Q4 2020 Earnings Call
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Thursday Thursday
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I'm good day and welcome to the mongodb fourth-quarter and full-year fiscal 2020 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist. Am I pressing the star key followed by zero after today's presentation. There will be an opportunity to ask you questions. Please limit yourself to one question and one follow-up so we may get to all clubs on today's call. Please note. This event is being recorded. I would now like to turn the conference over to mister Bryant and you from icr please. Go ahead.
Thank you Shawn. Good afternoon. And thank you for joining us today. It's a review mongodb s fourth-quarter and full-year fiscal 2020 Financial results, which we announced in our press release issued after the close of market today Jordan a call today or Dave in a chariot president and CEO mongodb and Michael Gordon. Mongodb c o l m c f l during this call. We we make statements related to our thoughts that are forward-looking under Federal Securities laws the same if you made pursuant to the safe harbor provisions of the private Securities litigation Reform Act of 1995 including statements related to our financial guy took the first fiscal quarter and full-year fiscal twenty Twenty-One, the anticipated impact of the Corona virus disease or coded nineteen Outbreak on our future operating and financial performance the impact of S6 Revenue timing and EM lab on our future results of operations are Market opportunity and Prospects increase our market share of the global database software Market,
You believe our data platform strategy.
All ready in about supposed to drive the same long-term growth the opportunity created by and scalability of our go-to-market and growth strategies our expectations regarding the impacts of an opportunity presented by the shift to the club the potential advantage of timing and like. A success of our new products product enhancements and plant Integrations such as realm Stitch and the anticipated impact of Atlas sales expansion on our gross margins and other Financial results. The words anticipate continued estimate expect intend will and similar expressions are intended to identify forward-looking statements or similar indications of future expectations, these statements reflect our views only as of today and should not be construed as representing. Our views isn't any subsequent date We've Got A Plan update least damage except as required by law. These statements are subject to a variety of risks and uncertainties that cause actual results to differ materially from expectations.
For discussion of risk to other important factors that can affect our actual results. Please refer to those contained in a report on form 10-q filed with the SEC on December 10th of 2019 and then subsequent reports that we file with the SEC from time to time including the inner report on form 10-K that we intend to file in the near-term these documents are available in the investor relations section of our website at ww.w. TV replay. This call will also be available there for a limited time initially non-gaap Financial managers will be discussing this conference call. Please refer to the table at least the investor relations portion of our website for a Reconciliation of these measures to the most directly comparable gaap Financial measure.
It's not like to turn the call over to Dave.
Thank you, Brian. And thank you to everyone for joining us today. Let me start off by saying that we live in a time of unprecedented circumstances the global spread of the covin 19 virus has created an extreme Health crisis and resulted in the disruption of the lives of billions of people. The first priority for mongodb is a safety and well-being of our employees and our customers and we have been managing the business to that page. Michael will speak in more detail on how we expect this crisis to impact our financial performance our job as a management team is to keep steady amidst the turbulence while not losing sight of the long-term opportunity ahead of us.
Let me now turn to our fourth-quarter results manga manga be delivered strong results capping off an outstanding year for the company or technology Investments have further strengthened. What was already in a modern data platform our investments in sales and marketing have expanded our Market reach to make mommy be available to all customers of all sizes around the world. I am proud of the performer of our team and fiscal 2020 and believe we are well on our way to establishing mongodb as one of the primary winners as the database Market moves to the cloud.
Looking quickly at a fourth-quarter results in the fourth quarter. We generated revenue of 123.5 million of 44% year-over-year increased and above the high end of our guidance for the the year fiscal 2020. We generated four hundred twenty one point seven million in revenues a 58% year-over-year increase in growth. We grew subscription Revenue 46% off here in the fourth quarter and 61% for the full-year atlas Revenue grew over 80% year-over-year in the fourth quarter and now represents 41% of Revenue and we had another quarter of customer growth any of the quarter with over 17,000 customers.
We Believe
Fourth-quarter and full-year fiscal 2020 results demonstrate that we have established ourselves as the modern data platform of choice. We continue to be pleased and encouraged by the breadth of adoption of our platform in terms of use cases industry verticals and geographies. Our sales force is executing at a high level and we saw meaningful activity increases in both our Enterprise and corporate channels. We also continue to be very pleased with the birth of our self serve business as evidenced by a record number of custom editions in Q4 and we continue to expand our self-serve operations to become a world class product growth engine.
Entering physical 20-21 we are pleased with our achievements and the two and half years since becoming a public company and we are more confident than ever about our long-term prospects. We are pursuing one of the largest and fastest growing markets and all the software projects the database Market to be $71 billion and twenty20 growing to 97 billion and 2023. We have less than 1% share of the global market and a long runway for growth ahead of us.
As we look ahead we're keenly aware of the opportunity in front of us. We strongly believe that the database Market is at the very beginning of a profound platform shift towards the cloud over the next decade as the fax you an existing workloads migrated to the cloud customers will be forced to examine and modernize their data architectures technology history teaches us that in times of such platform dislocation new company that has generation of leaders to this end our belief is that the best way to maximize long-term shareholder value is to make key Investments that will position us as one of those leaders.
