Good day, and thank you for standing by. Welcome to MongoDB Third Quarter Fiscal Year '23 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Brian Denyeau from ICR. Please go ahead.

Thank you, Carmen. Good afternoon, and thank you for joining us today to review MongoDB's third quarter fiscal 2023 financial results, which we announced in our press release issued after the close of market today. Joining me on the call today are Dev Ittycheria, President and CEO of MongoDB; and Michael Gordon, MongoDB's COO and CFO. 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 COVID-19 pandemic and the adverse macroeconomic environment and their impacts on our business, results of operations and clients that could cause actual results to differ materially from our expectations. For a discussion on certain risks and uncertainties that could affect our actual results, please refer to the risks described in quarterly report on Form 10-Q for the quarter ended July 31, 2022, filed with the SEC on September 2, 2022. Any forward-looking statements made on this call reflect our views only as of today, and we undertake no obligation to update them, except as required by law. 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. With that, I'd like to turn the call over to Dev.

Thanks, Brian, and thank you to everyone for joining us today. I will start by reviewing our third quarter results before giving you a broader company update. We generated revenue of $334 million, a 47% year-over-year increase and above the high end of our guidance. Atlas revenue grew 61% year-over-year, representing 63% of revenue. And we had another strong quarter of customer growth, ending the quarter with over 39,100 customers. Overall, we are pleased with our performance and execution in Q3 despite the challenging macro environment. Let me give you a bit more context on what we saw in Q3. We had another strong quarter of new business. We added over 500 direct sales customers, and we keep winning new workloads in existing accounts from start-ups to Fortune 500 companies. Our new business from Enterprise Advanced also significantly exceeds our expectations, which is particularly notable in this environment given that EA requires an upfront commitment. Turning to Atlas consumption trends. We have seen an improvement in Q3 versus Q2, albeit still below historical levels. Michael will cover this in more detail. Finally, retention rates remained very strong in Q3, demonstrating the mission-criticality of our platform. Indeed, our Q3 results are an indication that our value proposition resonates with customers even in a difficult macro environment. Let me remind you of the key pillars of our developer data platform. First, MongoDB enables the customers to unleash developer productivity. The more productive developers are, the faster the organizations can innovate. The document model, which underpins MongoDB, has proven to be the best way for developers to work with data because it aligns well with how developers think and code. Second, MongoDB supports the performance and scale requirements of the most demanding modern applications. MongoDB is built from the ground up as a…

Thanks, Dev. As mentioned, we delivered a strong performance in the third quarter, both financially and operationally. I'll begin with a detailed review of our third quarter results and then finish with our outlook for the fourth quarter and full fiscal year 2023. First, I'll start with our third quarter results. Total revenue in the quarter was $333.6 million, up 47% year-over-year. As Dev mentioned, we continue to see a healthy environment for new business. Thus, this is confirmation that we remain a top priority for our customers, and our value proposition continues to stand out even in this market. Shifting to our product mix, let's start with Atlas. Atlas grew 61% in the quarter compared to the previous year and now represents 63% of total revenue compared to 58% in the third quarter of fiscal 2022 and 64% last quarter. As a reminder, we recognize Atlas revenue based on customer consumption of our platform, and that consumption is closely related to end-user activity of the application, which can be impacted by macroeconomic factors. Let me provide some context on Atlas consumption in the quarter. Overall consumption trends improved compared to what we saw in Q2, though they are not back to historical levels. Specifically, there are a couple of trends worth noting. First, we saw a bounce back in areas that were below our expectation in Q2, namely the mid-market channel globally and our enterprise business in Europe. Second, we saw stronger sequential growth in underlying application usage in Q3 versus Q2, a trend observed across most industries and geographies. We observed a similar pattern last year, and we believe that this may be an emerging seasonal effect. Turning to Enterprise Advanced. EA significantly exceeded our expectations in the quarter, and we have continued having success selling incremental workloads…

[Operator Instructions] One moment for our first question please. It's from the line of Kash Rangan with Goldman Sachs.

