Earnings Call Transcript - MDB Q4 2021

Operator, Operator

Good day, and welcome to the MongoDB Fourth Quarter Fiscal Year 2021 Earnings Call. Please note that this event is being recorded. I would now like to turn the conference over to Brian Denyeau from ICR. Please go ahead, sir.

Brian Denyeau, Investor Relations

Great. Thank you, Carl. Good afternoon, and thank you for joining us today to review MongoDB’s fourth quarter and full year fiscal 2021 financial results, which we announced in our press release issued after the close of the market today. Joining me on the call today are Dev Ittycheria, President and CEO of MongoDB; and Michael Gordon, MongoDB’s COO and CFO. During this call, we will make forward-looking statements including statements related to our market and future growth opportunities, the benefits of our product platform, our competitive landscape, our financial guidance, our planned investments and anticipated impact of the COVID-19 pandemic on our business and results of operations as well as on our clients and the macroeconomic environment. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from our expectations. For discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks described in our SEC filings, including our most recent 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 in the Investor Relations portion of our website for a reconciliation of these measures to the most directly comparable GAAP financial measures. With that, I’d like to turn the call over to Dev.

Dev Ittycheria, CEO

Thank you, Brian, and thank you to everyone for joining us today. I will start by reviewing our fourth quarter results before giving you a company update. Looking quickly at our fourth quarter financial results, we generated revenue of $171 million, a 38% year-over-year increase and above the high end of our guidance. We grew subscription revenue 39% year-over-year, Atlas revenue grew 66% year-over-year and now represents 49% of revenue, and we had another strong quarter of customer growth, ending the quarter with over 24,800 customers. I believe we will look back at 2020 as the year that emphasized the need for businesses to reinvent themselves using software and data. As the world becomes increasingly digital-first, there’s no off-the-shelf software that organizations can purchase to differentiate themselves against their competition. You cannot buy a competitive advantage; you have to build it yourself. To build your differentiated future using software and data, you have to maximize the productivity of your developers. Managing data is a developer’s most challenging problem and the biggest drain on their productivity. Legacy platforms are not designed for how developers think and code, nor are they designed for performance and scale. This problem worsens as the data intensity and performance requirements of modern applications increase. Consequently, developers spend an enormous amount of time working around the limitations of existing solutions rather than building better applications and user experiences that drive a competitive advantage. Moving to the cloud promised reduced complexity and improved productivity, but many early cloud adopters learned the hard way that moving to the cloud often exacerbates the poor state of their data infrastructure. First, companies decided to lift and shift their existing on-prem relational workloads to the cloud, replicating their on-premise problems. As a senior IT executive at one of the world’s largest asset management firms recently told us, he doesn’t know of a single one of his peers who didn’t come to regret the lift and shift strategy. Second, given the known limitations of relational databases, cloud providers promoted various single-purpose databases to address more diverse requirements, which created a larger number of data stores for customers to learn, manage, and integrate. This dramatically increased the complexity of their data architecture. Third, cloud providers encourage customers to go all-in with their proprietary offerings across the IT stack. The overwhelming number of proprietary point solutions not only slows developers down, but also deepens vendor lock-in. Given the failings of existing approaches, developers and enterprises are clamoring for a modern application data platform that accelerates innovation. A modern platform must support a broad range of use cases, meet stringent requirements for resiliency, security, and scalability and provide enterprises the flexibility to run applications wherever they choose. Our FY2021 results indicate that MongoDB has clearly established itself as the world’s preeminent application data platform for building the applications of today and tomorrow. We are becoming a more strategic partner to customers as they increase their sense of urgency to modernize their IT stacks. In many of our largest accounts, we’ve become an enterprise standard, which indicates strategic importance and positions us to win more workloads. The journey from the first win to becoming a standard can take years as we build trust with various constituents within the enterprise, including the C-suite. While each customer story has unique elements, they tend to follow a similar path toward declaring MongoDB as a standard. We usually land an account by identifying a specific pain point that cannot be addressed by existing technologies. For example, in a Fortune 50 financial institution that is now a seven-figure customer, our early use cases leveraged the strength of the document model to efficiently capture a complex loan application with hundreds of entries. In the case of a global gaming leader, developers first started using MongoDB for microservices that leveraged the rapid scalability of our technology. After establishing a presence with the customer, we leveraged the success of the initial workloads to expand across divisions and geographic boundaries within that account. A top 10 U.S. bank experienced a significant data center outage a couple of years ago, and MongoDB outperformed all other databases in terms of performance and availability. At the time, our teams capitalized on the performance of our platform to serve our customers' needs more broadly, organizing teachings and hackathons with other app development teams across the company. Two years later, that bank’s customer website experience runs on MongoDB, and with other use cases, the bank is now an eight-figure annual customer. Depending on the account's size, the expansion phase can last many years. This is where we currently are with many of our customers today and it is