Q3 2025 MongoDB Inc Earnings Call

Welcome to the Mongols VB third quarter fiscal year 2025 conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hat.

Speaker Change: And as rates to withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now like to turn the call over to your speaker for today, Brian The New please go ahead.

Speaker Change: Thank you Lisa good afternoon, and thank you all for joining us today to review <unk> third quarter fiscal 2025 financial results, which we announced in our press release issued after the close of market today.

Speaker Change: During our call today are Dave <unk>, President and CEO of Mongo, DB, and Michael Gordon <unk>, COO and CFO.

During this call we will make forward looking statements, including statements related to our market and future growth opportunities our expectations for the macroeconomic environment in fiscal 2025, and the impact of AI.

Speaker Change: The benefits of our product platform, our competitive landscape customer behaviors, our financial guidance on our planned investments and growth opportunities NII.

Speaker Change: These statements are subject to a variety of risks and uncertainties, including the results of operations and financial condition.

Speaker Change: Cause actual results to differ materially from our expectations.

Speaker Change: For a discussion of the material risks and uncertainties that could affect our actual results. Please refer to the risks described in our quarterly report on Form 10-Q for the quarter ended July 31, 2024 that we filed with the SEC on August 32024.

Speaker Change: Any forward looking statements made on this call reflect our views only as of today and we undertake no obligation to update them, except as required by law.

Speaker Change: Additionally, we will discuss non-GAAP financial measures on this conference call.

Speaker Change: Please refer to the tables in our earnings release on the Investor Relations portion of our website for a reconciliation of these measures to the most directly comparable GAAP financial measure.

Speaker Change: That I would like to turn the call over to Dave Dave.

Thanks, Brian and thank you to everyone for joining us today I am pleased to report that we had a strong quarter of new business and executed well against our large market opportunity, let's begin by reviewing our third quarter results before giving you a broader company update.

Speaker Change: Generated revenue of $529 million or 22% year over year increase and above the high end of our guidance Atlas revenue grew 26% year over year, representing 68% of total revenue.

We generated non-GAAP operating income of $101 million or 19% non-GAAP operating margin and we ended the quarter with over 52600 customers.

Speaker Change: Overall, we were pleased with our performance in the third quarter we.

Speaker Change: We had a strong new business quarter, and we're happy with our new workload acquisition on Atlas are non Atlas business significantly exceeded expectations in part because we benefited from a few large multiyear deals as customers continue to value our run anywhere strategy and want to build a deeper longer term relationship with Mongo DB Alice.

Speaker Change: Now lets consumption was slightly better than expected in a macro environment that we would characterize as largely consistent with what we saw in the first half of the year, Michael will cover our consumption trends in more detail.

Speaker Change: Retention rates remained strong in Q3, demonstrating the mission criticality of our platform.

Speaker Change: On our Q1 earnings call, we shared with you the three major strategic initiatives that we believe will enable us to maximize our long term opportunity.

Speaker Change: I want to give you an update on the progress we're making on those initiatives.

Speaker Change: First we are increasing our investment in the enterprise channel since we see the strongest returns in this part of the market specifically, we are expanding our strategic account program going into next year as we see more accounts that will benefit from incremental investment. In addition, we are investing time and resources to educate developers and large enterprise accounts and up level, they're among the DB skills.

Speaker Change: These organizations have thousands of developers and as we penetrate them more deeply we encountered developers who have historically only build sequel applications and simply do not know how to use <unk> to its full potential and our experience educating these developers and the benefits among <unk> drive significant incremental adoption of our platform.

To fund these upmarket investments, we're reallocating a portion of our mid market investments the mid market remains an attractive opportunity for us, but we believe that prioritizing investment upmarket will deliver strong returns in the current environment. We also believe there are additional ways to serve the mid market more efficiently through our self serve channel and other scaled technology enabled sales and customer.

Service motions.

Speaker Change: Second we are optimistic about the opportunity to accelerate legacy app monetization using AI and are investing more in this area.

Speaker Change: As you recall, we ran a few successful pilots earlier in this year demonstrating that AI tooling combined with professional services and a relational migrated product can significantly reduce the time cost and risk of migrating legacy applications onto Makati beat.

Speaker Change: While it's early days, we have observed a more than 50% reduction in the cost to modernize on the back of these strong early results additional customer interest is exceeding our expectations large enterprises in every industry and geography are experiencing acute pain from their legacy infrastructure and are eager for more agile performance and cost effective solution.

Speaker Change: Not only our customers excited engage with us. They also want to focus on some of the most important applications in their enterprise further demonstrating the level of interest and size of the long term opportunity.

Speaker Change: As it relational applications encompass a wide variety of database types programming languages versions in other customer specific variables. We expect monetization projects to continue to include meaningful services engagements in the short and medium term. Consequently, we're increasing our professional services delivery capabilities, both directly and through partners.

Speaker Change: In the long run, we expect to automate and simplify and large parts of the modernization process to that end, we're leveraging the learnings from early service engagements to develop new tools to accelerate future monetization efforts, although it's early days and scaling our legacy App monetization capabilities will take time, we have increased conviction that this motion will cigna.

Speaker Change: <unk> add to our growth in the long term.

Speaker Change: Third we are investing to capitalize on our inherent technical advantages as a key component of the emerging AI Tech stack. As a reminder, <unk> is uniquely equipped to query rich and complex data structures typical of AI applications. The ability of the database to query rich and complex data structures is crucial because AI applications often rely on Holly.

Speaker Change: Detailed interrelated and nuance data to make accurate predictions and decisions for example, a recommendation system doesn't just analyze the single customers purchase will also considers their browsing history peer group behaviour and product categories, requiring a database that inquiry and installing these complex data structures. In addition, <unk> architectural unified <unk>.

Source data metadata operation data and vector data and all the one platform updating the need for multiple database systems and complex backend architectures. This enables a more compelling developer experience than any other alternatives.

Speaker Change: From what we see in the market today, most customers are still in the experimental stage as they work to understand the effectiveness of the underlying tech stack and build early proof of concept applications. However, we are seeing an increasing number of AI ops in production today, we have thousands of AI apps on our platform, while we don't yet see as many of these apps actually achieving meaningful product.

Speaker Change: Market fit and therefore significant traction in fact as you take a step back and look at the entire universe of apps, a very small percentage of them have achieve the type of scale that we commonly see with enterprise specific applications.

Speaker Change: We do have some AI apps that are growing quickly, including one that is already a sudden figure workload that has grown <unk> since the beginning of the year.

Speaker Change: Similar to prior platform shifts as the usefulness of AI Tech improves and becomes more cost effective we will see the emergence of many more apps that do nail product market fit, but it's difficult to predict when that will happen more broadly.

Speaker Change: We remain confident that we will capture our fair share of the successful AI applications as we see that our platform is popular with developers building more sophisticated AI use cases.

Speaker Change: We continued investing in our product capabilities, including enterprise grade Atlas vectors search functionality to build on this momentum and even better positioned <unk> to be to capture the opportunity.

In addition, as previously announced we're bringing search and vector service to our community and EAA offerings, leveraging our run anywhere competitive vantage in the world of AI.

Speaker Change: Finally, we're expanding our <unk> applications program or map, which helps enterprise customers build and bring AI applications into production by providing them with reference architectures integrations with leading tech providers and coordinated services and support last week, we announced a new core to partners, including Mckinsey Confluent <unk>.

Speaker Change: Gemini and unstructured as well as the collaboration with meta to enable developers to build and rich applications on <unk> using llama.

Speaker Change: Next I'd like to provide you with a brief product update at our Dot local developer conference in London in October we announced the general availability of <unk> eight point out the fastest and most performing version longer to be ever more going to be eight point outperforms, 20% to 60% better against common industry benchmarks compared to our prior version and is built to exceed our.

Speaker Change: Our customers, most stringent security resiliency availability and performance requirements.

Speaker Change: Best serve our customers, we regularly review and re prioritize investments in our product portfolio to ensure we're allocating our resources to products with the highest demand from our customers and to do that we also deprecate products and im not showing results. We desire. Consequently, we made the decision to consolidate our Atlas service service offerings with our smallest dedicated tiers to create Atlas.

<unk> customers, a new offering with a simpler architecture that provides the elasticity features akin to surplus we will begin migrating effective customers as a single simple entry level solution in Q4.

Speaker Change: Also decided to deprecate Atlas device sink and other capable is not widely adopted in order to focus our engineering resources on the core platform.

Speaker Change: While these re prioritization decisions are not made lightly they allow us to deliver the most value to the largest number of customers reinforcing our commitment to be the best modern database and helping us to grow faster.

Speaker Change: Now I'd like to spend a few minutes reviewing the adoption trends among the b across our customer base.

Speaker Change: Across industries and around the world are running mission critical projects and monitoring the Atlas leveraging the full power of our developer data platform, including financial times car Gurus in Victoria Secret.

Speaker Change: As part of their digital transformation journey global specialty retailer Victorias secret and company migrate its ecommerce platform to <unk> Atlas as a fully managed platform <unk> outlets allow the company to simplify its architecture improved performance supporting the retail to provide a resilient secure and fast web and mobile e-commerce experience for their millions of <unk>.

Speaker Change: Customers around the world.

Ali <unk> Alpha <unk> Swiss post and Pelosity are turning to <unk> going to be to modernize applications pelosity, a leading provider of cloud based payroll and human capital management software.

Speaker Change: The market would be the power proprietary application aimed at fostering employee connections and engagement when traffic increased and the original sequel based solution was unable to keep up with the required performance metrics philosophy migrates to <unk> Atlas to take advantage of the flexible flexible schema architecture performance and scalability of <unk>.

Speaker Change: <unk> costs five times less than the previous sequel database solutions and the Companys developers can now create an application with the minutes something that used to take weeks.

Speaker Change: Mature companies and startups like are using <unk> to help deliver the next wave of AI powered application of the customers, including nerd wallet, Cisco and Teal book.

Speaker Change: Fuel book, a supplier intelligence platform migrated from post crest, PG Vectren elastic search demand going to be to eliminate technical debt and consolidate their tech stack the company experienced workload isolation and scalable issues in PG vector and were concerned with the search index and consistency, which were all resolved with the migration demand going to be.

Speaker Change: Without this vector search and dedicated search knows fuel book has realized improved cost efficiency and increased scalability for the supplier data platform and application that uses <unk> to collect verify and enrich supplier data across various sources.

Best serve our customers, we regularly review and re prioritize investments in our product portfolio to ensure we're allocating our resources to products with the highest demand from our customers and to do that we also deprecate products that are not showing results. We desired. Consequently, we made the decision to consolidate our Atlas service service offerings with our smallest dedicated tiers to create Atlas.

Speaker Change: In summary, we had a healthy Q3 with both Atlas and EAA exceeding expectations, we saw a strong new business quarter, and we remain confident in our ability to become an increasingly strategic provider and our large and growing market looking forward, we see a great opportunity to grow our adoption in the enterprise through new workloads.

<unk> customers, a new offering with a simpler architecture that provides the elasticity features into service, we will begin migrating effective customers as a single simple entry level solution in Q4.

Speaker Change: Modernizing legacy applications and winning the next generation of AI powered applications.

We also decided to deprecate Atlas device sink and other capabilities not widely adopted in order to focus our engineering resources on the core platform.

I would like to finish by providing an update on our senior leadership.

Speaker Change: First as we announced early in the press release after nearly 10 years, Michael Gordon has made the decision to leave Mongo DB Michael has been instrumental in monitoring your success over the past decade, leaving our successful IPO, helping us grow our revenue nearly 50 fold and scaling and successfully scaling our business model to generate meaningful operating leverage has been a trusted advisor and business.

These price re prioritization decisions are not made lightly they allow us to deliver the most value to the largest number of customers reinforcing our commitment to being the best modern database and helping us to grow faster.

Speaker Change: Now I'd like to spend a few minutes reviewing the adoption trends among the b across our customer base.

Speaker Change: The board and me over the years and also has become a personal friend Michael is excited to take a well deserved break.

Speaker Change: Customers across industries and around the world are running mission critical projects and monitoring the Atlas leveraging the full power of our developer data platform, including financial times cargoes in Victoria's secret as.

We have commenced the search for Michaels replacement and we'll be evaluating both internal and external candidates one of Michael's proudest complements accomplishments has been building a world class finance team under his leadership and I am confident that we will not Miss a beat during this transition.

