Good day, and welcome to the MongoDB First Quarter Fiscal Year 2022 Earnings Conference Call. Please note that this event is being recorded. I would now like to turn the conference over to Brian Denyeau from ICR. Please go ahead, sir.

Great. Thank you, Chuck. Good afternoon, and thank you for joining us today to review MongoDB’s first quarter fiscal 2022 financial results, which we announced in our press release issued after the close of the 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, our financial guidance, our planned investments and anticipated impact of the COVID-19 pandemic on our business and results of operations as well as on our clients and the macroeconomic environment. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from our expectations. For discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks described in our SEC filings, including our most recent annual report on Form 10-K. Any forward-looking statements made on this call reflect our views only as of today, and we undertake no obligation to update them. 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.

Thanks, Brian, and thank you to everyone for joining us today. I will start by reviewing our first quarter results before giving you a company update. Looking quickly at our first quarter financial results, we generated revenue of $181.6 million, a 39% year-over-year increase and above the high-end of our guidance. We grew subscription revenue 40% year-over-year. Atlas revenue grew 73% year-over-year and now represents 51% of revenue and we had another strong quarter of customer growth, ending the quarter with over 26,800 customers. June marks the 5th anniversary of launching Atlas, our MongoDB database as a service offering. In Q1, Atlas reached a remarkable milestone, becoming the majority of revenue in just under 5 years. Deployed in over 80 regions around the world across AWS, Azure, and GCP, Atlas is now on a nearly $400 million revenue run rate business growing over 70% year-over-year. While we are proud of how quickly we have grown this business since its inception, we are confident that we've only scratched the surface of the opportunity ahead of us. As we look back at the first five years of Atlas, we see a story of innovation, aggressive investment, and demonstrated ability to take smart risks, some of which seemed quite controversial at the time. We launched Atlas in June of 2016 as a self-serve only offering on AWS. Although in retrospect, the decision to launch an independent database as a service business seemed like a no-brainer, it wasn't obvious at the time; there was a fair amount of skepticism in the market that an independent company could build a successful cloud service while both partnering and competing with the hyperscale cloud vendors. A year later, we launched Atlas on Azure and GCP. Even though it was more work and added more expense to support all three cloud providers, we made this a priority as we understood from the outset that as the cloud became mainstream, customers would want a multi-cloud solution. Due to the strong initial reception of Atlas in our direct sales channel, we invested aggressively to achieve feature parity between enterprise advanced and Atlas. We reached that milestone in mid-2018 ahead of our original schedule, and since then have led with innovation on Atlas. Our ability to quickly ship new features and get customer feedback has not only allowed us to innovate faster but has also benefited our enterprise advanced customers. From an outsider's perspective, one of the more controversial decisions we made was to change our license from AGPL to SSPL in 2018. Our objective was to remain true to our open-source roots while ensuring that we could build a meaningful database as a service business in the cloud era. While some suggested this would limit the adoption of MongoDB, we had the conviction that we could better serve customers with this change. MongoDB's popularity with developers has continued to grow after adopting SSPL. Given the success of Atlas, a number of open-source companies have now switched to similar license structures. Around the same time, we acquired mLab, which not only increased our scale in the cloud but also increased our expertise in the self-serve channel. We uncovered a virtuous cycle between our field sales organization, our inside sales team, our customer success organization, and our self-serve channel. Investments in any one area lead to the acceleration for the entire cycle. And this virtuous cycle has been a key enabler of our growth. To give you some context, the majority of Atlas revenue was originally sourced by our self-serve channel, but the majority of growth has come through the direct sales channel. In 2019, we acquired Realm, the world's leading independent mobile database, and now have beta versions of Atlas Search and Atlas Data Lake. With these actions, we took the first steps to move from offering a database to becoming a comprehensive application data platform. Our expanded product vision was driven by a customer's desire to leverage MongoDB more broadly across their organization. In 2020, we continued to make changes that made it easier for customers to start using Atlas. These