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Here's How MongoDB Shares Gained 20% Last Month

By Anders Bylund – Oct 6, 2021 at 10:02AM

Key Points

  • Another impressive earnings report sent share prices skyward.
  • The stock hung on to its lofty valuation despite negative earnings and a turbulent stock market.

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The database systems specialist crushed everybody's expectations in the second quarter.

What happened

Shares of MongoDB (MDB 3.03%) rose 20.3% in September, according to data from S&P Global Market Intelligence. The maker of next-generation database systems posted an impressive second-quarter report on Sept. 2, and the stock never cooled down from the resulting surge.

So what

MongoDB's sales rose 44% year over year to $199 million. Adjusted net losses increased from $0.22 to $0.24 per diluted share. Your average analyst would have settled for a deeper net loss of $0.39 per share on top-line revenue near $184 million. The results also landed above the high end of MongoDB's guidance ranges for the second quarter.

An engineer works on a laptop in a modern data center.

Image source: Getty Images.

Now what

The robust revenue surprise provided the financial fuel for MongoDB's improved profitability. The sales rode a rising tide of customer interest in the cloud-based MongoDB Atlas database platform and the on-site Enterprise Advanced system. These systems are a perfect fit for organizing large and messy data streams, such as user input from mobile apps or real-world sensor readings from Internet of Things devices. That timeliness shows in MongoDB's financial results. In particular, Atlas sales jumped 83% above the year-ago reading and accounted for 56% of the company's total revenue.

The stock has now gained 90% in 52 weeks and trades at the lofty valuation of 42 times trailing sales. That's business as usual for a young company with skyrocketing revenue growth, and MongoDB is staring down a massive long-term opportunity as its hypermodern database technology threatens to overthrow the old-school relational database market. Global database systems revenue added up to $65 billion last year and MongoDB's $421 million of 2020 sales accounted for just 0.6% of the total market.

There's a lot of market share left to steal here. That's why MongoDB's sky-high and rising valuation actually makes sense.

Anders Bylund owns shares of MongoDB. The Motley Fool owns shares of and recommends MongoDB. The Motley Fool has a disclosure policy.

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