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spk06: and welcome to the MongoDB fourth quarter fiscal year 2021 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press stars and one. Please note that this event is being recorded. I would now like to turn the conference over to Brian Denue from ICR. Please go ahead, sir.
spk04: Great. Thank you, Colt. Good afternoon, and thank you for joining us today to review MongoDB's fourth quarter and full year fiscal 2021 financial results, which we announced in our press release issued after the close of the market today. Joining me on the call today are Dave Idicharia, President and CEO of MongoDB, and Michael Gordon, MongoDB's COO and CFO. During this call, we will make four looking statements, including statements related to our market and future growth opportunities, the benefits of our product platform, our competitive landscape, our financial guidance, our planned investments, and anticipated impact of the COVID-19 pandemic on our business and results of operations, as well as on our clients and the macroeconomic environment. These statements are subject to a variety of risks and uncertainties that cause actual results to differ materially from our expectations. For discussion of the material risks and uncertainties that could affect our actual results, Please refer to the risks described in our SEC filings, including our most recent quarterly report on Form 10-Q. Any forward-looking statements made on this call reflect our views only as of today, and we undertake no obligation to update them. Additionally, we will discuss non-GAAP financial measures on this conference call. Please refer to the tables in our earnings release of the investor relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I'd like to turn the call over to Dave.
spk09: Thank you, Brian, and thank you to everyone for joining us today. I will start by reviewing our fourth quarter results before giving you a company update. Looking quickly at our fourth quarter financial results, we generated revenue of $171 million, a 38% year-over-year increase, and above the high end of our guidance. We grew subscription revenue 39% year-over-year. Atlas revenue grew 66% year-over-year and now represents 49% of revenue. And we had another strong quarter of customer growth, ending the quarter with over 24,800 customers. I believe we will look back at 2020 as the year that put an exclamation point on the need for businesses to reinvent themselves using software and data. As the world increasingly becomes digital first, there's no off-the-shelf software that organizations can buy to differentiate themselves against their competition. To be blunt, you cannot buy a competitive advantage. You have to build it yourself. And to build your differentiated future using software and data, you have to maximize the productivity of your developers. Managing data is a developer's most challenging problem and the biggest drain on their productivity. Legacy platforms are not designed for how developers think and code, nor are they designed for performance and scale. This problem only gets worse as the data intensity and performance requirements of modern applications increase. Consequently, developers spend an inordinate amount of time working around the limitations of existing solutions versus spending time building better applications and user experiences that drive a competitive advantage. Moving to the cloud held out the promise of reduced complexity and improved productivity. What many early cloud adopters have learned the hard way is that moving to the cloud often exacerbates the poor state of their data infrastructure. First, companies decided to lift and shift their existing on-prem relational workloads to the cloud, replicating their on-premise problems in the cloud. As a senior IT executive in one of the world's largest asset management firms recently told us, he doesn't know of a single one of his peers who didn't come to regret the lift and shift strategy. Second, given the known limitations of relational databases, cloud providers promoted a number of other single-purpose databases to address more diverse requirements, which in turn created a larger number of data stores for customers to learn, manage, and integrate. This dramatically increased the complexity of their data architecture. Third, Cloud providers encourage customers to go all in with their proprietary offerings across the IT stack. The overwhelming number of proprietary point solutions not only slows developers down, but also deepens cloud vendor lock-in. Given the failings of existing approaches, developers and enterprises are clamoring for a modern application data platform that accelerates innovation. To be effective, a modern platform must support a broad range of use cases, meet stringent requirements for resiliency, security, and scalability, and provide enterprises the flexibility to run applications wherever they want. Our FY21 results indicate that MongoDB has clearly established itself as the world's preeminent application data platform for building the applications of today and tomorrow. We are becoming a more strategic partner to customers as they increase their sense of urgency to modernize their IT stacks. In a number of our largest accounts, we've become an enterprise standard, which indicates our strategic importance and positions us to win more workloads. The journey from the first win to becoming a standard can take a number of years as we build trust with and support from a variety of different constituents within the enterprise, including the C-suite. While each customer story has its unique elements, we have observed that they tend to follow a similar path on the way to declaring MongoDB a standard. We usually land an account by identifying a specific pain point that cannot be addressed by existing technologies. In a Fortune 50 financial institution that is now a seven-figure customer, Our early use cases leveraged the strength of the Docker model to efficiently capture complex loan applications with hundreds of entries. In the case of a global gaming leader, developers first started using MongoDB for microservices that leveraged the rapid scalability of our technology. After establishing a presence with a customer, we leveraged the success of the initial workloads to expand across divisional and geographic boundaries within the account. A top 10 US bank experienced a major data center outage a couple of years ago, and MongoDB outperformed all other databases in terms of performance and availability. At the time, our team seized on the performance of our platform to more broadly serve our customers' needs, organizing teachings and hackathons with other app development teams across the company. Two years later, that bank's customer's website experience runs on MongoDB, and with other use cases, the bank is now an annual eight-figure customer. Depending on the size of the account, the expansion phase can last many years. This is where we currently are with many of our customers today, and it is the key driver of our consistently strong net expansion rates. Once we become widely deployed, we leverage our existing internal proof points to pursue