SEC Filing | MongoDB, Inc.

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mdb-20220430

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

___________________

FORM 10-Q

___________________

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38240

___________________

MONGODB, INC.

(Exact Name of Registrant as Specified in its Charter)

___________________


Delaware		26-1463205
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1633 Broadway,	38th Floor
New York,	NY	10019
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 646-727-4092

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

MDB

The Nasdaq Stock Market LLC

(Nasdaq Global Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	þ	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of May 31, 2022, there were 68,114,986 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

Table of Contents


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of April 30, 2022 and January 31, 2022	1
	Unaudited Condensed Consolidated Statements of Operations for the three months ended April 30, 2022 and 2021	2
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended April 30, 2022 and 2021	3
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit)	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended April 30, 2022 and 2021	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 3.	Defaults Upon Senior Securities	63
Item 4.	Mine Safety Disclosures	63
Item 5.	Other Information	63
Item 6.	Exhibits	64
Signatures		65

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

MONGODB, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars, except share and per share data)

(unaudited)


	April 30, 2022		January 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	456,275	$	473,904
Short-term investments	1,372,420		1,352,019
Accounts receivable, net of allowance for doubtful accounts of $4,217 and $4,966 as of April 30, 2022 and January 31, 2022, respectively	164,885		195,383
Deferred commissions	66,754		63,523
Prepaid expenses and other current assets	35,973		32,573
Total current assets	2,096,307		2,117,402
Property and equipment, net	62,761		62,625
Operating lease right-of-use assets	45,248		41,745
Goodwill	57,775		57,775
Acquired intangible assets, net	18,313		20,608
Deferred tax assets	1,963		1,939
Other assets	152,174		147,494
Total assets	$	2,434,541	$	2,449,588
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,204	$	5,234
Accrued compensation and benefits	87,717		112,568
Operating lease liabilities	8,671		8,084
Other accrued liabilities	49,216		48,848
Deferred revenue	351,914		352,001
Total current liabilities	503,722		526,735
Deferred tax liability, non-current	93		81
Operating lease liabilities, non-current	40,279		38,707
Deferred revenue, non-current	23,555		23,179
Convertible senior notes, net	1,137,361		1,136,521
Other liabilities, non-current	56,652		57,665
Total liabilities	1,761,662		1,782,888
Commitments and contingencies (Note7)

Stockholders’ equity:
Common stock, par value of $0.001 per share; 1,000,000,000 shares authorized as of April 30, 2022 and January 31, 2022; 68,160,434 shares issued and 68,061,063 shares outstanding as of April 30, 2022; 67,543,731 shares issued and 67,444,360 shares outstanding as of January 31, 2022	68		67
Additional paid-in capital	1,945,737		1,860,514
Treasury stock, 99,371 shares (repurchased at an average of $13.27 per share) as of April 30, 2022 and January 31, 2022	(1,319)		(1,319)
Accumulated other comprehensive loss	(4,679)		(2,928)
Accumulated deficit	(1,266,928)		(1,189,634)
Total stockholders’ equity	672,879		666,700
Total liabilities and stockholders’ equity	$	2,434,541	$	2,449,588

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MONGODB, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of U.S. dollars, except share and per share data)

(unaudited)


	Three Months Ended April 30,
		2022		2021
Revenue:
Subscription		$	274,581	$	174,570
Services		10,866		7,078
Total revenue		285,447		181,648
Cost of revenue:
Subscription		64,569		45,402
Services		13,646		9,126
Total cost of revenue		78,215		54,528
Gross profit		207,232		127,120
Operating expenses:
Sales and marketing		150,268		97,890
Research and development		96,372		64,751
General and administrative		36,532		25,925
Total operating expenses		283,172		188,566
Loss from operations		(75,940)		(61,446)
Other income (expense):
Interest income		624		173
Interest expense		(2,453)		(3,658)
Other income (expense), net		1,621		(437)
Loss before provision for (benefit from) income taxes		(76,148)		(65,368)
Provision for (benefit from) income taxes		1,146		(1,376)
Net loss		$	(77,294)	$	(63,992)
Net loss per share, basic and diluted		$	(1.14)	$	(1.04)
Weighted-average shares used to compute net loss per share, basic and diluted		67,706,502		61,361,670

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

MONGODB, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands of U.S. dollars)

(unaudited)


	Three Months Ended April 30,
		2022		2021
Net loss		$	(77,294)	$	(63,992)
Other comprehensive loss, net of tax:
Unrealized (loss) gain on available-for-sale securities		(2,364)		34
Foreign currency translation adjustment		613		(90)
Other comprehensive loss		(1,751)		(56)
Total comprehensive loss		$	(79,045)	$	(64,048)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MONGODB, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands of U.S. dollars, except share data)

(unaudited)


	Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balances as of January 31, 2022	67,444,360	$	67	$	1,860,514	$	(1,319)	$	(2,928)	$	(1,189,634)	$	666,700
Cumulative effect of accounting change	—	—		—		—		—		—		—
Stock option exercises	235,517	—		1,656		—		—		—		1,656
Vesting of early exercised stock options	—	—		—		—		—		—		—
Vesting of restricted stock units	381,178	1		—		—		—		—		1
Stock-based compensation	—	—		83,566		—		—		—		83,566
Conversion of convertible senior notes	8	—		1		—		—		—		1
Unrealized loss on available-for-sale securities	—	—		—		—		(2,364)		—		(2,364)
Foreign currency translation adjustment	—	—		—		—		613		—		613
Net loss	—	—		—		—		—		(77,294)		(77,294)
Balances as of April 30, 2022	68,061,063	$	68	$	1,945,737	$	(1,319)	$	(4,679)	$	(1,266,928)	$	672,879


	Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount
Balances as of January 31, 2021	60,898,451	$	61	$	932,332	$	(1,319)	$	(704)	$	(935,403)	$	(5,033)
Cumulative effect of accounting change	—	—		(309,381)		—		—		52,635		(256,746)
Stock option exercises	483,787	1		3,539		—		—		—		3,540
Vesting of early exercised stock options	—	—		10		—		—		—		10
Vesting of restricted stock units	341,939	—		—		—		—		—		—
Stock-based compensation	—	—		50,914		—		—		—		50,914
Conversion of convertible senior notes	372,096	—		2,999		—		—		—		2,999
Unrealized gain on available-for-sale securities	—	—		—		—		34		—		34
Foreign currency translation adjustment	—	—		—		—		(90)		—		(90)
Net loss	—	—		—		—		—		(63,992)		(63,992)
Balances as of April 30, 2021	62,096,273	$	62	$	680,413	$	(1,319)	$	(760)	$	(946,760)	$	(268,364)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MONGODB, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)

(unaudited)


	Three Months Ended April 30,
	2022		2021
Cash flows from operating activities
Net loss	$	(77,294)	$	(63,992)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	3,787		3,251
Stock-based compensation	83,566		50,914
Amortization of debt issuance costs	840		1,427
Amortization of finance right-of-use assets	994		994
Amortization of operating right-of-use assets	2,018		1,522
Deferred income taxes	(61)		(1,585)
Accretion of discount on short-term investments	2,231		1,527

Gain on non-marketable securities	(1,751)		—
Unrealized foreign exchange loss	581		315
Change in operating assets and liabilities:
Accounts receivable	28,740		35,145
Prepaid expenses and other current assets	(3,293)		(9,027)
Deferred commissions	(4,722)		(5,882)
Other long-term assets	(358)		23
Accounts payable	1,023		224

Accrued liabilities	(23,016)		(17,152)
Operating lease liabilities	(2,192)		(1,027)
Deferred revenue	152		9,749
Other liabilities, non-current	329		3,791
Net cash provided by operating activities	11,574		10,217
Cash flows from investing activities
Purchases of property and equipment	(2,538)		(627)
Acquisition, net of cash acquired	—		(4,469)
Investment in non-marketable securities	(1,119)		(936)
Proceeds from maturities of marketable securities	75,000		100,000
Purchases of marketable securities	(100,146)		(101,479)
Net cash used in investing activities	(28,803)		(7,511)
Cash flows from financing activities

Proceeds from exercise of stock options	1,656		3,539


Principal repayments of finance leases	(595)		(1,199)

Repayments of convertible senior notes attributable to principal	—		(27,594)


Net cash provided by (used in) financing activities	1,061		(25,254)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,467)		(94)
Net decrease in cash, cash equivalents and restricted cash	(17,635)		(22,642)
Cash, cash equivalents and restricted cash, beginning of period	474,420		430,222
Cash, cash equivalents and restricted cash, end of period	$	456,785	$	407,580
Supplemental cash flow disclosure
Cash paid during the period for:
Income taxes, net of refunds	$	1,589	$	995
Interest expense, net	$	755	$	819





Reconciliation of cash, cash equivalents and restricted cash within the condensed consolidated balance sheets, end of period, to the amounts shown in the statements of cash flows above:
Cash and cash equivalents	$	456,275	$	407,055
Restricted cash, non-current	510		525
Total cash, cash equivalents and restricted cash	$	456,785	$	407,580

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MONGODB, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

MongoDB, Inc. (“MongoDB” or the “Company”) was originally incorporated in the state of Delaware in November 2007 under the name 10Gen, Inc. In August 2013, the Company changed its name to MongoDB, Inc. The Company is headquartered in New York City. MongoDB is the leading modern, general purpose database platform. The Company’s robust platform enables developers to build and modernize applications rapidly and cost-effectively across a broad range of use cases. Organizations can deploy the Company’s platform at scale in the cloud, on-premise or in a hybrid environment. In addition to selling subscriptions to its software, the Company provides post-contract support, training and consulting services for its offerings. The Company’s fiscal year ends on January 31.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim condensed consolidated balance sheet as of April 30, 2022, the interim condensed consolidated statements of stockholders’ equity (deficit) for the three months ended April 30, 2022 and 2021, the interim condensed consolidated statements of operations and of comprehensive loss for the three months ended April 30, 2022 and 2021 and the interim condensed consolidated statements of cash flows for the three months ended April 30, 2022 and 2021 are unaudited. The interim unaudited condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position as of April 30, 2022, its statements of stockholders’ equity (deficit) as of April 30, 2022 and 2021, its results of operations and of comprehensive loss for the three months ended April 30, 2022 and 2021 and its statements of cash flows for the three months ended April 30, 2022 and 2021. The financial data and the other financial information disclosed in the notes to these interim condensed consolidated financial statements related to the three-month periods are also unaudited. The results of operations for the three months ended April 30, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2023 or for any other future year or interim period.

The interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and accounts have been eliminated. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission. The condensed balance sheet data as of January 31, 2022 was derived from the Company’s audited financial statements, but does not include all disclosures required by U.S. GAAP. Therefore, these interim unaudited condensed consolidated financial statements and accompanying footnotes should be read in conjunction with the Company’s annual consolidated financial statements and related footnotes included in its Annual Report on Form 10-K for the fiscal year ended January 31, 2022 (the “2022 Form 10-K”).

Use of Estimates

The preparation of the interim unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, revenue recognition, allowances for doubtful accounts, the incremental borrowing rate related to the Company’s lease liabilities, stock-based compensation, legal contingencies, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, fair value of non-marketable securities and accounting for income taxes. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events.

The ongoing COVID-19 pandemic has impacted demand and supply for a broad variety of goods and services, including demand from the Company’s customers, while also disrupting sales channels and marketing activities for an unknown period of time.

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or adjust

Table of Contents

MONGODB, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s financial statements.

Significant Accounting Policies

There have been no changes to the Company’s significant accounting policies as described in the Company’s 2022 Form 10-K.

