MongoDB, Inc. (MDB) Q3 2022 Earnings Report, Transcript and Summary

00:05 Good day, and welcome to the MongoDB’s Third Quarter Fiscal Year Twenty Twenty Two Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. 00:37 I would now like to turn the conference over to Brian Denyeau from ICR. Please go ahead, sir.

00:45 Thank you, Alley. Good afternoon and thank you for joining us today to review MongoDB’s third quarter fiscal twenty twenty two financial results, which we announced in our press release issued after the close of the market today. During the call today are Dev Ittycheria, President and CEO of MongoDB, and Michael Gordon, MongoDB’s COO and CFO. 01:05 During this call, we will make forward-looking statements including statements related to our market and future growth opportunities, the benefits of our product platform, our competitive landscape, customer behaviors, our financial guidance and our planned investments. These statements are subject to a variety of risks and uncertainties, including those related to the ongoing COIVD-19 pandemic and its impact on our business, results of operations, clients and the macroeconomic environment, could cause actual results to differ materially from our expectations. 01:37 For discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks described in our SEC filings, including our most recent quarterly report on Form 10-Q. Any forward-looking statements made on this call reflect our views only as of today and we undertake no obligation to update them. 01:55 Additionally, we will discuss non-GAAP financial measures on this conference call. Please refer to the tables in our earnings release on the Investor Relations portion of our website for a reconciliation of these measures to the most directly comparable GAAP financial measure. 02:09 With that, I’d like to turn the call over to Dev.

02:11 Thank you, Brian, and thank you to everyone for joining us today. I will start by reviewing our third quarter results before giving you a company update. Looking quickly at our third quarter financial results, we generated revenue of two twenty seven million dollars, a fifty percent year-over-year increase and above the high end of our guidance. Atlas revenue grew eighty four percent year over year, representing fifty eight percent of revenue and is now over zero point five billion revenue run rate. We had another strong quarter of customer growth ending the quarter with over thirty one thousand customers. 02:45 Our third quarter results demonstrate that customers are increasingly choosing MongoDB to build modern apps that run their businesses. We had another strong quarter of customer additions led by a self-service channel. Both our field sales and inside sales teams again performed well. A key driver of results is the healthy expansion of our customers as many of them are meaningfully increasing their adoption of MongoDB. As you'll hear from Michael, some of our largest customers made increased multiyear commitments to MongoDB in Q3. 03:12 Our performance is clear evidence at MongoDB is emerging as an enterprise standard in a growing number of accounts. Our excellent Q3 performance as the result of continuously strong go to market execution as well as a confidence of two factors, secular trends that reinforce our technical advantages and are growing credibility and influence with customers. 03:33 Let me start with the secular trends that play to our strengths. First, the ability to move fast and innovate quickly, whether it's pivoting to a digital first strategy, quickly sees a new market opportunities or responds new threats has never been more important. MongoDB’s Document model maps data to the way developers think in code, removing friction from the development process to enable developers to move incredibly fast. 03:57 Second, while there has been a proliferation of single purpose databases that address specific needs. The result is that most customers find the challenges of learning, managing and supporting Myriad Technologies and resulting Data Silos to be overwhelming. Consequently, there's a growing demand for a modern general purpose database platform that supports a broad range of workloads to dramatically reduce the cost and complexity of company's data infrastructure. MongoDB’s application data platform is designed to address the specific need. 04:26 Third, the performance and scale expectations of modern applications continue to grow. MongoDB distributed architecture supports unlimited horizontal scaling, allowing organizations to linearly scale costs as the applications grow and to easily address data sovereignty regulations or to ensure responsive and predictable performance where the uses are local or across the world. Today, we have customers have workloads doing over one million transactions per second, with data sizes of hundreds of terabytes. Legacy platform struggled to address these demanding, performance and scale requirements. 05:04 Fourth, the accuracy availability and secure of data are paramount importance. MongoDB allows developers to easily build resilient mission critical applications with native replication, fast and automatic failover and retriable operations. MongoDB also for sophisticated security controls for access, auditing and end-to-end encryption whether data is in use or at rest. 05:27 And fifth customers want choice on where and how they deploy their applications. The offers can build and run MongoDB applications are in a data center in any cloud and at the edge. However, technical advantages are not enough unless there are customer proof points to validate these technical claims. As a disruptive of a massive market with a longstanding entrenched technology, we had to build our credibility one workload at a time. We usually land in an account by identifying a pinpoint that simply cannot be addressed by Legacy Technology. We then leverage the success of the first workload to expand across divisional and geographic boundaries. 06:03 Eventually, we up level the conversation to the C-suite and become a standard for future app development. While it's still early days, we believe the key driver of our success this year has been the growing trend of customers choosing MongoDB as an enterprise standard, which is having a positive impact on our ability to increase our penetration of these accounts over time. With more than thirty one thousand customers, which is up ten X since our IPO four years ago. We have all types of customers using MongoDB to do a wide variety of amazing things to run and transform their businesses. 06:35 We have had tremendous success in acquiring customers from large global two thousand organizations to cutting edge startups across all major industries in most geographies. This creates a compelling social proof effect. When we are able to reference customers in particular industries or geographies who are aggressively adopting MongoDB, other customers in those same industries or Geos are more interested in engaging with us. 06:59 While we feel confident about our position in the marketplace, we are not standing still. We recently moved to a quarterly product release schedule starting with MongoDB five point one to bring new features and more quickly to market. How that’s MongoDB five point one include time series enhancements, such as support for shorting, improved capabilities for joints and draft versus to do more sophisticated real time analytics and enhancements to our client side field level encryption security feature to work with any KMIP compliant key management system. In addition, we announced a preview ability to provide hundred X faster facets and counts in that research. 07:36 Faster search allows users to filter and quickly navigate search results by categories. Fast assets and counts are essential in a search first applications such as product catalogs and content search. MongoDB combines the core database and search data base into one unified developer and operational experience, differentiating it’s from all other standalone application search offerings in the market. Last but not least, we also announced Atlas data API which allows developers to easily access the MongoDB data via standard rest like interface. It exposes MongoDB’s rich query and migration capabilities we are fully managed scalable in the Brazilian API, which allows customers to quickly build microservice on Atlas and easily integrate with a wide array of tech stacks. 08:21 We made these product announcements at our (Dock) [ph] Local Developer Conference in London, which is our first in person event since the start of COVID-19. We also just returned from AWS reinvent, where announced the expansion relationship with AWS including the launch of a pay as you go MongoDB Atlas on the AWS marketplace. 08:38 Customers are used to buying services from the AWS marketplace can find a simple and integrated way to subscribe to MongoDB Atlas, starting even with the free trial and use Atlas without the need for not upfront commitment. This makes it even easier to start using Atlas. 08:55 Now, I'd like to spend a few minutes reviewing some customer wins and interesting use cases from the quarter. Coin based, which is dedicated to increasing economic freedom in the world by building more accessible, transparent and equitable financial system is the trusted choice of more than seventy three million individuals, businesses and institutions to interact with the crypto economy. The company is moving more work close to MongoDB Atlas so we can build new products and services quickly and meet the scale and avail the requirements of the unprecedented growth in the cryptocurrency markets. The adoption of Atlas Data lake gives their engineers as simple and powerful way to create resilient data pipelines that enable downstream analytics on the large volumes of data generated by the platform. 09:37 Global technology and communications leader Verizon is working with MongoDB to bring data closer to the edges as part of its multi access edge computing and 5G data architecture. This can enable the next generation of low latency applications such as Machine Learning, Intelligent Edge, Robotics, ARVR, Autonomous Vehicle, Telemedicine and more. 10:00 QHealth is a healthcare technology company that makes it easy for individuals to access health information and places diagnostic information at the center of care. Their revolution on new device, the QHealth monitoring system paired with COVID-19 test is the first at home molecular COVID-19 test available over the counter without a prescription, and it is used by the NBA, Johnson Johnson and Mayo Clinic. The company chose MongoDB Atlas, search and Realm Sync to power their mobile application, mobile database and synchronization enabling consumers to receive data from the QHealth devices on the smartphones and securely stored in the cloud. 10:39 Telecom Italian Mobile or TIM, the communications industry leader in Italy and Brazil, up fixed mobile and cloud infrastructure, data centers service offerings and products for communications and entertainment. The company at the forefront of Digital Technologies, TIM selected MongoDB Atlas for fly together, it's a core digital service delivery platform to accelerate the transition to Google Cloud and enable flexible delivery of digital services through a Microservices Architecture. MongoDB has been a partner and maximize the customer experience across all of his digital channels. 11:11 In summary, we had another excellent quarter, our strong performance as a result of the seeds we planted years ago, such as launching Atlas, releasing multi-document asset transactions and expanding our go-to-market channels to complement our enterprise sales organization. Our continued success for the fuels are aspirations, we not only expect to benefit from the seeds already planted, but we will continue to plan new seeds to drive long-term growth. Customers are embracing the vision of our application to a platform that simplifies their data architecture while accelerating the pace of innovation. We believe the seeds are planting today will yield strong roles, results in the years to come. 11:48 Before I turn it over to Michael, I would officially like to welcome our new CMO, Peter (Ulander) [ph] to MongoDB. A development is core, Peter joined us from AWS, where let developer enterprise marketing. He brings deep experience in the Cloud, Open Source, engaging with developers and has a track record of helping brands from startups to tech leaders to take advantage of major market transitions. With that. Here's Michael.

