Good day, everyone and welcome to the MongoDB First Quarter Fiscal 2019 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brian Denyeau, Investor Relations. Please go ahead, sir.

Thank you, Tilary. Good afternoon, and thank you for joining us today to review MongoDB's first quarter fiscal 2019 financial results, which we announced in our press release issued after the close of market today. Joining us on the call today are Dev Ittycheria, President and CEO of MongoDB; and Michael Gordon, MongoDB's CFO. During this call, we may make statements related to our business that are forward-looking on our Federal Securities Law. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our financial guidance for the second quarter and full year of fiscal 2019, industry and market trends, our go-to-market and growth strategies, our introduction of future product enhancements and the potential advantage of those enhancements, our market opportunity, our ability to expand our leadership position to drive revenue growth, the opportunity presented by our partnership with IBM and the broader partner ecosystem, our ability to maintain and up-sell existing customers, our ability to acquire new customers, our ability to expand our relationship with partners and anticipate a benefit of our platform for our customers and partners. The words anticipate, continue, estimate, expect, intend, will and similar expressions are intended to identify forward-looking statements or similar indications of future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date. We do not have plans to update these statements except as required by law. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risk and other important factors that could affect our actual results, please refer to those contained in our annual report on Form 10-K filed with the SEC on March 30, 2018 and our other periodic filings with the SEC. These documents are available on the Investor Relations section of our website at www.mongodb.com. A replay of this call will also be available for a limited time. Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release on the Investor Relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measures. With that, I'd like to turn the call over to Dev.

Thanks, Brian. Thanks to all of you for joining us today to review our first quarter results. MongoDB began fiscal 2019 with strong financial and operational performance, which reflects our market momentum and all the drivers behind our growth. To quickly summarize our first quarter results, we generated revenue of 48.2 million, a 49% year-over-year increase, which is above the high end of our guidance. We grew subscription revenue 53% year-over-year. We ended the quarter with over 6600 customers, up 83% compared to a year ago. We saw strong growth across all major regions, including North America, EMEA and Asia and Atlas is now 14% of revenue. Our position as the leading, modern general purpose database platform gets stronger each quarter with customers, partners and the larger ecosystem, putting us in great position to continue generating strong top line growth. Digital transformation has become one of the most important IT initiatives for all companies and all industries. While these digital initiatives hold the promise of a more nimble enterprise that can respond quickly to changing market conditions and provide a better experience for its customers, executing on these initiatives is far easier said than done. In my meetings with senior executives around the world, it's clear that companies are highly motivated to use modern technologies to transform their businesses to create a competitive advantage. In the first quarter alone, I had more than 20 meetings with C level executives at large global organizations across many industries to discuss how MongoDB can be a partner in their transformation process. The scope and frequency of these senior level conversations are far different than the types of conversations we had even 18 months ago. Previously, they were typically exploratory conversations to learn more about the company and the technology and what projects they…

Thanks, Dev. As mentioned, we're very pleased with our first quarter performance. I'll begin with a detailed review of our first quarter results and then finish with our outlook for the second quarter and full year fiscal 2019. Total revenue in the quarter was $48.2 million, up 49% year-over-year. Subscription revenue was $44.6 million, up 53% year-over-year and professional services revenue was $3.7 million, up 14% year-over-year. The strong performance of the business was broad based during the quarter with healthy new logo and upsell activity among enterprise customers as well as continued rapid adoption of Atlas. Atlas represented 14% of revenue during the quarter, up 4% in the first year -- first quarter last year. We continue to see strong global demand for our offerings. During the first quarter, we grew our customer base by approximately 900 customers, bringing our total customer count to over 6600, which is up from over 3600 in the year ago period and over 5700 at the end of last quarter. Of our total customer count, over 1550 are direct customers, which compares to over 1450 at the end of the prior quarter and over 1300 in the year ago period. The growth in our total customer count is being driven in large part by Atlas, which had over 4400 customers at the end of the quarter compared to over 3400 at the end of the fourth quarter. The growth in total customers includes growth in our Enterprise Advanced customers as well as new Atlas customers. It is important to keep in mind that the growth in our Atlas customer count reflects both new customers to MongoDB as well as existing EA customers, adding incremental Atlas workloads. We also continue to see healthy expansion from existing customers. Our net AR expansion rate in the…

[Operator Instructions] We'll take our first question from Raimo Lenschow with Barclays.

Congrats on a great start to the year. Dev, first question, on the IBM deal, can you give us a little bit more insight here like, historically, we have seen smaller software companies do deals with these large vendors and on the one hand [on paper they look good] [ph] often there's not that much in reality coming through. Can you talk, what's the incentive structure? How does it work for you guys? Why is it exciting for the two of you? Thank you.