3. Fair Value Measurements

The following tables present information about the Company’s financial assets that have been measured at fair value on a recurring basis as of April 30, 2022 and January 31, 2022 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):


	Fair Value Measurement as of April 30, 2022
	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents:
Money market funds	$	288,993	$	—	$	—	$	288,993
Short-term investments:
U.S. government treasury securities	1,372,420		—		—		1,372,420
Total financial assets	$	1,661,413	$	—	$	—	$	1,661,413


	Fair Value Measurement as of January 31, 2022
	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents:
Money market funds	$	331,221	$	—	$	—	$	331,221
Short-term investments:
U.S. government treasury securities	1,352,019		—		—		1,352,019
Total financial assets	$	1,683,240	$	—	$	—	$	1,683,240

The Company utilized the market approach and Level 1 valuation inputs to value its money market mutual funds and U.S. government treasury securities because published net asset values were readily available. The contractual maturity of all marketable securities was less than one year as of April 30, 2022 and January 31, 2022. As of April 30, 2022, unrealized losses on our U.S. government treasury securities were approximately $5.8 million, net of tax. The increase in market interest rates as of April 30, 2022 has resulted in unrealized losses on these securities. The Company intends to hold these securities to maturity and, as a result, does not expect to realize these losses in its financial statements. The Company concluded that an allowance for credit losses was unnecessary for short-term investments as of April 30, 2022. Gross realized gains and losses were not material for each of the three-month periods ended April 30, 2022 and 2021.

Convertible Senior Notes

The Company measures the fair value of its outstanding convertible senior notes on a quarterly basis for disclosure purposes. The Company considers the fair value of its convertible senior notes at April 30, 2022 to be a Level 2 measurement due to limited trading activity of the convertible senior notes. Refer to Note 5, Convertible Senior Notes, for further details.

Non-marketable Securities

As of April 30, 2022 and January 31, 2022, the total amount of non-marketable equity and debt securities included in other assets on the Company’s condensed consolidated balance sheets were $7.7 million and $4.8 million, respectively. During the three months ended April 30, 2022, the Company invested an additional $1.1 million of its cash in non-marketable equity securities. In addition, the Company recognized a gain on certain of these non-marketable securities of $1.8 million during the three months ended April 30, 2022. No gain or loss was recognized for the three months ended April 30, 2021.

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MONGODB, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Refer to Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of the Company’s 2022 Form 10-K for further information. The Company considers these assets as Level 3 within the fair value hierarchy. The estimation of fair value for these investments is inherently complex due to the lack of readily available market data and inherent lack of liquidity and requires the Company’s judgment and the use of significant unobservable inputs in an inactive market. In addition, the determination of whether an orderly transaction is for the identical or a similar investment requires significant management judgment, including understanding the differences in the rights and obligations of the investments, the extent to which those differences would affect the fair values of those investments and the stage of operational development of the entities.

4. Goodwill and Acquired Intangible Assets, Net

There were no material changes to goodwill carrying amounts during the three months ended April 30, 2022. The gross carrying amounts and accumulated amortization of the Company’s intangible assets were as follows (in thousands):


	April 30, 2022
	Gross Carrying Value		Accumulated Amortization		Net Book Value		Weighted-Average Remaining Useful Life (in years)
Developed technology	$	38,100	$	(24,517)	$	13,583	2.4
Customer relationships	15,200		(10,470)		4,730		1.6
Total	$	53,300	$	(34,987)	$	18,313


	January 31, 2022
	Gross Carrying Value		Accumulated Amortization		Net Book Value		Weighted-Average Remaining Useful Life (in years)
Developed technology	$	38,100	$	(22,982)	$	15,118	2.6
Customer relationships	15,200		(9,710)		5,490		1.8
Total	$	53,300	$	(32,692)	$	20,608

Acquired intangible assets are amortized on a straight-line basis. Amortization expense of intangible assets was $2.3 million and $2.2 million for the three months ended April 30, 2022 and 2021, respectively. Amortization expense for developed technology was included as research and development expense in the Company’s condensed consolidated statements of operations. Amortization expense for customer relationships was included as sales and marketing expense in the Company’s condensed consolidated statements of operations.

As of April 30, 2022, future amortization expense related to the intangible assets is as follows (in thousands):


Years Ending January 31,
Remainder of 2023	$	6,885
2024	8,505
2025	2,130
2026	680
2027	113

Total	$	18,313

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MONGODB, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. Convertible Senior Notes

The net carrying amounts of the Company’s convertible notes were as follows for the periods presented (in thousands):


	April 30, 2022		January 31, 2022
	2026 Notes		2026 Notes
Principal	$	1,149,986	$	1,149,988

Unamortized debt issuance costs	(12,625)		(13,467)
Net carrying amount	$	1,137,361	$	1,136,521

As of April 30, 2022, the estimated fair value (Level 2) of the outstanding 2026 Notes (as defined herein), which is utilized solely for disclosure purposes, was approximately $2.1 billion. The fair value was determined based on the closing trading price per $100 of the 2026 Notes as of the last day of trading for the period. The fair value of the 2026 Notes is primarily affected by the trading price of the Company’s common stock and market interest rates.

In January 2020, the Company issued $1.0 billion aggregate principal amount of 0.25% convertible senior notes due 2026 in a private placement and, also in January 2020, the Company issued an additional $150.0 million aggregate principal amount of convertible senior notes pursuant to the exercise in full of the initial purchasers’ option to purchase additional convertible senior notes (collectively, the “2026 Notes”). The 2026 Notes are senior unsecured obligations of the Company and interest is payable semiannually in arrears on July 15 and January 15 of each year, beginning on July 15, 2020, at a rate of 0.25% per year. The 2026 Notes will mature on January 15, 2026, unless earlier converted, redeemed or repurchased. The total net proceeds from the offering, after deducting initial purchase discounts and estimated debt issuance costs, were approximately $1.13 billion.

Refer to Note 6, Convertible Senior Notes, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of the Company’s 2022 Form 10-K for further information on the 2026 Notes.

