Earnings Call Transcript
MongoDB, Inc. (MDB)
Earnings Call Transcript - MDB Q4 2022
Operator, Operator
Good evening. Thank you for attending today's MongoDB Fourth Quarter FY 2022 Earnings Call. My name is Selena, and I will be your moderator. All lines will be muted during the presentation portion of the call, with an opportunity for questions-and-answers at the end. I would now like to pass the conference over to our host, Brian Denyeau, with ICR. Please go ahead.
Brian Denyeau, Host
Thank you, Selena. Good afternoon, and thank you for joining us today to review MongoDB's fourth quarter fiscal 2022 financial results, which we announced in our press issued after the close of the market today. Joining 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, customer behaviors, our financial guidance and our planned investments. These statements are subject to a variety of risks and uncertainties, including those related to the ongoing COVID-19 pandemic and its impacts on our business, results of operations, clients and the macroeconomic environment that cause actual results to differ materially from our expectations. For a 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 quarterly report on Form 10-Q. 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. With that, I'd like to turn the call over to Dev.
Dev Ittycheria, CEO
Thanks, Brian, and thank you to everyone for joining us today. I will start by reviewing our fourth quarter results before giving you a broader company update. Looking quickly at our fourth quarter financial results, we generated revenue of $266 million, a 56% year-over-year increase and above the high end of our guidance. Atlas revenue grew 85% year-over-year, representing 58% of revenue. We had another strong quarter of customer growth, ending the quarter with over 33,000 customers. The fourth quarter marked another major milestone as we crossed $1 billion in annualized revenue run rate. Crossing over the $1 billion mark five years after reaching the annualized $100 million mark is clear evidence of the value MongoDB's application data platform offers customers, large and small, all over the world. Our excellent fourth quarter performance was broad-based. We saw success in nearly every industry, geography and customer type. It was powered once again by the ongoing strength of Atlas. We also saw an uptick in sales for Enterprise Advanced, which speaks to the popularity of MongoDB, regardless of where our technology is deployed. Customer net additions remained robust, especially in our direct channel where Q4 marked a new record. It is expected that hundreds of millions of new applications will be developed over the next few years, as most organizations now recognize that a competitive advantage has to be built rather than blocked with off-the-shelf software. The core reason for our success is that in an era where there is an urgency to build compelling modern applications, MongoDB reduces the friction and cost of working with data, which is the biggest challenge developers face. However, the developer experience of working with data has become increasingly complex. The technologies and mechanisms of working with data have continued to get more fragmented as there has been a proliferation of specialized and niche data technologies, each designed to solve a slice of a growing set of necessary data use cases. The hyperscale cloud providers are reinforcing this by taking a bag-of-tools approach by introducing many proprietary point solutions. This approach pushes complexity onto developers, requiring them to wrangle these data technologies in their applications and develop workarounds to address scalability and performance. The complexity created by this data sprawl impedes the speed of innovation, adds cost and effectively becomes a direct business risk. MongoDB's application data platform takes a radically different approach to liberate the developer from unnecessary data complexity to accelerate innovation. First, our platform removes tremendous friction in how a developer works with data. Instead of requiring developers to work with inflexible data models, MongoDB is built on the document model, which is aligned to the way developers think and code. The document model not only allows developers to build applications faster but to also easily make changes in response to business conditions or customer feedback. Second, our application data platform enables developers to focus on the needs of the business as opposed to working around the constraints of their data infrastructure. MongoDB abstracts away all that complexity through an architecture that is designed to address the vast majority of use cases. Instead of having to deal with numerous point solutions, customers can use our tightly integrated platform that offers a unified and seamless developer experience. Third, our platform is designed to meet the most demanding requirements for performance and scale. Unlike other solutions that struggle to scale beyond a few nodes in a few regions, MongoDB's application data platform enables anyone to provision a globally distributed and persistent data platform anywhere in a matter of minutes with just a few clicks of a button by virtue of being available in over 80 regions across AWS, Azure and GCP. Perhaps the best evidence that our platform is resonating in the marketplace is in the growth of our customer base. We ended the year with over 33,000 customers, of which over 1,300 are six-figure customers and 164 are $1 million plus customers, the latter number growing nearly 70% year-over-year. This level of customer adoption is reflective of our popularity around the world as well as our value as a general-purpose rather than a niche technology. To provide a small sampling of how MongoDB is used across different industries: In Financial Services, MongoDB is used for a trading platform, global payment data store, a digital end-to-end loan origination and servicing solution, general ledger system of record, regulatory risk, treasury and for many other back-office processes. In the retail sector, MongoDB is used for a single view, real-time product catalogs, hyper-personalization, recommendation engines, AI-driven customer engagement, and inventory and supply chain management, including sensor tracking and omni-channel user experiences. In the telecom industry, MongoDB is used to enable smart home services, Internet of Things, media streaming, call routing, endpoint management, real-time fulfillment, AI-based fraud detection and advanced billing and payment services. These are a few examples of how MongoDB is being used. We also do extensive work in healthcare, manufacturing, gaming, oil and gas, and many other industries. We continue to be excited about the future and the massive opportunities in front of us. Businesses across all industries will continue to invest heavily in software as a means to differentiate themselves to seize new opportunities and to respond to