Yeah. Thanks, Raimo. What I think IBM has seen and the other ones that actually first approached us was that they are seeing frankly MongoDB being adopted everywhere in their customer base and they’re seeing specific demand from the customers for MongoDB and they wanted to use MongoDB for their private cloud initiative and use some of the proprietary features. What's interesting about this transaction is that their sales people actually are incentivized through quota relief to sell MongoDB. So this is not just one of those barney announcements. There's real motivation by IBM to activate its 7000 plus sales people around the world to resell MongoDB and they see a big opportunity in front of them. Why it’s attractive to us is that even though we're a fast growing company, we only have a certain amount of reach and we're very attracted by the opportunity to expand our reach through their presence in these markets and accounts and where they have a lot of influence, where they can embed MongoDB more quickly than, say, we would try to do ourselves. So we're very excited about this relationship and we think it will pay dividends in the future.

Perfect. And then another follow-up on Atlas, obviously, the growth, I think in our calculation is like 400% so that it’s really, really healthy. Can you talk a little bit about how you see that evolving in terms of direct, can you comment in comment on some more direct deals this quarter versus self-serve. How do you see that evolving over time and then what’s the enterprise features you have kind of talked about, how will that change then the dynamic in the second half of the year.

Right. So if you remember, we launched Atlas a little less than two years ago and it’s only about this time last year that we really started getting our sales teams to really focus on selling Atlas directly and I think we're seeing the returns in that investments starting to pay off. Obviously, as part of our run anywhere strategy, we're giving customers choice about not only where they want to run MongoDB, but how they want to consume MongoDB. And we're starting to see a lot of large customers want and like the optionality of basically procuring MongoDB as a service through Atlas and that's definitely driving a big part of the growth. We're really excited about the traction we're seeing, not just here in North America, but frankly all around the world and not just with small customers, with some of the largest companies and frankly some very arguably industries that are probably more -- have reputations to be more slow moving who are aggressively moving to the cloud and see Atlas as a very attractive alternative. It also speaks to the fact that when people use MongoDB, in some ways, they future proof their applications because it can start on premise, go to the cloud, manage it themselves, consume it as a service and have it delivered on AWS, on Azure or on GCPs. So it gives them real optionality and I would tell you that Atlas is the only database as a service offering that's available in 54 regions around the world by virtue of us being able to run Atlas across the three largest cloud providers in the world. No other provider can say that.

Okay, perfect. And maybe if I can squeeze in one more question for Michael, like, if I look, at the moment, your revenue is kind of running faster than we had modeled, but you kind of also keep investing, like, how flexible are – like, as you said on the call, you kind of are kind of playing -- being very dynamic with the investments, given the higher ROI, but like how does it work for you to like, how does the planning work for you or the cost allocation or the investment decisions, how does it work for you that you can kind of react so quickly.

Yes. So in general, given the market opportunity that we're going after, there are shorter lead time investments and longer lead time investments that we can make and so obviously in the planning process, it's a mix of doing both of those. We obviously saw very first, a very strong first quarter performance and we've been able to invest with two main areas that we will invest, as we see incremental opportunities. We will be on the sales and marketing side and the R&D side. Both of those obviously have somewhat ramp times, but the engineering ramp time for a return to value is longer, given product cycles, but those are really the two main areas that we look to and we look to reinvest in with continued strength in the business and as long as we see high rates of return for both of those, we will continue to do that within the context of showing the continuing operating leverage that we're showing overall as a company.

[Operator Instructions] We’ll move next to Keith Weiss with Morgan Stanley.

Excellent, guys. A very nice quarter and thank you for taking the question. I think after Raimo asked seven questions, we should all get at least three. Furthering on sort of the Atlas conversation, can you talk to us a little bit on how you're seeing kind of those use cases develop, what kind of use cases are you seeing going towards Atlas versus what you traditionally do on the, like a EA customer would be doing? And in the cases of where you have sort of an existing EA customer expand to Atlas, maybe talk to us a little bit about sort of the use case that drives that as well, because it seems like there has been significant overlap, at least 100 customers, that one from EA to Atlas as well.

