MongoDB Inc. (NASDAQ: MDB) stock price has gained more than 90% in what is turning out to be a break out year for the general-purpose database platform company. The explosive run stems from investors acknowledging the fact that the company is reaping the rewards of the ongoing transition from secular trends to cloud computing and big data processing.
MongoDB Competitive Edge
The cloud database platform provider looks set to continue powering high as it continues to set standards for others to follow. The company’s cloud-based applications have proved to be highly effective in doing pretty much that other NoSQL databases can do.
While databases like Oracle require lots of detailed planning and precise data inputs to function properly, MongoDB-based solutions have proved to work with various data types, all but strengthening their competitive edge. It thus does not come as a surprise that the company is attracting more enterprise customers.
Revenue Growth
As the company releases its third-quarter financial results, the focus will be on revenue growth going by the 39% growth in the second quarter. Gross margin has been drifting lower in recent quarters, having tanked 1% point in Q2.
Amid revenue growth, MongoDB cash flow continues to tread in the red, negative free cash flow of $13.8 million in the most recent quarter remains a point of concern. However, the cash burn should not concern investors much, given that the company has more than $900 million in cash and short term investment thanks to a $1.1 billion convertible debt issued last year.
Increasing share of customers generating recurring revenue of at least $100,000 all but affirms MongoDB revenue run rate heading into the earnings session. As it stands, there is nothing wrong with MongoDB’s business right now. Customer growth has led to healthy growth in deferred revenue, which was up in the second quarter to $195 million.
The company is firing on all cylinders amid the ongoing transition into the cloud. Likewise, the stock looks set to continue powering high as underlying fundamentals continue to edge higher.