new threats. While this has been happening aggressively over the past decade, we are still only in the early stage of this movement. As infrastructure becomes more advanced, with chips getting more powerful, algorithms getting smarter, and networks getting faster, the capability for innovation only increases. Powerful software powered by real-time data will empower experiences and business models we cannot even conceive of today. Future applications will need to be incredibly responsive, increasingly global, and require strong distribution data to the edge or across the world. However, there is still a dearth of development talent to meet this demand. Consequently, organizations will invest in technologies that allow developers to go faster by offering an integrated suite of data capabilities to build smarter applications. In fiscal 2023, we'll continue to build on our momentum and advantages in the marketplace. In product, we'll continue innovating to enhance the value of our platform. Our high win rates and strong broad-based performance give us confidence to continue to rapidly scale our sales organization as we remain fractionally penetrated in the $70 billion-plus market. In marketing, we see a great opportunity to elevate our brand and our value proposition to the voice of our customers who are doing remarkable things with our platform across different industries and geographies. Finally, we'll continue investing in our people, processes and systems to support rapidly scaling our company. Now I'd like to spend a few minutes reviewing some customer wins and interesting use cases from the fourth quarter. Ultrafast grocery delivery pioneer, Getir has revolutionized last-mile grocery delivery with its 10-minute grocery delivery proposition, making thousands of everyday items available in minutes. The company has built its core grocery delivery platform on MongoDB Community and migrated to Atlas. Getir achieved superior performance and reliability and also relied on Atlas' always-on multi-region clusters for 99.995% uptime during its critical US launch. One of the largest North American banks chose MongoDB as its modern database standard to fuel modernization, improve uptime and power a highly available, always-on secure customer experience for the bank's 10 million retail customers. The bank runs over 200 applications on MongoDB across digital, capital markets, consumer lending, risk and payment divisions. Use cases span mainframe offload, operational data store, single view of the customer, time series, caching, real-time analytics, mobile and content management. Società Generale d'Informatica, or Sogei, is an information technology company operated by the Italian Ministry of Economy and Finance. It recently chose MongoDB as the application data platform for a government initiative that mandates citizens present a digital or paper certificate to show whether they have been vaccinated, tested negative, or recovered from COVID-19. Called the Greenpass project, the program grants access to activities like restaurant dining, museums, cinemas, amusement parks and more. Sogei was able to generate 150 million certificates in less than 45 days with MongoDB. Content cloud company Box empowers more than 100,000 businesses globally to revolutionize how they work by securely connecting their people, information and applications. Box's content ingestion solutions, Box Shuttle leverages MongoDB Atlas to accelerate customers' migration to the cloud. Box wanted a FedRAMP-ready multi-cloud managed cloud database to support high throughput and horizontal scale by processing large data sets. One of the largest supermarket chains in the United States selected Atlas and Atlas Search to power its enterprise promotions engine. The engine gives customers immediate access to promotions and coupons while shopping at any one of its thousands of stores across the US. With Atlas Search, the company was able to modernize the data structure so that developers can make more updates more quickly and use multidimensional array lookups to run 5 million queries per day faster. Insulet Corporation is an innovative medical device company dedicated to simplifying life for people with diabetes. Insulet's flagship product, Omnipod, is the first tubeless automated insulin delivery system that is helping people with diabetes lead better lives. Insulet migrated to MongoDB Atlas to reduce costs while simplifying the complexity of mission-critical database management, configuration, upgrades and scale without business interruption while having HIPAA, PII and PCI compliance protection. In summary, we had another excellent quarter. We are seeing continued strong momentum because we're solving one of the most important problems impeding innovation, namely the challenges of working with data. We are more optimistic than ever about our prospects and we'll continue investing and executing to capture the large market opportunity ahead of us. With that, here's Michael.
Michael Gordon, CFO
Thanks, Dev. As mentioned, we delivered another strong performance in the fourth quarter, both financially and operationally. I'll begin with a detailed review of our fourth quarter results and then finish with our outlook for the first quarter and full fiscal year 2023. First, I'll start with our fourth quarter results. Total revenue in the quarter was $266.5 million, up 56% year-over-year. Subscription revenue was $258.2 million, up 58% year-over-year, and professional services revenue was $8.3 million, up 17% year-over-year. It was a very strong quarter across the board, and we exceeded our expectations for both Atlas and Enterprise Advanced. Overall, Atlas' strong performance continues to be the largest contributor to our growth. Atlas grew 85% in the quarter compared to the previous year and represents 58% of total revenue compared to 49% in the fourth quarter of fiscal 2021 and 58% last quarter. On a sequential basis, this quarter's strong Atlas revenue performance was driven in part by the exceptionally high in-quarter expansion of existing customers that we previously called out in Q3. Simply put, strong in-quarter expansion benefits not just the revenue of the completed quarter but also the revenue in the following quarter because the new quarter starts with a higher beginning run rate. In Q4, we experienced strong in-quarter expansion of existing customers that was in line with historical trends versus the exceptionally high growth rates we experienced in Q3. Enterprise Advanced had a particularly strong quarter. An important driver of the strength of EA is the success we are seeing in our large, high-potential accounts. As a reminder, we provide incremental resources to some of our most promising customers in order to accelerate the adoption of MongoDB. A number of these high-potential accounts are primarily using EA, and we had a strong new business quarter with them in Q4. During the fourth quarter, we again grew our customer base by over 