the key driver of consistently strong net expansion rates. Once we become widely deployed, we leverage existing internal proof points to pursue becoming a standard for future app development. We emphasize the versatility of the document model to address various use cases, significantly simplifying data architecture. We illustrate the performance, security, and scalability of our platform ensuring that MongoDB can be trusted for the most demanding requirements. Furthermore, apps built on MongoDB can run on-premise, on any cloud, or across different cloud providers, offering real platform independence—benefits that no other alternative can provide. A CTO from a Fortune 100 company was astonished when we demonstrated how easily a customer can deploy a workload across two different cloud providers. He remarked that he planned to have a 50-person team work on this, and now one person can do it in a few hours. Platform independence is particularly important to the C-suite. This strategy is working. We finished FY2021 with nearly 1,000 customers spending over $100,000 a year on our platform and close to 100 customers spending an excess of $1 million a year with us—an almost 60% increase from a year ago. As excited as we are about these stats, we are just in the beginning stages of becoming an enterprise standard. Even within our largest customers, MongoDB typically represents a small fraction of their total database spend, affording us the opportunity for meaningful growth even in our biggest accounts. We have also expanded our global reach through a new partnership with Tencent Cloud, allowing customers to easily adopt and use MongoDB as a service across Tencent’s global cloud infrastructure. With this partnership, the two largest cloud providers in China now provide authorized MongoDB managed service offerings, demonstrating both the popularity of MongoDB in one of the largest markets in the world and the strength of our intellectual property. Now I’d like to take a few minutes to review some customer wins and interesting use cases from the fourth quarter. Acxiom, part of the Interpublic Group of Companies, is a customer intelligence company that provides data-driven solutions to enable the world’s best marketers to understand their customers, create better experiences, and fuel business growth. As part of its ongoing innovation in real-time decision-making capabilities, Acxiom chose MongoDB Atlas, Data Lake, Realm, and Charts to be key parts of its cutting-edge cloud architecture. Acxiom has now reduced the time to deploy solutions for new customers from two months to under 20 minutes. 1199 Funds is one of the largest labor management funds in the U.S., providing comprehensive health and retirement benefits to more than 450,000 healthcare industry workers and their families. In response to COVID-19, the company accelerated a massive cloud transformation initiative. After migrating from SQL Server to MongoDB Atlas on Google Cloud, it was able to modernize its enterprise data warehouse and leverage MongoDB Realm to deliver a COVID-19 health screening app, which captured health questionnaires from nearly 3,000 employees a day. From project initiation to the go-live date, the complete solution was deployed in just three weeks. Cox Automotive has 40,000 auto dealers across five continents, aspiring to bridge the gap between consumers, manufacturers, dealers, and lenders at every stage of the automotive experience. In response to COVID-19, the company’s Mobile Car Care division, RideKleen, developed a mobile platform that enables drivers to schedule and technicians to manage and perform on-site disinfection services with PureProtect. RideKleen turned to MongoDB Realm Sync for zero-latency data retrieval, offline application functionality, and bi-directional syncing of data between the Realm mobile database and MongoDB Atlas. The largest department of the UK government, the Department for Work and Pensions, distributes welfare, pensions, and child support to UK citizens. Its reformed welfare program, Universal Credit, faced an unprecedented test when COVID-19 caused claims to skyrocket by 10X. DWP Digital chose MongoDB to support a secure platform that scales its services across a distributed microservices architecture to meet the huge increase in demand. PicPay, Brazil's largest e-wallet, has over 40 million users and is accepted at over 3 million stores throughout the country. After experiencing 126% growth in 2020, the company chose MongoDB Atlas because they needed a highly scalable cloud database with real-time performance and low total cost of ownership to achieve its ambitious growth goals. Enterprise security features, including data encryption at rest, in transit, and data locality, made it easy for PicPay to comply with GDPR and financial services regulations while continuing to provide a best-in-class customer experience to its growing user base. Today, more than one in ten new apartments in the U.S. are built using Latch IoT products. Latch delivers a full building enterprise SaaS platform that helps owners, residents, and third-parties experience modern building services like Smart Access, Smart Home, Sensor Controls, and Connectivity. Latch chose MongoDB Atlas for enhanced security features and the ability to move to a microservices architecture, allowing the company to scale quickly and protect its customers’ data. In summary, we had an exceptional year amidst unprecedented disruption and uncertainty. As I reflect on our earnings call a year ago at the outset of COVID-19, I can't help but marvel at how we exceeded our own expectations despite the pandemic being longer and more severe than we could have imagined at the time. I'm incredibly proud of how our team executed amid unforeseen challenges. The past year reaffirmed our conviction that we are addressing an enormous market where secular trends are increasingly in our favor. We have a highly differentiated value proposition, and our team knows how to execute and deliver results. In FY 2022, our goals remain unchanged as we are singularly focused on the opportunity ahead of us. We will continue innovating to ensure that our application data platform remains the best way to build the applications of today and tomorrow. We will expand and evolve our go-to-market strategy to drive frictionless adoption of our platform, regardless of how our customers choose to consume MongoDB, and we will remain focused on our people, processes, and culture to ensure that we scale to fulfill our potential. Simply put, we're committed to innovating and investing to maximize our long-term value.

