00:00Investors are weighing in. They're not happy. As we said, a record drop for the stock.
00:04What can you tell us about the outlook and the business?
00:09So, Carol, we had fantastic Q4 and it was to handle across the board from top line and bottom line.
00:18So 27 percent revenue growth, 23 percent operating margin.
00:23Our Atlas, which is our cloud business, grew 29 percent.
00:26And so when I think about that and also add net retention rate was 121 percent, as in our customers
00:35are expanding with us.
00:37So we exceeded top range of our guidance across the top line and the bottom line for Q4.
00:44And going into fiscal 27, as in the new fiscal year we are in, we feel very good about the
00:50business.
00:51The expectations were high and the expectations were high from the buy side.
00:55So there was some sort of disappointment that is currently being played out from the market reaction perspective.
01:03But I can tell you, being speaking to 200 plus customers in last 100 days, I'm a CEO for last
01:09100 days.
01:10And I feel very good about the strength of our business.
01:14And we always guide Prudent for the year.
01:20And that's what we guided.
01:21And that's how markets are reacting.
01:26CJ, what are you hearing from those customers about agentic AI and how they might be using that technology to
01:36disintermediate or to, you know, grabbing like open, using open source adoption?
01:43And I'm curious about, like, in an AI-led world, how you retain an advantage here and what message you
01:49have for investors who are concerned that, yeah, AI is a threat to this company.
01:54So absolutely, Tim.
01:56Here is what I would start with.
01:58First is VR infrastructure software.
02:02And infrastructure software is an extremely hard thing to build.
02:06And you cannot just use your way to a coding agent to build infrastructure software.
02:12And that's what you are seeing with our net retention rate of world-class 121% in Q4.
02:18So that's one thing.
02:19When you are infrastructure software, not like other software that may be at the application layer, which is where your
02:26concern is, what we are seeing being played out with customers is like a tale of two positive cities.
02:32One, I would say, enterprises continue to build.
02:36We used an example in our earnings remarks.
02:49And you contrast that with AI-native companies.
02:53I'm in Palo Alto today, right here in Silicon Valley.
02:56And you see companies that we mentioned, like 11 Labs, which is crushing it now at $11 billion valuation.
03:05You guys were just talking about companies going public.
03:08But $11 billion valuation completely built on MongoDB.
03:12So whether it's AI-native company that is a disruptive force in the software market, or whether it's a large
03:20bank or a large healthcare company,
03:22or a large retailer building agentic commerce, they are also building on MongoDB.
03:28So, so far, in customer conversations, I do not hear, hey, CJ, do we really need MongoDB?
03:36Our business is very strong, both for large enterprises building AI workloads or AI companies where AI is their business,
03:45right here in Silicon Valley or maybe Seattle or maybe New York City, are also building on MongoDB from frontier
03:52model companies
03:53to domain-specific AI companies that are being built right now.
04:00All right.
04:01So, CJ, we get this idea of MongoDB as this foundational data platform for AI.
04:06And this is part of why the acquisition of Voyage AI, also Atlas Vector Search.
04:12So what percentage of new bookings are specifically AI-related?
04:16And how are you kind of measuring that native or AI-native customer attraction?
04:22And when do you expect AI to become a material revenue contributor?
04:27And maybe that's what investors are looking for.
04:29Yeah, Carol.
04:30You know, this is the question I got asked on the callbacks after our print.
04:34And as I stated, we had a fantastic print.
04:38And on the guidance, we also gave guidance according to our long-range plan.
04:44Okay.
04:44So that's one.
04:45Given that in the large enterprises, Carol, we are still seeing a lot of experimentation done being on AI,
04:52whether it's airline or retailer or a bank and so on.
04:55I haven't seen AI agents at scale.
04:58And that's, from my standpoint, on behalf of MongoDB customers, that is an upside to our guidance.
05:08That when AI really takes off at an airline or a bank or a retailer or a healthcare company,
05:14that would be a tailwind because nobody is concerned about, hey, is MongoDB relevant in AI?
05:21We are 100% relevant in AI.
05:24And then I look at AI-native companies.
