Q4 2021 MongoDB Inc Earnings Call

Good day and welcome to the Mongo DB fourth quarter fiscal year 2021 earnings call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be and opportunity to ask questions to ask a question you May Press Star then one. Please note that this is.

And is being recorded I would now like to turn the conference over to Brian <unk> from ICR. Please go ahead Sir.

Great. Thank you Paul.

Good afternoon, and thank you for joining us today to review Margaret a b its fourth quarter and a full year of fiscal 2020, one and a financial results, which we announced in our press release issued after the close of a market today.

Joining me on a call today are Dave and a cherry, our president and CEO, a mongo DB and Michael Gordon Margaret a B C. L O N C a CFO.

During this call we will make forward looking statements, including statements related to our market and a future growth opportunities and the benefits of a product platform a competitive landscape our financial guidance, our planned investments and anticipated impact of the COVID-19 pandemic on our business and results of operations as well as on our clients and then a macroeconomic.

And then.

These statements are subject to a variety of risks and uncertainties and cause actual results to differ materially from our expectations.

For a discussion of our T O a restaurant uncertainties that could affect our actual results. Please refer to the risks described in our SEC filings, including our most recent quarterly report on form 10-Q.

Any forward looking statements made on this call reflect our views only as of today and we undertake no obligation to update them.

Additionally, we will discuss non-GAAP financial measures on this conference call. Please.

Please refer to the tables and our earnings release of the Investor Relations portion of our website for a reconciliation of these measures and their most directly comparable GAAP financial measure.

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 company update.

Looking quickly at a fourth quarter financial results, we generated revenue of $171 million, a 38% year over year increase and above the high end of our guidance. We grew subscription revenue, 39% year over year Atlas revenue grew 66% year over year and now represents 49% a revenue and we had another strong quarter of a customer.

Growth and in the quarter with over 24800 customers.

I believe we will look back a 'twenty 'twenty as a year to put an exclamation point on the need for businesses to reinvent themselves using software and data and as the world increasingly becomes a digital first there's no off the shelf software that organizations can buy to differentiate themselves against their competition to be blunt you cannot buy a competitive advantage you have to build it yourself and to.

Bill you differentiate a future using software and data you have to maximize the productivity of your developers.

Managing data is a developers most challenging problems and the biggest drain on their productivity legacy platforms and not designed for how developers think and code nor the designed for performance and scale. This problem only gets worse, that's a data intensity and performance requirements of modern applications increase consequently, developers spend and and northern Mount a time working around the limit.

Patients and existing solutions versus spending time building, a better applications and user experiences that drive a competitive advantage.

Moving to the cloud held out the promise of a reduced complexity and improved productivity. What many early cloud adopters have learned the hard way is that moving to the cloud often exacerbates a poor state of their data infrastructure.

First companies decided to lift and shift their existing on Prem relational workloads to the cloud replicating their on premise on premise problems in the cloud as.

And as a senior executive and one of the world's largest asset management firms recently told US He doesn't know a a single one of its peers, who didn't come to regret the lift and shift strategy.

Second given a known limitations a relational databases cloud providers promoted a number of other single purpose databases to address more diverse requirements, which in turn and create a larger number of data stores for customers to learn and manage and integrate this dramatically increased the complexity of their data architecture.

Third cloud providers encourage customers to go all in with a proprietary offerings across the it stack the overwhelming number a proprietary point solutions not only slows developers down but also deepens cloud vendor lock in.

Given the failings of existing approaches developers and enterprises are clamoring for a modern application data platform that accelerates innovation to be effective a modern platform a support a broad range of a use cases meet stringent requirements for zelinski security and scalability and provide enterprises, a flexibility to run applications wherever they want.

Our FY 'twenty, one and results indicate that marketing has clearly established itself as the world's preeminent application data platform for building the applications a today and tomorrow.

We are becoming a more strategic partner to customers as they increase their sense of urgency to modernize their it stacks.

And a number of our largest accounts, we've become and enterprise standard, which indicates a strategic importance and positions us to win more workloads. The journey from the first win to becoming a standard can take a number of years as we build trust with and support from a variety of different constituents within the enterprise, including the C suite.

Well each customer story has its unique elements, we have observed that they tend to follow a similar path on the way to declaring Margaret a be a standard.

We usually land and account by identifying a specific pain point that cannot be addressed by existing technologies.

And a fortune 50 financial institution that is now a seven figure customer our early use cases leveraged the strength of a Doc and the model to officially capture a complex loan applications with hundreds of entries and.

And the case of a global gaming leader developers first started using mom and to be from micro services that leverage the rapid scalability of our technology.

After establishing a presence with a customer we love Leverages a success of the initial workloads to expand across divisional and geographic boundaries wasn't the account.

A top 10 U S bank experienced a major data center a outage a couple a years ago and Margaret would be outperformed all other databases in terms of performance and availability at the time, our team sees and the performance of a platform to more broadly serve our customers needs and organizing teachers and hackathons with other app development teams across the company two years later the banks.

<unk> website experience runs a among a DB and with other use cases, a bank is now and eight figure annual eight figure a customer depending on the size of the account the expansion phase can last many years. This is where we currently are with many of our customers today and it is a key driver of a consistently strong net expansion rates.

Once you become widely deployed we leverage our existing internal proof points to be to pursue a becoming a standard for future App development here.

And here, we emphasize the versatility of the document model to address a wide variety of use cases meaningfully simplifying their data architecture, secondly, illustrate the performance security scale and scalability of our platform, ensuring that long and hebe can be trusted for the most demanding requirements and third apps built on a long and it can be run on kind of a run on premise on any cloud.

