MongoDB, Inc. (MDB) Q2 2027 Earnings Call Transcript

Hello, and welcome to MongoDB's second quarter fiscal 27 earnings call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I will now like to hand the conference over to Jess Lubert, Vice President of Investor Relations. You may begin.

Thank you, Operator. Good afternoon, and thank you for joining us today to review MongoDB's second quarter fiscal 2027 financial results, which we announced in our press release issued after the close of market today. Joining me on the call today are CJ Desai, President and CEO of MongoDB, and Mike Berry, CFO of MongoDB. During this call, we will make forward-looking statements, including statements related to our market and future growth opportunities, our opportunity to win new business, our expectations regarding Atlas consumption growth, the impact of EA and other business, and multi-year license revenue, and the long-term opportunity of AI, our financial guidance, and underlying assumptions, including expectations regarding profitability and operating margin, and our investments and growth opportunities. opportunities in AI. These statements are subject to a variety of risks and uncertainties, including the results of operations and financial conditions that could cause actual results to differ materially from our expectations. For a discussion of material risks and uncertainties that could affect our actual results, please refer to the risks described in our quarterly report on Form 10-Q for the quarter ended July 31st, 2026, filed with the SAC on September 1st, 2026. Any forward-looking statements made on this call reflect our views only as of today, and we undertake no obligation to update them except as required by law. 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 gap financial measures. With that, I'd like to turn the call over to CJ.