12:13 Thanks, Dev. As mentioned, we delivered another strong performance in the third quarter, both financially and operationally. I'll begin with the detailed review of our third quarter results and then finish with our outlook for the fourth quarter and full fiscal year twenty twenty two. First, I'll start with the third quarter results. Total revenue in the quarter was two hundred and twenty six point nine million dollars up fifty percent year-over-year. Subscription revenue was two hundred seventeen point nine million dollars up fifty one percent year-over-year and professional services revenue was nine million dollars up thirty five percent year-over-year. It was a very strong quarter across the board, and we exceeded our expectations for both Atlas and Enterprise Advanced. 12:53 Overall, Atlas’ strong performance continues to be the largest contributor to our growth. Atlas grew eighty four percent in the quarter compared to the previous year and now represents fifty eight percent of total revenue compared to forty seven percent in the third quarter of fiscal twenty twenty one and fifty six percent last quarter. In any given quarter, the sequential growth of Atlas has driven primarily by the expansion of the existing applications on our platform. As you can see in our strong Q3 results, that expansion was towards the higher end of the historical range this quarter. 13:24 Enterprise Advanced also exceeded our expectations this quarter driven by stronger than anticipated new business demand. During the third quarter, we again grew our customer base by over two thousand customers sequentially bringing our total customer count to over thirty one thousand which is up from over twenty two thousand six hundred in the year ago period. Of our total customer count over three thousand nine hundred direct sales customers, which compares to over two eight hundred in the year ago period. 13:52 As a reminder, our direct customer count growth is driven by customers who are net new to our platform, as well as self-service customers with whom we have now established a direct sales relationship. The growth in our total customer count is being driven in large part by Atlas, which have over twenty nine thousand five hundred customers at the end of the quarter compared to over twenty one thousand one hundred customers in the year ago period. 14:16 It is important to keep in mind that the growth in our Atlas customer count reflects new customers to MongoDB in addition to existing Enterprise Advanced customers adding incremental Atlas workloads. We had another quarter with our net air expansion rate above one hundred and twenty percent. We ended the quarter with one thousand two hundred and one customers with at least one hundred thousand dollars in ARR and annualized MRR, which is up from eight ninety eight in the year ago period. The continued strong growth in customers with one hundred thousand dollars or more in ARR is an indication of the success of our land and expand go-to-market strategy and the fact that we are increasingly becoming a strategic partner for our customers. 14:55 Moving down the income statement, I'll be discussing our results on a Non-GAAP basis unless otherwise noted. Gross profit the third quarter was one hundred and sixty three point nine million dollars representing a gross margin of seventy two percent, which is consistent with last quarter and consistent with seventy two percent in the year ago period. In the near term, we continue to expect some modest reduction in the overall company gross margin as Atlas continues to grow as a percentage of our revenues. 15:23 Our operating loss was three point five million dollars or a negative two percent operating margin for the third quarter compared to a negative eleven percent margin in the year ago period. Our outperformance versus our operating loss guidance was clearly driven by our revenue outperformance but also by timing of certain expenses. Due to the ongoing COVID-19 pandemic, we are experiencing less of a rebound in travel events and workplace expenses that we'd previously assumed. At the beginning of fiscal twenty two, we had shared with you our expectation that these categories would contribute an incremental twenty million dollars to twenty five million dollars in expenses for the year compared to fiscal twenty twenty one with most of it occurring in the second half. 16:06 Given the sustained impact from the pandemic, our revised expectation is that these incremental expenses will only amount to nine million dollars to twelve million dollars for the current year. We see this is a one-time benefit as we do expect our activities to return much more closely to pre-COVID levels in fiscal year twenty three. 16:22 In addition, our marketing spend was lower than expected in Q3 as our new CMO, Peter Ulander, but certain programs on hold while we evaluated their effectiveness. This process is now complete, and we expect our marketing spend to revert to normal levels in Q4. Net loss in the third quarter was seven point two million dollars or zero point one one dollars per share based on sixty six point four million weighted average shares outstanding. This compares to a loss of eighteen point two million dollars or zero point three one dollars per share on fifty nine point four million weighted average shares outstanding in the year ago period. 16:57 Turning to the balance sheet and cash flow, we ended the quarter with one point eight billion dollars in cash, cash equivalents, short-term investments and restricted cash. I would also like to point your attention to a meaningful sequential increase in our deferred revenue. As Dev mentioned in his remarks, we are increasingly becoming an enterprise standard and strategic partner to our largest customers. And correspondingly, these customers have high confidence and continued growth of MongoDB. In order to optimize the best commercial terms. These companies – these customers typically make multiyear commitments to MongoDB. 17:32 In Q3 we had a number of our largest Atlas customers renew their Q4 and Q1 contracts early because these are Atlas customers and Atlas revenues recognized upon consumption, the multiyear nature of these Atlas commitments did not affect revenue in the period. However, there was an impact on deferred revenue, given these contracts were billed annually in advance. While early renewals occur regular in our business, the dollar magnitude in Q3 was significantly above what we had experienced in the past. 18:00 Operating cash flow in the third quarter was negative five point eight million dollars after taking into consideration approximately three point four million dollars in capital expenditures and principal repayments of finance lease liabilities. Free cash flow was negative nine point two million dollars in the quarter. This compares to negative free cash flow of fourteen point nine million dollars in the third quarter of fiscal twenty twenty one. 18:22 I would now like to turn to our outlook for the fourth quarter and full year fiscal twenty twenty two. For the fourth quarter, we expect revenue to the range of two thirty nine million dollars to two forty two million dollars. We expect Non-GAAP loss from operations to be thirteen million dollars to eleven million dollars and Non-GAAP net loss per share to the range of zero point two four dollars to zero point two one based on sixty seven million dollars weighted average shares outstanding. 18:46 For the full year of fiscal twenty twenty two, we now expect revenues in the range of eight forty six point three million dollars to eight hundred forty nine point three million dollars. For the full fiscal year twenty twenty two, we expect Non-GAAP loss of operations to be thirty six point four million dollars to thirty four point four million dollars and Non-GAAP net loss per share to be range of zero point seven four dollars to zero point seven one dollars based on sixty four point six million dollars weighted average shares outstanding. 19:10 To summarize, MongoDB delivered excellent third quarter results. We're seeing strong customer additions as well as excellent expansion within our existing customers. Customers have increased confidence in our application data platform and our turn increasing their commitments to MongoDB. Our performance gives us increased confidence to continue to investing to capture the large market opportunity ahead of us and we're seeing attractive returns on those investments. 19:32 With that, we'd like to open it up to questions. Operator?

