This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
Operator
Good evening. Thank you for attending today's MongoDB fourth quarter FY 2022 earnings call. My name is Selena, and I will be your moderator. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Brian DeNew with ICR. Please go ahead.
Brian DeNew
Thank you, Selena. Good afternoon, and thank you for joining us today to review MongoDB's fourth quarter fiscal 2022 financial results, which we announced in our press release issued after the close of the market today. Joining 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 forward-looking statements, including statements related to our market and future growth opportunities, the benefits of our product platform, our competitive landscape, customer behaviors, our financial guidance, and our planned investments. These statements are subject to a variety of risks and uncertainties, including those related to the ongoing COVID-19 pandemic and its impacts on our business, results of operations, clients, and the macroeconomic environment. They 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 in this call reflect our views only as of today, and we undertake no obligations to update them. Additionally, we will discuss non-GAAP financial measures on this conference call. Please refer to the tables in our earnings release on the investor relations portion of our website for a reconciliation of these measures to the most directly comparable GAAP financial measure. With that, I'd like to turn the call over to Dave.
Selena
Thanks, Brian, and thank you to everyone for joining us today. I will start by reviewing our fourth quarter results before giving you a broader company update. Looking quickly at our fourth quarter financial results, we generated revenue of $266 million, a 56% year-over-year increase and above the high end of our guidance. Atlas revenue grew 85% year-over-year, representing 58% of revenue. We have another strong quarter of customer growth ending the quarter with over 33,000 customers. The fourth quarter marked another major milestone as we crossed $1 billion in annualized revenue run rate. Crossing over the $1 billion mark five years after reaching the annualized $100 million mark is clear evidence of the value MongoDB's application data platform offers customers large and small all over the world. Our excellent fourth quarter performance was broad-based. We saw success in nearly every industry, geography, and customer type. It was powered once again by the ongoing strength of Atlas. We also saw an uptick in sales for Enterprise Advance, which speaks to the popularity of MongoDB, regardless of where our technology is deployed. Customer net additions remained robust, especially in our direct channel, where Q4 marked a new record. It is expected that hundreds of millions of new applications will be developed over the next few years, as most organizations now recognize that a competitive advantage has to be built, rather than being bought with off-the-shelf software. The core reason for our success is that in an era where there's an urgency to build compelling modern applications, MongoDB reduces the friction and cost of working with data, which is the biggest challenge developers face. However, the developer experience of working with data has become increasingly complex. The technologies and mechanisms of working with data have continued to get more fragmented as there has been a proliferation of specialized and niche data technologies, each designed to solve a slice of a growing set of necessary data use cases. The hyperscale cloud providers are reinforcing this by taking a bag of tools approach by introducing many proprietary point solutions. This approach pushes complexity onto developers to wrangle these data technologies in their applications and develop workarounds to address scalability and performance. The complexity created by this data sprawl impedes the speed of innovation, adds cost, and effectively becomes a direct business risk. MongoDB's application data platform takes a radically different approach to liberate the developer from the unnecessary data complexity to accelerate innovation. First, our platform removes enormous friction in how a developer works with data. Instead of requiring developers to work with inflexible data models, MongoDB is built on the document model, which is aligned to the way how developers think and code. The document model not only allows developers to build applications faster, but to also easily make changes in response to business conditions or customer feedback. Second, our application data platform enables developers to focus on the needs of the business as opposed to working around the constraints of their data infrastructure. MongoDB abstracts away all that complexity through an architecture that is designed to address the vast majority of use cases. Instead of having to deal with numerous point solutions, customers can use our tightly integrated platform that offers a unified and seamless developer experience. Third, our platform is designed to meet the most demanding requirements for performance and scale. Unlike other solutions that struggle scaling beyond a few nodes and a few regions, MongoDB's application data platform can enable anyone to provision a globally distributed and persistent data platform anywhere in a matter of minutes with just a few clicks of a button. By virtue of being available on 80 plus regions across AWS, Azure, and GCP. Perhaps the best evidence that our platform is resonating in the marketplace is in the growth of our customer base. We ended the year with over 33,000 customers, of which over 1,300 are six-figure customers and 164 are million-dollar-plus customers, the latter number growing nearly 70% year-over-year. This level of customer adoption is reflective of our popularity around the world as well as our value as a general purpose rather than a niche technology. To provide a small sampling of how MongoDB is used across different industries, in financial services, MongoDB is used for a trading platform, global payment data store, a digital end-to-end loan origination and servicing solution, general ledger system of record, regulatory risk, treasury, and for many other back office processes. In the retail sector, MongoDB is used for single view, real-time product catalogs, hyper-personalization, recommendation engines, AI-driven customer engagement, inventory and supply chain management, including sensor tracking and omni-channel user experiences. In the telecom industry, MongoDB is used to enable smart home services, Internet of Things, media streaming, call routing, endpoint management, real-time fulfillment, AI-based fraud detection, and advanced billing and payment services. These are a few examples of how MongoDB is being used. We also do extensive work in the healthcare, manufacturing, gaming, oil and gas, and many other industries. We continue to be excited about the future and the massive opportunities in front of us. Businesses across all industries will continue to invest heavily in software as a means to differentiate themselves, to seize new opportunities, and to respond to new threats. While this has been happening aggressively over the past decade, we are still only in the early stage of this movement. As infrastructure becomes more advanced, with chips getting more powerful, algorithms