Thank you for standing by, and welcome to MongoDB's second quarter fiscal year 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session where you'll limit yourself to one question and one follow-up. To ask a question or raise your hand during the session, you will need to press star one one on your telephone. I would now like to hand the call over to Brian Denyeau of ICR. Please go ahead. Thank you, Latif. Good afternoon, and thank you for joining us today to review MongoDB's second quarter fiscal 2023 financial results, which we announced in our press release issued after the close of market today. Joining the call today are Dev Ittycheria, President and CEO of MongoDB, and Michael Gordon, MongoDB's COO and CFO. During this call, we will make forward-looking statements, including statements related to our market and future growth opportunities, the benefits of our product platform, our competitive landscape, customer behaviors, our financial guidance, and our planned investments. These statements are subject to a variety of risks and uncertainties, including those related to the ongoing COVID-19 pandemic and its impact on our business, results of operations, clients, and the macroeconomic environment. They cause actual results to differ materially from our expectations. For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks described in Quarterly Report on Form 10-Q for the quarter ended April 30th, 2022, filed with the SEC on June 3rd, 2022. Any forward-looking statements made on this call reflect our views only as of today, and we undertake no obligation to update them except as required by law. Additionally, we will discuss non-GAAP financial measures on this conference call. Please refer to the tables in our earnings release on the investor relations portion of our website for a reconciliation of these measures to the most directly comparable GAAP financial measures. With that, I'd like to turn the call over to Dev. Thanks, Brian, and thank you to everyone for joining us today. I will start by reviewing our second quarter results before giving you a broader company update. Let's start with our second quarter financial results. We generated revenue of $304 million, a 53% year-over-year increase, and above the high end of our guidance. Atlas revenue grew 73% year-over-year, representing 64% of revenue, and we had another strong quarter of customer growth, ending the quarter with over 37,000 customers. Overall, we are pleased with our performance and execution in Q2 despite the challenging macro environment. Let me give you a bit more context on what we saw in Q2. The new business environment remains robust, as evidenced by our record increase in direct sales customer account. We have seen no change in deal activity and sales cycles. We believe our strong new sales performance is a demonstration of the critical business value our developer data platform delivers and our superior go-to-market execution. As we have said in the past, nearly every organization uses software to drive their value proposition. Consequently, these organizations seek modern solutions that make their developers more productive. Furthermore, retention rates remain strong, further evidence that MongoDB is a non-discretionary spend for our customers. As expected, we did see the macro environment weigh on the growth of Atlas consumption. As we discussed last quarter, it's important to understand that the slower than historical consumption growth is a result of slower usage growth of our customers' underlying applications due to macro conditions. Our customers spend on our platform is well-aligned with the performance of their business. In the current environment, some businesses, and consequently their applications, are growing more slowly. Michael will address the second quarter consumption trends in more detail. Let me tell you how we are navigating the current environment. First, we are doubling down on velocity. As we've discussed with you in the past, we are in the business of bringing new workloads onto our platform and then focus on making those workloads successful. In the current environment, we are even more focused on removing friction in acquiring workloads from new and existing customers. The strength of our new business performance in the first half of the year demonstrates our success in this area. Second, we will continue to invest for the long term and will make investments in our growth initiatives and platform capabilities where we are generating strong returns. We have never taken a growth at all costs approach, and we will remain vigilant and prioritize our highest return areas. We are confident that the recent consumption trends will improve as the macro environment normalizes over time. The value proposition of the MongoDB developer data platform has never been stronger. Our conviction comes not only from our results, but also from the success our customers are having with our platform. Customers are very focused on removing complexity from their technology stack. They understand that complexity is a tax that increases expenses, creates risks, and slows down innovation. They're increasingly turning to our developer data platform to address this challenge. A multinational trillion-dollar financial services company chose MongoDB to power the next generation trading platform to cover all of their various trading businesses with one solution. Since launching the new service, the customer has been able to decommission eight legacy trading systems and realize cost savings of almost $50 million in annualized expenses. A leading Canadian security provider migrated its IoT and AI security platform away from an open source relational database to Atlas. With the ability to use MongoDB's native sharding to distribute their database over lower cost instances, the company has been able to significantly reduce their database spend by 60%, which is particularly compelling given the open source nature of their prior solution. Another one of our customer priorities is to invest in their core competencies and outsource or eliminate everything else. They understand that clinging to the old ways of delivering innovation is not only time-consuming, but also incredibly expensive. A global travel technology leader is in the process of getting out of the business of managing their own data centers. They turned to MongoDB in order to modernize a key legacy application and move it to the cloud. The monolithic application was originally built on Oracle and Elasticsearch, but the customer decided to migrate the application to Atlas because they couldn't meet their timeline and performance requirements with their existing solution. A Web 3.0 pioneer started off by building and managing their own computing infrastructure. However, the development team quickly reached a point where they were overwhelmed by day-to-day tasks of managing the infrastructure. By migrating to MongoDB Atlas, the company saved three years in development time and reduced the need to hire 40 developers. Finally, in this environment as any other, customers understand that high performance and scalability are critical to their success. A Fortune 500 consumer technology leader turned to MongoDB to replace its existing compliance platform