Speaker Change: As part of their digital transformation journey global specialty retailer Victorias secret and company migrate its ecommerce platform to <unk> Atlas as a fully managed platform <unk> outlets allowed the company to simplify its architecture improved performance supporting the retail to provide a resilient secure and fast web and mobile e-commerce experience for their millions of <unk>.

Speaker Change: Michael will continue to serve as CFO through January 31 to help us finish the fiscal year and then we'll transition to an adviser to the company to ensure a seamless process. If you have not named Michael successor by fiscal year end surge Tonga SVP of finance will serve as interim CFO beginning on February one.

Speaker Change: Customers around the world.

Speaker Change: Ali yards Altra marks Swiss post and Pelosity opportunity are turning to market would be to modernize applications pelosity, a leading provider of cloud based payroll and human capital management software selected market would be to power proprietary application aimed at fostering employee connections and engagement when traffic increased and the original sequel based solution was unable to keep.

Speaker Change: Second we are promoting Cedric cash currently our chief revenue officer to the newly created role of President worldwide field operations in this new position Cedric will oversee all of our field based customer facing and go to market enablement teams, including professional services. We believe this org structure will best enable us to execute on some of the key strategic initiative.

Speaker Change: Up with the required performance metrics Pelosity migrates to monitoring the Atlas to take advantage of the flexible flexible schema architecture performance and scalability longer they be cost five times less than their previous sequel database solutions and the Companys developers can now create an application with the minutes something that used to take weeks.

Speaker Change: As I discussed earlier in particular increased focus on upmarket and the App monetization opportunity.

I would like to congratulate Cedric on this well deserved promotion.

Michael Gordon: With that let me turn the call over to Michael Thanks, Dave and thanks for the kind words and our incredible partnership over the past decade. The past 10 years have been the most rewarding of my professional career and I'm extremely proud of what we've achieved together and of course of the whole <unk> team.

Speaker Change: Mature companies and startups alike are using <unk> to to help deliver the next wave of AI powered applications that customers, including nerd wallet Cisco until book.

Speaker Change: Teal book, a supplier intelligence platform migrated from Postgresql, PG Vectren elastic search demand going to be to eliminate technical debt and consolidate their tech stack the company experienced workload isolation and scalability issues in PG vector and were concerned with the search index and consistency, which were all resolved with the migration demand going to be.

Michael Gordon: With as much success as we had I still believe the market abuse in the early stages of realizing its full potential as it continues to take share in one of the largest markets in software.

Michael Gordon: Now turning to the results for the quarter.

Michael Gordon: Begin with a detailed review of our third quarter results and then finish with our outlook for the fourth quarter and full fiscal year 2025.

Michael Gordon: First I will start with our third quarter results total revenue in the quarter was $529 4 million up 22% year over year and above the high end of our guidance shifting to our product mix Atlas grew 26% in the quarter compared to the previous year and now represent 68% of total revenue compared to 66% in the third quarter of <unk>.

Speaker Change: Without this vector search and dedicated search knows Tilbrook has realized improved cost efficiency and increased scalability for the supplier data platform and application that uses <unk> to collect verify an enriched supplier data across various sources.

Speaker Change: In summary, we had a healthy Q3 with both Atlas and EAA exceeding expectations, we saw a strong new business quarter, and we remain confident in our ability to become an increasingly strategic provider and our large and growing market looking forward, we see a great opportunity to grow adoption in the enterprise through new workloads, Martin modernizing legacy applications and winning the next <unk>.

Michael Gordon: 2024, and 71% last quarter.

Michael Gordon: We recognize Atlas revenue, primarily based on customer consumption of our platform and that consumption is closely tied to end user activity of their applications let.

Michael Gordon: Let me provide some context on Atlas consumption in the quarter in Q3 consumption was slightly ahead of our expectations. This year's Q3 seasonal improvement was more muted than in years past as expected on a year over year basis consumption growth remains below that of prior year period.

Speaker Change: Generation of AI powered application.

Speaker Change: I would like to finish by providing an update on our senior leadership.

Speaker Change: First as we announced early in the press release after nearly 10 years, Michael Gordon has made the decision to leave Mongo DB Michael has been instrumental in <unk> success over the past decade, leaving our successful IPO, helping us grow our revenue nearly 50 fold and scaling and successfully scaling our business model to generate meaningful operating leverage he has been a trusted advisor and business Park.

Michael Gordon: Turning to non Atlas revenue.

Speaker Change: Net loss came in significantly ahead of our expectations as Dave mentioned <unk>, New business was strong and we continue to have success selling incremental workloads into our existing customer base.

Speaker Change: In addition, our Q3 non Atlas revenue benefited from a few large multiyear deals as you know due to ASC 606, we recognize the entire term license component of a multi year contract at the start of that contract.

Speaker Change: The board and me over the years and also has become a personal friend Michael is excited to take a well deserved break.

We have commenced the search for Michaels replacement and we will be evaluating both internal and external candidates one of Michael's proudest complement accomplishments has been building a world class finance team under his leadership and I am confident that we will not Miss a beat during this transition.

Speaker Change: Compared to Q3 of last year.

Speaker Change: The multiyear license component of non Atlas revenues was over $15 million higher.

Speaker Change: Turning to customer growth during the third quarter, we grew our customer base by approximately 1900 customers sequentially, bringing our total customer count over 52600, which is up from over 46400 in the year ago period.

Speaker Change: Michael will continue to serve as CFO through January 31 to help us finish the fiscal year and then we'll transition to an adviser to the company to ensure a seamless process. If you have not named Michael successor by fiscal year end surge Tonga SVP of finance will serve as interim CFO beginning on February one.

Speaker Change: Of our total customer count over 7400 are direct sales customers, which.

Speaker Change: Second we are promoting subject cash currently our chief revenue officer to the newly created role of President worldwide field operations in this new position Cedric will oversee all of our field based customer facing and go to market enablement teams, including professional services. We believe this structure will better enable us to execute on some of the key strategic initiative.

Speaker Change: Compares to over 6900, the year ago period.

The growth in our total customer count is being driven primarily by Atlas, which had over 51100 customers at the end of the quarter compared to over 44900, a year ago period.

Speaker Change: It is important to keep in mind that the growth in our Atlas customer count reflects new customers demand going to be in addition to existing <unk> customers, adding their first Atlas.

As I discussed earlier in particular increased focus on upmarket and the App monetization opportunity.

Speaker Change: Continuing on in Q3, our net expansion rate was approximately a 120% we ended the quarter with 2000 and 314 customers with at least $100000 in IRR and annualized MLR up from 1972 in the year ago period.

Speaker Change: I would like to congratulate Cedric under his well deserved promotion.

Speaker Change: With that let me turn the call over to Michael Thanks, Dave and thanks for the kind words and our incredible partnership over the past decade. The past 10 years have been the most rewarding of my professional career and I am extremely proud of what we've achieved together and of course of the whole <unk>.

Speaker Change: Moving down the income statement I'll be discussing our results on a non-GAAP basis, unless otherwise noted.

Speaker Change: With as much success as we had I still believe the market abuse in the early stages of realizing its full potential as it continues to take share in one of the largest markets in software.

Speaker Change: Gross profit in the third quarter was $405 $7 million representing.

Speaker Change: Representing a gross margin of 77%, which is flat versus the year ago period.

Speaker Change: Now turning to the results for the quarter.

Speaker Change: Begin with a detailed review of our third quarter results and then finish with our outlook for the fourth quarter and full fiscal year 2025, first I'll start with our third quarter results total revenue in the quarter was $529 4 million up 22% year over year and above the high end of our guidance shifting to our product mix Atlas grew 26% in the quarter.

Speaker Change: Our income from operations was $101 5 million or 19% operating margin for the third quarter compared to an 18% operating margin in the year ago period.

Speaker Change: The primary reason for a more favorable operating income results versus guidance as our revenue outperformance, including the very high margin multi year license revenue benefit.

Speaker Change: Compared to the previous year and now represents 68% of total revenue compared to 66% in the third quarter of fiscal 2024, and 71% last quarter.

Speaker Change: Net income in the third quarter was $98 1 million or $1 16 per share based on $84 2 million diluted weighted average shares outstanding.

Speaker Change: We recognize Atlas revenue, primarily based on customer consumption of our platform and that consumption is closely tied to end user activity of their applications let.

Speaker Change: This compares to a net income of $79 1 million or <unk> 96 per share on $83 7 million diluted weighted average shares outstanding in the year ago period.

Speaker Change: Let me provide some context on Atlas consumption in the quarter in Q3 conceptual was slightly ahead of our expectations. This year's Q3 seasonal improvement was more muted than in years past as expected on a year over year basis consumption growth remains below that of prior year period.

Speaker Change: Turning to the balance sheet and cash flow.

Speaker Change: We ended the third quarter with $2 $3 billion in cash cash equivalents short term investments and restricted cash.

Speaker Change: Operating cash flow in the third quarter was $37 4 million.

Speaker Change: After taking into consideration approximately $2 9 million in capital expenditures and principal repayments of finance lease liabilities free cash flow was $34 $6 million in the quarter.

Speaker Change: Turning to non Atlas revenue.

Speaker Change: Atlas came in significantly ahead of our expectations as Dave mentioned <unk>, New business was strong and we continue to have success selling incremental workloads into our existing customer base.

Speaker Change: This compares to free cash flow of $35 million in the year ago period.

Speaker Change: In addition, our Q3 non Atlas revenue benefited from a few large multiyear deals as you know due to ASC 606, we recognize the entire term license component of a multi year contract at the start of that contract.

Speaker Change: In Q3, we did not incur capital expenditures to purchase IPV four addresses as we previously expected, but we did start making those purchases in November and still expect a total outlay of $20 million to $25 million. This fiscal year as we'd previously communicated.

Speaker Change: Compared to Q3 of last year.

Speaker Change: The multi year license component of non Atlas revenues was over $15 million higher.

Speaker Change: I'd now like to turn to our outlook for the fourth quarter and full fiscal year 2025.

Turning to customer growth during the third quarter, we grew our customer base by approximately 1900 customers sequentially, bringing our total customer count over 52600, which is up from over 46400 in the year ago period.

Speaker Change: For the fourth quarter, we expect revenue to be in the range of $515 million to $519 million. We expect non-GAAP income from operations to be in the range of $55 million to $58 million and non-GAAP net income per share between the range of 62 to 65 based.

Speaker Change: Of our total customer count over 7400 are direct sales customers, which compares to over 6900 in the year ago period.

Speaker Change: Based on $84 9 million estimated diluted weighted average shares outstanding.

Speaker Change: The growth in our total customer count is being driven primarily by Atlas, which had over 51100 customers at the end of the quarter compared to over 44900, a year ago period.

Speaker Change: For the full fiscal year 2025, we expect revenue to be in the range of $1 973 billion to.

To $1 $97 7 billion non-GAAP income from operations to be in the range of $242 million to 245 million and non-GAAP net income per share to be in the range of $3 <unk> to.

Speaker Change: It is important to keep in mind that the growth in our Atlas customer count reflects new customers demand going to be an addition to existing <unk> customers, adding their first Atlas Corp.

Speaker Change: The $3 <unk>.

Speaker Change: Continuing on in Q3, our net expansion rate was approximately 120% we ended the quarter with 2314 customers with at least $100000 in IRR and annualized MLR up from 1972 in the year ago period.

Speaker Change: Based on 84 million estimated diluted weighted average shares outstanding.

Speaker Change: Note that the non-GAAP net income per share guidance for the fourth quarter and full fiscal year 2025 include the non-GAAP tax provision of approximately 20%.

I'll now provide some more context around our updated guidance.

Speaker Change: Moving down the income statement I'll be discussing our results on a non-GAAP basis, unless otherwise noted.

Speaker Change: First in terms of Atlas consumption, we expect to see a typical seasonal slowdown in Q4, driven by underlying application usage moderating during the holiday season.

Gross profit in the third quarter was $405 7 million reps.

Speaker Change: Representing a gross margin of 77%, which is flat versus the year ago period.

Speaker Change: Second since Atlas consumption remained lower on a year over year basis. In Q3, we expect to see continued deceleration of Atlas year over year growth in Q4.

Speaker Change: Our income from operations was $101 5 million.