getting smarter, and networks getting faster, the capability for innovation only increases. Powerful software powered by real-time data will empower experiences and business models we cannot even conceive of today. Future applications will need to be incredibly responsive, increasingly global, and require strong distribution data to the edge or across the world. However, there's still a dearth of development talent to meet this demand. Consequently, organizations will invest in technologies that allow developers to go faster by offering an integrated suite of data capabilities to build smarter applications. In fiscal 23, we'll continue to build on our momentum and advantages in the marketplace. In product, we'll continue innovating to enhance the value of our platform. Our high win rates and strong broad-based performance gives us confidence to continue to rapidly scale our sales organization as we remain fractionally penetrated in the $70 billion plus market. In marketing, we see a great opportunity to elevate our brand and our value proposition to the voice of our customers who are doing remarkable things with our platform across different industries and geographies. Finally, we'll continue investing in our people, processes, and systems to support rapidly scaling our company. Now I'd like to spend a few minutes reviewing some customer wins and interesting use cases from the fourth quarter. Ultra-fast grocery delivery pioneer Gatier has revolutionized last-mile grocery delivery with its 10-minute grocery delivery proposition, making thousands of everyday items available in minutes. The company has built its core grocery delivery platform on MongoDB Community and migrated to Atlas. Gatier achieved superior performance and reliability and also relied on Atlas' always-on multi-region clusters for 99.995% uptime during its critical US launch. One of the largest North American banks chose MongoDB as its modern database standard to fuel modernization, improve uptime, and power a highly available, always-on, secure customer experience for the bank's 10 millions of retail customers. The bank runs over 200 applications on MongoDB across digital, capital markets, consumer lending, risk and payment divisions. Use cases span mainframe offload, operational data store, single view of the customer, time series, caching, real-time analytics, mobile, and content management. Societa Generali di Informatica, or SOGIE, is an information technology company operated by the Italian Ministry of Economy and Finance. It recently chose MongoDB as the application data platform for a government initiative that mandates citizens to present a digital or paper certificate to show whether they have been vaccinated, tested negative, or recovered from COVID-19. Called the Green Pass Project, the program grants access to activities like restaurant dining, museums, cinemas, amusement parks, and more. SoGA was able to generate 150 million certificates in less than 45 days with MongoDB. Content cloud company Box empowers more than 100,000 businesses globally to revolutionize how they work by securely connecting their people, information, and applications. Box's content ingestion solution, Box Shuttle, leverages MongoDB Atlas to accelerate a customer's migration to the cloud. Box wanted a FedRAMP-ready multi-cloud managed cloud database to support high throughput and horizontal scale by sharding large data sets. One of the largest supermarket chains in the United States selected Atlas and Atlas Search to power its enterprise promotions engine. The engine gives customers immediate access to promotions and coupons while shopping at any one of its thousands of stores across the U.S. With Atlas Search, the company was able to modernize its data structure so that developers can make more updates more quickly and use multi-dimensional array lookups to run 5 million queries per day faster. Insulet Corporation is an innovative medical device company dedicated to simplifying life for people with diabetes. Insulet's flagship product, Omnipod, is the first tubeless automated insulin delivery system that is helping people with diabetes lead better lives. Insulet migrated to MongoDB Atlas to reduce costs while simplifying the complexity of mission-critical database management, configuration, upgrades, and scale without business interruption while having HIPAA, PII, and PCI compliance protection. In summary, we had another excellent quarter. We are seeing continued strong momentum because we're solving one of the most important problems impeding innovation, namely the challenges of working with data. We are more optimistic than ever about our prospects and will continue investing and executing to capture the large market opportunity ahead of us. With that, here's Michael.
Brian
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 2023. First, I'll start with our fourth quarter results. Total revenue in the quarter was $266.5 million, up 56% year-over-year. Subscription revenue was $258.2 million, up 58% year-over-year. And professional services revenue was $8.3 million, up 17% year-over-year. It was a very strong quarter across the board, and we exceeded our expectations for both Atlas and Enterprise Advanced. Overall, Atlas' strong performance continues to be the largest contributor to our growth. Atlas grew 85% in the quarter compared to the previous year and represents 58% of total revenue compared to 49% in the fourth quarter of fiscal 2021 and 58% last quarter. On a sequential basis, this quarter's strong Atlas revenue performance was driven in part by the exceptionally high in-quarter expansion of existing customers that we experienced and previously called out in Q3. Simply put, strong in-quarter expansion benefits, not just the revenue in the completed quarter, but also the revenue in the following quarter because the new quarter starts with a higher beginning run rate. In Q4, we experienced strong in-quarter expansion of existing customers that was in line with historical trends versus the exceptionally high growth rates we experienced in Q3. Enterprise Advanced had a particularly strong quarter. An important driver of the strength of EA is the success we are seeing in our large high potential accounts. As a reminder, we provide incremental resources to some of our most promising customers in order to accelerate the adoption of MongoDB. A number of these high potential accounts are primarily using EA, and we had a strong new business quarter with them in Q4. During the fourth quarter, we again grew our customer base by over 2,000 customers sequentially, bringing our total customer count to over 33,000, which is up from over 24,800 in the year-ago period. Of our total customer count, over 4,400 are direct sales customers, which compares to over 3,000 in the year-ago period. As a reminder, our direct customer count growth is driven by customers who are net new to our platform, as well as self-serve customers with whom we've now established a direct sales relationship. The growth in our total customer count is being driven in large part by Atlas, which had over 31,500 customers at the end of the quarter, compared to over 23,300 in the year-ago period. It's important to keep in mind that the growth in our Atlas customer count reflects new customers to MongoDB, in addition to existing EA customers adding incremental Atlas workloads. We