19:37 We will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from Sanjit Singh with Morgan Stanley.

20:02 Thank you for taking the questions and congrats on the – on a very strong quarter. Great? The results across the board and including Atlas. If I take a step back, Dave and I look at where we are with Atlas in terms of the mix, sort of fifty eight percent of revenue, it’s almost two thirds of your subscription revenue. When we look at the motion around migration, so, enterprise customers have been expanding for Atlas for quite some time. Now are you starting to see more of the outright migrations on Enterprise Advanced Atlas or is that still on the common? And when customers do that, is there a revenue uplift associated with customers who from Enterprise Advanced to Atlas?

20:43 Thanks Sanjit. Yes, to your question on migrations, still, it's a very small set of customers who have actually migrated from Enterprise Advanced to Atlas. The bulk of our growth of Atlas is net new workloads. And in terms of a price increase, in general, it tends to be flattish, maybe this is slight price premium, but there's not like some significant price delta. Again, I would say the growth of Atlas is really driven by there's a massive cloud transformation happening in the enterprise and best would be vendors are winning and clearly customers are very comfortable moving mission critical workflows, not only to the cloud, but also to MongoDB, and that's what I think you've seeing here.

21:29 Makes total sense and in your script, I thought to call out on claim base being a customer was pretty interesting. That obviously tied to the sort of new financial revolution that's going on and we think of massive scale, but also financial transactional integrity. I was wondering like what the sort of specifics set of use cases Atlas was playing with that customers. Is that more around sort of customer interactivity or is that more on kind of on the transactional level?