During the three months ended April 30, 2022, the conditional conversion feature of the 2026 Notes was triggered as the last reported sale price of the Company's common stock was more than or equal to 130% of the conversion price for at least 20 trading days in the period of 30 consecutive trading days ending on April 30, 2022 (the last trading day of the fiscal quarter) and therefore the 2026 Notes are currently convertible, in whole or in part, at the option of the holders from May 1, 2022 through July 31, 2022. Whether the 2026 Notes will be convertible following such period will depend on the continued satisfaction of this condition or another conversion condition in the future.

During the three months ended April 30, 2022, certain holders elected to redeem an immaterial aggregate principal amount of the 2026 Notes. The Company elected to settle the redemption through the issuance of common stock. The Company may elect to repay the 2026 Notes in cash, shares of the Company’s common stock or a combination of both cash and shares with respect to future conversions of the 2026 Notes.

Capped Calls

In connection with the pricing of the issuance of our convertible notes due June 15, 2024 (the “2024 Notes”) and the 2026 Notes, the Company entered into privately negotiated capped call transactions with certain counterparties (the “Capped Calls”). The Capped Calls associated with the 2024 Notes each have an initial strike price of approximately $68.15 per share, subject to certain adjustments, which corresponded to the initial conversion price of the 2024 Notes. These Capped Calls have initial cap prices of $106.90 per share, subject to certain adjustments.

The Capped Calls associated with the 2026 Notes each have an initial strike price of approximately $211.20 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes. These Capped Calls have initial cap prices of $296.42 per share, subject to certain adjustments. The Company did not unwind any of its Capped Calls through April 30, 2022.

Refer to Note 6, Convertible Senior Notes, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of the Company’s 2022 Form 10-K for further information on the Capped Calls and the 2024 Notes.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. Leases

The Company has entered into non-cancelable operating and finance lease agreements, principally real estate for office space globally. The Company may receive renewal or expansion options, leasehold improvement allowances or other incentives on certain lease agreements. Lease terms range from 1 to 12 years and may include renewal options, which the company deems reasonably certain to be renewed. The exercise of the lease renewal option is at the company's discretion.

The Company entered into a new agreement to lease office space in Gurgaon, India for a term of five years with total estimated aggregate base rent payments of $7.0 million. This lease commenced and payments began in April 2022.

Lease Costs

The components of the Company’s lease costs included in its condensed consolidated statement of operations were as follows (in thousands):


	Three Months Ended April 30,
		2022		2021
Finance lease cost:
Amortization of finance lease right-of-use assets		$	994	$	994
Interest on finance lease liabilities		750		819
Operating lease cost		2,564		1,907
Short-term lease cost		537		66
Total lease cost		$	4,845	$	3,786

Balance Sheet Components

The balances of the Company’s finance and operating leases were recorded on the condensed consolidated balance sheet as follows (in thousands):


	April 30, 2022		January 31, 2022
Finance Lease:
Property and equipment, net	$	30,469	$	31,463
Other accrued liabilities (current)	5,257		4,511
Other liabilities, non-current	47,830		49,173
Operating Leases:
Operating lease right-of-use assets	$	45,248	$	41,745
Operating lease liabilities (current)	8,671		8,084
Operating lease liabilities, non-current	40,279		38,707

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Supplemental Information

The following table presents supplemental information related to the Company’s finance and operating leases (in thousands, except weighted-average information):


	Three Months Ended April 30,
		2022			2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance lease		$	750		$	819
Operating cash flows from operating leases		2,722			1,506
Financing cash flows from finance lease		595			1,199
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		$	5,744		$	11,924
Weighted-average remaining lease term (in years):
Finance lease		7.7			8.7
Operating leases		6.6			7.9
Weighted-average discount rate:
Finance lease		5.6		%	5.6		%
Operating leases		5.0		%	4.3		%

Maturities of Lease Liabilities

Future minimum lease payments under non-cancelable finance and operating leases on an annual undiscounted cash flow basis as of April 30, 2022 were as follows (in thousands):


Year Ending January 31,	Finance Lease		Operating Leases
Remainder of 2023	$	6,055	$	8,089
2024	8,073		10,364
2025	8,445		8,670
2026	8,711		7,273
2027	8,711		6,155
Thereafter	25,407		16,880
Total minimum payments	65,402		57,431
Less imputed interest	(12,315)		(8,481)
Present value of future minimum lease payments	53,087		48,950
Less current obligations under leases	(5,257)		(8,671)
Non-current lease obligations	$	47,830	$	40,279

7. Commitments and Contingencies

Non-cancelable Material Commitments

During the three months ended April 30, 2022, other than certain non-cancelable operating leases described in Note 6, Leases, there have been no material changes outside the ordinary course of business to the Company’s contractual obligations and commitments from those disclosed in the 2022 Form 10-K.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Legal Matters

From time to time, the Company has become involved in claims, litigation and other legal matters arising in the ordinary course of business, including intellectual property claims, labor and employment claims and breach of contract claims. For example, on March 12, 2019, Realtime Data LLC (“Realtime”) filed a lawsuit against the Company in the United States District Court for the District of Delaware alleging that the Company is infringing three U.S. patents that it holds: U.S. Patent No. 9,116,908, U.S. Patent No. 9,667,751 and U.S. Patent No. 8,933,825. On May 4, 2021, in a consolidated action that includes Realtime's case against MongoDB, the District Court granted certain defendants' motion to dismiss without prejudice, finding that the patents are invalid under 35 U.S.C. § 101. Realtime filed an amended complaint against the Company on May 18, 2021, and the Company moved to dismiss that amended complaint on June 29, 2021. On August 23, 2021, the District Court granted the Company's motion to dismiss. On August 25, 2021, Realtime filed a notice of appeal of the Delaware District Court’s order. Realtime filed its appellate brief on December 2, 2021 and the defendants (including MongoDB) filed a responsive brief on March 11, 2022. Realtime filed a reply brief on April 29, 2022. The oral argument has not yet been scheduled.