have another quarter with our net AR expansion rate above 120%. We ended the quarter with 1,307 customers with at least $100,000 in ARR and annualized MRR, which is up from 975 in the year-ago period. As Dave mentioned, we ended the year with 164 customers with at least $1 million in ARR and annualized MRR, which is up from 98 in the year-ago period. The continued strong growth in our $100,000 and million-dollar-plus annualized spend is an indication of the success of our land and expand strategy and the fact that we're increasingly becoming a strategic platform for our customers. Moving down the income statement, I'll be discussing our results on a non-GAAP basis unless otherwise noted. Gross profit in the fourth quarter was $196.6 million, representing a gross margin of 74%. which is up from last quarter and up from 72% in the year-ago period. Our loss from operations was $1.3 million, or a negative 1% operating margin for the fourth quarter, compared to a negative 9% margin in the year-ago period. Our outperformance versus our operating loss guidance was primarily driven by our revenue outperformance. Net loss in the fourth quarter was $6.3 million, or 9 cents per share, based on 67 million weighted average shares outstanding. This compares to a loss of $19.9 million, or 33 cents per share, on 60.5 million weighted average shares outstanding in the year-ago period. Turning to the balance sheet and cash flow, we ended the fourth quarter with $1.8 billion in cash, cash equivalents, short-term investments, and restricted cash. This quarter, we saw strong sequential growth in deferred revenue driven by the strength of enterprise advance given EA contracts are predominantly billed annually in advance. As we've discussed in the past, Q4 is the seasonally strongest quarter for our EA installed base. As a reminder, in Q3, we noted that our deferred revenue benefited from several very large Atlas early renewals. We did not see a similar impact in Q4, but would like to reiterate that some of those large deals that renewed early in Q3 were originally scheduled to renew in Q1. Operating cash flow in the quarter was positive $22.3 million. After taking into consideration approximately $5.5 million in capital expenditures and principal repayments of finance lease liabilities, free cash flow was positive $16.8 million in the quarter. This compares the negative free cash flow of $20.7 million in the fourth quarter of fiscal 2021. For the full fiscal year 2022, we had positive operating cash flow of $7 million and negative free cash flow of $6.7 million. While we have had positive operating cash flow quarters before, This is the first full year in our company's history that we generated cash from operations. I'd now like to turn to our outlook for the first quarter and full fiscal year 2023. Please note that the guidance provided for fiscal year 2023 includes certain refinements to our non-GAAP financial measures for expenses related to stock-based compensation to more accurately depict the underlying business results each quarter. For comparative purposes, we've provided a historical reconciliation of these updated measures in our earnings release. For the first quarter, we expect revenue to be in the range of $263 million to $267 million. We expect non-GAAP loss from operations to be $5 million to $2 million, and non-GAAP net loss per share to be in the range of 12 cents to 8 cents, based on 67.7 million weighted average shares outstanding. For the full fiscal year 2023, we expect revenue to be in the range of $1,151,000,000 to $1,181,000,000. For the full fiscal year 2023, we expect non-GAAP loss of operations to be $22 million to $7 million, and non-GAAP net loss per share to be in the range of $0.51 to $0.29, based on 68.7 million weighted average shares outstanding. Our strong guidance for fiscal 2023 reflects our underlying confidence in our market opportunity and our ability to deliver strong growth at significant scale. Let me provide some incremental context around our guidance. In Q1, at the midpoint of our guidance, we expect to see a slight sequential revenue decline as Q1 is typically a lower new business quarter for enterprise advance than Q4. As a reminder, EA revenue recognition under ASC 606 is disproportionately affected by the upfront term license component. In addition, as we've discussed in the past, Atlas sequential growth in Q1 is lower compared to other quarters, driven by seasonal factors impacting consumption, Most notably the fact that there's simply fewer calendar days in Q1 than in other quarters. Let me also discuss how we are factoring the impacts of the COVID-19 pandemic into our fiscal year 23 guidance. First, unlike in fiscal 21 and fiscal 22, we do not assume any impact of the pandemic on our revenue performance in fiscal 23. Despite the ongoing uncertainty related to the pandemic, our performance over the last two years gives us confidence in our ability to execute in this environment. In other words, our guidance reflects that we have more confidence operating in the current environment than in either of the last two years. Second, on the expense side, our guidance anticipates the normalization of travel, event, and office expenses as COVID-19 restrictions continue to relax. We previously expected a normalization in the second half of fiscal 22, but the spread of the Delta and Omicron variants delayed our return to office plans and reduced employee travel. As a result, our travel event and office expenses in fiscal 22 were only modestly higher than in fiscal 21 and well below our initial expectation. However, we now expect normalization starting in Q2, and we anticipate an incremental $45 to $55 million in travel event and office expenses in fiscal 23. To summarize, MongoDB delivered excellent fourth quarter results. We continue acquiring new customers at a strong pace. and our revenue growth is a testament to the breadth of platform adoption and our increasing strategic importance to our customers. We remain convinced that we're in the early innings of pursuing our large market opportunity. With that, we'd like to open up to questions. Operator?
Operator
Thank you. If you'd like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by 2. Again, to ask a question, press star 1. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. The first question comes from Cash Rangan with the Goldman Sachs. Please go ahead.
Atlas
Congratulations on the quarter. I just want to clarify the seasonality comment, Michael, that you made with respect to athletes. We're merely talking about it sequentially only because that was a much larger business today than it was exactly a year ago going into a Q1. Or are we actually calling out any structural changes in consumption that underlie that forecast? I also have a follow up question. Thank you so much.
Brian
Yeah, so what we're talking about, and we called this out last year, is that Q1 for Atlas is seasonally lower because of the fewer calendar days in the quarter. It's a consumption-based model, and just obviously you need days in order to consume, and Q1 has fewer of those days. But the overall cohort behaviors, as evidenced by the Q4 numbers, are very strong, and we feel good about the underlying patterns.
Atlas
Got it. So consumption as a structural chain driver of your Atlas business still as positive as you felt.
Tyler
Yeah, no change.