Yes. So a great question, Keith. I mean I would say you should think about, again, we launched Atlas less than two years ago. So you can see -- as you can imagine, a lot of the early customers were doing a lot of dev test workloads, doing a lot of early prototyping work on Atlas is easy to get started with, didn't have to procure any hardware, didn’t have to worry about getting their internal teams to support the infrastructure. As the comfort with Atlas has grown, you're starting to see people move -- to move more production and mission critical workloads to Atlas and we've seen that -- we saw that in our inside sales channel earlier, but now we’re even seeing that in our direct sales force and we're seeing a number of large deals move to Atlas. And so it speaks to, one, the comfort and familiarity with Atlas, two, we’ve continued to expand the envelope of Atlas coverage. As I mentioned, we're now on 54 regions around the world. Three, we've added more and more features. We've made it easier. We’ve built tools and content to make it easy for people to quickly migrate their on-prem installation to Atlas with minimal kind of effort and so all those things are really helping customers to move workloads to Atlas. We've also introduced or plan to introduce a bunch of, what I call, enterprise features, things around LDAP, security, auditing and so forth that will continue to encourage customers to be more comfortable moving mission critical workloads to Atlas. And to your point about EA customers moving to Atlas, you should think about the fact that, they might be very different workloads. It might be that they have certain set of workloads on premise, but other workloads they think are better fit or they're more -- the one move more quickly to Atlas. In fact, you see in many situations where sometimes a large enterprise may see some unexpected demand in a particular product or service offering and the internal teams can't keep up with that demand and then they'll quickly choose to move to Atlas because of the elastic nature of that service.

Got it. And perhaps just my one follow-up for Michael. With sort of the increase in Atlas and sort of the conversation you’re talking about how a lot of that is billed in arrears than sort of billed on a consumption basis, the rebound that we saw in current subscription billings from last quarter into this quarter, that would probably be more predicated on sort of EA strength versus Atlas, the Atlas strength that we saw in the quarter, which were just more so just at the income statement. Is that the correct way to view it?

Yeah. I think in general, I mean we saw strength across the board. There are different cash flow and deferred revenue aspects to each of them, which is correct and just for everyone, everyone is on the same page, the self serve Atlas is the majority of Atlas today as opposed to Atlas sold through the sales force. Self serve Atlas bills monthly in arrears and so it is a very different dynamic, but we benefit obviously from the incremental cash flow of that as well. So that’s sort of additive to the story, but we've got multiple engines of growth, both in the enterprise event side as well as on the Atlas side.

We’ll move next to Brad Reback with Stifel.

Atlas revenue per customers continue to expand at a really healthy clip sequentially over the last few quarters and given your commentary, [indiscernible] around the enterprise features sort of being additive going forward, should we assume that most of that growth thus far has been existing customers expanding implementations and then over time there's opportunity for even more, as they add these enterprise features.

No. Actually, Brad, I would say it's actually both. We're seeing obviously a strong expansion of existing customers, but we're also seeing newer customers start bigger on Atlas. And so – and I think that's again a function of the fact that those tend to be more mission critical workflows versus dev tests or early prototypes and people now are starting to view Atlas as a very, very viable platform to run mission critical applications. And the one thing that I should also point out is that, one of MongoDB’s strength is the distributed nature of our database platform and a lot of those features and those distributed capabilities are actually even better exposed in Atlas in terms of placing workloads closer to users, working around GDPR or other privacy regulations, in particular, countries. That really shows the power of MongoDB and so we're actually seeing customers realize that with Atlas, they actually do more things on MongoDB than they could in their own datacenters.

Yeah. Brad, maybe just form like a math or sort of breaking down like the piece parts, the simplest way I think to think about it is the self serve customers are exhibiting very strong underlying cohort behavior, so there's very good expansion in the self serve customer base, but also we're seeing an increasing percentage of the Atlas customers are [sales sold] [ph] and those customers have a higher price point or a higher ASP. So the combination of those two things lead to generally increasing average revenue per Atlas customer if that helps.

Sure. And then one real quick follow-up on that last point. The two big deals you talked about being sold on the AWS marketplace. Were those sold by the AWS sales force or by you guys or by self-service?

It was definitely sold by us, Brad, but I would tell you that the AWS sales team really worked with us to make sure those transactions happened. Obviously it’s early days, but it was a really great sign of partnering in the field and we're really excited about what the future may hold there.

Next we will move to Heather Bellini with Goldman Sachs.

I had a couple of questions. I wanted to start out first with just a kind of comment from you Dev, kind of about the competitive environment and in particular, Satya Nadella on their conference call commented about cosmos and how quickly that's gone from zero to 100 million in annualized revenue. I'm just wondering if you could share with us kind of how you see them in the market, where there might be overlap or complementary? And then I had two quick follow ups.