Across different cloud providers, which offers a real platform independents benefits no other alternatives can provide.

A CTO from a fortune 100 business almost fell off his chair when we demonstrated how easily a customer can deploy a workload across two different cloud providers. He remark. He was planning to have a 50 person team work on this and now one person can do this and a few hours.

And from Independents is something the C suite and particular cares a lot about.

This strategy is working we finished FY 'twenty, one with close to 1000 customers spending over $100000 a year on a platform and close to 100 customers who are spending in excess of $1 million a year with us and almost 60% increase from a year ago as excited as we are about these stats we are only at the beginning stages of becoming a.

Enterprise standard even within our largest customers among a D. B typically represents a small fraction of their total database spend affording us the opportunity to meaningfully grow even and a lot and even in our biggest accounts.

We also expanded a global reach through a new partnership with Tencent cloud allows customers to easily adopt and use <unk> as a service across 10 since global cloud infrastructure with this partnership the two largest cloud providers and China now provide authorized mom and you be managed service offerings demonstrating both the popularity among a D b and one of the largest markets and the world and.

And the strength of our intellectual property.

Now I'd like to spend a few minutes reviewing some customer wins and interesting use cases from the fourth quarter.

Axiom part of the Interpublic group of companies as a customer intelligence company that provides a data driven solutions to enable the world's best marketers to understand the customers create better experiences and fewer business growth as part of its ongoing innovation and the area a real time decision and capabilities axiom chose marketing be Atlas data Lake realm, and now charged.

To be a key part of its cutting edge cloud architecture axiom has now reduced this time to deploy solutions for new customers from two months to less than 20 minutes.

11, 99 funds is one of the largest labor management funds and the United States, providing comprehensive health and retirement benefits to more than four and 50000 health care industry workers and family members and response to COVID-19, the company accelerated a massive cloud transformation initiative after migrating from sequel server to market it'd be Atlas and Google.

<unk> it was able to modernize its enterprise data warehouse and leverage marketing would be realm to deliver a COVID-19 health screening App, which captured health questionnaires from nearly 3000 employees a day.

From the start of the project. The go live date, a complete solution was deployed and just three weeks.

Cox automotive has 40000 and all the dealers across five continents aspiring to bridge the gap between consumers manufacturers dealers and lenders at every stage of the automotive experience.

And our response to COVID-19, the company's mobile car care Division rise clean developed a mobile platform, enabling drivers to schedule and technicians to manage and perform onside disinfection services with pure protect right clean turned among debuted realm zone four zero latency data retrieval offline application functionality and Baidu.

Actual thinking of data between the rail and mobile database and moms and he be Atlas.

The largest department of the UK government the department for work and pensions distributes welfare pensions and child support to U K citizens. It's reformed welfare program Universal credit faced and unprecedented test when COVID-19 caused claims to skyrocket by Tenex.

DWP digital chose Makati b to underpin a secure platform and scale it services across a distributed a micro services architecture to support the huge increase in demand.

Picked a brazil's largest E wallet has over 40 million users and is accepted at over 3 million stores throughout the country.

After experiencing 126% growth in 2020 the company chose <unk> Atlas because they needed a highly scalable cloud database with real time performance and low T. C O in order to achieve its ambitious growth goals enterprise security features like data encryption at rest and transit and data locality and made it easy for pick a pay to comply with GDP.

And our and FSA regulations, and Canadian Pride, a best in class customer experience to its growing user base.

Today more than one and 10, new apartments, and the United States are built using latch Iot products latched delivers a full building enterprise SaaS platform that helps owners residents and third parties experienced a modern building through services like smart access smart home and sensor controls and connectivity.

<unk> chose moggy outlets sports and enhanced security features and the ability to move to a micro services architecture. So the company could scale quickly and protect its customers' data.

In summary, we had an exceptional year amidst unprecedented disruption and uncertainty and so.

I think back to our earnings call a year ago at the outset, a COVID-19, I can't help but Marvel at how we exceeded our own expectations, despite the pandemic being longer and more severe than we could adventure and at the time.

I'm incredibly proud of how our team executed given the unforeseen challenges the past year reaffirmed our conviction that we are attacking and enormous market where secular wins are increasingly at our back we have a highly differentiated value proposition and our team knows how to execute and deliver results and.

That's why 'twenty two a goals remain unchanged as we singularly focused on the opportunity ahead of US we will continue innovating to ensure that our application did a platform remains the best way to build a applications of today and tomorrow, we will expand and evolve our go to market strategy to drive a frictionless adoption of a platform no matter, how and where our customers choose to consume.

A D b and we will remain focused and our people processes and culture to ensure that we scale to fulfill a potential simply put we're committed to innovating and investing to make the most of the opportunity and maximize a long term value with that I'll turn it over to Michael.

Thanks, Dave as mentioned, we delivered another strong performance and the fourth quarter, both physically and financially and operationally.

I'll begin with a detailed review of our fourth quarter results and then finish with our outlook for the first quarter and full fiscal year 2022.

First I'll start with a fourth quarter results total revenue in the quarter was $171 million up 38% year over year subscription revenue was $163 $9 million up 39% year over year and prefer.

Services revenue was $7 $1 million up 24% year over year.

As Dave mentioned, we're very proud of our execution and it's difficult and uncertain environment and.

Particular, we had another stronger than expected quarter in terms of a closing new business and.

Enterprises cannot afford a delay or slow down and innovation and for that reason as customers continue to increase their investment and our application data platform.