So Dev and Michael, just wondering what you've seen in the month of November with respect to consumption trends? And what do you make of the new Atlas wins in the quarter? I would assume that given that there was a lot of belt tightening in the quarter from a macro standpoint, rates went up. These new customers are probably even more discerning customers. They've plans with MongoDB are probably even more certain than the customers that might have been part of other cohorts. And as you look into calendar '23, what is your outlook for how you think about consumption patterns as your Atlas customer base becomes bigger and easier to predict, not easy but easier to predict?

You want to start with the Atlas wins? Yes. So one is the -- Kash, first, thanks for the question. I'm going to first start with the Atlas wins, and then I'll have Michael talk about consumption trends in November. First, the key thing that I think people understand is that software is central to every company's value proposition. And in recent discussions with customers, our own customer advisory board, in the field and more recently last week at re:Invent, our customers are very focused on modernizing to drive more differentiation, operational efficiency and agility. And so the platform message that we are out there with really resonates because, one, it enables high developer productivity, so people can do more with less. The platform enables customers to consolidate on one solution versus connecting and stitching together a point of distorted tools. So it reduces cost and complexity of the data architecture. And all this provides a very compelling ROI, which really drives those new customer additions.

And just on the consumption questions, a few thoughts, Kash. First of all, Q4 generally does not see anything that we would describe as a seasonal benefit. When we look at the November patterns, they were consistent with Q3 and that effectively implies that the latter part of the quarter will be slower growth because in general, we haven't historically seen anything that looks like seasonal growth in Q4. So that will give you a sense for the balance of this year. And as it relates to fiscal '24, we're obviously not providing guidance right now. We'll update that in the March call. It's obviously good to see the continued success in new business as well as the recovery in those growth rates, but it's certainly a very fluid macro environment and we're monitoring the situation closely.

It's from the line of Brad Reback with Stifel.

So last quarter, you guys talked about the digital-native customers being a big problem from a consumption basis. Have those businesses now sort of stabilized at a consistent level?

Yes. So a couple of things. Thanks for the question, Brad. I wouldn't have described it as a problem, but we did kind of sliced and diced the consumption behavior to see what we were exposed to folks what we're seeing, including what areas where we were seeing slower growth. Of which, that part of the mid-market demonstrated that behavior. As I mentioned in the prepared remarks, we saw a rebound in consumption across the board, but including the mid-market, everywhere across geographies and across industries and also in Europe. So not all the way back to historical levels, but improved versus Q2.

That's great. And then on the OpEx side, I know you guys aren't guiding for next year, but Dev and Michael, you both talked about the leverage you guys have generated since IPO, and the results this quarter were astounding. Is there any reason to believe that OpEx won't meaningfully grow slower than revenue next year?

Yes. So as I said, we're not going to guide as it relates to fiscal '24. You can see that the implied guide for fiscal '23 is 100 basis points improvement in terms of the year-over-year margin on the op income side. We're very pleased with that, and we'll obviously, as we work through our plans over next year, monitor the environment and everything else. I would just add that we have always had a fairly granular view of things in terms of our returns framework and the returns, evaluating and assessing the returns that we're getting out of different investments. We continue to apply that framework, although obviously, the market environment has changed, which sort of implicitly means that the return threshold has gone up. And we've applied that scrutiny, and we'll likely do that as we get through the fiscal '24 guide.

One moment for our next question. And it comes from the line of Brent Bracelin with Piper Sandler.

Dev, the big surprise for us here is the momentum you're seeing in that EA business. We're seeing some of the peers obviously see moderation just as the overall tech market starts to do more belt tightening. What drove the strength in EA this quarter, specifically? And if you could provide any color by industry, that's really the question here, what type of industry is driving the momentum and driving the upside here in EA specifically?

Yes. Thanks, Brent. I think what we saw in EA is just evidence that customers are really viewing MongoDB to be an important part, if not a standard, in their tech stack. And once you are viewed as a critical element of the tech stack, people are more comfortable investing more aggressively, especially in this environment where people do need to modernize their legacy platforms to drive more efficiency and lower cost as well as drive more agility. So I think that's, I think, why we're seeing the upside on EA. And so we feel good about that. And obviously, this shows you that customers also like optionality by building apps on MongoDB, they can truly run their apps anywhere, not only on-premise but on any hyperscaler and obviously switch between on-premise or any hyperscalers. So that is also a very compelling benefit to customers in this environment.