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 2022. First, I'll start with the fourth quarter results. Total revenue in the quarter was $171 million, up 38% year-over-year. Subscription revenue was $163.9 million, up 39% year-over-year, and professional services revenue is $7.1 million, up 24% year-over-year. As Dev mentioned, we're very proud of our execution in this difficult and uncertain environment. In particular, we had a stronger than expected quarter in terms of closing new business. Enterprises cannot afford to delay or slow down innovation, and for that reason, customers continue to increase their investment in our application data platform. That said, despite our strong go-to-market execution, COVID-19 continues to impact our quarterly performance. Overall, Atlas's strong performance continues to be the largest contributor to our growth. Atlas grew 66% in the quarter compared to the previous year and now represents 49% of total revenue, compared to 41% in the fourth quarter of fiscal 2020 and 47% last quarter. During the fourth quarter, we grew our customer base by over 2,200 customers sequentially, bringing our total customer count to over 24,800, up from over 17,000 in the year-ago period. Out of our total customer count, over 3,000 are direct sales customers, which compares to over 2,000 in the year-ago period. As a reminder, our direct customer count growth is driven by customers who are new to our platform as well as self-service customers with whom we now have established a direct sales relationship. The growth in our total customer count is largely driven by Atlas, which had over 23,300 customers at the end of the quarter, compared to over 15,400 in the year-ago period. It's crucial to remember that growth in our Atlas customer count reflects new customers to MongoDB, in addition to existing enterprise advanced customers adding incremental Atlas workloads. We had another quarter with our net annual recurring revenue expansion rate above 120%. We ended the quarter with 975 customers with at least $1,000 in annual recurring revenue and annualized monthly recurring revenue, up from 751 in the year-ago period. We ended the year with 98 customers spending at least $1 million in annual recurring revenue and annualized monthly recurring revenue, which is up from 62 in the year-ago period. As Dev highlighted, the continued strong growth in customers with $1 million or more in annual recurring revenue clearly indicates that we are increasingly becoming a strategic partner and database standard for our customers. Moving down the P&L, I will be discussing our results on a non-GAAP basis unless otherwise noted. Gross profit in the fourth quarter was $123.3 million, representing a gross margin of 72%, which is consistent with our last quarter and down from 74% in the year-ago period. Overall, we are pleased with our gross margin performance, which has been negatively impacted by Atlas becoming a bigger portion of our revenue. As you know, Atlas has lower gross margins than Enterprise Advanced due to its infrastructure component. This downward pressure has been partially offset by the greater efficiency and scale that we've been able to generate as Atlas grows. We continue to expect that we'll see some modest reduction in overall company gross margin as Atlas continues to grow as a percentage of our revenues. Our operating loss was $16 million, or a negative 9% operating margin for the fourth quarter, compared to a negative 10% 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 $19.9 million, or $0.33 per share, based on 60.5 million weighted-average shares outstanding. This compares to a loss of $0.25 per share on 56.9 million weighted-average shares outstanding in the year-ago period. Turning to the balance sheet and cash flow, we ended the quarter with $958.3 million in cash, cash equivalents, short-term investments, and restricted cash. Operating cash flow in the fourth quarter was negative $18.6 million after accounting for approximately $2 million in capital expenditures and principal repayments of finance lease liabilities. Free cash flow was negative $20.7 million in the quarter, compared to negative free cash flow of $10.9 million in the fourth quarter of fiscal 2020. I would now like to turn to our outlook for the first quarter and full fiscal year 2022. For the first quarter, we expect revenue to be in the range of $167 million to $170 million. We expect a non-GAAP loss from operations to be between $21 million to $19 million and a non-GAAP net loss per share to be between $0.39 to $0.36, based on 61.2 million weighted-average shares outstanding. For the full fiscal year of 2022, we expect revenue to be in the range of $745 million to $765 million. For fiscal year 2022, we expect a non-GAAP loss from operations to be between $84 million to $74 million, and a non-GAAP net loss per share to be between $1.55 to $1.39 per share, based on 62.1 million weighted-average shares outstanding. Let me provide some context behind our revenue outlook. Our expectation is that the COVID-19 impact will continue to affect our new business activity in the near term, but that business conditions will slowly improve as the year progresses and as global vaccination efforts positively influence the macroeconomic environment. More specifically for Q1, we expect a slight sequential revenue decline, as Q1 is typically a lower new business quarter than Q4. As a reminder, revenue recognition under ASC 606 for our Enterprise Advanced product disproportionately affects quarterly performance due to the upfront term license. Let me now turn to our investment framework for fiscal 2022. As Dev mentioned, we were pleased with both our strong execution and the market's receptivity to our platform. Therefore, we believe that the right approach is to invest for the long term to pursue our market opportunity. In fiscal 2022, we will continue funding high-priority areas across the organization. First, we will continue robust research and development investments to advance the breadth and depth of our application data platform. Second, we will continue growing our sales capacity globally. We remain fractionally penetrated relative to the size of our opportunity. Given another year of strong productivity, we believe that the primary constraint to our productive capacity growth is how quickly we can effectively scale our operations. Third, we will continue investing as appropriate to ensure that we are efficiently scaling organizational systems and processes as we pursue our long-term opportunity. Finally, it is worth noting that our COVID-19 outlook has implications for our operating expenses as well as our revenues. As life slowly normalizes throughout fiscal 2022, we expect to incur incremental expenses, particularly related to our offices, travel, and in-person events. Our current expectation is that we will incur approximately $20 million to $25 million of incremental expense in this area compared to fiscal 2021, with most of that impact occurring in the second half of the year. To summarize, MongoDB delivered excellent fourth quarter results and full fiscal 2021 results, despite operating in an unprecedented environment. Our focus on executing against our product roadmap and expanding our go-to-market reach is driving high levels of growth in sales, and we are seeing attractive returns on those investments. The success we are having in establishing ourselves as the world's preeminent application data platform positions us for continued long-term success. With that, we’d like to open up to questions.

