MongoDB, Inc.

Good day and thank you for standing by. Welcome to the MongoDB fiscal fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brian Denue from ICR.

Thank you, Josh. Good afternoon, and thank you for joining us today to review MongoDB's fourth quarter fiscal 2023 financial results, which we announced in our press release issued after the close of market today. Joining me on the call today are Dave Itacharia, 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, customer behaviors, our financial guidance, and our planned investments. These statements are subject to a variety of risks and uncertainties, including the results of operations and clients that could 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 risk describing quarterly report on Form 10-Q for the quarter ended October 31st, 2022, followed the SEC on December 8th, 2022. Any forwarding statements made in this call reflect our views only as of today, and we undertake no obligation to update them except as required by law. 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 reconciliation of these measures to their most directly comparable GAAP financial measure. And with that, I'd like to turn the call over to Dave.

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 broader company update. Before I do that, I want to take a moment to acknowledge that today is International Women's Day. And in particular, I want to acknowledge that all the amazing women at MongoDB who make us a very special company. Now, turning to our results, We generated revenue of $361 million, a 36% year-over-year increase, and above the high end of our guidance. Atlas revenue grew 50% year-over-year, representing 65% of revenue. And we had another strong quarter of customer growth, ending the quarter with over 40,800 customers. Overall, we continued to execute well in Q4, despite a challenging macro environment. Before we dive into the quarter, let me remind you of the framework through how we operate the business and analyze our performance. Our principal focus is acquiring workloads, or said another way, new applications, which is the biggest driver of our long-term growth. In our market, it's important to understand that the unit of competition is the workload. Getting both new and existing customers to deploy new workloads in our data platform is our overarching goal. Once a workload has been onboarded, its consumption growth is not something we can meaningfully influence. Some workloads will grow faster than others, depending on the underlying business drivers for their specific application, the macro environment, seasonality, and other factors. While we cannot control the rate of growth of existing workloads, we do know workloads typically grow over time. So as long as we keep acquiring new workloads at a healthy rate, we are well positioned for the long run. With that, let's discuss what we saw in Q4. We had another strong quarter of new business acquisition, adding approximately 500 net new direct sales customers. And we continue to have success with new workloads and existing accounts. Unlike many of our peers, we have not seen the macro environment impact our ability to win new business. We believe this is due to a combination of the mission criticality of our platform, strong ROI, and the excellent job our go-to-market teams have done navigating incremental hurdles and approvals and sales cycles. Turning to Atlas consumption trends, Q4 was below our expectations. In our Q3 call, we told you we got off to a solid start to Q4, and that we had expected to see a usage-driven holiday slowdown in the back half of Q4. This slowdown did happen, but it was more pronounced than we had anticipated, impacting our Q4 results as well as our outlook. Consumption growth in February improved relative to December and January and was broadly in line with the average growth we've seen since the macro slowdown began in Q2 of last year. We continue to believe that recent fluctuations in consumption trends are largely driven by broad-based macroeconomic trends as they're occurring across different geographies, vertical markets, and customer segments. Finally, retention rates remained incredibly strong in Q4, which exemplifies the value customers received from MongoDB. As I look forward into FY24 and beyond, I'm excited by the opt-in I see ahead of us. My enthusiasm ultimately comes from our customers. Our value proposition and product vision clearly resonate given our new business activity, our account of 100,000 plus, and million-plus customers and our own customer conversations. For example, some of our largest and most sophisticated customers plan to meaningfully increase their MongoDB deployments. After working with them for a number of years, two global financial institutions are preparing to deploy hundreds of applications, both new and existing, on Atlas in the coming quarters. It's important to understand that large enterprise customers take a comprehensive and long-term view when deciding to change their operational data platform standards given the scale and complexity of their business. Both customers chose to standardize on MongoDB after a rigorous review of all available choices based on developer preference, the optionality we provide on where they can run their workloads, and their confidence that we can address their demanding requirements both today and tomorrow. To remind everyone, the core drivers for why MongoDB is adopted include, one, customers increasingly find legacy technology limits how quickly they can respond to changing business needs. and recognize that the cost of not addressing this issue now frequently exceeds the near-term friction of making a change. A senior IT