changes resulted in a big uptick in new customers, leading to over 25,000 customers of almost every size and from nearly every geography and industry using Atlas today. Looking back at the first 5 years of Atlas, we see a few key lessons learned. First, while innovation, strong execution, and unconventional thinking contributed to the growth of Atlas, none of this would have been possible without MongoDB's outstanding product-market fit and a massive market, which is estimated by IDC to be $73 billion in 2021. With 175 million cumulative downloads, of which over 70 million were in the last 12 months, MongoDB continues to be the world's most popular modern general-purpose database. The popularity of MongoDB is the foundational pillar for the success of Atlas. Second, given the choice, customers would rather focus resources on building new applications and shipping new features quickly than spend time and resources on the undifferentiated heavy lifting of managing their distributed application data infrastructure. Third, multi-cloud is proving to be even more important than we originally imagined. Customers have experienced firsthand that cloud providers do have outages, so building resilience across cloud providers is critical for many customers. Moreover, as cloud providers differentiate among themselves, being able to leverage different services from different cloud providers is something customers want to do. Finally, customers value solutions that make it easy to move from one cloud provider to another, reducing lock-in with any one cloud vendor. As we look to the future, there are a number of reasons why we are bullish about our long-term prospects. First, we are seeing increased enterprise adoption of Atlas. In the first quarter, approximately two-thirds of new business won by our field sales team was Atlas, more than double the percentage from two years ago. Not only are customers choosing more of Atlas, they’re building or moving mission-critical workloads onto Atlas, which is the biggest driver of growth of our more than 1,006 figure customers. Second, cloud partners are recognizing the value that MongoDB and Atlas bring to their own businesses. Using Q1 as an example, we had a record co-sell quarter with AWS, GCP, and Alibaba. We are seeing increasing opportunities to expand ways we partner with cloud providers through both technical integrations as well as go-to-market initiatives to enable more customers around the world to derive the benefits of using MongoDB. Finally, our C-level customer conversations indicate that our application data platform strategy is clearly resonating in the marketplace. Customers increasingly tell us that they prefer to standardize on a general-purpose platform rather than use a myriad of single-function databases that add more cost and increase the complexity of running workloads in the cloud. Now I'd like to spend a few minutes reviewing some customer wins and interesting use cases from the first quarter. Commerce Tools, the leading next-generation eCommerce platform, selected Atlas to power the world's most popular eCommerce sites used by over 200 leading global brands such as Audi, AT&T, and Tiffany. Commerce Tools is now able to scale its platform and flexible API-first approach to support the world's biggest retailers so they can design unique and seamless shopping experiences across all digital touch points. At the beginning of May, MongoDB and Commerce Tools helped one of the world's largest toy companies launch a massive and highly anticipated campaign to millions of fans across the world without a hitch. UiPath, a leading enterprise automation software company offering an end-to-end automation platform that combines robotic process automation with a full suite of capabilities to enable organizations to rapidly scale digital business operations, chose MongoDB as their underlying data persistence platform to increase efficiency for developers and accelerate time to market with new features and functionality. Leading provider of cloud-based compliance solutions, Avalara, is migrating from SQL server to MongoDB to support its complex data requirements. With more than 30,000 customers in 95 countries, the company needs a database to keep up with billions of transactions as it rapidly scales its platform to support new industries, geographies, and compliance services. One of the largest grocery chains in the world chose Atlas to strengthen its digital portfolio and scale its services across the eCommerce platform and in-store offerings. The company, which has more than 2,000 stores, selected MongoDB to replace Cosmos DB after searching for a scalable solution with a flexible data model that will give developers a richer feature set and better visibility to their data. Capital created by leading Japanese intercompany CyberAgent is a dating application with over 6 million registered users. The app, which has made over 200 million matches since inception, was deployed in Atlas for ease of use, the capacity to store 7.5 billion documents, and the ability to upgrade very large clusters while scaling to accommodate large user growth. In summary, we're off to a strong start in fiscal '22. With that, I'll turn it over to Michael.