Helpful color. And then a quick follow-up for Michael here. Short-term deferred growth did slow. I didn't know if there was an impact on payment timing or if you saw a similar slowdown in RPO. So could you just kind of walk through short-term deferred and why it slowed? And if we should expect a similar slowdown in RPO?

Yes. So what I would just point you to, Brent, is that we've talked about that deferred in general and sort of calculated billings more broadly, is not a particularly relevant metric for us, as we've talked about for a few years now, as we continue to make it as easy as possible for customers to adopt usage of our platform, which then allows them to subsequently expand. We have deemphasized upfront commitments and tried to streamline that sort of upfront part of the negotiation. And so that has a natural consequence from a balance sheet perspective as sort of flowing through there. And that's where you see it. And that's why we tend to talk about that as being less relevant for our business.

One moment for our next question. And it comes from Raimo Lenschow with Barclays.

Congrats from me as well, and two quick questions. Michael, on staying on that EA, one, was there anything like in terms of Q4 deals that kind of got pulled into Q3, et cetera, that make like the Q3 performance like that there were one-off? I consider or was it just like a general performance being better. And then one for Dev, like in this sort of environment, there tends to be -- well, there is a tendency to go back to the established platform. What are you seeing in terms of new customer projects starting and going to Mongo, but also in terms of cleanup of like legacy Oracle, legacy IBM and stuff like that and people consolidating on the platforms of those movements? Are those initiatives happening as we speak?

Raimo, thanks for the question. On the pull forwards, no, we did not see any particular pull activity. The only thing I'd call out, which I mentioned in the script on the EA, is we saw a little more multiyear in EA, which under 606, drives a little more revenue, but no pull forwards.

Yes. In regards to the question about...

Engagement at current level.

Yes, platform. So we are definitely seeing customers continue to choose us and standardize us in terms of using Atlas. And the breadth of the platform is really attracting customers to use MongoDB in a wide variety of ways. And so we feel really good about the win rates. We feel really good about our engagement with customers. And obviously, you saw that in the new customer wins. The new customer wins were quite strong.

One moment for our next question. And it comes from Sanjit Singh with Morgan Stanley.

Thank you for taking the question and very impressive set of Q3 results. Dev, if I go back to the pandemic, some of the initiatives that you guys put in place that really served you well coming out of the pandemic, you saw the new customer adds really accelerate in 2020 as you sort of focus on sort of just onboarding customers at lower overall spend levels. In terms of the playbooks that could unfold in 2023, what sort of your playbook that you're going to be focusing the team more on sort of the app modernization use case? Is it going to be about further accelerating the customer adds? How are you sort of thinking about the sales playbook as we go into calendar 2023?

Right. Thanks, Sanjit. I just want to make the point that it was actually pre-pandemic that we decided to make it much more easy for customers to engage with us by both changing sales compensation incentives as well as making it easier for customers to commercially engage with us. And obviously, that paid, to your point, paid huge dividends for us during the pandemic. What I will tell you is that it's really more of the same. We're really hyper focused on acquiring new customers and adding more workloads from existing customers, and that's across the board, across every channel, every industry and every customer segment. So that is something that we care a lot about. And we're seeing that now and expand in terms of getting customers now to adopt some of the new capabilities we've rolled out to the marketplace. So as I talked about in my prepared remarks, we're seeing a lot of customers embrace the full suite of the platform. So that drives incremental workloads that we would not have gotten in the past. And so we feel really good about that, and that's our real focus. It's all about acquiring new workloads and getting more and more people to build apps on MongoDB.

And then just one quick follow-up for Michael. You referred to the sort of ROI framework and what sort of alluding to like a higher bar, given the current environment. Could you give us a sense of like what the team is prioritizing more and what may be following kind of below the line or being deprioritized as you think about driving both sustaining growth, but also extracting more efficiencies in the business?