becoming a standard for future app development. Here we emphasize the versatility of the document model to address a wide variety of use cases, meaningfully simplifying their data architecture. Second, we illustrate the performance, security, and scalability of our platform, ensuring that MongoDB can be trusted for the most demanding requirements. And third, apps built on MongoDB can run on-premise, on any cloud, or across different cloud providers, which offers real platform independence, benefits no other alternative can provide. A CTO from a Fortune 100 business almost fell off his chair when we demonstrated how easily a customer can deploy a workload across two different cloud providers. He remarked he was planning to have a 50-person team work on this, and now one person can do this in a few hours. Platform independence is something the C-suite in particular cares a lot about. This strategy is working. We finished FY21 with close to 1,000 customers spending over $100,000 a year on our platform and close to 100 customers who are spending in excess of $1 million a year with us, an almost 60% increase from a year ago. As excited as we are about these stats, we are only at the beginning stages of becoming an enterprise standard. Even within our largest customers, MongoDB typically represents a small fraction of their total database spend, affording us the opportunity to meaningfully grow even in our biggest accounts. We also expanded our global reach through a new partnership with Tencent Cloud that allows customers to easily adopt and use MongoDB as a service across Tencent's global cloud infrastructure. With this partnership, the two largest cloud providers in China now provide authorized MongoDB managed service offerings, demonstrating both the popularity of MongoDB in one of the largest markets in the world and the strength of our intellectual property. Now I'd like to spend a few minutes reviewing some customer wins and interesting use cases from the fourth quarter. Axiom, part of the interpublic group of companies, is a customer intelligence company that provides data-driven solutions to enable the world's best marketers to understand the customer's create better experiences, and fuel business growth. As part of its ongoing innovation in the area of real-time decision and capabilities, Axiom chose MongoDB Atlas, Data Lake, Realm, and now Charts to be a key part of its cutting-edge cloud architecture. Axiom has now reduced its time to deploy solution for new customers from two months to less than 20 minutes. 1199 Funds is one of the largest labor management funds in the United States, providing comprehensive health and retirement benefits to more than 450,000 healthcare industry workers and family members. In response to COVID-19, the company accelerated a massive cloud transformation initiative. After migrating from SQL Server to MongoDB Atlas on Google Cloud, it was able to modernize its enterprise data warehouse and leverage MongoDB Realm to deliver a COVID-19 health screening app, which captured health questionnaires from nearly 3,000 employees a day. From the start of the project to the go-live date, the complete solution was deployed in just three weeks. Cox Automotive has 40,000 auto dealers across five continents aspiring to bridge the gap between consumers, manufacturers, dealers, and lenders at every stage of the automotive experience. In response to COVID-19, the company's mobile car care division, Ride Clean, developed a mobile platform enabling drivers to schedule, and technicians to manage and perform onsite disinfection services with PureProtect. RideClean turned to MongoDB Realm Sync for zero latency data retrieval, offline application functionality, and bidirectional syncing of data between the Realm mobile database and MongoDB Atlas. The largest department of the UK government, the Department for Works and Pensions, distributes welfare, pensions, and child support to UK citizens. Its reformed welfare program, Universal Credit, faced an unprecedented test when COVID-19 caused claims to skyrocket by 10x. DWP Digital chose MongoDB to underpin its secure platform and scale its services across the distributed microservices architecture to support the huge increase in demand. PicPay, Brazil's largest e-wallet, has over 40 million users and is accepted at over 3 million stores throughout the country. After experiencing 126% growth in 2020, the company chose MongoDB Atlas because it needed a highly scalable cloud database with real-time performance and low TCO in order to achieve its ambitious growth goals. Enterprise security features like data encryption at rest, in transit, and data locality made it easy for PicPay to comply with GDPR and FSI regulations and continued to provide a best-in-class customer experience to its growing user base. Today, more than one in ten new apartments in the United States are built using Latch IoT products. Latch delivers a full building enterprise SaaS platform that helps owners, residents, and third parties experience the modern building through services like smart access, smart home, and sensor controls and connectivity. Latch chose MongoDB Atlas for its enhanced security features and the ability to move to a microservices architecture so the company could scale quickly and protect its customers' data. In summary, we had an exceptional year amidst unprecedented disruption and uncertainty. As I think back to our earnings call a year ago at the outset of COVID-19, I can't help but marvel at how we exceeded our own expectations despite the pandemic being longer and more severe than we could have mentioned at the time. I'm incredibly proud of how our team executed given the unforeseen challenges. The past year reaffirmed our conviction that we are attacking an enormous market where secular winds are increasingly at our back. We have a highly differentiated value proposition and our team knows how to execute and deliver results. In FY22, our goals remain unchanged as we singularly focus on the opportunity ahead of us. We will continue innovating to ensure that our application data platform remains the best way to build the applications of today and tomorrow. We will expand and evolve our go-to-market strategy to drive frictionless adoption of our platform no matter how or where our customers choose to consume MongoDB. And we will remain focused on our people, processes, and culture to ensure that we scale to fulfill our potential. Simply put, we're committed to innovating and investing to make the most of our opportunity and maximize our long-term value. With that, I'll turn it over to Michael. Thanks, Dave. As mentioned, we delivered another strong performance in the fourth quarter, both financially and operationally. I'll begin with a detailed review of our fourth quarter results and then finish with our outlook for the first quarter and full fiscal year 2022. First, I'll start with our fourth quarter results. Total revenue in the quarter was $171 million, up 38% year-over-year. Subscription revenue was $163.9 million, up 39% year-over-year. And professional services revenue was $7.1 million, up 24% year-over-year. As Dave mentioned, we're very proud of our execution in this difficult and