Sure. So we basically – one, I would say that we feel very comfortable about our competitive positioning. We have to talk to customers who have tried Cosmos and frankly the feedback we've heard has not been that positive. They’ve tried to do some sophisticated things and many customers have said that, they've said like they try to make Cosmos work because they were already in Azure and have realized that they just couldn’t meet their needs. They came to MongoDB. We've had some large ISV relationships who have strategic partnerships with Microsoft who had every incentive to try and make Cosmos work and it didn't work for them. Now, there's no question, being a cloud provider and just being in the slipstream of all the deals going to -- on all the work that’s moving to the cloud, that they’re definite getting business. But when it comes to head to head, we’re feeling very comfortable of our positioning and we feel very excited about the future.

Okay. Great. And are there any areas where you could be complementary to what they're doing or not really?

I think with the database, I mean, typically, a database is pretty much an architectural decision. So, I think where we see the complementary nature is less about the database and more around the ancillary infrastructure, where we can help customers consume more kind of compute and storage services and other services that our cloud proprietor may offer and so we're seeing that, not only with Microsoft, but we’re seeing that with the other partners as well, which is why they're very motivated to work with us.

Great. And then just two quick follow-ups, you had really strong international results this quarter. I was wondering if you could share what drove the strength there. And then just a follow-up, I think Raimo might have asked earlier a little bit about that, if you could give us an idea of the EA features in Atlas that are driving adoption and what customers are asking for in particular for EA and Atlas? That would be great. Thank you.

Yeah. Sure. So the international growth is really driven by the fact that we've been investing with teams in EMEA and Asia for the last couple of years and we're really starting to see the results of those investments, both in terms of just the size of deals we’re doing, the strategic nature of those deals and the relationships that we're building. So we're very excited about the opportunity there and I would tell you that we're still -- we still have wide swaths of EMEA and Asia that we don't have a lot of people in. So there's a lot of opportunities to continue to expand our reach, but it's really a function of putting people in market, having good leaders in place who can direct to manage them and bring a real focus to that market and we see good things happening. Candidly, one of the question that was asked earlier with Michael -- from Michael about investments, we constantly get asked, hey, should we put people in the Middle East, should we expand more quickly into Latin Americas. It’s just a function of how large this market is and obviously we want to be disciplined about how we run the business, but as we are a non-market constraint, there's a massive market out there. And then in terms of EA features, we've introduced and will continue to introduce a bunch of commercial features in Atlas around security, auditing, the ability to use our BI connector, which allows people to run reports right off of Atlas. Those are all proprietary features that are now available on Atlas and you'll see that the number of those kind of features grow over time. So that's just again expanding and offering more capabilities an Atlas that gets people comfortable on putting mission critical workloads on that platform.

We’ll move next to Richard Davis with Canaccord.

So maybe we’ll do some product questions. So you guys have a -- my understanding is you have a really good kind of aggregation framework which is, as we all know, is kind of the dirty little secret in data, but what the hard part is kind of getting everything lined up, so you can actually experience stuff like that. Could you kind of talk about how this differentiates Mongo from other firms? And then the ancillary question is, and I think the answer is 99% chance is no, but is there any overlap with your kind of aggregation framework and things that are offered by companies like [indiscernible]?

Yes. So just for everyone else's benefit, what an aggregation framework is is in layman's terms, is just the ability to process and analyze data inside the database and most no sequel databases do not have this capability. It's one of the things that really distinguishes MongoDB from other more modern databases. Relational databases have this capability, but relational databases suffer from the problem of being an architecture that was built 40 years ago and so they have trouble scaling and having resiliency in their platform. So what MongoDB does is gives you all the benefits of a relational database with the power to scale the performance and the flexibility of a modern database, which is why it makes it such an attractive platform for developers. And so that's essentially what the aggregation framework does and it's a very attractive part of our value proposition to those developers and customers who are using MongoDB.

Got it. And then you already got 85 questions on Atlas, but I’ll ask one anyway. So I think I saw that you lowered the price, is that MongoDB Atlas cost I think deployed on AWS Mumbai, is that right by like 10% to 15%? Is that right? And so could you maybe talk about the logic and expected payoff from that decision?

Yes. And so what we've seen is there's actually a little bit of a price war going on between AWS and Google in that marketplace. And so as the beneficiary of being a basically customer AWS and as they started reducing prices in that market, we were able to pass on those savings to those customers. We think obviously that market is also more price sensitive than say other markets, just because the cost of labor is that much cheaper and we feel like India is a massive market for us. it's one of the highest download sites of any region in the world and we're very excited about the opportunity there and we believe that those price decreases will pay off in a big way.

And next we have Jack Andrews with Needham.