Yes. I'll do my best to try and kind of walk you through it. I mean I think you kind of have to run sort of type of investment versus type of investment. And obviously, ultimately, we look across the entirety of the portfolio, whether it's go to market or R&D or things like that. But it's probably easiest to think about within the different buckets and flavors as it relates today as sort of those teams effectively compete for capital. And so within the go-to-market, we obviously are looking at the returns that we're generating. We are continuing to invest. We are continuing to hire and grow within the teams, but we're backing the areas that are having the most success in delivering us the highest returns. Go-to-market is a little bit easier to measure quantitatively and on a short-term basis. On the R&D side, things take a little bit longer to play out. And you've got a little bit of a lag between when you make the investment and when you see the payback. But we certainly have conversations at a fairly detailed and granular level, even within the R&D side about where do we think we're seeing the most success and the most traction in which areas do we want to incrementally lean into versus which areas do you maybe want to deprioritize relative to the areas generating the highest returns.

Yes. If I can just add, it's like, for example, like in the marketing side of this digital programs, we were -- we do a lot of experimentation of what's working. So we have a certain return thresholds. And so if we don't see those programs working, we'll shut them down. Similarly, in the sales organization, there are certain teams that are outperforming, we'll invest more. In other teams, they are not and will potentially slow down. So we're just really doing more of the same and just being very rigorous about that.

One moment for our next question. And it comes from the line of Phil Winslow with Credit Suisse.

Congrats on a great quarter. A question for you Michael and a follow-up for Dev. When you think about just new workloads, new application go-lives and the trends that you're seeing there, wondering if you can cross that with what you've maybe seen in previous quarters, or maybe even last year? Obviously, you talked about just overall consumption, but curious about the new apps, the go-lives and the ramp of those. In terms of what you can control in go-to-market, Dev, how do you feel about sales productivity relative to the sort of these new apps, those go lives, new customer wins, et cetera?

Yes. I mean I think what we're really seeing in terms of these new workloads and sales productivity is that our customer base is very diversified both in terms of the types of customers as well as the types of use cases. That's the benefit of having a general-purpose platform. So clearly, we have start-ups who are building potentially new industries or disrupting existing ones. And then we have large companies moving quickly to transform different parts of their business. So it really varies. So clearly, with the platform play now, we're seeing a lot more interest in search, in search workloads and consolidating search workloads on top of MongoDB. We're seeing a lot of interest in time series, being able to again have one unified developer experience. Time series leads to things that what I talked about is application-driven analytics where people want to be able to get meaningful insights of their business, automates human decision-making into applications. So those use cases are getting more and more popular with customers. But then we have still a lot of the classic bread and butter use cases that customers are using us for. And in terms of sales productivity, what I would say is it's really a function of their -- the quality of their pipeline and how quickly they can add new workloads to our platform and how quickly we can acquire new customers. So we're really focused, and the sales leadership team is very, very focused on both things, acquiring new customers and acquiring these workloads. It's less about is one workload providing a better ROI than other? It's really a function of the customers' requirements and what they're most interested and focused on.

And Phil, just to the cohort part of your question, it really -- it's probably easiest to think about in the context of when you bring a new customer on, and you think about the changes that we made a few years ago and how that drove incremental velocity. We've continued to see good and consistent behavior with those cohorts. I would just remind you and call out that those changes and where sort of the bulk of the customer adds come from is more in the mid-market, right? And so those tend to be spending less than the average direct sales customer. And so it's just important to keep that in mind as people are building their models and thinking about the long-term impact of that.

Congrats again. Really awesome.

Thanks, Phil.

Thank you.

One moment for our question. And it comes from the line of Jason Ader with William Blair.

So how do you interpret the bounce back, especially mid-market European enterprise when seemingly macro is getting worse? And I have a follow-up.