uncertain environment. In particular, we had another stronger than expected quarter in terms of closing new business. Enterprises cannot afford to delay or slow down innovation, and for that reason, customers continue to increase their investment in our application data platform. That said, despite our strong go-to-market execution, COVID-19 continues to have an impact on our quarterly performance. Overall, Atlas's strong performance continues to be the largest contributor to our growth. Atlas grew 66% in the quarter compared to the previous year and now represents 49% of total revenue. compared to 41% in the fourth quarter fiscal 2020, and 47% last quarter. During the fourth quarter, we grew our customer base by over 2,200 customers sequentially, bringing our total customer count to over 24,800, which is up from over 17,000 in the year-ago period. Of our total customer count, over 3,000 are direct sales customers, which compares to over 2,000 in the year-ago period. As a reminder, Our direct customer account growth is driven by customers who are net new to our platform, as well as self-service customers with whom we now have established a direct sales relationship. The growth in our total customer account is being driven in large part by Atlas, which had over 23,300 customers at the end of the quarter, compared to over 15,400 in the year-ago period. It is important to keep in mind that the growth in our Atlas customer account reflects new customers to MongoDB, in addition to existing Enterprise Advanced customers adding incremental Atlas workloads. We had another quarter with our net AR expansion rate above 120%. We ended the quarter with 975 customers with at least $100,000 in ARR and annualized MRR, which is up from 751 in the year-ago period. We ended the year with 98 customers with at least $1 million in ARR and annualized MRR, which is up from 62 in the year-ago period. As Dave highlighted, the continued strong growth in customers with $1 million or more in ARR is a clear indication that we are increasingly becoming a strategic partner and a database standard for our customers. Moving down the P&L, I'll be discussing our results on a non-GAAP basis unless otherwise noted. Gross profit in the fourth quarter was $123.3 million, representing a gross margin of 72 percent, which is consistent with our last quarter and down from 74 percent in the year-ago period. Overall, we are pleased with our gross margin performance, which is negatively impacted by Atlas becoming a bigger portion of our revenue. As you know, Atlas has lower gross margins than Enterprise Advance because of its infrastructure component. This downward pressure has been partially offset by the greater efficiency and scale that we've been able to generate as Atlas grows. We continue to expect that we'll see some modest reduction in overall company gross margin as Atlas continues to grow as a percentage of our revenues. Our operating loss was $16 million, or a negative 9% operating margin for the fourth quarter, compared to a negative 10% margin the year-ago period. Our outperformance versus our operating loss guidance was driven primarily by our revenue outperformance. Net loss in the fourth quarter was $19.9 million, or $0.33 per share, based on 60.5 million weighted average shares outstanding. This compares to a loss of $0.25 per share on 56.9 million weighted average shares outstanding in the year-ago period. Turning to the balance sheet and cash flow, we ended the quarter with $958.3 million in cash, cash equivalents, short-term investments, and restricted cash. Operating cash flow in the fourth quarter was negative $18.6 million, After taking into consideration approximately $2 million in capital expenditures and principal repayments of finance lease liabilities, free cash flow is negative $20.7 million in the quarter. This compares to negative free cash flow of $10.9 million in the fourth quarter of fiscal 2020. I'd now like to turn to our outlook for the first quarter and full fiscal year 2020. For the first quarter, we expect revenue to be in the range of $167 million to $170 million. We expect non-GAAP loss from operations to be $21 to $19 million, and non-GAAP net loss per share to be in the range of $0.39 to $0.36, based on 61.2 million weighted average shares outstanding. For the full fiscal year 2022, we expect revenue to be in the range of $745 million to $765 million. For the full fiscal year 2022, we expect non-GAAP loss from operations to be $84 to $74 million, and non-GAAP net loss per share to be in the range of $1.55 to $1.39 per share, based on 62.1 million weighted average shares outstanding. Let me provide some context behind our revenue outlook. Our expectation that the COVID-19 impact will continue to impact our new business activity in the near term, but that the business conditions will slowly improve as the year goes on, and as global vaccination efforts positively impact the macroeconomic environment. More specifically for Q1, we expect to see a slight sequential revenue decline as Q1 is typically a lower new business quarter than Q4. As a reminder, revenue recognition under ASC 606 for our enterprise advanced product disproportionately affects in-quarter performance due to the upfront term license. Let me now turn to our investment framework for fiscal 22. As Dave mentioned, we are pleased both by our strong execution and the market's receptivity to our platform. We therefore continue to believe that the right posture is to invest for the long term to pursue our market opportunity. In fiscal 22, we will continue funding high priority areas across the organization. First, we'll continue with robust R&D investments to further advance the breadth and depth of our application data platform. Second, we will continue growing our sales capacity globally. We remain fractionally penetrated relative to the size of our opportunity. Given another year of strong productivity, we believe that the primary constraint of our productive capacity growth is how quickly we can effectively scale our operations. Third, we will continue investing as appropriate to ensure that we are efficiently scaling our organization, systems, and processes as we pursue our long-term opportunity. Finally, it is worth noting that our COVID-19 outlook has implications for our OPEX as well as our revenues. As life slowly normalizes throughout fiscal 22, we expect to incur incremental expenses, most notably related to our offices, travel, and in-person events. Our current expectation is that we will incur approximately $20 to $25 million of incremental expense in this area compared to fiscal 21, with most of that impact occurring in the second half of the year. To summarize, MongoDB delivered excellent fourth quarter results and full fiscal 21 results, despite operating in an unprecedented environment. Our focus on executing against our product roadmap and expanding our go-to-market reach is driving high levels of growth at scale, and we are seeing attractive returns on those investments. The success that we are having establishing ourselves as the world's preeminent application data platform positions us for continued long-term success. With that, we'd like to open up to questions.
