MongoDB(MDB) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for MongoDB, Inc. as of and for the three and six months ended July 31, 2024, including Balance Sheets, Statements of Operations, Statements of Comprehensive Loss, Statements of Stockholders' Equity, and Statements of Cash Flows Unaudited Condensed Consolidated Balance Sheets As of July 31, 2024, the company reported total assets of $3.13 billion, an increase from $2.87 billion on January 31, 2024, driven by a significant increase in cash and cash equivalents to $1.29 billion, while total liabilities slightly decreased to $1.77 billion and total stockholders' equity increased to $1.36 billion Condensed Consolidated Balance Sheet Data (in thousands) | Account | July 31, 2024 | January 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,290,901 | $802,959 | | Short-term investments | $973,933 | $1,212,448 | | Total current assets | $2,722,047 | $2,483,636 | | Total assets | $3,131,230 | $2,869,642 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $541,155 | $564,220 | | Convertible senior notes, net | $1,144,977 | $1,143,273 | | Total liabilities | $1,768,183 | $1,800,653 | | Total stockholders' equity | $1,363,047 | $1,068,989 | | Total liabilities and stockholders' equity | $3,131,230 | $2,869,642 | Unaudited Condensed Consolidated Statements of Operations For the three months ended July 31, 2024, total revenue grew 13% year-over-year to $478.1 million, but net loss widened to $54.5 million due to increased operating expenses, while for the six-month period, revenue grew 17% to $928.7 million, with a net loss of $135.1 million Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2024 (Three Months) | Q2 2023 (Three Months) | YTD 2024 (Six Months) | YTD 2023 (Six Months) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $478,109 | $423,791 | $928,670 | $792,071 | | Gross Profit | $349,856 | $318,454 | $677,720 | $589,285 | | Loss from Operations | ($71,440) | ($49,003) | ($169,626) | ($117,550) | | Net Loss | ($54,529) | ($37,597) | ($135,122) | ($91,843) | | Net Loss Per Share | ($0.74) | ($0.53) | ($1.84) | ($1.30) | Unaudited Condensed Consolidated Statements of Cash Flows For the six months ended July 31, 2024, net cash provided by operating activities significantly increased to $62.2 million, net cash from investing activities was $242.3 million primarily from marketable securities, and net cash from financing activities was $186.9 million, boosted by $170.6 million from capped call settlements Cash Flow Summary (Six Months Ended July 31, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $62,215 | $28,428 | | Net cash provided by investing activities | $242,277 | $101,087 | | Net cash provided by financing activities | $186,896 | $20,587 | | Net increase in cash, cash equivalents and restricted cash | $488,837 | $151,517 | Notes to Condensed Consolidated Financial Statements (unaudited) The notes provide detailed information on the company's accounting policies, business operations, and financial items, including revenue disaggregation, convertible senior notes, goodwill from the Grainite acquisition, and stock-based compensation expenses - MongoDB is a developer data platform company, with its main offering being a document-based database deployable in cloud, on-premises, or hybrid environments, with revenue primarily from software subscriptions and related services[16] - In June 2024, the company received $170.6 million in cash from the settlement of derivative assets related to the Capped Calls associated with its 2024 Notes[37] Disaggregation of Revenue (in thousands) | Category | Q2 2024 (Three Months) | Q2 2023 (Three Months) | YTD 2024 (Six Months) | YTD 2023 (Six Months) | | :--- | :--- | :--- | :--- | :--- | | By Product | | | | | | MongoDB Atlas-related | $339,683 | $267,258 | $653,538 | $505,014 | | Other subscription | $124,122 | $142,076 | $247,163 | $259,034 | | Services | $14,304 | $14,457 | $27,969 | $28,023 | | By Geography | | | | | | Americas | $284,789 | $253,485 | $556,882 | $475,831 | | EMEA | $136,824 | $113,446 | $260,120 | $218,569 | | Asia Pacific | $56,496 | $56,860 | $111,668 | $97,671 | - As of July 31, 2024, the company had $694.0 million in remaining performance obligations, with approximately 58% expected to be recognized as revenue over the next 12 months[52] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting revenue growth driven by MongoDB Atlas, which now constitutes 71% of total revenue for Q2 2024, while addressing the negative impact of the macroeconomic environment on existing Atlas applications and detailing increased operating expenses that contributed to a wider net loss, despite maintaining a strong liquidity position with $2.3 billion in cash, cash equivalents, and short-term investments Overview and Key Performance Factors MongoDB positions itself as a developer data platform company, with revenue primarily from subscriptions, driven by MongoDB Atlas, which increased to 71% of total revenue in Q2 2024, though macroeconomic headwinds have slowed growth rates for existing Atlas applications and the net ARR expansion rate has declined to approximately 119% - MongoDB Atlas revenue grew to represent 71% of total revenue for the three months ended July 31, 2024, up from 63% in the prior-year period[75] - The company experienced slower than historical growth rates for existing MongoDB Atlas applications during the first six months of fiscal 2025 due to the negative impact of the macroeconomic environment[80][83] Key Customer Metrics | Metric | July 31, 2024 | July 31, 2023 | | :--- | :--- | :--- | | Total Customers | >50,700 | >45,000 | | Direct Sales Customers | >7,300 | >6,800 | | MongoDB Atlas Customers | >49,200 | >43,500 | | Customers with >$100k ARR | 2,189 | 1,855 | - The net ARR expansion rate was approximately 119% as of July 31, 2024, a decline from historical levels of over 120%, attributed to a smaller contribution from expanding customers[86] Results of Operations This section provides a detailed comparison of financial results for the three and six months ended July 31, 2024, and 2023, showing that for the second quarter, revenue increased 13% to $478.1 million, while cost of revenue rose 22%, leading to a gross margin decline from 75% to 73%, and operating expenses increased by 15%, with notable rises in R&D (19%) and Sales & Marketing (13%), further widening the operating loss for the six-month period where revenue grew 17% and operating expenses increased 20% Comparison of Three Months Ended July 31, 2024 and 2023 (in thousands) | Item | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $478,109 | $423,791 | $54,318 | 13% | | Gross Profit | $349,856 | $318,454 | $31,402 | 10% | | Sales and marketing | $221,539 | $195,934 | $25,605 | 13% | | Research and development | $148,967 | $125,420 | $23,547 | 19% | Comparison of Six Months Ended July 31, 2024 and 2023 (in thousands) | Item | 2024 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $928,670 | $792,071 | $136,599 | 17% | | Gross Profit | $677,720 | $589,285 | $88,435 | 15% | | Sales and marketing | $440,983 | $378,667 | $62,316 | 16% | | Research and development | $295,027 | $242,237 | $52,790 | 22% | Liquidity and Capital Resources As of July 31, 2024, MongoDB's principal sources of liquidity were $2.3 billion in cash, cash equivalents, short-term investments, and restricted cash, which the company believes is sufficient to fund operations for at least the next 12 months, with cash flow from operations for the first six months of fiscal 2025 at $62.2 million, significantly up from the prior year, and a notable financing inflow of $170.6 million from the cash settlement of Capped Calls associated with the 2024 Notes - As of July 31, 2024, the company's principal sources of liquidity totaled $2.3 billion, consisting of cash, cash equivalents, short-term investments, and restricted cash[121] - In June 2024, the company received $170.6 million in cash from the settlement of Capped Calls associated with its 2024 Notes, significantly boosting cash from financing activities[121][128] Cash Flow Summary (Six Months Ended July 31, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $62,215 | $28,428 | | Net cash provided by investing activities | $242,277 | $101,087 | | Net cash provided by financing activities | $186,896 | $20,587 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks, including interest rate risk on its $2.3 billion in cash and investments, foreign currency risk from international operations, and market risk related to its portfolio of non-marketable securities valued at $18.4 million, though a hypothetical 10% change in interest rates or foreign exchange rates is not expected to have a material impact, and the fair value of its convertible notes is also subject to market risk based on the company's stock price - The company is exposed to interest rate risk on its $2.3 billion of cash, cash equivalents, and short-term investments, though a hypothetical 10% change in interest rates is not expected to have a material impact[134] - Foreign currency risk exists as a portion of operating expenses are denominated in foreign currencies, particularly GBP and EUR, however, the impact of a 10% change in exchange rates is not considered material[135] - The company holds $18.4 million in non-marketable securities as of July 31, 2024, which are subject to volatility and a risk of partial or total loss of invested capital[136] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of July 31, 2024, with no material changes to the internal control over financial reporting identified during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of July 31, 2024, the company's disclosure controls and procedures were effective at the reasonable assurance level[139] - There were no changes in internal control over financial reporting during the quarter ended July 31, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls[140] PART II. OTHER INFORMATION Item 1. Legal Proceedings On July 9, 2024, a putative class action lawsuit, Baxter v. MongoDB, Inc., et al., was filed against the company, its CEO, and CFO, alleging material misstatements regarding the company's sales strategy and financial results between August 31, 2023, and May 30, 2024, which the company intends to defend vigorously - A putative class action lawsuit was filed on July 9, 2024, against MongoDB, its CEO, and CFO, alleging violations of the Securities Exchange Act related to purported material misstatements about sales strategy and financial results[144] - The lawsuit seeks unspecified monetary damages on behalf of persons who acquired MongoDB common stock between August 31, 2023, and May 30, 2024, and the company plans to defend itself vigorously[144] Item 1A. Risk Factors This section outlines significant risks to the company's business, including adverse economic conditions impacting IT spending, dependence on customer renewals and expansion (particularly for MongoDB Atlas), intense competition from legacy database providers and cloud giants, challenges in managing rapid growth, potential security breaches, enforceability of its SSPL software license, reliance on third-party cloud providers, and various legal, regulatory, and international operational risks - Unfavorable global economic conditions, including inflation and rising interest rates, could reduce IT spending and limit business growth, with the company noting that adverse macroeconomic conditions resulted in slower than historical growth of existing Atlas applications[151][162][190] - The business heavily relies on revenue from MongoDB Atlas, and failure to meet customer demands for this service, or fluctuations in its usage-based revenue, could adversely affect financial results and make future revenue harder to predict[161][162] - The company faces significant competition from established legacy database providers (IBM, Microsoft, Oracle) and major public cloud providers (AWS, GCP, Microsoft Azure) who have greater resources and can bundle offerings[166][167] - The company's decision to offer its Community Server under the Server Side Public License (SSPL), a new and judicially untested license, may harm adoption due to legal uncertainty[172] - Security breaches or unauthorized data access could lead to loss of customer trust, litigation, and significant liability, as the company disclosed a security incident in December 2023 where a third party gained access to certain corporate applications used for customer support[194][200] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities, no use of proceeds from such sales, and no issuer purchases of equity securities during the period - There were no unregistered sales of equity securities during the reported period[341] - There were no issuer purchases of its equity securities during the reported period[343] Item 5. Other Information The company states that during the three months ended July 31, 2024, none of its executive officers or directors adopted, terminated, or modified a Rule 10b5-1 equity trading plan or a non-Rule 10b5-1 equity trading arrangement - During the three months ended July 31, 2024, no executive officers or directors adopted, terminated, or modified a Rule 10b5-1 trading plan or any non-Rule 10b5-1 trading arrangement[344] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the company's articles of incorporation, bylaws, and certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act