Yes. So the first thing I'd say, with Jason is it really relates to the underlying usage of the application, right? If you think about sort of what drives consumption within Atlas, I think that's the critical thing. And so when you think about the usage, we're seeing stronger underlying usage. We were always in a growth environment. What we saw in Q2 was slower growth in the mid-market and in Europe. Those rebounded again, not all the way back to historic levels, but improved levels relative to Q2. Part of our thought process, which we shared in the prepared remarks, is that we believe it's a bit of an emerging seasonal trend, which particularly relates to sort of people coming back from summer vacations and things of that because you'll recall in our September call, we talked about August being in line with what we've seen in Q2. And so that sort of suggests the improvement that we saw in September and October. We saw that same dynamic in the year ago period. And while we only have a couple of years that are COVID affected where we've got Atlas at scale, that's kind of our best current working theory. But we can see it in terms of the underlying usage of the applications. The other thing I'd say more broadly from a macro standpoint that I think is impressive, is on the new business side. We continue to win there. We continue to have our value prop resonate. We haven't seen sort of those increasing deal cycles and other things like that, that others have seen. We obviously are monitoring the situation closely, but we've been really pleased from that standpoint.

Great. And then one quick follow-up for you, Dev, just on cloud marketplaces. Is that something that you guys are going to be able to talk about in terms of, I don't know, any metrics, growth rates, percentage of business going through cloud marketplaces? Because it does seem like, broadly speaking, more third-party software is going through these marketplaces, and it seems like that's a really good thing at a lot of levels.

Yes, I'm not sure that we're going to be sharing like quarterly stats on how things are going, but we definitely provide color. I think what -- the fact that across all three hyperscalers, customers can go to their consoles and be able to sign up for Atlas is a meaningful thing. It gives us an access to a whole new customer base that we may not have direct relationship with, and also speaks to the popularity of customers wanting to use MongoDB in the cloud. And so I think those two things have really driven that. There's not many companies who can say that they are on the consoles of all three hyperscalers.

One moment for our next question. That comes from the line of Tyler Radke with Citi.

I wanted to ask you first about the EA performance. Obviously, a really strong number on pretty tough comps. As we think about Q4, it looks like you're guiding Q4 to be flat sequentially from Q3, which in the last two years you've kind of guided up 7% last year and 4%. Is there something you're seeing in terms of timing on the EA business that would drive a sub-seasonal guide for Q4? Or maybe you're just layering in more macro conservatism given the environment out there? But if you could just kind of unpack your view on the EA business and overall outlook in Q4.

Sure. Thanks, Tyler. We obviously don't guide by product, but maybe a couple of things I can say about Q4. First of all, as I mentioned, it was obviously an incredibly strong EA quarter, with EA growing 26% year-over-year. And so as we look out at Q4, it doesn't make a ton of sense to -- as we look at the business, to think that we're going to meaningfully improve sequentially from an EA perspective, given how incredibly strong Q3 was. And then we talked a little bit on the Atlas side around Q4 doesn't benefit from the seasonal tailwinds that Q3 does. And so I think on a sequential basis, those are the key factors to keep in mind.

Great. And it sounded like you talked about some -- certainly some improvements in consumption on Atlas. But if I look at the sequential dollar growth in Atlas in Q3 versus Q2, it was down a bit. Could you just kind of square with improving expansion rates, why would the sequential dollar adds be down? Is it kind of a reflection of new business? Or just help us understand the moving pieces there?

Yes. I think it's mostly a reflection of the starting ARR. So you're basically starting with the compounding slower growth. And so when you think about the entry point, whether it's Q3 in terms of for the second half of the year or Q4 for the final quarter of the year, you've seen several months of slower growth. And so that means at the beginning ARR is lower on an absolute basis. And even if the growth rates were to revert, the number would be lower just by virtue of the fact that the starting ARR is lower.

[Operator Instructions] One moment for our next question please. And it comes from the line of Fred Havemeyer with Macquarie.

I was interested also in cloud marketplaces and just kind of a follow-up around that. With the announcement of cloud marketplaces, even today, you're showing more integration with -- for example, today, like Microsoft's entire data platform. What is it that is drawing these -- or what are you doing correctly here that's drawing these hyperscalers that have their own competitive database offerings to not just sell your product, but potentially partner with MongoDB and provide it through the platform? And then I have a follow-up as well.

