MongoDB Inc Q2 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : One for Dev and one for Michael. Dev, you talked about these big customer wins. At what point are we set up for an inflection point in the database market where less expensive but technologically very compelling solutions like MongoDB? You hit the tipping point -- and during a downturn as the one we're going through, initially, you see the pullback in spending. But as customers realize the value, are we set up for a time P x Q or in the customer's mind that there is an inflection point in that you could actually reap the benefits? Typically, during these transitions, the compelling price performance technologies gain share relative to the more expensive incumbents. So wondering what your thoughts are in that regard. And Michael, one for you. As you walk through the tougher comparisons in the second half of the year, is that because of Atlas momentum? And if so, how does the -- how does calendar '23 shape up if you project out these Atlas trends? And what are the things that we should be expecting as per normalization of growth rates are concerned?

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : So Dev, Snowflake has increasingly talked about its evolution to a cloud app development platform. In some ways, it sounds similar to the vision you've laid out for Mongo's developer data cloud. I know you and I have talked about this, but I still get the question from investors. Can you just talk about where you see the intersection of those efforts and where the key differences lie today?

Question: David E. Hynes - Canaccord Genuity Corp., Research Division - Analyst : Yes. Yes, that's great color and a helpful explanation. Michael, a follow-up for you. Just what does the strategy become with the mid-market digital natives that seem to be getting hit the hardest in terms of their consumption trends? I mean is it just about waiting it out? Or how do your conversations with those customers change given that dynamic?

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : So maybe I could just ask you about what assumptions you're embedding in your guidance. I think one thing that investors took comfort from, at least I did on the last call, is your assumption that things get worse. So I just wanted to make sure I understand what you're assuming. Are you indeed assuming that things get worse in the second half from what you saw in July? One would assume so, given that you didn't carry the full 2Q beat into your full year raise, but I just would love to clarify.

Question: Karl Emil Keirstead - UBS Investment Bank, Research Division - Analyst : Okay. Got it. And then if I could ask a follow-up. Just building on the last question around these digital native customers. You probably don't want to specifically size it, but I think it might be helpful, like what is MongoDB's exposure to that customer segment? And was there any -- anything specific to your vertical exposure that is worth calling out in 2Q?

Question: Rishi Nitya Jaluria - RBC Capital Markets, Research Division - Analyst : Wonderful. I wanted to ask first, maybe just thinking through the consumption patterns and the visibility there. Can you remind us within Atlas, how much spending is maybe in control of the company or the developers versus those where the usage or consumption is dependent on the usage of the end application itself and by the consumers? Anything directional would be helpful. And then I have a follow-up.

Question: Rishi Nitya Jaluria - RBC Capital Markets, Research Division - Analyst : Okay. Great. And then on the call, you did mention an example of a customer migrating a legacy monolithic app to the cloud, and you called out displacing both Oracle and Elastic in that. Can you maybe talk -- since you announced Atlas Search at the conference, how does the replacement opportunity look? How do you think about that in the long run? And what sort of early momentum have you seen with that product?

Question: Steven Richard Koenig - SMBC Nikko Securities America, Inc., Research Division - Analyst : Steve Koenig here. Let's see. Well, I wanted to thank you first for the high degree of transparency around the trends in your business, very helpful. One question for Dev and one for Michael. Dev, as you're talking with existing customers that know you well, and they're looking at deploying Atlas for new workloads, new applications, what's the tone of those conversations? And how has that aspect of your business kind of trended in Q2? That -- and kind of what bigger picture, kind of what are your customers saying about their willingness to invest kind of given macro uncertainties here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 31, 2022 / 9:00PM, MDB.OQ - Q2 2023 MongoDB Inc Earnings Call

Question: Steven Richard Koenig - SMBC Nikko Securities America, Inc., Research Division - Analyst : Terrific. Terrific. And Michael, for you. So you helped us understand what was behind the lower operating income guide with some granularity. But maybe if I could just back up and just make it super kind of simple for me. So you're raising your revenue guidance, but you're lowering the operating income guidance. And so the delta is spending. And so I guess, would I be correct in conclusion -- in concluding that you're accelerating the pace of spending in the second half versus what you previously anticipated? And if so, kind of in what areas? So that's all I have.