executive in the travel industry recently told us that most of their Oracle estate will transition to MongoDB. Two, MongoDB's developer platform enables customers to reduce the complexity and the cost of the technology stack by eliminating point solutions and consolidating workloads onto a single platform. This is especially relevant in the current macro environment where customers are looking to reduce the number of vendors they work with to rationalize their infrastructure and operating costs. Two of Europe's largest retailers are in the process of ripping out a myriad of legacy and niche systems and replacing them with large, mission-critical deployments of Atlas Search and Atlas Device Link. Finally, customers understand that their business strategy is directly expressed through their software applications they develop to build new products and services as well as to run their business. MongoDB's modern platform enables them to increase their pace of innovation to deliver better business performance. At a recent customer advisory board meeting, a gaming industry executive said to his peers, they are standardizing on MongoDB because, simply put, we make it so easy for developers to build great applications. Customer conversations like this and the ongoing strength of our new business performance make us incredibly confident in our long-term opportunity. We will continue to invest appropriately as we believe it will create the most long-term value for the business. At the same time, we recognize we are operating in a different macro environment. This presents us with an opportunity to assess our org structure, systems, and processes to ensure we are effective and efficient as possible. In fiscal 24, we will raise the bar on our performance, enabling us to further capitalize on our long-term opportunity when macroeconomic conditions normalize. To that end, we are making a number of changes this year. We will significantly slow down our overall headcount growth in fiscal 23. We grew headcount by 30%. We expect this number to be in the single digits in FY24. We remain focused in orienting all our go-to-market activities around our North Star new workload acquisition. We continue to drive cross-functional coordination to build the required systems, tools, and compensation structure to acquire workloads more efficiently. We will continue to grow our quota-carrying rep count and, as always, prioritize investments in regions and channels where we see the best returns. We will also reduce investments in some supporting areas. In our product and engineering organizations, we will focus on our key priorities, including enhancing our core database and adding to our search and time series capabilities, as well as planting seeds for future growth areas. In G&A, the focus is investing in systems that can deliver automation, repeatability, and scalability to drive further efficiency improvements. Now, I'd like to spend a few minutes reviewing the adoption trends of MongoDB across our customer base. We have many customers, including companies such as Avalara, Electrolux, Bosch, and Telefonica Tech, who have achieved meaningful cost savings by using MongoDB. Telefonica Tech, a subsidiary of Telefonica SA, spearheads Telefonica Digital Transformation Service in technology and connectivity. They needed a platform with the capacity to outpace the ever-increasing device usage for 30 million IoT devices that run on their managed connectivity platform. They selected MongoDB as their primary database to deliver uninterrupted user service while reducing expenses by 40%. Customers across different industries and geographies, including Cathay Pacific, Iron Mountain, Polaris, and Midland Credit Management are running mission-critical projects on MongoDB Atlas, leveraging the full power of a developer data platform. Iron Mountain turned to MongoDB to support the expansion from providing traditional physical asset storage and shredding solutions into offering an intelligent document processing solution. Iron Mountain needed an agile solution to quickly respond to customer requests, and MongoDB's document model gives them the ability to ingest data quickly with a flexible schema. MongoDB's developer data platform enables Iron Mountain's customers to search through tens of millions of documents with queries coming back in milliseconds. Many customers have migrated from legacy technology or clones of MongoDB, including Amadeus, Penske, and Clear, a company that helps millions of Indian citizens with their tax returns. Penske, one of the world's largest transportation services companies, selected MongoDB Atlas to modernize its customer notification platform that was originally built on relational technology, which was too rigid to provide the rapid, iterative development that Penske required. After migrating to MongoDB Atlas, Penske experienced increased developer productivity, and the team was able to scale seamlessly, resulting in improved platform performance regardless of spikes in traffic and higher overall customer satisfaction. In summary, I'm pleased with our execution in the fourth quarter. We are excited and energized about our long-term prospects. I've lived through a number of bad macro environments in my career, and I remind our team almost daily that these moments offer precious growth opportunities for frontline employees, for first-time managers, senior leaders, and for the entire company. I firmly believe it is in times like these that great companies separate themselves from the pack. We intend to do just that, and we will emerge from the slowdown even better positioned to pursue our goal of building a generational software company. With that, here's Michael.