MongoDB Inc Q2 2025 Earnings Call Summary

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

Question: Sanjit Singh - Morgan Stanley - Analyst : Hi, thank you for taking the questions and congrats on Q2. Nicely, Mongo, beating and raising again. Dave, I wanted to follow up on some of the operational changes you're making to the business that you announced last quarter. Just in terms of the update in terms of realigning some of the sales incentives to drive higher workload quality and while maintaining some of that record workload growth that you saw last year. Could you walk us through what the changes were that you put in place? And how much confidence do you have that you will drive better workload growth as we get into early next year?

Question: Sanjit Singh - Morgan Stanley - Analyst : And then as a follow-up for Michael. I remember at the Q4 last year, you gave us the update on the unused credit dynamics. As we start to think about the back half of this year, is there anything else that we should think about that? I mean you just mentioned some of the cash flow impacts just now. Is there anything on like the revenue side of the equation that we should keep in mind? I noticed at the end of this year, there's just more holiday days in the quarter in Q4, does that have an impact? Anything that you would like to call out in terms of our modeling when we think about expectations for Atlas more broadly going into the end of the year?

Question: Sanjit Singh - Morgan Stanley - Analyst : Appreciate that color. Thank you.

Question: Raimo Lenschow - Barclays - Analyst : Hey, thank you. Two quick questions from me. Michael, on the EA, you talked about like a slightly better pipeline in the second half. Can you talk a little bit -- is that still the continuation of what we saw in Q2, Q3 last year where people wanted to modernize their self-service footprint ahead of the move to the cloud or what's the dynamic there? And then one for Dave, like -- there's a big debate about like reference architecture on AI. And I think it's a little bit too early, but it comes up with investors a lot like what are you seeing there? I know AI infrastructure, we're still in the early innings, but what are you seeing there in terms of people engaging with you? Thank you.

Question: Raimo Lenschow - Barclays - Analyst : Okay. Thank you.

Question: Kash Rangan - Goldman Sachs - Analyst : That's perfect. I was about to call Raimo and say, can you please explain reference architectures, and I'll buy you a nice glass of wine. So hopefully, he'll take me up on that offer because that was a very technical question. But anyway, coming back to the call here, Dave, a question for you. Why is EA doing so well? So you talked about a pipeline in the second half of the year. Last year, you had some significant wins for EA. We were supposed to be on this cloud journey. So definitely, Atlas has reached parity in many senses. It can support big scale applications, whatnot. So curious to get your thoughts on why is EA still an important piece of the business and I suppose when you look at AI, could something surprise us? I know that you've had this view that we're building infrastructure first and then the platform than applications. Could it be by any chance, a different way to approach AI in this cycle and that we don't really need applications, but somehow these LLMs are going to be a perfect replacement for the way we think about old world applications? Just curious to see what the devil's advocate you might be somewhat very skeptical of the whole AI applications build out on top of the infrastructure and platform. Thank you so much.

Question: Kash Rangan - Goldman Sachs - Analyst : Thank you.

Question: Tyler Radke - Citi - Analyst : This is Tyler, that geared I think the question is from you can name, but thanks for taking the question. Dave, you talked about a Postgres displacement in the quarter. And I think that's the first time you've talked about that at least in recent quarters. So I was wondering if you could just frame for us what use cases do you come across them? I know it is popular in terms of a sequel displacement for migrating out of legacy applications. But if you could just frame for us the competitive environment in Postgres both the open source stuff and some of the new venture-backed start-ups in the space.

Question: Tyler Radke - Citi - Analyst : Thank you. And a follow-up question for Michael. You talked about how consumption in Atlas in the quarter tracked a bit better than planned. It sounds like it was not a macro-related improvement. What do you think the driver of that was? And are you seeing any improvement in some of the recently acquired workloads, those starting to ramp up better? Or maybe they have different seasonal patterns than you thought. Any color on that driver of outperformance would be helpful. Thank you.

Question: Tyler Radke - Citi - Analyst : Thank you.

Question: Brad Reback - Stifel Nicolaus & Co - Analyst : Great. Thanks very much. Dave, on your commentary around the modernization pilots, how should we think about timing of that being a bit of a tailwind to the overall growth rate?

Question: Brad Reback - Stifel Nicolaus & Co - Analyst : That's great. And then one last follow-up. It feels like we've spoken about EA more than typical on this call, which is great. As we think about the back half pipeline, is the composition similar in so much as it's predominantly existing customers? Or are you beginning to see an uptick in net new customers there as well? Thanks.

Question: Brad Reback - Stifel Nicolaus & Co - Analyst : Thanks very much. Thank you.