That said despite a strong go to market execution COVID-19 continues to have an impact on a quarterly performance.

Overall Atlas a strong performance continues to be the largest contributor to our growth.

Atlas grew 66% in a quarter compared to the previous year and now represents 49% a total revenue compared to 41% and the fourth quarter of fiscal 'twenty, and 'twenty and 47% last quarter.

During the fourth quarter, we grew a customer base by over 2002 hundred customers sequentially, bringing our total customer count to over 24008 hundred which is up from over 17000 and a year ago period.

Of our total customer count over 3000, or a direct sales customers, which compares to over 2000 and a year ago period.

As a reminder, our direct customer count growth is driven by customers, who are a net new to our platform as well a self service customers with whom we now have established a direct sales relationship.

The growth and our total customer count is being driven in large part by Atlas, which had over 23003 hundred customers at the end of the quarter compared to over 15004 hundred and a year ago period.

Important to keep in mind that the growth and our Atlas customer count reflects new customers and among a D. V. In addition to existing enterprise advanced customers, adding incremental Atlas workloads.

We had another quarter with a net expansion rate above 120%. We ended the quarter with 975 customers with at least $100000 and a RR and annualized M. A R, which is up from 751 and a year ago period.

We ended the year with 98 customers with at least a million dollars and air and annualized M. A R, which is up from 62 and a year ago period.

As Dave highlighted the continued strong growth and customers of a million dollars a more and arrow is a clear indication that we are increasingly becoming a strategic partner and a database standard for our customers.

Moving down the P&L I'll be discussing our results on a non-GAAP basis, unless otherwise noted.

Gross profit and the fourth quarter was a $123.3 million, representing a gross margin of 72%, which a consistent with our last quarter and down from 74% and a year ago period. Overall, we were pleased with our gross margin performance, which is negatively impacted by Atlas, becoming a bigger portion of our revenue.

As you know Atlas has a lower gross margins and enterprise advance because of its infrastructure component.

This downward pressure, it's been partially offset by the greater efficiency and scale that we've been able to generate as Atlas gross but.

We continue to expect that we'll see some modest reduction and overall company gross margin as Atlas continues to grow as a percentage of our revenues.

Our operating loss was $16 million or a negative 9% operating margin for the fourth quarter compared to a negative 10% margin and a year ago period.

Our outperformance versus our operating loss guidance was driven primarily by a revenue outperformance.

Net loss and the fourth quarter was $19 $9 million, a 33 per share based on $60 5 million a weighted average shares outstanding. This compares to a loss of 25 cents per share on $56 9 million weighted average shares outstanding and a year ago period.

Turning to the balance sheet and cash flow, we ended the quarter with $958 $3 million and cash cash equivalents and short term investments and restricted cash.

Operating cash flow and the fourth quarter was negative $18 $6 million after taking into consideration approximately $2 million and capital expenditures and principal repayments, a finance lease liabilities free cash flow was negative $27 million and a quarter.

This compares to a negative free cash flow, a $10.9 billion and the fourth quarter and fiscal 2020.

I'd now like to turn to our outlook for the first quarter and full fiscal year 2020.

For the first quarter, we expect revenue to be in a range of a $167 million to $170 million.

We expect non-GAAP loss from operations to be $21 million to $19 million and non-GAAP net loss per share to be in a range of 39 cents to 36 cents based on $61 2 million weighted average shares outstanding.

For the full fiscal year, 2020 two we expect revenue to be in a range of 745 million to $765 million for the full fiscal year 'twenty. Two we expect non-GAAP loss from operations to be $84 million to $74 million and non-GAAP net loss per share to be in a range of a dollar a 55 to a $1 39 per share based and $62 1 million weighted average.

Shares outstanding.

Let me provide some context behind our revenue outlook.

Our expectation that the COVID-19 impact will continue to impact our new business activity and the near term, but that the business conditions will slowly improve as a year goes on and it's a global vaccination efforts positively impact a macroeconomic environment.

More specifically for Q1, and we expect to see a slight sequential revenue decline as a coupon is typically a lower new business quarter than Q4.

As a reminder, revenue recognition under ASC 606 for a enterprise advanced product disproportionate effects in quarter performance due to the upfront term license.

Let me now turn to our investment framework for fiscal 'twenty two.

As Dave mentioned, we were pleased both by a strong execution and the market's receptivity to our platform. We therefore continue to believe that the right posture is to invest for a long term pursue our market opportunity and fiscal 'twenty. Two will continue finding high priorities I priority areas across the organization.

First we will continue with robust R&D investments to further advance the breadth and depth of our application data platform.

Second we will continue growing our sales capacity globally, we remain fractionally penetrated relative to the size of our opportunity given another year a strong productivity. We believe that the primary constraint of our productive capacity growth and how quickly we can effectively scale our operations.

Third we will continue investing as appropriate to assure that we're efficiently scaling our organization systems and processes as we pursue our long term opportunity.

Finally, it is worth noting that our COVID-19 outlook has implications for opex as well as our revenues as life slowly normal right normalizes throughout fiscal 'twenty, two we expect to incur incremental expenses, most notably related to our offices travel and in person events. Our current expectation is that we will incur approximately $20 million to $25 million of incremental expense.

And this area compared to fiscal 'twenty, one with most of that impact occurring in the second half a year.

To summarize I'm not going to be delivered excellent fourth quarter results and full fiscal 'twenty one results, despite operating and unprecedented environment, our focus on executing against our product roadmap and expand their go to market reach and driving high levels of growth a sale and we are seeing attractive returns and those investments the success that we're having establishing ourselves as a world's preeminent application data data platform.