2,000 customers sequentially, bringing our total customer count to over 33,000, which is up from over 24,800 in the year-ago period. Of our total customer count, over 4,400 are direct sales customers, which compares to over 3,000 in the year-ago period. As a reminder, our direct customer count growth is driven by customers who are net new to our platform as well as self-serve customers with whom we've now established a direct sales relationship. The growth in our total customer count is being driven in large part by Atlas, which had over 31,500 customers at the end of the quarter, compared to over 23,300 in the year-ago period. It's important to keep in mind that the growth in our Atlas customer count reflects new customers to MongoDB, in addition to existing EA customers adding incremental Atlas workloads. We had another quarter with our net ARR expansion rate above 120%. We ended the quarter with 1,307 customers with at least $100,000 in ARR and annualized MRR, which is up from 975 in the year-ago period. As Dev mentioned, we ended the year with 164 customers with at least $1 million in ARR and annualized MRR, which is up from 98 in the year-ago period. The continued strong growth in our $100,000 and $1 million-plus annualized spend is an indication of the success of our land-and-expand strategy and the fact that we are increasingly becoming a strategic platform for our customers. Moving down the income statement, I'll be discussing our results on a non-GAAP basis unless otherwise noted. Gross profit in the fourth quarter was $196.6 million, representing a gross margin of 74%, which is up from last quarter and up from 72% in the year-ago period. Our loss from operations was $1.3 million or a negative 1% operating margin for the fourth quarter compared to a negative 9% margin in the year-ago period. Our outperformance versus our operating loss guidance was primarily driven by our revenue outperformance. Net loss in the fourth quarter was $6.3 million, or $0.09 per share based on 67 million weighted average shares outstanding. This compares to a loss of $19.9 million or $0.33 per share on 60.5 million weighted average shares outstanding in the year-ago period. Turning to the balance sheet and cash flow. We ended the fourth quarter with $1.8 billion in cash, cash equivalents, short-term investments, and restricted cash. This quarter, we saw strong sequential growth in deferred revenue, driven by the strength of Enterprise Advanced, given EA contracts are predominantly billed annually in advance. As we've discussed in the past, Q4 is the seasonally strongest quarter for our EA installed base. As a reminder, in Q3, we noted that our deferred revenue benefited from several very large Atlas early renewals. We did not see a similar impact in Q4 but would like to reiterate that some of those large deals were new early in Q3, originally scheduled to renew in Q1. Operating cash flow in the quarter was positive $22.3 million. After taking into consideration approximately $5.5 million in capital expenditures and principal repayments of finance lease liabilities, free cash flow was positive $16.8 million in the quarter. This compares to negative free cash flow of $20.7 million in the fourth quarter of fiscal 2021. For the full fiscal year 2022, we had positive operating cash flow of $7 million and negative free cash flow of $6.7 million. While we have had positive operating cash flow quarters before, this is the first full year in our company's history that we generated cash from operations. I'd now like to turn to our outlook for the first quarter and full fiscal year 2023. Please note that the guidance provided for fiscal year 2023 includes certain refinements to our non-GAAP financial measures for expenses related to stock-based compensation to more accurately reflect the underlying business results each quarter. For comparative purposes, we've provided a historical reconciliation of these updated measures in our earnings release. For the first quarter, we expect revenue to be in the range of $263 million to $267 million. We expect non-GAAP loss from operations to be $5 million to $2 million and non-GAAP net loss per share to be in the range of $0.12 to $0.08 based on 67.7 million weighted average shares outstanding. For the full fiscal year 2023, we expect revenue to be in the range of $1.151 billion to $1.181 billion. For the full fiscal year 2023, we expect non-GAAP loss from operations to be $22 million to $7 million and non-GAAP net loss per share to be in the range of $0.51 to $0.29 based on 68.7 million weighted average shares outstanding. Our strong guidance for fiscal 2023 reflects our underlying confidence in our market opportunity and our ability to deliver strong growth at significant scale. Let me provide some incremental context around our guidance. In Q1, at the midpoint of our guidance, we expect to see a slight sequential revenue decline, as Q1 is typically a lower new business quarter for Enterprise Advanced than Q4. As a reminder, EA revenue recognition under ASC 606 is disproportionately affected by the upfront term license component. Additionally, as we've discussed in the past, Atlas' sequential growth in Q1 is lower compared to other quarters, driven by seasonal factors impacting consumption, most notably the fact that there are simply fewer calendar days in Q1 than in other quarters. Let me also discuss how we are factoring the impact of the COVID-19 pandemic into our fiscal year 2023 guidance. First, unlike in fiscal 2021 and fiscal 2022, we do not assume any impact of the pandemic on our revenue performance in fiscal 2023. Despite the ongoing uncertainty related to the pandemic, our performance over the last two years gives us confidence in our ability to execute in this environment. In other words, our guidance reflects that we have more confidence operating in the current environment than in either of the last two years. Second, on the expense side. Our guidance anticipates the normalization of travel event and office expenses as COVID-19 restrictions continue to relax. We had previously expected normalization in the second half of fiscal 2022, but the spread of the Delta and Omicron variants delayed the return-to-office plans and reduced employee travel. As a result, our travel, event and office expenses in fiscal 2022 were only modestly higher than in fiscal 2021 and well below our initial expectation. However, we now expect normalization starting in Q2, and we anticipate an incremental $45 million to $55 million in travel, events and office expenses in fiscal 2023. To summarize, MongoDB delivered excellent fourth quarter results, we continue acquiring new customers at a strong pace, and our revenue growth is a testament to the breadth of platform adoption and our increasing strategic importance to our customers. We remain convinced that we're in the early innings of pursuing our large market opportunity. With that, we'd like to open it up to questions. Operator?