22:02 Yes. I think there's limits to what I can say, but it's definitely the transactional level along with some adjacent applications and what I would tell you is they have some pretty unique requirements when it comes to performance and scale. And now you could imagine in their market, they have a lot of periods where they have some intense trading days and then to scale up capacity very, very quickly, to deal with those surges and trading volume so on and so forth. So they basically realize the only platform out there, they could really address our need was MongoDB.

22:32 Well, great [Indiscernible] there and very impressive. I'll see the floor. Thank you. Congrats again for the great quarter.

22:38 Thanks, Sanjit.

22:44 Our next question comes from Raimo Lenschow with Barclays.

22:50 Hey, congrats from me as well. And two quick ones. Dev, what we saw this quarter in terms of what we haven't seen for quite a wireless on the EA side, you talked about new customers starting to kind of come back and doing more deals etcetera. Can you talk a little bit about what you're seeing there in terms to what people are doing on that side? Is that kind of more regulated industries, that can't go to Atlas, yes, there were, it is it like post pandemic investments again and then I had one follow-up for Michael on the deferred side?

23:23 Yes, we have a lot of EA customers who are just expanding their usage of MongoDB in the enterprise, some of its driven by cultural reasons where basically they're just comfortable running workloads in their own data center and want to continue to do that. The benefit for them obviously is that when they do decide to move the cloud, they don't have to rewrite one line of code and then clearly, there are some customers who can trained by the industry they operate in and they can't move to the cloud as quickly as they like to, and that's where EA comes in.

23:54 Yeah. Okay. But you do see it's coming back now after the pandemic as well. Okay. And then Michael, on the deferred side like the and obviously like there's no kind of (TMO) [ph] benefit on people renewing earlier like what's driving those kind of big early renewals, did do anything of terms of terms – opinion in terms of something to encourage did or is that like here financial year, it seems unusual without you kind of pushing for it.

24:25 Yeah. I think this is an example of really customer demand responding to the customer needs, I think what we've tried to make clear over the last couple of years is that we're trying to make it increasingly easier to adopt and use MongoDB. We've tried to strip away some of the incentives that our sales folks have for people to do things naturally. So it's much more customer centric. And this is really a result of them looking at their own demand profiles internally, aggregating demand and thinking and being confident that they will be able to sort of expand more and therefore looking for sort of best possible commercial terms and started coming to us saying, hey, we'd like to commit even more based on what we see internally.

25:05 Perfect. Congratulations. Really good news.

25:08 Thanks, Raimo.

25:11 Our next question comes from Brad Reback with Stifel.

25:17 Great. Thanks a lot. Dev, you had mentioned the hiring of Peter, CMO and Michael, you talked about some delayed marketing spend as a result. Can you give us a high level sense of what maybe some of the changes, the marketing go to market will be going forward?

25:34 Yes, I think what Peter wanted to do and he came from almost like you came out of central casting given his background and open source in the cloud and also knowing how to engage the developers. He really want to do a comprehensive review of all the marketing programs that were underway and what he's done I would say there's a major swings in kind of strategy, but it's basically making some optimizations around doubling down some areas and pulling back to some other areas. So I don't think you'll see any drastic changes. He's also building tighter relationships with the sales organization and so he and Cedric Pech, our CRO are working very closer together and making sure the market team is aligned with the sales efforts around and going up market as well as going down market. So that's essentially what's happening, and we're thrilled to have Peter on the team.

26:26 Great. And Michael, maybe one quick follow-up for you last quarter, you had talked about some specific 2Q to 3Q seasonal trends within Atlas. Anything we should think about as relates to 3Q to 4Q seasonal trends as we head to the end of the year?

26:40 Thanks.

26:42 Yes. I think there are a couple of different ways to think about that. I think within Atlas, as we mentioned, Q1 is seasonal softer and so we were trying to help put in contact some of the strength that we saw in Q2 certainly the results in Q3. We're very strong and compare very favorably when you sort of adjust for that seasonality. I think the only other thing I'd call out that's probably important in terms of Q4 seasonality is two things. One, we had a very strong year ago year in Q4 particularly in Atlas and then on a more macro basis, Q4 tends to be disproportionately Enterprise Advanced, Centric, a lot of the renewal base as it relates to workloads tends to, like I said disproportionately skewed towards Enterprise Advanced in Q4 and so that's take another factor to keep in mind as well.

27:33 That's great. Thanks very much guys.

27:36 Thanks, Brad.

27:38 Our next question comes from Brent Bracelin with Piper Sandler.

27:44 Good afternoon. Thanks for the question here it's incredibly see the return fifty percent fast growth for the first time in two years. On the drivers of the growth here an acceleration, it looks like not only to be a strong Atlas new customer growth, but the Atlas usage in particular was very strong even actually stronger than last quarter. So, walk me through kind of what are you seeing across the broader side of customers, what's driving higher Atlas usage on a per customer basis and one quick follow-up on renewals?

28:24 Yeah, sure, Brad. Thank you. A few different things. So I think you have to think about the mix overall and just as a reminder for folks, we don't run the business on a product basis. We run the business on a channel basis. Just so people kind of remember that, but if you think about the overall growth, I think about in terms of new business and then expansions of existing behavior. So it continued to be another strong new business quarter within Atlas workloads, that new business doesn't tend to have as big an impact immediately, whereas under Enterprise Advanced you've got the term license component recognized under six zero six. And then as it relates to expansion, we've seen very consistent like good strong cohort behavior across the expansion. I mentioned in the prepared remarks specifically for Atlas during this quarter that what we saw was sort of higher than sort at the higher end of what we typically see for the cohort behavior and that drive – that drove some of the Atlas outperformance. You can also tell if you look at our numbers and Brent, I don't know if this is what you're getting at, but you can tell if you look at the numbers where you can calculate from our disclosure, the average revenue per direct sales customer and that is up a little bit year-over-year and up sequentially and I think that's generally pretty impressive given the fact that there's a bit of a tailwind given that, a lot of the customers that we've added overall are in the mid-market who tend to spend below the average level and then also some of those customers that are new to the direct sales channel or self-service customers who we've moved to be in the, we've now established a direct sales relationship with them, they will grow more quickly as a result of that. But that's revenue is not all like net new and obviously those folks started at a lower basis. And so, I think sort of despite some mix headwinds if you want to think about it. Those results have continued to impress us.