And positions us for continued long term success with.

With that we'd like to open it up to questions operator.

Okay.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys.

Kindly ask that you please limit yourself to one question and one follow up.

And at this time, we will pause momentarily to assemble the roster.

And our first question today will come from Sanjay Singh with Morgan Stanley. Please go ahead.

Hi, and thank you for taking the questions and congrats on a on a great and fiscal year 'twenty, one and you know it.

Strong Q4, it was really great to see the Atlas accelerating a 66% growth and so maybe the first questions to start on Atlas and so.

Could you sort of give us some of the trends you're seeing within Atlas as it relates to growth.

Growth coming from hot modernization or relationship will play a relationships.

Relationships displacements versus net new.

And sort of a mix.

Play out in Q4 versus what you've seen on from for the balance of the year.

Yes.

And so the signs a let's say a couple of things a one I would say that obviously, there's a big secular trend about the move to the cloud, but what's happening is that people are recognizing that just lift and shift is not the right approach and that I would more frame it as lifts and transform and that's where among the becomes and people recognize the benefits of a very a flexible data model.

And <unk> through the document model they recognize the benefits of running and using multiple use cases because of the versatility of the document model. They also appreciate the scalability and performance of a distributed architecture and even more pronounced because atlas basically automates all that.

What we're also seeing a new trend is the increasing importance, a multi cloud and customers a more and more interest and multi cloud and being able to deliver a multi cloud solution a for either a resiliency or other reasons.

And and so we see customers building, new apps on Atlas and re platforming existing apps on Atlas, but we're seeing trends across the board, making actress Alice a very attractive destination for App development.

That's really helpful. And then as my follow up and I think about guidance for fiscal year 'twenty, two and some of the things that could come online I wanted to just get a status update on on partners and which ones. You think are the most material in terms of contributing and growth and which ones are more earlier stage as it relates to you just sign on the 10th and all.

Hey, Bob.

We used to making a closer relationship.

And with Google and you get sort of like walk through some of the.

The progress with a strategic partners and which one do you think.

And that wasn't a material scale at this juncture.

Well I'll start with a hyperscale vendors first a the U S based ones I'm you know, we have deep relationships with all three and a we're doing well across the board and I think it's coming down to one market DBS incredibly popular on all the three platforms. A two I think customers can separate the difference between some of the emulation offering.

Vs. Among the Atlas.

A three I think people are getting more and more comfortable with the a but you know our document architecture and how versatile it is and how it really enables a innovation to happen very very quickly and and I would say that so that you know so we're partnering a lot and the field with a you know the class.

Vendors where the.

The Tencent relationship is fairly new so I think that's going to take a little bit of a time for it to take hold but the fact that we now have relationships with both Alibaba and Tencent and one of the largest markets a world.

Feel really good about a and then I would say a the other partnerships in terms of the global systems integrators are also a penny and a.

Paving the way, we're seeing a lot of activity as they're bringing us into deals or we're using them or customers are using them as too to augment their development capacity.

And we're also working with some boutique size, who have some real domain expertise from a market b to help a accelerate a customer's a time to market a for their needs and so I would say, we're seeing does not one partner that's I would say moving the needle more than anyone else was basically the same broad based a help across the board across our our partnerships.

I appreciate the thoughts thanks, Congrats on a Q4 thank you.

And our next question will come from Brad Reback with Stifel.

Stifel. Please go ahead.

Great. Thanks, very much maybe sticking with Atlas the sequential acceleration and the business just a pretty impressive.

Even with the acceleration of digital transformation and out there were there any one time items that positively impacted the quarter or is this just normal usage trends.

No I would describe it a is it was a good quarter, Brad and thanks for calling that out a we've talked about sort of some of the trends that we were saying during COVID-19. We mentioned in Q3 that the cohorts, we're back to sort of pre COVID-19 expansion levels. We've continued.

And to see that a and so you know I think there's nothing particularly worth calling out you know one time, there obviously always like one time puts and takes and in any quarter, but nothing sort of outside of the normal a it was a good quarter a across the board, but particularly within Atlas with and self serve we saw some nice expansion a but overall a gist.

And a really strong and not a lot of businesses that you know.

Have you know a $300 million run rates growing north of 60%.

Impressive thanks very much.

Yeah.

Okay.

And our next question will come from Brent bracelet with Keybanc. Please go ahead.

And thank you and a good afternoon, and I guess I wanted to talk a little bit about new customer lands. If I look at the last two quarters I think you've added more customers and in the last six months and then you added all of last year as you think about the momentum here is this a signal of just kind of.

Broader longer to be brand awareness is is this a sign that maybe there is an industry acceleration and and the appetite to build new apps and and then just if you could just share a is a profile that's a new customers changing or is it still predominantly being led by developers.

Any color there would be helpful. Right. So I mean, a I would say it's it's a there's a few factors at play one I think it's become clear to everyone that Margaret a b is a very viable mission critical platform and contrast to and as and as a viable alternative to a relational databases and frankly, we don't hear anyone you know and a.

Customer and he's talking about growing to a sequel server Oracle or D. B to a state. So people are definitely moving off their legacy platforms and then when they think about building out a new platform they quickly understand and versatility and flexibility of the a document model. They also appreciate a performance and scalability.

And of our architecture and what's interesting now is as I mentioned earlier, a multi cloud has become an increasingly important a consideration a.

Some customers want a cloud provider, a resiliency and a single country.