Operator, Operator
Thank you. The first question comes from Kash Rangan with Goldman Sachs. Please go ahead.
Kash Rangan, Analyst
Congrats on the quarter. I just want to clarify the seasonality comment, Michael, that you made with respect to Atlas. So we're merely talking about it sequentially only because Atlas is a much larger business today than it was exactly a year ago going into Q1, or are we actually calling out any structural changes in consumption that underlie that forecast? I also have a follow-up question. Thank you so much.
Michael Gordon, CFO
Yeah. So what we're talking about – and we called this out last year, is that Q1 for Atlas is seasonally lower because of the fewer calendar days in the quarter. It's a consumption-based model. And obviously, you need days in order to consume, and Q1 has fewer of those days. But the overall cohort behaviors, as evidenced by the Q4 numbers, are very strong, and we feel good about the underlying patterns.
Kash Rangan, Analyst
Got it. So consumption as a structural change driver of your Atlas business is still less positive as you felt –
Michael Gordon, CFO
No change.
Kash Rangan, Analyst
Got it. Yeah. And one for Dev, when you look at the cohort of Atlas customers, initial deployment steadily small, but what are some of the bigger deployments on Atlas looking like that rival the more traditional on-prem deployments that give you the conviction that some of the biggest database appointments on the planet could end up being completely cloud-native in the next two to three years? Thank you so much.
Dev Ittycheria, CEO
Thank you, Kash. I want to highlight our seven-figure customers, the majority of whom are currently using Atlas. We have large clients as well as innovative startups running mission-critical workloads on Atlas, which forms the core of their businesses. This demonstrates that Atlas is suitable for more than just small workloads. Over the years, enterprises have become increasingly comfortable migrating their critical workloads to the cloud. One key advantage of choosing MongoDB is the flexibility to start on-premises and transition to the cloud, or even switch between cloud providers. We are observing strong interest in this approach, and we have the customer success stories that provide reassurance for moving mission-critical workloads to Atlas.
Kash Rangan, Analyst
Tremendous. Thank you so much.
Operator, Operator
Thank you, Kash. The next question comes from Sanjit Singh with Morgan Stanley. Please proceed.
Sanjit Singh, Analyst
Well. Thank you so much for the questions, and my congrats on another exceptional year. Dev, you mentioned that you went from $100 million to $1 billion in annualized revenue. Can you talk about the challenges typically faced when crossing such a major milestone?
Dev Ittycheria, CEO
Sure. We have consistently aimed to be proactive in adapting our go-to-market approach. In the beginning, we relied on a direct sales model targeting everyone. Then we added an inside sales team, introduced self-service options, and established dedicated teams for high-end accounts. We also focused on streamlining the initial sales process to onboard customers more efficiently. Our goal is to refine our strategy continually in line with the market's size, ensuring we engage with customers in ways that suit them rather than forcing a single method. Moving forward, we will emphasize verticalization. As mentioned, we're experiencing significant momentum in key industry verticals and have built strong confidence in these areas. Our team has been dedicated to solutions marketing in specific industries for several years, and you will see us align our sales teams accordingly over time. Additionally, we are targeting what we term digital natives: fast-growing mid-market companies that develop their own software rather than just purchasing it. They will find significant value in our offerings. Expect us to keep pushing boundaries in innovation. I believe we have the best sales organization in the enterprise software sector.
Sanjit Singh, Analyst
Well, plenty of opportunity ahead. So it sounds like, a lot to look forward to. Michael, on the guidance, you did a really great job of sort of contextualizing how you're approaching guidance this year versus last year, particularly on the element of COVID. But I guess I just have to ask, just given the geopolitical environment that we're in, particularly with exposure, potential exposure to Russia and Eastern Europe and then we also have this element of higher oil prices and what that can do for the macro environment more broadly, to what extent did you incorporate those factors into this year's guidance, understanding that COVID looks hopefully, knock on wood, largely behind us?
Michael Gordon, CFO
Yeah. So thank you. We try and be thoughtful and transparent in the guidance. That said, we don't have a crystal ball for what's going to happen geopolitically or macroeconomically. I think we feel confident in our ability to execute despite the uncertainty. Specifically, on your point about Russia, I would just call out that we have very limited revenue in Russia for fiscal 2022, approximately a low single-digit millions revenue contributor. We're obviously complying with all the relevant laws and regulations as they emerge. But if there are future developments on the horizon that we can't contemplate, we'll certainly update you, but we feel good about the outlook.
Sanjit Singh, Analyst
Super helpful context. Thank you, Michael, and congrats.
Operator, Operator
Thank you, Sanjit. The next question comes from Raimo Lenschow with Barclays. Please proceed.
Raimo Lenschow, Analyst
Thank you. Dev, could you share some insights on the relationship with the major hyperscalers? It seems like the deals influenced by them have significantly increased, which reflects a unique dynamic of competition and collaboration. How are they engaging with you, and how is that relationship evolving over time? I have a follow-up question as well.