Operator, Operator

We will now begin the question-and-answer session. And our first question today will be from Sanjit Singh with Morgan Stanley. Please go ahead.

Sanjit Singh, Analyst

Thank you for taking the questions and congrats on a great fiscal year 2021 and a strong Q4, it was really great to see the Atlas accelerating to 66% growth. And so maybe the first question is to start on Atlas. Dev, could you sort of give us some of the trends you're seeing within Atlas, as it relates to growth coming from app modernization or the relational displacements versus net new? How does that mix play out in Q4 versus what you've seen for the balance of the year?

Dev Ittycheria, CEO

Yes. So Sanjit, I'd say a couple of things. One, I would say that obviously, there's a big secular trend about the move to the cloud, but what's happening is that people are recognizing that just lift and shift is not the right approach and that I'd more frame it as lift and transform. And that's where MongoDB comes in. People recognize the benefits of our flexible data model through the document model. They recognize the benefits of running and using multiple use cases because of the versatility of the document model. They also appreciate the scalability and performance of our distributed architecture, which is even more pronounced because Atlas basically automates all that. What we're also seeing is the increasing importance of multi-cloud, and customers are more and more interested in multi-cloud solutions for resiliency or other reasons. We see customers building new apps on Atlas and re-platforming existing apps. So we've seen trends across the board making Atlas a very attractive definition for app development.

Sanjit Singh, Analyst

That's really helpful. And then that's my follow-up. As I think about the guidance for fiscal year 2022 and some of the things that could come online, I want to just get a status update on partners and which ones you think are the most material in terms of contributing to growth and which ones are more earlier stage as it relates to, you just signed on with Tencent, Alibaba, as a couple of years in the making, a closer relationship with Google. If you could just walk through some of the progress with the strategic partners and which ones you think have more material scale at this juncture?