We're only a chloride and only has one region and.

And the reason for a multi cloud is a customers often maybe acquire other companies and so they start picking a question should I put everything in one cloud and then the third reason is that they want to take advantage of different capabilities offered by different cloud providers and so so we see a whole host of a.

The reasons, why we're acquiring new customers and I would say and.

A lot of it just a function of a market you'd be just emerging as a truly the preeminent application data platform.

Maybe just quickly I'd I'd add on to that to the second part of your question. Brent you know clearly a large market and we're early on and their penetration and so that's great to see in terms of the customers and the customers that we're adding here and sort of how do they compare to historic customers. Maybe I'll just say a couple of quick things first of all obviously, it's early but we do have a couple of quarters of data.

And I'd say the initial signs are certainly encouraging obviously ultimately the long term.

A quality will depend on the expansion over multiple years a.

But so far what we're seeing on an apples to apples basis is the cohorts a broadly in line from a size and growth characteristics versus.

The prior cohorts I'd say, they're probably a two important mix components to keep in mind, though the first is that some of the good a market optimizations that we've talked about and the last couple of calls that we've made sort of may reduce the friction make it easier for customers to come on board a disproportionally just fortunately helped the mid market.

And the mid market customers spend meaningfully less on average than and enterprise customers such a so keep that in mind and then secondly.

Some of the you know a acceleration and direct sales customers are customers, who were previously self serve who we've gotten better at identifying the signals for those for whom we'd benefit from a direct relationship with and that sort of is accretive to their future growth, but that's not net revenue you know change and a.

And that's not that's shifting channels. If you will in terms of customer accounts. So those are probably two important mixed things to keep in mind as you're kind of looking out or trying to extrapolate.

Super helpful. There I think even my dog got a little excited by a.

[laughter] so thanks for the color.

Thanks Brent.

And our next question will come from Matt, Hey, Koji a with Barclays. Please go ahead.

Hey, guys. Thanks for taking my question and congrats on a really strong Q4.

And I just want to stay on the topics of a land and expand motion wage. So he saw a.

The land motion really do well despite the pandemic and you discuss the drivers there, but if I look at the expansion rate and the expand motion looking ahead to fiscal 'twenty two.

And help us understand a suit view like what do you think about so all of a CVR and hopefully a putting COVID-19 and the background here and right. So and one of the there's a the headwinds on the business would have been some expansion side, where maybe some applications that were and the pipeline a.

Would be put on all right. So I'm just curious as to how youre thinking about the trajectory of net expansion rate to a fiscal 'twenty two and how have you factored that into guidance and then I have a follow up question. Thank you.

Yeah, It's a moment, what I'd say as a as we mentioned in the prepared remarks, even in a largest accounts, we still believe you're a a very small percentage of their you know data a total database spend now I do want to make clear marketing and he is not a product that you just buy and then start using you have to actually build and application on top of it. So there's a certain rate and pace of App development, whether you're building.

New applications or re platforming existing applications and but what we've seen and as we mentioned once we get into an account we find it reasonably easy to expand into adjacent opportunities and.

And the adjacent opportunities tend to be bigger than the initial and.

And deal and so we don't see that we don't expect to be a meaningful change and that this coming year.

And while the world and they start opening up and people may be a potentially building new apps faster, we think that and that that can only help our business, but right now we feel that we're really well positioned for for a the opportunities that we have already uncovered and these new customers and we're still continue to seek new custom.

There is going to this year. So that we continue to build a a a healthy pipeline of and a large customer base.

Thank you and my follow up question is on the a go to market investment site. So I mean this is typically at a time of the urban company, it's sort of like evaluate a holiday sales and most.

<unk> and sales structure and looking ahead.

So as you scale the business right. So obviously, a very healthy growth and scale as well.

Scale further and as we make these go to market investments is there anything we should be right off income so sales structure changes or anything like that that's just my and I was thinking.

Yeah. So a I think we've talked about it in previous calls, but we've been very pleased with the success, we've been seeing a with our execution through our sales channels.

And so we're essentially doubling down and what we did this past year. The the sales organization and a marketing authorization executed really really well and that a and we're also seeing benefits of a flywheel effect between a self serve channel and a sales channel as Michael mentioned, our sales realizations getting better and better at understanding product use a six months to figure out.

Which customers would benefit from having a more direct relationship and a self serve channel becomes a very easy channel for us to acquire new customers. So that's playing paying dividends as well. So I think you'll see us continue to refine the model, but you're not gonna see any major changes will probably get more sophisticated around segmenting certain parts of the markets and a and a certain parts of a market that we still have a.

Poor geographic coverage, so you'll see us expand.

Our sales reach and markets, where we feel like we can benefit from adding more people a and in the region.

Thanks, guys.

Thank you.

And our next question will come from Tyler Radke with Citi. Please go ahead.

Yeah.

Hey, Thanks, very much for taking my question I wanted to ask about your investing and in FY 'twenty. Two obviously the guidance implies that your you know continuing just to spend a lot on growing the business and FY 'twenty two so I'm curious where the biggest priorities areas are for you and then.

And within.

The direct sales side or are you kind of investing more and in the mid market size, a where you know you've seen really nice and and.

Net adds there or is it more on on the enterprise. Thank you.

Yeah, Yeah. So we see the bulk of investments going in two areas, one and product and the others and go to market and obviously on the product side. We're really excited about the market opportunity. We're going after is the market just seems to be bigger and bigger the more and more we spent time and it and a we're clearly getting a lot of it.