Thanks, Dev. As mentioned, we delivered another strong performance in the first quarter both financially and operationally. I will begin with a detailed review of our first quarter results, and then finish with our outlook for the second quarter and full fiscal year 2022. First, I'll start with our first quarter results. Total revenue in the quarter was $181.6 million, up 39% year-over-year. Subscription revenue was $174.6 million, up 40% year-over-year, and professional services revenue was $7.1 million, up 29% year-over-year. Overall, Atlas's strong performance continues to be the largest contributor to our growth. Atlas grew 73% in the quarter compared to the previous year, and now represents 51% of total revenue compared to 42% in the first quarter of fiscal 2021 and 49% last quarter. As Dev discussed, Atlas's continued strong growth at increasing scale reflects strong product-market fit, our large market opportunity, and the clear market shift among customers of all sizes towards a fully managed cloud database offering. Given that Atlas is now the majority of our revenue, and that we continue to expect it to grow as a percent of revenue, I thought it would be helpful to remind everyone how Atlas impacts our reported financials. First, Atlas revenue is recorded on a consumption basis and therefore varies with usage, whereas enterprise advanced includes a term license component that is recognized upfront. So for a comparable dollar-size contract, both enterprise advanced and Atlas will recognize the same amount of revenue over the contract term, but the Atlas contract will generate less initial revenue. Second, self-serve Atlas customers and a growing portion of our direct sales Atlas customers do not pay us annually upfront, as is customary for enterprise advanced customers. We believe that payment and commitment flexibility facilitates Atlas’s adoption and usage, which will ultimately maximize long-term revenues and cash flows. However, as a result, Atlas generates less deferred revenue and less upfront cash than enterprise advanced. To illustrate this point, as of Q1, nearly 40% of our total ARR had little or no impact on our deferred revenue. Finally, Atlas has a lower overall gross margin than enterprise advanced because of its infrastructure component. That said, we've significantly reduced the margin difference between the two as Atlas has scaled. In addition, on an apples-to-apples functionality basis, Atlas is a creative dollar of gross profit. As a reminder, we do not try to influence which of our products customers choose. What we really care about is customers adopting and expanding their use of MongoDB. We're happy to have customers run MongoDB in whatever way best suits their IT strategy. And we expected enterprise advanced will continue to grow, especially in regulated industries such as financial services and healthcare that are moving to the cloud at a more measured pace. During the first quarter, we grew our customer base by over 2,000 customers sequentially, bringing our total customer count to over 26,800 customers, which is up from over 18,400 in the year-ago period. Of our total customer count, over 3,300 are direct sales customers, which compares to over 2,200 in the year-ago period. As a reminder, our direct customer count growth is driven by net new customers to our platform as well as self-service customers with whom we now have established a direct sales relationship. The growth of our total customer count is being driven in large part by Atlas, which had over 25,300 customers at the end of the quarter compared to over 16,800 in the year-ago period. It is important to keep in mind that growth in our Atlas customer count reflects new customers to MongoDB in addition to existing enterprise advanced customers adding incremental Atlas workloads. We had another quarter with our net expansion rate above 120%. We ended the quarter with 1,057 customers with at least $100,000 in ARR and annualized MRR, which is up from 780 in the year-ago period. The continued strong growth in customers with $100,000 or more in ARR is an indication of the success of our land-and-expand go-to-market strategy and the fact that we are increasingly becoming a strategic partner and a database standard for our customers. Moving down the P&L, I'll be discussing our results on a non-GAAP basis unless otherwise noted. Gross profit in the first quarter was $131.6 million, representing a gross margin of 72%, which is consistent with last quarter and down from 73% in the year-ago period. Overall, we are pleased with our gross margin performance, which is only seeing a modest impact from Atlas as it becomes a bigger portion of our revenue. Despite its infrastructure component, we've had good success driving greater efficiency as Atlas scales to minimize the gross margin impact. We continue to expect that we'll see some modest reduction in overall company gross margin as Atlas continues to grow as a percent of total revenue. Our operating loss was $8.4 million and a negative 5% operating margin for the first quarter compared to a negative 6% margin in the year-ago period. Our outperformance or operating loss guidance was driven primarily by revenue outperformance. Net loss in the first quarter was $9.5 million, or $0.15 a share based on 61.4 million weighted average shares outstanding. This compares to a loss of $7.3 million, or $0.13 a share on 57.6 million weighted average shares outstanding in the year-ago period. Turning to the balance sheet and cash flow, we ended the quarter with $935.6 million in cash, cash equivalents, short-term investments, and restricted cash. Operating cash flow in the first quarter was positive $10.2 million driven by strong collections following record Q4 sales results after taking into consideration approximately $1.8 million in capital expenditures and principal repayments of finance lease liabilities. Free cash flow was positive $8.4 million again in the quarter. This compares to negative free cash flow of $8.5 million in the first quarter of fiscal 2021. Despite the stronger-than-expected Q1, we continue to expect that we will burn cash in full fiscal year 2022 as we continue to invest significantly in the business. I'd now like to turn to our outlook for the second quarter and full year fiscal 2022. For the second quarter, we expect revenue to be in the range of $180 million to $183 million. We expect non-GAAP loss from operations to be $24 million to $22 million and non-GAAP net loss per share to be in the range of $0.43 to $0.40, based on 62.4 million weighted average shares outstanding. For the full fiscal year 2022, we now expect revenue to be in the range of $771 million to $784 million. For the full fiscal year 2022, we expect non-GAAP loss from operations to be $76 million to $68 million and non-GAAP net loss per share to be in the range of $1.38 to $1.25 based on 62.6 million weighted average shares outstanding. To summarize, MongoDB delivered excellent first quarter results. We are driving high levels of growth at scale, driven by our exceptional product-market fit and customer demand for a modern application data platform. We continue investing to capture the large opportunity ahead of us. We're seeing attractive returns on those investments and are excited about our positioning for the future. With that, we'd like to open it up to questions.