30:21 Absolutely and I'm just quickly on the renewals, short-term of forty nine million dollars sequentially, you talked about some of that data, early renewals, can you just maybe remind us why someone would be motivated to renew early, would it be strictly tie to some of the [Indiscernible] rebound solve years and I mean more heavy renewals or are there benefits for an Atlas customer, if they're starting to consume more today is there a financial advantage for them to kind of really renewed just to onboard more use cases, just try to understand because there's a little unusual or why customers would be on that to spend more now and it really renew just trying to drill little deeper to that? Thanks.

31:10 Sure. Yeah. And that's part of the reason why we wanted to call it out because it was typical. Obviously, we've said for some time though that deferred revenue and the calculated billing calculation, the number of folks do is not a particularly insightful or instructive measure for our business, and that certainly continues to be the case. But just given the behavior in Q2, we wanted to call that out. These were Atlas customers and therefore, really as we discussed doesn't affect the revenue, the revenue in Atlas is really all consumption. Based and so what this is reflecting is the increasing strategic or mission critical nature of Atlas in those accounts and so those folks are looking at their run rate. They're seeing their run rate increase. And while they may get whatever benefits are of the initial commercial deal that they struck given that they are at meaningfully higher run rates, they want to make sure that they're getting sort of the best commercial terms out of the relationship and as a result, are entering into committed paying advanced contracts for larger amounts to try and make sure they're optimizing their spend levels with us. And so that's why we want to call it up, but again, unlike kind of typical kind of the calculated billings number, my sort of hypothesis or assumption is that part of the reason people like that as they view that as sort of an indicator of future revenue and where the business going. I think given that Atlas is consumption based and these folks that already were at run rates, often that exceeded their commitment, it's not necessarily as helpful in that way that people are traditionally used to seeing it, but nevertheless, I think it's a great sign around the strategic nature of Atlas and their conviction that kind of continue to invest and expand usage of the platform.

32:55 It is very clear and helpful with color. Thank you.

33:00 Our next question comes from DJ Hynes with Canaccord.

33:05 Hey, thanks guys. I go to congrats on awesome set of numbers here. Two questions. I'll start with you, Michael just kind of building off the thread that Brent start last question around expansion. I know you guys don't get granular with disclosure around net revenue retention metrics and north of one one twenty is great. But is it fair to think that you're seeing that metric kick higher? I mean, I think it makes sense given net adds have been strong, but they've been pretty consistent for the last five, six quarters, but growth has been accelerating. Is that one of the drivers?

33:40 Yes, I would say that the net air expansion rate has been strong at that north of a one hundred and twenty percent level. And I think when we look at the underlying cohort dynamics, they have generally been consistently strong. I think the success has really been a mix. I think it's adding new customers as well as expanding within existing customers and you have to remember a lot of times particularly with Atlas, which is where the bulk of the new customers are coming. There's new customers aren't necessarily coming right away and are spending at their full levels right away and so you get a little bit blurred. It becomes a little bit sort of artificial distinction between what is a new customer land and what is a is what part is the expansion rate? Because when you think about if you're starting off relatively small, and I only look at what are you spending on day one, everything else is expansion. So, yes, of course, you could say that, but you wouldn't have that opportunity to expand if you hadn't added them and so just, I think it's too pronged, I think it's both acquiring new customers continue to lay that foundation for that sort of expansion of the multilayer cake or however you want to think about it and so we've got to keep adding those new customers but then expanding within them. So hopeful for that helps.

34:52 Yeah, that makes sense. And then Dave, I want to ask you a competitive question that's really not related at all to the quarter, but my sense is that Reddit is talking to public investors a bit more. So maybe could just spend a minute touching on competitive differentiation there. I don't know if that's key value versus document or maybe used cases. Where they make more sense than you and vice versa any comparative contrast, I think would be helpful at this point?

35:19 Yes, sure. So, Reddit is predominantly used as a front end cash and so that was a use case that actually lot of people to use MongoDB before in the early days. We have a much broader set of capabilities as a document model. We support so many different types of workloads between key value. We support relational joints, we have time series, graft reversals, etcetera. So we offer broad sort of capabilities. We also support multi-document asset transactions. So to decline base example and we have lots of financial services customers that using us for mission critical workloads, the breadth and capabilities of our platform are far wider and superior. And I think what I talked about little bit in the prepared remarks was that we hear loudly from customers that it just can't continue to use a net new technologies for every net new use case. That the challenges of learning supporting and managing all these different data technologies, having all these different data silos, how do you synchronize that data? How do you secure that data, how do you back up that data? How do you query that data becomes even more challenging? And so, they're gravitating to more of a modern platform where it can run most of those workloads on one platform it really simplifies the operational issues. It really makes a life of developer that much more easy and so that's why we're winning. We don't really compete with Reddit per se. It's very rare that we go into battle Reddit because it's becomes quite easy to differentiate our [Indiscernible] against them. But this is a big market. So there's no doubt that they're probably getting some traction somewhere, but we really feel good about our competitive advantages.

36:57 Very helpful. Thank you guys.

37:02 Our next question comes from Kash Rangan with Goldman Sachs.