A lot of traction and our customers are asking for more and more capabilities. We talked about some of the new products. We G. H a last summer a they're starting to get very healthy traction and so that gives us even more confidence about a all of the things that we want to build based on customer feedback as well as our own strategic insight in terms of what we think the market needs. So.

And and by the way I think we have a first class engineering and product organization. So it makes that these you know a decision that much easier and the second point I'd make is a to the early a question we've seen a lot of success and sales. So the classic thing is when you see success you continue to invest a.

And our performance is broad based and a we're seeing performance a great performance, both and through our field organization as well as our inside sales team and you're going to see us invest aggressively in both areas I think you're going to see us as I said, a probably do a little bit more refinement of how we go to market a little bit more segmentation.

And across the market a little bit more focus on hunting versus farming.

Perhaps even a little bit more focus and the mid market a two to what you implied a but it's all about just going out and capturing more of a market because a market is so large and leveraging all the lessons. We've learned so far in terms of a how we build a sales processes, how we generate pipeline and how we prosecute deals.

Yeah.

Great. Thank you and and just a quick follow up a maybe from Michael I I wanted to kind of clarify a.

One of the dynamics you referenced in terms of the Atlas of the Atlas cohorts. So so I think it's been about a year. Since you made a go to market changes to kind of reduce the friction in terms of new customers coming onboard with a with a lower or no commit but now maybe.

And maybe just in and now that you look back at the past year like how have those spending levels.

You know trended relative to kind of the old approach I think you might have.

Notice that the spending levels were kind of consistent with the so called a all the approach, but just wanted to clarify that thank you yeah, absolutely. Yeah. So I think it's important to look at sort of like high and customers are and so if you look meeting sort of you know a mid market versus and enterprise customer or something like that as opposed to compare and everyone does the average because you know it mixes to a matter here, but yeah.

And that's exactly right. If you if you look sort of on a like kind of apples to apples basis, we're seeing a fairly comparable behavior from cohorts in terms of size and growth rates and expansion rates, a et cetera et cetera, obviously, we don't have years and years of data. So we'll have to see that but certainly the initial signs are encouraging and and consistent with that.

Series and the initial observations.

Great. Thank you.

And our next question will come from Rishi, Joe you're already a with D. A Davidson. Please go ahead.

Hey, Dave and Michael Thanks, Thanks, So much and I think and my question and a nice to see continued strong execution.

We're out there and have a year one of them maybe starting a day.

And with a comment that you made it and your prepared remarks switches and just how.

Under penetrated you are even and the existing customer base.

What is it going to take time and grow that footprint within existing customers and is that just a matter of capturing new workloads and and new apps and there's just a natural mix shift that happens over time or is there anything that youre doing and can continue to do and accelerate the migration and and as you talked about a lift and transform.

From a strategy and then I've got a follow up.

Yeah. So so what I was trying to convey and my prepared remarks is that a growing and account takes time you kind of go through a set of stages. The first stage is landing a deal. The second stage is using us and the early success of your initial a win.

Went to expand into adjacent opportunities and then a.

As you get promulgated across the organization you end up becoming declared a standard and what that really implies is when you become a standard is that you're essentially you're giving the developing teams free reign to use Margaret it'd be for for a pretty much any use case and so it becomes that much easier for the organization to deploy a new workloads among a D b, but the.

Active actually building and writing and App and then running a you know whether it's on premise or and the cloud still takes time, it's not like these apps magically create themselves. So there's still obviously some effort required from the development teams to build those applications. So there's a certain rate and pace by which you can expand the workloads on your platform, but by definition as we grow.

So as people get more and more comfortable using long a D. B as we have more and more proof points and now with nearly 25000 customers. We have proof points almost across every potential use case every industry every geography, and so it gives customers a lot of confidence to bet on longer than a b and so that becomes a marginally that much easier to win the next incremental.

Workload and so but it does take some time, it's not like magically you can find a re platform a thousand apps and a long and it'd be overnight.

Got it okay and thanks, that's Super helpful. And then I wanted to maybe ask a little bit about a future.

Future opportunities for M&A, obviously round and it seems to be a have been a pretty successful a product and technological.

<unk> given given the kind of cash balance you have an and and the dry powder you have to put to work where what should we be thinking about future opportunities for you to do more of those smaller technological acquisitions and expand a the platform. Thanks.

Yes, given the nature of our application data platform. It you typically will not see us do some major acquisition and kind of try and bolt on some other solution onto a platform that becomes a very hard to do if you look at our history. What we have done is made some surgical acquisitions you mentioned realm. A earlier, we made an acquisition a wire tiger, which really allowed us to.

To deliver on some a enhanced performance capabilities around write intensive use cases and now is the underlying storage engine for a core database server. A we also did an acquisition a M labs, which we're trying to accelerate and expansion into offering a among a D. B as a service offering but there were I would say a more surgical acquisitions I don't think you'll see us go.

And do some massive mega acquisition, but we will obviously you know whenever you see something that potentially allows us to accelerate our product roadmap and and a certain way I think you you're right. We have the resources to go do those kinds of things and we're constantly kind of talking to people and the marketplace.

Wonderful. Thank you so a lot.

And our next question will come from UTI could run with Oppenheimer. Please go ahead.

So a good numbers guys. A couple from me I guess, maybe I'm on a kind of a double click on assets a little bit and.

And get it back, but our understanding of the overlap between a customer usage and your large customers. When you talk about a million dollar and 100000 dollar customers and what's the penetration of a high class into those customers right now and how do I think about the size of the deployment.