And the first question will come from Sanjit Singh with Morgan Stanley. Please go ahead.

Thank you for taking the questions. I actually wanted to start with a pretty high-level question, just given the traction that you're seeing in the cloud and also in terms of customer counts. Dev, do you have a goal in mind in terms of where MongoDB can get to? I mean, is 100,000 customers possible? If you look at some of the modern software companies, I think last year it was like north of 200,000; a Datadog, which is a little bit younger company than you guys are, sort of getting 15,000 to 20,000 customers. What do you think from a customer base perspective MongoDB can ultimately get to?

Yes, as we said many times, we're going after one of the largest markets in enterprise software. And while most of the dollars per customer are in what I call the global 2,000, there's a massive opportunity to grow the long tail. So while I don't want to speculate on what the high end of the number could be, I think that number could easily be a lot higher than this today, and potentially even six figures. But at this point, we're not constrained by market; it's more about our operational capability and how quickly we can scale the business.

Got it. And then as a follow-up, if we sort of get your latest views on the demand environment. As we come out of the pandemic, you guys did a really good job more or less sustaining growth in the back half of last year, given what you're seeing in terms of new projects and digital more applications being rolled out. Is there a potential for growth to accelerate coming in the back half? Or is it more of a sustained growth framework that you're thinking about as we go into the rest of the year?

As Michael mentioned, we are increasing our guidance for the year, which reflects our confidence in the demand environment. We believe that as customers acknowledge their need to adopt a digital-first approach due to the pandemic, they will not revert to their previous, more expensive, and less efficient distribution methods. Instead, they will understand the importance of a robust digital presence for business growth. When evaluating their business strategies, all companies are focusing on leveraging software and data to gain a competitive edge. This implies that every organization is considering ways to enhance the productivity of their sales force and developers, recognizing that they cannot simply purchase their competitive advantage but must develop it. Therefore, we believe this positions us favorably for the future as businesses and organizations emerge from the pandemic.

Excellent. Appreciate the thought, Dev.

The next question will come from Raimo Lenschow with Barclays. Please go ahead.

And congratulations from me as well. Amazing quarter. First question, I had two questions. One was on the relationship between EA and direct. If I look at this quarter, we have seen lots of momentum around direct, while EA is kind of in the background. Is that kind of the way you see it as well playing out in the future? Have customers fully realized they should be in the cloud, and that's kind of the path forward? Or is there kind of a delay effect of EA potentially coming back a little bit more in the second half of the year and next year? And then the second question is on self-service. As we are coming out of the pandemic, do you think self-service will start picking up again, as developers have a little bit more money? Or is it all going to be direct going forward? Thank you.

Thanks, Raimo. So, on the first part of your question about the relationship between our sales force and EA, I would just tell you that we are not prescriptive about what products to sell to customers. We just want to serve the customers the best way that they want to be served. So for some customers, they still have a very measured approach to moving to the cloud; others are going much more aggressively to the cloud. And we obviously have offerings for both sets of customers. I will tell you that we clearly see the high end of the market getting very, very comfortable moving mission-critical workloads to the cloud, and in particular to Atlas. One of the comments I made in the prepared remarks is that the majority of our six-figure customers are now Atlas only accounts. That tells you a lot about the sophistication of our customers who are using Atlas at the high end. That said, I think there's always going to be some seasonality in the mix between Atlas and EA, and we still believe that EA is going to grow healthily over the long-term. Regarding self-service, self-service is a very, very important channel. One of the comments I made in the prepared remarks was to explain that the majority of sourced revenue for Atlas came from the self-serve channel, not just customers, but revenue. Now the majority of the growth came from our sales force. Self-serve is a very healthy part of our business, and we see a nice flywheel effect between self-serve and direct sales. I don't want you to think that because of the numbers, self-serve business is not growing. What happens is our sales force is now very adept at picking off the highest quality self-serve accounts and growing those accounts that much more quickly. So the self-serve channel is paying huge dividends for us, and we're investing in all parts of the business.