I want to spend more time today to explain her a platform strategy and the associate R&D Investments are designed to drive or long-term growth to start. Let me provide some historical context. There have been to offer insights that are driven our business to dates the first key inside that led to the founding of the company was that the inflexibility and lack of scalability of relational databases were major impediments to organizations that desire to build modern apps quickly with performance and scale among the abuse document model and distributed data architecture address. These problems resulting in mongodb is incredible popularity with develop where the second key inside was that the process of building modern apps was dramatically increasing the burden of undifferentiated work on development teams, as apps Ki proliferating and apps themselves get decomposed into smaller distributed components due to the use of microservices containers and other related Technologies the scope and complexity of managing apps and infrastructure grows exponentially wage.
Undifferentiated work ends up crowding out the resources needed to invest in enhancing the application and ultimately the business as a result in 2012. We started building our tools to automate the provisioning management and Thursday of our database the logical progression was the introduction of Atlas and 2016 are fully managed databases service offering that enabled organizations to avoid the hassle of managing distributed databases. All together today atlus continues to be a huge success for us growing over 80% year-over-year representing 41% of our Revenue in Q4 and is at a $200 annualized Revenue run. Great. Thanks to these two insights. We are the only modern database that is considered to be a true general-purpose database has been adopted by millions of developers around the world has generated meaningful Commercial Success affording us the opportunity to sustain strong growth rates for years to come.
Our success is enabled.
To acquire over 15,000 Atlas customers in the past 3 and 1/2 years giving us a unique perspective and how we can provide even greater value to customers in the future.
The productivity and economic benefits of the cloud such as real-time provisioning almost unlimited scale and usage-based pricing are at this point. Well known. However, we also see the challenges that the move my cloud has created in the first decade the cloud ecosystem largely involved moving existing technology stacks on to the new infrastructure Paradigm, this Force developers to deal with a fragmented set of apps and infrastructure tied to discrete use cases multiple apis and data spread across many disparate silos developer productivity is impeded as they are unable to CMC leverage dead different needs and these problems will only escalate as customers move more workloads to the cloud this experience led us to a third key inside. The one that is informing our data platform strategy that the way of the future will dramatically expand and their functionality and scope future applications will enable continuous engagement and access to massive amounts of real-time data monkey constituents need users customers.
Partners or suppliers availability of instantaneous operation data along with inside and that data will increasingly Drive business decisions. That means traditional operational workloads will need to incorporate additional functionality such as real-time analytics in addition as data on the edge continues to explode due to the increasing use of mobile and iot apps future applications will require the ability to age synchronized data between the edge and the core finally rather than dealing with a large number of complex interfaces developers will require one unified interface designed to bring together data usage of skill to build these new applications more quickly and efficiently.
We believe mongodb is incredibly well-positioned to benefit from this emerging Trend. We are an operational database which puts us both of the Court every application. We support and makes us a source of its real-time mystical data. We believe developers will credibly expect their core operational database to extend into a full data platform that provides the additional capabilities. They need to expand an application scope and functionality.
Many of the exciting product announcements we have made of the past year or demonstrate how we are already evolving our data platform for applications with greater functionality and scope.
Atlas date of Lake brings transactional and political use cases together by allowing customers to query both operational and archived data.
The search brings the previously separate search functionality into the operational database finally the integration of Realm and Stitch will address the issue of edge Decor data synchronization these and other products will leverage are powerful API to access large amounts of data easily to provide an unparalleled developer experience.
We know that every Enterprises future will be increasingly powered by sulfur and then for the future will leverage data and even more sophisticated ways consequently. We're confident these Investments designer dress even more complex. Use cases will further extend our position as a leading modern data platform and put us in an even better position to deliver a strong long-term growth.
no, I'd like to spend a
Few minutes reviewing some customer wins and interesting use-cases from the fourth quarter Square Enix produces a Tomb Raider Dragon Quest and Final Fantasy video games chose mama-to-be to support office suite of asynchronous multiplayer features across a wide range of video games the company continues to invest in mongodb Atlas for game production to provide the scalability needed for its growing Global player base wage Alice allow Square Enix to scale elastically to meet the demands of the game regardless of the number of concurrent players.
Sofra a leading iot platform how long the shift to a truly connected World chose mama-to-be Enterprise Advanced as operational data store as data the key to driving actual sites into an IT enabled business among the TV plays a critical role in helping software AG customers transform connected device data into immediate value in a scalable and reliable manner.
Uncork a no code application platform that helps large Enterprises Health Care Providers and government agencies build complex custom software faster selected mongodb Atlas as primary Cloud database platform a 2017 the company expanded its used among the last quarter because they wanted our data platform provider that was Cloud agnostic highly scalable Enterprise security ready and trusted by their 14500 customer location of where data infrastructure company radar Labs chose mama-to-be Atlas to Powers geo-location platform, which currently runs on more than 25 million devices around the globe processing billions of location data points each week and an early member of my mom would it be for startups program the company continues to make big bets among would be to help scale the delivery of its Rich geo-location services. So, it's developers can focus on the company's goal of making every app on every device contacts fully aware.
