Since its successful IPO in October 2017, MongoDB has experienced remarkable gains in the stock market. With its share price soaring from $24 to the mid-$250s, the company’s market cap now stands at an impressive $19 billion. MongoDB’s rapid growth, expanding gross margins, and exposure to the thriving artificial intelligence (AI) market have captivated investors. However, the question remains: Can MongoDB evolve into a trillion-dollar company by 2050? To assess its potential, let’s delve into its business model.
MongoDB operates as a niche player in the realm of database management, offering a platform that enables clients to efficiently store large amounts of unstructured data. Its cloud-based service, MongoDB Atlas, secures recurring subscriptions, providing customers with a reliable and scalable solution. With over 49,000 clients worldwide and partnerships with more than 1,000 tech and service providers, MongoDB has established itself as a key player in the industry.
While major cloud infrastructure platforms like Amazon Web Services (AWS), Microsoft Azure, and Alphabet’s Google Cloud Platform (GCP) offer their own database management services, MongoDB stands out as a flexible option for companies that utilize multiple cloud platforms or prefer not to rely solely on a single infrastructure giant. Despite its relatively small market share, MongoDB controls only a low-single-digit slice of the global database market, which is projected to grow at a compound annual growth rate (CAGR) of 14% from 2023 to 2027, according to IDC.
MongoDB’s growth trajectory has been impressive thus far. From fiscal 2018 to fiscal 2024, the company achieved a CAGR of 40% in revenue. During the same period, its adjusted gross margin increased from 75% to 77%, and its adjusted operating margin improved from negative 49% to positive 16%. However, like many cloud-based software companies, MongoDB faces macro headwinds that have led to reduced spending by businesses. As a result, the company expects its revenue to grow by only 12% to 13% in fiscal 2025. Analysts, on the other hand, anticipate a CAGR of 18% in revenue from fiscal 2024 to fiscal 2027. Although this projected growth rate may be slower than its previous performance, MongoDB still has the potential to outpace the global database market.
MongoDB’s stock valuation appears reasonable, trading at 10 times this year’s sales. In May, CEO Dev Ittycheria highlighted the company’s new generative AI database applications, emphasizing their ability to streamline the modernization of legacy relational applications. Ittycheria noted that MongoDB’s document model, which offers flexibility in handling various data structures, is well-suited for AI workloads, distinguishing it from older first-party databases that rely on rigid schemes.
Considering an optimistic scenario where MongoDB achieves a 15% CAGR in revenue from fiscal 2024 to fiscal 2050, benefiting from the expansion of the database and generative AI markets, it could generate $55 billion in revenue by the final year. If the company maintains a valuation of 10 times sales, its market cap would reach $550 billion. This would represent a substantial gain of nearly 2,800% from its current price, placing it slightly beyond the halfway mark towards becoming a trillion-dollar company.