MongoDB Destroys Its Own Revenue Guide By Undermining Its Own Risk Profile

Read on. This is important.

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Put Your Thinking Cap On

by Alex King

Want to get really good, like, pro-good, at software fundamental analysis?  Then read this.  If you can process this fast, and repeat the analysis on other similar names, you are better than most sellside analysts already.

Here we will try to distill into a few lines the very important shift that is going on within MongoDB's business model and why that matters to the stock.

First the good.  The company just destroyed its own revenue guidance and delivered an accelerated growth quarter.  That's superb and not only for MDB, it tells you that enterprise customers are spending more freely on technology.  It's likely the stock responds positively to this.

Next the meh.  EBITDA in the quarter was excellent, because revenue was up a lot and expenses weren't up a lot.

Now the hmm.  Cashflow was terrible this quarter, because there was a large outflow of working capital.  TTM UFCF margins still went up, because EBITDA was so good, but, that working capital outflow means that the company got paid a lot less cash in the quarter than it paid out.

And finally the nub of the matter.  Revenue growth was huge because