I was wondering if you could talk a little bit more about the catalyst that enabled you to have the 20 plus conversations with C level executives. I mean, is that related to the fact that we keep hearing that some of these digital transformations are not going so well or just how did you really get an opportunity to have those type of conversations? Was it through direct sales, partners, if you could shed some light on that would be helpful?

Yeah. Absolutely. So I would say a couple of things. I would say that with regards to a lot of these digital transformation efforts, obviously, everyone's been talking about digital transformation for a while, but what people find is that it's far easier said than done. In fact, one of the blockers to basically getting to where people want to go is the fact that they have trouble using their data. The data is either trapped in silos, it’s hard to use, there is a lot of duplicative data and so forth and so people are realizing that they don't have a way to really manage their data. If they are really be successful is going to be limited. Second, I would say is that we, as a company, have fundamentally changed a lot over the last few years. Obviously, we went public last October. That was a real signal to customers that we are now a really viable and strategic partner to companies that mature with the product has increased dramatically, especially now with the announcement of ask the transaction support, that provoked up a lot of people's years about the fact that, wow, they could use MongoDB for virtually any use case and I would also say the maturity and the efficacy of our go to market efforts, these meetings didn’t just happen by themselves, because our sales teams are now being much more strategic in how they engage with customers. We're trying to go higher earlier in the sales cycle and that’s yielding these kinds of meetings. And so I would tell you that the quality of these meetings have been outstanding and it's really a sign of one, how important this is to all these customers, and two, our credibility as a potential partner to them in their efforts.

Sure. Thanks. And then just as a quick follow-up, you mentioned that people are in the evaluation process of MongoDB 4.0 right now. Could you just talk about maybe just qualitatively the level of interest you're seeing for this particular release of your product versus maybe some other releases and how optimistic are you of a potential uplift, if you will, from this product.

I would say the interest has been extremely high. This has probably been the most requested feature for a number of years. So when we announced it in February, there was a huge amount of receptivity, positive receptivity to that announcement. That's also generated a bunch of new engagement with customers and prospects and frankly it's allowing us to be more strategic. The beta version of the software is available for people to use and test. The feedback has been very positive and we expect to GA it in the near future.

[Operator Instructions] We’ll move next to Brian White with Monness, Crespi.

Yes. On the IBM relationship, how should we think about that ramping in fiscal ’19? And IBM has their own cloud, so I am wondering if you’re going to have a partnership with their cloud as well and will they be selling Atlas?

I would say that we are quite optimistic about the IBM relationship. We feel like it's a real relationship. It's not again one of these Barney announcements. And as I said and the way it's real is that their sales people are now incentivized to sell Atlas to their customers. We're already seeing interest, I'm sorry, MongoDB, we’re all seeing interest in the field and there's already a bunch of engagements happening in a bunch of different regions. And so I'll defer to Michael in terms of how we think we want to -- how we think it will show up?

Look, I think it will take time. The agreement has some time horizon for them to work through the commitment. So, it won't be an immediate impact and it will take time for them to ramp the global sales force, but we should see the benefit of it over time.

And just as a follow-up, 5G commercial network starting to come online this year and so I'm wondering what does 5G mean to MongoDB.

Well, I think, one of the things about -- one of the trends that we see very clearly is the rise of mobile applications and MongoDB has been well suited for a long time for people to build mobile apps. One, it's a very -- mobile apps tend to have a very high rate of change because people are constantly adding new features, fixing bugs and so they need a platform that can enable them to have high developer productivity. Obviously, with certain apps, you can have thousands, if not millions of users and so you want a platform that can scale and with a distributed capability, you also want to have fast or low latency read/write access and so MongoDB is well designed for those kind of use cases. And as the pikes get bigger, 5G today could be something of the future, that only place to our strength because it will encourage people to build higher performance, more content rich, more streaming content, video and so forth that has -- requires more bandwidth and that plays well to MongoDB, as people think about building those kinds of applications.

And to everyone, that concludes our question-and-answer session at this time. And for closing remarks, I’d like to turn it back over to Dev Ittycheria.

Well, we're really pleased about the quarter. I think we are thrilled about the fact that MongoDB is increasingly being viewed as a strategic vendor by customers everywhere. There's clearly strong demand for MongoDB all around the world and the breadth of use cases continues to grow. We're really excited about the partner ecosystem growing, as evidenced by the IBM relationship and the fact that our partner business is really healthy and obviously Atlas continues to grow very, very quickly. And as I mentioned in my prepared remarks, we have our MongoDB World conference on June 27 and so we encourage all of you to visit us here in New York City. Thank you.

Everyone, that does conclude our conference call for today. Thank you for your participation. You may now disconnect.