spk04: Operator?
spk06: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. We kindly ask that you please limit yourself to one question and one follow-up. And at this time, we'll pause momentarily to assemble the roster. And our first question today will come from Sanjit Singh with Morgan Stanley. Please go ahead.
spk05: Hi, and thank you for taking the questions, and congrats on a great fiscal year 21. in a strong Q4. It was really great to see the Atlas accelerating the 56% growth. And so maybe the first question is to start on Atlas. Dave, could you sort of give us some of the trends you're seeing within Atlas as it relates to growth coming from app modernization or relational displacements versus net new? How that sort of mix play out in Q4 versus what you've seen for the balance of the year?
spk09: Yes, so Sanjay, I'd say a couple of things. One, I would say that obviously there's a big secular trend about the move to the cloud, but what's happening is that people are recognizing that just lift and shift is not the right approach, and that I would more frame it as lift and transform. And that's where MongoDB comes in. People recognize the benefits of our flexible data model through the document model. They recognize the benefits of running and using multiple use cases because of the versatility of the document model. They also appreciate the scalability and performance of our distributed architecture, and it's even more pronounced because Atlas basically automates all that. What we're also seeing a new trend is the increasing importance of multi-cloud, and customers are more and more interested in multi-cloud and being able to deliver a multi-cloud solution for either resiliency or other reasons. And so we see customers building new apps on Atlas and re-platforming existing apps So we've seen trends across the board, making Atlas a very attractive destination for app development.
spk05: That's really helpful. And then as my follow-up, as I think about guidance for fiscal year 22 and some of the things that could come online, I want to just get a status update on partners and which ones you think are, you know, the most material in terms of contributing growth and which ones are more earlier stage as it relates to you just signed one with Tencent, Alibaba a couple years in the making, a closer relationship with Google. Can you just sort of, like, walk through some of the – the progress with the strategic partners, and which one do you think is at more than material scale at this juncture?
spk09: Well, I'll start with the hyperscale vendors. First, the U.S.-based ones. We have deep relationships with all three, and we're doing well across the board. I think it's coming down to, one, MongoDB is incredibly popular on all the three platforms. Two, I think customers can separate the difference between some of the emulation offerings versus MongoDB Atlas. Three, I think people are getting more and more comfortable with our document architecture and how versatile it is and how it really enables innovation to happen very, very quickly. And I would say that we're partnering a lot in the field with the cloud vendors. The Tencent relationship is fairly new, so I think that's going to take a little bit of time to take hold. But the fact that we now have relationships with both Alibaba and Tencent in one of the largest markets in the world, we feel really good about. And then I would say the other partnerships in terms of the global systems integrators are also paving the way. We're seeing a lot of activity as they're bringing us into deals or we're using them or customers are using them to augment their development capacity. And we're also working with some boutique SIs who have some real domain expertise around MongoDB to help accelerate customers' time to market for their needs. And so I would say we're seeing there's not one partner that's, I would say, moving the needle more than anyone else. We're basically seeing broad-based help across the board, across our partnerships.
spk05: Appreciate the thoughts, Pip. Congrats on the report.
spk06: Thank you. And our next question will come from Brad Reback with Spiegel. Please go ahead.
spk10: Great. Thanks very much. Maybe sticking with Atlas, the sequential acceleration in the business is pretty impressive, even with acceleration of digital transformation out there. Were there any one-time items that positively impacted the quarter, or is this just normal usage trends?
spk09: No, I would describe it as it was a good quarter, Brad. Thanks for calling that out. We've talked about some of the trends that we were seeing during COVID. We mentioned in Q3 that the cohorts were back to sort of pre-COVID expansion levels. We've continued to see that. And so, you know, I think there's nothing particularly worth calling out, you know, one time. There are obviously always like one time puts and takes in any quarter, but nothing sort of outside of the normal. It was a good quarter across the board, but particularly within Atlas within self-serve. We saw some nice expansion, but overall just, you know, really strong and not a lot of businesses that, you know, north of, you know, $300 million run rates growing north of 60%.
spk10: Impressive. Thanks very much.
spk06: Our next question will come from Brent Braceland with KeyBank. Please go ahead.
spk10: Thank you and good afternoon. I guess I wanted to talk a little bit about new customer lands. If I look at the last two quarters, I think you've added more customers in the last six months than you added all of last year. As you think about the momentum here, is this a signal of just kind of broader MongoDB brand awareness? Is this a sign that maybe there's an industry acceleration and the appetite to build new apps? And then just if you could just share, is the profile of new customers changing or is it still predominantly being led by developers? Any color there would be helpful.