Atlas
No change, got it, yeah. And one for Dave. When you look at the cohort of Atlas customers, initial deployment is generally small, but then what are some of the bigger deployments on Atlas looking like that rival the more traditional on-prem deployments that give you the conviction that some of the biggest database deployments on the planet could end up being completely cloud-native? And my price is two or three years from now. Thank you so much.
Selena
Yeah, thanks, Cash. I would say just I'd point to the seven-figure customers. The majority of those customers are on Atlas today. So we have large customers and actually even cutting-edge startups who are running mission-critical workloads. For startups, it's probably their entire business on Atlas. For large customers, they're running mission-critical workloads. And so... Atlas is not just for small workloads. We're seeing, and this has happened now for a number of years, we're seeing enterprises increasingly get comfortable with moving mission-critical workloads to the cloud. And one of the benefits of moving to MongoDB is that you get real optionality of not just starting on-prem and moving to the cloud, but going from one cloud provider to another. So we're seeing strong interest, and I think we have the customer proof points to give people confidence to really move mission-critical workloads to Atlas.
Atlas
Tremendous. Thank you so much.
Michael
Thank you.
Operator
Thank you, Kosh. The next question comes from Sanjit Singh with Morgan Stanley. Please proceed.
Kosh
Thank you for your questions and my congrats to the team on another exceptional year. You mentioned that you went from $100 million to $1 billion in five years. It's incredible. If you think about how you can do that, Hey, Sanjit.
Selena
Hey, Sanjit, we're having trouble hearing your question. It's coming across very muffled.
spk10
I apologize, Dave. I think that was my headset. So the question is essentially like as you scale beyond a billion dollars, going from $1 billion to $2 billion, is anything in the sort of how you go to market, how you organize the business, change versus how you got to a billion dollars? Typically, in prior sort of ramps of software companies, there's been a bit of a hiccup scaling past a billion dollars. As this business crosses $1 billion, how do you feel about your ability to scale to $2 billion and beyond over time?
Selena
Sure. So, you know, we've constantly always tried to stay ahead of where the business is in terms of anticipating changes to our go-to-market model. I mean, as you can imagine, in the early days, we had one model, which is a direct sales force, really trying to sell to everyone. Then we introduced an inside sales team. Then we introduced self-serve. Then we introduced the notion of having focused teams on high-end accounts. We introduced the notion of removing friction from the initial sales selling process to get customers on a platform more quickly. So we're always refining our go-to-market motion in anticipation of, one, how big this market is, and we try to meet customers where they are versus trying to force them, trying to engage with us in one way. And you'll see us continue to do that. We're going to be focusing, increasing on verticalization. As I mentioned in the prepared remarks, we're seeing a lot of traction in key vertical industries. We're developing a deep degree of competence around those industries. We've been having a team focused on solutions marketing for a number of years to particular industries, and you're going to see us organize our sales teams more over time with a vertical orientation. You'll also see us going after what we call digital natives, which are kind of fast-growing mid-market customers who are building software and not just buying software, and they will obviously see a lot of value from MongoDB. So you can see us pushing the envelope in terms of innovation, and I would argue that we have the best sales organization in enterprise software.
spk10
Well, plenty of opportunity ahead. It sounds like a lot to look forward to. Michael, on the guidance, you did a really great job of sort of contextualizing how you're approaching guidance this year versus last year, particularly around the element of COVID. I guess I sort of just have to ask, you know, just given the geopolitical environment that we're in, particularly with exposure issues, potential exposure to Russia and Eastern Europe, and then we also have this element of, you know, higher oil prices and what that can do for the macro environment more broadly. To what extent did you sort of incorporate those factors into this year's guidance, understanding that, you know, COVID looks hopefully not going to win largely behind us?
Brian
Yeah, so thank you. So obviously we try and be thoughtful and transparent in the guidance. That said, we don't have a crystal ball for what's going to happen geopolitically or macroeconomically. I think we feel confident in our ability to execute, you know, sort of despite the uncertainty. Specifically on your point about Russia, I would just call out we have very limited revenue, you know, in Russia. You know, for fiscal 22, it was roughly, a low single-digit millions revenue contributor. We're obviously, you know, complying with all of the relevant laws and regulations, you know, as they emerge. But obviously, if there are future things on the horizon that we can't contemplate, we'll certainly update you, but we feel good about the outlook.
spk10
Super helpful context. Thank you, Michael, and congrats.
Michael
Thank you.
Operator
Thank you, Sanjit. The next question comes from Raymo Linchao with Barclays. Please proceed.
Raymo Linchao
Thank you. Could you speak a little bit to the relationship with the big hyperscalers? It looked like the deals influenced by them kind of shot up quite a bit, like, you know, and obviously it's this funny relationship of cooperation. Like, what did you see there in terms of, like, how they are interacting with you and how that relationship is changing over time? And then I had one follow-up.
Selena
Sure. The basis of our relation with the cloud providers is really first and foremost based on the strong product market fit of MongoDB. MongoDB is incredibly popular and the popularity spans all major cloud providers. I think what we have shown first with Google as we started working with them very closely given their ambitions to grow their business quickly is that we could partner effectively and help them acquire a lot of new customers, a lot of new workloads onto their platform. This did not go unnoticed by some of the other cloud providers, and we started going deeper with AWS. As people may remember, in early 2018, AWS introduced a competitor, a clone of MongoDB, and there were some worries about how that relationship would evolve. And I'm pleased to say that I feel like the relationship has never been stronger. We have deep relationships in the field. We partner more on deals. and AWS has recognized that MongoDB drives a lot of demand to their platform, and so the relationship there is very healthy, and we're also doing a lot of business with Azure. So I would say our win rates are still very high against them when you go head-to-head against them, but clearly they're good partners, and we're investing a lot in those relationships.