Okay, perfect. Thank you and congrats.

The next question will come from David Hynes with Canaccord. Please go ahead.

Hey, thanks, guys. Great set of numbers here. Michael, I'm going to start with you. I feel silly asking this coming off of a 73% growth quarter, and I know it's clearly not contemplated in the guide. But it's possible that Atlas could accelerate further from here as we lap quarters a year ago, where expansion was coming under pressure during COVID.

Yes, thanks for the question. When I think about it, I would go back to what Dev said. We really think about the business from a channel basis. And I think that this is important to underscore, especially for people who haven't been following the story closely. So when you think about the channel, we've got the self-serve channel, which is almost entirely Atlas, and we've got a bunch of disclosures around that. Then there's the direct sales channel. The direct sales channel really can be thought of as having two main components: a midmarket component and then a field component, a higher enterprise component. What we've seen is that midmarket component is also almost entirely Atlas. One of the biggest factors when you think about what the Atlas trajectory will look like over time is how rapidly does the field enterprise channel adopt public cloud; we sort of said for a while that's the biggest swing factor overall in terms of the Atlas numbers. Clearly, you can see in the mix of results from Q1, in some of the vignettes that Dev shared, it was a very strong quarter for Atlas; when you look at the mix of deals in the enterprise channel, roughly two-thirds of the new business was coming from Atlas, which is a very significant kind of high watermark. That has an impact, as we talked about in terms of the financials, not having term license revenue and other factors that play into the rest of the year. We do think over the long term it will trend, but really in Q1, it's more of a mix of deals issue.

Yes, that's helpful color. And then, Dev, the follow-up. As we think about the introduction of new functionality over time and how you take that to market, do you think there are capabilities that may come in the form of new SKUs? Or should we expect the innovation to be more aimed at differentiating the core offering? I think of search and what you did there. Just trying to think about the longer-term monetization of R&D efforts.

Yes, that's a great question, David. What I would tell you is today, our focus is really about innovating at the core. Our new products are all about finding new ways to acquire new customers and expanding the lifetime value of our existing customers. Today, the revenue does show up mainly in Atlas, rather than separate SKUs, but you should not assume that will be the case long-term. We have a pretty aggressive innovation agenda, so over time you will see us add more products and more SKUs.

Yes, very helpful. Thanks, guys. Congrats.

The next question will come from Brad Reback with Stifel. Please go ahead.

Great. Thanks very much. Dev, from a high level, is there any way to know how much of what your customers are spending with you is net new budget versus what's being reallocated from legacy relational databases?

I would say that as companies recognize that at the heart of their value proposition is how effectively they use software and data, I have to believe that their investments in building software applications are growing over time. Now, we believe that applications have a certain lifespan; depending on the application, it could be as short as 3 or 4 years or as long as 15 or 20 years. Applications have a natural retirement rate. There could be situations where applications are just not serving the business or end-users effectively, so people may decide that changes need to be made more quickly. It's hard for us to suss out the net new budgets versus existing ones, but we recognize that we have to make a compelling business case. Our sales organization is quite adept at ensuring that whenever you get a six-figure deal, someone's got to justify that expenditure. No one is going to hand someone a six-figure check, so there really has to be a compelling case for advancing the business forward or reducing costs in existing infrastructure or whatever might be necessary. So the business case is compelling; there will be dollars available, even if it's at the expense of existing budgets.

Yes, I would add, Brad, that away from budget, which is a little bit hard for us to have perfect visibility on, we've consistently seen that about a quarter of the enterprise advanced wins are relational migrations. That number is lower on Atlas, because Atlas tends to be new applications as people are adopting the cloud. But that's been a pretty consistent number we've seen.

Great. Thanks very much.

Thanks, Brad.

The next question will come from Brent Bracelin with Piper Sandler. Please go ahead.