as it needed to double the performance while lowering cost and enabling real-time visibility of operations. MongoDB was able to address the performance requirements while lowering cost by 70%. One of the world's largest healthcare companies, historically an Oracle shop, was unable to meet their desired performance expectations and had to spend tens of thousands of hours just to maintain their existing environment. Over the last few years, they have implemented MongoDB for their most demanding new projects, such as their COVID vaccine application, as well as their digital health app. Perhaps the best way to illustrate how the perception of MongoDB has changed is to review our relationship with one of the world's premier commercial investment banks. Four years ago, a senior executive at the bank told me that he didn't think MongoDB was ready to be declared a standard for their mission-critical applications. At the time, they had a myriad of relational and non-relational technologies deployed across their organization. Since then, not only did the bank become more focused on and confident in moving workloads to the cloud, but the bank's leadership team also observed how overwhelmingly popular MongoDB had become with their development teams across the organization. As a result, they decided to make MongoDB one of their enterprise standard offerings as part of their journey to the cloud. In the second quarter, they signed a multi-million-dollar agreement as a sign of their desire to use MongoDB as a preferred platform for mission-critical workloads. Our customers are not only excited about our current product offering, but also by our roadmap. We received enthusiastic feedback at this year's MongoDB World about our developer data platform vision, as well as our product announcements. To highlight a few, we announced Queryable Encryption, an industry-first feature that allows customers to query data while it remains encrypted. Given the heightened focus on security and privacy, this announcement received a lot of attention from both customers and the academic community, and currently over 60 companies, the majority of whom are Fortune 500 customers, are in development with this feature. We also announced Relational Migrator, a product that simplifies the process of migrating workloads off relational databases and onto MongoDB. Our early access program is oversubscribed and we're getting great customer feedback. Given most companies' increased focus on cost management, we believe this technology will accelerate customer confidence in replatforming applications off relational databases. We also received positive feedback related to our analytics announcements. Most notably, Atlas Data Federation and Atlas Data Lake storage are seeing healthy early adoption and use cases related to the ingestion, data transformation, and querying of large volumes of data to provide greater insights from data generated by applications on Atlas. Now I'd like to spend a few minutes reviewing some additional customer wins and interesting use cases from the second quarter. Leading German retailer Conrad Electronic built an online B2B marketplace on MongoDB. Turning to MongoDB for its simplicity as the marketplace grew, it moved from MongoDB Community Edition to Atlas for further scalability and to reduce management complexity. Conrad Electronic's database now hosts over 8 million active SKUs, which is estimated to reach 100 million SKUs by 2024. Locus Robotics, a leading warehouse robotics company, leverages Atlas to store data uploaded from their physical warehouses, including metadata, logs, configurations, and reports. Their Locus Cloud warehouse orchestration platform utilizes Atlas to store and access data for operation reports, ensuring seamless and reliable functionality for their customers. Locus Robotics selected MongoDB Atlas because they needed a fully managed data platform that allowed them to build faster and handle vast amounts of data. In their efforts to improve their automation processes, e-commerce platform Rent the Runway selected and implemented MongoDB Atlas as the database platform to streamline how garments were sorted and cleaned in their fulfillment centers. With Atlas, Rent the Runway is able to seamlessly extract data and real-time analytics from the robotic sorting arm and X-ray machines, resulting in a 67% decrease in processing time. In summary, I am pleased with our execution in the second quarter. Despite macroeconomic uncertainty, we are focusing on what we can directly control, namely bringing new customers and new workloads onto our platform. The breadth of adoption across many use cases gives us continued confidence to judiciously invest across our business to best position ourselves to fully capitalize on a long-term market opportunity. With that, here's Michael. Thanks, Dev. As mentioned, we delivered another strong performance in the second quarter, both financially and operationally. I'll begin with a detailed review of our second quarter results and then finish with our outlook for the third quarter and full fiscal year 2023. First, I'll start with our second quarter results. Total revenue in the quarter was $303.7 million, up 53% year-over-year. As Dev mentioned, we saw a continued strong new business environment and experienced no noticeable change in sales cycles. To us, this is an indication that we remain a top priority for our customers. Shifting to our product mix, Enterprise Advanced exceeded our expectations, driven by upsells to existing customers. Moving on to Atlas. Atlas grew 73% in the quarter compared to the previous year, and now represents 64% of total revenue, compared to 56% in the second quarter of fiscal 2022, and 60% last quarter. As a reminder, we recognize Atlas revenue based on customer consumption of our platform, and that consumption is closely related to end user activity of the application, which can be impacted by the macroeconomic environment. Overall, our performance this quarter was strong and we're pleased with our results. We do think it's helpful to provide investors some incremental context around the puts and takes that we are seeing in consumption trends. As you probably recall, on our Q1 call, we shared with you that we were starting to see the impact of macroeconomic uncertainty on Atlas consumption in certain pockets of our business and discussed with you the framework on how we expected the macro impact to play out for the rest of the year. Let me update you on our performance compared to this framework in Q2. Starting with our self-service channel, you'll recall that we experienced slower than historical consumption growth in Europe in Q1 and in the U.S. in May. The May consumption patterns generally continued for the remainder of Q2, and self-serve did modestly better than our expectations. Moving on to the mid-market channel. For context, the customers in this channel tend to be traditional medium-sized businesses. This channel includes a disproportionate share of digital-native, fast-growth companies that have built their businesses on MongoDB. Our expectation that the mid-market slowdown we saw in Europe in Q1 would become global in Q2. This is what we experienced, but the slowdown was more significant than we had