Dev Ittycheria, CEO
Sure. The basis of our relationship with the cloud providers is really, first and foremost, based on the strong product markets of MongoDB. MongoDB is incredibly popular, and the popularity spans all major cloud providers. I think what we have shown first with Google as we started working with them very closely, given their ambitions to grow their business quickly is that we could partner effectively and help them acquire a lot of new customers and new workloads onto their platform. This did not go unnoticed by some of the other cloud providers, and we started going deeper with AWS. As people may remember, in early 2018, AWS introduced a competitor, a clone of MongoDB and there were some worries about how that relationship would evolve. I’m pleased to say that I feel like the relationship has never been stronger. We have deep relationships in the field. We partner more on deals. AWS has recognized that MongoDB drives a lot of demand to their platform. So the relationship there is very healthy. We're also doing a lot of business with Azure. Our win rates are still very high against them when we go head to head against them. But clearly, they're good partners, and we're investing a lot in those relationships.
Raimo Lenschow, Analyst
Yeah. Okay. And then, Michael, on the guidance, like it's really impressive to see the margin guidance, if I consider the $45 million to $55 million extra spending that we see this year. Can you just talk a little bit about the other drivers that helped you achieve that?
Michael Gordon, CFO
The what helped us?
Raimo Lenschow, Analyst
It seems that the internal efficiencies and the scale of the businesses enable that, as the outlook is actually better than what I had anticipated despite the spending.
Michael Gordon, CFO
Yes. We've been continuing to show meaningful operating leverage. We feel good about that. We're seeing scaling throughout the business. That said, we certainly are investing to pursue the market opportunity. That means both investments in sales and marketing and in R&D and obviously, sort of everything else to scale the business. But no, we've been really pleased both at the gross margin line with the success, given where Atlas is as a percentage of this and executing against the plan there, as well as on the bottom line. I think that we'll continue to execute on that, but we feel really good about where we are.
Raimo Lenschow, Analyst
Perfect. Congrats. Well done.
Michael Gordon, CFO
Thank you.
Dev Ittycheria, CEO
Thank you.
Operator, Operator
Thank you, Raimo. The next question comes from Phil Winslow with Credit Suisse. Please proceed.
Phil Winslow, Analyst
Hi, guys. Thanks for taking my question. If we look at just an analysis of sales efficiency, it seems that the productivity continues to rise, but you also continue to add capacity. Would you give us a sense of just what you're seeing from the inside in terms of productivity and how you're thinking about this coming year in terms of just capacity adds but also productivity? Thanks.
Dev Ittycheria, CEO
Yes. Thanks, Phil. We feel really good about the performance and the productivity of the sales organization. Its performance was broad-based. One of the traps in software sales is that you can get some big deals can mask weak performance in the rest of the sales cohort. We're not seeing that. We're seeing broad-based performance across our entire sales teams across all the different theaters. That's giving us a lot of confidence. We're adding a lot of people quickly. MongoDB is viewed as a very attractive place to come to. We believe that we really help people understand and master the art of sales. Because we're growing so fast, we give people tremendous opportunities for growth. So people can really grow their careers here at MongoDB, and we push the envelope on innovation. So we're doing things that not many other companies are doing. All things put together, we feel really good about the sales organization and as a result, it's the reason why we're investing aggressively to expand the capacity of that organization.
Phil Winslow, Analyst
Great. And thanks, guys. Keep doing the great work.
Dev Ittycheria, CEO
Thanks, Phil.
Operator, Operator
Thank you, Phil. The next question comes from DJ Hynes with Canaccord. Please proceed.
DJ Hynes, Analyst
Hi, everyone. It's great to see these numbers. Dev, we've noticed a change in revenue per customer over the last few quarters. I'm curious if this is primarily due to your larger customers increasing their spend. We've seen record adds over $100,000, or is it mostly the smaller Atlas customers you've brought on board over the past couple of years that are starting to spend more? I suspect it's a combination of both, but I would appreciate any insights you can provide.
Dev Ittycheria, CEO
Yes. In general, the expansion rates of the cohorts are very strong, but I think a lot of it is also due to mix. When we changed how we want to engage with customers, we saw a big influx of self-serve customers moving to a direct relationship. So obviously, that change in mix affected the revenue per customer number. As things have kind of gone to a more steady-state function, you're seeing those numbers stabilize. But we feel that we have a really huge embedded growth opportunity in our customer base, and that's where we're spending a lot of time as well as acquiring new customers.
DJ Hynes, Analyst
Yes. Okay. And then, Michael, my follow-up for you. I mean, obviously, the EA strength in the quarter drove the strong cash flow that we saw. As you look out to fiscal 2023, do you think Mongo can be free cash flow positive?
Michael Gordon, CFO
Thank you for that, DJ. I want to mention a couple of points. Overall, Q4 was a very strong quarter in terms of cash flow. This strength is less about the EA sales and more about the robust performance in Q3, which included some pull-forward effects we noted earlier. Usually, collections in the quarter when business is booked are slightly lower. The specifics of cash flow can depend on linearity. We haven't provided concrete guidance regarding operating cash flow positivity, but I think it's significant that we exceeded $20 million in Q4 and achieved $7 million in positive operating cash flow for the entire year. While it's not a goal we specifically aimed for, it does reflect positively on the underlying trends in the business.