The Company investigates all claims, litigation and other legal matters as they arise. Although claims and litigation are inherently unpredictable, the Company is currently not aware of any matters that, if determined adversely to the Company, would individually or taken together have a material adverse effect on its business, financial position, results of operations or cash flows.

The Company accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. Although the results of claims and litigation are inherently unpredictable, the Company believes that there was less than a reasonable possibility that the Company had incurred a material loss with respect to such loss contingencies, as of April 30, 2022 and January 31, 2022; therefore, the Company has not recorded an accrual for such contingencies.

Indemnification

The Company enters into indemnification provisions under its agreements with other companies in the ordinary course of business, including business partners, landlords, contractors and parties performing its research and development. Pursuant to these arrangements, the Company agrees to indemnify, hold harmless and reimburse the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company’s activities. The terms of these indemnification agreements are generally perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is not material. The Company maintains commercial general liability insurance and product liability insurance to offset certain of the Company’s potential liabilities under these indemnification provisions.

The Company has entered into indemnification agreements with each of its directors and executive officers. These agreements require the Company to indemnify such individuals, to the fullest extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of their affiliation with the Company.

8. Revenue

Disaggregation of Revenue

Based on the information provided to and reviewed by the Company’s Chief Executive Officer (“CEO”), its Chief Operating Decision Maker, the Company believes that the nature, amount, timing and uncertainty of its revenue and cash flows and how they are affected by economic factors is most appropriately depicted through the Company’s primary geographical markets and subscription product categories. The Company’s primary geographical markets are North and South America (“Americas”); Europe, Middle East and Africa (“EMEA”); and Asia Pacific. The Company also disaggregates its subscription products between its MongoDB Atlas-related offerings and other subscription products, which include MongoDB Enterprise Advanced.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table presents the Company’s revenues disaggregated by primary geographical markets, subscription product categories and services (in thousands):


	Three Months Ended April 30,
		2022		2021
Primary geographical markets:
Americas		$	174,056	$	109,476
EMEA		81,969		54,725
Asia Pacific		29,422		17,447
Total		$	285,447	$	181,648

Subscription product categories and services:
MongoDB Atlas-related		$	169,995	$	93,510
Other subscription		104,586		81,060
Services		10,866		7,078
Total		$	285,447	$	181,648

Customers located in the United States accounted for 55% of total revenue for each of the three months ended April 30, 2022 and 2021. No other country accounted for 10% or more of revenue for the periods presented.

Contract Liabilities

The Company’s contract liabilities are recorded as deferred revenue in the Company’s condensed consolidated balance sheet and consist of customer invoices issued or payments received in advance of revenues being recognized from the Company’s subscription and services contracts. Deferred revenue, including current and non-current balances, as of April 30, 2022 and January 31, 2022 was $375.5 million and $375.2 million, respectively. Approximately 43% and 42% of the total revenue recognized for the three months ended April 30, 2022 and 2021, respectively, was from deferred revenue at the beginning of each respective period.

Remaining Performance Obligations

Remaining performance obligations represent the aggregate amount of the transaction price in contracts allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations include unearned revenue, multi-year contracts with future installment payments and certain unfulfilled orders against accepted customer contracts at the end of any given period. As of April 30, 2022, the aggregate transaction price allocated to remaining performance obligations was $401.9 million. Approximately 59% is expected to be recognized as revenue over the next 12 months and the remainder thereafter. The Company applies the practical expedient to omit disclosure with respect to the amount of the transaction price allocated to remaining performance obligations if the related contract has a total duration of 12 months or less.

Unbilled Receivables

Revenue recognized in excess of invoiced amounts creates an unbilled receivable, which represents the Company’s unconditional right to consideration in exchange for goods or services that the Company has transferred to the customer. Unbilled receivables are recorded as part of accounts receivable, net in the Company’s condensed consolidated balance sheets. As of April 30, 2022 and January 31, 2022, unbilled receivables were $6.4 million and $6.1 million, respectively.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Allowance for Doubtful Accounts

The Company considers expectations of forward-looking losses, in addition to historical loss rates, to estimate its allowance for doubtful accounts on its accounts receivable. The following is a summary of the changes in the Company’s allowance for doubtful accounts (in thousands):


	Allowance for Doubtful Accounts
Balance at January 31, 2022	$	4,966
Provision	536
Recoveries/write-offs	(1,285)
Balance as of April 30, 2022	$	4,217

Costs Capitalized to Obtain Contracts with Customers

Deferred commissions were $208.1 million and $203.3 million as of April 30, 2022 and January 31, 2022, respectively. Amortization expense with respect to deferred commissions, which is included in sales and marketing expense in the Company’s condensed consolidated statement of operations, was $17.6 million for the three months ended April 30, 2022 and $9.7 million for the three months ended April 30, 2021. There was no impairment loss in relation to the costs capitalized for the periods presented.

9. Equity Incentive Plans and Employee Stock Purchase Plan

2008 Stock Incentive Plan and 2016 Equity Incentive Plan

The Company adopted the 2008 Stock Incentive Plan (as amended, the “2008 Plan”) and the 2016 Equity Incentive Plan (as amended, the “2016 Plan”), primarily for the purpose of granting stock-based awards to employees, directors and consultants, including stock options, restricted stock units (“RSUs”) and other stock-based awards. With the establishment of the 2016 Plan in December 2016, all shares available for grant under the 2008 Plan were transferred to the 2016 Plan. The Company no longer grants any stock-based awards under the 2008 Plan and any shares underlying stock options canceled under the 2008 Plan will be automatically transferred to the 2016 Plan.

Stock Options

The 2016 Plan provides for the issuance of incentive stock options to employees and non-statutory stock options to employees, directors or consultants. The Company’s Board of Directors, or a committee thereof, determines the vesting schedule for all equity awards. Stock option awards generally vest over a period of four years with 25% vesting on the one-year anniversary of the award and the remainder vesting monthly over the next 36 months of the grantee’s service to the Company. There were no stock options granted during the three months ended April 30, 2022.