expected. Specifically, the digital-native subset of the mid-market experienced slower growth in their applications as a result of macroeconomic conditions, and therefore their underlying consumption growth of MongoDB slowed as well. Finally, turning to enterprise, our largest channel. As of Q1, we had not seen an impact on consumption, but we expected a modest impact to manifest itself in Q2. Here, consumption growth was above our expectations in North America, while in Europe we experienced greater than expected macroeconomic headwinds. The slowdown in Europe was evidenced across all sub-regions and industries. Turning to customer growth. During the second quarter, we grew our customer base by over 1,800 customers sequentially, bringing our total customer count to over 37,000, which is up from over 29,000 in the year ago period. Of our total customer count, over 5,400 are direct sales customers, which compared to over 3,600 in the year ago period. Q1 was a record quarter of direct customer net additions, which speaks to the popularity of our platform and the relevance of our value proposition. As a reminder, our direct customer count growth is driven by customers who are net new to our platform, as well as self-service customers with whom we've now established a direct sales relationship. The growth in our total customer count is being driven in large part by Atlas, which had over 35,500 customers at the end of the quarter, compared to over 27,500 in the year ago period. It's important to keep in mind that the growth in our Atlas customer count reflects new customers to MongoDB, in addition to existing EA customers adding incremental Atlas workloads. We had another quarter of our net ARR expansion rate above 120%. We ended the quarter with 1,462 customers with at least $100,000 in ARR and annualized MRR, which is up from 1,126 in the year ago period. Moving down the income statement, I'll be discussing our results on a non-GAAP basis unless otherwise noted. Gross profit in the second quarter was $223.2 million, representing a gross margin of 73%, which is up from 72% in the year ago period. Our year-over-year margin improvement is primarily driven by improved efficiencies that we are realizing in Atlas. Our loss from operations was $12.4 million or a -4% operating margin for the second quarter, compared to a -2% operating margin in the year ago period. As a reminder, in Q2, we saw the return of large in-person events, most notably our flagship event, MongoDB World, which attracted approximately 3,000 attendees to the Javits Center in New York. Net loss in the second quarter was $15.6 million or $0.23 per share based on 68.3 million weighted average shares outstanding. This compares to a loss of $7.7 million or $0.12 per share on 63.4 million weighted average shares outstanding in the year ago period. Turning to the balance sheet and cash flow. We ended the second quarter with $1.8 billion in cash equivalents, short-term investments, and restricted cash. Operating cash flow in the second quarter was negative $44.7 million. After taking into consideration approximately $3.9 million in capital expenditures and principal repayments of finance lease liabilities, free cash flow was negative $48.6 million in the quarter. This compares to free cash flow of negative $22.7 million in the second quarter of fiscal 2022. I'd now like to turn to our outlook for the third quarter and full fiscal year 2023. For the third quarter, we expect revenue to be in the range of $300 million-$303 million. We expect non-GAAP loss from operations to be in the range of $10 million-$8 million, and non-GAAP net loss per share to be in the range of $0.19-$0.16 based on 68.9 million estimated weighted average shares outstanding. For the full fiscal year 2023, we expect revenue to be in the range of $1.196 billion-$1.206 billion. For the full fiscal year 2023, we expect non-GAAP loss from operations to be in the range of $13 million-$8 million and non-GAAP net loss per share to be in the range of $0.35-$0.28 based on 68.6 million estimated weighted average shares outstanding. I'll now provide some more context around our guidance. First, we expect the Atlas consumption trends we experienced in Q2 to continue for the remainder of the year. Second, in the second half of last year, as we called out at the time, we had exceptionally strong Atlas consumption growth, leading to difficult Atlas year-over-year compares for the back half of the year. Third, we expect a sequential decline in Enterprise Advanced in Q3 as the renewal base is sequentially lower. Looking into Q4, we expect a seasonal uptick in revenue from EA, but recall we face a very difficult year-over-year comparison given strong EA new business activity we saw last year. To summarize, MongoDB delivered strong second quarter results. Our new business performance and record direct customer net additions indicate the strong underlying demand for our developer data platform. We will continue investing responsibly in pursuit of our long-term opportunity. With that, we'd like to open up to questions. Operator? Yes, sir. As a reminder, to ask a question, you will need to press star one one on your telephone. Please limit yourself to one question and one follow-up, then return to the queue. Please stand by while we compile the Q&A roster. Our first question comes from Sanjit Singh of Morgan Stanley. Sanjit Singh, your line is open. Thank you for taking the questions. Can you hear me? Yes. Yes. Okay, great. Thank you for taking the question, guys, and congrats on the strong deal activity and momentum in Q2. I had a couple of clarifying questions, Michael, on kind of the profile in terms of the different trends we see across the business. How much does the mid-market represent as a percentage of ARR? I think self-serve is pretty straightforward to figure that out. But between mid-market and enterprise, what's the relative size of those? And did you see going into August things sort of sustaining coming out of July, or did things get worse, or did things modestly improve? Yeah. In general, the mid-market is a small portion of the overall direct business and therefore the business overall. In terms of August was consistent with what we experienced in Q2. Understood. Just a question on the operating income guidance that did come down versus your prior guidance. I was wondering if you could provide more context there on what seems to be a higher level of OpEx spend in the back half. What's driving that? Where are those investments going? Thank you. Yeah. Couple different things. You know, from a macro standpoint, if you take a step back, you know, we're investing relative to our long-term opportunity. We have very fractional penetration and continue to see, you know, robust new business. As you think about the business more holistically, new customers and new workloads are what really determine the long-term outcome and the long-term success. We continue to invest in sales and marketing and in, you know, the R&D of the platform to position ourselves to capitalize on that long-term opportunity. As it relates to expansion of existing workloads, which is sort of the other piece of the equation, that's more relevant in the short term, not as relevant in the long term. That's