DJ Hynes, Analyst
Yes. I agree. Okay. Thank you.
Operator, Operator
Thank you, DJ. The next question comes from Karl Keirstead with UBS.
Karl Keirstead, Analyst
Thanks a lot. Maybe two for Mike. Mike, back to the Atlas strong sequential usage growth. I'm sure you're well aware that some of your peers, Snowflake, Confluent, and Datadog, that also have AWS-centric usage models called out a bit of a usage lull or unusual consumption seasonality in December and January. Did you see that? And if you perhaps it was offset by other drivers, or did you not? And if you didn't, what makes your model different from those peers? Thank you.
Michael Gordon, CFO
Yes. Thanks, Karl. So no, we saw a very strong behavior in Q4. The cohort expansion was in line with historical trends. So nothing abnormal or atypical there. It was a strong quarter in Q4, as we mentioned, in part because the beginning run rate was higher given the exceptionally high expansion in Q3, but Q4 itself behaved pretty normally. So I think it doesn't fit the patterns that you're describing. Hard for me to speculate exactly all the reasons why as it relates to those other businesses, other than the fact that from the database standpoint, it sort of has an always-on component to it, for lack of a better phrase, as opposed to something that is a specific episodic or analytics query or batch-query driven basis.
Karl Keirstead, Analyst
Yes. Okay. That's perfectly clear. Thanks for that, Mike. And then my follow-up, I just want to be crystal clear on what you're conveying when you say that you're not assuming a pandemic impact in your fiscal '23 guidance. Mike, are you really saying that you're guiding less conservatively going forward, and therefore, implying that perhaps we should not be thinking that the beat cadence will maintain at the level you've put up in the last two to three quarters?
Michael Gordon, CFO
Yes. The way I would think about it, Karl, is that our guidance philosophy hasn't changed, but I think our perception of the uncertainty or risk of the environment has changed. Given how well we've operated over the course of the last two years of the pandemic, it would be hard for us to have confidence, and despite the uncertainty that still exists, I think we just have a lot of confidence that we can execute in that environment. That hasn't been the case the last two Marches when we've provided that guidance. So I wouldn't describe it as a change in philosophy or a change in conservatism, but I think it's just sort of reacting to the facts as we have them and less risk and less uncertainty than we've had previously.
Karl Keirstead, Analyst
Got it. Okay. That’s very clear and congrats to the whole team on the great results.
Michael Gordon, CFO
Thanks.
Operator, Operator
Thank you, Karl. The next question comes from Brent Bracelin with Piper Sandler. Please proceed.
Brent Bracelin, Analyst
Thanks for taking a question here. Michael, it certainly is impressive to hear all this talk about positive free cash flow and positive cash from operations. I guess, as you think about the guide for next year, clearly much better than what we had modeled from an operating perspective. Where do you expect to see the most operating efficiencies coming from in the coming year? And then, Dev, if you could talk a little bit about Atlas? The usage trends per customer are showing the highest growth rate that we've seen in three years. I'm just wondering here if that's seasonally strong or do you think this is just tied to a broader adoption, broader number of customers standardizing the platform? Thanks.
Michael Gordon, CFO
Yes. Thanks, Brent. On the first part of the question, I don't think that there's any material skew sort of one way or the other. If you look across the board, I think we'll continue to show progress overall, and that will come from sales and marketing, R&D and then overall, the rest of the organization in G&A. So we're not intentionally trying to skew that in any particular way. As Dev mentioned, we feel like we are still quite thin on the footprint coverage. We're trying to expand sales and marketing as rapidly as we responsibly can just to make sure that we're in as many conversations and customer dialogues as possible. Then, given the breadth of the product roadmap and the returns that we've been getting on those investments, we think it’s prudent to invest in those as well. So there's not one particular lever that we're looking to sort of disproportionately increase. But you'll see scaling in aggregate, as you can see in the results and in the guide. And then, Dev, do you want to talk about the other?
Dev Ittycheria, CEO
Yes. So Brent, on your question on usage trends, whether it's seasonal or there's some other things going on. I would say it’s definitely the latter. We are definitely seeing broader adoption of Atlas by customers. We're definitely adding more customers and more workloads to Atlas. I'd also say the mission-criticality of those workloads is increasing from, say, four or five years ago to today where people are now running major elements of their infrastructure, major elements of their business on our platform. These are not applications that you turn off or slow down. That’s why you’re seeing the usage strength as we've observed.
Michael Gordon, CFO
Yes, I would just add, Brent, I'm not exactly sure which math you're doing, but if you're looking at average Atlas revenue for average Atlas customer, part of that will very specifically come from the fact that we're seeing increased adoption of Atlas among direct sales customers, which will be at a higher spending level than self-serve customers. That's really more of an output rather than an input. Again, we run the business on a channel basis, and that's a little bit of what's happening below the surface of the math that you might be doing.
Brent Bracelin, Analyst
Helpful color. Great to see the momentum. Thanks.
Operator, Operator
Thank you, Brent. The next question comes from Ittai Kidron with Oppenheimer. Please proceed.
Ittai Kidron, Analyst
Thanks. Great quarter. Dev, I want to discuss the macro environment. I know the events in Russia and Ukraine have just occurred, but I am curious if you’ve had any discussions with customers in Europe, where there is increasing concern about a potential recession on the continent or among several companies. Has there been any change in the tone of discussions or in investment planning? Are deal closings becoming more prolonged? Any insights that could help us understand the current state of mind in that region, apart from Ukraine and Russia?