spk09: I would say there's a few factors at play. One, I think it's become clear to everyone that MongoDB is a very viable mission-critical platform in contrast to and as a viable alternative to relational databases. Frankly, we don't hear anyone in our customer base talk about growing their SQL Server, Oracle, or DB2 estate. People are definitely moving off their legacy platforms. Then when they think about building on a new platform, They quickly understand the versatility and the flexibility of the document model. They also appreciate the performance and scalability of our architecture. And what's interesting now is, as I mentioned earlier, multi-cloud has become an increasingly important consideration. Some customers want cloud provider resiliency in a single country where a cloud provider only has one region. Another reason for multi-cloud is that customers often maybe acquire other companies, and so they start bringing questions, should I put everything in one cloud? And then the third reason is that they want to take advantage of different capabilities offered by different cloud providers. And so we see a whole host of reasons why we're acquiring new customers, and I would say a lot of it's just a function of MongoDB just emerging as truly the preeminent application data platform. Maybe just quickly, I'd add on to that, to the second part of your question, Brent. Clearly, large market and we're early on in the penetration, so that's great to see. In terms of the customers and the customers that we're adding here and how do they compare to historic customers, Maybe I'll just say a couple of quick things. First of all, obviously, it's early, but we do have a couple quarters of data. And I'd say the initial signs are certainly encouraging. Obviously, ultimately, the long-term quality will depend on the expansion over multiple years. But so far, what we're seeing on an apples-to-apples basis is the cohorts are broadly in line from size and growth characteristics versus the prior cohorts. I'd say there are probably two important mix components to keep in mind, though. The first is that some of the go-to-market optimizations that we've talked about in the last couple calls that we've made sort of reduced the friction, made it easier for customers to come on board, and disproportionately helped the mid-market. And the mid-market customers spend meaningfully less on average than an enterprise customer, so just keep that in mind. And then secondly, some of the acceleration in direct sales customers are customers who were previously self-serve, who we've gotten better at identifying the signals for those for whom we'd benefit from a direct relationship with.
spk08: and that sort of is accretive to, you know, their future growth, but that's not net revenue, you know, change in the period, and that's not, you know, that's shifting channels, if you will, in terms of customer accounts. So those are probably two important mixed things to keep in mind as you're kind of looking out or trying to extrapolate.
spk10: Super helpful there. I think even my dog got a little excited by it. So thanks for the color.
spk06: Thanks, Brent. And our next question will come from Mohit Gojia with Barclays. Please go ahead.
spk01: Thanks for taking my question and congrats on a really strong P4. I just want to stay on that topic. So the land and expand motion, right? So we saw the land motion really do well despite the pandemic and you discussed the drivers there. But if I look at the expansion rate and the expand motion looking ahead to fiscal 22, can you help us understand as to where, like, How do you think about, so obviously we are hopefully putting COVID in the background here, right? And one of the headwinds on the business would have been an expansion site where maybe some applications that were in the pipeline would be put on hold, right? So I'm just curious as to how you're thinking about that trajectory of that expansion rate through fiscal 2022 and how have you factored that into guidance? And then I have a follow-up question. Thank you.
spk09: Yes, Mohit, what I'd say is, as we mentioned in the prepared remarks, even in a larger account, we still believe they have a very small percentage of their total database spend. Now, I do want to make clear, MongoDB is not a product that you just buy and then start using. You have to actually build an application on top of it. So there's a certain rate and pace of app development, whether you're building new applications or re-platforming existing applications. But what we've seen, and as we mentioned, Once we get into an account, we find it reasonably easy to expand into adjacent opportunities. And the adjacent opportunities tend to be bigger than the initial deal. And so we don't see that we don't expect to be a meaningful change in that this coming year. And while the world may start opening up and people may be potentially building new apps faster, we think that that can only help our business. But right now, we feel that we're really well positioned for the opportunities that we've already uncovered in these new customers. And we're still continuing to seek new customers going through this year so that we continue to build a healthy pipeline and a large customer base.
spk01: Thank you. And my follow-up question is on the go-to-market investment side. So, I mean, this is typically the time of the year when companies sort of evaluate how their sales motions and sales structures tank. looking ahead. So as you scale the business, right, so obviously very healthy growth at scale. As you scale further and as you make these go-to-market investments, is there anything we should be aware of in terms of sales structure changes or anything of that sort? That's it from my end, guys. Thank you.
spk09: Yeah, so I think we've talked about it in previous calls, but we've been very pleased with the success we've been seeing with our execution through our sales channels. And so we're essentially doubling down on what we did this past year. The sales organization and our marketing organization executed really, really well. And we're also seeing benefits of a flywheel effect between our self-serve channel and our sales channel. As Michael mentioned, our sales organizations are getting better and better at understanding product usage signals to figure out which customers would benefit from having a more direct relationship. And the self-serve channel becomes a very easy channel for us to acquire new customers. So that's paying dividends as well. So I think you'll see us continue to refine the model, but you're not going to see any major changes. We'll probably get more sophisticated around segmenting certain parts of the market. And there's certain parts of the market that we still have very poor geographic coverage. So you'll see us expand our sales reach in markets where we feel that we can benefit from adding more people in the region.
spk06: Thanks, folks. Thank you. And our next question will come from Tyler Radke with Citi. Please go ahead.
spk08: Hey, thanks very much for taking my question. I wanted to ask about your investing in FY22. Obviously, the guidance implies that you're continuing to spend a lot on growing the business in FY22. So I'm curious where the biggest priority areas are for you. And then within the direct sales side, are you kind of – investing more in the mid-market side where you've seen really nice kind of net ads there, or is it more on the enterprise? Thank you.