where we've seen the slower growth that we've described. We're continuing to take a long-term orientation. We're obviously not doing that in a vacuum or with blinders on. We've always maintained a high level of financial discipline and scrutiny, and we continue to prioritize, you know, the highest level, you know, investments and, you know, constantly, you know, monitor things to make sure that we're being appropriate in terms of positioning ourselves for the long run. Understood. I appreciate the context, Michael. Thank you. Thank you. Thank you. Our next question comes from the line of Raimo Lenschow of Barclays. Raimo Lenschow, your line is open. Yes. Two quick questions from me as well. Dev, can you talk a little bit about the, in your prepared remarks, you had quite a few interesting customer stories in terms of people standardizing on you, some very big deployments on Atlas Enterprise. What are you seeing in terms of where you are on that journey there in terms of people kind of putting much bigger workloads onto the platform than a few years ago when, you know, people were trying and testing it out versus now putting like proper stuff on there? Like, what are you seeing there, and where are we on that journey? And then one for Michael. On EA, like, you know, you kind of talked about sequential decline in Q3 as well. Can you talk a little bit about the drivers there? Because is that kind of cloud transition and more and more startups going to the cloud now and that's impacting that negatively? Is that consumption? Can you just give us an idea so that we get a better idea about the run rate there? Thank you. Hi, Raimo. To your first question, we've been essentially being used for mission-critical applications for some time now. That's evidenced by almost every bank on Wall Street using us for some important use case. We have large Fortune 500 companies in industries like telecom, media, tech, healthcare, et cetera, who are using us for very mission-critical use cases. I would say that we're still early in the journey in terms of you know having greater share in those larger accounts. You've heard us talk about our focus accounts. We're bringing more resources to bear to really drive the expansion of those existing accounts and get more workloads on our platform. That's as Michael mentioned going well. In terms of MongoDB's readiness for mission-critical platforms, we feel like we're really well positioned. We've added some new capabilities, which we announced at MongoDB World, and our roadmap is very rich with features. Our customers truly view us as a strategic platform, and that's why you're seeing more and more customers standardize on MongoDB. Yeah, Raimo, your question on EA. As you know, we manage the business on a channel basis, not a product basis, but certainly wanna try and call out some of the trends so that people can kind of put you know the guide in context and some of the things that we're thinking about. The new business environment continues to be robust, but EA continues to be a smaller and smaller percentage of that overall new business environment. As you look at the back half of the year, that continuing, you know, sort of evolution and share is sort of important to take into account. In addition, EA is subject to, you know, 606 accounting and the term license component there, which, you know, adds into the increased variability and reduced comparability that we see, you know, period to period. Lastly, as I mentioned in the prepared remarks, we did have very strong performance of EA in the second half of last year. Not only does that set up a tough compare in the classic sense, but depending on the nature of the structure of a deal, if that's a multiyear deal, the term license revenue can be recognized, you know, upfront. Not only does it, you know, boost the current period, that now becomes the year-ago period, but the current period, which is now the present period in the back half of this year, doesn't have that license revenue. You've sort of got a two-factor impact there, and just trying to call that out for folks so they understand. Thank you. Our next question comes from Kash Rangan of Goldman Sachs. Kash Rangan, your line is open. Hi, thank you very much. 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, you know, 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 P x Q, where in the customer's mind that there is inflection point, and that you could actually reap the benefits typically during these transitions, the compelling price-performance technologies gain share relative to the more expensive incumbents. Wondering what your thoughts are in that regard. Michael, one for you. As you walk through the tougher comparisons in the second half of the year, is that because of Atlas momentum? If so, how does calendar 2023 shape up if you project out these Atlas trends, and what are the things that we should be expecting as far as normalization of growth rates are concerned? Thank you so much. Hi, Kash. Thanks for your question. On your first question, I just wanna remind everyone, we're not seeing any change in deal sizes or sales cycle times. I think your point about, as you know, the customers face this macro headwind, is there an opportunity for them to essentially drive more efficiency in their business, and we're definitely seeing customers starting to do that. We're definitely seeing customers look at their legacy platforms and recognize how expensive and brittle those platforms are and are more motivated to move on to more modern platforms like MongoDB. Frankly, that, and to help customers in that journey, that was the motivation for us to release the Relational Migrator product, because this is not a new trend to help customers just reduce the cost of moving off relational to MongoDB. I think you're gonna see more and more customers take a hard look at their legacy infrastructure and think about modernizing potentially sooner than later. Yeah. Yeah. I would just to your second question about sort of second half and compares, I walked through the EA compare. On the Atlas compare, yes, last year we had very strong cohort expansion in Q3 and in Q4, that leads to, you know, difficult compares. But also, and I think this is part of your point, Kash, as you think about where we're entering the second half of the year, right? As we start off the third quarter, given some of the slower growth that we've seen in the expansion of existing cohorts, that starting ARR, you know, is at a lower point, as we look at the second half of the year, and so that will also affect fiscal 2023 results. Obviously, we're not providing fiscal 2024, you know, guidance on this call, and we'll look to do that on the March call. Certainly how the next six months, you know, play out will impact kind of the starting position for fiscal 2024. Thank you. Our next question comes from D.J. Hynes of Canaccord Genuity. D.J. Hynes, your line is open. Hey, guys. Thanks for taking the question. 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 MongoDB's developer data platform. 