Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MongoDB Inc (MDB, Financial) reported a 13% year-over-year increase in revenue, reaching $478 million, surpassing the high end of their guidance.
- Atlas revenue grew 27% year-over-year, now representing 71% of total revenue.
- The company ended the quarter with over 50,700 customers, showing strong customer growth.
- MongoDB Inc (MDB) generated a non-GAAP operating income of $52.5 million, achieving an 11% non-GAAP operating margin.
- The company launched the MongoDB AI Applications Program (MAAP), which has garnered significant interest and partnerships with major cloud providers and AI pioneers.
Negative Points
- Atlas consumption growth, while modestly ahead of expectations, is still below the original forecast from the beginning of the year.
- Non-Atlas revenue was down 13% year-over-year due to difficult comparisons with the previous year.
- Gross margin declined to 75% from 78% in the year-ago period, primarily due to a lower mix of high-margin upfront license revenue and the growing percentage of Atlas revenue.
- The net AR expansion rate declined to approximately 119%, attributed to a smaller contribution from expanding customers.
- The company anticipates a negative impact on operating cash flow in the back half of the year due to prepayments to cloud providers and capital expenditures for acquiring IPv4 addresses.
Q & A Highlights
Q: Can you walk us through the operational changes you made to drive higher workload quality and how confident are you in driving better workload growth?
A: We made slight incentive comp changes to balance the size versus volume of workloads acquired. These changes were well received, and we had a good workload quarter. While it's too early to declare victory, we are pleased with the results so far. β Dev Ittycheria, President and CEO
Q: Are there any specific factors we should consider for Atlas revenue in the second half of the year?
A: We have tough year-over-year comparisons due to headwinds from unused commitments. The slower start in Q1 affects the growth rate throughout the year. We also expect a slower seasonal rebound in Q3 and a seasonally weaker Q4. β Michael Gordon, CFO and COO
Q: What is driving the strength in Enterprise Advanced (EA) pipeline in the second half?
A: The strength in EA is broad-based and not solely tied to AI. It reflects the success of our run-anywhere strategy and includes both multiyear and volume phenomena. β Michael Gordon, CFO and COO
Q: Why is EA still an important piece of the business despite the cloud journey?
A: Many customers, for regulatory or other reasons, still want to run workloads on-premise. Our run-anywhere strategy allows them to build on MongoDB with the option to move to the cloud later. β Dev Ittycheria, President and CEO
Q: What are you seeing in terms of AI reference architectures and customer engagement?
A: AI-driven workloads require databases capable of processing complex data structures quickly. MongoDB is well-positioned to handle various data types and integrate with leading app development frameworks and AI platforms. β Dev Ittycheria, President and CEO
Q: How should we think about the timing of modernization pilots being a tailwind to growth?
A: AI has created a shortcut for modernizing legacy applications, significantly reducing time and cost. While it's early days, there's a growing pipeline of customers interested in this approach. β Dev Ittycheria, President and CEO
Q: What is driving the momentum in Atlas growth, and how does it compare to industry growth?
A: Atlas is widely available across major hyperscalers, supports a wide range of use cases, and benefits from a large developer community. Our execution and product strength contribute to our growth, which is significantly faster than the industry average. β Dev Ittycheria, President and CEO
Q: What are your expectations for the public sector and federal verticals in the third quarter and fiscal year-end?
A: We have a good team and are well-suited for workloads requiring FedRAMP Moderate certification. We are also working on FedRAMP High certification to expand our opportunities. β Dev Ittycheria, President and CEO
Q: How are newer services like vector and stream processing contributing to new workloads?
A: We are seeing solid momentum in Search and Vector, attracting new customers and use cases. Stream processing, launched in May, has generated strong interest across various industries. β Dev Ittycheria, President and CEO
Q: Have you seen any improvement in Atlas consumption trends, and what are the drivers?
A: Q2 consumption growth was better than expected, driven by a higher starting ARR and improved performance in recently acquired workloads. However, the growth assumptions for Q3 and Q4 remain unchanged. β Michael Gordon, CFO and COO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