Thank you, Jess, and thanks everyone for joining us today. I'm pleased to share our very strong Q2 results. Total revenue of $772 million, up 30% year-over-year, and representing the highest level of quarterly growth seen since fiscal year 24. Atlas revenue grew approximately 29% year-over-year for the fifth straight quarter, driven by large enterprise customers and building AI momentum. EA and other had a standout quarter growing 36% year-over-year due to widespread strength driven by our run-anywhere capabilities. We generated a non-GAAP operating margin of 24%, driven by the strong revenue growth we delivered. We ended the quarter with 70,600 customers, adding a record 2,900 net new customers in the period. Boyage customer count nearly doubled quarter over quarter, and Atlas Vector Search adoption continues to outpace the growth of the rest of the company, showing our strong early momentum for AI workloads. Our core business remains strong, and our Run Anywhere advantage is a key differentiator for this quarter's growth across both Atlas and EA. Enterprises across financial services, healthcare, tech are running their most demanding mission-critical workloads on MongoDB, and we are winning more workloads each quarter. Increasingly, these same enterprises, as well as AI natives, are choosing our platform for AI workloads evidenced by the adoption of Atlas Vector Search and Voyage Embeddings. My team and I spent another quarter with the C-suite of our customers discussing our data platform for their most pressing core AI and modernization needs. Our Q2 performance is exactly why I'm confident that we are emerging as the real-time intelligent data platform for modern application in the multi-cloud and AI era. I will begin with what I'm seeing in the enterprise. For customers that already run large part of their data state on MongoDB building an agent on top of that data is a natural extension because the data an agent actually needs is live operational data not a stale copy sitting in a warehouse search vector search and embeddings are built in not bolted on so rather than agents connecting to many separate systems they connect to one platform we are seeing this show up across industries in a range of use cases whether it's retrieval of internal knowledge customer facing chatbots and agents or fraud and identity workflows it is still early but we are seeing more of these workloads reach production such as the financial times which leverages us to power ai driven discovery reaching millions of readers with interactive experiences at scale with vector search and voyage the financial time now unifies their operational data and vector embeddings on a single platform building a hybrid full text and semantic search solution eliminating the complexity of syncing separate systems and accelerating time to production by indexing content with the high accuracy oh4 model and serving over 100 000 daily queries on the cost-efficient voice for light model the financial times has significantly cut retrieval costs with minimal performance impact what used to take weeks of manual index monitoring is now finished in a day moving on to the momentum we are seeing with frontier labs who are both customers and partners for us multiple leading labs leverage atlas for workloads that are mission critical to how they ship their products. One lab uses us for inference and chat workloads after moving away from Postgres due to performance lags and outages affecting user experience. They migrated their chat memory system onto Atlas in just four weeks and now run at 10x faster reads than Postgres. Beyond that, labs use us for research workloads to store experimental results, evaluation data and training artifacts for model development these relationships are still early and engagement varies lab by lab but we are energized by the traction we are seeing with them as partners with this frontier labs we are enabling the developers and agents building on their platforms to leverage Atlas just recently we launched a fully managed MCP server making it easier for developers and agents to connect directly to MongoDB when they are using cloud code, codecs, and grog build, as well as popular coding tools like Cursor and Devon from Cognition. This is how we stay embedded in the AI supply chain for how new applications get built. Paul Smith, Chief Commercial Officer at Anthropic, described our technology partnership and recent integration with cloud by noting the best ai applications need a strong database which is why we have long pointed to developers building on cloud to mongodb oedge for embeddings more recently demand from those developers drove mongodb to build a new managed mcp server which has seen faster options since launch and now let's developers explore query and manage their MongoDB data without ever leaving Claude. The final piece of the AI opportunity is AI natives, companies whose data layer determines whether the product can support a rapid scale. Some chooses from day one, others start elsewhere like prompt-driven development platforms and migrate to us as they hit scaling limits and real usage arise. That pattern is showing up in the numbers. We added a record 2,900 net new customers this quarter and many of them are AI natives. Fireflies, a unicorn AI native startup, is building what it calls the number one AI assistant for work, helping people unlock the knowledge buried in their conversations. Fireflies serves more than 20 million users across a million plus organizations and has processed over seven billion meeting minutes. Fireflies chose Atlas from day one for its flexible document model over a rigid relational schema and totally runs today runs more than 40 microservices with chain streams powering real-time pipelines for analytics and growth intelligence. That lean scalable foundation has helped their fuel that hyper growth seamlessly we are also seeing strong traction with voyage our embedding and re-ranking models which consistently rank at the top of independent leaderboards in August we brought automated voyage embeddings to Atlas for one click vector search setup launch voice code for a model purpose will for code and shipped and upgraded re-ranking API, all keeping Atlas retrieval accuracy for AI ahead of the market. Voyage traction is showing up on both ends of the market. Some of our largest existing Atlas customers are beginning to adopt Voyage for AI use cases, while a large majority of new Voyage customers are AI natives and have no prior relationship to MongoDB. EVE is one of them, a unicorn AI native that automates legal case intake, medical chronologies, and demand letter drafting for plaintiff law firms. EVE uses Atlas Embedding and Reranking API powered by Voyage AI's Rerank 2.5 to surface the most relevant evidence from large sets of case documents. This improves retrieval quality directly into EU's RAG layer while simplifying the infrastructure needed to build and evolve these AI experiences. Turning to enterprise advance, this quarter's strength was widespread across our install base, particularly within financial services, tech, and the public sector. Two patterns in how customers are using EA stand out, and both point to why this business is strategic for us. The first is AI in governed, self-managed environments. This quarter, we brought search and vector search to EA, closing a gap between our cloud and self-managed experiences. Demand came in immediately and across industries from customers looking to take a consolidated approach to building AI in their own governed, self-managed environments. A major U.S. bank shows what that looks like in practice. EA already serves as the standardized data platform for more than 100 production applications across payments, fraud detections, document processing, customer and account services. This quarter, that bank extended that same environment to Gen AI and Symantec Search for employee advisors, chatbots, product search, and document intelligence. By bringing operational data, search, and vector retrieval together, self-managed with EA, they keep sensitive customer and conversational data inside their own governed environment without sending up separate systems. That gives them a practical foundation to expand AI across the bank on the same platform already running their most critical operations. The second is hybrid deployment. More and more of my customer conversations involve running across multiple clouds and self-managed environments at the same time. For customers on both EA and Atlas, it is an and, not an or. For example, one of the largest cybersecurity companies runs a substantial estate across both Atlas and EA, and both parts grew meaningfully in the quarter. Nationwide UK, the world's largest building society, is also a good example. They now run their growing speed layer application across both EA and Atlas, simultaneously giving members real-time access to account and transaction data across every digital channel and supporting more than 24 million weekly app logins. Splitting that workload across EA and Atlas gives Nationwide stronger operational resilience and helps satisfy UK regulatory requirements while simplifying an estate that used to be far more fragmented. Nationwide already runs with us for faster payments, up to 3 million transactions and 1.5 billion pounds in value on a peak day on a self-managed dual cloud EA cluster. Bringing AI self-manage opens net new demand for us, and hybrid deployment often means that the strong EA estate opens the door to net new Atlas conversations within the same customers. EA's profitability also lets us invest more heavily in R&D and go to market, furthering Atlas growth and our AI roadmap. Finally, I feel great about the leadership team driving innovation across both Atlas and EA. Ben Cepolo owns Core Products and Pablistern Plaza owns AI and emerging products. And on the go-to-market side, Ryan McBen has hit the ground running as our new CRO, giving me real confidence in our ability to capture the opportunity ahead. Before I close, I would like to remind everyone that we will be hosting our investor day in New York City on September 29 and our dot local New York user event on September 30th we look forward to seeing many of you there with that I will turn over to Mike thank you CJ good afternoon everyone I will walk through the second quarter fiscal 27 results and then turn to our outlook for the third quarter and the balance of the fiscal year as always I will be discussing both gap and non gap results.