Raymo Linchao
Yeah, okay. And then, Michael, on the... On the guidance, it's really impressive to see the margin guidance. If I consider the 45 to 55 million extra spending that we see this year, can you just talk a little bit about the other drivers that help you achieve that?
Brian
The what? Sorry, help this?
Raymo Linchao
It does look like the internal efficiencies or the scale of the businesses that allow you to do that because that looks, despite the spending, the outlook is actually better than what I modeled.
Brian
Yeah, no, no. We've been continuing to show meaningful operating leverage. We feel good about that. We're seeing scaling throughout the business. That said, we certainly are investing to pursue the market opportunity. That means both investments in sales and marketing and in R&D and obviously sort of everything else to scale the business. But no, we've been really pleased. both, you know, at the gross margin line, you know, with the success given where, you know, Atlas is as a percentage of business and executing against the plan there, as well as, you know, on the bottom line. And I think that, you know, we'll continue to execute on that, but we feel really good about where we are. Perfect. Congrats. Well done.
Raymo Linchao
Thank you. Thank you.
Operator
Thank you, Remo. The next question comes from Phil Winslow with Credit Suisse. Please proceed.
Remo
Hey, guys. Thanks for taking my question. If we look at just an analysis of just sales efficiency, it seems that the productivity continues to rise, but you also continue to add capacity. What do you have a sense of just what you're seeing from the inside in terms of productivity and how you're thinking about this coming year in terms of just capacity as but also productivity? Thanks.
Selena
Yeah, thanks, Phil. We feel really good about the performance and the productivity of the sales organization. The performance was broad-based. One of the traps in software sales is that you can get some big deals can mask weak performance in the rest of the sales cohort. We're not seeing that. We're seeing broad-based performance across our entire sales teams, across all the different theaters. So that's giving us a lot of confidence. We're adding a lot of people quickly. MongoDB is viewed as a very attractive place to come to. We believe that we really help people understand and master the art of sales. And so we put a lot of time and effort into developing our people. Because we're growing so fast, we give people tremendous opportunities for growth so people can really grow their careers here at MongoDB. And we push the envelope on innovation. So we're doing things that not many other companies are doing. And so All things put together, we feel really good about the sales organization, and as a result, it's the reason why we're investing aggressively to expand the capacity of that organization.
Remo
Great. Thanks, guys. Keep up the great work. Thanks, Phil.
Operator
Thank you, Phil. The next question comes from DJ Hines with Canaccord. Please proceed.
Phil
Hey, guys. Nice set of numbers here. Dave, we've seen a bit of an inflection in revenue per customer over the last couple of quarters. I'm wondering if that's more a function of your big customers getting bigger, right? I mean, we saw a record 100K plus ads, or is it all the smaller starting Atlas customers that you've added over the last couple of years now kind of ramping to more material spend levels? I'm sure it's a bit of both, but I'd love to get some qualitative color.
Selena
Yeah, in general, the expansion rates of the cohorts are very strong, but I think a lot of it's also due to the mix. When we changed the way we want to engage with customers, we saw a big influx of self-serve customers moving to a direct relationship. So obviously that change in mix affected the revenue per customer number. And as things have kind of, as I said, gone to more of a steady state function, you're seeing those numbers stabilize. But we feel like we have a really huge embedded growth opportunity in our customer base. And that's where we're spending a lot of time with as well as acquiring new customers.
Phil
Yeah. Okay. And then Michael, my follow up for you. I mean, obviously the EA strength in the quarter drove the strong cashflow that we saw. If you look out to fiscal 23, do you think Mongo can be free cashflow profitable?
Brian
Yeah, so thanks for that, DJ. A couple things. I would say part of the, so in general, it's a very strong quarter Q4 from a cash flow perspective. I would say that's less as a result of the EA sales in Q4 and more a result of the strong Q3, inclusive of some of the pull forwards that we called out previously. Typically, you know, there is a little less intra-quarter collection from when you book business. Obviously, it depends a little bit on the linearity. We haven't given specific guidance around operating cash flow positive, but I certainly do think it's noteworthy, not just the strong and significant magnitude, the more than $20 million in Q4, but the fact that we had $7 million in positive operating cash flow for the full year, I do think is noteworthy. It's not a specific milestone that we've focused on or set out, but I do think it's a positive reflection of the underlying trends of the business.
Phil
Yep. Yep, I agree. Okay, thank you.
Operator
Thank you, DJ. The next question comes from Carl Kirsten with UBS. Please proceed.
Carl Kirsten
Thanks a lot. Maybe two for Mike. Mike, back to the Atlas strong sequential usage growth. I'm sure you're well aware that some of your peers, Snowflake, Confluent, Datadog, that also have AWS-centric usage models called out a bit of a usage lull or unusual consumption seasonality in December, January. Did you see that? And perhaps it was offset by other drivers, or did you not? And if you didn't, what makes your model different from those peers? Thank you.
Brian
Yeah, thanks, Carl. So, no, we saw very strong behavior in Q4. The cohort expansion was in line with historical trends, so nothing sort of abnormal or atypical there. It was a strong quarter in Q4, as we mentioned, in part because the beginning run rate was higher given the exceptionally high expansion in Q3, but Q4 itself behave pretty normally, so I think it doesn't quite fit the patterns that you're describing. Hard for me to speculate exactly on all the reasons why as it relates to those other businesses, other than the fact that from the database standpoint, it sort of has an always-on component to it, for lack of a better phrase, as opposed to something that is a specific
Selena
Episodic.
Brian
Yeah, episodic or query, analytics query or batch query driven basis.
Carl Kirsten
Yeah, okay, that's perfectly clear. Thanks for that, Mike. And then my follow-up, I just want to be crystal clear on what you're conveying when you say that you're not assuming a pandemic impact in your fiscal 23 guidance. Mike, are you really saying that you're guiding less conservatively going forward and therefore implying that perhaps we should not be thinking that the beat cadence will maintain at the level you've put up in the last two to three quarters.