Question: Karl Keirstead - UBS Equities - Analyst : Okay, great. Hey, Dave, at the beginning of the call, you mentioned that Mongo's slow start to the year was purely operational but on the Q1 call, when you were describing what happened, you described it as very much a broad-based macro issue. So I'm curious, should I interpret that comment as you, Mike and the team have done a bit of a rethink and might be changing modestly at least your explanation about the Q1 results? 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 29, 2024 / 9:00PM, MDB.OQ - Q2 2025 MongoDB Inc Earnings Call

Question: Karl Keirstead - UBS Equities - Analyst : Okay. That's great. And then my follow-up for you, Mike, is when you were pressed in prior questions about the second half, most of the variables that you brought up were , frankly, headwinds, things like tough compares. But if I look objectively your 3Q total revenue guide of [$497 million], and this is my assumption, but I assume a normal beat. That's going to result in sequential total revenue growth. That's actually the highest, I think, that MongoDB has ever put up. So clearly, there's something good that you're embedding in that 3Q guide. What is that specifically?

Question: Karl Keirstead - UBS Equities - Analyst : Okay. That's helpful, Mike. Thanks. Thank you.

Question: Jason Ader - William Blair & Co - Analyst : Yes, thank you. I'm trying to understand the Q4 implied revenue guide, Michael. Just the implied sequential growth there is only 1.5%. If I look at your full year, relative to what you said specifically on Q3, that would be well below the historical seasonal pattern in Q4. So I just want to understand, is there something going on in Q4 that's different, just sequentials -- I understand the year over year is tough, but the sequential seem well below where you've normally been. And is there something specific that we should think about there?

Question: Jason Ader - William Blair & Co - Analyst : Got you. Okay. And then just one quick follow-up on gross margins. Did you talk about Atlas gross margins in the quarter? And then how material will the impact be from the prepayments and the IPv4 for purchases on Atlas gross margins over time?

Question: Jason Ader - William Blair & Co - Analyst : Thank you.

Question: Brad Sills - BofA Global Research - Analyst : Great. Thank you so much. Great to hear the continued strength in new workloads here. That's been very consistent theme here throughout all of this. I did want to ask about some of the newer services like vector and stream processing. How are those contributing to the sustained strength you're seeing in new workloads?

Question: Brad Sills - BofA Global Research - Analyst : And one more, if I may, please. On the last earnings call, you mentioned how the slowdown in consumption was broad-based across industries and workload types, which led you to believe that it was a macro-related impact. With some of the improvement you've seen this quarter, I know it's early, but was that also broad-based? And could you deduce that maybe that might mean some improvement in the underlying macro? Or was it more outsized to certain types of industries and services? Thank you.

Question: Brad Sills - BofA Global Research - Analyst : Wonderful. Thank you.

Question: Rishi Jaluria - RBC Capital Markets - Analyst : A wonderful. Hey, this is Rishi Jaluria from RBC. Two questions. Maybe, Dave, I wanted to first start out going back to some of what you talked about, which is the MongoDB versus Postgres debate. One of the popular debates out there is which architecture is better suited to new generative AI applications, especially if we truly do believe AI will lead to a replatforming, a software similar to what we saw with the cloud. I know you talked a little bit about reference architecture earlier in Q&A, but maybe could you walk us through why you believe MongoDB is better suited to new generative native applications versus Postgres? And then I've got a quick follow-up.

Question: Rishi Jaluria - RBC Capital Markets - Analyst : Got it. Thank you. That's really helpful. And then maybe just sticking on the theme of AI. We've talked before in the past that AI is just driving a lot of new code, being developed is significantly more productive. Have you seen that behavior in any of your existing customers on Atlas where maybe their utilization rate goes up or the number of applications built for customer goes up, anything like that, that understanding it's super early, might at least give you some early indication that the increased developer productivity could turn into a real tailwind in terms of consumption of the underlying Atlas stream? Thank you. 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 29, 2024 / 9:00PM, MDB.OQ - Q2 2025 MongoDB Inc Earnings Call

Question: Rishi Jaluria - RBC Capital Markets - Analyst : Wonderful. Thank you.

Question: Brent Bracelin - Piper Sandler Co - Analyst : Thank you. This is Brent Bracelin at Piper Sandler. Dave, I wanted to go back to Atlas. And the question here is, given all the moving parts here around accounting, tough compares, unused commitments. Atlas growth looked really strong, I think 30% plus on a normalized basis after adjusting for unused commitments. That's before any benefit from AI. Can you just go back to the growth algorithm for Atlas here, I ask because 30% normalized growth would be 3x faster than industry growth, implying a meaningful share capture of new software build. So maybe it would be worthwhile if you just go walk through what is driving the momentum on the Atlas side that is, again, 2 times, 3 times faster than the industry?

Question: Brent Bracelin - Piper Sandler Co - Analyst : Perfect. And then Michael, just a quick follow-up on margins. Guidance implies 10% plus op margins in the second half, particularly as the revenue run rate here gets to $2 billion exiting the year. Can you continue to invest in sales capacity while balancing double-digit margins at this scale?

Question: Brent Bracelin - Piper Sandler Co - Analyst : Thank you.

Question: Eric Heath - KeyBanc Capital Markets Inc - Analyst : Hey, good afternoon and thanks for taking the question. Just a couple of quick ones for me. Mike, I was curious to get a better understanding and just maybe some of your assumptions on why you're expecting a slower than typical rebound coming out of 3Q. And then, Dave, thinking about the third quarter here and fiscal year-end, just what are some of your expectations for that vertical, which I assume is usually a big EA opportunity. Thanks.