Speaker Change: Our 19% operating margin for the third quarter compared to an 18% operating margin in the year ago period.

Speaker Change: Third we expect to see a sequential decline in non Atlas revenue in Q4, which is contrary to our normal pattern the.

The primary reason for a more favorable operating income results versus guidance as our revenue outperformance, including the very high margin multiyear license revenue benefit.

Speaker Change: The reason for this is that we experienced a significant additional benefit from multi year deals in Q3, which we do not expect to recur in Q4.

Speaker Change: Net income in the third quarter was $98 1 million or one.

Speaker Change: In addition, I want to provide some incremental color on some of our recent product.

Speaker Change: Dollars 16 per share based on $84 2 million diluted weighted average shares outstanding.

Speaker Change: Some of our recent product and go to market changes will impact the growth of our reported customer count going forward.

Speaker Change: This compares to a net income of $79 1 million or <unk> 96 per share on $83 7 million diluted weighted average shares outstanding in the year ago periods.

First as Dave explained we are reallocating a portion of our go to market resources from the mid market to enterprise channel.

Speaker Change: As a result, we expect to see significantly fewer mid market direct sales customer net additions.

Speaker Change: Turning to the balance sheet and cash flow.

Speaker Change: We ended the third quarter with $2 $3 billion in cash cash equivalents short term investments and restricted cash.

Speaker Change: And as a result slower direct sales customer growth going forward.

Speaker Change: Operating cash flow in the third quarter was $37 4 million.

Speaker Change: We believe this reallocation of investment dollars will drive higher revenue growth over time, so it's a tradeoff that makes sense.

Speaker Change: After taking into consideration approximately $2 9 million in capital expenditures and principal repayments of finance lease liabilities free cash flow was $34 6 million in the quarter.

Speaker Change: Second as we introduced Atlas flex clusters in Q4 and automatically migrate customers in Q1, we expect to see a one time negative impact to our customer count since we have approximately 4000 server list customers, who are very low spending and we do not expect them to transition over to flex. These.

Speaker Change: This compares to free cash flow of $35 million in the year ago period.

Speaker Change: In Q3, we did not incur capital expenditures to purchase IPV four addresses as we previously expected, but we did start making those purchases in November and still expect a total outlay of $20 million to $25 million. This fiscal year as we had previously communicated.

Speaker Change: These customers have a negligible impact on our revenue, but will impact our reported customer account.

Speaker Change: To summarize we're pleased with our third quarter results and especially our ability to win new business. We have a small share one of the largest and fastest growing markets in all of software with a number of secular tailwind, including AI at our back we'll continue investing judiciously and focusing on our execution to capture this long term opportunity with that we'd like to open it up to questions.

Speaker Change: I would now like to turn to our outlook for the fourth quarter and full fiscal year 2025.

For the fourth quarter, we expect revenue to be in the range of $515 million to $519 million. We expect non-GAAP income from operations to be in the range of $55 million to $58 million and non-GAAP net income per share to be in the range of 62 to 65 based.

Speaker Change: Operator.

Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone.

Speaker Change: Based on $84 9 million estimated diluted weighted average shares outstanding.

Speaker Change: We also ask that you wait for your name and company should be announced before you proceed with your question.

Speaker Change: For the full fiscal year 2025, we expect revenue to be in the range of $1 97 3 billion to.

Speaker Change: Our first question for the day will be coming from <unk> <unk> of Morgan Stanley. Your line is open.

Speaker Change: <unk> to $1 $97 7 billion non.

Speaker Change: non-GAAP income from operations to be in the range of $242 million to 245 million and non-GAAP net income per share to be in the range of $3 <unk>.

Speaker Change: Thank you for taking the questions and congrats Michael on in South Korea, or you had an absolutely fantastic brand among other DB.

Speaker Change: The $3 three.

Speaker Change: I had to see what you do next or excited if you just take a breather so congrats Michael.

Speaker Change: Based on 84 million estimated diluted weighted average shares outstanding.

Speaker Change: I guess to take the question to start off with.

Speaker Change: The non-GAAP net income per share guidance for the fourth quarter and full fiscal year 2025 include the non-GAAP tax provision of approximately 20%.

The questions when we look at what Atlas has been doing the past two quarters correct me, if I'm wrong, but I think consumption coming in at least modestly ahead of your expectations.

Speaker Change: I'll now provide some more context around our updated guidance.

Speaker Change: First in terms of Atlas consumption, we expect to see a typical seasonal slowdown in Q4, driven by underlying application usage moderating during the holiday season.

Speaker Change: Relative to what we've seen at the beginning of the year, what sort of is it a function of sales execution is it a function of the end user activity sort of improving.

Speaker Change: Second since Atlas consumption remained lower on a year over year basis. In Q3, we expect to see continued deceleration of Atlas year over year growth in Q4.

Speaker Change: What's driving at least the <unk>.

Speaker Change: Proved mint in Atlas consumption, the past few quarters.

Speaker Change: Yes, so a few different things. So I think if you look at our outlook at the beginning of the year. We had indicated that we thought we would see stable Atlas growth from a consumption standpoint, what we've seen and what we've talked about is we've actually seen lower year over year growth based off of the underlying consumption.

Third we expect to see a sequential decline in non Atlas revenue in Q4, which is contrary to our normal pattern.

Speaker Change: The reason for this is that we experienced a significant additional benefit from multi year deals in Q3, which we do not expect to recur in Q4.

Speaker Change: In addition, I want to provide some incremental color on some of our recent product.

Speaker Change: And so and that's incorporated into our Q4 guide.

Speaker Change: Some of our recent product and go to market changes will impact the growth of our reported customer count going forward.

Speaker Change: We.

Speaker Change: <unk> seen.

Speaker Change: First as Dave explained we are reallocating a portion of our go to market resources from the mid market to the enterprise channel.

Speaker Change: The Q3, and Q4, sorry, Q2, and Q3 excuse me be better than our expectations, but it's still down on a year over year basis, and so I want to make sure that we're in.

Speaker Change: As a result, we expect to see significantly fewer mid market direct sales customer net additions.

Speaker Change: Are confusing the the comparative set of year over year versus relative to our expectations.

Speaker Change: And as a result slower direct sales customer growth going forward we've.

Speaker Change: Understood.

Speaker Change: We believe this reallocation of investment dollars will drive higher revenue growth over time, so it's a tradeoff that makes sense.

Speaker Change: The carbon LNG due to your question is really the underlying usage of the applications.

Speaker Change: Second as we introduced Atlas flex clusters in Q4 and automatically migrate customers in Q1, we expect to see a one time negative impact to our customer count since we have approximately 4000 server less customers, who are very low spending and we do not expect them to transition over to flex.

Speaker Change: Yes that makes total sense and then Dave I have to ask you. The AI agent question in terms of an AI agent needing more context. It has going to have a set of tools to take its actions what does it mean for Mongo DB is an operational data store.

Speaker Change: Customer start to rollout more adjourn tech applications.

Speaker Change: These customers have a negligible impact on our revenue, but will impact our reported customer count.

Speaker Change: Yes so.

Speaker Change: Just to talk about agents I think when you think about the agents.

Speaker Change: To summarize we're pleased with our third quarter results and especially our ability to win new business. We have a small share one of the largest and fastest growing markets in all of software with a number of secular tailwind, including AI at our back we'll continue investing judiciously and focusing on our execution to capture this long term opportunity with that we'd like to open it up to questions.

Theres jobs.

Speaker Change: Sorry.

Speaker Change: Our job this projects and then this task right now the agents that are being rolled out are really focused on tasks like say something from Sierra or some other companies that are rolling out agents.

Speaker Change: But youre right well, what they deemed to do is to deal with.

Speaker Change: Operator.

Speaker Change: Being able to create a rich and complex data structures now why is this important for.

Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone.

Speaker Change: AI is that AI models don't just look at isolated data points, but they need to understand relationships hierarchies and patterns. When this when the data they need to be able to.

Speaker Change: We also ask that you wait for your name and company should be announced before you proceed with your question.

Speaker Change: Our first question for the day will be coming from <unk> <unk> of Morgan Stanley. Your line is open.

Speaker Change: Essentially you get real time insights for example, if you have a chat bot where someone's clearing.

Speaker Change: Thank you for taking the questions and congrats Michael on in South Korea, or you had an absolutely fantastic running Mongo DB.

Our customers kind of trying to get some update on the order they placed five minutes ago, because they may have not gotten any confirmation youre chatbot needs to be able to deal with real time information you need to be able to deal with.

Speaker Change: I have to see what you do next or excited if you just take a breather so congrats Michael.

Speaker Change: I guess to take the question to start off with.

Speaker Change: Basically handling.

Speaker Change: The questions when we look at what Atlas has been doing the past two quarters correct me, if I'm wrong, but I think consumption coming in at least modestly ahead of your expectations.

Speaker Change: A very advanced use cases understanding like things do things like fraud detection to understand behaviors of supply chain. So you need to understand integrate data relationships. All of these things are consistent with Mongo DB offers and so we believe that at the end of the day, we are well positioned to.

Speaker Change: Relative to what we've seen at the beginning of the year, what sort of is it a function of sales execution is it a function of the end user activity sort of improving.

To handle this and the other thing that I would say is that we've embedded in a very natural way search and Vectra Serge. So we're just not in <unk> database, we do tech search and Vectra search.

Speaker Change: What's driving at least the <unk>.

Speaker Change: <unk> mint in Atlas consumption, the past few quarters.

Speaker Change: Yes, so a few different things. So I think if you look at our outlook at the beginning of the year. We had indicated that we thought we would see stable Atlas growth from a consumption standpoint, what we've seen and what we've talked about is we've actually seen lower year over year growth based off of the underlying consumption.

All one experience and no other platform offers that and we think we have a real advantage and so we're integrated with the leading AI frameworks and platforms, we have enterprise grade security and compliance.

Speaker Change: And customers can run us anywhere either on a 118 cloud regions or on Prem and that that again is a huge differentiator for us.

Speaker Change: And so and that's incorporated into our Q4 guide.

Speaker Change: Awesome I appreciate the thoughts there.

Speaker Change: We.

Speaker Change: <unk> seen.

Speaker Change: Thanks Angie.

Speaker Change: The Q3, and Q4, sorry, Q2, and Q3 excuse me be better than our expectations, but it is still down on a year over year basis, and so I want to make sure that we're in.

Speaker Change: Thank you and the next question.

Speaker Change: And our next question will be coming from the line of Taylor.

Speaker Change: Are confusing the comparative set of year over year versus relative to our expectations.

Speaker Change: Tyler Radke.

Speaker Change: Your line is open.

Speaker Change: Understood.

Sanjay: The carbon Sanjay.

Speaker Change: Alright, Thank you very much for taking the question and Michael all the best and congratulations on 10 years.

Sanjay: <unk> is really the underlying usage of the applications.

Sanjay: Yes that makes total sense and then Dave I have to ask you. The AI agent question in terms of an AI agent needing more context. It has going to have a set of tools to take its actions.

Speaker Change: Going back to the sales execution I mean, one of the things that you talked about earlier this year was.

Speaker Change: Some challenges just in terms of the.

Speaker Change: Does it mean for Mongo DB is an operational data store.

Recently acquired workloads ramping and I think a lot of those were from.

Speaker Change: Customer start to rollout <unk> applications.

Speaker Change: The past fiscal year. So so curious how the quality of workload acquisition has trended this year and.

Speaker Change: Yes so.

Speaker Change: Just to talk about agents I think when you think about agents.

Speaker Change: Do you think about the ramp in consumption potential into next year, how does that sort of look versus this time a year ago.

Speaker Change: Theres jobs.

Speaker Change: Yes.

Speaker Change: Sorry, John.

Speaker Change: Job. This projects and then this task right now the agents that are being rolled out are really focused on tasks like say something from Sierra or some other companies are rolling out agents.

Speaker Change: Yes, maybe I'll just talk about what we're doing and the changes we made and then Michael can talk a little bit about the consumption trends. So.

Speaker Change: So we did make some changes at the beginning of the year and we really wanted to focus on both the volume and the quality of the workloads.

But you are right what they deemed to do is to deal with.

Speaker Change: Being able to create a rich and complex data structures now why is this important for.

Speaker Change: And.