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? Yeah. Thanks, D.J. First of all, I want to make it clear to everyone that we don't see Snowflake in any deals, right? In terms of customer buying behavior, there's no confusion. Obviously, there is acknowledgement that there is potentially a trend of some overlap between analytics and operational OLTP stores. What we believe is that the future analytics will really be powering more intelligent applications, which is essentially automating human decision-making that is done today using existing BI tools and data warehouses. When you think about how apps become more sophisticated, it's really all about software and automation, which is really a developer challenge. One thing I think we've proven is to know how to build tools for developers to be more productive and more effective, and that's what we plan to do. I should also point out that this trend of developers doing more, we've already seen, say, in the DevOps space, where developers have taken on more of the operational responsibility that operators and data centers used to do, or in the security space, where developers are taking on more responsibility for security, and there's a whole advent of new security-focused developer tools. We think the same thing will happen in analytics, where developers will basically embed more analytics into building smarter applications. Yeah. Yeah, 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? Yeah. I think it's a couple different things. You know, there are two flavors here, and again, I would just sort of go back to this way to look at the market and how it floats through in terms of the numbers. There are new customer wins, right? That, you know, new companies are obviously being created regularly in that digital native part of the mid-market, that subset. We continue to have, you know, a very strong value proposition there. We continue to resonate. We continue to be, you know, a platform of choice, as it relates to that. In terms of the consumption side, and that's ultimately what's most important for the long term, and so our ability to land those customers, to continue to have success with those customers, is a long-term asset, and it creates the sort of long-term value proposition. In the short term, you know, depending on, you know, how long the current macroeconomic environment goes on, as we see slower growth, you know, from those customers, that will impact numbers, you know, in the short term, but that's a relatively, you know, small part of the equation. If I think about the long-term opportunity and what relative, you know, market share we have and everything else, it's sort of fairly early on. Obviously we've got to sort of navigate, you know, through that period and we talked about sort of our desire to keep, you know, an ability to keep sort of a close pulse on things, but that's really how we think about it. Thank you. Our next question comes from Karl Keirstead of UBS. Your question please, Karl Keirstead. 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. 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. Thank you. Yeah, sure. I think when you think about our second half assumptions, we generally think that they're broadly in line with what we experienced in Q2. Okay. Got it. If I could ask a follow-up, just building on the last question around these digital native customers. You probably don't wanna, you know, specifically size it, but I think it might be helpful. Like what is MongoDB's exposure to that customer segment? Was there anything specific to your vertical exposure that is worth calling out in 2Q? As I look at the vertical exposure and the regional exposure across the mid-market, it was pretty broad-based. I don't think there's anything specific worth calling out there. In terms of the, you know, the mid-market overall is a small portion, you know, of the direct business, and those digital natives are just a subset, you know, of the overall mid-market. We're sort of talking about fractions of fractions here as we kind of, you know, winnow down. What we saw in terms of the slower growth was across regions and across industries. Yeah. I also wanna add that we view this segment to be an important part of our business. We expect to add more customers in this segment over time. This segment is frankly a great signal for our future prospects. When the next generation of companies are building on top of MongoDB, that makes, frankly, us sleep a lot better at night. This is a segment that we'll continue to put a lot of focus on. Clearly, as Michael discussed, you know, there's some short-term headwinds. Thank you. Our next question comes from Phil Winslow of Credit Suisse. Your question please, Phil Winslow. My question, obviously, you highlighted some of the announcements from earlier this summer at MongoDB World. Dev, you touched on the Relational Migrator, but wondering if you'd give us some of the early feedback that you're hearing from customers, whether it be the, you know, geographic indexing, you know, secondary improvements around time series, you know, search, et cetera. Anything that's you're getting positive feedback on that you think is resonating with customers. Yeah, we're getting a lot of positive feedback on time series, much like in search, where essentially, you know, customers liked, you know, the one unified and seamless platform, a very, you know, elegant developer experience and the ability to essentially drive cost out of the business. We're seeing the same phenomenon in time series. There's a lot of demand. Again, we're taking things slowly. It's a new product. Obviously, you know, we're already seeing customers starting to use it, but it's in the early days, and we expect to get a lot of feedback. As you know, in this space, this is a multi-year journey, but we're really excited about the opportunity to drive more time series workloads on MongoDB. I should also say, you know, we've always had many customers use us for time series workloads, especially in the IoT area, but we just expect that to happen even more now that we have more capability to address these sophisticated workloads. Just to follow up on that, obviously you highlighted vendor consolidation from a relational, you know, NoSQL's perspective. But when you think about these multiple niche tools, you know, that you just mentioned, the potential of MongoDB to consolidate those, how do you think about that opportunity, once again, not just relational NoSQL, but consolidation of, call it multiple NoSQL functions and call it, you know, other functions as well? Yeah. To your point, you know, we do view the developer data platform as in some ways, not just a benefit for customers in terms of having one unified and elegant developer experience, one, you know, data silo versus multiple silos, but it also enables customers to consolidate vendors and drive more efficiency in their business. I do believe some of these niche companies are going to struggle in this environment because we've always talked about this, and I think it only becomes even more imperative as customers don't wanna use a net new technology for every net new use case. It just doesn't scale, adds much more complexity to the environment, makes the developer's life much more difficult, and I think that's gonna resonate even more now in this environment. Thank you. Our next question comes from Jason Ader of William Blair. Jason Ader, your line