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    MDB
    Earnings call· Jan 2025(Q4 FY25)

    MongoDB, Inc. MDB

    Mar 5, 2025 Source

    Executive summary

    MongoDB Q4 FY25 — Strong Atlas Consumption and Strategic AI Acquisition

    MongoDB delivered a strong Q4 FY25, driven by stable Atlas consumption trends and robust new workload acquisition. The company is positioning FY26 as a transition year, making strategic investments in R&D, particularly in AI with the Voyage AI acquisition, and marketing to capitalize on long-term growth opportunities in AI and application modernization. Management expresses confidence in the business's future, anticipating significant growth beyond FY26 as these investments mature.

    Highlights

    4

    • Total revenue of $548.4 million, a 20% year-over-year increase, exceeded guidance.

    • Atlas revenue grew 24% year-over-year, representing 71% of total revenue.

    • Non-GAAP operating income reached $112.5 million, resulting in a 21% operating margin.

    • Ended the quarter with over 54,500 customers, and 320 customers spending over $1 million in ARR, a 24% YoY growth.

    Concerns

    2

    • Non-Atlas business is expected to be a meaningful headwind in FY26, with an estimated $50 million headwind from multiyear license revenue.

    • FY26 non-GAAP operating margin is guided to 10% at the midpoint, down from 15% in FY25, due to non-Atlas headwinds and increased investments.

    Guidance & targets

    11
    CategoryTargetConfidence
    Q1 FY26 Revenue
    $524 million to $529 million
    high materiality
    High
    Q1 FY26 Non-GAAP income from operations
    $54 million to $58 million
    medium materiality
    High
    Q1 FY26 Non-GAAP net income per share
    $0.63 to $0.67
    medium materiality
    High
    FY26 Revenue
    $2.24 billion to $2.28 billion
    high materiality
    High
    FY26 Non-GAAP income from operations
    $210 million to $230 million
    medium materiality
    High
    FY26 Non-GAAP net income per share
    $2.44 and $2.62
    medium materiality
    High
    FY26 Atlas consumption growth
    roughly stable
    high materiality
    High
    FY26 Non-Atlas subscription revenue growth
    down in the high single digits
    high materiality
    High
    FY26 Operating margin
    10%
    high materiality
    High
    FY26 AI revenue contribution (Voyage AI)
    immaterial amount of revenue
    low materiality
    High
    FY26 Operating margin impact (Voyage AI)
    modestly dilutive
    low materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Atlas
    Atlas revenue represented 71% of total revenue in Q4 FY25. Consumption was ahead of expectations, showing stable year-over-year growth compared to Q4 FY24.
    		$389.3 million24%——
    Non-Atlas
    Non-Atlas revenue came in ahead of expectations, partly due to over $10 million more from multiyear deals than contemplated in guidance. Non-Atlas ARR growth in Q4 FY25 was in the mid-single digits year-over-year, compared to low double-digit growth in the year-ago period, as customers increasingly deploy incremental workloads on Atlas.
    Non-Atlas ARR growth: mid-single digits YoY
    		$159.1 million10%——

    Operational metrics

    19
    Non-GAAP operating income
    $112.5 million
    Q4 FY25

    Reported non-GAAP operating income for the quarter.

    Non-GAAP operating margin
    21%up from 15% in year-ago period
    Q4 FY25

    Operating margin benefited from revenue outperformance and timing of hiring.

    Total revenue
    $548.4 million20% year-over-year increase
    Q4 FY25

    Total revenue for the quarter, above the high end of guidance.

    Total customers
    54,500+up from 47,800+ in year-ago period
    Q4 FY25

    Total customer count at the end of the quarter.

    Direct sales customers
    7,500+up from 7,000+ in year-ago period
    Q4 FY25

    Number of customers served by direct sales.

    Atlas customers
    53,100+up from 46,300+ in year-ago period
    Q4 FY25

    Number of customers using Atlas, including new customers and existing EA customers adding Atlas workloads.

    Net ARR expansion rate
    118%decline versus historical period
    Q4 FY25

    Decline attributed to a smaller contribution from expanding customers.

    Customers with at least $100,000 in ARR
    2,396up from 2,052 in year-ago period
    Q4 FY25

    Number of large customers.

    Customers with $1 million or more annualized on platform
    320up from 259 a year ago (24% YoY growth)
    Q4 FY25

    Number of very large customers, reinforcing move upmarket.

    Gross profit
    $411.7 million
    Q4 FY25

    Gross profit for the quarter.

    Gross margin
    75%down from 77% in year-ago period
    Q4 FY25

    Year-over-year decline driven in part by Atlas growing as a percent of the overall business.

    Non-GAAP net income
    $108.4 millionup from $71.1 million in year-ago period
    Q4 FY25

    Non-GAAP net income for the quarter.

    Non-GAAP EPS
    $1.28up from $0.86 in year-ago period
    Q4 FY25

    Non-GAAP diluted EPS for the quarter.

    Diluted weighted average shares outstanding
    84.6 millionup from 82.9 million in year-ago period
    Q4 FY25

    Shares used for diluted EPS calculation.

    Cash, cash equivalents, short-term investments and restricted cash
    $2.3 billion
    Q4 FY25

    Total cash and investments balance at quarter-end.

    Capital expenditures
    $27.6 million
    Q4 FY25

    Capital expenditures for the quarter, including IPv4 purchases.

    IPv4 address purchases
    $24 million
    Q4 FY25

    This concludes the company's IPv4 address purchases.

    Non-GAAP tax provision
    20%
    Q1 FY26 and FY26

    Estimated non-GAAP tax provision for guidance.

    Stock buyback authorization
    $200 million
    FY26

    Authorized by the Board to offset dilutive impact of Voyage AI acquisition.

