MongoDB, Inc. (MDB) Q3 2019 Earnings Conference Call Transcript

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MongoDB, Inc. (NASDAQ: MDB)

Q3 2019 Earnings Conference Call

Dec. 04, 2018 , 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

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

Brian DenyeauSenior Vice President

Thank you, Ann. Good afternoon and thank you for joining us today to review MongoDB’s third quarter fiscal 2019 financial results, which we announced in our press release issued after the close of market today. Joining me in the call today are Dev Ittycheria, President and CEO of MongoDB; and Michael Gordon, MongoDB’s CFO.

During this call, we may make statements related to our business that are forward-looking under federal securities laws. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our financial guidance for the fourth quarter and full year fiscal 2019, our market opportunity, our go-to-market and growth strategies, the potential advantages of our new products and enhancements, our ability to expand our leadership position and drive revenue growth and the anticipated benefits from our acquisition of mLab.

The words anticipate, continue, estimate, expect, intend, will and similar expressions are intended to identify forward-looking statements or similar indications of future expectations. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date. We do not have plans to update these statements except as required by law. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

For discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our annual report on Form 10-K filed with the SEC on March 30, 2018, our quarterly report on Form 10-Q filed on September 7, 2018 and our other periodic filings with the SEC.

These documents are available on the Investor Relations section of our website at www.mongodb.com. A replay of this call will also be available there for a limited time. Additionally, non-GAAP financial measures will be discussed in this conference call. Please refer to the tables in our earnings release on the Investor Relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. And with that I’d like to turn the call over to Dave.

Dev IttycheriaPresident and Chief Executive Officer

Thanks, Brian, and thanks to all of you for joining us today to review our third quarter results. We delivered terrific performance in the third quarter across all aspects of our business. Our ability to generate best in class growth at significant scale, which now exceeds $0.25 billion (ph) revenue run rate reflects our strengthening position as the next generation database platform of choice. We serve one of the largest markets in enterprise software.

IDC now forecasts that the database market is $59 billion in size in 2018, growing to $84 billion in 2022 reflecting a 9% compound annual growth rate. We believe MongoDB is uniquely positioned to capture growing share of this market given the power of MongoDB’s sophisticated document model, large developer mindshare and compelling customer proof points across nearly every industry and geography.

To quickly summarize the third quarter results, we generated revenue of $65 million, a 57% year-over-year increase, which was above the high end of our guidance. We grew subscription revenue 59% year-over-year. Atlas revenue grew more than 300% year-over-year and now represents 22% of revenue. We ended the quarter with over 8,300 customers, up 69% compared to a year ago and we saw strong growth across all major regions, including North America, EMEA and Asia.

I do want to note that our results do not include any impact from the acquisition of mLab, which closed on November 1. Our success with customers is based on the strength of our database platform. At our recent MongoDB Europe event we announced the general availability of MongoDB Mobile which gives developers a uniform way to work with data wherever the data resides. MongoDB Mobile allows developers to build faster and more responsive applications that can take advantage of the document model for data held on the mobile device. Previously developers were stuck using a feature limited tabular database for a mobile app.

We also included several updates to MongoDB Stitch, our serverless platform, including the MongoDB Stitch SDK which allows data access regardless of whether it is held on the mobile client or the backend. This allows developers to query mobile and IoT data anyway they want with local reads and writes, native JSON storage, indexing and aggregations.

With Stitch Mobile Sync now available in beta, users can automatically synchronize changes between data held on an end device and a back-end database, even after the device has been offline. Expanded integration options, including more than 20 AWS services and additional authentication providers which can all be exploited without learning new APIs or adding back-end code.

Last week, we also introduced updates to MongoDB Atlas, including high throughput clusters and AWS that will enhance real-time workload processing to accelerate new and existing applications. These clusters are optimized for low latency very high IO performance for large datasets.

Support for cross-region VPC peering which allows Atlas to communicate with the customers’ virtual private cloud across regions via private networking. This will enable customers to connect data between disparate data and database nodes without utilizing the public Internet significantly reducing security risks and operational work overhead and improving performance.

We also introduced the Server Side Public License, or SSPL, a new licensing model for open source development in the cloud era. We are in a unique position to decide how our softwares license because we are full copyright holders of all underlying MongoDB database code. We created this new license for Community Server, our free to download offering to make explicit the conditions for providing MongoDB as a service. We are strong believers in open source and believe it leads to more valuable, robust and secure software.

By introducing SSPL, we have given the community a new licensing model built on the spirit of AGPL. We will continue to provide the same freedom to the open source community to use, review, modify or redistribute the software. The only substantive change is an explicit condition that any organization attempting to offer MongoDB as a third party service must open source the software that uses to offer such a service.

Turning to our third quarter results in more detail, we again saw a healthy mix of new wins and strong upsell activity including customers migrating existing workloads from legacy databases to MongoDB. Our performance in the quarter exemplified the power of a land, expand and expand model and our multiple vectors for growth. We saw success across the board. A number of exciting customer wins came from outside the United States, including countries where we are either beginning to establish a direct sales presence or where we have partners that are expanding our market reach.

We are also seeing a growing number of wins with customers in traditionally conservative industries and markets reflecting the growing popularity and mass appeal of MongoDB. We believe both of these trends demonstrate the mainstream adoption of MongoDB and growing recognition by the industry that we are the modern database platform of choice. We also believe it illustrates the strong returns we’re getting on our sales and marketing investments.

Duration: 53 minutes

Call participants:

Brian DenyeauSenior Vice President

Dev IttycheriaPresident and Chief Executive Officer

Michael GordonChief Financial Officer

David RainvilleBarclays Capital — Analyst

Sanjit SinghMorgan Stanley — Analyst

Brad RebackStifel — Analyst

Ted LinGoldman Sachs — Analyst

Brent BracelinKeyBanc Capital Markets — Analyst

Pat WalravensJMP Securities — Analyst

Tyler RadkeCiti Bank — Analyst

Unidentified Participant— Analyst

Chris EberleNomura — Analyst

Hannah RudoffD.A. Davidson — Analyst

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Referenced Symbols: MDB

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