is open. Guys, in thinking about the lower op income guide, are you basically saying that the mix of new customers versus existing customers is different than what you expected a quarter or two ago, and basically new customers are more expensive to transact with? Is that the right way to think about the lower op income for the year guidance? No, that's not how I think about it. I think about it as being, you know, we are continuing to see good customer wins. Unit economics. Strong, you know, receptivity in the market that underscores or translates into strong customer unit economics. We are continuing to invest in building out sales. As you think about what the implication is in terms of, you know, rolling through some of the slower cohort expansion of existing Atlas customers that we're seeing, and when you run the math through, that winds up having, you know, a slight impact to our full year op income guide. I wouldn't take it as any kind of judgment or try to do any math unless some sort of incremental value of workloads or slicing and dicing it that way. Just simply looking at the market, having a long-term orientation, continuing to see strong, you know, new wins, no increases in customer churn, continuing to have the value proposition resonate and being sort of at the top of the customer priority list, wanting to continue to invest in that, as well as continuing to invest in our product capabilities and executing against our platform vision. All of which, of course, you know, monitoring how the whole package comes together. To Dev's point, you know, we've never taken a growth at all costs approach. It's always been a very financially disciplined one, but that's just sort of how the numbers run through to wind up with sort of a slight decrease in the operating income guide. Was that a tough decision to make right now, Michael, just given the optics of, you know, the revenue guide and then the op income as well? No. I think when you're looking at the long term and when you see the underlying returns that we're seeing and the success we're having in the market, no. Thank you. Thank you. Again, to ask a question, please press star one one on your telephone. Again, that's star one one on your telephone to ask a question. Our next question comes from the line of Mike Cikos of Needham & Company. Please go ahead, Mike Cikos. Hey, guys. Thanks for getting me on here. I do apologize if this is recapped already. I've just been juggling a couple of different earnings calls tonight. I did wanna ask. I know that the, on these investments in the second half of the year when you're looking at the sales and marketing and the R&D. Specifically on sales and marketing and that go-to-market, is there a way to help us think through the anticipated, whether it's headcount growth, or those assumptions around productivity? And maybe as a much more basic question, what is the anticipated time for those new hires to ramp? The follow-up I had is on the strategic collaborations you guys have. I know last quarter we were talking about the AWS announcement. In this current press release, we're talking about Google. How do those strategic relationships continue to evolve for MongoDB? Want to take this one? Yeah, sure. I think on the first question, while we you know always regardless of environment continue to sort of tweak and optimize which channels and which roles we wanna prioritize and allocate, we won't tackle that you know any differently you know than we have previously. The overall unit economics continue to be strong, sort of as I mentioned. I wouldn't think of there as being any kind of radical you know rephasing you know of the sales and marketing. When we think about the new customer wins that we're having, you saw it was a record quarter for new customer net new additions in customer count. When, you know, we've sort of crossed 1% market share and are closing in 2% market share, and our biggest challenge, as we've talked about, you know, sort of each call probably, is that, you know, our footprint coverage is very thin. When we are in conversations and in dialogues, our win rates are exceptionally high. When you marry that with some of the anecdotes and vignettes that Dev shared about customers really responding to our developer data platform, you know, we wanna continue pursuing that for the benefit, you know, of the long-term outcome. Yeah, Mike, to your second question about our strategic relationships with the hyperscale vendors, they're very strong. One is a function of how popular MongoDB is on their respective platforms. We've been constantly told that we are one of the most popular technologies that developers are running on their platforms. Two, what they've also seen is that they're the net beneficiary of our growth and the Atlas growth on their platforms because customers not only obviously, Atlas drives more online consumption of storage and compute, but customers themselves, you know, end up using other ancillary services. For the hyperscale vendor, it truly becomes a win-win relationship. You know, you talked about the AWS relationship. That relationship is going really, really well. There's so much engagement happening in literally almost every theater of the world. The GCP relationship has historically been strong and remains so, and the Azure relationship is actually picking up, and we're seeing a lot more activity with the Microsoft Azure team. In general, I would frame the relationships with the hyperscale vendors to be very, very good. Thank you. Our next question comes from Rishi Jaluria of RBC Capital Markets. Your line is open, Rishi Jaluria. Well, wonderful. Thanks, guys. Well, I wanted to ask, first, maybe just thinking through the consumption, you know, patterns and the visibility there. Can you remind us, within Atlas, you know, 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 will be helpful, and then I have a follow-up. Yeah. The underlying usage is extremely tied to the database activity and the underlying usage and application of the application. The value that we're driving is highly aligned to, you know, the value that the customers are seeing out of it. Okay, great. You know, on the call, you did mention an example of a customer migrating a legacy monolithic app to the cloud, and you called out replacing both Oracle and Elastic in that. Can you maybe talk, you know, since you announced Atlas Search at the conference, you know, how does the replacement opportunity look? How do you think about that in the long run? You know, what sort of early momentum have you seen with that product? Thank you. The opportunity is quite big. The momentum I just want to remind you, we're you know Elasticsearch offers other capabilities outside of application search, which is our particular focus there in logs and some security use cases which we're not pursuing. We're really focused on again the persona of the developer. In that area, we see a big opportunity and that example kind of makes the point. Rather than using an OLTP platform and a bolt-on some search database, with MongoDB, now you can have one seamless and unified platform, a very elegant developer experience, and you don't have to invest in tooling to move data between your OLTP platform and your search database and vice versa. That enables the customer to have a much more, you know, effective and performant system than using multiple solutions and customers are really resonating with that. To your question about how things are going, we don't see any market constraints. Frankly, we're trying to enable our sales force as quickly as possible all around the world to really get comfortable and conversant in kind of addressing this use case with our customers, and we're quite excited about the opportunity. Thank you. Our next question comes from Steve Koenig of SMBC Nikko Securities. Your line is open, Steve Koenig. Hi, gentlemen. Thanks for taking my question. 