Dev Ittycheria, CEO

Well, I'll start with the hyperscale vendors. First, the U.S.-based ones, we have deep relationships with all three, and we're doing well across the board. MongoDB is incredibly popular on all three platforms. Customers can differentiate between some of the vendor offerings versus MongoDB Atlas. People are getting more comfortable with our document architecture, and they recognize how versatile it is, enabling innovation to happen quickly. So we're partnering in the field with the cloud vendors, while the Tencent relationship is fairly new, which may take time to mature. However, having relationships with both Alibaba and Tencent, in one of the largest markets in the world, gives us confidence. The global systems integrators are also paving the way for us as we see a lot of activity, whether they're bringing us into deals or customers are using them to augment their development capacity. We're also working with some boutique firms to help accelerate customers' time to market for their needs. Overall, we're seeing broad-based help across the board.

Brad Reback, Analyst

Great. Thanks very much. Maybe sticking with Atlas, the sequential acceleration in the business is pretty impressive, even with the acceleration of digital transformation out there. Were there any one-time items that positively impacted the quarter? Is this just normal usage trends?

Dev Ittycheria, CEO

No, I would describe it. It was a good quarter, Brad. Thanks for calling that out. We've talked about some of the trends that we were seeing during COVID. We mentioned in Q3 that the cohorts were back to sort of pre-COVID expansion levels. We've continued to see that. So I think there's nothing particularly worth calling out one-time. There are always one-time fluctuations in any quarter, but nothing outside of the normal. It was a good quarter across the board, particularly within Atlas and in self-serve. We saw some nice expansion, but overall, just strong and not many businesses growing over $300 million in revenue at rates north of 60%.

Brent Bracelin, Analyst

Thank you, and good afternoon. I guess I wanted to talk a little bit about new customer acquisitions. If I look at the last two quarters, I think you've added more customers in the last six months than you added all of last year. As you think about the momentum here, is this a signal of just broader MongoDB brand awareness? Is this a sign that the industry is accelerating its appetite to build new apps? And just if you could share how the profile of new customers is changing or if it's still predominantly being led by developers? Any color would be helpful.

Dev Ittycheria, CEO

Right. So, I mean, I would say there are a few factors at play. One, it has become clear that MongoDB is a viable, mission-critical platform, positioned as an alternative to relational databases. We don’t hear anyone in our customer base discussing growing their SQL server, Oracle, or DB2 estates. People are indeed moving off their legacy platforms. When they think about building on a new platform, they quickly understand the versatility and flexibility of the document model and appreciate the performance and scalability of our architecture. What’s interesting now, as I mentioned earlier, is the increasing importance of multi-cloud alternatives. Some customers want cloud provider resiliency in a single region where their vendor might only have one. Others might want to maximize differing capabilities offered by different cloud providers. We see a wide range of reasons for acquiring new customers, and much of it is driven by MongoDB establishing itself as the dominant application data platform.

Michael Gordon, CFO

Maybe just quickly, I'd add on to that for the second part of your question, Brent. Clearly, large market and we're early on in their penetration. So that's great to see. In terms of the customers and the customers that we're adding here and sort of how do they compare to historic customers? Maybe I'll just say a couple of quick things. First of all, obviously it's early, but we do have a couple quarters of data and I'd say the initial signs are certainly encouraging. Ultimately, the long-term quality will depend on the expansion over multiple years. But so far, what we're seeing on an apples-to-apples basis is the cohorts are broadly in line from sizing, growth characteristics, and expansion rates. I'd say there are probably two important mix components to keep in mind. First, some of the go-to-market optimizations we've discussed in the past have reduced friction, making it easier for customers to come on board. This has disproportionately helped the mid-market segment, and as such, mid-market customer spending reduces the average compared to enterprise customers. Secondly, some of the acceleration in direct sales customers is coming from those who were previously self-serve, whom we've become better at identifying the signals for and individuals who would benefit from a direct relationship. This isn't net revenue change in the period, just a channel shift for customer accounts. So those are probably two important mix elements to keep in mind when looking for extrapolation.

Mohit Gogia, Analyst

Thanks for taking my question and congrats on the really strong Q4. I just want to stay on that topic. The land and expand motion works. We saw the land motion really do well despite the pandemic and you discussed the drivers there. But if I look at the expansion rate and the expand motion looking ahead to fiscal quarter two, can you help us understand how you think about the trajectory of the expansion rate for fiscal 2022 and how you’ve factored that into guidance?