Yes. Fred, I think what that really speaks to is just the power of the MongoDB platform and the product market fit that's evidenced by how popular we are. I mean we are truly the most popular modern data platform in the world. And so -- and a lot of -- majority of those users tend to run MongoDB in the cloud. So each of the hyperscalers see a lot of MongoDB usage on each of the clouds. Yes, you're right. In the early days, they tried more to compete than to partner. And frankly, a lot of people, when we first went public, were skeptical about how we could actually build a cloud business when trying to compete with the hyperscalers. Obviously, we've proven the ability to do that. And I think that's also evidence of the fact that customers are also more discerning, and they're not just going to take the a la carte in many choice. They're going to be very judicious in their evaluation process. And given our -- the value we provide, I think you're seeing the hyperscalers recognize that. And by the way, the hyperscalers also benefit from our growth. They benefit both from the underlying consumption of storage and compute of Atlas as well as that those customers that they win, who are running Atlas workloads in their clouds, then buy other ancillary services themselves. So it ends up truly being a win-win relationship. And I think that's why you're seeing the hyperscalers essentially engage with us more deeply.

And then a follow-up, it's multi-cloud again related. But I wanted to ask about multi-cloud clusters because I think it's one of the more unique offerings that you have Atlas out of the box. Just generally, could you help us or just describe where you're seeing customer adoption trends with your multi-cloud cluster capability and replicase capabilities? .

Yes. I mean, the trend is -- I mean what we're seeing is there's a lot of customer interest on this capability. One, depending on the customers' needs, they could be -- they may have a preferred hyperscaler, but they're expanding into a geographic region where that hyperscaler may only have one region or no regions and they want some diversity across hyperscales in case that region goes down. And so they want the benefit of being able to quickly switch over to another hyperscaler. The other thing that we see is, obviously, as these hyperscalers compete with each other and offer a differentiated set of services, customers want to be able to leverage some services offer in one hyperscaler versus another, even though maybe they're preferred hyperscaler does not offer such a service. And then third, there's always the benefit of avoiding lock in and being able to diversify their workloads across different hyperscalers. And again, just to be clear, the multi-cloud cluster essentially enables customers to run one app or one workload across multiple clouds. So that is profoundly different than what most people can offer today.

Congratulations on a strong quarter.

Thanks, Fred.

One moment for our next question. It's from Mike Cikos with Needham & Company.

I had a two quarter to start, and I just wanted to come back to the Atlas consumption trends improving quarter-over-quarter in Q3. It sounds like things really began to improve in September. I just wanted to see, was it stable from there on out? Or did you see continuing strength even from September when we think about how October and November played out? And then on a relative basis, are there certain pockets of the market which have maybe a larger delta versus those historical consumption trends you're talking to? And then I do have a follow-up.

Yes. So generally, I would say it was broad-based as we described. The rebound was most perceptible in the sense of the mid-market globally and Europe, but only because those are the areas where we had seen slower growth that we called out in Q2. And we talked about, like I said, August being in line with Q2. And so September and October were stronger. And then just to continue, I don't want to get into like a day-by-day reading here, but we did see that behavior. And so -- and that shows up in the results, and that's also consistent with what we saw sort of in the year ago period. Hence, the commentary about this emerging seasonal trend.

And the follow-up I had, I just kind of wanted to paint out a scenario for you guys and just to soundboard an idea, if you will. I'm looking at where we have the 4Q guide today. Call this year-to-year growth rate you guys are targeting for about 26% at the midpoint. And the reason I'm bringing this up if I think about how this year has played out, you guys are going to have a tough comp in the first half of next year with 50% plus growth that you guys delivered in the first half of this year as well as strength from EA. And so the reason I'm bringing this up is if I look at next year, the consensus is currently at, call it, mid- to high 20s percent growth rate versus the exit velocity of this year where we're looking at 26%. And at least from a qualitative perspective, can you provide us any directional comments as far as whether or not that appears to be the right ballpark? Is that aggressive? How should we be thinking about next year's growth?

Yes. I think the key thing is we'll obviously update that in the March call. We've tried to give you the best lay of the land as we can for the current fiscal year and what we see for Q4. It certainly is a fluid and uncertain macro environment. We're monitoring that closely, and we'll obviously update everyone in the March call around our outlook.

One moment for our next question. That comes from Steve Koenig with SMBC Nikko.

