Atlas, MongoDB's(MDB 7.69%) cloud-based database-as-a-service product has long stood out for its rapid growth. However, Atlas now makes up more than half of the cloud company's revenue, and should help drive Mongo profitability as it grows.
In this episode of "Beat and Raise" recorded on Sept. 3, Fool contributors Jeremy Bowman and Brian Withers explain why Atlas helping the company gain leverage and how big of a tailwind it could be.
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Jeremy Bowman: I think the company's most important product is Atlas, which is their database-as-a-service, or their Cloud-based offering, which is opposed to the traditional standard MongoDB, which is more of an on-premise offering. Atlas has really been the growth driver for the company's sales, and that business was up 83 percent in the quarter.
Brian Withers: Wait, Jeremy. Can you say that again? [laughs]
Jeremy Bowman: Yeah, 83 percent growth. [laughs]
Brian Withers: That is awesome.
Jeremy Bowman: Yeah. That product has really been a big spark for the company. I think since they first introduced it, it was growing maybe in like 300 percent range. As it's gotten bigger, the numbers have cooled off a little but still, 83 percent is phenomenal. Atlas also now represents 56 percent of total revenue. But I think it's great to see that it makes up more than half of sales. I think one thing that if you can find in the stock that's great to ride on is companies that are transitioning from product-based revenue to service-based revenues, which is what we see happening with Atlas, which is the service-based product or Cloud-based product, because those tend to be more higher-margin than product-based revenue. I think a classic example of this is Amazon, which started out with first-party e-commerce sales and transitioned to third-party and AWS. Talking about that, Apple has also done the same thing with their services in App Stores and insurance and all that. I think Atlas will definitely be a long-term driver profitability.
Brian Withers: The 29,000, most of those customers are Atlas customers. But what's interesting, what I've seen in the last few quarters, is that initially, the Atlas is the Cloud-based model of this stuff. When MongoDB was founded, you had to install the stuff on-premise in your own servers. It was a product sales as you talked about it. For the longest time, it felt like big customers were installing it on-premise and small customers were using the Cloud version. Now, more and more customers are using the Cloud version, the Atlas version to run key parts of their business. That's exciting to me to see that switch of customers using their flagship Atlas platform now, not just for little one-off programs, but for running key parts of their business.
Jeremy Bowman: Yeah, as you said, I think for a long time, Atlas has been the future of the company, but I think we're at a point to where it's like the present of the company as well, and management really sees it that way. It sees it as their core of the business.