In summary, we are encouraged by attraction as evidenced by a strong Q4 results this success in a track record of execution give us confidence to aggressively pursue our long-term opportunity. We believe the market is down in ways that will increasing play to our core strengths and further establish mongodb as the modern data platform of choice for Developers.
Before I turn over the call to Michael I want to take this opportunity to personally thank our co founder and CTO Elliot Horowitz for his vision and Technical leadership for over almost thirteen years. I talk today about the foundational inside the Elliot and the co-founders had many namely that Legacy database technology was not designed to address the needs of modern applications out of that inside came to document model a query language and the tremendous popularity among the be in the developer Community. Thanks to Elliott's vision and Leadership today Mom is the world's most popular modern database path platform. It will cross half a billion Revenue off your has over ninety million downloads and over 17,000 customers all around the world the company and in particular the entry team assembled by Elliott has never been in better shape and there is strong and deep wage. There's a strong and deep leadership team ready to take the Baton to further vision of improving developers lives by making it's telling me easy to work with data. We're excited at Elliot will continue to stay involved and become a member.
After leaving his full-time role with that. Let me turn the call over to Michael to review our financial results.
Our outlook for the first quarter and full fiscal year 2021 first, I'll start with our fourth-quarter results total revenue in the quarter was 123.5 million dollars up 43% year-over-year subscription revenue is 117.8 million dollars up 46% year-over-year and Professional Services. Revenue was five point seven million dollars up 17% year-over-year are strong performance in the quarter benefited from broad-based strength on both Atlas and Enterprise Advanced. It is worth noting that one large multi-year Enterprise Advance deal with a fortune fifty customer drove 3 and 1/2 million dollars of our outperformance as a reminder do Revenue recognition mechanics associated with ASC 606. We generally recognized the term license revenue for all the contractors upfront not just the initial years.
The rapid adoption of Atlas continues to be the largest contributor to our growth Atlas Grill over 80% in the quarter and now represents 41% of total revenue compared to 32% in the fourth quarter of fiscal 2019 and 40% last quarter Atlas continues to benefit from strength in both our self service and direct sales channels while experiencing a growth headwind from the history and Lab customer base, which we anniversary in the fourth quarter during the fourth quarter. We grew our customer base by over 1,100 customers sequentially bring our total customer account to over 17,000 month, which is up from over 13,400 in the year ago period of our total customer count over 2000 our direct sales customers which Compares 2 / 1750 in the year ago. The growth our total customer account is being driven in large part by Atlas which had over fifteen thousand four hundred customers at the end of the quarter compared to over $11,400 in a year ago. The South
So growth in total customers includes growth and our Enterprise Advanced customers as well as new Outlets customers. It is important to keep in mind that the growth in our Atlas customer base reflects new customers to Mom going to be home in addition to existing customers adding incremental Atlas workloads. We also continued see how the expansion from our customers which is a key component of our growth strategy. Arnett are expansion rate in the fourth quarter of the above a hundred and twenty percent. We ended the quarter with 751 customers is at least a hundred thousand dollars an hour and annualized Mr. Which is up from $557 in a year ago. We also end of the year with 62 customers with least 1 million dollars in an annualized MR which is up from thirty nine in the year ago. Moving down the p&l. I'll be discussing our results on an ongoing basis unless otherwise noted please note that we have provided additional disclosures in our earnings release showing the non-gaap reconciliation of the individual effects line items to help you with your understanding and model wage.
Of the business gross profit in the fourth quarter was 91.2 million dollars representing a gross margin of 74% compared to 72% last quarter and 71% in the year ago. Off course margin benefited from the large multi-year license Revenue associated with the Fortune 50 customer we mentioned earlier overall. We are pleased with our gross margin performance which reflects greater efficiency in a scale in our Atlas business. However, we continue to expect it will see some modest reduction in overall gross. Margin as Atlas continues to become a bigger portion of our revenue aramco losses twelve million dollars or negative 10% operating margin for the fourth quarter compared to a negative 11% Margin in the year ago. Net loss in the fourth quarter was 14 and 1/2 million dollars or $0.25 a share wage based on 56.9 million weighted average shares outstanding this compares to a loss of $0.17 per share on fifty three point eight million shares outstanding in the year ago.
Turning to the balance sheet and cash flow.
We ended the quarter with $987 million dollars in cash cash equivalents short-term Investments and restricted cash operating cash flow in the fourth quarter was -8.6 million dollars month after taking into consideration approximately 2.3 million dollars in capital expenditures and principal repayments of Finance lease liabilities free cash flow was -10.9 million dollars in the quarter disconnect the negative free cash flow of twelve point six million dollars in the fourth quarter of fiscal 2019, and now like to turn to our outlook for the first quarter and full-year fiscal 2021.