05:26What we have stated is they are, you know, most of the AI-native companies,
05:31including frontier model companies that are using MongoDB today for key use cases,
05:36that is today a small percent of our revenue but growing very fast.
05:41And I think the biggest lift we are going to get is that when things are at scale from an
05:47inference standpoint,
05:48and we will benefit and these companies will benefit too.
05:54I think some investors might have questions about organizational changes at the company,
05:59like the appointment of Erica Volini as chief customer officer.
06:02What specific changes are being made to the sales organization?
06:06How are you thinking about compensation structure differently, customer segmentation strategy?
06:11How do you ensure execution continuity during the transition?
06:16Absolutely. So, Tim, I'll start with the first principles.
06:21When I think about first principles, MongoDB nailed two key transitions,
06:27which makes us, from my standpoint, true AI winner.
06:31Number one, they moved to cloud in 2017, starting with AWS, and all other hyperscalers followed.
06:38Okay, that was in 2017.
06:40And about a couple of years ago, they switched to consumption model
06:43that you only pay what you use.
06:46Sales reps only get paid when customer uses MongoDB Atlas, for example,
06:54for whatever data they put in MongoDB Atlas at a database layer.
06:57So, these two transitions versus a seed-based model and other things
07:02is definitely a great thing for us.
07:05We are cloud agnostic, as well as we are fully consumption-based.
07:09Now, on the organization, our retention rate, and this was very important,
07:16to be 121%, it was 120% before 119% a year ago.
07:22This improving just shows the durability of our platform.
07:27Erica's focus is, having worked at iconic companies in the past,
07:32is to serve our customers at the highest level as they onboard agentic workloads
07:38or core workloads and making sure they get the value out of MongoDB
07:42and are successful with our platform.
07:44So, that's one piece.
07:46We are also currently searching for a chief revenue officer.
07:50However, Paul is going to be with us through end of quarter one
07:57and help us transition through Q2 while we do the search.
08:02We are in the latter stages of the search.
08:04However, the leadership team that Paul has for Americas, for Europe,
08:08and for Asia Pacific Japan, I have full confidence in the team.
08:13I don't see disruption risk.
08:15We have set already annual plans for every salesperson,
08:19and no compensation changes.
08:25CJ, just to wrap up here, and again, I'm looking at shares.
08:28They were down as much as 29% today, still down about 20% off their lows,
08:33but nonetheless, investors still overwhelmingly selling here.
08:37I'm just curious.
08:38I want to go back to your conservative guidance,
08:39because maybe there is some clarification.
08:41What level of conservatism is embedded in this fiscal year 2027 outlook,
08:47and what are the key variables that could drive the upside?
08:50Because I think folks were surprised that this guidance,
08:54which you say tends to be conservative,
08:57was on the back of improved net revenue retention rates,
09:00which improved 121% in the fourth quarter versus 119, 120 in the previous quarter.
09:06So I think people are trying to square this, that there was improvement there,
09:10and yet here's the conservatism.
09:13So how much, how conservative are you being in this fiscal year outlook?
09:18Maybe that might help in terms of clarifying some stuff for investors.
09:24Carol, thank you for asking that question.
09:25One of the interesting things we saw was that when we guided,
09:30they said the midpoint of our guidance was below consensus, okay?
09:36The midpoint of our guidance was below consensus.
09:39We thought that they would look at our high range of the guidance,
09:43which was right at consensus for fiscal year 27.
09:48So that's point number one.
09:49Point number two, the visibility, of course, in a consumption business,
09:54we have very good visibility for next two quarters.
09:59And, you know, as we plan out the year, we feel pretty good about our forecasting.
10:03But Carol, to answer your question, like the AI tailwinds.
10:07When I say AI tailwinds, AI companies are building on MongoDB,
10:10or enterprises are building agents on MongoDB,
10:12but they are not scaling, as in they're figuring out their own on how AI can scale.
10:18But as they scale, that benefit is not baked into our guidance, okay?
10:23So that's number one.
10:24And as we continue to execute, we decided,
10:29with what we just talked about with the sales leadership change as well,
10:32to be prudent rather than over our skis.
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