Speaker Change: There was some slight adjustments that we've made we think those changes are having a reasonable positive impact again, it's too early to declare victory because these workloads as we usually start small and grow over time, but we're really pleased with the results we're seeing so far.

Speaker Change: AI is that AI models don't just look at isolated data points, but they need to understand relationships hierarchies and patterns. When this when the data they need to be able to.

Speaker Change: Essentially get real time insights for example, if you have a chatbot where someone's clearing.

Speaker Change: But again, it's early days.

Speaker Change: <unk>.

Speaker Change: Obviously, you all know about the fiscal 'twenty five workloads as we go into fiscal 'twenty six, but so far so good Michael and consumption, Yes, just a couple of things and thanks Tyler.

Speaker Change: Our customers kind of trying to get some update on the order they placed five minutes ago, because they may have not gotten any confirmation youre chatbot needs to be able to deal with real time information you need to be able to deal with.

Speaker Change: The fiscal 'twenty four cohorts that we called out earlier.

Speaker Change: Basically handling.

Speaker Change: Lower growth does continue.

Speaker Change: A very advanced use cases understanding like things do things like fraud detection to understand behaviors in supply chain you need to understand interested data relationships. All of these things are consistent with Mongo DB offers and so we believe that at the end of the day, we are well positioned to.

Speaker Change: Line with our revised expectations we.

Speaker Change: We made some changes that we talked about it earlier in the year.

That should affect the fiscal 'twenty five cohorts, but it's just too early to tell on those we need a few more quarters of data before you can really see.

Speaker Change: How we're seeing those.

Speaker Change: Behave differently I will say, we've talked about the new business environment and our success in new business, we have been pleased with that but.

Speaker Change: To handle this and the other thing that I would say is that we've embedded in a very natural way search and Dr. Serge. So we're just not in OLED TV database, we do tech search and vector search.

Speaker Change: That just shows kind of the initial piece, we need to see how they how they grow and how those cohorts evolve.

Speaker Change: Great. Thanks, and follow up on the <unk> side, you talked about the outsized strength in <unk>.

Speaker Change: All one experience and no other platform offers that and we think we have a real advantage and so we're integrated with the leading AI frameworks and platforms, we have enterprise grade security and compliance.

Non Atlas business this quarter.

Speaker Change: Maybe if you could unpack like the relative upside that was that was driven by simply duration versus versus new business I know you called out.

Speaker Change: And customers can run us anywhere either on a 118 cloud regions or on Prem and that that again is a huge differentiator for us.

Speaker Change: The duration impact year over year, but.

Speaker Change: Awesome I appreciate the thoughts.

Do you feel like this was sort of a one off or do you feel like maybe some of your bigger customers are indexing more towards EMEA and how does that impact the way you think about the product and introducing things like sector search and stream processing under the on Prem products.

Thanks Angie.

Speaker Change: Thank you Mr next questions.

Speaker Change: And our next question will be coming from the line of Taylor.

Tyler Radke: Tyler Radke.

Speaker Change: Yes. Thank you. So overall, we continue to find the EA product resonate with customers. It is an important part of the run anywhere strategy and we've continued to see successful there and people wanting to increase their investment in Mongo DB Theres always been a multi year component.

Tyler Radke: Your line is open.

Speaker Change: Alright, Thank you very much for taking the question and Michael all the best and congratulations on 10 years.

Speaker Change: Going back to the sales execution I mean, one of the things that you talked about earlier this year was.

Speaker Change: And we continue to see that we talked about that at the beginning of the year as to how fiscal 'twenty four had an abnormally high amount of multi year benefit and therefore, we were anticipating that being a headwind and we quantified that in roughly the $40 million range.

Speaker Change: Some challenges just in terms of the.

Speaker Change: Recently acquired workloads ramping and I think a lot of those were from.

Speaker Change: The past fiscal year, so curious how the quality of workload acquisition has trended this year and as you think about the ramp in consumption potential into next year, how does that sort of look versus this time a year ago.

Speaker Change: What we talked about on this call earlier as we saw from a few.

Speaker Change: Yes, maybe I'll just talk about.

Speaker Change: Large accounts.

Speaker Change: What we're doing and the changes we made and then Michael you can talk a little bit about the consumption trends. So.

Speaker Change: A surprising amount of multi year that positively benefited Q3.

Speaker Change: So we did make some changes at the beginning of the year and we really wanted to focus on both the volume and the quality of the workloads.

Speaker Change: Add a little more than $15 million in revenue compared to what we saw Q3 a year ago.

Speaker Change: And.

Speaker Change: And there was some slight adjustments that we've made we think those changes are having a reasonable positive impact again, it's too early to declare victory. Because these workloads that are usually start small and grow over time, but we're really pleased with the results we're seeing so far.

So not as much of a headwind as we had been expecting obviously with the $6 six dynamic some of these things, especially for a large deal can be kind of media and chunky and lumpy, which is why we try and call it out and sort of help people understand but there is a pretty healthy kind of baseline flow.

Speaker Change: But again, it's early days.

Speaker Change: <unk>.

Tyler Radke: Obviously, we all know about the fiscal 'twenty five workloads as we go into fiscal 'twenty six, but so far so good Michael and consumption, Yes, just a couple of things and thanks Tyler.

Not just the VA, but also a multiyear and when we see spikes, we just try and call it out for you.

Speaker Change: Yes, I just wanted to add Tyler that we are investing in our what we call. Our EA business first we're starting by investing with search and vector search in a community product that does a couple of things for us one.

Tyler Radke: The fiscal 'twenty four cohorts that we called out earlier.

Tyler Radke: Lower growth does continue.

Speaker Change: Whenever anyone starts with market B with the open source product they need to get all the benefits of that complete.

Line with our revised expectations we.

Tyler Radke: We made.

Tyler Radke: Some changes that we talked about it earlier in the year.

Speaker Change: Highly integrated platform to those capabilities will then migrate to EMEA. So EBITDA for US is an investment strategy, we definitely see lots of large customers who are very very <unk>.

Tyler Radke: It should affect the fiscal 'twenty five cohorts, but it's just too early to tell on those we need a few more quarters of data before you can really see.

How we're seeing those.

Tyler Radke: Hey differently I will say, we've talked about the new business environment and our success in their business, we have been pleased with that but.

Committed to running workloads on Prem, we even see some customers want who run to run AI workloads on Prem so the optionality they get by using <unk> to be to not just be on prem in the cloud, but also cross cloud is a very compelling one.

Tyler Radke: That just shows kind of the initial piece that we need to see how they how they grow and how those cohorts evolve.

Speaker Change: Great. Thanks, and follow up on the EBITDA side, you talked about the outsized strength in non Atlas business this quarter.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for the next questions.

Speaker Change: Maybe if you could unpack like the relative upside that was that was driven by simply duration versus versus new business I know you called out.

Speaker Change: And our next question will be coming from the line Brad.

Speaker Change: <unk>.

Speaker Change: Stifel. Your line is open.

The duration impact year over year, but.

Speaker Change: Okay.

Speaker Change: Great. Thanks very much.

Speaker Change: Do you feel like this was sort of a one off or do you feel like maybe some of your bigger customers are indexing more towards EBITDA and how does that impact the way you think about the product and introducing things like vector search and stream processing under the on Prem products.

Speaker Change: Michael Best of luck, it's been a great run.

Speaker Change: Dave you started the call talking about a bunch of investments, which are great given the growth of the business.

Speaker Change: Obviously, you talked about reallocating some expenses, but net net should we think about this.

Speaker Change: Yes. Thank you. So overall, we continue to find the EA product resonate with customers. It is an important part of the run anywhere strategy and we've continued to see success with air and people wanting to increase their investment in <unk>. There has always been a multi year component.

Speaker Change: Incremental investment phase next year as gating margin upside.

Speaker Change: I think thats something that we obviously are not ready to talk about next year, just now, but I would say that the.

Speaker Change: The reason, we're looking to invest in just to summarize again going up market.

Speaker Change: And we continue to see that we talked about that at the beginning of the year as to how fiscal 'twenty four had an abnormally high amount of multi year benefit and therefore, we were anticipating that being a headwind and we quantified that in roughly the $40 million range.

Speaker Change: On legacy App monetization, where we see a.

Very large workloads potentially.

Speaker Change: And being the ideal database for Gen AI apps, which is the future as important investments to drive long term growth and we're quite energized by those investments and Thats something that we have high conviction on.

We talked about on this call earlier as we saw from a few.

Speaker Change: Yeah.

Speaker Change: That's great and then on the map program.

Speaker Change: Large accounts.

Speaker Change: Are most of those workloads kind of wind up in Atlas or will that be a healthy combination of EAA and Atlas.

Speaker Change: Surprising amount of multi year that positively benefited Q3.

Speaker Change: Add a little more than $15 million in revenue compared to what we saw Q3, a year ago. So not as much of a headwind as we had been expecting obviously with a $6 six dynamic some of these things, especially for a large scale can be kind of media and chunky and lumpy, which is why we try and call it out and sort of help.

Speaker Change: I think it's again early days I would say.

Speaker Change: Probably more on the side of Atlas in EMEA in the early days I think once we introduce.

Speaker Change: Search and vector search into the EA product that youll see more of that on Prem obviously people can use <unk> for AI workloads using other technologies as well in conjunction with market DB for on Prem.

Speaker Change: People understand but there is a pretty healthy kind of baseline flow not just the VA, but also a multiyear and when we see spikes, we just try and call it out for you.

Speaker Change: <unk> use cases, but I would say, you're probably going to see that happen first.

Speaker Change: And Atlas.

Speaker Change: Great. Thanks, very much thank you.

Speaker Change: Yes, I just wanted to add Tyler that we are investing in our what we call. Our EA business first of all starting by investing with search and vector search in a community product that does a couple of things for us one.

Speaker Change: Thank you and one moment to the next question.

Speaker Change: Our next question will be coming from the line of Jason Adler.

Speaker Change: William Blair Your line is open.

Speaker Change: Anyone starts to the market to be with the open source product they need to get all the benefits of that complete.

Speaker Change: Okay.

Speaker Change: Yes. Thank you.

Speaker Change: I'm not going to.

Speaker Change: Highly integrated platform to those capabilities will then migrates to EMEA. So EA for US is an investment strategy, we definitely see lots of large customers who are very very committed.

Speaker Change: The labor.

Speaker Change: Gratulate, Michael but it has been it has been fun working with you and best of luck.

Speaker Change: The question I have is on the strength in EMEA.

Speaker Change: Do you think David represents a comment on how enterprises might be rethinking of reassessing, the kind of on Prem versus cloud.

Committed to running workloads on Prem, we even see some customers want to run to run AI workloads on Prem so the optionality they get by using <unk> to not just be on Prem in the cloud, but also cross cloud is a very compelling one.

Speaker Change: Workload placement decision.

Speaker Change: Well when I think about large enterprises I think large enterprises have meaningful workloads that are still running on Prem I think the belief that everything would go to the cloud was probably something that was really popular in the good old days observed but.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for the next question.

Speaker Change: And our next question will be coming from the line of Brad.

But I think now as customers assess their investments that they already have in place.

Speaker Change: Back.

Speaker Change: Of Stifel. Your line is open.

Speaker Change: They are being <unk>.

Speaker Change: Great. Thanks very much.

Speaker Change: Much more judicious about where they run those workloads and if they think they can leverage their exist.

Speaker Change: Michael Best of luck, it's been a great run.

Speaker Change: Dave you started the call talking about a bunch of investments, which are great given the growth of the business and obviously you talked about reallocating some expenses, but net net should we think about this.

Speaker Change: Existing investments in their own infrastructure, then theyre going to do so also for a bunch of other reasons like regulatory reason some customers are.

Speaker Change: Quite not moving as aggressively to the cloud we see that in particular in Europe, where we see a lot of the European banks still running majority of the workloads on Prem. So it also varies by region. We're conversing in Asia, we're seeing people much move much more aggressively.

Speaker Change: Incremental investment phase next year as gating margin upside.

Speaker Change: I think thats something that we obviously are not ready to talk about next year, just now, but I would say that the.

Speaker Change: Up to the cloud so I think it really depends on industry on geography, and the personal <unk>.

The reason, we're looking to invest in just to summarize again going up market.

Speaker Change: Dynamics of.

On legacy App monetization were received.