spk09: Yeah, so we see the bulk of investors going in two areas, one in product and the other is in go-to-market. Obviously, on the product side, we're really excited about the market opportunity we're going after. The market just seems to be bigger and bigger the more we spend time in it. and we're clearly getting a lot of traction, and our customers are asking for more and more capabilities. We talked about some of the new products we GA'd last summer. They're starting to get very healthy traction, and so that gives us even more confidence about other things that we want to build based on customer feedback as well as our own strategic insight in terms of what we think the market needs. And by the way, I think we have a first-class engineering and product organization, so we're it makes that decision that much easier. The second point I'd make is to the earlier question, we've seen a lot of success in sales. So the classic thing is when you see success, you continue to invest. Our performance is broad-based, and we're seeing performance, great performance both through our field organization as well as our inside sales team. And you're going to see us invest aggressively in both areas. I think you're going to see us As I said, probably do a little bit more refinement of how we go to market, a little bit more segmentation across the market, a little bit more focus on hunting versus farming, perhaps even a little bit more focus in the mid-market to what you implied. But it's all about just going out and capturing more of the market because the market is so large and leveraging all the lessons we've learned so far in terms of how we build our sales processes, how we generate pipeline, and how we prosecute deals.
spk08: Great. Thank you. And just a quick follow-up maybe for Michael. I wanted to kind of clarify one of the dynamics you referenced in terms of the Atlas cohorts. So I think it's been about a year since you made the go-to-market changes to kind of reduce the friction in terms of new customers coming on board with a lower or no commit. But maybe just now that you look back at the past year, how have those spending levels trended relative to kind of the old approach? I think you might have noted that the spending levels were kind of consistent with the, you know, so-called old approach, but just wanted to clarify that. Thank you.
spk09: Yeah, you know, absolutely, yeah. So I think it's important to look at sort of like-kind customers. And so if you look, meaning sort of, you know, a mid-market versus an enterprise customer or something like that, as opposed to you know, comparing everyone to the average because, you know, mixes do matter here. But, yeah, that's exactly right. If you look sort of on a like-kind apples-to-apples basis, we're seeing fairly comparable behavior from cohorts in terms of size and growth rates and expansion rates, et cetera, et cetera. Obviously, we don't have years and years of data, so we'll have to, you know, see that. But certainly the initial signs, you know, are encouraging and consistent with the theories and the initial observations. Great. Thank you.
spk06: And our next question will come from Rishi Jayaudhya with DA Davidson. Please go ahead.
spk00: Hey, Dave and Michael. Thanks so much for taking my questions, and nice to see continued strong execution throughout the end of the year. I wanted to maybe start, Dave, with a comment that you made in your prepared remarks, which is just how underpenetrated you are, even in the existing customer base. What is it going to take to grow that footprint within the existing customers? Is that just a matter of capturing new workloads and new apps and just a natural mixture that happens over time? Or is there anything that you're doing and can continue to do to accelerate the migration? And as you talked about, the lift and transform strategy. And then I've got a follow-up.
spk09: Yeah, so what I was trying to convey in my prepared remarks is that growing an account takes time. You go through a set of stages. The first stage is landing a deal. The second stage is using the early success of your initial win to expand into adjacent opportunities. And then as you get promulgated across the organization, you end up becoming declared a standard. What that really implies is when you become a standard is that you're essentially giving the development teams free reign to use MongoDB for for pretty much any use case. And so it becomes that much easier for the organization to deploy new workloads among the DB. But the act of actually building and writing an app and then running it, you know, whether it's on premise or in the cloud still takes time. It's not like these apps magically create themselves. So there's still obviously some effort required from the development teams to build those applications. So there's a certain rate and pace by which you can expand the workloads on your platform. But by definition, as we grow, As people get more and more comfortable using MongoDB, as we have more and more proof points, and now with nearly 25,000 customers, we have proof points almost across every potential use case, every industry, every geography. And so it gives customers a lot of confidence to better MongoDB, and so it becomes marginally that much easier to win the next incremental workload. But it does take some time. It's not like magically you can finally replatform 1,000 apps on MongoDB overnight.
spk00: Got it. Good. Thanks. That's super helpful. And then I wanted to maybe ask a little bit about future opportunities for M&A. Obviously, Realm seems to have been a pretty successful product and technological expansion. Given the kind of cash balance you have and the dry powder you have to put to work, where should we be thinking about future opportunities for you to do more of those smaller technological acquisitions and expand the platform? Thanks.
spk09: Given the nature of our application data platform, you typically will not see us do some major acquisition and kind of try and bolt on some other solution onto our platform. That becomes really hard to do. If you look at our history, what we have done is made some surgical acquisitions. You mentioned Realm. Earlier, we made an acquisition of Wired Tiger, which really allowed us to deliver on some enhanced performance capabilities around write-intensive use cases. And now it's the underlying storage engine for our core database server. We also did an acquisition of MLabs, which kind of accelerated our expansion into offering a MongoDB as a service offering. But there were, I would say, more surgical acquisitions. I don't think you'll see us go do some massive mega acquisition, but we will obviously, you know, whatever, if we see something that potentially allows us to accelerate our product roadmap in a certain way, I think you're right. We have the resources to go do those kinds of things, and we're constantly kind of talking to people in the marketplace.
spk01: Wonderful. Thank you so much.
spk06: And our next question will come from Itai Kidron with Oppenheimer. Please go ahead.
spk02: Thanks. Good numbers, guys. A couple for me. Dev, maybe I want to kind of double-click on Atlas a little bit and get a much better understanding of the overlap between customer usage and your large customers. When you talk about the million-dollar and the $100,000 customers, what's the penetration of Atlas into those customers right now? And how do I think about the size of the Atlas deployments?
