MongoDB, Inc. Q3 FY2025 earnings call

Strategic Initiatives - Increased investment in the enterprise channel, reallocating mid-market investments to focus on up-market opportunities. - Optimistic about accelerating legacy app modernization using AI, with successful pilots showing over 50% reduction in modernization costs. - Investing to capitalize on MongoDB's technical advantages in the AI tech stack, including expanding the MongoDB AI applications program (MAAP) and enhancing product capabilities like Atlas Vector Search. ### Product Updates - MongoDB 8.0 GA, the fastest and most performant version. - Consolidated Atlas serverless offerings into Atlas Flex and deprecated Atlas Device Sync. ### Customer Examples - Customers like Victoria's Secret, Paylocity, Tealbook are using MongoDB for various applications, citing benefits like performance, scalability, and cost-efficiency. ### Leadership Changes - Michael Gordon is leaving, with a search for replacement underway; Cedric Pech promoted to President Worldwide Field operations.

MongoDB generated revenue of $529 million in the third quarter, a 22% year-over-year increase. Atlas revenue grew 26% year-over-year, representing 68% of total revenue. Non-GAAP operating income was $101 million, resulting in a 19% non-GAAP operating margin. The company ended the quarter with over 52,600 customers.

Fourth Quarter 2025 - Expected revenue: $515 million to $519 million. - Expected non-GAAP income from operations: $55 million to $58 million. - Expected non-GAAP net income per share: $0.62 to $0.65. ### Full Fiscal Year 2025 - Expected revenue: $1.973 billion to $1.977 billion. - Expected non-GAAP income from operations: $242 million to $245 million. - Expected non-GAAP net income per share: $3.01 to $3.03. - Reallocation of go-to-market resources from mid-market to enterprise channel will slow direct sales customer growth but drive higher revenue growth over time. - Atlas Flex clusters to have a one-time negative impact on customer count due to migration of low-spending serverless customers.

Risks include actual results differing materially from expectations, macroeconomic environment impacts, and uncertainties related to the adoption and scaling of AI applications, as well as the success of strategic investments and product reallocations.

Q: Sanjit Singh of Morgan Stanley asked about Atlas consumption being ahead of expectations.

A: Michael Gordon mentioned Atlas consumption was slightly ahead of expectations, driven by underlying application usage, but year-over-year growth is decelerating.

Q: Tyler Radke of Citi asked about the quality of workload acquisition.

A: Dev Ittycheria said changes made at the start of the year are having a positive impact, though it's early to declare victory as workloads start small and grow over time.

Q: Brad Reback of Stifel asked about incremental investments gating margin upside.

A: Dev Ittycheria stated investments in up-market legacy app modernization and GenAI are for long-term growth with high conviction.

Q: Jason Ader of William Blair asked about EA representing on-prem vs cloud decisions.

A: Dev Ittycheria said large enterprises vary in their on-prem vs cloud decisions, and MongoDB's run anywhere strategy provides optionality.

Q: Andrew Nowinski of Wells Fargo asked about EA sequential decline in Q4.

A: Michael Gordon explained Q3 had multi-year deal benefits not recurring in Q4, leading to sequential decline in non-Atlas revenue.

Q: Raimo Lenschow of Barclays asked about hyperscaler partnerships.

A: Dev Ittycheria said partnerships with AWS, Azure, and GCP are strong, with continued integrations and deals.

Q: Brad Sills of Bank of America asked about new workloads ramping.

A: Dev Ittycheria detailed strong uptake of vector search, stream processing, and relational migrator, with customers benefiting from bundled capabilities.

Q: William Power of Baird asked about relational migrator interest.

A: Dev Ittycheria explained interest is driven by legacy app modernization needs, AI contributions, and customer pain points with legacy systems.

Q: Rudy Kessinger of DA Davidson asked about Q3 consumption growth.

A: Michael Gordon said Q3 had a seasonal rebound but lower year-over-year growth compared to prior years.

Q: Eric Heath of KeyBanc asked about EA business and workload quality.

A: Michael Gordon and Dev Ittycheria discussed commitment to EA, with Atlas remaining a key growth engine, and workloads being early with small starts but potential for growth.