Speaker Change: What's happening with that particular count I mean, we see some large U S. Banks are also very committed to running things on Prem. So it really varies and that's why we feel really good about our run anywhere strategy because it gives customer optionality. They can build something that run on prem.

Speaker Change: Very large workloads potentially.

Speaker Change: And being the ideal database for Gen AI apps, which is the future as important investments to drive long term growth and we're quite energized by those investments and Thats something that we have high conviction on.

If and when they choose to move to the cloud, it's very easy to do so with monotherapy.

Speaker Change: Alright, and then just as a follow up also on the investments you're making in strategic sales in enterprise.

Speaker Change: That's great and then on the map program.

Speaker Change: Are most of those workloads kind of wind up in Atlas or will that be a healthy combination of EAA in Atlas.

Speaker Change: Could you just get a little more specific on what those investments.

Speaker Change: I think it's again early days I would say.

Speaker Change: B is it hiring a lot of new salespeople is it working more with size of investing more in size any additional detail would be helpful. Thanks.

Speaker Change: More on the side of Atlas in EMEA in the early days I think once we introduce.

Search and vector search into the EIA product that youll see more of that on Prem obviously people can use <unk> for AI workloads using other technologies as well in conjunction with Margaritaville for on Prem.

Speaker Change: So just for everyone's benefit.

Speaker Change: We've identified a number of accounts, which we call strategic accounts, which we think that.

Speaker Change: Have high upside for us we've seen a number of accounts that grow very quickly when we deployed the right mix of resources now they are all not necessarily.

Speaker Change: Use cases, but I would say you could probably going to see that happen first and.

Speaker Change: In Atlas.

Speaker Change: Great. Thanks, very much thank you.

Speaker Change: Quota carrying resources that could be additional technical sales resources.

Speaker Change: Thank you and one moment to the next question.

Speaker Change: Additional resources additional customer service resources to better service and support those accounts, we even do things like run education sessions for <unk>.

Speaker Change: Our next question will be coming from the line of Jason Ader of William Blair. Your line is open.

Speaker Change: Okay.

Speaker Change: Development of the accounts they called.

Yes. Thank you.

Speaker Change: Either hackathons or like what.

Speaker Change: I'm not going to.

Speaker Change: The labor congratulated.

What do we call it developer days or even design reviews, where we'll meet with the development teams are looking to build an application to help them think about how they would potentially use <unk> to build that particular app and what we find is that because many of these developers the experience with <unk> is quite limited the more we can engage with them the more we can.

Speaker Change: Congratulate Michael but it has been it has been fun working with you and best of luck.

Speaker Change: The question I have is on the strength in EMEA.

Speaker Change: Do you think David represents a comment on how enterprises might be rethinking of reassessing, the kind of on Prem versus cloud workload placement decision.

Speaker Change: Educate them and the more we can show them, how simple and easy. It is like like for example, most customers today think like that to use the <unk> database search database, maybe a vector database and then like a caching database and all of that is integrated and <unk>. So all of a sudden customers can say wow I can simplify my life simplify my back.

Speaker Change: Well when I when I think about large enterprises I think large enterprises have meaningful workloads that are still running on Prem I think the belief that everything would go to the cloud was probably something that was really popular in the good old days observed.

But I think now as customers assess their investments that they already have in place.

Speaker Change: Infrastructure build build this app far more quickly and it will be much more easier to manage long term baidu everything on market would be and it is really a function of just educating them on the power among them to be that really opens up a lot of opportunities for us. So that's why we are doubling down and the mix of resources is really predicated on the on the on the <unk>.

They are being <unk>.

Speaker Change: Much more judicious about where they run those workloads and if they think they can leverage their existing investments in their own infrastructure, then theyre going to do so also for a bunch of other reasons like regulatory reason some customers are.

Quite not moving as aggressively to the cloud we see that in particularly in Europe, where we see a lot of the European banks still running majority of the workloads on Prem. So it also varies by region, whereas Conversely in Asia, we're seeing people much move much more aggressively to the up.

But it's not just quota carrying resources as the whole suite of resources that we bring to the table.

Thank you.

Speaker Change: Okay.

Speaker Change: Thank you one moment for the next questions.

Speaker Change: Up to the cloud so I think it really depends on industry on geography, and the personal dynamics of.

Speaker Change: Our next question will be coming from the line of <unk>.

Speaker Change: Andrew Nowinski.

Speaker Change: What's happening in that particular count I mean, we see some large U S. Banks are also very committed to running things on Prem. So it really varies and that's why we feel really good about our run anywhere strategy because it gives customer optionality. They can build something then run on Prem.

Speaker Change: Of Wells Fargo. Your line is open.

Speaker Change: Okay. Good afternoon. Thank you very much for taking the question and congrats on a nice quarter.

Speaker Change: You gave an example of a customer that migrated off post for us and I think you said they had issues with their PG vector.

Speaker Change: If and when they choose to move to the cloud, it's very easy to do so with Margaritaville.

Speaker Change: Function I was wondering.

Speaker Change: How long is that customer using post cross before they decided to make a change to mongo, meaning was there some sort of like a rebound type customer where they are.

Speaker Change: Alright, and then just as a follow up also on the investments youre, making in strategic sales in enterprise.

Speaker Change: Could you just get a little more specific on what those investments might be is it hiring a lot of new salespeople is it working more with size of investing more in size any additional detail would be helpful. Thanks.

Speaker Change: Chose pega excuse me post growth and it didn't work and then how frequently are you seeing this type of transition.

Speaker Change: Yes, so so.

Speaker Change: Can't give you the specifics on how long they were using postgresql, but this is not this is a trend that we're seeing in our business you have to remember post crest is a 40 year old technology and they have been the beneficiary of people lifting and shifting from other types of relational databases Oracle sequel server My sequel etcetera.

Speaker Change: Yes, so just for everyone's benefit we've identified a number of accounts, which we call strategic accounts, which we think that.

Speaker Change: Have high upside for us we've seen a number of accounts that grow very quickly when we deployed the right mix of resources now they are all not necessarily.

Speaker Change: And they are an open source database and.

Speaker Change: Quota carrying resources, there could be additional technical sales resources.

Speaker Change: But as part of <unk> because of an open source and a relational database. They have the same inherent challenges all relational databases do they are quite and flexible. So once you build the scheme, that's very hard to change the schema, it's hard to scale and hard to distribute data and if you have large.

Speaker Change: Additional resources additional customer service resources to better service and support those accounts, we even do things like run education sessions for <unk>.

Speaker Change: Development of the accounts they called.

Either hackathons or like what.

Speaker Change: Large data volumes you have to do weird things like for example resort to off road storage for large data objects, which creates performance bottlenecks and so again people default to post aggressive I don't know anything better because all day knows relational and everyone is kind of moving off those other relational platforms and thats. The whole point I was saying earlier once we <unk>.

Speaker Change: What do we call it developer days or.

Or even design reviews, where we'll meet with our development teams are looking to build an application to help them think about how they would potentially use mongo DB to to build that particular app and what we find is that because many of these developers the experience with <unk> is quite limited the more we can engage with them. The more we can educate them and the more we can show them how soon.

Speaker Change: <unk> developers on the flexibility of schema, how easily so our horizontal scale the rich query language, where you can do aggregations and do sophisticated geospatial indexes.

Speaker Change: Simple and easy it is like like for example, most customers today think like they have to use the <unk> database search database, maybe a vector database and then like a caching database and all of that is integrated and <unk>. So all of a sudden customers can say wow I can simplify my life simplify my backend infrastructure build.

Speaker Change: The productivity gains by using the document model and how easy is to organize data.

Speaker Change: People are just like Wow its life, so much easier now I want to be clear.

Speaker Change: This is not a zero sum game post stress does not have to fail for us to be successful, it's a big market and we're quite excited about the opportunity, but we do see customers moving up close to us in coming to market.

Speaker Change: <unk> app far more quickly and it will be much more easier to manage long term baidu everything on market would be and it's really a function of just educating them on the power among to be that really opens up a lot of opportunities for us. So that's why we're doubling down and the mix of resources is really predicated on the on the on.

Speaker Change: Thank you that was very helpful and maybe just a quick follow up if we if we normalize the $15 million of multiyear deal impact you had in Q3.

The accounts, but it's not just quota carrying resources as the whole suite of resources that we're bringing to the table.

Speaker Change: <unk> still be down sequentially in Q4, thank you.

Speaker Change: We haven't given that level of guidance, but I'm just trying to help you understand in the context of the full year numbers and the headwinds that we've talked about at the beginning of the year just given the strength that we saw in Q3.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you one moment for the next questions.

Speaker Change: Our next question will be coming from the line of Ann.

Speaker Change: Got it thanks.

Speaker Change: Andrew Nowinski.

Speaker Change: Thank you and one moment for the next question.

Speaker Change: Of Wells Fargo. Your line is open.

Speaker Change: Okay.

Speaker Change: Okay. Good afternoon. Thank you very much for taking the question and congrats on a nice quarter.

Speaker Change: The next question will be coming from the line of Raimo.

Speaker Change: Lynn Zhao of Barclays. Your line is open.

Speaker Change: You gave an example of a customer that migrated off post for us and I think you said they had issues with their PG vector.

Okay. Thank you.

Speaker Change: Okay.

Speaker Change: You think about the any.

Speaker Change: <unk> I was wondering.

Speaker Change: Strength this quarter, Michael you'd kind of give us a little bit.

Speaker Change: How long is that customers are using post crossed before they decided to make a change to mongo, meaning was there some sort of like a rebound type customer where are they.

Speaker Change: How should we think about renewal the renewal renewal pool coming up like <unk> or that you have in Q3.

Chose pega excuse me post growth and it didn't work and then how frequently are you seeing this type of transition.

Coming up in Q4 et cetera as well.

Speaker Change: And then like.

Speaker Change: What does it mean in terms of upsell cross sell.

Speaker Change: Yes, so so I can't give you the specifics on how long they were using postgresql, but this is not this is a trend that we're seeing in our business you have to remember post crest is a 40 year old technology.

Speaker Change: Yes people think about starting AI projects.

Speaker Change: So as you kind of mentioned earlier on the call.

Yeah.

Speaker Change: Yes, so I think about if you think about EAA for Q4, it tends to be a large renewal order, but what we're talking about in terms of the guide is because we had such strength in multi year, that's where we would expect to see.

Speaker Change: <unk> been the beneficiary of people lifting and shifting from other types of relational databases Oracle sequel server mice equal et cetera, and there an open source database and.

Speaker Change: EAP down sequentially, which is not typically our pattern, which is why we called it out in terms of AI workloads and some of those other things I think it's early to tell and obviously, we will continue to.

Speaker Change: But as part because theyre in open source.

Speaker Change: Database they have the same inherent challenges all relational databases do they are quite and flexible. So once you build the scheme is very hard to change the schema, it's hard to scale and hard to distribute data.

Speaker Change: Evolve and assess our view when we get to the full year guide in March.

And if you have large.

And then we'll also have an updated view on how the cohorts are behaving and sort of multi year played out.

Speaker Change: Large data volumes, yet to do weird things like for example resort to off road storage for large data objects, which creates performance bottlenecks and so.

Speaker Change: But I think in terms of Q4.

Speaker Change: People default to post stress if they don't know anything better because all day knows relational and everyone is kind of moving off those other relational platforms and thats. The whole point I was saying earlier once we educate developers on the flexible schema how easily so our horizontal scale. The rich query language, where you can do aggregations and do sophisticated geospatial indexes.

Speaker Change: So the.

Speaker Change: The comments that I made earlier hopefully will help.

Speaker Change: Yes, okay perfect.

Speaker Change: And then.

Speaker Change: Can you talk a little bit about like obviously that the debate like rich database will be the persistence layer. If you do AI projects et cetera, what do you see from the Big Hyperscale guys in terms of working with you guys and partnerships, we obviously need to tap AWS kind of summit et cetera can you speak a little bit like how your relationship with those guys.

Speaker Change: The productivity gains by using the document model and how easy is to organize data.

Speaker Change: People are just like Wow life, so much easier now I want to be clear.

Evolving around it and Michael all of US Jay and Keith I can talk to you.

Speaker Change: This is not a zero sum game post stress does not have to fail for us to be successful, it's a big market and we're quite excited by the opportunity, but we do see customers moving off <unk> coming to market.

Speaker Change: Yes, so I'll start with the partnerships first like.