Brian
Yeah, the way I would think about it, Carl, is that our guidance philosophy hasn't changed, but I think our perception of the uncertainty or risk of the environment has changed. And given how well we've operated over the course of the last two years of the pandemic, it would be hard for us, despite the uncertainty that still exists, I think we just have a lot of confidence that we can execute in that environment, and that hasn't been the case the last two marches when we've provided that guidance. So I wouldn't describe it as a change in philosophy or a change in conservatism, but I think it's just sort of reacting to the facts as we have them and less risk and less uncertainty than we've had previously.
Carl Kirsten
Got it. Okay, that's very clear. And congrats, the whole team, on the great results.
Rishi
Thanks, Carl.
Operator
Thank you, Carl. The next question comes from Brent Graceland with Piper Sandler. Please proceed.
Carl
Thanks for taking the question here, Michael. It certainly is impressive to hear all this talk about positive free cash flow and positive cash from operations. I guess as you think about the guide for next year, clearly much better than what we had modeled from an operating perspective. Where do you expect to see the most operating efficiencies coming from in the coming year. And then Dave, if you could talk a little bit about Atlas, the usage trends per customer are showing the highest growth rate that we've seen in three years. And just wondering here if that's seasonally strong, or do you think this is just tied to a broader adoption, broader number of customers standardizing the platform? Thanks.
Brian
Yeah, thanks, Brent. On the first part of the question, I don't think that there's any material skew, you know, sort of one way or other. If you look across the board, I think we'll, you know, continue to show, you know, progress, you know, overall, and that will come from sales and marketing, you know, R&D, and then, you know, overall, you know, the rest of the organization in G&A. So we're not intentionally trying to skew that, you know, in any way. particular way, as Dave mentioned. We feel like we are still quite thin on the footprint coverage, and so we're trying to expand sales and marketing as rapidly as we responsibly can just to make sure that we're in as many conversations and customer dialogues as possible. And then given the breadth of the product roadmap and the returns that we've been getting on those investments. We think that it's prudent to invest in those as well. So there's not one particular lever that we're looking to sort of disproportionately or incrementally scale, but you'll see, you know, scaling and aggregate, as you can see in the results and in the guide. And then, Brian, do you want to cover the other piece?
Selena
Yeah. So, Brent, any question on usage trends, whether it's seasonal or there's some other things going on? I would say it's definitely the latter. We are definitely seeing broader adoption of Atlas by customers. We're definitely adding more customers and more workloads to Atlas. And I'd also say the mission criticality of those workloads is increasing from, say, four or five years ago to today, where people are now running major elements of their infrastructure, major elements of their business on our platform. And these are not applications that you turn off or slow down. And I think that's why you're seeing the usage trends as we've observed.
Brian
Yeah, I would just add, Brent, I'm not exactly sure which math you're doing, but if you're looking at sort of Atlas revenue per average Atlas customer, part of that today's point will very specifically come from the fact that we're seeing increased adoption of Atlas among direct sales customers, right, which will be at a higher spending level than self-serve customers. And so that's really more of an output rather than an input. Again, we run the business on a channel basis, and that's a little bit of what's happening kind of below the surface of the map that you might be doing.
Carl
Helpful color. Great to see the momentum. Thanks.
Operator
Thank you, Brent. The next question comes from Atai Kedron with Oppenheimer. Please proceed.
Brent
Thanks. Hey, guys. Great quarter. Dev, I want to go to the macro environment. I know the events in Russia and Ukraine are not more than two weeks old, but I'm just kind of wondering if your discussions, I'm sure you had a few of them, with customers in Europe where there's greater concern that the continent will go into recession, or several continents will go into recession over there. Is there any change in the tone and the discussion and the investment planning? Are things getting elongated as far as deal closings? Any color that will help us understand what the state of mind is over there right now, of course, outside of Ukraine and Russia?
Selena
Yeah, outside of Ukraine and Russia, we see no change. We feel really good about Q1 as per the guidance, and we look at this on a daily and weekly basis, and we're seeing no change.
Brent
Very good. Thanks.
Operator
Thank you, Atai. The next question comes from Rishi Jaluria with RBC. Please proceed.
Atai
Oh, wonderful. Hey, Dave. Hey, Michael. Thanks so much for taking my question. Just two on my end. First, I wanted to start with the serverless offering, which is in preview mode. Can you talk a little bit about how has customer feedback and early adopter feedback been? How to think about the long-term impact if this starts to see real adoption? And maybe help us understand some use cases that you've seen for serverless versus the core Atlas. And then I've got a follow-up.
Selena
Sure. So the whole notion of serverless is to essentially abstract the way the need to do capacity planning, that people can basically connect to our database, start using it, and not have to worry about it anymore. The database would just scale up and down based on the needs of the application. And so the early feedback has been incredibly positive. We're seeing a lot of interest. We have a lot of people using it today. We're getting great customer feedback. And you'll see us continue to invest aggressively on serverless. And we obviously will have our own dedicated offerings as well as serverless. But over time, we think serverless will become a more meaningful part of the business. But we're super excited by the feedback so far. All right, great.
Atai
And then I wanted to go into the NRR. Showing 120% plus NRR at a billion in ARR is really impressive. Can you talk a little bit about what are kind of some of the drivers of being able to maintain this level of NRR at this scale? You know, is it a function of, you know, expanding workloads, new use cases, upmarket momentum, lower churn? Maybe walk us through a few of the drivers for keeping it up and how to think of that metric going forward. Thanks.