As CJ noted, we had another very strong quarter and came in above all of our guidance ranges. Given this performance and the strong momentum across the business, we are rolling the beat from Q2 and raising our second half fiscal 27 guidance, largely driven by strength in Atlas. Before getting into the details, I want to highlight a few key takeaways for the quarter. First, total revenue growth accelerated to 30 percent, the first time we've reached that level since fiscal 24. Second, this is the fifth consecutive quarter with Atlas growth of approximately 29 percent. Third, EA and other had an exceptional quarter, growing 36 percent year over year, driven by EA's growing strategic importance to many of our largest customers and early traction from our Q2 launch of search and vector search on EA. And finally, as a result of these trends, we significantly outperformed our operating margin and EPS guidance, reflecting the strength of our operating model. Moving on to the results, total revenue in the second quarter was $772 million dollars representing 30 percent year-over-year growth compared to 24 percent growth in the year-ago quarter. Turning to our product breakdown, Atlas revenue grew approximately 29 percent year-over-year and exceeded our guidance by approximately 300 basis points. Consumption was strong, resulting in a third straight beat consistent with our guidance framework. This is the sixth straight quarter of year-over-year dollar growth in Atlas, adding a record $127 million in the quarter. Our main growth driver this quarter continued to be strength in North America and our largest customers, particularly those in the $100,000 plus ARR cohort, consistent with the broader upmarket momentum we have discussed in recent quarters. This continued strength is reflected in our total company net ARR expansion rate, which increased to 122% for the quarter compared to 119% a year ago and 121% last quarter. The quarter-over-quarter increase in net ARR expansion rate was driven by strength in both Atlas and EA. We also continue to see momentum in the AI Native cohort and across AI signals, including adoption of vector search, new Voyage customers, and a continued increase in clusters connecting through MCP. Turning to EA and other revenue, we saw very strong results, with revenue growing approximately 30% year-over-year, our strongest quarter in three years. We saw early demand for the search and vector search capabilities we launched on eaq2 adding retrieval capabilities that enhance our ability to support ai workloads this strength was broad-based reflecting momentum across a number of deals rather than any single transaction with particular strength and financial services public sector and technology this continued momentum highlights the strategic importance of EA as customers continue to expand their self-managed footprints to support both traditional and AI applications EA and other ARR which normalizes for the impact of duration grew approximately 11 percent year-over-year the third consecutive quarter of double-digit ARR growth moving down the P&L total non- GAAP gross margin was 75.9%, up approximately 210 basis points year-over-year, and subscription gross margin was 78.3%, up approximately 70 basis points year-over-year. The increase in subscription gross margin was primarily driven by the higher EA revenue mix in Q2. Moving to profitability, we are excited that Q2 marks our third consecutive quarter of GAAP EPS profitability, and our full-year guidance incorporates our expectation to be GAAP EPS profitable for fiscal 27. Non-GAAP income from operations was $186 million for an operating margin of 24% compared to 15% in the year-ago period. We continue to be very pleased with our operating margin results, which benefited from the strong revenue performance this quarter. Second quarter non-GAAP net income was $163 million, or $1.90 per share, based on $85.8 million fully diluted shares outstanding. This compares the net income of $87 million, or $1 per share, on $87.1 million fully diluted shares outstanding in the year-ago period. Our remaining performance obligations, which we define as obligations for contracts with a duration greater than 12 months, ended the quarter at $1.52 billion, representing year-over-year growth of 91%, with the current portion growing 73%. We had a very strong quarter for new customers, adding approximately 2,900 customers sequentially, bringing our total customer count to 70,600, up from 59,900 in the year-ago period. Growth continues to be driven primarily by Atlas, which had 69,300 customers at the end of the second quarter, compared to 58,500 in the year-ago period. Within Atlas, Voyage customers roughly doubled quarter over quarter for the second consecutive quarter, continuing the encouraging signs of the demand for our AI embedding capabilities. We continue to feel good about the momentum we are seeing with new customers and would remind you that this metric will fluctuate from quarter to quarter. We entered the quarter with nearly 3,000 customers with at least $100,000 in ARR, representing 17% year-over-year growth. Revenue growth from this cohort continues to be strong and outpaced total company revenue growth, consistent with our move-up market. We also continue to see strong Atlas performance adoption. Of our Atlas customers generating at least $100,000 in ARR, 48% are leveraging two or more features on our platform, which is up from 42% in the year-ago quarter, driven largely by vector and text search adoption. Turning to the balance sheet and cash flow, we ended the second quarter with $2.4 billion in cash, cash equivalents, and short-term investments. During the quarter, we allocated $100 million toward share repurchases and $59 million to settle taxes on employee RSUs. Operating cash flow was $142 million, compared to $72 million in the year-ago period, and free cash flow was $138 million compared to $70 million a year ago. We remain committed to driving meaningful and durable cash flow, and through the first half of fiscal 27, we have generated $344 million in operating cash flow and $335 million in free cash flow. Now I'd like to share some of the assumptions driving our third quarter outlook and provide some additional detail into how we're thinking about the rest of fiscal 27 as i mentioned earlier we continue to be pleased with the strong and consistent atlas growth our growth to date has been driven primarily by continued strength with our largest enterprise customers and we expect that to continue in the second half of fiscal 27. based on this continued momentum we expect atlas growth of approximately 26 percent in Q3, and we are raising our full-year growth expectation to approximately 27%, an increase of 300 basis points from the midpoint of our prior guidance. Our second-half guidance raised for total revenue is primarily driven by the strength we are seeing in Atlas. The strength in Atlas is highlighted by the sixth straight quarter of increasing revenue dollar growth year-over-year, strong net ARR expansion rate, increasing multi-product penetration, and early signs of adoption of AI workloads. We discussed over the last several quarters that as Atlas has gotten larger, it has become more predictable and less sensitive to revenue movements by any individual customer or cohort. This can be seen in the consistency of the results we have delivered over the last three quarters, where we have seen approximately 200 to 300 basis points of outperformance relative to our initial guidance. We used the same guidance framework for our Q3 outlook, understanding that Q3 is our toughest compare of the year for Atlas. For EA and other, given the strength we saw in the first half, including the demand we are seeing for the search and vector search capabilities we launched on EA in Q2, we are raising our full-year expectations for EA and other revenue to approximately 11% growth in fiscal 27, up from our prior guidance amid single-digit growth. This is the first time in three years EA and other is projected to grow at a double-digit rate for the full year. Our second-half guide is consistent with what we shared last quarter. We continue to expect the EA and other revenue to be approximately flat in the second half, with growth in the mid-single digits in the third quarter. Because multi-year deals are inherently hard to predict, we will continue to be prudent in how we guide the EA business. We are excited about the growth we are seeing in EA and would encourage you to focus on the full-year growth rather than any single quarter, since performance will naturally move around period to period. Turning to profitability, you can see in the first half fiscal 27 results the leverage in the business model and the ability to drive incremental profitability while still investing in growth initiatives, specifically engineering and product innovation. We remain committed to driving both revenue growth and improved profitability. We now expect to expand operating margin by approximately 250 basis points in fiscal 27, 100 basis points higher than the high end of our previous range. We will achieve this expansion while continuing to invest in key growth initiatives across both products and go-to-market. Our product investment remains focused on enhancing our AI and core database capabilities, including on EA, and you will hear more about our new product innovations at our upcoming investor day. On the go-to-market side, we are investing in accelerating adoption of new product innovations and continuing to focus on our highest growth opportunities by geography and customer segment. We will also continue to invest in quota carrying headcount, marketing programs, and developer awareness. On cash flow, given our strong first-half performance, we now expect full-year free cash flow to conversion to be at the upper end of our long-term target range of 80 to 100%. Now let's shift to how this translates to guidance for the third quarter in fiscal 27. To reiterate, this second-half raise is being driven mainly by strength in Atlas. For the third quarter, we expect total revenue of 756 to 761 million dollars representing 20 to 21 percent year-over-year growth. We expect non-GAAP income from operations of 152 to 156 million dollars for an operating margin of approximately 20.5 percent at the high end of guidance. We expect non-GAAP net income per share of $1.57 to $1.61 based on 87.1 million diluted shares outstanding. For fiscal 27, we now expect total revenue of 2.99 to 3.03 billion dollars, representing full-year growth of 21 to 23 percent, which would be the second straight year of total revenue acceleration at the high end of guidance. We expect non-GAAP income from operations of $616 to $636 million for an operating margin of approximately 21% at the high end of guidance. With the combination of 23% revenue growth and 21% operating margin, we are targeting a rule of 44 performance at the high end of our fiscal 27 outlook. We expect non-GAAP net income per share of $6.39 to $6.58, based on 86.4 million diluted shares outstanding. In closing, I want to thank the entire MongoDB team for another quarter of strong execution. We are pleased with the results, confident in the durability of our growth, and remain focused on driving long-term shareholder value as we continue to invest responsibly in the Last but not least, we look forward to seeing many of you later this month at our Investor Day. You can find more information on how to register for the live event or listen to the live stream on our IR website. With that, operator, let's open it up for questions.

Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. We ask that you limit yourself to one question only. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ramo Lynch-Chow with Barclays. Your line is open.

Perfect. Thank you. Congrats on the great quarter. The question I had was on Atlas. If I look at your, if I listen to your guidance comments, the strength driven by Atlas, what are the factors that you're considering there and what's driving your confidence? Thank you.

Thanks for the question, Ramo. It's Mike. So, as we talked about, we feel very good about the Atlas business. And what we look at is this was the fifth straight quarter of approximately 29% a year over your growth, very consistent. We've increased the full year guidance by 300 basis points from the previous guide. And that is also buttressed by a record net new 127 million net new Atlas dollars, as well as the increase in the net AR expansion rate. And now Atlas is almost a $2.3 billion run rate. So, as we look forward, we continue to expect really good growth from our larger enterprise customers, especially in the U.S. We started to see some benefit from AI, even though it's small, but we are excited about the momentum. And we do expect consumption to continue to be consistent with what we've seen during the first half of the year. Thank you.

Thank you. Our next question comes from the line of Alex Zucin with Wolf Research. Your line is open.

Hi, guys. Thanks for taking the question. I guess maybe, CJ, if I look at the business, right, on the first half, clearly Atlas is accelerating. Subscription revenue growth is accelerating. But it felt like QQ, maybe it was a slight decel on Atlas. The guide for the rest of the year, particularly Q4, implies a pretty meaningful deceleration in Atlas. And I understand conservatism, but if we're kind of early and rolling down the hill with some of the AI natives and labs. What are some of the dynamics? Is it possible that EA is flipping some deals to Atlas like happened in Q4 of last year? What's kind of the dynamic that maybe we're not seeing?

Okay. So, Alex, thank you. Let me address there are quite a few questions in there I would say first to see consistent 29% growth in Atlas now as Mike outlined it is extremely encouraging and that execution whether it's in the enterprise or with AI native cohort is overall very encouraged encouraging for us and like you called out we have seen the acceleration in the first half compared to what we guided in beginning of March. So that's number one. Number two, I want to be very clear that the growth of EA, self-managed MongoDB, is not coming at the expense of Atlas. Atlas actually continues to grow, and we are, Alex, meeting customers where they are. When I originally joined, and I outlined in the first earnings call, is that customers asked us that we want to run for this large, massive workloads that they run on MongoDB EA, CJ, we want to get this AI ready, and hence the team should build a search and vector search on it. Because these kind of workloads, for a variety of reasons, whether it's data sovereignty, whether they don't want to move it to public cloud for other reasons, will run in our self-managed environment. So we did that, and we delivered that on June 30th, and we saw that that was received really well in our customer base. And as Mike called out, this was a widespread trend on our self-managed MongoDB, and it was not concentrated in a single customer and across industries. So point number one is that I feel very good about Atlas consumption trends in the first half going into the second half. number two I EA growth that we are seeing from a self-managed perspective whether they are running in neo clouds whether they are running on-prem in their colos whether they are sometimes some customers run EA in a public cloud in certain regions around the world feel very good that that is not coming at expense of Atlas and a couple of examples that I highlighted we are actually seeing that from operational resilience perspective some of the large banks or government customers have said that this is a strength of MongoDB data platform versus one over the other from Atlas on EA perspective. Now in terms of guidance I'll let Mike comment on it but we raised the guidance by 300 basis points for the year on Atlas you know where we started in March and now we are at 27% growth, we are always going to be prudent about it. And for Q4 specifically, it is still in consumption dynamics. That is still ways away from our perspective. We need to see how things play out in the month of September, in month of October, which becomes the baseline. Then the holidays are coming in Q4, which does impact our consumption. So we are trying to be prudent in how we guide and I am optimistic on what I'm seeing both from the core cohort perspective on Atlas as well as what we are seeing on the AI native side and Mike do you want to comment on the guidance on Atlas yeah thank you great answer CJ I just want to underline what he said is our guidance philosophy Alex has not changed in terms of how we guided the rest of the year will always be prudent more than a quarter out and that's what's reflected in the guidance I also want to address your comment about Q4 and just be super clear on the call.

Hey, there were no large bundle deals in the quarter. There was none of that Q4 dynamic this quarter.

Thank you. Please stand by for our next question. Our next question comes from the line of Matt Martino with Goldman Sachs. Your line is open.

Thanks for taking my question. CJ, for you, this is the second quarter you've highlighted strong momentum in Voyage customer and I think you made an interesting comment in the prepared remarks where a variety of Voyage customers are net new to MongoDB. It seems like a great topple funnel to win some hyper-growth workloads among AI natives. How would you characterize the success in converting some of those customers to a broader platform sale thus far? Thanks.

Yeah. So, Matt, I would approach this in two buckets, okay? Bucket number one, we are really, really energized by the new customer count for MongoDB that is coming via Voyage. And you are absolutely correct, and that's why those remarks were made explicitly, that many of them are actually not MongoDB customers. So that is absolutely true. And the acquisition, as you know, was done in February of 2025. so we are only 18 months into the acquisition between the voice team that is making sure that we are best in class embedding model when you look at you know external data benchmarks and so on but most importantly there are some customers who come in as voice customers and they become atlas customers but it is still early because we just started making sure that we can now cross sell upsell whatever the right term you want to use but I see this as a massive opportunity for Atlas long term that we are getting this voyage customers and almost always when I look at the names of the kind of customers we are getting whether they are in San Francisco Bay Area whether they are large enterprise whether they are in London or Tel Aviv or Seattle they tend to be driven by AI workloads and when the team did analysis on where is the referral for our voyage is coming, as you would have imagined, most of this referral is coming via coding agents. Number one, Codex, and sorry, Claude, and number two, Codex, is driving most of the referral traffic for voyage. So we have like multiple things happening. Coding agents love voyage. They're recommending us, and we are getting this new customer cohort. Second is that becomes top of the funnel, like you said, that we will cross-sell, up-sell, Orion's team have a plan for Atlas customers. And number three, almost always, these are AI workloads. So, overall, early, but super encouraging.

Thank you. Our next question comes from the line of Call Kids Steer with UBS. Your line is open.

