Database management company MongoDB (NASDAQ:MDB) reported better-than-expected quarterly results on Wednesday. Revenue soared, driven by its rapidly growing subscription revenue.
"MongoDB's terrific third quarter results are the latest example of how the powerful combination of our modern data platform and sophisticated go-to-market efforts are driving increased adoption by both new and existing customers," said MongoDB CEO Dev Ittycheria in the company's third-quarter earnings release.
Here's a look at some of the key metrics from the quarter.
1. Revenue increased 52%
MongoDB's fiscal third-quarter revenue increased 52% year over year to $109.4 million. While this was significantly higher than the $98 million to $100 million management guided for, it marked a deceleration compared with the 67% growth the database company saw in fiscal Q2.
Subscription revenue increased 56% year over year to $103.8 million, fueled primarily by Atlas -- the tech company's full-service software-as-a-service (SaaS) database management product.
2. Gross margin narrowed to 71%
The company's gross margin narrowed from 75% in the third quarter of fiscal 2019 to 71% in the third quarter of fiscal 2020.
"As a reminder, the year ago period benefited from the larger license mix from multi-year enterprise advanced transactions and the current period margin is impacted by the mLab acquisition," said MongoDB Chief Financial Officer Michael Gordon in the company's fiscal third-quarter earnings call. In addition, Atlas is putting pressure on the company's total gross margin since the product operates at a lower gross margin than MongoDB's consolidated gross margin.
3. Non-GAAP loss per share was $0.26
MongoDB's non-GAAP loss per share was $0.26 -- double the loss per share it reported in the year-ago quarter.
This wider loss reflects management's aggressive investments in growth opportunities.
"Given the size and early stage of our market opportunity and our demonstrated product market fit, our primary focus will be to continue investing in the business," Gordon explained.
4. Atlas revenue surged 185%
Atlas continues to be a powerhouse for MongoDB. Revenue from the SaaS offering soared 185% year over year, accounting for 40% of total revenue.
"This was another outstanding quarter for Atlas, which is now [a] $175 million revenue run rate business, just over three years from launch," said Ittycheria during the earnings call. He added that the offering is helping morph MongoDB into a cloud-first company.
5. Revenue in Q4 will probably exceed $111 million
For the company's fourth quarter, management guided for revenue between $109 million and $111 million. The high end of this guidance range implies 34% year-over-year revenue growth. However, given the company's tendency to crush its own guidance, actual revenue during the period will probably be above this range.