I would say a big percentage of a seven figure accounts already using Atlas, but there there's definitely some settings and sun figure customers, who are a only so it is there's a mix, but the there's a broader base of Atlas customers and as I said you know we have a lot of customers who are moving more slowly to the cloud, but you Margaret you be as a very a.

Tractive platform, because they will never have to rewrite the application as a transition from from on Prem to the cloud or from one cloud provider to another cloud provider, which makes it a very attractive future proof platform for customers.

Got it and then Michael is a just a follow up for you and <unk>.

You've talked about and <unk>.

Spansion rates kind of coming back to normal, but you also talked about COVID-19 headwinds and the impact still remains so maybe you can fine tune and for us exactly where and how do you still see impacts from Covid only a business.

Yeah sure absolutely I think the key thing in terms of Covid impact is just a new business environment.

I think what we've seen in terms of the Atlas cohorts is you know a resumption of the pre COVID-19 a cohort behavior. So it's really more about new business and it's very consistent and we talked about last quarter, which was sort of you know bigger.

Bigger deals multiyear deals you know getting extra scrutiny that kind of stuff.

Does that mean.

Overall, just uncertainty of the macro environment you know it does.

That does have an impact on your business. Okay, well you just had a great two record breaking quarters and you add so I'm just trying to understand is just a number of new adds or they just start with a smaller size I think yeah. I think I think as it relates to Covid specific I think its more about magnitude than quantity of of a count okay very good.

Thanks.

Okay.

And our next question will come from Jack Andrews with Needham. Please go ahead.

Oh, Thanks for taking my question I wanted to see if you could provide an update in terms of a sim adoption trends youre seeing for for your newer products like search and data Lake and how should we be thinking about any uplift in consumption rates for customers, who are adopting these types of products.

Right. So again, just as a reminder for people we G. Eight three products last summer.

<unk> Atlas data Lake and search and let me go a one by one so we've seen solid reception of realm, and especially now with the availability of a realm sync, which really enables developers to build very sophisticated and mobile applications and synchronize a that.

The data at the edge with data at the core net saves developers and enormous amount of time and effort and it's something that's quite complicated and so we're seeing a lot of a interest there and.

And so we're quite pleased with a traction I would say with Atlas data Lake one of the most popular use cases as data hearing, allowing customers to manage large volumes of data, while retaining the ability to access and query that data and a and emerging use cases being able to do federated queries and using a D. L. A as a mechanism to transform data within our platform.

And and create across multiple databases and storage locations and so a so so that's really exciting and then on search and.

And we've made some enhancements, including a visual index builder, which has really accelerated adoption and a what we're seeing is customers I like the fact that they don't have to use solar or elastic in conjunction with mongo DB, but that they can do everything and the mom and D V. It really simplifies their life and their data architecture and so a so we're quite excited about the traction.

All three products I do want to remind everyone that the revenue does not show up as individuals skus, but as Atlas revenue and.

And a and these products do have multi year journeys and you'll see us continue to refine and enhance our these.

And these these products and a and and we expect them to have a a strong IRI over the next coming years.

Great. Thanks, and congratulations on the results. Thank you.

And once again, if you'd like to ask a question. Please press Star then one and our next question will come from Fred Haven Bar with Macquarie. Please go ahead.

Okay. Thank you very much for this I'd like to ask you know.

Some of our work we've been picking up that Isps are incrementally interested and Banca a D b Atlas and that we've seen a couple just narrow a cultural scaling and top of it. So I would like to ask generally speaking how do you see the I S V ecosystem around Mongo, DB, and perhaps specifically Mongo DB Atlas evolving.

And where do you think that this stands in terms of a maturity today.

Yeah. That's a that's a great question. So we've had a I see a since the early days among and you'd be built a.

Use mom and baby is the underlying data store for their product and obviously and the early days is more front end applications. What's happening now is we're starting to see the vertical specific a deepened a back office a I S vs. A you know and financial services insurance and telecom et cetera, who are looking to re platform.

<unk>, obviously, a customer buying behaviors change people want to consume software as a service a those Ics also wanna stopped paying the Oracle tax and those Isps are quite attracted by the a flexibility and agility of the document model as well as the scalability of our architecture. So it allows them to serve global needs a quite easily and so we I have a.

A have a small team focused on on a on the ice vs and there it's almost like a two step process, where we are essentially selling to the CTO and VP product, sometimes a C or depending on the size of the ice V. And then helping them build a re platform their product on Mongo DB.

And then helping them generate the first set of customers and I should also add that I S vs. Typically don't want to use a cloud proprietary database because by definition that would limit them to only one cloud and customers do care about multi cloud and so the fact that long and it'd be runs across.

And all the major cloud vendors and the fact that they can you know offer capabilities and a multi cloud environment makes them on a D be even that much more attractive.

And thank you for that and then I'd like to follow up I think touching on something you. You were also referencing and some of your prepared remarks around the multi cloud cluster capabilities on a mongo DB Atlas and it's something that is a fairly it's a very unique it seems and the database as a service market place to have essentially like one click multi cloud deployments and so I'm curious.

You referenced one specific customer, but I'm wondering if you could more broadly speak about how.

Your customers are approaching a.

The multi cloud just a bunk and you'd be outlets capability and whether that's something that is bringing more customers to the table or perhaps also bringing a.

More of your enterprise customers also back in to speak to you about what Atlas can do.

Right. So and concept you know a platform it depends a something that customers care a lot about and reality. The onus was on the customer to try and figure out how to make it work they have to figure out how to abstract and all the differences between the different cloud providers deal with it and a great deal with all the integrations deal with different authentication schemes and so on and so forth.