37:08 Hey Dev and team congratulations on a fantastic quarter. Dev, I'm curious to get your perspective as you look at Atlas, if you want to look at it two to four years from now, what kind of scale of applications do you see Atlas supporting? Scope of applications, scale up applications, Atlas supporting that are currently just not today and what are the other technological break-through that you are looking for in the core system to be able to accomplish clearly three or four years from now what MongoDB is capable of achieving. Thank you so much, congrats again.

37:45 Yes, thanks, Kash. So what I'd say is one of the advantages MongoDB had from day one is that was built on a distributed system, right? So, by definition, we allow customers to really scale out there, the environment and deal with massive amounts of data and very high performance requirements. And the reason that coming to us is because the existing relational technologies just can't handle today's skill, so to your point as modern applications have even greater requirements to scale the existing set of technologies will be even more handicapped. And so, we've done a lot of sophisticated things around replication for data resiliency, shorting for scale out, doing things like workload isolation, so that when you're running sophisticated analytics, impact user performance, building and materialize views so that you can predefined queries upfront and have those, that data ready versus trying to run the grace when you need it and then impacting CPU usage, all these things we're doing and we're just chipping away and adding more and more capabilities. So it's hard for me to see here and say what we'll be doing five years from now, but we're just pushing the envelope on performance and scale and because we've been built on a distributed architecture, we have a fundamental advantage over all the other technologies out there and that allows us to really serve our customers well. And that's why the most sophisticated and demanding customers like the coin basis of world and others are using MongoDB because no other platform can address their needs.

39:18 Wonderful. Thank you very much. Happy holidays, Dev.

39:21 Thanks, Kash.

39:24 Our next question comes from Karl Keirstead with UBS.

39:31 Oh thank you. I wanted to ask you about the EA business, if we can go back to that twenty percent growth is an acceleration from mid-teens over the last couple of quarters and if it was not the EA business that was the beneficiary of these early renewals, what would you attribute the growth rate acceleration to Michael, I know you mentioned generally new business demand, but maybe you could elaborate. Thank you.

39:57 Yes, certainly. Thanks, Karl. I think this goes back to some of the things we've said for a while, which is that while clearly, we're seeing a lot of adoption of Atlas, not every customer is ready to be in the cloud and our goal is to give customers choice to meet them wherever they are on their cloud journey. Enterprise Advanced could be a great setup as David alluded to earlier to eventually moving into the cloud when they are ready for it. But I think more broadly, it just sort of speaks to the fact that the MongoDB value proposition resonates with customers and so here we have customers who are not as cloud forward continuing to add and expand to their MongoDB footprint and that drove, the better expected quarter that we saw from sort of that product line.

40:48 Got it. Okay. That's helpful. And then Michael, just if you don't mind, back on (DR) [ph], does it feel like this early renewal, larger multiyear commitment phenomenon is sort of one offish? Or does it feel like this is the start of a trend and maybe to put it another way, would you encourage us to be somewhat tempered in our DR growth estimates for 4Q and 1Q, if in fact some deals renewals were pulled forward. Thank you.

41:20 Yes. I think I'm going to say so sort of yes to both even though that might seem somewhat contradictory in the sense of like, yes, I think it's a one off. I think it is a directional trend over time as Atlas becomes more strategic within accounts, but I would at least in the near term certainly think of this as more one off which is part of the reason why we wanted to explicitly call it out, so people didn't sort of get unduly take the numbers and sort of extrapolate, do whatever you all want to do with it.

41:48 Yep. Thanks for my question. That's clear. Thanks, Michael.

41:55 Our next question comes from Patrick Walravens with JMP Securities.

42:02 Great. Thank you and let me add my congratulations. So, Dev, I've been listening carefully to some of the broader themes that you've been mentioning as we've been going through massive cloud transformation, the enterprise, the benefit that's distributed an architecture and the reason I've been trying to figure out what it might be MongoDB, Snowflake, Datadog and Confluent, Mike all having in common because you guys are all already at super high growth rates and all accelerated in Q3. So if you have one of few thoughts on that, I would love to hear it.

42:43 Well thanks. Thanks for the question. What I would say is a couple of things. One, obviously, we are going through a massive transformation of the enterprise where people are moving workloads to the cloud, they've taken some time to get there, but now they're really moving aggressively to move not just tertiary second tier apps, but mission critical workloads to the cloud, but by that move, they also been very thoughtful about what technology they use and not just taking the standard offerings from any of the cloud vendors, but cloud providers, but really taking a best breed approach and so I think that's what you're seeing as the beneficiaries are there basically choosing the best technologies available in the marketplace? And running the workloads there. And I think we are well positioned and this – and to your point about themes or trends that I mentioned, their desire to increase the speed of development. Are people just going to want to move faster of course, they are. Are they going to want to buy standalone single purpose databases no, they need to have a general purpose platform? Our performance and scale requirements is going to grow over time, of course, they are. The security availability going to be important, of course, they are. Our both customers one choice, of course, they will. So we feel all those trends are only going to be playing to our strengths and that's why I think you're seeing customers increasingly choosing MongoDB to run their mission critical applications in the cloud.

44:08 Great. Thank you.

44:13 And our next question comes from Fred Havemeyer with Macquarie.

44:20 Thank you. So MongoDB, you recently announced pays you go for Atlas. Last quarter, you announced several described, but across the board that MongoDB, it's really looking like you're trying to align database consumption deployment and utilization and make that much tighter of loop than I think it really has been historically. Also I got to say, I'd like to shut [Indiscernible] on MongoDB and I recall that earlier this year you've also announced UI path had adopted MongoDB, so you certainly have something going on with supporting lowering no code workloads. But that's the kind of question in hands here. How should be thinking about Atlas growth drivers? We say traditional enterprises adopting Atlas for just more agile development cycles versus innovative startups to rapidly growing on your platform and perhaps adopting it because it much more tightly aligns what their need for scaling.