First our guidance includes our current best estimate for the anticipated impact of Cove in nineteen on a results. Obviously, the situation is evolving rapidly, but we felt that it was important to attempt to incorporate some impact despite all of the uncertainty for the first quarter. We expect Revenue to be in the range of 119 million dollars to $121. We expect non-gaap loss from operations to be forty fifty million dollars to twelve million dollars and non-gaap net loss per share to be in the range of $0.25 to $0.22 based on 57.5 million weighted average shares outstanding for the full fiscal year 2021. We expect revenues in the range of $510 to $530 for the full fiscal year 2021. We expect non-gaap Lobster of operations to be seven eight million dollars to $68 and non-gaap net loss per share to be in the range of a dollar forty two a dollar twenty three per share based on 57.9 million weighted average shares outstanding job.
Let me provide some additional color to our guidance by discussing and attempting to quantify the potential impact of the Cove in nineteen virus on our business like many Global organizations. We believe our operations will likely be impacted by the slow down and economic activity that is occurring globally our fiscal 21 planning was completed before the recent acceleration the spread of the virus, but the current and rapidly evolving realities in the ground led us to decide to update our current forecast. Our current assumption is the disruption caused by koven 19 will impact q1 revenues by approximately one to two million dollars and fiscal 21 revenues by approximately 15 to 25 million dollars due to anticipated weaker bookings in the first half of the year to be clear at this point. We are seeing minimal impact across our sales channels around the world including closing transaction the first quarter even in the countries hardest hit by could have a nineteen however as a management team, we believe that it is now prudent and responsible to incorporate that into our Outlook that we expect wage.
Be a much more challenging economic environment in the coming weeks and months. Our guidance assumes a more normalized business environment in the second half of the Year. Obviously the situation regarding Kovac 19 is changing rapidly off and we will continue to evaluate its potential impact on our business with respect to our overall investment Cadence. We had made the decision before the code 19 outbreak that we want to continue investing in the business aggressively off to pursue our Market opportunity. We are funding high priority projects across the organization including first growing our sales capacity globally which Still Remains in its early stages from that perspective for context. Even the United States. We still did not have coverage in roughly a quarter of the NFL cities and only have two or fewer reps in half of the NFL cities given our strong history productivity. We believe that the primary governor and productive capacity should be organizational capacity.
Second continue investing in our marketing organization particularly our product LED growth team in order to continue to drive ourselves.
Was that was business and overall Atlas adoption finally as Dave describing his remarks continuing with robust R&D Investments, but deliver on our data platform vision and to further enhance our core products given the attractive long-term opportunity we have in front of us. We think it continues to be important and appropriate to keep investing in these high return areas to summarize among a excellent fourth-quarter results are focused on executing on our product roadmap and expanding our go-to-market reach is driving high levels of growth at scale the steps we've taken to establish mongodb is the modern general-purpose database platform of choice positions us for continued long-term success while we expect to see an impact to our business from the coven nineteen situation in the short-term. We remain committed to strong execution in order to capture a long-term Market opportunity with that. We'd like to open up the questions operator.
Thank you. We will now begin the question-and-answer session to ask you a question. You may press * then 1 on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press * then two as a reminder. Please limit yourself to one question and one follow-up to ensure that we get all questions in. The queue off. First question will come from Sunday singing with a Morgan Stanley, please. Go ahead.
Hi, thank you for taking the questions and congrats the team on another strong year really great to see on the strong results coming out of Q4 and and Michael thank you for framing the the guidance on that was very helpful. I was wondering if you could just sort of take us behind the curtains a little bit in terms of how you sort of came up with the with the one or two million impact and Q on the 15 to 25 million for the full year specifically. How do you expect this to potentially impact a business? Is it going to be more on the sales sold side part of the business the self-serve or maybe on the Professional Services wage and how and to what extent do you see assume like lower clothes rates any sort of color that you could give us to contextualize the guidance would would be helpful.
Yeah, great. Thank you for the question. You're happy to provide the guidance. Obviously. It's a rapidly evolving situation. So it's hard to you know, capture it all with a point estimate. But what we tried to do is we tried to look at the life and say what are some potential outcomes that might be appropriate to incorporate into our guidance. And so fundamentally. What we did is we said let's imagine that in the first half of the year. We see a slow down and you know overall economic activity in the way that would flow through is through in sales activity and bookings activity. I think that's specifically for the direct sales side of of the business. I think it is less likely that you'll see that on the self-service side. And so what we tried to do is we tried to you know, look at the regions that were most affected and runs and sensitivity analysis for a month but you know different scenarios might look like we have assumed as I mentioned in the prepared remarks, we have assumed a normalisation of activity in the second half of the year. So obviously if things persist or or prolonged bath
we of course would have to re-evaluate that approach, but fundamentally, I think you know, we're
Exceptionally, well, you know positioned in the market overall. We haven't seen any meaningful impact in the business to date, you know, we have the benefit of having a wide diversification off customers and geographies and industries that we serve. There's certainly some industries that are harder hit than other industries that are actually benefiting and that their versus portfolio is certainly, you know, working working for us, but we need to try and do our best to sort of call it out recognizing how the situation continues to evolve.