Selena
Yeah, so we believe that we have built a very durable business. And a big reason for that is we've really focused on acquiring workloads, acquiring customers and acquiring workloads in those customer accounts. And unlike other businesses where you can grow very, very quickly because you just basically manage a lot of data, our unit of measure in terms of account penetration is the number of apps or number of workloads. So they do take time. No one's going to move 100 workloads overnight, but you have a great opportunity because we're so fractionally penetrated in even our existing accounts. Even though they may be large customers and they're spending a lot of money with us, there's still thousands of apps that we can win, whether they're new apps they're building or existing apps that they want to modernize. And so we also put a lot of focus on making sure our customers are successful. really ensuring that the customers get value very, very quickly from our platform, which obviously affects retention rates and churn. And so the degree to which we do that well, that also affects our net expansion rates. And so I think those two factors, along with adding new customers in general to our platform, really help keep that high net retention rate.
Atlas
All right, great. Thank you.
Operator
Thank you, Rishi. The next question comes from Tyler Ratke with Citi. Please proceed.
Rishi
Hey, thanks for taking the question. Obviously the Atlas revenue was really impressive this quarter, but I think the Enterprise Advanced Revenue really stood out to me this quarter. It grew seven points faster than you saw last quarter where there was kind of a pull forward dynamic. I was wondering if you could just kind of unpack the drivers of the EA performance this quarter. Was it primarily driven by an uptick in new customers? And given that EA customers tend to be, you know, larger companies, are you seeing any change in terms of, you know, the mix of legacy or, you know, traditional database migrations? Thanks.
Brian
Sure, yeah. As you mentioned and as I, you know, commented on in the prepared marks, it was obviously a very strong enterprise advance quarter Q4 historically has been the strongest EA renewal base. We clearly demonstrated, you know, and observed very strong demand for more EA workloads. Most of the, just if you step back more generically, most sales of EA are to existing EA customers, right, who are expanding incremental workloads. And in addition, as we called out these sort of focus accounts that we're putting more resources around, A number of them are primarily EA accounts. And we, you know, had a lot of success deepening our penetration with those customers. And given that Q4 is a large renewal base, that's often a good time, you know, when that takes place. Certainly EA will be volatile quarter to quarter given, you know, 606. But it continues to be very strong. And again, our goal is really just to give the customers choice and meet them wherever they are in their cloud journey.
Rishi
Great. And maybe a question for Dave. So you've released a lot of kind of interesting new capabilities around support for time series and streaming. I'm just curious how you're seeing kind of the uptick in operational intelligence or real-time analytics within your customer base and how impactful is that going to be in terms of growing existing accounts? going forward? Thanks.
Selena
Oh, so we believe that the trend of applications getting smarter and they get smarter by embedding more data and more real-time data and more analytics into the application is a trend that's going to increase dramatically, which is why we believe we're well set up to take advantage of that trend. One, by definition, we're an operational data platform, but that's where you get the live data. Two, we have a distributed platform, so you can segregate nodes One for essentially, you know, writing the transaction and the other nodes for reading data. So this enables you to do that without impacting user performance. Three, we came out with capabilities where if you want to do a sophisticated query, obviously operational data is constantly changing. You can take a snapshot of the data at some point in time and run a query and get that result and embed that result back into the application. So we're embedding more and more capabilities into our platform to enable developers to build smarter applications. And as I mentioned, with the advent of faster networks, faster chips, better algorithms, the sophistication of use cases are only going to increase. And we feel like we're really well positioned to take advantage of that. And you'll see a lot of our investments go in that direction.
spk00
Thank you.
Operator
Thank you, Tyler. The next question comes from Fred Havemeyer with Macquarie. Please proceed.
Tyler
Hey, thank you. You know, in your prepared remarks, Dave, you were mentioning how Get Here was scaling from just MongoDB Community Edition onto MongoDB Atlas. And it got me thinking, you know, Dave, would either you or Michael be able to provide any context on some of the larger Atlas customers or generally MongoDB customers and How many of them began as just kind of like community edition startups and scaled into some of your larger and more material accounts?
Selena
Well, in the early days, all of them came from community. And what they were attracted by was the notion of really outsourcing all the undifferentiated work of provisioning, configuring, and managing a distributed database, and essentially focusing on building great apps that transform their business. What we've done over the last few years is really enabled a free tier of users on Atlas, and so they essentially can try and test and play with Atlas. And then we get those customers to migrate into our paid offerings, and we're starting to see increased success with that motion where people start our free tier because they don't even want to – they just want to work on the cloud, and then very quickly they start using their level of usage and interest ends up getting them to a paid offering. So that's another trend that we're seeing that's emerged. And so obviously it all starts with the product market fit of MongoDB, the document model, the way we just make it so easy to build applications quickly, the way we enable developers to innovate fast. And obviously Atlas just allows them to essentially focus on what's important and leave all the plumbing to us.
Brian
Yeah, I would just add that Atlas self-serve, whether it's free tiered or paid, is sort of the modern, more contemporary version of downloading community server and managing it yourself. And as we pointed out before, more than 50% of Atlas ARR was self-serve sourced, right? So it's just sort of reinforcing that same motion that Dave is describing.
Tyler
Thank you for the context there. And I think I'm one of those free tier users. Eventually, I'll scale up. The second question I wanted to ask you about is... Oh, thank you. I'll head over to your office and knock on the door and ask for some help, just like back in the old days. I'd also like to ask about cash in the balance sheet and with generating some free cash flow this year, material free cash flow this year, I wanted to ask how, Michael, are you thinking about cash deployment within MongoDB? Generally, are you thinking about Really, how are you thinking about cash in your balance sheet and how do you characterize MongoDB's M&A appetite if you have one?
