MongoDB(NASDAQ: MDB) is the company behind the document-orientated database model that has seen incredible growth in popularity and adoption over the last decade. The company created its core product after it couldn’t find a suitable product in the market that would meet their requirements and decided to develop it themselves.
During the later stages of the development, the company started realizing its potential and decided to shift its strategy and make it a core product with related offerings in support and consultation.
In recent years, Mongo’s clients became more vocal about the performance of its database, as many of them have already been using it for years in the production environment and could draw better conclusions on database’ performance and the quality of the support services MongoDB provided.
The company’s client base is vibrant and ranges from large, well-established companies to small and agile startups.
MongoDB’s popularity can be attributed to a few factors. The product is relatively easy to work with, compared to more traditional, relational databases. It appeals to the startup sector, where more simple, more straightforward tools and technologies are often preferred, as one of the ways to bring products faster to the market. Ideology is important too. Younger companies don’t necessarily want to get in bed with the industry’s behemoths, such as Oracle. Startups want more flexibility and as few hurdles as possible, especially when it comes to dealing with larger software companies.
So far, Mongo’s approach seems to be working: the sales are more vital than ever. For six months ending July 31, 2020, the sales revenue was $268,610 million vs $188,756 same period in 2019. Sales grew in all regions, with the Americas contributing the largest share ($168,581 million),compared to EMEA($79,201 million) and the Asia Pacific ($20,819 million).
For the investors, it is crucial to understand that the company is no longer a startup it was ten years ago. MongoDB is a listed company; however, its financials don’t reflect it at all.
The company has increased its sales-related staff by 50% ( 615 in 2019 to 988 in 2020). However, most roles could be categorized as sales support or account management. It can be argued that the growing number of staff matches the recent growth in revenue. It is concerning that the company must spend so much on existing client management instead of pursuing new accounts.
Mongo already proved it could grow its business over the years; however, it comes a time when the company needs to become profitable too. The growth in R&D spending is assuring and very important in such a competitive sector; however, continuous innovation eventually needs to find itself on a path of more significant margins. The current business model and its pricing structure are unlikely to put the company’s finances in the black. Mongo’ potential is still huge, especially within small-medium size businesses, but it also must show its path to profitability, whether it’s through higher prices or a more optimized delivery model, that may not require so many human resources.
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