The following table summarizes stock option activity for the three months ended April 30, 2022 (in thousands, except share and per share data and years):


	Shares	Weighted-Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Balance - January 31, 2022	2,591,894	$	7.46	3.9	$	1,030,680
Stock options exercised	(235,517)	7.16
Stock options forfeited and expired	—	—
Balance - April 30, 2022	2,356,377	$	7.67	3.8	$	824,527
Vested and exercisable - January 31, 2022	2,591,894	$	7.46	3.9	$	1,030,680
Vested and exercisable - April 30, 2022	2,373,165	$	7.61	3.8	$	824,239

Restricted Stock Units

The 2016 Plan provides for the issuance of RSUs to employees, directors and consultants. RSUs granted to new employees generally vest over a period of four years with 25% vesting on the one-year anniversary of the vesting start date

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

and the remainder vesting quarterly over the next 12 quarters, subject to the grantee’s continued service to the Company. RSUs granted to existing employees generally vest quarterly over a period of four years, subject to the grantee’s continued service to the Company.

The following table summarizes RSU activity for the three months ended April 30, 2022:


	Shares	Weighted-Average Grant Date Fair Value per RSU
Unvested - January 31, 2022	3,226,759	$	258.85
RSUs granted	1,012,314	317.80
RSUs vested	(381,178)	181.62
RSUs forfeited and canceled	(84,920)	274.86
Unvested - April 30, 2022	3,772,975	$	282.11

Executive Performance Share Awards

During the three months ended April 30, 2022, the Company created a long-term performance-based equity award program and granted performance share units (“PSUs”) to the Company’s CEO and certain other executives. The vesting of PSUs is conditioned upon the achievement of certain targets for the year ended January 31, 2023. Upon achievement of those conditions, the PSUs vest annually over a period of three years from the date of grant, subject to the executive’s continued employment with the Company. Each vested PSU entitles the executive to one share of common stock. A PSU performance factor of 100 will result in the targeted number of PSUs being vested. The minimum percentage of PSUs that can vest is zero, with a maximum percentage of 200. On the date of grant, the Company assumed a performance factor of 100, which would result in 74,823 PSUs to be issued, if fully vested.

The grant date fair value of these PSUs was $23.7 million at a performance factor of 100, which was determined by using the closing price of the Company’s stock at the date of grant. Compensation expense is recognized over the requisite service period if it is probable that the performance condition will be satisfied based on the accelerated attribution method.

2017 Employee Stock Purchase Plan

In October 2017, the Company’s Board of Directors adopted, and stockholders approved, the 2017 Employee Stock Purchase Plan (the “2017 ESPP”). Subject to any plan limitations, the 2017 ESPP allows eligible employees to contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of the Company’s common stock at a discounted price per share. The Company’s current offering period began December 16, 2021 and is expected to end on June 15, 2022.

Stock-Based Compensation Expense

Total stock-based compensation expense recognized in the Company’s unaudited condensed consolidated statements of operations is as follows (in thousands):


	Three Months Ended April 30,
		2022		2021
Cost of revenue—subscription		$	4,467	$	2,990
Cost of revenue—services		2,212		1,487
Sales and marketing		30,534		18,876
Research and development		35,483		20,335
General and administrative		10,870		7,226
Total stock-based compensation expense		$	83,566	$	50,914

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. Net Loss Per Share

The Company calculates basic net loss per share by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. Diluted net loss per share is computed by giving effect to all potentially dilutive common shares outstanding for the period, including stock options, restricted stock units and shares underlying the conversion option of the convertible senior notes. Basic and diluted net loss per share was the same for each period presented, as the inclusion of all potential common shares outstanding would have been anti-dilutive due to the net loss reported for each period presented.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data):


	Three Months Ended April 30,
		2022		2021
Numerator:
Net loss		$	(77,294)	$	(63,992)

Denominator:
Weighted-average shares used to compute net loss per share, basic and diluted		67,706,502		61,361,670

Net loss per share, basic and diluted		$	(1.14)	$	(1.04)

In connection with the issuance of the 2024 Notes and 2026 Notes, the Company entered into Capped Calls, which were not included for purposes of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive. The Capped Calls are expected to partially offset the potential dilution to the Company’s common stock upon any conversion of the 2024 Notes and the 2026 Notes. The Company has not exercised any of its Capped Calls as of April 30, 2022.

The following weighted-average outstanding potentially dilutive shares of common stock were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been anti-dilutive:


	Three Months Ended April 30,
		2022	2021
Stock options pursuant to the 2016 Equity Incentive Plan		621,307	918,106
Stock options pursuant to the 2008 Stock Incentive Plan		1,836,934	2,755,430
Unvested restricted stock units		3,675,756	3,812,342
Unvested executive PSUs		42,876	—
Early exercised stock options		—	416
Shares underlying the conversion option of the 2024 Notes		—	871,697
Shares underlying the conversion option of the 2026 Notes		5,445,069	5,445,135
Total		11,621,942	13,803,126

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. Income Taxes

The Company recorded a provision for income taxes of $1.1 million for the three months ended April 30, 2022 and a benefit from income taxes of $1.4 million for the three months ended April 30, 2021. The provision recorded during the three months ended April 30, 2022 was driven by the increase in global income and the associated foreign taxes as the Company continues its global expansion. The benefit from income taxes for the three months ended April 30, 2021, was due to a reduction in the valuation allowance as a result of goodwill from an immaterial business combination and the impact from the adoption of ASU 2020-06, partially offset by an increase in foreign taxes. The calculation of income taxes was based upon the estimated annual effective tax rates for the year applied to the jurisdictional mix of current period income (loss) before tax plus the tax effect of any significant unusual items, discrete events or changes in tax law.

The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has maintained a valuation allowance on U.S., U.K. and Ireland net deferred tax assets, as it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company assesses uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainties in Tax. As of January 31, 2022, the Company’s net unrecognized tax benefits totaled $22.7 million, which would have no impact on the Company’s effective tax rate if recognized.