Okay, great. Maybe I'll direct this one to CJ. CJ, you said that MongoDB is seeing some early momentum with AI workloads. As all of us try to monitor the timing and magnitude of the pending AI pull-through to Mongo, I'm just wondering if you could elaborate on what kind of AI use cases or workloads have you found have the greatest pull-through to Mongo? I was intrigued by a comment that Mike made inter-quarter where he flagged customer-facing enterprise workloads and I know in your prepared remarks you mentioned customer support use cases but perhaps you could elaborate a little bit on specific use cases that have the most powerful pull through so we can all watch for those thank you absolutely so what I have seen and this is across many conversations call is I'm just going to first look at the bucket of enterprise okay Enterprises as in whether you want to say Global 2000 or Fortune 500 or Fortune 100.

When I look at those, MongoDB was always, almost always, a database platform that was used for customer-facing workload, whether it's insurance claims, healthcare policies, whether it's credit card transactions and getting the fast data for the end users. MongoDB always shines when it is a massive workload that is customer-facing. What I'm seeing is initially, say you are a wealth manager at a bank, and there are lots and lots of knowledge-based articles that you want to vectorize, use our embeddings, and then use as a chatbot for folks that are doing wealth management and talking to clients real-time. that is a one very specific example where a particular large bank is using MongoDB there are also other examples where because there are lots and lots of documents employee facing use cases where knowledge base articles so that employees can leverage do a search because now search is fully integrated into the operational data and documents get loaded and then embeddings make the of vectorization better. That will be another large enterprise example where we are seeing use cases. But the clarity that I got was that it was almost always, hey, we want to use MongoDB where the scale matters on the agents that we are trying to create for our customer-facing activities, whatever the customer-facing activities are. We are not seeing early traction with, hey, I created a co-pilot kind of a thing that appeals to, you know, a couple of hundred employees. We are not seeing MongoDB being used because they are like, hey, this is too big. MongoDB, of course, gives us scale and all this other functionality. So that's number one. And, Carl, the other thing I would say is when you look at AI natives, including I'm going to put Frontier Labs in there, but you look at the example that I shared, which was on Eve, or whether it was Fireflies, which are agents in production. But when you look at these agents in production, we have used 11 labs in the past and others these are millions of agents in production that are doing something that is customer facing and they would say we want to use mongodb for scale performance and of course run anywhere and that's where you're using it so these are the two vectors that i'm seeing in enterprises are agents going into production where it makes sense on atlas okay let's do that and on EA that I touched on in my prepared remarks make no mistake as they these regulated industries are trying to get their operational data AI ready was also the reason EA growth was driven across the industry including tech where customers says hey I'm building an AI agent for my tech whatever uh technology platform uses mongodb or technology company and we saw the growth there so that would be my overall summary on where we are seeing and i'm going to have my comment anything additional if you need it nope great answer thank you thank you please stand by for our next question our next question comes from the line of sanjet singh with morgan stanley your line this open.

Yeah, I appreciate you taking the question. CJ, I wanted to focus on Enterprise Advance because I think under your tenure, the EA growth profile has definitely been uplisted while Atlas growth has, to your point, sustained at a very attractive rate at 29%. And some of the things that we've been hearing from customers is that if Mongo wants these customers to ultimately get to atlas right um you know advancing um ea's capabilities with search and vector search uh and potentially uh um voyage as well like that's really important do you have a perspective on one the timeline on when when you get these customers on the new ai features what the ultimate you know uh if you want to call it an upgrade or a migration to atlas what that timing could look like that's the first part of the ea question the second part of the ea question is which cohorts are incrementally using it so you mentioned kind of the large enterprises the financial institutions are not surprising but do you see an opportunity i think you guys get into that neo clouds using ea as well do you is there a world where the ai natives start to use um ea uh because maybe uh under the theme of like data sovereignty or some other reason on why they become adopters of ea as well. So those are my few questions at EA. Thank you very much.

