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MongoDB IPO: Is This the Oracle Corporation (ORCL) Killer?

MongoDB, which operates a next-generation database platform, has filed to go public. The company’s underwriters include Morgan Stanley (NYSE:MS), Goldman Sachs Group Inc (NYSE:GS), Barclays PLC (ADR)(NYSE:BCS) and Allen & Company LLC. MongoDB also plans to list its shares on the Nasdaq Composite exchange under the proposed ticker symbol of MDB.

MongoDB IPO:  Is This the Oracle Corporation (ORCL) Killer?The company is the mastermind of serial entrepreneurs Dwight Merriman, Eliot Horowitz and Kevin P. Ryan, all of whom helped launch other leading companies like DoubleClick and BusinessInsider.

What Is MongoDB?

As for MongoDB, it was launched back in 2007. The focus was on creating a database system that would meet the onerous needs of modern web apps. What’s more, in order to accelerate the adoption of the technology, the company leveraged the open source model. In other words, the company made the software free to download so long as developers agreed to donate their own work to the project.

The strategy has certainly paid off in a big way. Consider the following metrics:

  • Over 30 million downloads in more than 85 countries.
  • More than 4,300 customers and over 50% are from the Fortune 100.
  • 296 customers pay at least $100,000 in subscription fees.

And yes, the company has posted strong top-line growth. During the first half of this year, revenues shot up by 51% to $68 million.

Although, as is the case with many early stage companies, MongoDB continues to burn cash. For 2017, the operating cash flows were negative $26.9 million. As should be no surprise, the company continues to spend heavily on R&D and marketing as well as the cloud infrastructure.

Now, regarding the MongoDB database, it is a blend of traditional and new approaches (that is relational and NoSQL databases). According to the S-1: “Our document-based architecture enables developers to manage data in a more natural way, making it easy and intuitive for developers to rapidly and cost-effectively build, modernize, deploy and maintain applications, thereby increasing developer productivity. Customers can run our platform in any environment, depending on their operational requirements: in the cloud, on-premise or in a hybrid environment.”

It’s a powerful value proposition. In fact, MongoDB could be a threat to some of the legacy players like Oracle Corporation (NYSE:ORCL). For the most part, it looks like the database market is facing the most significant changes in decades. As a result, it can be tough for legacy operators to retool their solutions.

Something else: The market opportunity for MongoDB is enormous. Based on research from IDC, the global spending came to $44.6 billion in 2016 and it is forecasted to hit $61.3 billion by 2020. Some of the key drivers include cloud computing, the growth in social networking and mobile apps, Artificial Intelligence (AI) and the Internet of Things (IOT).

Bottom Line on the MongoDB IPO

When it comes to tech IPOs, the market has been mixed. For the most part, the consumer-focused operators have had a rocky ride, as seen with the performances of Snap Inc (NYSE:SNAP) and Blue Apron Holdings Inc (NYSE:APRN).

But as for the enterprise companies, the situation has been much better. For example, Appian Corp (NASDAQ:APPN) is up 53% and Okta Inc (NASDAQ:OKTA) has logged a gain of 21%.

So how will MongoDB do?

It’s tough to say. The reason is that the company has not set the price range on the deal. Rather, this will not happen until a month or so when MongoDB goes on the roadshow. But given the strength with enterprise companies — especially those gunning for large market opportunities — the MongoDB IPO is likely to get lots of attention on Wall Street.

Tom Taulli runs the InvestorPlace blog IPO Playbook and is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short SellingFollow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/ipm_ipo_pb/mongodb-ipo-oracle-corporation-orcl/.

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