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. You know, 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, you know, kind of trended in Q2? And kind of, bigger picture, what are your customers saying about their willingness to invest, you know, kind of given macro uncertainties here? I would say the tone is very positive and we feel really, really good about, you know, winning new workloads. The morale of our sales force is very high. They're very excited about the opportunity in front of them. We feel really, really good about the opportunity to add both new customers as well as new workloads onto our platform. That's a huge priority for us, you know, in the back half of the year as well. Terrific. Thanks for that. Michael, for you, so you helped us understand what was behind the lower operating income guide with some granularity. Maybe if I could just back up and just make it super kinda simple for me. You're raising your revenue guidance, but you're lowering the operating income guidance, and the delta is spending. I guess, would I be correct in concluding that you're accelerating the pace of spending in the second half versus what you previously anticipated? You know, and if so, kind of in what areas? That's all I have and thanks again. Yeah. Thanks, Steve. It's not quite how I think about it. I think when you look at the investments that we're planning on making, they're primarily in both sales and marketing and R&D for all the reasons that we've previously discussed, both in terms of increasing our footprint coverage as well as executing, you know, against our product roadmap. I think really what you see is as we look at the revenue for the second half of the year, by the fact that we have Took our, you know, guide up by less than the beat in Q2, right? You can see that there's implied, you know, less revenue in the second half, but we are executing against the long-term opportunity, in particular, against those two areas. I think it's just a sort of mathematical consequence of that more than anything else. We're quite aware of the current environment, and we keep a close pulse on everything, but we're not, you know, radically pivoting, given that we're seeing incredibly strong customer reception. We're seeing record new customer wins. The value proposition is resonating, not just despite the current environment, but in some cases because of the current environment, as we've talked about. As we position ourselves for the long term, that's really kinda how that plays out, you know, over the next couple quarters. Thank you. Our next question comes from Brent Bracelin of Piper Sandler. Your line is open, Brent Bracelin. Thank you for taking the question. Can you hear me? Yes. Hey, Brent. Okay, great. I thought I heard a little click there. Good afternoon. I wanted to, Michael, start with you here. If I look at the implied second half guidance and actually drill down into the implied Q4 revenue guide, it is well below the normal Q4 seasonal uptick that we typically see in this business. How much of that guide is tied to EA, the ratable components of EA, and the fact that there's less visibility you have into some of those larger EA ratable deals? It does look like the guide implies Q4 will be, you know, well below normal seasonal patterns. Just trying to, you know, double-click into what you factored in there on EA. Thanks. A few different things. Thanks, Brent. A few different things. One, yes, we have continued to assume that EA continues to be a lower portion, you know, of the business. We talked about our expectations for Q3 in terms of EA being down sequentially. That's certainly a factor. Secondly, you know, I probably should have started with this, but like, you know, as you know, we do run the business on a channel basis, and the sort of products have to come out, but we do have to have some point of view on products in order to come up with our revenue forecast. That's what's happening, you know, as it relates to EA. In terms of Atlas, you're seeing two things. One, just like EA, they also have very tough Atlas compares year over year. Again, remember that in Q3 and Q4, that's when we saw the, you know, significant acceleration in cohort expansion from existing applications in the year ago period. The third thing that I'd say is we're entering the back half of the year, meaning we start Q3 with, you know, less in the way of ARR than we would have had we seen historical trends. When you start to flow that through, even if you instantly reverted to normalized levels, you would wind up with less revenue in the back half of the year. We are also assuming that the trends that we saw in Q2 continue in the second half of the year. The guidance that we've provided for the second half of the year really is the output of all of that. Got it. That's helpful color. Just, Dev, as a quick follow-up for you here. As we think about financial services vertical in particular, that's an area where we've seen some job postings really start to pop up at some higher profile financial customers. I think Snowflake specifically called out financial services as an area of strength for them, as they kinda lean in to some of these emerging technologies. What are you seeing in financial services? Maybe just double-click a little bit more on that specific vertical and what you're seeing. Thanks. Yeah. Financial services has historically been a strong vertical for us, and it remains as such. In fact, we feel really bullish about the opportunities. As you know, in financial services, there were a lot of regulatory constraints about how quickly customers could move certain workloads to the cloud. A lot of those customers are much more inclined to move workloads to the cloud now than they say they were two, three, four years ago. That trend is a tailwind for us. In general, financial services customers are also, you know, very apt to try and drive more innovation, as they see, obviously, competitor pressures from the next generation of companies. They're also very quick to recognize when they need to drive their innovation agenda more aggressively. Obviously, you know, MongoDB comes into play. Financial services historically is the company to try a lot of technologies to see ultimately who's gonna be the winner in any particular sector. As we clearly become the leading player in this next generation data platform space, it's clear that, you know, financial services companies are now more comfortable on standardizing on MongoDB, so we're starting to see that phenomenon as well. I think in general, we expect financial services to be a big