The Company continues to monitor and interpret the impact of proposed and enacted global tax legislation, such as the Coronavirus Aid, Relief, and Economic Security Act, and the impact of such tax legislation on the effective tax rate and tax provision thereunder. In addition, the Tax Cuts and Jobs Act of 2017 ("Tax Act") provided for significant changes to the U.S. tax system including the mandatory capitalization of research and experimentation costs starting in the 2022 tax year. The Company is still assessing the impact due to the lack of Treasury Regulations, however, the legislation is not expected to have an impact on the Company's financial statements due to the net operating losses and full valuation allowances. To date, based on the full valuation allowance against the Company’s two most significant tax jurisdictions, the United States and Ireland, the impact of global enacted and proposed legislation has not had an impact on the tax provisions of the financial statements. The Company continues to monitor to ensure both the Company’s financial results and its related tax disclosures are in compliance with any tax legislation.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Unless the context otherwise indicates, references in this report to the terms “MongoDB,” “the Company,” “we,” “our” and “us” refer to MongoDB, Inc., its divisions and its subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our interim unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 (the “2022 Form 10-K”). All information presented herein is based on our fiscal calendar year, which ends January 31. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years ended January 31 and the associated quarters, months and periods of those fiscal years.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations, including our expectations regarding our future growth opportunity, revenue and revenue growth, investments, strategy, operating expenses and the anticipated impact of the global economic uncertainty and financial market conditions, caused by the ongoing COVID-19 pandemic and the macroeconomic environment, on our business, results of operations and financial condition. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part 2, Item 1A of this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Our corporate website is located at www.mongodb.com. We make available free of charge, on or through our corporate website, our annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with, or furnishing such reports to, the Securities and Exchange Commission (“SEC”). Information contained on our corporate website is not part of this Quarterly Report on Form 10-Q or any other report filed with or furnished to the SEC.

Overview

MongoDB is the leading modern, general purpose database platform. Our robust platform enables developers to build and modernize applications rapidly and cost-effectively across a broad range of use cases. Organizations can deploy our platform at scale in the cloud, on-premise, or in a hybrid environment. Through our unique document-based architecture, we are able to address the needs of organizations for performance, scalability, flexibility and reliability while maintaining the strengths of legacy databases. Software applications continue to redefine how organizations across industries engage with their customers, operate their businesses and compete with each other. A database is at the heart of every software application. As a result, selecting a database is a highly strategic decision that directly affects developer productivity, application performance and organizational competitiveness. Our platform addresses the performance, scalability, flexibility and reliability demands of modern applications while maintaining the strengths of legacy databases. Our business model combines the developer mindshare and adoption benefits of open source with the economic benefits of a proprietary software subscription business model. MongoDB is headquartered in New York City and our total headcount increased to 3,798 as of April 30, 2022, from 2,745 as of April 30, 2021.

We generate revenue primarily from sales of subscriptions, which accounted for 96% of our total revenue for each of the three months ended April 30, 2022 and April 30, 2021.

MongoDB Atlas is our hosted multi-cloud database-as-a-service (“DBaaS”) offering that includes comprehensive infrastructure and management, which we run and manage in the cloud. During the three months ended April 30, 2022, MongoDB Atlas revenue represented 60%, as compared to 51% of our total revenue during the three months ended April 30, 2021, reflecting the continued growth of MongoDB Atlas since its introduction in June 2016. We have experienced strong growth in self-serve customers of MongoDB Atlas. These customers are charged monthly in arrears based on their usage. In

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addition, we have also seen growth in MongoDB Atlas customers sold by our sales force. These customers typically sign annual contracts and pay in advance or are invoiced monthly in arrears based on usage.

MongoDB Enterprise Advanced is our proprietary commercial database server offering for enterprise customers that can run in the cloud, on-premise or in a hybrid environment. MongoDB Enterprise Advanced revenue represented 33% of our subscription revenue for the three months ended April 30, 2022 and 40% of our subscription revenue for the three months ended April 30, 2021. We sell subscriptions directly through our field and inside sales teams, as well as indirectly through channel partners. The majority of our subscription contracts are one year in duration and are invoiced upfront. When we enter into multi-year subscriptions, we typically invoice the customer on an annual basis.

Many of our enterprise customers initially get to know our software by using Community Server, which is our free-to-download version of our database that includes the core functionality developers need to get started with MongoDB without all the features of our commercial platform. Our platform has been downloaded from our website more than 265 million times since February 2009 and over 90 million times in the last 12 months alone. We also offer a free tier of MongoDB Atlas, which provides access to our hosted database solution with limited processing power and storage, as well as certain operational limitations. As a result, with the availability of both Community Server and MongoDB Atlas free tier offerings, our direct sales prospects are often familiar with our platform and may have already built applications using our technology. A core component of our growth strategy for MongoDB Atlas and MongoDB Enterprise Advanced is to convert developers and their organizations who are already using Community Server or the free tier of MongoDB Atlas to become customers of our commercial products and enjoy the benefits of either a self-managed or hosted offering.

We also generate revenue from services, which consist primarily of fees associated with consulting and training services. Revenue from services accounted for 4% of our total revenue for each of the three months ended April 30, 2022 and April 30, 2021. We expect to continue to invest in our services organization as we believe it plays an important role in accelerating our customers’ realization of the benefits of our platform, which helps drive customer retention and expansion.

We believe the market for our offerings is large and growing. According to IDC, the worldwide database software market, which it refers to as the data management software market, is forecast to be approximately $85 billion in 2022 growing to approximately $138 billion in 2026, representing a 13% compound annual growth rate. We have experienced rapid growth and have made substantial investments in developing our platform and expanding our sales and marketing footprint. We intend to continue to invest heavily to grow our business to take advantage of our market opportunity rather than optimizing for profitability or cash flow in the near term.