Good afternoon and thanks for taking the question here. Dev, I wanted to drill down into kind of this five-year anniversary of Atlas. Clearly, you’re messaging a milestone shift and enterprise interest in the platform. Could you talk a little bit about maybe the number of $100,000 Atlas customers, are you seeing any $1 million plus Atlas customers yet? Clearly, it sounds like it's starting to really resonate with enterprises. But any additional color you could talk about relative to the size of some of these Atlas enterprise deployments would be helpful. And then one quick follow-up for Mike.

Sure. The six-figure related customer count grew quite handily from last quarter to this quarter, and a big driver of that was Atlas. We see a number of not only six-figure customers on Atlas but also a quite large number of seven-figure customers in Atlas. There should be no misunderstanding: people are building and deploying very sophisticated complex mission-critical workloads on Atlas. Atlas has really proven itself through the ubiquity of its reach. We're in over 80 regions around the world. So we are by definition, because you can run across AWS, Azure, and GCP, the most geographically widely available database-as-a-service offering in the market. Some of the capabilities we've recently introduced, like global clusters, enable customers to run the same workload across two different cloud providers, something no one else can do. There are also many capabilities around data partitioning, privacy, and security that not many people can do. Customers run very, very sophisticated workloads on Atlas, and I think you're seeing the results of the enterprise and the high end of the market recognizing that more workloads are moving onto Atlas.

And Brent, just to give you the stats so it's clear for everyone: roughly 60% of our customers at that $100,000 or greater mark have Atlas spend above that level. That doesn't mean that they have only Atlas spend; they may have Atlas in addition to other products, but 60% of the customers over that $100,000 threshold have Atlas spend that would qualify them alone for above that level.

I believe you're talking about record partner revenue contribution; I think it was from Alibaba. Was that just MongoDB as a service? Was it predominantly Alibaba? Were there other MongoDB as a service partners there? Just clarify what that record was and what you're referencing relative to the strength you saw on Alibaba and others in the quarter?

Yes. We saw a huge increase in joint wins with not just Alibaba but Amazon and GCP as well. With Alibaba, it is not Atlas since, due to the regulatory environment in China, we cannot offer Atlas directly. We partner with both Alibaba and Tencent. We started with Alibaba first. We have repurposed some of our local sales team in China to enable the Alibaba organization to position and articulate the value proposition of MongoDB more effectively. We're seeing pretty positive impact in the short timeframe we've done that, so much so that even Alibaba is investing more and building a center of excellence around MongoDB. We feel really good about what's happening with Alibaba. Tencent, we're in the early days, and our plan is to do the same there in terms of operationalizing their capabilities to sell MongoDB as a service to their customers as well.

Helpful color, and good to see them around here. Thank you.

Thank you, Brent.

The next question will come from Jason Adder with William Blair. Please go ahead.

Yes. Thank you. Dev, you talked about your portability value proposition. I'm just wondering, have you seen any noticeable change from your customer base on how they're viewing databases from cloud providers like AWS and Azure, just in terms of that cloud lock-in risk? And then does it differ by the size of the customer? In other words, do larger customers tend to be more worried about it? Any color there would be great.

Yes. One of the compelling value propositions of MongoDB is you can run it anywhere. What that really means is you don't have to rewrite one line of code, whether you run it in your own data center, manage it yourself in the cloud, or use it as a service across AWS, GCP, or Azure. That becomes a pretty compelling value proposition because, as we all know, business conditions change. Cloud providers differentiate among themselves, offering price concessions or new capabilities that customers may want to leverage. What they don't want, however, is to be locked into any one environment. In terms of competition, we have been competing with clone offerings from Amazon and from Azure, and all the cloud providers do offer some types of database services. Our win rates against them are exceptionally high, because the clones are compromised; they're not built on the same architecture as MongoDB but rather constructed on relational backends. So they're compromised in terms of features and performance, and we can go toe-to-toe with any relational database, knowing the superiority of our architecture, scalability of our platform, and the ability for customers to move much more quickly on MongoDB versus any other solution. So we feel good about the competitive environment today.

And a quick follow-up for Michael. Michael, the operating margin guidance for the year, does that assume that your expenses are going to be kind of back to normal as we come out of COVID?

Yes, we talked about in the March call that we assumed a significant resumption of expenses that were not realized in the context of COVID, mostly related to office and travel. I think we quantified those in the back half of the year at roughly $20 million to $25 million. I see no reason for change on that based on the global situation related to the pandemic.