Dev Ittycheria, CEO

Yes. Mohit, what I would say is, as we mentioned in the prepared remarks, even in large accounts, we believe we still have a very small percentage of their total database spend. Now I want to make clear, MongoDB is not a product that you just buy and start using. You have to build an application on top of it. There’s a certain rate and pace of app development, whether building new applications or replatforming existing applications. What we’ve observed and have mentioned is that once we get into an account, we can reasonably easily expand into adjacent opportunities. These adjacent opportunities tend to be larger than the initial deal. We don’t expect any meaningful changes in that aspect coming this year. While the world may start opening, and people potentially build new apps faster, we believe that could only help our business.

Mohit Gogia, Analyst

Thank you. And my follow-up question is about the go-to-market investment sides. Typically, this is the time of year when companies evaluate their sales motions and structures. As you grow the business, what should we be aware of regarding any changes in sales structure or anything of that sort? Thank you.

Dev Ittycheria, CEO

Yes. We’ve discussed this in previous calls, but we've been pleased with the success we've seen from our execution through our sales channels. Thus, we’re doubling down on what we did this past year. The sales and marketing organizations executed really well. We’re also seeing benefits of a flywheel effect between our self-serve channel and our sales channel. Our sales organization is becoming better at identifying product usage signals to determine which customers would benefit from a more direct relationship. The self-serve channel is very effective for acquiring new customers, and that strategy is paying dividends. You’ll see us refining the model but no major changes. We’ll likely become more sophisticated in segmenting certain parts of the markets and focusing more on regions that still require better coverage.

Tyler Radke, Analyst

Thanks very much for taking my question. I wanted to ask about your investing in FY2022. Obviously, the guidance implies that you're continuing to spend a lot on growing the business in FY2022. So, curious where the biggest priorities are for you. Are you investing more in the mid-market side where you've seen nice net additions, or is it more on the enterprise?

Dev Ittycheria, CEO

Yes. We'll be investing most in two areas: product development and go-to-market strategies. On the product side, we're excited about the growing market opportunity. We are gaining traction as our customers demand more capabilities. We talked about some of the new products we launched last summer, which are starting to gain substantial traction. We have a world-class engineering and product organization, which allows us to make informed decisions. In terms of sales, as I mentioned earlier, our performance has been broadly consistent across the board, both through our field organization and inside sales team. Consequently, we’ll invest aggressively in both areas. You can expect us to refine our strategies while focusing on expanding into mid-market opportunities.

Michael Gordon, CFO

I wanted to clarify one of the dynamics about the Atlas cohorts. It’s been about a year since you made go-to-market changes to reduce customer onboarding friction. Looking back at the past year, how have spending levels trended relative to the previous approach? Absolutely. I think it's important to look at like-kind customers, comparing mid-market versus enterprise customers, rather than the average. We’re seeing fairly consistent behavior from cohorts in terms of growth rates, expansion rates, etc. While there's no years’ worth of data just yet, initial signs are encouraging and consistent with our theories.

Rishi Jaluria, Analyst

Thanks so much for taking my questions and nice to see continued strong execution throughout the year. I wanted to start, Dev, with a comment you made about how under-penetrated you are within the existing customer base. What will it take to grow that footprint within those customers? Is it a matter of capturing new workloads or is there anything you're doing to accelerate migrations?

Dev Ittycheria, CEO

What I meant to convey is that growing an account takes time, and there are stages. The first stage is landing a deal, then using early successes to expand into adjacent opportunities. As you become standardized, development teams can use MongoDB across various use cases. However, building applications takes effort, and growth occurs gradually. As we accumulate success stories with nearly 25,000 customers, we build confidence, making it easier to secure additional workloads. This takes time, and it's not like applications can be replatformed overnight.

Operator, Operator

This will conclude our question-and-answer session. I'd like to turn the conference back over to Dev Ittycheria for any closing remarks.

Dev Ittycheria, CEO

I want to thank everyone for joining us today. In summary, enterprises are feeling an urgent need to reinvent themselves, which they can achieve using software and data. We are seeing great success in building strategic partnerships with our customers, as evidenced by the growth of our six and seven-figure accounts. Lastly, the accelerating secular trends and our track record give us confidence to invest aggressively and maximize our long-term potential. That’s what we’re committed to. Thank you for joining us, and we look forward to speaking to you soon.

Operator, Operator

The conference is now concluded. Thank you for attending today’s presentation. At this time, you may now disconnect your lines.