spk09: I would say a big percentage of our seven-figure accounts are already using Atlas, but there's definitely some seven-figure customers who are EA only. So there is a mix, but there's a broader base of Atlas customers. And as I said, we have a lot of customers. who are moving more slowly to the cloud, but view MongoDB as a very attractive platform because they will never have to rewrite the application as they transition from on-prem to the cloud or from one cloud provider to another cloud provider, which makes it a very attractive future-proof platform for customers.
spk02: Got it. And then, Michael, just a follow-up for you. You've talked about expansion rates coming back to normal. But you also talked about COVID headwinds. The impact still remains. So maybe you can try and tune for us exactly where and how do you still see impact from COVID on your business?
spk09: Yeah, sure. Absolutely. I think the key thing in terms of COVID impact is just the new business environment. I think what we've seen in terms of the Atlas cohorts is, you know, a resumption of the pre-COVID, you know, cohort behavior. So it's really more about new business. And it's very consistent with what we talked about last quarter, which is sort of bigger deals, multi-year deals, getting extra scrutiny, that kind of stuff. The overall just uncertainty of the macro environment, you know, does have an impact on your business.
spk02: Okay. Well, you just had like great two record-breaking quarters in new ads. So I'm just trying to understand, is this the number of new ads or they just start with a smaller size?
spk09: I think as it relates to COVID specific, I think it's more about magnitude than quantity of, you know, count.
spk02: Okay. Very good. Good luck, guys. Thanks.
spk06: Thanks. And our next question will come from Jack Andrews with Needham. Please go ahead.
spk10: Thanks for taking my question. I wanted to see if you could provide an update in terms of some adoption trends you're seeing for your newer products like Search and Data Lake. And how should we be thinking about any uplift in consumption rates for customers who are adopting these types of products?
spk09: Right. So again, just as a reminder for people, we GA'd three products last summer, Realm, Atlas Data Lake, and Search. And let me go one by one. So we've seen solid reception of Realm, especially now with the availability of Realm Sync, which really enables developers to build very sophisticated mobile applications and synchronize the data at the edge with data at the core. That saves developers an enormous amount of time and effort, and it's something that's quite complicated. And so we're seeing a lot of interest there, and so we're quite pleased with the traction. I would say with Atlas Data Lake, one of the most popular use cases is data tiering, allowing customers to manage large volumes of data while retaining the ability to access and query that data. And an emerging use case is being able to do federated queries using ADL as a mechanism to transform data within our platform and then create across multiple databases and storage locations. And so that's really exciting. And then on search, we've made some enhancements, including a visual index builder, which has really accelerated adoption. And what we're seeing is customers like the fact that they don't have to use solar or elastic in conjunction with MongoDB, but that they can do everything in MongoDB. It really simplifies their life and their data architecture. And so we're quite excited about the traction of all three products. I do want to remind everyone that the revenue does not show up as individual SKUs, but as Atlas revenue. And these products do have multi-year journeys, and you'll see us continue to refine, enhance these products, and we expect them to have a strong RI over the next coming years.
spk10: Great. Thanks, Cindy. Congratulations on the results.
spk06: Thank you. And once again, if you'd like to ask a question, please press star then one. And our next question will come from Fred Havenmeyer with Macquarie. Please go ahead.
spk07: Hey, thank you very much for this. I'd like to ask, you know, during some of our work, we've been picking up that ISVs are incrementally interested in MongoDB Atlas and that we've seen a couple just in our work also scaling on top of it. So, I'd like to ask, generally speaking, how do you see the ISV ecosystem around MongoDB and perhaps specifically MongoDB Atlas evolving? And where do you think that this stands in terms of the maturity today?
spk09: Yeah, that's a great question. So we've had ISVs since the early days of MongoDB build, use MongoDB as the underlying data store for their product. And obviously in the early days it was more front-end applications. What's happening now is we're starting to see vertical-specific, deep in the back office, ISVs, financial services, insurance, and telecom, et cetera, who are looking to re-platform. Obviously, customer buying behaviors change. People want to consume software as a service. Those ISVs also want to stop paying the Oracle tax. And those ISVs are quite attracted by the flexibility and agility of the document model, as well as the scalability of our architecture. So it allows them to serve global needs. quite easily, and so we actually have a small team focused on the ISVs, and there it's almost like a two-step process where we are essentially selling to the CTOs, the VP products, sometimes the CEO, depending on the size of the ISV, and then helping them build or re-platform their product on MongoDB, and then helping them generate the first set of customers. And I should also add that ISVs typically don't want to use a cloud proprietary database because, by definition, that will limit them to only one cloud, and customers do care about multi-cloud. And so the fact that MongoDB runs across all the major cloud vendors and the fact that they can offer capabilities in a multi-cloud environment makes MongoDB even that much more attractive.
spk07: Thank you for that. And then I'd like to follow up, I think, touching on something you were also referencing in some of your prepared remarks around the multi-cloud cluster capabilities on MongoDB Atlas. It's something that is fairly to very unique, it seems, in the databases and service marketplace to have essentially one-click multi-cloud deployments. So I'm curious, you referenced one specific customer, but I'm wondering if you could more broadly speak about how your customers are approaching the multi-cloud, just MongoDB Atlas capabilities, and whether that's something that is bringing more customers to the table or perhaps also bringing more of your enterprise customers also back in to speak to you about what Atlas can do.