Thank you, Michael. That was that was super clear. And it took my follow-up maybe for for Dave one of the things I've been trying to think through is self hosted Enterprise Advanced package. And what's sort of the outlook for that and clearly this quarter with that large Fortune fifty deal seems to underscore that that this is going to continue to be a growth catalog even as Apple's continue to post sort of leading growth in in the company. Can you sort of give us your view on sort of the positioning and the growth opportunity within and you said going forward? Yes. Sure, Sanji, you know, we believe that, you know, the growth of the year will continue to be strong why because there are many customers who want to suck on their own in terms of you know, maintaining managing their own database infrastructure either because they have a lot of sunk costs or there's regulatory requirements that require them.
To run EA on their premises or in in the in certain data centers that they're they're allowed to do business. And so one of our value propositions a value proposition to a customer's is the ability to run and use mongodb anywhere and so we don't force fit every customer to consume it as a service and Atlas And so, you know and customers like that choice and we have many customers who both procure as well as continue to invest in Atlas.
Appreciate it. Thank you.
Our next question will come from Lindsay with Barclays, please go ahead congrats on the quarter but also congrats for trying to kind of put an impact on the Corvette situation with the business world done on that one the two quick questions. So first one is can you talk a little bit about our Atlas the growth this quarter if I look organic Kim. A little bit but I do seem to remember that life sure. We had not just m Le but I think there were some other factors in the fourth quarter. Could you just remind us because we're trying to understand like the underlying growth run rate a little bit better and I've follow up is like what's the trigger point that you guys are looking for in terms of like, you know changing in terms of maybe the investment Cadence as this kind of situation unfolds around over 19,000.
Yeah, sure. So it was another strong quarter thing for the remote is another strong quarter for Atlas to your point. I think the two things that are worth.
Hang out our it was the first quarter where we had em lab in the base and we have talked about the uh, you know, the the different growth, you know profile those cohorts are Contracting as long, you know, indicated and called out that the time of the acquisition and also your corrected in fiscal 19th fourth quarter. We did call that specific over consumption that was not seasonally affected but was specifically related to the life cycle of of a couple of large apps that were in deployment. And so I think when you start to neutralize or normalize for both of those it was, you know, another very strong, you know Outlets quarter. So I think overall we feel quite good about that and then in terms of the second question in terms of investment, I think maybe just try and take a step back from an overall perspective. We as a management team have a great long-term orientation were very very early on in the stages of trying to capitalize on our opportunity. We will continue to you know, invest as we see, you know good rates of return.
On the Investments that we're making we see that in both the R&D side as well as in the sales and marketing side certainly if there were to be macroeconomic factors that would change or other size that sort of eroded or or degraded does investment opportunities. We would modulate the levels of investment, you know appropriately and we've done that, you know throughout, you know, the last many several of years and years. So we'll just for the continue to do that as we think about, you know, our our role is sort of balancing, you know, maximizing the long-term potential, but also making sure that it's not a growth at all costs of mindset, but instead sort of being a life of capital. Thank you.
Our next question will come from Heather Bellini with Goldman Sachs, please go ahead.
Great. Thank you so much. And and hopefully all of your families are doing well. So wish we should you guys the best through this had a couple of questions the first thank you Dave the first on the Direct business. And again, thank you is everyone said for for trying to clarify or quantify something that I know is probably impossible to do right now, but is there anything you could share with us about the linearity over a typical quarter, you know, like what typically you know in in on average how much comes in and month one versus months three months, you know, and I'm thinking on your Enterprise business where you typically have deferred associated with that just so we can think about how that how the the the sales run through. Not that not the revenue cuz I know that's regrettable wage then also just if you could share with us Michael just Atlas you said, you know less likely to be impacted if if there anything you could share with us about what the profile is of an atlas customer.
May make them less susceptible to what's going on from a macro standpoint. Thank you very much. Sure. So I'll maybe I'll take the first one. So I've been in Enterprise software now for almost twenty years. And the lesson I've learned is that customers are trained to obviously, you know, try and get as much leverage as possible and in every business I've been involved with you know, the quarters do tend to be back and load and obviously there's nothing different about Mom. I would tell you that one of the things that really differentiates us is that we have a very very rigorous culture of qualification and our sales process off. So, you know the forecast that roll up to Michael and me, you know, we have a lot of confidence in based on the rigor that the sales team puts in in terms of forecasting the business. So I am so so our confidence in the forecast is a measure of the quality the quality of the qualification process and and as you know for two and a half years of the public company, we've done a really good job.
Michael you want to handle the second question? Yeah, I think just on the second question just to sort of make sure there's not any confusion.