Speaker Change: Our.

Speaker Change: With AWS as you said, they just had their reinvent show last week.

Speaker Change: So it remains very very strong.

Speaker Change: Thank you that was very helpful and maybe just a quick follow up if we if we normalize the $15 million multiyear deal impact you had in Q3 with Eas.

Speaker Change: Close the kind of deals this past quarter.

Speaker Change: Some of them very very large deals we're doing integrations to some of the new products like <unk> and bedrock and the engagement of the field has been really strong on azure.

Speaker Change: <unk> still be down sequentially in Q4, thank you.

Speaker Change: We haven't given that level of guidance, but just trying to help you understand in the context of the full year numbers and the headwind that we've talked about at the beginning of the year just given the strength that we saw in Q3.

Speaker Change: As I've shared in the past, we start off with a little bit of a slow start but in the words of the person who runs our partner leadership.

Speaker Change: Among the <unk> relationship has never been stronger.

Speaker Change: Got it thanks.

Speaker Change: We've closed a large number of deals we're part of what's called the Azure Native IC service program and have a bunch of deep integrations with azure, including fabric powered by visual studio Samantha Carnival and Azure open AI studio and we're also one of <unk> largest marketplace partners and GCB does.

Speaker Change: Thank you and one moment for the next question.

Speaker Change: Yeah.

Speaker Change: The next question will be coming from the line of Raimo.

Speaker Change: Lynn Zhao of Barclays. Your line is open.

Speaker Change: Okay. Thank you.

Speaker Change: Okay.

Speaker Change: We've actually seen some uptick in terms of cross sales that we've done this past quarter <unk>.

Speaker Change: If you think about the E.

Speaker Change: Strength this quarter, Michael you'd kind of give us a little bit like.

Speaker Change: <unk> made some comp changes were that were favorable to working with them all going to be that we saw some results in the field then.

Speaker Change: How should we think about renewal the renewal renewal pool coming up.

Speaker Change: And we're focused on closing on a closing a handful of large deals with GCB and Q4, so in general I would say.

Speaker Change: You have to in Q3 coming up in Q4 et cetera as well.

Speaker Change: And then like what does it mean in terms of the upsell cross sell opportunity as people think about starting AI projects.

Speaker Change: Things are going quite well and then in terms of I guess implied in your question was like.

Speaker Change: The hyperscale or are they potentially bundling.

So as you kind of mentioned earlier on the call.

Speaker Change: Sure.

Speaker Change: Things along with their AI offerings, I mean candidly since.

Speaker Change: Yes, so I think about if you think about EAA for Q4, it tends to be a large renewal order, but what we're talking about in terms of the guide is because we had such strength in multi year, that's where we would expect to see.

Speaker Change: Since day, one the Hyperscale as had been bundling their database offerings with every offering that they have and thats been there.

Speaker Change: The predominant strategy and we've I think we've executed well against strategy because.

Databases are not like a by the way decision, it's an important decision.

Speaker Change: EAP down sequentially, which is not typically our pattern, which is why we called it out in terms of AI workloads and some of those other things I think it's early to tell and obviously, we will continue to.

Speaker Change: And I think the Hyperscale is seeing our performance and realize it's better to partner with us and.

Speaker Change: Customers understand the importance of the data layer, especially by our applications and so the partnership across all three Hyperscale is strong.

Speaker Change: Evolve and assess our view when we get to the full year guide in March.

Speaker Change: And then we will also have an updated view on how the cohorts are behaving and sort of multi year played out.

Speaker Change: Okay perfect. Thank you.

Speaker Change: Thanks Raimo.

Speaker Change: Thank you and one of them is that the next question.

Speaker Change: But I think in terms of Q4.

Speaker Change: Okay.

Speaker Change: The.

Speaker Change: The next question will be coming from the line of Brad Sills of Bank of America. Your line is open.

Speaker Change: Comments that I made earlier hopefully will help.

Speaker Change: Yes, okay perfect.

Speaker Change: Andy.

Brad Sills: Oh, great. Thank you so much and congratulations Michael on your next move.

Can you talk a little bit about like obviously that the debate like.

Speaker Change: <unk> database will be the persistence layer, if you do AI projects et cetera, what do you see from the Big Hyperscale guys in terms of working with you guys and partnerships. We obviously just have AWS kind of summit et cetera can you speak a little bit like how your relationship with those guys.

Brad Sills: I wanted to ask about new workloads here.

Brad Sills: Vector surge stream processing relational migrate or is there any one of those three and its ramping faster than maybe you expected just a little bit of color on how those new workload types are ramping thank you.

Speaker Change: It's evolving around it and Michael all of that.

Speaker Change: Yes, I'll kind of give you a rundown on some of the I mean, essentially you're asking about the new products like our.

Speaker Change: Talk to you.

Yes, so I'll start with the partnerships first like our.

Speaker Change: On search we introduce a new capability called Atlas search nodes, where you can asymmetrically scale your search nodes.

Speaker Change: With AWS as you said, they just had their reinvent show last week.

Speaker Change: So it remains very very strong.

Because if you are a search intensive use case you don't have to scale. Your all your notes have become quite expensive and we've seen that this is kind of groundbreaking breaking capability really well received.

Close the ton of deals this past quarter.

Speaker Change: All of them very very large deals we're doing integrations to some of the new products like <unk> and bedrock and the engagement of the field.

Speaker Change: The demand is quite high.

Speaker Change: Been really strong.

Speaker Change: <unk>.

Speaker Change: And because customers like they could they can tune the configuration to the unique needs of their search requirements. One of the world's largest banks is using Atlas search to provide like a Google like search experience on payments data for massive corporate customers. So there is a customer facing application and so performance and scalability of critical a leading provider of AI powered account.

Speaker Change: On Azure I think as I've shared in the past, we start off with a little bit of a slow start but in the words of.

Speaker Change: The person who runs our partner leadership the Azure among the relationship has never been stronger.

Speaker Change: We've closed a large number of deals we're part of what's called the Azure Native IC service program and have a bunch of deep integrations with azure, including fabric powered by visual studio a semantic kernel and Azure open AI studio and we're also one of <unk> largest marketplace partners and DCP does well.

Speaker Change: Software uses Atlas Pirates in voice analytics, future, which allows end users and finance teams to perform AD hoc analysis and easily find.

Speaker Change: Past due invoices and voices that contain errors.

Speaker Change: We've actually seen some uptick in terms of <unk> that we've done this past quarter.

Speaker Change: So that surge on vector search.

Speaker Change: Again, its been our kind of our first full year since since going generally available and the product uptake has been actually very very high in Q3, we released quantization for outlets vector search, which reduces the memory requirements by up to 96%, allowing us to support larger vector workloads with vastly improved price performance.

Speaker Change: <unk> made some comp changes were that were favorable to working with <unk> that we saw some results in the field.

Speaker Change: And we're focused on closing on a closing a handful of large deals with GCB and Q4, so in general I would say.

Speaker Change: Things are going quite well and then in terms of I guess implied in your question was like.

Speaker Change: For example, a multinational news organization created <unk> power tool designed to help producers and journalists officially search summarize and verify information from fast and very data sources, a leading security firm is using Atlas spectra certified AI fraud.

Speaker Change: The hyperscale or are they potentially bundling.

Speaker Change: So things along with their AI offerings, I mean candidly.

Speaker Change: Since day, one the Hyperscale as had been bundling their database offerings with every offering that they have and thats been there pretty pronounced predominant strategy.

Speaker Change: A leading global media company replaces elastic search with hybrid search inductive search use case for user recommendation engine. That's built to suggest that's building to suggest articles to end users and so that's super exciting to see as well.

Speaker Change: And we've I think we've executed well against strategy because.

Speaker Change: Databases are not like a by the way decision, it's an important decision.

Speaker Change: And I think the Hyperscale is seeing our performance and realize it's better to partner with us and.

Speaker Change: We're also seeing a lot of interest in our streaming product demand is very high we've just rolled it out to.

Speaker Change: I said customers.

Speaker Change: And the importance of the data layer, especially by our applications and.

Speaker Change: Another hyper scaler.

Speaker Change: So the partnership across all three Hyperscale is strong.

Speaker Change: Customers are commenting on debt. The use cases are being able to embed stream processing with market be it makes our life. So much easier. So overall, we're quite pleased with the progress we're making on the new products and and as I said before natively bundling all these capabilities really.

Speaker Change: Okay perfect. Thank you.

Speaker Change: Thanks Rommel.

Speaker Change: Thank you one moment Sir the next question is.

Speaker Change: Okay.

Speaker Change: The next question will be coming from the line of Brad Sills of Bank of America. Your line is open.

Speaker Change: It reduces or eliminates the need for customers to have to bolt on a bunch of different technologies.

Brad Sills: Oh, great. Thank you so much and congratulations Michael on your next move.

Speaker Change: I'll, just say a problem saving them a lot of time money and cost and risk.

I wanted to ask about new workloads here.

Speaker Change: Thats really exciting thanks, Dave and then I wanted to ask a question around <unk> appointment.

Brad Sills: Vector search stream processing relational migrate or is there any one of those three and its ramping faster than maybe you expected just a little bit of color on how those new workload types are ramping thank you.

Any.

Speaker Change: Focus that may be different here under his leadership that we should be thinking about.

Speaker Change: Going forward. Thank you.

Speaker Change: Cedric has been our CRO.

Speaker Change: Yes, I'll kind of give you just a rundown on some of the I mean, essentially you're asking about the new products like our.

Speaker Change: Crow for Gosh, now like I think like five six years and.

Speaker Change: Heat to heat I was the interim CFO for about three quarters until he took over.

Speaker Change: On search we introduce a new capability called Atlas search notes, which where you can asymmetrically scale your search nodes.

Speaker Change: Last made a change and this is really a expansion of his responsibilities I have known <unk> for a long time, he and I have worked with at multiple different companies.

Speaker Change: Because if you are a search intensive use case you don't have to scale. Your all your notes because that have become quite expensive and we've seen that this is kind of groundbreaking and breaking capability really well received.

Speaker Change: Have a good barometer for understanding sales leadership.

Speaker Change: There is a number of sales leaders who worked at other top tier.

Speaker Change: The demand is quite high.

Speaker Change: <unk>.

Speaker Change: And because customers like they could they can tune the configuration to the unique needs of their search requirements. One of the world's largest banks is using Atlas search to provide like a Google like search experience on payments data for massive corporate customers. So this is a customer facing application and so performance and scalability of critical a leading provider of AI powered account.

Software companies, who used to work for me are with me and so I'm Super excited by the role Cedric is going to take and then we're also making some changes under Cedric to better align the different organizations. So that we can.

Speaker Change: More tightly worked together on going upmarket on app monetization and positioning ourselves well to be the ideal database for <unk> apps.

Speaker Change: Software uses Atlas search pirates in voice analytics, future, which allows end users and finance teams to perform AD hoc analysis and easily find.

Speaker Change: These were exciting thanks, Dave.

Brad Sills: Thanks, Brad.

Speaker Change: Past due invoices and voices that contain errors.

Brad Sills: Thank you.

Brad Sills: And one woman and the next question please.

Speaker Change: So that surge on vector search.

Brad Sills: Our next question will be coming from the line of many sequels.

Speaker Change: Again, its been our kind of our first full year since since going generally available and the product uptake has been actually very very high in Q3, we released quantization for Atlas vector search, which reduces the memory requirements by up to 96%, allowing us to support larger vector workloads with vastly improved price performance.

Speaker Change: Needham and company your line is open.

Speaker Change: Hey, guys. Thanks for taking the questions here.

I just wanted to come back to the consumption growth being slightly better than expectations again for the second quarter in a row now and apologies if I missed it but this improvement that we're seeing is this across all vintages and geographies or is it potentially more concentrated in scope.

Speaker Change: For example, a multinational news organization created <unk> power tool designed to help producers and journalists officially search summarize and verify information from vast and very data sources, a leading security firm is using Atlas vector certified AI fraud.

Speaker Change: Just trying to get a better understanding what's taking place out there.

Speaker Change: What's embedded in the guide.

Yes, I would describe it is broad based Mike.

And a leading global media company replace elastic search with hybrid search conducted search use case for us our recommendation engine. That's built to suggest that's building to suggest articles to end users and so that's super exciting to see as well.

And obviously, we're pleased to see it.