Great. Thank you, guys.

The next question will come from Kash Rangan with Goldman Sachs. Please go ahead.

Hi, Kash.

Perhaps you have been muted, sir. And the next question will come from Karl Keirstead with UBS. Please go ahead.

Oh, thank you. Maybe one for Dev, one for Michael. Dev, I'm just wondering if you could comment on the pace at which the firm was able to add quota carrying reps during the quarter and whether the performance during the quarter has changed your hiring plans for the full year. Then, Michael, when you were providing Q1 guidance three months ago, you did mention what I believe was on the EA side of the revenue recognition 606 related issue that might cause subscription revenues to be down sequentially. It clearly wasn't, but I'm wondering if whether that issue that was on your mind transpired and was simply offset by goodness elsewhere? Perhaps you could comment on that. Thanks so much.

Karl, I'll take the first question regarding the pace of hiring. We're trying to hire salespeople as fast as possible. We're going after a really big market, and in enterprise sales, you have to show up to win. We know when we go head-to-head against the competitors, our win rates are exceptionally high. However, you do need to have the proper supporting infrastructure in place in terms of sales management, pre-sales technical skills, and the right enablement with sufficient ramp time, etc. So there’s a whole operation that we have to ensure to have the right support structure for making salespeople successful, but we're being very aggressive in terms of hiring salespeople as fast as possible.

Yes, so on the variability, we will see variability quarter-to-quarter based on the mix of deals, and that does have revenue implications given the term license component under 606 for enterprise advanced. I would generally characterize the quarter as good for both EA and Atlas. EA had a particularly difficult compare given the lumpiness of the term license recognition in the base period, but generally it was a strong quarter on both products, and for EA it was a particularly good quarter on relational migrations.

Got it. Okay, helpful. Thank you both.

Thanks, Karl.

The next question will come from Tyler Radke with Citi. Please go ahead.

Thanks for taking my question. It looks like you're starting to see a lot more success selling Atlas directly into your large customers. Dev, I think you referenced a Cosmos DB deal that you displaced, so I'm curious how the competitive landscape may differ relative to EA when you are selling those Atlas deals to large enterprises? Do you find you're displacing a cloud-native solution? If so, I'm curious who you're running into most frequently?

When someone chooses Atlas, by definition, they've already chosen MongoDB, because Atlas is the service offering that underlies MongoDB. One of the real advantages of MongoDB is the ability to scale your application through something called sharding. When customers try to do that themselves on their own premise, we find that some customers get intimidated by how quickly they can scale the environment, or they may not have sufficient capacity to scale as quickly as they want. When you move to the cloud, you now have elastic capacity, making it much easier to leverage the power of MongoDB. The distributed capabilities, ability to shard data and use capabilities for privacy and security regulations around data, and the ability for performance, moving some data closer to end users, all get much better exposure in Atlas than customers trying to do that in their own data centers. That's the added benefit customers see when running mission-critical workloads on Atlas.

Great. And a follow-up maybe for Michael or you Dev. During the pandemic, you obviously invested pretty aggressively in sales headcount. I think in the first half of last year, sales and marketing headcount grew close to 60%. I'm curious how the ramp of those reps has gone. It's probably a lot different getting those folks up and running in a remote environment. But maybe if you could just comment on the ramp time of those sales reps and the percentage of your sales reps that are fully ramped at this point.

We recognized very early on that working virtually presented challenges, particularly for new sales reps, who typically rely on personal connections and experience in their ramping process. We went out of our way to ensure that we provided a high level of enablement and support for those reps to ramp as quickly as possible. In general, the ramping of the new reps has been in line with our expectations, and we're putting a lot of focus there. We do so for employees across all functions, not just sales, but particularly focusing on salespeople for production. We have various levels of training, from boot camps to ongoing product updates, and we're ensuring that we track whether sales reps ramp are succeeding based on their time and tenure in the field. The same goes for our inside salespeople. We assume a shorter ramp for inside salespeople, but we have been preparing for this scenario and are invested in enabling every part of the business.

The only other thing I'd add is that we're consistently looking to expand the sales force. Given how thin our footprint coverage is relative to the magnitude of our market opportunity, we tend to be operationally constrained in how fast we can add people. If there are locations where we can opportunistically add even faster, we will go do that.

Thank you.

Our next question will come from Jack Andrews with Needham. Please go ahead.