My comments about the likely impact on the business at least from what we hypothesize. Yeah, it's self-serve obviously when the atlas or they're sort of the direct sales side of things, but when you think about some of the potential impacts on a direct sales model of not being able to go to customer sites people being, you know, quarantined or cities being, you know, a lock down that shouldn't really affect the self service side of the business as much obviously. It's not immune to macroeconomic outcomes, but some of the sort of specific things that were starting to see roll out across the geographies much more potential to directly affect to affect the direct sales side of it.
Okay, great. Thank you very much.
Our next question will come from Brad with stateful, please go ahead great. Thanks very much. So you just alluded to your obviously Decades of experience in software and the fact that you lived through so eight no nine any lessons from that experience that you think are applicable to the situation. We're in now and and how you might or how you sort of position the business for the organization Banks. Yes. So well, I'm old enough to Brad to tell you that I also lived through two thousand two thousand one. So I was a public company then and I was a public company officer in 2008/2009. And so I would tell you that, you know, we we believe that while sentiment can change quickly the underlying Trends don't change fast so deals and progression typically still happen. It's maybe deals Who start early in the sales cycle that may have and end up having, you know more more wage.
Approvals required and so sales Cycles may start lengthening as we said in the prepared remarks. We see minimal impact right now, but Prudence dictated that based on our judgment experience. I haven't seen this before that, you know, some impact given the macroeconomic environment was warranted.
Great. Thank you very much.
Our next question will come from Brent bracelin with Piper Sandler, please go ahead. Thank you and good afternoon. I guess Dave. I wanted to kind of go back to that law business and and and really try to understand, you know, how economically sensitive that business is, obviously in in in the down to our databases weren't usage-based Cloud models. And so how are you thinking about just the atlas business of their unique characteristics of of cloud data bases and and modern applications where maybe there won't be a lot of money but the the new business the new address potential business could be at risk. Anyway, you could kind of frame Atlas given again. It is new. We really didn't have usage-based transactional red streams in the last downturn and any insight specifically to hire thinking about the atlas impact potentially would be super helpful and then one quick follow-up for Michael if I could sure so
I would just tell you the address.
Business is consistent with the data business as a whole and that database software is incredibly sticky. Obviously, the database is the heart of every software application and people are not going to shut down existing applications or existing service. This is interesting websites because they're still have to conduct business and so on top of that with Atlas, you know, they've essentially handed off the ongoing management of the their database infrastructure to us. So in times when you know people may want to do a little bit of belt-tightening it's very unlikely that they'll decide to bring those workloads back in home. In fact, they were like the variable cost model, you know associated with with Atlas on top of that. It's most workloads. We see have a pretty predictable usage patterns. It's only a few workloads, you know, like games or some, you know, very seasonal workloads related to say, you know, the Q4, you know retail environment et cetera or some eCommerce.
Pharmacy around Mother's Day Etc. And so those kinds of events. Do you see some spike in usage? So in fact, we are seeing spikes in usage and with customers who are in the crypto-currency business Works bikes and usage with gaming companies. Obviously, there's a lot of people home playing online games. We're seeing a lot of spikes in usage in terms of telcos and cable companies and their use is growing up. So I would say in general though, the the the usage patterns tend to be fairly predictable and and on top of that with the fact that people have handed off the management of their database to us through outlets off those those work clothes tend to be very very sticky.
Super helpful. This is a follow-up for for Michael. You did talk about it a large with Fortune 50 customer. Could you just give us a little more color? Was that a month kind of database replacement opportunity was a tied to kind of new application build any any color they're on you know, why you won the deal how competitive it was and and off and kind of the proof points that the tip of the scale in your favor there.
Yeah, so we would normally like over index on talking about anyone customer, but just given the the magnitude and the fact it was a long-term deal that it impacted the numbers. We just wanted to put that in context a long-term, you know relationship with this customer, but this is a a meaningful expansion and effectively where the the platform going forward for non-relational workloads. And you know, typically I would see is that there would be a mix of both new applications as well as migrations in in scenarios like that. Okay. Great. Thank you.
Our next question will come from Tyler Radtke with City, please go ahead.
Hey, thanks very much for taking my question. I wanted to ask a couple on the million dollar customers, which I think grew almost 60% year-over-year month. I wonder if you could talk a little bit about some of the comedy use cases. You're seeing, you know, when you get to that type of a deal. Are you seeing more Legacy replacement? And then if you could give us a sense or how much of kind of those incremental million dollar customers or are coming from Atlas in and just how to think about, you know million dollar customers on on Atlas going forward. Thank you. Yeah. Yeah just to be clear or a million dollar account went from 39 to 62 just for everyone's benefit and it's incredibly Diversified set of customers. I would not say there's anyone predictable sort of use cases and even in those particular customers, you know, we we have a land expand business model. So invariably those customers are deploying mongodb for more and more applications and and and dog
Types of workloads, it's not one.