Brian
In general, I would say that we've got an appropriate and very healthy cash balance with $1.8 billion. It gives us the confidence to think long-term. Obviously, we're continuing to make operating leverage progress, but as we see needs or opportunities or high return investments, we're able to make those. I think specifically from an M&A perspective, we'll be opportunistic. We feel like we've got a lot of organic running room. to go, but we'll certainly be opportunistic as needed. Dave, I don't know if there's anything you want to add to that.
Selena
Yeah, I would say that we obviously stay very close to the ground in terms of what's happening in the data infrastructure space. There's a lot of activity in the startup ecosystem, but as Michael mentioned, we feel like we have a lot of opportunity with our core offerings. We have done some acquisitions in the past that tend to be smaller, more surgical acquisitions, And if you do end up doing anything, it's probably more in that category than anything meaningful.
Tyler
Thank you for the context, and congratulations on a strong quarter.
Selena
Thanks, Fred.
Operator
Thank you, Fred. The next question comes from Steve Coning with SMBC. Please proceed.
Fred
Hi, gentlemen. Just one question today from me. You know, Last week, it was pretty surprising to see from Snowflake how performance improvements in their platform negatively impacted effective pricing and the revenue outlook. And I don't think I've ever seen that, you know, either working in or covering database companies. And so I'm wondering, you know, without commenting on them, tell me about maybe your model of Why won't performance improvements negatively impact you guys, and is there a difference between operation and analytic data stores that's relevant here? Thank you very much.
Selena
Yeah, thanks, Steve, for your question. I would say the big difference is our unit of work is the application or the workload. I would say other companies' unit of work is the amount of data they have to ingest. And I think when people think about building a new application, there's obviously some sort of business case essentially some funding to solve some important business problem or seek some new business opportunity. So they think about that investment very differently than the amount of data that they're constantly collecting. So as you can imagine, it's not surprising to me that some customers, when they see their bills escalate, probably get frustrated at the rate and pace of how their bills are escalating, whereas as customers are building new applications on our platform for them, that's a new decision on a new use case, and for them it makes sense to obviously invest the appropriate resources and technologies to deliver on that use case. So I think that's the big difference that you're seeing, and we have made performance improvements in our platform, but it doesn't show up in the way I think it does for other companies, and I think we feel very, very comfortable about the value proposition that we're offering to our customers. Awesome. Great. Thanks, Dick. Thanks, Steve.
Operator
Thank you, Steve. The next question comes from Mike . Please proceed.
Michael
Hey, guys. Thanks for getting me on for a couple of questions here. I did just want to walk through the guidance real quick for Michael. If I'm thinking about that revenue guidance that you guys provided for the full year of fiscal 23 and parse out Q1, but is that implied deceleration? Is that just, should we be thinking about that as just more difficult year-on-year comps? Is that, or are there any other puts or takes to that? And then the second point, gross margins has really just held up phenomenally given the amount of exposure coming in from Atlas as it becomes a more meaningful driver to total revenue. Should we still expect some gross margin erosion going forward as that Atlas becomes a larger piece because of the associated infrastructure component?
Brian
Sure. You're thinking about your first question. The first question was? Guidance.
spk00
Oh, guidance.
Brian
Yes. Yeah, yeah, yeah. So, thank you. No, I think overall on the guide, we feel like it's a very strong outlook and we're guiding to significant durable growth at scale. I would say two key factors to point out. One is we continue to expect more Atlas over time and so less 606 impact of EA, obviously over a 12-month period, you know, that also comes out in the wash. But given that upfront term license component piece, as more of the business shifts from EA to Atlas over time, we expect to have less of that. And then, yes, the second point would be what you called out, which is the strong Atlas performance, particularly in the back half of the year, sets up, you know, a very significant compare. And then on the gross margins, Yes, we've been super pleased with how we've done on our gross margin game plan. We've executed better than we had thought we could. If we thought that it was going to be this size and scale and 58% of revenue, you'd say we'd have 74% non-GAAP gross margins and 77% non-GAAP subscription margins. I would have doubted that we'd be able to execute that. I don't think we're prepared to call a bottom, but I do think that we are closing in on one given the strong performance of our optimization program.
Michael
Thank you very much for that. And I hope I didn't mean to sound like the revenue guy is not strong here. I just wanted to make sure I understood the puts and takes to the full year. And just one more, one more, if I could, I think the last time we received an update as far as incremental op-eds, and I'm thinking about that, that 45 to 55 million that we're talking to is as commercial activity normalizes, right? For the, I guess backwards looking here, but for fiscal 22, I think we might have been expecting call it 9 to 12 million based on the most recent data point we had. I just wanted to see how the year ended up finishing up versus that 9 to 12 million, I guess, guideposts that we had previously had when thinking through the Q4 upside.
Brian
Yeah, I think what we talked about it, we said in the end fiscal 22 came out broadly in line with our fiscal 21 spending, and we had expected to spend much more in fiscal 22. on the sort of, you know, I'll call them COVID-related expenses, for lack of a better phrase. And just given the, you know, environment and backdrop, we did not see as much activity there.
Michael
Makes a ton of sense. Thank you very much for getting me on, guys. I really do appreciate it.
Selena
Thanks, Mike.
Michael
No problem.
Operator
Thank you, Mike. That concludes the Q&A session. I'll pass the conference back to MongoDB CEO, David Echeria, for additional remarks.
Selena
Thanks, Alina. I think it's fair to say that we had an excellent quarter. We're seeing to see strong momentum. We believe that we're solving fundamental problems and addressing fundamental problems that developers have, and the value of our platform offering one unified and integrated way to solve and address many use cases is really resonating in the marketplace. And that's evident in our continued strong customer growth. So with that, I want to thank everyone for joining us today, and we'll talk to you soon. Take care. Bye-bye.
Operator
That concludes the MongoDB fourth quarter FOI 2022 earnings call. Thank you for your participation. You may now disconnect your line.
Disclaimer