    Industry KPIs

    4
    MetricValueDetails
    Customer logo metrics54,500+customers
    Large customer cohorts320customers
    Consumption revenue growth24%%
    Net revenue dollar retention118%%

    Product announcements

    1
    ProductTypeDetails
    Voyage AI models integrationexpansion

    Deals & partnerships

    1
    Voyage AIAcquisition of an AI research team and embedding/reranking models to enhance MongoDB's AI capabilities.$220 million

    Total consideration was $220 million, with most Voyage shareholders receiving MongoDB stock and $20 million paid in cash. Voyage AI's models are highly rated for retrieval, classification, clustering, and reranking, and are used by AI leaders like Anthropic and LangChain.

    Risks & headwinds

    4
    Non-Atlas business headwindFY26, primarily impacting H2

    $50 million headwind from multiyear license revenue

    Mitigation: Not explicitly stated, but implies focus on Atlas growth and app modernization to offset.

    Operating margin declineFY26

    FY26 operating margin of 10% (down from 15% in FY25)

    Mitigation: Strategic investments in R&D (including Voyage AI) and marketing to capitalize on long-term AI opportunity; confidence in business economics and scalability.

    Gradual AI adoption by customersFY26

    Benefits of AI to be only modestly incremental to revenue growth

    Mitigation: Customers are still developing in-house skills; MongoDB is taking a solution-oriented approach, combining technology with best practices and experience to help customers move from experimentation to production faster.

    Q1 sequential revenue and operating income declineQ1 FY26

    Atlas revenue flat to slightly up sequentially; meaningful sequential decline in EA revenue; operating income decline sequentially

    Mitigation: Q1 has 3 fewer days than Q4; seasonally slower Atlas consumption growth during holidays impacts Q1 more; lower EA renewal base in Q1; increased pace of hiring.

    What to watch in Q1 FY26

    5

    Atlas consumption growth

    Q1 FY26
    CurrentStable year-over-year in Q4 FY25
    TargetContinued stability or improvement

    Why it matters

    Atlas consumption is the primary driver of MongoDB's revenue growth and a key indicator of customer adoption and platform usage.

    As I look into fiscal '26, let me share with you what I see as the main drivers of our business. First, we expect another strong year of new workload acquisition. ... Second, we expect to see stable consumption growth for Atlas in fiscal '26 compared to fiscal '25.

    Q&A highlights

    5

    Is the expected weaker multiyear non-Atlas performance in FY26 a mechanical issue due to the renewal portfolio, or a change in customer behavior/trends?

    The expected headwind is primarily a mechanical issue. After exceptionally strong multiyear deal performance in FY24 and FY25, the renewal base and opportunity for new multiyear deals in FY26 are simply lower. Conversion rates are assumed to be consistent with historical trends, indicating no change in customer behavior.

    “So it's not a change in trends. In fact, we assume same conversion rates as historically. It's just the opportunity set is lower in fiscal year '26.”

    asked by Raimo Lenschow · answered by Serge Tanjga

    2 min read6 chapters

    Detailed Narrative

    01

    Atlas Consumption Trends and Outlook

    Atlas consumption in Q4 FY25 exceeded expectations, showing stability in year-over-year usage and consumption growth compared to Q4 FY24. For FY26, the company anticipates roughly stable Atlas consumption growth compared to FY25. This stability is supported by an improved FY25 cohort of workloads and expected continued improvements in sales force productivity, which are driving new workload acquisition.

    02

    Non-Atlas Business Dynamics

    The non-Atlas business outperformed expectations in Q4 FY25, partly due to a greater-than-expected contribution from multiyear deals, which added over $10 million more than guided. However, FY26 is projected to face a significant headwind, with non-Atlas subscription revenue expected to decline in the high single digits. This is primarily due to an estimated $50 million headwind from multiyear license revenue, as the renewal base for such deals is lower after strong performance in FY24 and FY25. Historically non-Atlas customers are increasingly deploying incremental workloads on Atlas.

    03

    Strategic AI Opportunity and Voyage AI Acquisition

    MongoDB is highly optimistic about its long-term opportunity in AI, viewing it as a generational shift that will reshape industries. The company acquired Voyage AI for $220 million (mostly stock) to enhance its AI capabilities, specifically by integrating best-in-class embedding and reranking models. This acquisition aims to address the 'trust gap' in AI applications by improving data retrieval accuracy and reducing hallucinations, thereby enabling customers to build more reliable and mission-critical AI solutions.

    04

    Application Modernization Initiatives

    The company is scaling its application modernization efforts, particularly targeting Java applications running on Oracle. By combining AI tooling with services, MongoDB aims to reduce the cycle time and risk associated with modernizing complex legacy applications. Pilots in FY25 demonstrated success, and these efforts are expected to meaningfully contribute to new business growth starting in FY27, addressing significant revenue opportunities from technical debt.

    05

    Go-to-Market Strategy and Investments

    MongoDB continues to focus on its land-and-expand go-to-market motion, aiming for strong new workload acquisition and improved sales force productivity. The company is making significant incremental investments in its strategic accounts program, as evidenced by the growing number of customers with over $1 million in ARR. Overall, the company is reallocating and increasing investments in R&D (including Voyage AI integration) and marketing to drive awareness and educate customers on MongoDB's capabilities in the AI era.

    06

    FY26 as a Transition Year

    Management characterizes FY26 as a transition year where the benefits from AI and application modernization will be only modestly incremental to revenue growth. The focus is on making foundational investments to prepare for and capture the larger AI opportunity in FY27 and beyond. Despite the near-term margin impact from these investments and non-Atlas headwinds, the company remains confident in its long-term growth trajectory and ability to differentiate its platform.

    AI-generated summary of the company’s earnings call. Not investment advice.