MongoDB (NASDAQ:MDB), the developer of its namesake NoSQL database, is aiming to disrupt a market dominated by legacy tech giants. Oracle controls somewhere around 40% of the market for database software, and switching costs are astronomically high.

Winning will require more than simply offering an alternative database. The first glimpse of MongoDB's evolution came last year, when the company announced MongoDB Stitch. Stitch is a backend-as-a-service offering that simplifies application development by allowing direct access to MongoDB databases from client applications. Stitch aims to eliminate the application layer that typically sits between the application and the database.

Stitch, which MongoDB now refers to as a serverless platform, became generally available in June alongside the launch of MongoDB 4.0. While the database is still MongoDB's core business, the company is starting to look a lot more like a cloud platform provider.

A cloud.

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The headache Stitch relieves

When a mobile or web app needs data from a database, it typically makes an HTTP request to an application running somewhere, either on a server or in the cloud. That application then accesses the database, runs whatever query was requested, and returns the data to the client app.

This setup involves a middleman that complicates app development and maintenance. There are simply more places for things to go wrong. Stitch, on the other hand, allows a client app to access a MongoDB database directly, with a rules engine that makes sure data remains secure. Instead of a mobile app going through a middleman server application, it makes a single call to Stitch to retrieve whatever data it needs.

That's great for simple situations, but in some cases the app needs to do more than query a database. For example, consider a social media app. When a user tags another user in a post, that post needs to be pushed into a database, but the app may also need to send the tagged user a notification or an email.

Stitch tackles that use case with Stitch Functions, which allow developers to run blocks of JavaScript code in Stitch's serverless environment. That social media app would make a single API call to a Stitch function, which would then add the post to the database and make a call to a third-party notification or email service to send the notification. Instead of needing a heavy server-side application, a small snippet of serverless code does the trick, with the platform handling the underlying infrastructure.

Used alongside MongoDB Atlas, the company's database-as-a-service offering, MongoDB now allows developers to build applications entirely on its platform.

Plenty of alternatives

While MongoDB Stitch greatly increases what developers can accomplish using the company's products, there is plenty of competition. Serverless cloud functions are available on most major cloud platforms. Amazon Web Services, Microsoft Azure, Google Cloud, and IBM Cloud all offer cloud functions that serve the same purpose as Stitch's functions.

Direct database access also isn't unique to Stitch. Google, through its Firebase mobile development platform, offers similar functionality. Firebase Realtime database allows direct access to the underlying NoSQL database from the client app, and it supports automatic data synchronization between the backend database and connected devices. Stitch's similar data synchronization feature is listed as coming soon.

So Stitch isn't unique, and it's not the first service to offer this type of functionality. But for developers who have already bought into MongoDB's database, especially those using Atlas, Stitch is the obvious choice when it comes to serverless computing.

Atlas is proving to be a popular product, accounting for 18% of MongoDB's total revenue in the second quarter. Atlas revenue was up 400% year over year. Stitch, which is priced based on the amount of data sent to external services and the amount of computing resources consumed, represents a way for MongoDB to generate even more revenue from Atlas users.

MongoDB has successfully made its database into major contender. The software itself is open source, and it's been downloaded more than 40 million times. Now the company is trying to become a force in the cloud platform market, with Atlas and Stitch offering a potent combination for developers.

Investors are certainly optimistic about MongoDB's prospects. With a market capitalization of nearly $3.9 billion, MongoDB stock trades for nearly 18 times the average analyst estimate for fiscal 2019 revenue. The company is not profitable or even close. During the second quarter, MongoDB posted a net loss of $31.2 million on $57.5 million of sales.

It's not hard to see the potential of this company, especially given its cloud platform shift. But as with any high-flying growth stock with a nosebleed valuation, investors need to tread carefully.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Timothy Green owns shares of IBM. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and MongoDB. The Motley Fool owns shares of Oracle and has the following options: long January 2020 $30 calls on Oracle. The Motley Fool has a disclosure policy.