What happened
Shares of cloud-computing database company MongoDB (MDB -0.86%) jumped on Tuesday morning after the company announced it will introduce a new pay-as-you-go subscription offering for its MongoDB Atlas database platform. The program will be accessible via Alphabet's Google Cloud.
As of 1 p.m. EDT, MongoDB stock is up 3.5%.
Image source: Getty Images.
So what
Under the new program offering, MongoDB says customers with Google accounts will have "more choice in how they procure MongoDB on Google Cloud." Atlas can integrate with other Google Cloud products, says MongoDB. It can be ordered through Google Marketplace and launch directly from the Google Console. In addition, "customers only pay for the resources they use ... with no up-front commitments while using their Google accounts."
MongoDB appears to be designing the new subscription offering to broaden the range of customers it sells to -- "from bootstrap companies participating in the Google for Startups and MongoDB Startup programs, ranging to the largest, most complex Enterprises." Giving its smallest customers the option to dip a toe in the water with MongoDB is a logical way to introduce them to the product. In fact, for MongoDB, it's probably an even better idea than offering "free-to-play" options below paid-for tiers of service since it will require new customers to sink at least some costs into learning to use MongoDB's products, potentially reducing customer-churn rates.
Now what
Of course, over time the theory is that those new customers will "scale based on their needs," subscribing to more and more products as their needs, their businesses, and their revenues expand. In short, this is a way to help MongoDB grow alongside some of its smallest customers. As MongoDB has previously explained, the key to its ability to grow quickly (Atlas revenues are up 85% in the fourth quarter, for example) is its ability to provide products that "reduce friction" and "make it incredibly easy for developers to build compelling applications."
As MongoDB looks forward to reporting its first full year of positive free cash flow (in 2023), this is the right kind of subscription offering to keep the growth going.