45:12 Yeah. So thanks for your question. I just want to make one clarification. The pay as you go that we announced AWS is only new to the marketplace at AWS. We've always had essentially an option where you could sign up via self-serve without any commitment and we also actually offer that option now. Our salespeople can offer that for customers to basically sign up with the zero dollar contract just to get started. So the pay as you go is really just a feature available on the Amazon AWS marketplace, because obviously, they transact a lot there and we just want to make it even easier for customers on marketplace to engage with Atlas. But it's part of the general team, we just, as Michael mentioned, just making more and more easy for customers to use Atlas. In terms of signals that we are looking for, obviously, we really like the fact that large well-known brands I mentioned a couple of them in the prepared remarks are using MongoDB, but I also pay attention to signals of startups who are using MongoDB, because to me, when startups are betting on MongoDB, that's a great sign for future. Because the question I'd ask you is how many starts today using Oracle and I can't think of many and so to me, we spent a lot of time. Now you're looking at the starts using MongoDB, but what are some of the next generation developers? What tech stacks are using? What modern application framework are using? And that's where we feel really good because MongoDB basically at the center of those ecosystems and that's a good sign of help for our future.

46:40 Yes. Thank you, Dev. And I think that your ranking is on stock overflow consistently reflected some of that to. So a quick follow-up question for Michael. I think, can we get an update on how many of your over one hundred thousand dollars ARR customers would qualify for that level of spend on Atlas alone. Are you seeing any customers out there that are approaching on Atlas said like north of one million dollars in ARR?

47:06. Yes, so a couple of things. So, we reported earlier this year that roughly over sixty percent of the one hundred K customers would have qualified just on their Atlas spend alone. There's been no material change to that number. So, I think it continues to be a very strong percentage of Atlas. And so that's not surprising given the increased investment that we're seeing customers make.

47:35 Great. Thank you. Congrats on a strong quarter.

47:37 Thanks.

47:38 Thank you.

47:40 Our next question comes from Jason Adder with William Blair.

47:46 Yeah, thanks. Hey guys. I know you've kind of covered this ground somewhat, but I want to ask it in a slightly different way. This is the biggest beat you've had maybe ever. And I'm just wondering if something changed in the market here in the second half, whether there is the velocity of the enterprise transformation to cloud or is it something more company specific where you just been able to kind of separate yourself from the competition more?

48:18 Yes. I think the thanks, Jason. I think a couple of things as we sort of tried to call out in the prepared remarks. I think it was just a really strong quarter across the board. We talked about Atlas and the success in Atlas and the stronger expansion than we typically see which is great and then it was also a really strong Enterprise Advanced quarter as people commented on and some of the questions and the follow ups and so I think there, continue to be sort of multiple legs of the growth we continue to add customers, we continue to find the customers that we're adding are behaving attractively, consistently with their kind of like kind cohorts from beforehand so the changes that we've made in terms of making it easier to adopt MongoDB and easier to get in the platform are working and are having the desired effects and I think it's just sort of the combination of all those things going really well resulting in a really strong quarter that certainly beat our expectations.

49:17 So, it's kind of have maybe half macro where things are moving faster to cloud and half just really good execution across your various product areas. Is that a fair way to think about it?

49:31 I think it's hard to sort of parse it that way I guess I just look back and say, we're going after an incredibly large market. We are being increasingly effective at capitalizing on that market opportunity. You see that sort of showing up in the numbers. Dev talked about in the prepared remarks sort of the social proof impact and other things like that. And so I just think all that really added up to an exceptionally strong quarter.

50:00 Thanks guys.

50:03 Thank you.

50:06 Our next question comes from Ittai Kidron with Oppenheimer.

50:11 Thanks. Great numbers. Dev, my question is to you on the competitive front. I saw at [Indiscernible] event last week, it was in Vegas, and I couldn't be more surprised by the number of serverless announcements that AWS made with regards to pretty much every database platform that they have. At the same time, they've also been pushing the DocumentDB and the highlighting its compatibility to you, I think version for at this point and also the mantra of their whole event was the right tool for the right job. So, it seems like they're taking a little bit of a different approach to you and clearly they're being extremely successful. So I guess my question is two-fold, number one, what you make up all serverless announcements and what we did to make your life or bit more difficult to you and that they significantly simplify adoption of any platform, but then second, your platform comment, could just read that the market overall for everybody is very strong that the market is in a necessarily shifting to the platform. It's just, all both, getting lifted right here right now?

51:20 Yeah. Well, I'll make one eta, it’s good to see you at reinvent, it was good to actually have a face to face conference. So a couple things. One, I would say is on the serverless parts, we announced serverless over the summer and we've been working on it for a while. DocumentDB still does not have a serverless offering just to be clear and the reason we announced serverless was that we wanted to make it even easier use MongoDB, people will not have to do a front capacity planning and pick a particular instance size that the database would just scale elastically as their demands grow. 51:58 The second thing I would say that that is very different in terms of our strategy versus AWS strategies. We don't believe that customers want to use fifteen or eighteen different databases. I don't know if any customer and the team and I and our sales organization. We spent a lot of time off with customers. No customer said I want to use that many different databases. Because the challenge is very simple, the challenges of learning, managing, supporting all those different technologies, having data sitting in all those different silos, knowing how to create that data, backup that data, synchronized that data is an operational nightmare. And so that's why we believe our approach of offering a general purpose platform to – for our customers consolidated workloads is really resonating with our customers and obviously seen in our numbers. And I would say Amazon obviously has a big brand. There's have a lot of reach and they can get it's a big market. So clearly, they're doing well, but we feel, we've been partnering and competing with them and many others in the marketplace and we're holding our own effect we're doing extremely well, and we feel really good about our competitive position.

53:13 Very good. Thank you.

53:15 Thank you.

53:18 Our next question comes from Phil Winslow with Credit Suisse.

