For this cloud database provider, nothing’s changed except the price of the stock

Brian Withers (MDB):  MongoDB’s stock has been caught up in the tech pullback and is down around 30% from its high. Even a solid earnings report and an analyst upgrade didn’t stop the stock’s downward slide. For long-term-minded investors, this presents an opportunity to buy this cloud database provider at a discount. But before you jump in, let’s look at why this tech stock is worth your hard-earned cash.

Earlier in March, management reported its Q4 results with $171 million in top-line revenue growing at a 38% year-over-year clip. Atlas, its easy-to-onboard cloud offering, is continuing to be the workhorse in its stable with a 66% year-over-year revenue gain to become almost half of the company’s overall business. Even more impressive is that Atlas customer count grew a whopping 51% over the previous Q4 and its up sequentially 10% from last quarter.

Metrics

Q4 FY2020

Q3 FY2021

Q4 FY2021

QoQ change

YoY change

Revenue

$124 million

$151 million

$171 million

13%

38%

Atlas revenue % of total

41%

47%

49%

+2%

+8%

Atlas customers

15,400

21,100

23,300

10%

51%

Data from company earnings reports. Note that Q4 FY2021 ended on January 31, 2021.

Atlas customers tend to be smaller with an average of $6,000 to $7,000 in annual spend. Often, these are developers testing out the features and functionality with a non-mission-critical application before choosing the product to power an enterprise-wide application. This has been a successful land-and-expand model for the company. With consistent net expansion rates of 120%-plus, investors can see why customers who spend over $100,000 annually have grown to 975, up 30% over the last year.

As companies move their information technology applications to the cloud, this developer-loved platform will be the leading choice to power enterprises of tomorrow. In addition, new cloud applications are being developed every day, giving this cloud database plenty of room to run. It seems the long-term thesis for this tech stock is still intact. The only thing that’s changed for investors is the price of the stock. You may want to gobble up a few shares at this price to expand to your existing position or add this cloud player to your portfolio.