MongoDB, Inc. (NASDAQ:MDB) Q4 2023 Earnings Call Transcript

Michael Gordon : Yes. The only thing that I would add, you’re definitely right. We continue to have success even in this market winning new customers and winning new workloads, which speaks to the value proposition and the mission criticality. As Dev said, those customers do start out all though. We’re continuing to see strong growth out of the gate for new workloads, but all workloads are affected by the macroeconomic environment. And so that’s why we — I sort of revert you back to sort of our framework, which is in the short term the outcomes are more governed by the expansion of existing allocations whereas in the long-term, especially given how — what little penetration we have in this massive market that we’re going after. In the medium to long-term, it’s much more governed by our ability to continue to win new customers and new workloads.

Kash Rangan: Thank you so much.

Operator: Thank you. Our next question comes from Raimo Lenschow with Barclays. You may proceed.

Raimo Lenschow: Hey, thank you. You talked about a new dynamic this quarter in terms of customers not kind of fully utilizing their credits and that kind of helped you on revenue. How much of a theme do you think that will be going forward? Is that just a specific one for this year, or do you anticipate that for the coming year? And does that kind of trigger maybe thing to go back to the customers that they kind of want to renegotiate the contract or optimize the contract. Like how much of a real impact is this for you? And then I had a follow-up please.

Dev Ittycheria : Yes. So it’s a dynamic that’s always been there and it’s becoming less over time. But let me explain. As I mentioned, it’s something that’s sort of always there. As a result of the slower growth that we’ve seen over the last couple of quarters, you wind up with a higher probability that someone would not have consumed their full commit. And given the preponderance of contracts that end in Q4 given that it’s our highest kind of selling quarter, that’s what sort of leads to this. And we’re really only calling this out, so people can understand the Q1 guide. This is effectively revenue that under a normal consumption model and normal consumption patterns, we would have recognized earlier in the year, but because people were sort of consuming below their commitment level when they hit expiration that happened.

To your comment these are — remember, these are old contractors. These are all things that have been signed at least a year ago. And one of the things that we’ve been doing for the last couple of years is deemphasizing commitments. And so I think realistically, this is less of a factor over time. It’s something that sort of always exists in the business. But given that it was worth several million dollars this quarter, we wanted to call it out just so people could understand the sequential guide for Q1.

Raimo Lenschow: Yes. Okay. And the follow-up is on and it’s probably more a question for long-term investors is like if you do like your — the 5% headcount or the single-digit headcount growth you talked about, can you talk a little bit about the split there, because obviously the risk might be that as we’re coming out you might be short on seals capacity? So that’s why it’s important to understand the other side of the equation. Many thanks.

Dev Ittycheria : Yes, Raimo. I mean, we are basically making decisions across the business and in a surgical way. This is not some sort of broad-based slowdown. We’re investing in channels and markets where we see great performance and we’re slowing down that pace of investment in areas that maybe we’re waiting for things to get better. On the product side, we continue to invest on product and even in new growth areas that we think will pay handsome returns in the future. I would say that we feel pretty good about our ability to respond to the changes in the market. And so we feel like we have the sales capacity we need going into this year. And we’re also as we talked about very, very focused on both acquiring new customers and new workloads and we’re optimizing for that not served to really increase the rate and pace of new workload acquisition. As we see good returns, we’ll continue to adjust accordingly.

Raimo Lenschow: Okay. Thank you.

Operator: Thank you. Our next question comes from Rishi Jaluria with RBC Capital Markets. You may proceed.

Rishi Jaluria: Wonderful. Thanks so much for taking my questions. I wanted to start Dev maybe as you think about usage patterns that you’ve been seeing, was just wondering if you could give us a little bit of color in terms of uptake of some of the adjacent services around Atlas particularly search as well as Data Lake. Just wanted to see how that’s trending? And any moves that you can make to drive more usage or more expansions of existing Atlas customers onto the services? And I’ve got a quick follow-up.