Dev Ittycheria, CEO
Yes. Outside of Ukraine and Russia, we see no change. We feel really good about Q1 as for the guidance, and we look at this on a daily and weekly basis, and we're seeing no change.
Operator, Operator
Thank you, Ittai. The next question comes from Rishi Jaluria with RBC. Please proceed.
Rishi Jaluria, Analyst
Oh, wonderful. Hi, Dev. Hi, Michael. Thanks so much for taking my question. I have two questions. First, I wanted to start with the serverless offering, which is currently in preview mode. Can you discuss how customer and early adopter feedback has been? What is the expected long-term impact once it gains real adoption? Also, could you provide some examples of use cases for serverless compared to the core Atlas? I have a follow-up after that.
Dev Ittycheria, CEO
Sure. The whole notion of serverless is to essentially abstract the need for capacity planning so that people can connect to our database, start using it and not have to worry about it anymore. The database just scales up and down based on the needs of the application. The early feedback has been incredibly positive. We're seeing a lot of interest. We have a lot of people using it today. We're getting great customer feedback. You'll see us continue to invest aggressively in serverless. We'll have our own dedicated offerings as well as serverless. Over time, we think serverless will become a more meaningful part of the business, but we're super excited by the feedback so far.
Rishi Jaluria, Analyst
All right. Great. And then I wanted to go into the NRR. Showing 120%-plus NRR at $1 billion and ARR is really impressive. Can you talk a little bit about what are some of the drivers of being able to maintain this level of NRR at this scale? Is it a function of expanding workloads, new use cases, upmarket momentum, lower churn? Maybe walk us through a few of the drivers for keeping it up and how to think of that metric going forward? Thanks.
Dev Ittycheria, CEO
Yes. So we believe that we've built a very durable business. A big reason for that is we've focused on acquiring workloads and acquiring customers and acquiring workloads in those customer accounts. Unlike other businesses where you can grow very quickly because you're managing a lot of data, our unit of measure in terms of account penetration is the number of apps or number of workloads. They take time. No one's going to move 100 workloads overnight, but you have a great opportunity because we're fractionally penetrated in even our existing accounts even though they may be large customers. They're spending a lot of money with us, but there are still thousands of apps that we can win, whether they're new apps or existing apps that they want to modernize. We also put a lot of focus on making sure our customers are successful, really ensuring that the customers get value very quickly from our platform, which obviously affects retention rates and churn. The degree to which we do that well affects our net expansion rates. I think those two factors, along with adding new customers in general, really help keep that high net retention rate.
Rishi Jaluria, Analyst
All right. Great. Thank you.
Operator, Operator
Thank you, Rishi. The next question comes from Tyler Radke with Citi. Please proceed.
Tyler Radke, Analyst
Hey, thanks for taking the question. Obviously, the Atlas revenue was really impressive this quarter. But I think the Enterprise Advanced revenue really stood out to me this quarter. It grew seven points faster than you saw last quarter where there was kind of a pull-forward dynamic. I was wondering if you could just kind of unpack the drivers of the EA performance this quarter. Was it primarily driven by an uptick in new customers? And given that EA customers tend to be larger companies, are you seeing any change in terms of the mix of legacy or traditional database migrations?
Dev Ittycheria, CEO
As we mentioned in the prepared remarks, we had a very strong quarter for Enterprise Advanced. Traditionally, Q4 has been our strongest quarter for EA renewals, and we saw significant demand for additional EA workloads. Most of the sales came from existing EA customers who are expanding their workloads. We also identified specific accounts that we're dedicating more resources to, many of which are EA accounts, and we achieved considerable success in deepening our engagement with these customers. Since Q4 has a large renewal base, this is typically a favorable time for such developments. While EA can show volatility from quarter to quarter under ASC 606, it remains robust. Our aim is to provide customers with options and support them in their cloud journey.
Tyler Radke, Analyst
Great. And maybe a question for Dev, you've released a lot of interesting new capabilities around support for time series and streaming. I'm just curious how you're seeing the uptick in operational intelligence or real-time analytics within your customer base? And how impactful is that going to be in terms of growing existing accounts going forward? Thanks.
Dev Ittycheria, CEO
Oh! We believe that the trend of applications are getting smarter, embedding more data and more real-time data and analytics into their applications is a trend that's going to increase dramatically, which is why we believe we're well set up to take advantage of that trend. One, by definition, we're an operational platform, but that's where you get the live data. Two, we have a distributed platform, so you can segregate nodes, one for writing transactions and the other for reading data. This enables you to do that without impacting user performance. Three, we came out with capabilities where if you want to do a sophisticated query, obviously, operational data is constantly changing. You can take a snapshot of the data at some point in time and run a query and get that result and embed that result back into the application. We're embedding more and more capabilities into our platform to enable developers to build smarter applications. As I mentioned, with the advent of faster networks, faster chips, and better algorithms, the sophistication of use cases are only going to increase. We feel like we're really well positioned to take advantage of that. You'll see a lot of our investments go in that direction.
Tyler Radke, Analyst
Thank you.
Operator, Operator
Thank you, Tyler. The next question comes from Fred Havemeyer with Macquarie. Please proceed.