Speaker Change: And we will continuing monitoring and slicing and dicing it in different ways and as we have information or insights to you we'll share it.

Speaker Change: And without trying to throw a whole bunch of cold water on a reminder, was slightly better not.

Speaker Change: Also seeing a lot of interest in our streaming product demand is very high we've just rolled it out to.

Speaker Change: Or a step function change better.

Speaker Change: But good to see.

Speaker Change: Another hyper scaler.

Terrific and maybe for a quick follow up for Dave.

Speaker Change: And customers are commenting on that the use cases are being able to embed stream processing with market be it makes it a life. So much easier. So overall, we're quite pleased with the progress we're making on the new products and and as I said before natively bundling. All these capabilities is really.

Speaker Change: I think it builds or maybe tyler's question at the top of the Q&A, but.

You had cited that some customers are thinking about their workloads more holistically and even looking to run AI workloads on Prem.

Speaker Change: How much of that do you think is just a function of.

Speaker Change: It reduces or eliminates the need for customers to have to bolt on a bunch of different technologies to solve the same problem saving them a lot of time money and cost and risk.

Speaker Change: Customers are still trying to figure out how to optimize for latency and cost or is this more a demonstration of we really are in the early phases. The exploratory phase versus going into production is there any way to parse that out or is it too not necessarily connected.

That's really exciting thanks, Dave and then I wanted to ask a question around <unk> appointment.

Speaker Change: Any any.

Speaker Change: No I think I think it's kind of a little bit of both I think you have some customers who are very committed to running a big part of this state on Prem. So by definition, then if theyre going to build an AI workload. It has to be run on Prem, which means that they also need access to gpus.

Speaker Change: Focus that may be different here under his leadership that we should be thinking about.

Speaker Change: Going forward. Thank you.

Speaker Change: Cedric has been our.

Speaker Change: Crow for Gosh, now like I think like five six years and.

Speaker Change: I was the interim CFO for about three quarters of until he took over.

Speaker Change: And they're doing that.

Speaker Change: And then other customers are leveraging.

Speaker Change: Last made a change and this is really the expansion of his responsibilities I have known <unk> for a long time, he and I have worked with at multiple different companies.

Speaker Change: <unk>.

Speaker Change: Basically renting gpus from the cloud providers and building their own AI workloads I do think we are in the very very early days, there's still learning experimenting more.

Speaker Change: Have a good barometer for understanding sales leadership.

Speaker Change: More and more apps are entering production and as I said on the prepared remarks, we have thousands of workloads AI workloads running on <unk>, but.

Speaker Change: There is a number of sales leaders who've worked at other top tier.

Speaker Change: Software companies, who used to work for me are with me and so I'm Super excited by the role Cedric is going to take and then we're also making some changes under Cedric to better align the different organizations. So that we can.

Speaker Change: But a very small percentage of them have demonstrated meaningful product market fit and so the initial traction is.

Speaker Change: This is kind of still small.

Speaker Change: But I think as people get more sophisticated with AI as the AI technology matures and becomes more and more useful.

More tightly worked together on going upmarket on app monetization and positioning ourselves well to be the ideal database for <unk> apps.

Speaker Change: I think applications will.

Dave: Before exciting thanks, Dave.

Speaker Change: Start seeing these applications take off I kind of chuckled at today I see more senior leaders bragging about the chips that are using versus the apps are buildings that just tells you that we're still in the very very early days of this this big platform shift.

Brad Sills: Thanks, Brad.

Brad Sills: Thank you.

Brad Sills: And one moment to the next question please.

Speaker Change: Our next question will be coming from the line of many sequels.

Speaker Change: Great. Thank you again guys.

Speaker Change: <unk> Needham <unk> company your line is open.

Speaker Change: Thanks, Mike.

Hey, guys. Thanks for taking the questions here.

Speaker Change: Thank you and one woman and the next question.

Speaker Change: I just wanted to come back to the consumption growth being slightly better than expectations again for the second quarter in a row now and apologies if I missed it but this improvement that we're seeing is this across all vintages and geographies or is it potentially more concentrated in scope.

Speaker Change: Our next question will be coming from the line of Eric Heath.

Speaker Change: Keybanc Your line is open.

Speaker Change: Alright, Thanks for taking my question, Michael It sounds like the takeaway from the call is a greater focus on <unk> and.

Speaker Change: Trying to get a better understanding what's taking place out there.

Speaker Change: On enterprise.

Speaker Change: Should we structurally rethink the business differently and think of us more as it <unk>.

Speaker Change: What's embedded in the guide.

Mike: Yes, I would describe it is broad based Mike.

The double digit growth business going forward for this foreseeable future.

Mike: Obviously, we're pleased to see it.

Speaker Change: And then if I could just ask a follow up question separate to that but Michael I understand it's still early to identify the fiscal 'twenty five cohort of workloads, but I'm just curious at a high level.

Mike: And we will continuing monitoring and slicing and dicing it in different ways and as we have information or insights to you we'll share it.

Speaker Change: Can feel.

Mike: And without trying to throw a whole bunch of cold water on a reminder was slightly better.

Of higher quality than the fiscal 'twenty four cohort of workload.

Mike: Or a step function change better.

Speaker Change: But good to see.

Speaker Change: And you want to tackle the first one in terms of yes, I mean, I would say I mean, we are very committed to our run anywhere strategy and as I said, we are first investing in community where for many customers as the first way the experienced market to be and we want them to have the full experience integrating search and <unk>.

Speaker Change: Terrific and maybe for a quick follow up for Dave.

Speaker Change: I think it builds or maybe tyler's question at the top of the Q&A, but.

Speaker Change: You had cited that some customers are thinking about their workloads more holistically and even looking to run AI workloads on Prem.

Speaker Change: How much of that do you think is just a function of.

Research into our core product and so they can out of the gate really start building applications that will then transition to building those capabilities into EMEA. So we're clearly investing in in the EA product.

Speaker Change: Customers are still trying to figure out how to optimize through latency and cost or it's more a demonstration of we really are in the early phases. The exploratory phase versus going into production is there any way to parse that out or is it too not necessarily connected.

Speaker Change: But atlas is still.

Speaker Change: Big Big part of our business in a big Big part of our growth engine and we typically launch new features on Atlas.

Speaker Change: No I think I think it's kind of a little bit of both I think you have some customers who are very committed to running a big part of this state on Prem. So by definition, then if theyre going to build an AI workload. It has to be run on Prem, which means that they also need access to gpus.

Speaker Change: And because of.

Speaker Change: The capabilities, we already have the fact, it's multi cloud.

It makes it a very very compelling offering for many customers.

Speaker Change: Yes, I think in terms of the workloads.

And they are doing that.

Speaker Change: I do think it's early just as a reminder for folks they tend to start small.

Speaker Change: And then other customers are leveraging.

Speaker Change: <unk>.

Speaker Change: Basically renting gpus from the cloud providers and building their own AI workloads I do think we are in the very very early days, there's still learning experimenting.

Speaker Change: Real quickly I think the only other thing that I can add is we've been pretty consistent in that we've been pleased with the new business that we've done.

Speaker Change: But we need we need some time to let the cohorts play out as we are.

Speaker Change: More and more apps are entering production and as I said on the prepared remarks, we have thousands of workload AI workloads running on <unk>.

Speaker Change: Track them.

Speaker Change: But.

Speaker Change: Like I said, we've been happy with the new business.

Speaker Change: But a very small percentage of them have demonstrated meaningful product market fit and so the initial traction is.

Speaker Change: Is kind of still small.

Speaker Change: Thank you one moment for the next question.

Speaker Change: But I think as people get more sophisticated with AI as the AI technology matures and becomes more and more useful.

Speaker Change: And our next question will be coming from the line of William Power of Baird. Your line is open.

Speaker Change: I think applications will you'll start seeing these applications take off I kind of chuckled at today I see more senior leaders bragging about the chips that are using versus the apps are buildings that just tells you that we're still in the very very early days of this this big platform shift.

Speaker Change: Yes.

Speaker Change: Oh, sorry, yes. Thank you.

Speaker Change: Dave you had some encouraging comments on.

Speaker Change: Great. Thank you again guys.

Speaker Change: Religion relational migraineur.

Speaker Change: Thanks, Mike.

Speaker Change: Thank you and one woman and the next question.

Speaker Change: I was wondering if you could just touch on what you think is driving that.

Speaker Change: Our next question will be coming from the line of Eric Heath.

Speaker Change: Higher interest here and it sounds like AI and is contributing and healthy, but it'd be great to get some more color there because that.

Speaker Change: <unk> Bank your line is open.

Speaker Change: So it feels like a obviously a meaningful long term opportunity and then maybe the second part of the question.

Speaker Change: Alright, Thanks for taking our question Michael It sounds like the takeaway from the call is a greater focus on EMEA and on enterprise.

Speaker Change: For Dave or Michael just be great to get any framework around the professional services investments in any way to kind of think about quantification and timing of that.

Speaker Change: Should we structurally rethink business differently and think of us more as an <unk>.

Speaker Change: Double digit growth business going forward for the foreseeable future.

Speaker Change: Yes so.

Speaker Change: And then if I could just ask a follow up question separate to that but Michael I understand it's still early to identify this fiscal 'twenty five cohort of workloads.

Speaker Change: Okay.

Speaker Change: The reason, we're so excited about the opportunity to go after legacy applications as that one.

Speaker Change: Just curious at a high level.

Speaker Change: The it seems like there's a confluence of events happening one is that the increasing cost and tax of.

Speaker Change: Can feel.

Speaker Change: Of higher quality than that fiscal 'twenty four cohort of workload.

Speaker Change: Supporting and managing these legacy apps are just going up enough.

Speaker Change: Okay do you want to tackle the first one in terms of yes, I mean, I would say I mean, we are very committed to our run anywhere strategy and as I said, we are first investing in community.

Speaker Change: For many customers who are in regulated industries. The regulators are calling their the fact that they're running on these legacy apps a systemic risks. So they can no longer kicked the can down the road.

Speaker Change: For many customers as the first way the experienced market to be and we want them to have the full experience of integrating search and vector search into our core product and so they can out of the gate really start building applications that will then transition to building those capabilities into EMEA. So we're clearly investing in and the EA.

Speaker Change: Third also because they no longer keep mccann round. Some vendors are going end of life. So they have to make a decision to migrate those applications to a more modern tech stack.

Speaker Change: Fourth because gen. AI is so predicated on data and to build a competitive advantage you need to leverage a proprietary data people want to access that data and be able to do so easily and so that's another reason for them to want to modernize and then you also have people who build those applications were retiring or just no longer the firm. So it just creates more.

Speaker Change: Product.

Speaker Change: Atlas is still.

Speaker Change: Big Big part of our business in a big Big part of our growth engine and we typically launch new features on Atlas and and because of the capabilities. We already have the fact that multi cloud.

Speaker Change: More and more risk for the companies given all of that customers are incredibly interested in figuring out a way to easily and safely and securely migrate those off those.

Speaker Change: Makes it a very very compelling offering for many customers.

Speaker Change: Yes, I think in terms of the workloads.

Speaker Change: I do think it's early just as a reminder for folks they tend to start small.

Speaker Change: Applications, and we always could help them very easily move the data and mapped the schema from a relational schema to a document schema. The hardest part was essentially rewriting the application now with the advent of Gen AI.

Speaker Change: Although grow quickly I think the only other thing that I can add is we've been pretty consistent in that we've been pleased with the new business that we've done.

Speaker Change: But we need we need some time to let the cohorts.

Speaker Change: You can now significantly reduce the time wanting to use gen AI to analyze existing code to you can use <unk> to reverse engineer test to test what the code to us.

Speaker Change: Play out as we attract them.

Speaker Change: But.

Speaker Change: I think like I said, we've been happy with the new business.

Speaker Change: And then three you can use <unk> to build yugo and then use its test to ensure that the new code produce the same results as the old code.

Speaker Change: Thank you one moment to the next question.

Speaker Change: And our next question will be coming from the line of William Power of Baird. Your line is open.

Speaker Change: And so all of that time and effort is suddenly cut in a meaningful way and thats the only creating a lot of interest from customers, saying, Oh, my goodness and if you're already on a relational app moving to another relation lab doesn't feel like monetization. So the other advantages that moving to <unk> give them a much more modern platform are much more agile.