Per se that's growing very very quickly. And so so we're very very encouraged by and we've been talking about this, you know, ever since we've been a public company that our business is Al and expand off and the durability of our business is that it's not tied to any one specific app, but that over time people end up standardizing among and as they they get more and more value as long as you be they start using us for more and more faith workloads. So I wouldn't say there's any one particular use case or any common theme across this million dollar counts accept the fact that it's most of them are are classical and expand accounts.
And and do you have a sense just on the second part of the question around how much of those customers are on Atlas vs e a and maybe just what you'd expect that to look like going forward, That's also a a frankly a very healthy mix of both. So there's no one any concentration of both either customers or Atlas customers. And so we've seen you know, customer very very aggressively. We were also seeing a lot of other customers invest aggressively in Atlas and again because of of an early question, frankly we have cut off both. So you you get the you know Best of Both Worlds some work clothes. They want to maintain in house in other workloads. They think it make more sense to use a fully-managed service like Atlas.
Thank you.
As a reminder, if you would like to ask you a question, please press star then what our next question will come from Jack Andrews with Needham, please go ahead good afternoon. And thanks for taking my question. I'm wondering if you'd just provide an update to Trends. You're seeing around a legacy migrations, especially since you announced some new Partnerships that look to accelerate that trend.
Yes, so we are actually seeing a lot of interest of customers are trying to re platform of Legacy database infrastructure. You know, one of the big challenges for people is that they ultimately, you know have to not just move the work the data but then potentially have to rewrite the application and so we've talked in the past about using RSI Partners in life. And now we announced some other Partnerships where we offering customers migration tool kits through our partners to frankly reduce the amount of work and heavy lifting required to migrate off relational workloads to mongodb. And so the degree to which we can make that easier and easier for customers to do so and reduce the friction to do so, I think will only accelerate amount of migrations we see from Legacy were closed. Okay. Thanks and then just as a quick follow-up, could you touch on your auto scaling capability and how that may be impacting your own business and whether that's a source of margin log
For you over time.
One of the classic challenges is doing capacity planning with the database because you want to ensure that you offer a good service and good predictable performance to your end users. And so with auto scaling we basically take the afterlife level is that the performance demands of your application grow the database scales elastically. And so so this gives customers Peace of Mind in terms of not have to worry about, you know, having a reputation of performance for their you know, users customers and partners with the ability to Auto scale. And and typically we find that this is also a win-win for customers because they don't have a great day for some fixed utilization costs when a fixed cost when the utilization drops and so it's a win-win for both customers and and and for us and off that means handling more upscaling and also sometimes a little bit downscaling but in general it's a win-win and it allows us to build a really healthy long-term relationship with customers.
Right. Thanks and congratulations on the results. Thank you.
Our next question will come from Patrick Walravens with JMP Securities, please go ahead. Oh great and let me add my congratulations to trying to estimate wage in nineteen impact. I think you were the first ones to do it. Thank you. Yeah, so Dave the what sorts of tools, you know, and I'll give you an example in a second. But what sorts of time do you have to manage the business maybe a little differently if if we are heading into a real economic slowdown and as an example, we hosted a call to Salesforce this morning talked about how in the last downturn, you know, one of the things that benioff was really focused on it was making sure they maintain the customer relationship even if it meant so, you know, uh, keep the contract even if it means it's a lower pricing or significantly lower contract value the theory being that when you come out the other side, it's easier to expand an existing customer than to sign up again. So just in any kind of tools like that that you
Guys have loved to hear that they might be. Yeah, so I would say there's a couple things that we do one is we put a lot of rigor as I mentioned to an early question in our forecasting package because to us a revenue forecast is by definition also an expense forecast. And so the more you know Fidelity we have in our forecasts the better sense we have in terms of how to resize the capacity of the business relative that forecast and so we put an enormous amount of rigor on the on our forecasting process and we feel you know, really good about the quality of the forecast that we get from our sales force. Which so that's that's Point. Number one point number two is we obviously spend invest a lot of time with customers and with Atlas we get even higher levels of data and and instrumentation and how customers are using our platform. And so that gives us a sense about like, you know, they're using
Yes, I mean so auto-scaling is basically enabling customers to not worry. I mean the whole premise for for building mongodb is to really get the database out of the way and
Really are they are they running into any issues?
Have they configured their their database correctly either seeing any performance degradation etcetera. And you know again the database is the heart of every application and just so you know people care very quickly if there's any issues and so so we we spend a lot of time focusing on making sure that they're getting a lot of satisfaction and Delight from from both BB and from Atlas and so I would say in general, you know, we don't see today any real impact on the business but we do, you know again, I think that there will be some impact which is why we gave the guy that we did and we're obviously going to monitor this very very carefully both in terms of our pipeline our sales pipeline. We also tracking object e r r self-service final that funnel was also very very strong. And but if you see any changes we can respond very very quickly.
Great. Thank you.
Our next question will come from Richard Davis with canaccord, please. Go ahead.