I'll just ask one here. Congrats on the quarter and the rebound here. I'm wondering when it comes to new customers and/or new workloads, given kind of the macro environment and the pressures on business, both SMB and enterprise, what are you guys seeing in terms of customer behavior with respect to how they size the deals or the versions they choose? How does kind of that economic sensitivity manifesting itself in terms of those new deals kind of pricing wise or kind of the scale of the deal?

Yes. So Steve, thanks for your question. We haven't seen any discernible change in deal dynamics in Q3. And clearly, our EA results, in our opinion, it demonstrates the power of our platform and the ability for customers and the interest of customers running workloads anywhere. What I will say is we've been through -- I personally have been through, in the public company context, 2008, and also lived through 2000 as well. And in these kinds of situations, we definitely recognize that there's more scrutiny by customers on deals and probably approval levels go up the food chain. And so what we are obviously working closely with our sales teams on is to making sure that they rigorously qualify their forecast and to make sure that they really understand the decision process that customers have to go through to get deals done. But that is something that we have lived through in previous cycles, and that's something that we are going to be very focused on.

Our next question comes from the line of Michael Turits with KeyBanc.

I want to come back to seasonality. So there's all different seasonality in different parts of your underlying business. To the extent your customers are B2B customers, I guess, I get -- well, coming back from vacation, it makes sense to get projects going again. But I would also think that in B2C, as we go into the holiday season, that you would get a boost out of that also. So why wouldn't we see sort of continuing in a very typical fourth quarter positive seasonality at this point given how much of your business is focused on consumption?

Yes. Thanks, Michael. Just to clarify, I wouldn't say it's coming back and starting new projects. What we're talking about here, again, is the underlying usage of the database. And so whether it's internal applications or B2B applications or consumer-facing applications or whatever, what we see is an increase in the underlying database activity. So this is a different dynamic than people kicking off new projects, right? It's reflecting the underlying activity in the workload or in the application. And given that we've seen this now for two years in a row, we're highlighting it given the behaviors that we're seeing. I want to kind of call that out for folks as what appears to be an emerging seasonal trend.

Okay. And then Mike, can you quantify the impact of on rev rec -- upfront rev rec of the shift to a larger percentage of -- or a larger percent of multiyear EA deals because obviously, as you said, that pulls things forward a bit in terms of rev rec. So how much does from that shift could we have seen in terms of benefits in the quarter?

Yes. We're not going to quantify an exact number. Part of this is also based off of -- we assume some level of multiyear deals in our forecast, in our guidance, obviously. We saw a little bit more than that. It was material enough to bother to call out just so people don't extrapolate inaccurately. And so that's why we wanted to make sure people understood the dynamic.

One moment for our next question please. It comes from the line of Will Power with R.W. Baird.

Maybe just bigger picture. I know you touched on this a bit. But as customers increasingly focus on TCO in this environment, I'm just kind of curious how much more aggressive customers are getting at moving legacy databases and workloads over to Mongo versus maybe what you've seen six, nine months ago? Any real change in pace of that type of activity?

Yes. So Will, thanks for your question. We recently had a customer advisory board where we had some more -- some are larger customers with us for a number of days in Europe. And I would tell you the feedback there was that there's even more interest in moving off legacy platforms to more modern platforms in this environment because the cost structure and the brittleness of those architectures really are inhibitor for those companies to be able to move quickly and to seize new opportunities or to respond to new threats. And so in this environment, there's actually even more interest. We're actually seeing that also in say, an industry like financial services where they're starting to move to the cloud at scale. And that's a catalyst for them to be more aggressive in modernizing their tech portfolio. And that's more of a recent phenomenon, and we're obviously pleased about the engagements we're having with that vertical as well.

I'm not showing any further questions in the queue. I would like to turn the call back to Dev Ittycheria for his final comments.

Thank you. So we're really happy with our new business performance and see it as evidence that our value proposition resonates with developers, IT decision makers and our partners. We're obviously pleased to see the rebound in Atlas consumption during the quarter and expect a continued macro impacts, and so we're closely monitoring consumption trends. And we will deliver another year of operating margin expansion despite the macro headwinds, and we are committed to profitable growth. With that, thank you for your time today.

Everyone, thank you for participating in today's conference. You may now disconnect. Good day.