Fred Havemeyer, Analyst
Hey, thank you. In your prepared remarks, Dev, you mentioned it was scaling from just MongoDB Community Edition onto MongoDB Atlas. And that got me thinking, Dev, would either you or Michael be able to provide any context on some of the larger Atlas customers generally compared to MongoDB customers? How many of them began as just Community Edition start-ups and scaled into some of your larger and more material accounts?
Dev Ittycheria, CEO
Well, in the early days, all of them came from Community. What they were attracted by was the notion of really outsourcing all the undifferentiated work of provisioning, configuring and managing a distributed database and essentially focusing on building great apps that transform their business. What we've done over the last few years is really enable a free tier of users on Atlas. They essentially can try, test, and play with Atlas. We’re starting to see success with that motion where people start on our free tier because they don't want to engage and just want to work on the cloud. Then very quickly, they start using a level of usage and interest that gets them to a paid offering. That’s another trend we’re seeing emerging. It all starts with the product-market fit that MongoDB offers, the document model, the way we just make it so easy to build applications quickly. Atlas allows them to focus on what's important and leave all the plumbing to us.
Michael Gordon, CFO
Yeah. I would just add that Atlas self-serve, whether it's free tiered or paid, is sort of the most modern and contemporary version of downloading Community Server and managing it yourself. As we pointed out before, more than 50% of Atlas ARR was self-serve sourced, right? So it's just sort of reinforcing that same motion that Dev was describing.
Fred Havemeyer, Analyst
Okay. Thank you for the context there. And I think I'm one of those free-tier users. Eventually, I'll scale up. Second question I wanted to ask about is – on thank you. I'll head over to your office and knock on the door and ask for some help, just like back in the old days. I'd also like to ask about cash in the balance sheet and with generating some free cash flow this year, material free cash flow this year. I wanted to ask how, Michael, are you thinking about cash deployment within MongoDB? Generally, are you thinking about – just really, how are you thinking about cash in your balance sheet? And how would you characterize MongoDB's M&A appetite if you have one?
Michael Gordon, CFO
Yeah. So in general, I'd say we've got an appropriate and very healthy cash balance with $1.8 billion. It gives us the confidence to think long-term. Obviously, we're continuing to make operating leverage progress. But as we see needs or opportunities or high-return investments, we're able to make those. I think specifically, from an M&A perspective, we'll be opportunistic. We have a lot of organic running room to go, but we'll certainly be opportunistic as needed. Dev, I don't know if there's anything you want to add to that?
Dev Ittycheria, CEO
Yeah. I would say that we obviously stay very closely grounded in terms of what's happening in the data infrastructure space. There's a lot of activity in the start-up ecosystem. But as Michael mentioned, we feel like we have a lot of opportunities with our core offerings. We have done some acquisitions in the past. They tend to be smaller, more surgical acquisitions. If we do end up doing anything, it's probably more in that category than anything meaningful.
Fred Havemeyer, Analyst
Thanks for the context. And congratulations on a strong quarter.
Dev Ittycheria, CEO
Thanks, Fred.
Operator, Operator
Thank you, Fred. The next question comes from Steve Koenig with SMBC. Please proceed.
Steve Koenig, Analyst
Hi, gentlemen. Just one question today from me. Last week, it was pretty surprising to see from Snowflake how performance improvements in their platform negatively impacted effective pricing and the revenue outlook. I don't think I've ever seen that either working in or covering database companies. I'm wondering, without commenting on them, tell me about maybe your model and why won't performance improvements negatively impact you guys? Is there a difference between operational and analytic data stores that's relevant here? Thank you very much.
Dev Ittycheria, CEO
Yes. Thanks, Steve, for your question. I would say the big difference is our unit of work is the application of the workload. Other companies, their unit of work is the amount of data they have to ingest. When people think about building new applications, there's obviously some sort of business case, essentially some funding to solve some important business problem or seek some new business opportunity. They think about that investment very differently than the amount of data that we're constantly collecting. So it's not surprising to me that some customers, when they see their bills escalating, get frustrated at the rate and pace. Customers are building new applications on our platform. For them, that’s a new decision on a new use case, and for them, it makes sense to invest the appropriate resources and technologies to deliver on that use case. That's the big difference you’re seeing. We’ve made performance improvements in our platform, but it doesn’t show up in the way I think it does for other companies. We feel very comfortable about the value proposition we’re offering to our customers.
Steve Koenig, Analyst
Awesome. Great. Thanks, Dev.
Michael Gordon, CFO
Thank you.
Dev Ittycheria, CEO
Thank you.
Operator, Operator
Thank you. That concludes the Q&A session. I'll pass the conference back to MongoDB's CEO, Dev Ittycheria, for additional remarks.
Dev Ittycheria, CEO
Thanks, Selena. I think it's fair to say that we had an excellent quarter. We're seeing strong momentum. We believe that we're solving fundamental problems and addressing fundamental concerns that developers have about the value of our platform, offering one unified integrated way to solve and address many use cases. That is reflected in our continued strong customer growth. So with that, I want to thank everyone for joining us today, and we'll talk to you soon. Take care. Bye-bye.
Operator, Operator
That concludes the MongoDB Fourth Quarter FY 2022 Earnings Call. Thank you for your participation. You may now disconnect your lines.