53:23 Hey guys congrats on our good quarter and thanks for taking my question. We just wanted to focus on-the-go-to-market channels. Obviously, been highlighting especially having in direct. So question there is are things trending in terms of new hiring there? How do you feel back capacity and sort of plans for next year, but also want things so you highlighted it was the self-service channel, some of the new non-direct channels they are seeing success, wondering if you buy just more detail on those two? Thanks.

53:49 Yes, sure. So, yes, as you talked about in many of the quarterly calls that we're trying to grow our sales capacity as fast as operation possible. Q3 was another great quarter for hiring, and it's basically, we're running the same playbook, we're going to increasingly segment in the market. As you know, we have field sales organization, we have inside field sales organization, but we're now finding that business is like mid-market segment comprised of really digital natives we're building their own applications and being very sophisticated in the user technology, maybe have also raised a lot of capital that's a big target market for us. We're probably on the margins going to, started looking at some vertical areas of where there's some commonality of use cases where we can leverage our common learnings across, I’d say like financial services, manufacturing, retail, healthcare, etcetera. And so and that's all things in terms of just refining and optimizing our go-to-market. And so and on the self-serve side, again, it's really helping drive our business, the combined self-serve inside sales, filed sales organization and our partner organization is creating a really virtuous slightly look effect. Just to be clear, even today, over half of the revenue in Atlas was sourced from self-serve. So the self-serve channel is a great way to acquire customers and our sales organization then uses the customers require and grows them even faster. So the virtuous cycle is working really well.

55:25 Awesome. Thanks guys and congrats again on awesome quarter.

55:28 Thanks, Phil.

55:32 Our next question comes from Tyler Radke with Citi.

55:37 Hey, thanks for taking my question. I wanted to ask you just how are you seeing these large cloud platform partners help you get into these larger deals, I know you talked about that a bit in the script, but I'm curious if you're seeing those also help to accelerate the migration away from kind of non prem relational incumbent as well. Just talk to how does large cloud platform partnerships kind of an evolved from a relationship perspective? Thanks.

56:07 Yes, Sure Tyler and again, it was good to see who said reading then last week. What I would say is that the cloud partners have kind of realized that when the workload and Atlas workloads moving on the cloud, there is beneficiary of multiples of that revenue that's spend with us on their platform between the consumption of the underlying storage and compute as well as all the other ancillary services that customer may use and so it's truly, it sounds like a clean shave is truly a win win relationship. So, we've seen our partners and obviously last week, got some great relationships with senior level people at AWS because the relationship is really working and we're seeing a lot of – we're doing lot of business together and we're becoming a very, very meaningful partner for them. And so And I think it's, we've obviously been working with them closely now ever since the launch of Atlas over the last five years. We've learned a lot lesson and is an important not only to have product integrations, it was also important to have the sales organizations aligned to work well with each other and that took a little bit of time to work through these are naturally with some competitive offerings and salespeople are not the most trusting types when they had to work with someone who may have a competitive offering but when you incentivize them to work well together and becomes clear that we have the far superior solution, the cloud rep from the particular providers more than happy to work with us because they're going to get so much of the business that comes to them and that's essentially what's happening. We're doing now deeper integrations and as we talked about, we announced the pay as you go, announcement for AWS marketplace. So we're just making easier for customers to business with us and the cloud provider together, which is good news for everyone.

57:48 Great. And then just on hiring, you mentioned it was a strong quarter. Do you anticipate that you're going to grow your direct sales force faster next year than they needed this year?

58:01 Yes. I don't think we're prepared to go into what we'll do next, just say that'll be the March quarter, but I would tell you this in generally, we've been trying to grow our sales capacity, as fast as operationally possible now, we do have a high bar. So, we're not just going to hire salespeople in Italy. And we also want to make sure that we have the leadership capacity in place to develop and get – we got the sales reps to execute in the consistent way quarter in and quarter out. So we put a lot of thought in terms of how we think about capacity planning where we have people. Do we have the right leadership in place etcetera, etcetera, and but we're trying to move as fast as possible?

58:44 Thanks. Good to see you in last week.

58:46 Thanks, Tyler.

58:50 Our last question today comes from Jack Andrews with Needham.

58:55 Good afternoon. Thanks for fitting names in the call. I just wanted to ask if there's a quick update you can provide on the time series and just how we should be thinking about that patch opportunity within Atlas and how that may drive, that maybe the rate and pace of consumption?

59:12 Yes. I think what we're seeing is that the time series is a use case is growing quite rapidly and I think what is driven by is that you have the small and expensive IoT sensors and fast and reliable wireless networks that just made it so much easy for, so much easier for organizations to generate the collect times through his data. So, for example, Walmart will have seven million unit data points and stores, electric cars now over one thousand sensors in the cars. So those sensors could be across the board, temperature sensors, smart watches, smart meters and blood glucose monitors, etcetera, etcetera. And so that's a big big opportunity that we see, and MongoDB is well designed to service those workloads we can ingest data very quickly and we can scale as the volume data grows and so that's something that we're very focused on. We've made some enhancements to now support time [Indiscernible] before just on replica sets now on Charter clusters and you'll see us going after that opportunity quite aggressively. And again, the benefit of the customers again they have one platform where they can run time series workloads that can run key value or close, they can run transaction intensive workloads, etcetera, all one platform with one developer experience and so this makes their life so much more easy.

60:39 Thank you And congratulations.

60:42 Thank you.

60:45 This concludes our question-and-answer session. I'd like to turn the call back over to Dev Ittycheria for any closing comments.

60:52 Well, thank you for joining us today. As you know, we had an excellent quarter and I think just to reiterate our strong performance is really due to again our consistent go-to-market execution as well as the confluence of the fact that the secular trends are really reinforcing our technical advantages and are growing incredibly with customers. And our Q3 results really give us increased confidence to continue investing and planting seeds for future growth. With that, I would like to wish everyone, very happy and healthy and safe holiday season and we look forward to talk to you soon. Take care.

61:25 The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.