spk09: Right. So in concept, platform independence is something that customers care a lot about. In reality, the onus was on the customer to try and figure out how to make it work. They had to figure out how to abstract all the differences between the different cloud providers, deal with all the integrations, deal with different authentication schemes, and so on and so forth. That made it quite challenging for customers to do it themselves. What MongoDB Atlas does is actually make that very easy. So when we show customers, we do demos for customers and show them that literally with a few clicks, in a few minutes, they can provision clusters across two different cloud providers and do it very, very easily, they're shocked. because they know how much effort it would take them to try and do that themselves. So the other point I would make, which is what I said in the prepared remarks, we increasingly find senior-level stakeholders, they care a lot about platform independence, not just for lock-in, but they want for resiliency. They want to be able to take advantage of different capabilities on different cloud providers. And so being able to use MongoDB to do that becomes very, very attractive. And so you're right. It is definitely bringing more enterprises to look at us as a very viable mission-critical platform.
spk07: Great. Thank you for the call. I appreciate it.
spk09: Thanks, Fred.
spk06: And our next question will come from Pat Walravens with JMP Securities. Please go ahead.
spk03: Great. Thank you so much. This is Joey Marincic. I'm for Pat. Just two from our end. So first, you know, on those large customers, particularly the ones spending over a million, I'm just wondering, you know, how do those conversations evolve over time? And then secondly, you know, how are you guys thinking about return to work? You view MongoDB as a work-from-home company long-term. Thank you, guys.
spk09: Sure. So, with regard to large customers, most of our large customers start as small customers. They could be five or six-figure customers, and then they evolve into seven-figure customers. On the rare occasion, we might have a customer that quickly becomes a seven-figure customer, and that's typically because they have one use case or one workload that grows very, very fast. But in most situations, it's basically customers adding more workloads to the MongoDB platform. And so obviously it takes some time. As you said, once you get in and win a deal, depending on the size of the account, it could be multiple years as we are in the expansion phase of winning more and more business. And that at some point in time, when you start talking to senior level stakeholders, they see how popular we are with their Developers, they see how widely spread we are across the organization, and they want to build a more strategic relationship. And for us, we want to be declared a standard where, by definition, a developer doesn't have to seek permission to use MongoDB. So it's really a function of leveraging our successes early on. proving out the scalability and flexibility of our platform, and then really showing them that MongoDB can be truly a versatile application data platform, not just for on-premise, but across all the major cloud providers as well. And then in terms of your second question, return to work, yes, I mean, obviously today we're all working from home. What we have told our employees that we don't expect to be 100% remote organization. We do believe that there's value in our people coming together. There's value in coming together for team meetings, for planning sessions, for the you know, social benefit of connecting with people. We also believe that the employees earlier in their career will benefit from more direct mentorship from the managers and more of a, you know, direct contact basis versus over some sort of remote environment. But we also believe that we've learned a lot of lessons, that you can run a business of our scale and size remotely. And so we're not going to force everyone to come back to the office. We're going to reimagine our offices and create more multi-tenant environments where people can have a shared desk and come in maybe two, three days a week. Some people may work remotely for 80%, 90% of the time and maybe come to the office once in a while for key meetings. And so this also gives us more flexibility to look for talent and markets that we may naturally not have considered. because we've now seen how, you know, working remotely can be quite effective. And so we'll be more aggressive in sourcing talent for markets that we typically did not seek in the past.
spk03: You're very helpful. Thank you so much.
spk06: And our next question will come from Jason Ader with William Blair. Please go ahead. Hey, guys. This is Billy Fitzsimmons.
spk08: I'm for Jason Ader. Congrats on a solid quarter. Over the last several quarters, you guys have added both new features and new add-on products such as Realm, Realm Sync, Data Link, Charts, multi-cloud functionality. I guess, are any of these standing out over others in terms of customer adoption or in terms of generating customer excitement? And then, how would you say customer conversations have kind of evolved in recent quarters versus a year or two ago, both in regards to these new features or just how customer demand has changed in recent quarters?
spk09: Yeah, I think what you should think about these new capabilities is really adding to the richness and competitive and comparative advantage of our platform versus trying to be standalone products that we just position in markets independently. And so what it means is that people can run more and more use cases on MongoDB, have a much more simplified architecture rather than having a bunch of bespoke implementations for every use case that they potentially need. want to implement. They can obviously query that data much more easily, manage their infrastructure more easily. The developers only have one interface to learn. And essentially, they can run those workloads anywhere. They can run it on-premise as well as they can run it on any cloud or across clouds. So that's the real benefit of the expanding capabilities that we're adding. And we're seeing traction across the board. So I would say, again, all these products were GA'd last summer. We're still in the early days. but we're really excited, and it's really proving out the platform strategy. And as we noted, we already have some nice set of customers who are using the new products, and they're very sophisticated customers as well, so we feel good about the reaction we're getting. Thanks, Dave.
spk06: Appreciate it. And this will conclude our question and answer session. I'd like to turn the conference back over to David Echeria for any closing remarks.
spk09: Well, I want to thank everyone for joining us today. I just want to make, you know, in kind of summary, a couple points. One, I think it's clear that enterprises everywhere are feeling an extraordinary sense of urgency to reinvent themselves, and they have to do that using software and data. Second, we're seeing great success in building more strategic partnerships with our customers as evidenced by the growth of our six- and seven-figure accounts. And lastly, I would say that the accelerating secular trends and our track record of success give us increased conviction to aggressively invest in order to maximize our long-term potential. And that's what we're doing. Thank you for joining us, and we look forward to speaking to you soon. Take care.
spk06: The conference is now concluded. Thank you for attending today's presentation. At this time, you may now disconnect your lines.
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