Speaker Change: Okay.

Speaker Change: Oh, sorry, yes. Thank you.

Speaker Change: Dave you had some encouraging comments on.

Speaker Change: <unk> performance and scalable platform for their future needs and that's that's why we're so excited again, it's early days, we've run a number of pilots have gone well we're in the process of working with some customers now in the migration process. This will take time because these are very very complex applications and actually one thing as I also mentioned.

Speaker Change: Really relational Migraineur I.

Speaker Change: I was wondering if you could just touch on what you think is driving.

Speaker Change: Higher interest to you and it sounds like AI and is contributing and healthy, but it'd be great to get some more color there because it.

Speaker Change: It still feels like obviously, a meaningful long term opportunity and maybe the second part of the question.

Speaker Change: Was that Theyre not just going after saying go after some tertiary tier two or tier three application there, they're saying Hey, we want you to look at some of our crown jewels. Because these are the apps that are most painful for us. So that's also very exciting but again this will take time, but we're very committed to this and we think this is going to drive help us drive long term meaningful <unk>.

Speaker Change: For Dave or Michael just be great to get any framework around the professional services investments in any way to kind of think about quantification and timing of that.

Speaker Change: Yes so.

Speaker Change: Okay.

Speaker Change: The reason, we're so excited about the opportunity to go after legacy applications as that one.

Speaker Change: Term growth.

Speaker Change: Yes, it will into the last part of your question on the professional services investment.

Speaker Change: The it seems like there's a confluence of events happening one is that the increasing cost and tax of.

We're really building out that capacity in order to meet the demand that we're seeing relative to the opportunity we're calling it out in particular, because it has a gross margin impact.

Speaker Change: Supporting and managing these legacy apps are just going up enough.

Speaker Change: For many customers who are in regulated industries. The regulators are calling their the fact that they're running on these legacy apps a systemic risks so they can no longer to kick the can down the road.

Speaker Change: Because that's where that will typically show up.

Speaker Change: Maybe the last thing and it's probably obvious but just sort of underscore. It is the reason we're doing this though is for the IRR right to drive the new workloads, the additional workloads over to Margaret.

Speaker Change: Third also because they no longer can you keep it can round. Some vendors are going end of life. So they have to make a decision to migrate those applications to a more more modern tech stack.

Speaker Change: As part of that migration and.

Speaker Change: And over time as we've talked about before we hope and expect to be able to leverage technology more and more of it at least.

Speaker Change: North because gen AI, so predicated on data and to build a competitive advantage you need to leverage a proprietary data people want to access that data and be able to do so easily and so that's another reason for them to want to modernize and then you also have people who've built those applications, who are retiring or just no longer the firm. So it just creates more.

Speaker Change: Initially and into the medium term, there's going to be a healthy humans lash services component to that just wanted to sort of effectively telegraphed that out to folks.

Speaker Change: That's helpful. Thank you.

Paul: Thanks, Paul.

Paul: Thank you one moment for the next questions.

Speaker Change: More and more risk for the companies given all of that customers are incredibly interested in figuring out a way to easily and safely and securely migrate those off those.

Speaker Change: And our next question will be coming from the line of Rudy Cassandra.

Speaker Change: Applications, and we always could help them very easily move the data and mapped the schema from a relational schema to a document schema. The hardest part was essentially rewriting the application now with the advent of Gen AI.

Speaker Change: D. A davidson. Please go ahead.

Speaker Change: Hey, guys. Thanks for sneaking me in here.

Speaker Change: I believe last quarter, you said consumption growth.

Speaker Change: Patients and wild down slower year over year growth versus Q2 last year the year over year growth did improve from Q1, and so I guess I'm curious for Q3.

Speaker Change: You can now significantly reduce the time one you can use gen AI to analyze existing code to you can use <unk> to reverse engineered test to test what the code does.

Could you make a comment in that same regard obviously slower on a year over year basis in Q3 last year, but was it stable with your views consumption growth in Q2 or better or worse.

Speaker Change: And then three you can use <unk> to build new goat and then use its test to ensure that the new code produce the same results as the old code.

Speaker Change: And so all that time and effort is suddenly cut in a meaningful way and thats, the only creating a lot of interest from customers, saying, Oh, my goodness and if you're already on a relational app moving to another relational app doesn't feel like monetization. So the other advantage is that moving to <unk> gives them a much more modern platform are much more agile.

Speaker Change: Yes, Randy Thanks for the question, we Havent specifically.

Speaker Change: <unk> called that out relative to Q2, we did see.

Speaker Change: Lower year over year growth as we called out we did see a rebound usually Q3 is stronger than Q2, and we talked about how that was.

Speaker Change: Mauler than in the prior year, so hopefully that will help you all triangulate.

Flexible performance and scalable platform for their future needs and that's that's why we're so excited again, it's early days, we've run a number of pilots have gone well we're in the process of.

Speaker Change: Okay, and then just a quick follow up I believe it was on your Q4 call back in March.

Speaker Change: At that point, Dave you said it would be at least another year until AI applications are being deployed at scale it sounds like the commentary.

Speaker Change: We are working with some customers now in the migration process. This will take time because these are very very complex applications and actually one of the things I also mentioned was that theyre not just going after saying go after some tertiary tier two or tier three application.

Speaker Change #100: Some early.

Speaker Change #100: Large workloads, but out of the 1000 is just not many that are at large scale. I guess is your expectation now that maybe it's still at least another year until we're seeing broad AI application rollouts of scale.

Speaker Change: They are saying Hey, we want you to look at some of our Crown jewels. Because these are the apps that are most painful for us. So that's also very exciting but again this will take time, but we're very committed to this and we think this is going to drive help us drive long term meaningful long term growth.

Speaker Change #101: Yes, I think I think a lot of it is a function of the.

Speaker Change #101: What's happening in the.

Speaker Change #101: The R&D side of AI right. So for example, today, we don't have a very compelling no.

Speaker Change: Yes, It will end in the last part of your question on the professional services investment.

Speaker Change #101: Models designed for our phones right because.

Speaker Change: We're really building out that capacity in order to meet the demand that we're seeing relative to the opportunity we're calling it out in particular, because it has a gross margin impact.

Speaker Change #101: Today the <unk>.

Speaker Change #101: Loans don't have the computing horsepower to run complex models.

So you don't see a ton of very very successful consumer apps, Besides say chassis Claude.

Speaker Change: Because thats, where that will typically show up.

Speaker Change #101: Sure.

Speaker Change #101: So we don't we also don't see like hundreds of.

Speaker Change: And then maybe the last thing and it's probably obvious but just to sort of underscore. It is the reason we're doing this though is for the IRR right to drive the new workloads, the additional workloads over to Margaret.

Apps, taking off like you saw kind of the first generation of like the Internet.

Speaker Change #101: The cloud era, right or the mobile era. So like I think we're still in the early days of AI and so while we see a lot of people building apps.

Speaker Change: As part of that migration.

Speaker Change: And over time as we've talked about before we hope and expect to be able to leverage technology more and more but at least initially.

Speaker Change #101: A lot of them have kind of fairly rudimentary functionality.

Speaker Change: Initially and into the medium term, there's going to be a healthy humans lash services component to that and just wanted to sort of effectively telegraphed that out to folks.

Speaker Change #101: But I think that over time, that's going to change and in fact, I know it will change.

Speaker Change #101: I just can't predict when that will happen, but where we do see apps having production having.

Speaker Change: That's helpful. Thank you.

Speaker Change #101: Having traction we are seeing them grow very very quickly and we have a lot of them on our platform is just very few of them are really have meaningful.

Paul: Thanks, Paul.

Paul: Thank you one on one for the next questions.

And our next question will be coming from the line Baroody Kissinger.

Speaker Change #102: Thank you and that concludes today's Q&A session I would like to go ahead and turn the call back over to Dave for closing remarks. Please go ahead.

D. A davidson. Please go ahead.

Speaker Change: Hey, guys. Thanks for sneaking me in here.

Speaker Change: I believe last quarter, you said consumption growth.

Dave Dave: Thank you everyone I just wanted to say, we're really pleased with our Q3 results with strong new business performance and revenue exceeding expectations, both across both Atlas and EMEA.

Speaker Change: Expectations, and wild down slower year over year growth versus Q2 last year the year over year growth did improve from Q1, and so I guess I'm curious for Q3.

We're making the necessary investments to expand our enterprise channel, where we see the largest opportunity to establish more going to be at the standard and the strongest returns on our go to market investments.

Could you make a comment in that same regard obviously slower on a year over year basis in Q3 last year, but was it stable with year on year consumption growth in Q2 or better or worse.

Dave Dave: Looking ahead, we are encouraged by the progress we're making on both accelerating legacy app monetization with AI as well as established establishing ourselves as the standard of the emerging AD Tech stack for Greenfield applications and last one at least I would like to thank Michael again for his contributions over the past 10 years and wish him well.

Speaker Change: Yes. Thanks for the question, we Havent specifically.

Speaker Change: <unk> called that out relative to Q2, we did see.

Speaker Change: Lower year over year growth as we called out we did see a rebound usually Q3 is stronger than Q2, and we talked about how that was smaller than in the prior year. So hopefully that will help you all triangulate.

Dave Dave: Thank you everyone and we'll talk to you soon.

Dave Dave: Hi.

Speaker Change #104: Thank you for participating in today's conference call you may all disconnect.

Speaker Change #100: Okay, and then just a quick follow up I believe it was on your Q4 call back in March.

Speaker Change #101: That point, Dave you said it will be at least another year until AI applications are being deployed at scale it sounds like the commentary.

Some early.

Large workloads, but out of the thousands just not many that are at large scale. I guess is your expectation now that maybe it so at least another year until we're seeing broad AI application rollouts at scale.

Speaker Change #102: Yes, I think I think a lot of it's a function of the.

Whats happening in the.

Speaker Change #102: The R&D side of AI right. So for example, today, we don't have a very compelling no.

Speaker Change #102: Models designed for our phones right because.

Speaker Change #102: Today the <unk>.

Speaker Change #102: Phones don't have the computing horsepower to run complex models.

Speaker Change #102: So you don't see a ton of very very successful consumer apps, Besides say chassis.

Speaker Change #102: <unk>.

Speaker Change #102:

Speaker Change #102: So we don't we also don't see like hundreds of.

Speaker Change #102: Of apps, taking off like you saw kind of the first generation of like the internet or the cloud.

Speaker Change #102: Cloud era, right or the <unk>.

Speaker Change #102: Mobile era, so like I think we're still in the early days of AI and so while we see a lot of people building apps.

Speaker Change #102: A lot of them have kind of fairly rudimentary functionality.

Speaker Change #102: But I think that over time, that's going to change in fact, I know that will change.

Speaker Change #102: Just can't predict when that will happen, but where we do see apps having production.

Speaker Change #102: Having traction we are seeing them grow very very quickly and we have a lot of them on our platform is just very few of them are really have meaningful.

Speaker Change #103: Thank you and that concludes today's Q&A session I would like to go ahead and turn the call back over to Dave for closing remarks. Please go ahead.

Dave: Thank you everyone I just wanted to say, we're really pleased with our Q3 results with strong new business performance and revenue exceeding expectations, both across both Atlas and EMEA.

Dave: We're making the necessary investments to expand our enterprise channel, where we see the largest opportunity to establish <unk> as a standard and the strongest returns on our go to market investments.

Dave: Looking ahead, we are encouraged by the progress we're making on both accelerating legacy app monetization with AI as well as establish establishing ourselves as the standard of the emerging AD Tech stack for Greenfield AI applications and last but not least I would like to thank Michael again for his contributions over the past 10 years and wish him well.

Speaker Change #104: Thank you everyone and we'll talk to you soon.

Okay.

Speaker Change #105: Thank you for participating in today's conference call you may all disconnect.

Okay.

Speaker Change #105: Okay.

Speaker Change #105: Okay.

Speaker Change #105: Okay.

Speaker Change #105: Okay.

Speaker Change #105: Okay.

Speaker Change #105: Okay.

Speaker Change #105: Yes.

Speaker Change #105: Yes.

Speaker Change #105: Okay.

Speaker Change #105: Okay.

Yes.

Speaker Change #105: Yeah.

Speaker Change #105: Okay.

Speaker Change #105: Yes.

Speaker Change #105: Okay.

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