Thanks and congratulations on the results. Dev, I was wondering if you could provide an update in terms of how the Global SI might be helping you. You've talked in the past that a number of them have been building MongoDB practices. So could you maybe frame for us; what proportion of deals they might be factoring in today? And I'm also just wondering, are they helping you to gain access to more of these C level conversations you’re having over time?

Right. So there’s a synergistic relationship between MongoDB and the SIs because, in many cases, they act as either the company’s development arm or augment their existing development organization. By definition, they're developers of the applications using MongoDB to build those applications. The SIs are building cloud migration factories, practices in that area, to help customers migrate workloads from on-premise to the cloud. We're working with a number of large SIs like Accenture, TCS, Capgemini, Infosys, etc. They have different programs by organization, essentially with their MongoDB accelerator program, Capgemini and TCS have various programs focusing on different verticals. We also work with some boutique SIs that have deep expertise in either MongoDB itself or a certain vertical or geography. Overall, our business with SIs is growing, but there’s plenty more to do. It can be challenging with larger SIs because they're decentralized, meaning that success in one account or area doesn’t translate quickly across the organization. However, as we gain more credibility and have more wins, we're seeing SIs coming to us with more and more opportunities.

First, great. Thanks for the color.

Thank you.

The next question will come from Fred Havemeyer with Macquarie. Please go ahead.

Okay. Thank you, Dev. Similar to the SI question, could you give an update on how your ISV ecosystem is progressing? And then also how you're seeing MongoDB adoption among ISVs trending between adoption of either Atlas or other offerings?

In the prepared remarks, I talked about Commerce Tools, which is just nice to be really assisting retailers, so we're having a lot of success with them. There are several other ISVs that we work with, and we have a dedicated sales team now that's pursuing ISVs. It's really a two-step sales process. One is a sell to process where we engage with the CTO, CEO, or Chief Product Officer and their teams to build their new version of their product or replatform an existing product off a legacy database onto MongoDB. The second step is to work with them to close their first set of customers, and then we're ultimately the beneficiaries of their growth. Our ISV team numbers in the hundreds, and that represents a big opportunity for us. You're going to see us devote more focus, time, and resources to serving ISVs.

Thank you. And then just a follow-up. During the prepared remarks, you mentioned how UiPath is using MongoDB for its persistence layer. With the rise of low code and no-code vendors using MongoDB, what do you think or what are you seeing in the low-code and no-code trend? Can you discuss this further and generally how it affects your overall go-to-market strategy?

Yes. We see ISVs, including a segment of those being low code or no code vendors choosing MongoDB. One reason is the document data model, which we would argue is the best way to work with data. The flexibility of the data model allows you to manage data the way developers think in code, allowing for easy changes. If you talk to anyone who's worked with relational databases, by the time an application gets past revision 1 or 2, the data model becomes very brittle. You do not have that issue with MongoDB. Additionally, MongoDB is the most distributed and scalable platform available. It was built to be a distributed data platform, which ISVs appreciate because they serve various customers and require a platform that can scale. Lastly, MongoDB can run anywhere; it’s not a cloud-only platform, which allows ISVs various deployment options. That flexibility helps them maintain a host of options, and that's why you see ISVs choosing MongoDB.

Thank you very much. Congratulations on a wonderful quarter, and especially the cloud traction you're getting. Dev, I wanted to just get your perspective on incrementally speaking, as the economy opens up. You've been very successfully operating and producing results in a virtual setting. As we open up, what are the incremental opportunities that MongoDB can take advantage of that you couldn't do with the virtual setting during the pandemic? Thank you so much once again.

Thanks, Kash. As we mentioned last year and more recently in the last quarter, while we've done well during the pandemic, we believe that COVID has been a slight headwind to our business. There’s still an enormous amount of deal scrutiny, especially on big deals. Approvals still take longer, and if customers are concerned about their business health, they will be cautious about investing with new technology. So, as the world opens up, we believe people will have more confidence in using MongoDB. The pandemic has shown us that those companies proficient in using software and data thrive, as all businesses must become digital first. Companies are recognizing they cannot simply buy their competitive advantage; they need to build it themselves. Companies need proficiency in building applications that truly transform their businesses, enabling them to add features quickly and respond to new opportunities and threats. MongoDB enables them to do this in a flexible and scalable way, so we believe we are well-positioned as the world opens up.

Wonderful. Thank you so much. Congrats again.

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