 39,000.
MongoDB also provided strong guidance. Full year revenue of 1.26 billion represents a 45% compounded growth rate since 2016 which is among the best in the market right now.
Analysts were also excited by the fact revenues were up 47% but operating expenses were only up 37%.
However, MongoDB is not yet a profitable company. When you account for those operating expenses and a large amount of stock based compensation, net income over the last 12 months is negative 365 million.
Also, the stock is expensive. Accounting for cash and debt, the enterprise value works out to around 12.6 billion. That means MongoDB is valued at over 10 times revenue and almost 15 times gross profit.
To understand what MongoDB does, I recommend reading this Substack article from Technically.substack.com
But basically, MongoDB is a document database that helps organizations store and run queries on data. For example, Mediastream uses MongoDB to help stream the Fifa World cup to 30 million users. And Vodafone uses MongoDB to operate hundreds of cloud-native apps.
There’s no doubt that MongoDB is running a quality operation. Enterprise customers continue to grow and the company shows strong trends on analytic platforms like Google search. This company is better placed than many growth stocks but a 10 x sales multiple might still be too much.
If you assume MongoDB grows revenues 20% per year for the next 10 years then manages to hit a 20% ebitda margin. Ebitda in 10 years time would be roughly 1.8 billion dollars. A 20 times multiple on that figure gets the enterprise value to 36 billion and that works out to an investment return of just over 11% per year.
Considering the company’s strong growth I think MongoDB is worth a deeper investigation. But right now, I give this stock a neutral rating. Because this market continues to sell off growth stocks and 10 x revenue is quite a stretch.
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MongoDB ripped 20% last week after the company reported a solid third quarter.
Revenues were up 47% year on year to 334 million. Gross margin increased 2 percentage points to 72% and total customers increased 26% to over 39,000.
MongoDB also provided strong guidance. Full year revenue of 1.26 billion represents a 45% compounded growth rate since 2016 which is among the best in the market right now.
Analysts were also excited by the fact revenues were up 47% but operating expenses were only up 37%.
However, MongoDB is not yet a profitable company. When you account for those operating expenses and a large amount of stock based compensation, net income over the last 12 months is negative 365 million.
Also, the stock is expensive. Accounting for cash and debt, the enterprise value works out to around 12.6 billion. That means MongoDB is valued at over 10 times revenue and almost 15 times gross profit.
To understand what MongoDB does, I recommend reading this Substack article from Technically.substack.com
But basically, MongoDB is a document database that helps organizations store and run queries on data. For example, Mediastream uses MongoDB to help stream the Fifa World cup to 30 million users. And Vodafone uses MongoDB to operate hundreds of cloud-native apps.
There’s no doubt that MongoDB is running a quality operation. Enterprise customers continue to grow and the company shows strong trends on analytic platforms like Google search. This company is better placed than many growth stocks but a 10 x sales multiple might still be too much.
If you assume MongoDB grows revenues 20% per year for the next 10 years then manages to hit a 20% ebitda margin. Ebitda in 10 years time would be roughly 1.8 billion dollars. A 20 times multiple on that figure gets the enterprise value to 36 billion and that works out to an investment return of just over 11% per year.
Considering the company’s strong growth I think MongoDB is worth a deeper investigation. But right now, I give this stock a neutral rating. Because this market continues to sell off growth stocks and 10 x revenue is quite a stretch.
#investing101
#investmentadvice
#financialfreedom
#investmentopportunities
#investorsclub
#mongodbstock
#overlookedalpha
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NewsTranscript
00:00 Should you buy MongoDB stock, ticker symbol MDB.
00:04 MongoDB ripped 20% last week after the company reported a solid third quarter.
00:11 Revenues were up 47% year on year to $334 million.
00:15 Gross margin increased 2 percentage points to 72% and total customers increased 26% to
00:23 over 39,000.
00:25 MongoDB also provided strong guidance, full year revenue of $1.26 billion represents a
00:31 45% compounded growth rate since 2016 and that's among the best in the market right
00:38 now.
00:39 Analysts were also excited by the fact revenues were up 47% but operating expenses were only
00:45 up 37%.
00:46 However MongoDB is not yet a profitable company.
00:50 When you account for those operating expenses and a large amount of stock based compensation,
00:55 net income over the last 12 months is -$365 million.
01:01 Also the stock is expensive, accounting for cash and debt, the enterprise value works
01:07 out to about $12.6 billion.
01:09 That means MongoDB is valued at over 10 times revenue and almost 15 times gross profit.
01:16 To understand what MongoDB does is essential and I recommend reading this Substack article
01:22 from Technically.
01:24 But basically MongoDB is a document database that helps organisations store and run queries
01:30 on their data.
01:32 For example MediaStream uses MongoDB to help stream the FIFA World Cup to its 30 million
01:38 users.
01:39 And Vodafone uses MongoDB to operate hundreds of cloud native apps.
01:44 There's no doubt that MongoDB is running a quality operation here, enterprise customers
01:49 continue to grow and the company shows strong trends across analytic platforms like Google
01:55 Search.
01:56 I think this company looks a lot better than many other grave stocks at the moment but
02:00 a 10 times sales multiple still might be too much of a stretch.
02:05 If you assume MongoDB can grow revenue 20% per year for the next 10 years and then manages
02:11 to hit a 20% EBITDA margin, EBITDA in 10 years time would be roughly $1.8 billion.
02:18 And then a 20 times multiple on that figure gets the enterprise value to $36 billion.
02:23 So that works out to an investment return of just over 11% per year and so there's not
02:28 a lot of margin of safety.
02:31 Considering the company's strong growth though I think MongoDB is worth a deeper investigation.
02:36 But right now I'm going to give this stock a neutral rating because this market continues
02:40 to sell off grave stocks and 10 times revenue is quite a stretch.
02:44 But these are my own opinions not financial advice.
02:47 For more detailed investing ideas visit our website overlookedalpha.com