A mixed Q4 awaits MongoDB (MDB) amid high costs, steady customer growth

MongoDB’s (NASDAQ: MDB) stock briefly halted the free-fall this week and stabilized ahead of the fourth-quarter earnings release, after slipping to a twelve-month low as the Covid-19 outbreak battered markets across the globe.

Related: MongoDB Earnings Conference Call Transcript

When the New York-based database developer publishes the January-quarter results on Tuesday after the bell, the market will be looking for a loss of $0.28 per share, which marks a slight deterioration from the prior-year period. Revenues are seen rising 33% from last year to $110.57 million.

Turnaround

The market will be curious to know how the tech firm ended 2019, after incurring losses consistently. The steady uptick in top-line performance, marked by stable customer growth, has added to hopes that the company might achieve profitability in 2020. MongoDB has been using most of its cash resources to innovate the data platform and enhance the go-to-market efforts, which is having a negative impact on the bottom-line.

Customer Addition

The customer growth, especially for the cloud database service Atlas, is expected to have helped the company for last year’s revenue performance. Initial estimates show that the top-line also benefited from strategic partnerships with leading cloud service providers like Alibaba (BABA), for the data intelligence platform, and Google (GOOG) Cloud Platform.

Meanwhile, margins will remain under pressure due to the high costs, mainly associated with heavy spending on marketing and research & development.

Q3 Results

In the third quarter, the number of customers nearly doubled year-over-year to around 16,000, driving revenues up by 52%. Atlas accounted for about 40% of revenues and the results topped the Street view. However, net loss widened due to investments in growth initiatives. Earnings surpassed estimates in each of the trailing four quarters.

Also see: Cloudflare bets on customer growth to reward investors

Last month, MongoDB’s shares climbed to the highest level since it debuted in the Nasdaq Stock Exchange nearly two-and-half years ago. The stock lost about 38% in less than a month amid the mass selloff triggered by the coronavirus epidemic. In a sign of recovery, it traded higher during Friday’s regular session..

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