Sounds good. So I'm going to up level this a little bit Sanjit and you know we are a very customer driven company and the reason we invested in EA roadmap that we outlined and it is nice to see it's working out is that customers said to us many many customers even in my early days that you must invest in EA and if EA gets to being AI ready with search, vector search, and so on, they're asking, hey, can we also make a voyage available in a self-managed type of an environment? That was very customer-driven, and we are meeting customers where they are, okay? So that's my number one thing. Second thing, as Mike shared, three-quarters of double-digit EA growth gives me optimism that now we have two growth drivers, Atlas and EA, and as I shared, not coming at expense of each other because that's a very important thing. Sometimes customers will say, I need to do this for operational resiliency. Sometimes customers will say, I don't see this workload moving to Atlas, but given what you're doing and I'm seeing it on search and vector search being unified, here is a new workload. that we want to try it on Atlas. So our momentum on EA is also driving potential additional use cases that a bank or a public sector organization, a government organization is using Atlas. I'll be very specific. In the second quarter, we have a customer in public sector who decided to then expand their usage of our self-managed MongoDB as in EA, But in addition, we are currently working with them because they see some benefits of MongoDB code base, and they're like, CJ, if you guys are going to manage it and provide security patches and all other things, they currently have a pilot for Atlas in that government cloud that they are running. So from my standpoint, having now two growth drivers on behalf of MongoDB Corporation for both Atlas and EA is very, very encouraging. Now, in terms of the timeline, you know, one thing is that when we introduce this functionality for search and vector search, which was driven by the AI demand, we are charging our customers extra for that feature set that we are providing in EA. So that's number one. Number two, in terms of time to value, Sanjit, I would say the time to value is pretty fast. It's not like months, but it's weeks on the way we have released these features for our customers. It's just that they are self-managing versus when we manage in Atlas. Like what we saw on my Financial Times use case that I shared, that the time to value for them to leverage vector search and embedding was in weeks, not in months and years, to get AI ready for searches and others that happened. So that would be my overall perspective, and then the last thing I would say is that specifically in banking and healthcare, what I'm also seeing is, hey, CJ, we are going to use Atlas, but we are going to potentially fail over to EA because of op resiliency that you guys provide, which is definitely world class and our big advantage. so that's the summary that i see this as a durable growth driver for mongodb corporation it is driven based on customer demand and the customer demand is we want to run anywhere sometimes we'll self-manage sometimes it's mongodb managed thank you our next question

comes from the line of ryan mcwims with wells fargo your line is open okay thanks for taking the question um two-part question here first one for cj are you seeing customers um come back to ahead of their schedule renewal and renew at a higher rate compared to a year ago like are they truing up sooner or are they seeing consumption trends improve more strongly and then for Mike I know your guidance philosophy hasn't changed but given less history with quarterly atlas guides getting some questions on the implied 4Q atlas guide can you just help us with some inputs into that guide and how we should think about it as investors thanks yeah so the first thing as Mike

outline our NRR was very strong and high and that was true across both Atlas and EA so in terms of retention rate and what I'm seeing even the dynamics on hey a customer may want to optimize the workload with our customer success teams and all that the trends are very healthy and improving which is a great testimonial to our eight dots zero release last year that customers feel very good about price performance and how their consumption is growing. Now, there are some customers who have outlined to me, the large ones, that our consumption is growing faster than we thought it would. And CJ, can we have a conversation on if we continue to grow at this rate, should we re-look at the contract? But that's not happening a lot. This is like onesies and twosies, maximum single digits, but not widespread. So that's encouraging, meaning we are not getting the pushback as the consumption increases that we want to renegotiate the contract or the commits and so on. So that's how I would answer that. And in terms of, you know, I will state what I stated before, which was Alex's question, is I feel very good about Atlas business, the durability of that business the innovation we are driving of course we are not going to guide based on Mike's framework on how we are going to guide for Q3 and we were always going to be prudent about Q4 but we raised that's why 27% guide for the year on Atlas Mike yep so thank you CJ so Ryan to that point we've the guidance methodology and philosophy has stayed consistent all year and we want to stay

with that which is when we guide for the the current quarter i will call it or the first quarter out we always want to stay within that hey you should look at that 200 to 300 basis point range we've provided again hopefully consumption comes in better we finish at the at the upper end of that and we will always ryan be prudent on the out quarters it is a consumption business i know it only seems like not that long one more quarter out but we want to be prudent hopefully then we execute well in Q3 and we're able to increase that guide when we get to Q4.

Thank you. Our next question comes from the line of Kirk Maturney with Evercore ISI. Your line is open.

Yeah, thanks very much for taking the question. CJ, the question for you is really about sort of attach rates on Voyage and Vector. And I'm kind of curious when you land a new customer with you know these products are they coming in and experimenting first and then scaling quickly i'm just kind of curious you know obviously landing a new customer with them is great but getting them to scale and getting the ar to be you know more meaningful from a you know total you know a total company perspective is where you want to go so i'm just kind of curious you know how fast those products can go from something that's maybe piloted in the department to being thought of as strategic or company-wide as something like Atlas or EA?

Yeah, of course. So I'll touch on both. You know, Atlas is completely consumption-driven, as you're fully well aware. So when I see some of the large customers, like these are a few Fortune 100 customers, they did all their testing. They're like, okay, we do search in this other siloed system, or we are trying to do vector search from some early-stage startup that provides a vector functionality. This large bank told me that based on their testing, they believe that vectors should be integrated fully in the operational data layer, and MongoDB doing that was seen as a huge advantage. And the time to value there was a few weeks, And then we would have a dedicated search node and so on, which drives the consumption. Even a large media company, which became one of our biggest Vector Search customer, that was driven by an agent trying to do the semantic query and figuring it out, okay, if this is an operational data layer, then it just works. And we are seeing that even in AI native cohort, that Vector being part of the database is received really, really well. And one of the examples I shared last quarter, 11 labs, which continues to scale nicely with MongoDB, they see that as a huge advantage of vector being embedded. And we are doing the same thing now in EA. Now, on embeddings, we are making it easier, like I shared in my remarks, to make sure that we have auto embeddings in Atlas, how it works, how does it work in the cloud. and that time what I am right now you know in all the customer conversation seeing is that still the awareness is low that voyage is actually coming from MongoDB and this customer told me oh we love voyage we are using voyage and I said you know that is a MongoDB product and they're like oh we did not know that okay then we should now look at Atlas because you have Atlas auto embeddings so it varies but search vector search I would say the time to value is not that