part, you know, of our plans for the long term. Thank you. Our next question comes from Tyler Radke of Citi. Tyler Radke, your line is open. Thanks for taking the question. Michael, I just wanted to go back to make sure I understood, kind of what your underlying assumptions and commentary are on the macro environment. I guess just first, how should we think about the relative sizing of these digital native customers that you're calling out? You know, is this kind of mid-single digit percent of revenue? And then last quarter, I think you talked about a $30 million-$35 million macro headwind for the full year. I just wanna clarify, are you saying it's a little bit worse than that or that's kind of the same expectations, as last quarter? Thank you. Sure. Yeah. Thanks, Tyler. Remember, the mid-market is the smallest piece of the overall direct customer sales channel, and the digital natives are a small subset of the mid-market. Again, as I mentioned earlier, we're sort of talking about fractions of fractions. And then in terms of your question around basically how does the back half of the year compare? As I called out in the prepared remarks, we had some areas that were better than expected, so self-serve, enterprise in North America, you know, overall new business activity in general were all to the positive. In terms of the existing consumption or the sort of growth of existing applications, it was weaker in Europe, across the board, meaning both enterprise and mid-market, and then mid-market sort of without regard to industry, you know, or geography. A little bit of pluses and minuses as you think relative to sort of the stake that we put in the ground back in June. In terms of the second half of the year, obviously as I mentioned earlier, you know, our effective outlook is worse than it was in June, but we're assuming that the trends that we saw in Q2 continue for the balance of the year. Okay. Thanks for that. As I think about your largest customers, you know, your enterprise customers, not necessarily Enterprise Advanced revenue, how are you thinking about that consumption maintaining in the back half of this year? I guess, billings, you know, was really strong again, north of 50%. Do you have better visibility, you know, or is more of that revenue kind of coming from pre-committed contracts or from the balance sheet? Yeah. If you think about the enterprise channel, on a product mix basis, obviously it will be, you know, disproportionate or, you know, more representative EA, you know, relative to Atlas, although we are increasingly seeing Atlas and the Atlas value proposition resonate at the high end of the market, you know, as well. I don't think it's just as simple, as, you know, trying to slice that channel by product. We continue to see, you know, strong new business, you know, in enterprise globally. On the consumption patterns, North American enterprise has been very strong and it's been better than our expectations. As I mentioned, Europe being a little weaker. Thank you. Our next question comes from Fred Havemeyer of Macquarie. Your line is open, Fred Havemeyer. Hey. Thank you. When you look at your Atlas consumption model, do you think that Atlas' alignment with your end customer's demand trends means that you're more or less seeing the macro downturn in essentially real time, something that maybe is a little more unique here versus other software vendors? Do you think that this alignment also means that you could see the benefits of an economic recovery sooner than other, you know, annual subscription software models? I think the short answer, Fred, is yes, we do think it's a more real-time reflection, given that we're really, you know, sort of a second order effect of the underlying activity in their applications. Obviously we're not macroeconomists, and so I'm not forecasting a recovery. Yes, theoretically, that, you know, if there were increases in activity and increases in underlying usage, that would drive incremental consumption of our platform. Thank you. I'll fire one more out there quickly. You know, we got quite excited about Queryable Encryption, and I wanted to ask less about Queryable Encryption, but more about just generally your innovation. Because, you know, using structured encryption, very interesting. You're always at kind of the bleeding edge in an already technical market in terms of products and functionality. I wanted to ask, how do you think about investing into R&D spend generally for technical innovation versus kind of incremental platform updates? Do you think that in this labor market with tech layoffs rising, do you see tactical hiring opportunities? Yeah. I will answer the second part of your question first. Clearly, we feel really good about the team we had, and we tend to hire, you know, some of the best and brightest engineers in the marketplace. Clearly, in this macro environment, we'll be opportunistic. If there's an opportunity to do some acqui-hiring, you know, we'll certainly pursue that path if it makes sense. In terms of your question around, you know, our, you know, R&D philosophy, I would say that it's really driven first and foremost by, one, customer feedback. With 37,000 customers, we have a lot of customers who give us feedback. It's also driven by essentially our instincts about where the market's going and what developers may need going forward. As I talked about earlier, answering one of the other questions, we think the scope of the role of a developer is only expanding over time, and we think that the developer can do more, especially in the area of analytics. With regards to Queryable Encryption, you know, this is one of the classic challenges that we've had in software is the, you know, encrypting data is nice because it secures the data, but then it becomes very hard to use that data. If you can kind of almost have your cake and eat it too by making that data queryable while keeping it secure, especially in an environment where people care a lot about security and privacy, that becomes a win-win. You know, obviously, we have a team, a very strong team in the security space, and we were able to leverage some, you know, very cutting-edge work going on in academia to leverage a couple of people to join us and help us build this feature. We're really excited about the opportunity that we have in front of us. Thank you. Thank you. At this time, I'd like to turn the call back over to Dev Ittycheria for closing remarks. Sir? Well, I wanna thank everyone for joining us today. We obviously had a really strong Q2. The new business environment really remains quite robust, and customers continue to gravitate to the developer data platform to reduce complexity, you know, outsource undifferentiated work, and drive more efficiencies. We, you know, did see some consumption headwinds in the quarter, and that's really tied to the growth of the underlying applications. Those applications, you know, are growing more slowly than historical trends. We remain incredibly optimistic about the opportunities in front of us, and we will be investing for the long term as an opportunity. Thank you very much for your time, and we'll talk to you soon. This concludes today's conference call. Thank you for participating. You may now disconnect.