Thanks, thinking, you know in a tough environment one of the pitches if I was a Salesman for you guys is that could offer kind of a hard dollar Roi and I think you can pretty much offered that they might just make sure I'm not mistaken. But can I walk in and go listen, you know, you can get rid of your old systems and save money. It's not like one of these companies to say. Oh we're going to save every 1,000. It's a day like I don't even know what that means. Is that a fair assessment of the business model there. Thanks. Oh absolutely, one of the compelling benefits of mongodb and atlases an atlas in the fact that you don't have to manage your databases. Just a total cost of ownership of Mama to be so much lower than you know, Legacy technology.
Got it. And then the second quick follow-up. Would you guys go up against other cuz you know, they're a bunch of other nosql database companies, you know, I'll take that phrase but Thursday we use it. Is it is it oftentimes? Is it performance benchmarking or is it is this a business where you know developer mind share and market share kind of matters. I mean, obviously if I'm used to the change from one company to another I'll take your system with me or recommend it. Is it is it can you tell which one is more important or is it may have you reached a Tipping Point to one side of the other? Thanks. Yeah, I would tell you that. It's much more the latter than the former, you know, there's a you know in in in databases historically there's been a lot of benchmarks used but a lot of the benchmarks are jerry-rigged with certain age and test that make one vendor look better than another vendor and and customers and and developers are particularly become wise to that. What it is is really all about making a developer's life easier and one of the real birth
Is and the reason why we are the most popular modern database in the world is that we can get customers and developers up and running very very quickly the document model query language.
The fact that our database scales very very easily the fact that they can consume it as a service the fact that they can you know use it for almost every any particular case because it was true general-purpose platform not submit solution makes us a very very compelling solution which is why our business has grown so quickly and it's all developer LED and we're investing a lot in the business office. We made a lot of investments in expanding our developer relations capabilities to engage with our developers and given everyone's now working virtually, you know, we're going to see do a lot more online seminars and education to age, you know, get developers up to speed on all the latest features and benefits of mung. And on top of that, you know, we continue to you know, invest a lot in our self serve business where developers developers, you know to you know, sitting in a garage or developers from a large fortune five hundred organization can engage with mongodb and and get going very very quickly.
Thank you so much. Thank you.
Our next question will come from with d a Davidson please go ahead. Hey guys. Thanks so much for taking my questions two quick ones and let me check on my my car off and have been appreciated the fact that you're trying to put a natural dollar figure around the impact of code coding or guidance. I think it's it's a great lesson. That's a lot of other enterprise software companies that might be able to follow your lead on them first. Just wanted to maybe understand what the mongodb world turning virtual this year. You know, how should we thinking about the potential impact be that on you Brookings or on a lead generation or or anything to that effect? And then for Dave with Elliot stepping down, you know, obviously, you know brought brought a lot of kind of vision and great that he's staying on it off a little bit of an advisory role. Just what would you be looking for in in Elias replacement a CTO if you are in fact looking for lunch, thanks. Sure. So let me take both questions on the first question.
On world where I want to be clear world was never designed to be a pipeline acceleration conference. It was really designed to be an education conference for our community. And in fact, the more meaty and Technical and ended up the contents better. And so obviously those big Investments by organization, especially on the engineers who actually building, you know, those are our capabilities, you know, that's who the developers want to spend time with they want to you know, meet the people who are writing the code ask technical, you know deep technical questions spend time with the experts. So it was never really a pipeline acceleration conference obviously around that conference. We may arrange meetings with more senior-level stakeholders. But if you look at the content from prior years, it was really really focused on serving the needs of the technical community among so we don't see any potential impact on making mongodb world of virtual conference on the job.
And kindly frankly now that it's virtually I should mention where in fact reimagining the conference and frankly.
Trying to maybe since its virtual, you know appealing it's being able to reach many more developers at one time because we only used to broadcast the Keynotes. I had ten thousand fifteen people listen to the Keynotes, but the individual conference were not broadcast or video streamed and so, you know, we reimagine the conference so that way more people can have access and hear the latest and greatest about mamidi be with regards to Elliot. Obviously, you know, we're incredibly grateful for his contributions and his leadership or the last thirteen years. He has really assembled an incredibly strong strong strong team two of his key lieutenants have been you know with the company for more than seven plus years off and and they're stepping up in the bigger role and see here. Our chief product officer was put in place a couple of quarters ago. And so that was also part of the setting up the phone number.
Fishing for this move. And so we really really got a strong deep bench under Elliot. There's no plans to recruit a CTO from the outside at this point and I could be prouder of the team that's here because I feel that we have a massive opportunity front of us and and it work last team to help us get there.
Right, that's really helpful. Thank you.
This concludes have a question and answer session. I would like to turn the conference back over to Dave attached area for any closing remarks.
Well again, I am very grateful for all of you who are able to listen to the conference. Obviously my thoughts and prayers to all of you and those affected by koven. Nineteen. We hope we will get through this quickly an autopsy. We're focused as a business on serving the needs of our customers employees and we'll talk to you at an excellent school. Thank you. Thank you. The conference is now concluded wage attending today's presentation and you may now disconnect.
Yes.
Thursday