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Since cloud database platform provider MongoDB (NASDAQ:MDB) released its fiscal second-quarter 2021 earnings report on Sept. 2, its shares have experienced an extended swoon, falling 17% to date despite vigorous results. The reasons aren’t hard to identify. Some investors chose to take money off the table despite the solid report — the stock had gained roughly 80% year to date before the release. In addition, a choppy market environment in the first several days of September has further pressured shares. Let’s take a step back, however, and look at four important themes from last week’s report that will have a longer-term impact on share price than current selling pressure.
The professional services segment is a loss leader
While MongoDB clinched year-over-year revenue growth of 39% last quarter, to $138 million, gross margin drifted down by one percentage point, to 69%. Subscription gross margin rose by 24 basis points to 74.3% but was offset by professional services margin, which saw its negative gross margin of 11.8% in Q2 2020 balloon to a negative gross margin of 43.6% in Q2 2021.
At $5.8 million this quarter, the professional services segment makes up just 4% of total revenue. But importantly, the business is designed to make sure that new customers maximize their understanding and use of MongoDB’s …
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