That made a quite challenging for customers to do it themselves what Mongo DB Atlas does this actually make that very easy. So when we show customers you know and we do demos for customers and show them that literally with a few clicks and a few minutes they can provision and clusters across two different cloud providers and do it very very easily.

And they're shocked and.

And a because they know you know how much effort it would take them to try and do that themselves. So a the other point I would make which is what I've said in the prepared remarks, we increasingly find senior level stakeholders. They care a lot about platform independence and not just for lock in but they want from for resiliency, they want to be able to take advantage of different.

These on a different different a cloud providers and so being able to use mongo DB to do that becomes very very attractive and so a so so you're right. It is definitely bringing more enterprises to look at us as a as a very viable and mission critical platform.

Great. Thank you for the color I appreciate it.

Thanks, Brett.

And our next question will come from Pat Wall Ravens with JMP Securities. Please go ahead.

Great. Thank you so much as a giant rents have gone from part a.

Just two from our and so first you know on those large customers, particularly the ones spending over a million.

Wondering you know how many of those conversations evolve over time and then secondly, how do you. How are you guys thinking about return to work you view Michael D. V is a work from home company long term. Thank.

Thank you guys.

Sure so with regard to large customers most of a large customer start a small customers and they could be five or six figure customers and then they evolve into a seven figure customers on the rare occasions, and we might have a customer that quickly becomes a seven figure customer and that's typically because they have one use case, a one workload that growth very very.

Fast, but most in most situations, it's basically customers, adding a more.

More workloads to the among the B platform and.

And and so obviously it takes some time as you said once you get you know get in and win a deal it depending on the size of account it could be multiple years as we are and the expansion phase a winning more and more business and that at some point in time, you know when you start talking to a senior level stakeholders. They see how popular we are with their developers they see a widely spread.

We are across the organization and they want to build and a more strategic relationship and for US we want to be declared a standard where by definition a.

Developer it doesn't have to seek permission to use models and you'd be so a so so it's really a function of leveraging our our successes early on and proving out the scalability and flexibility for a platform and a and then a really showing them that a hum that market.

Can be truly a a versatile application did a platform not just for on premise, but across all the major cloud providers as well.

And then in terms of a your second question returned to work, yes, I mean, obviously today. We're all a you know we're all working from home.

We have what we have told our employees that we don't expect to be 100% remote organization, we do and I believe that this value and are people coming together and there's value and coming together for a team meetings for a planning sessions and for.

And for the you know a social benefit of connecting with people. We also believe that the employees earlier in their career and will benefit from more direct mentorship from the managers.

And more of a direct contact basis versus over some sort of a remote environment, but we also believe that we've learned a lot of lessons are that you can run a business of our scale and size remotely and so we're not going to force everyone to come back to the office, we're going to re imagine our offices and create more a multi tenant environments where people.

And can have a share a desk and come and maybe two or three days a week. Some people may work remotely for you know 80, and 90% of time and maybe company office and.

You know once in a while for key meetings.

And so a this also a lot it gives us more flexibility to a look for talent and markets that we mean naturally and not have considered because we've now seen how are you now working remotely can can be quite effective and so we'll be more aggressive and and sourcing talent from markets that we typically did not seek and the past.

And we're helping them. Thank you so much.

And our next question will come from Jason Ader with William Blair. Please go ahead.

Hey, guys. This is a belief that simmons on for Jason Ader, Congrats on a solid quarter.

Over the last several quarters, you can expand and both new features and a new antibiotics, such as such as round and round sync data Lake charts, multi client functionality I guess or any of these standing out over others in terms of customer adoption or in terms of generating customer excitement.

And then a how would you say customer a conversation said and that's kind of evolved in recent quarters for it versus a year or two ago. Both in regards to these new features or just how a customer demand has changed in recent quarters.

Yeah, I think what you should think about these new capabilities is really adding to the richness and competitive and comparative advantage of our platform versus like trying to be standalone products that we just position and market a independently.

Independently and so what it means is that people can run more and more use cases, among a D. B have a much more simplified architecture, rather than having a bunch a bespoke implementations for every use case that they potentially a want to implement them. They can obviously query that data much more easily manage their infrastructure more easily the developers only have one interface.

To learn and essentially they can run those workloads anywhere they can run it on premise as well as they can run it on on a on any cloud across cloud. So that's the real benefit of the expanding.

No capabilities that were adding and and now we're seeing traction across the board. So I would say you know again all of these products where G. Eight last summer we're still in the early days.

But we're really excited and it's really proving out the AR and the platform strategy and a as we noted that we already have some nice set of customers who are using a new products and a and there are a very sophisticated customers as well. So we feel good about a the reaction we're getting.

Thanks, Dave I appreciate it.

Okay.

And this will conclude our question and answer session I'd like to turn the conference back over to David a chair you for any closing remarks.

Well I want to thank everyone for joining us today I just want to make a you know kind of a summary of a couple of points. One I think it's clear that enterprises everywhere, a feeling and extraordinary sense of urgency to reinvent themselves and they have to do that using software and data.

Second we're seeing great success and building more strategic partnerships and customers as evidenced by the growth of our six and seven figure accounts and lastly, I would say that the accelerating secular trends and a track record of success give us increased conviction to aggressively invest in order to maximize our long term potential and that's what we're doing thank you for joining us and we look forward to.

And speaking to you soon take care.

The conference has now concluded. Thank you for attending today's presentation. At this time you may now disconnect your lines.

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