long because the moving pieces as in the moving systems are fewer and that's why it works thank you ladies and gentlemen due to the interest of time we will take two more questions our next question would come from the line of Tyler Radke with Citi your line is open yeah thank you CJ you talked about some inference workloads at AI Labs.

Can you just elaborate, were those new this quarter? How do you see sort of the sizing of those workloads compared to some other, you know, kind of large workloads across traditional companies? And then Mike, just on EA, clearly a big outperformance this quarter. I think you had some of the new capabilities released from a GA perspective in July.

So I guess what gives you the confidence that there's not even more upside in the second half you know given that most of the raise in the second half was was Atlas for CA thanks yeah so Tyler you know we were very specific on comments because we want to be extremely transparent with you so with one of the labs they started towards the later half of last calendar year with one of the workloads that was running inference on MongoDB and used us as a memory layer. With that lab, our team, what they saw on the Atlas performance for that specific inference, then they said, wow, Atlas is performing really well across reads and writes compared to Postgres. That's what they were using originally. They started then moving just recently in Q2 a few other workloads for inference on Atlas. So we had one inference workload that started last year in November-December time frame, and then they moved another couple of workloads for inference for some other products that they have created in, I want to say this is August, so around June-July time frame. So we are seeing, they told me like straight up this is the technology team that atlas has taken all the pain away from an uptime perspective performance perspective we don't even think about it and we are now as we create new products we want to run inference on it so that's what i would say that we started with one inference some of the other workloads and then we got some additional just in q2 and tyler this is mike on your questions on ea great questions thank you for that so the last week quarters we've seen ARR growth, as CJ talked about, in double digit.

We did increase the full year guide from mid-single digit to 11% for the full year. You know, just like us, hey, the hard part here is estimating the multi-year deals. We will always be prudent for all of our sake to make sure that we don't lean over until we see those deals land. If the last four quarters are any history, hopefully some of those do come in as multi-year deals or larger than we expected um so certainly we want to make sure that especially for ea we're prudent on the guide and but as cj talked about we feel really good about the progress there we we think it can be and know it can be a durable growth driver hopefully we can do better than we guided thank you our last question comes from the line of Koji Akita with Bank of America.

Your line is open.

Yeah. Hey, guys. Thanks so much for squeezing me in. I wanted to ask about EA and really around Atlas and the total business too. And so, you know, clearly in the prepared remarks and your answers to all these questions, AI is definitely sounds like it's becoming a driver for the total business. And EA sounds really really good too and cj i think you mentioned that ea is not coming at the expense of atlas but how should we be thinking about just atlas and ea and any sort of change ultimately um to how atlas could become or the the revenue mix from atlas to total revenue over the next three to five years thank you hey koji it's mike so so let me take that so we will talk more um obviously as we guide next year, we'll have a financial session at Investor Day.

If you take a look at this year's full-year guidance with Atlas at 27% in EA now at 11%, if Atlas is around 74% now, that certainly should continue to increase as a percent, but we do expect EA to be a more durable growth driver. So to that extent, it should continue to increase, probably not at the rate we thought before because as you talked about the ai push is both in atlas and in ea and we feel very good that it is an and not an or so we expect atlas to continue as a percent of total revenue but certainly ea also contributing much more than we thought when we started the year yeah and goji i would say from a technical perspective um you know this run anywhere op resilience hybrid multi-cloud these are different terms that customers use with us and what we are seeing is like specifically you know there was a question on neo

clouds and others yes what happens is when somebody wants to run in neo cloud because of the capacity issues in a public cloud that they may have they're saying hey can we run EA in that neo cloud which goes to our run anywhere and driving demand we offer database as service in some of the other neo clouds which also goes to EA bucket line and that's why we are very clear that a year doesn't come at the expense of Atlas and just seeing that broad based trend versus just one particular customer or three or four customers is what very encouraging for these two to be durable growth drivers thank you ladies and gentlemen at this time I would like to turn the call back to management for closing remarks thank you very much operator so in summary we delivered a strong second quarter with broad base strength across Atlas EA and AI workloads what's notable is the breadth of the demand frontier labs global banks public sector power scaling startups some expanding what they already run with us. Others coming to us new. We are seeing AI workloads land on MongoDB across all of them. That's why we raised our outlook for the second half and why we are confident we can keep expanding operating margin while we invest. MongoDB is emerging as the real-time intelligent data platform of choice, and I have never felt better about our position with our customers. Thank you very much.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.