Impact of the Ongoing COVID-19 Pandemic

The ongoing COVID-19 pandemic has continued to impact the United States (“U.S.”) and the world. The full extent of the impact of the ongoing COVID-19 pandemic on our future operational and financial performance will depend on certain developments, including the duration and spread of the outbreak and the impact of new variants of the virus that cause COVID-19; the public health measures taken by authorities and other entities to contain and treat COVID-19; the actions taken to effect a widespread, global roll-out of the available vaccines and the efficacy and durability of such vaccines; and the impact of the COVID-19 pandemic on the global economy and on our current and prospective customers, employees, vendors and other parties with whom we do business, all of which are uncertain and cannot be predicted.

In 2020, we adopted several measures in response to the COVID-19 pandemic, including temporarily requiring employees to work remotely, suspending non-essential travel by our employees, and replacing in-person marketing events (including our annual developer conference) with virtual events. In 2021, we began to re-open our offices in the United States and certain other locations globally for employees to voluntarily return. In April 2022 we moved forward with our return to office plan, which encompasses a hybrid approach to in-office attendance based on the different needs of teams across the company. Business travel resumed during 2021 on a voluntary basis and we started to hold in-person marketing events. We expect spending on business travel and in-person marketing events to increase during 2022. We continue to monitor the developments of the COVID-19 pandemic and we may adjust our policies as may be required or recommended by federal, foreign, state or local authorities.

We also continue to evaluate the nature and extent of the impact of COVID-19 on our business. For further discussion of the potential impacts of the ongoing COVID-19 pandemic on our business, operating results, and financial condition, see the section titled “Risk Factors” included in Part II, Item 1A of this Quarterly Report on Form 10-Q. Other factors affecting our performance are discussed below, although we caution you that the ongoing COVID-19 pandemic may also impact these factors.

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Key Factors Affecting Our Performance

Growing Our Customer Base and Expanding Our Global Reach

We are intensely focused on continuing to grow our customer base. We have invested, and expect to continue to invest, heavily in our sales and marketing efforts and developer community outreach, which are critical to driving customer acquisition. As of April 30, 2022, we had over 35,200 customers across a wide range of industries and in over 100 countries, compared to over 26,800 customers as of April 30, 2021. All affiliated entities are counted as a single customer and our definition of “customer” excludes users of our free offerings.

As of April 30, 2022, we had over 4,800 customers that were sold through our direct sales force and channel partners, as compared to over 3,300 such customers as of April 30, 2021. These customers, which we refer to as our Direct Sales Customers, accounted for 87% of our subscription revenue for the three months ended April 30, 2022 and 84% of our subscription revenue for the three months ended April 30, 2021. The percentage of our subscription revenue from Direct Sales Customers increased during the three months ended April 30, 2022, in part due to existing self-serve customers of MongoDB Atlas becoming Direct Sales Customers. We are also focused on increasing the number of overall MongoDB Atlas customers as we emphasize the on-demand scalability of MongoDB Atlas by allowing our customers to consume the product with minimal commitment. We had over 33,700 MongoDB Atlas customers as of April 30, 2022 compared to over 25,300 as of April 30, 2021. The growth in MongoDB Atlas customers included new customers to MongoDB and existing MongoDB Enterprise Advanced customers adding incremental MongoDB Atlas workloads.

In an effort to expand our global reach, in October 2019, we announced a partnership with Alibaba Cloud to offer an authorized MongoDB-as-a-service solution allowing customers of Alibaba Cloud to use this managed offering from their data centers globally. We expanded our reach in China in February 2021 when we announced the launch of a global partnership with Tencent Cloud that allows customers to easily adopt and use MongoDB-as-a-Service across Tencent’s global cloud infrastructure.

Increasing Adoption of MongoDB Atlas

MongoDB Atlas, our hosted multi-cloud offering, is an important part of our run-anywhere strategy. To accelerate the adoption of this database-as-a-service offering, we provide tools to easily migrate existing users of our Community Server offering to MongoDB Atlas. We have also expanded our introductory offerings for MongoDB Atlas, including a free tier, which provides limited processing power and storage in order to drive usage and adoption of MongoDB Atlas among developers. Our MongoDB Atlas free tier offering is available on all three major cloud providers (Amazon Web Services (“AWS”), Google Cloud Platform (“GCP”) and Microsoft Azure) in North America, Europe and Asia Pacific. In addition, MongoDB Atlas is available on AWS Marketplace, making it easier for AWS customers to buy and consume MongoDB Atlas. Our business partnership with GCP provides deeper product integration and unified billing for GCP customers who are also MongoDB Atlas customers and offers GCP customers a seamless integration between MongoDB Atlas and GCP. The availability of MongoDB Atlas on the Microsoft Azure Marketplace offers unified billing for joint customers of MongoDB Atlas and Microsoft and makes it easier for established Azure customers to purchase and use MongoDB Atlas.

We have also expanded the functionality available in MongoDB Atlas beyond that of our Community Server offering. We expect this will drive further adoption of MongoDB Atlas as companies migrate mission-critical applications to the public cloud. The enterprise capabilities that we have introduced to MongoDB Atlas include advanced security features, enterprise-standard authentication and database auditing. We have invested significantly in MongoDB Atlas and our ability to drive the adoption of MongoDB Atlas is a key component of our growth strategy.

Retaining and Expanding Revenue from Existing Customers

The economic attractiveness of our subscription-based model is driven by customer renewals and increasing existing customer subscriptions over time, referred to as land-and-expand. We believe that there is a significant opportunity to drive additional sales to existing customers, and expect to invest in sales and marketing and customer success personnel and activities to achieve additional revenue growth from existing customers. If an application grows and requires additional capacity, our customers increase their usage of our platform. Growth of an application is impacted by a number of factors including the macroeconomic environment. During the three months ended April 30, 2022, we believe we experienced a macroeconomic impact on the growth of existing applications, which affected our revenue growth. We expect the macroeconomic environment to continue to impact us for the remainder of the year. In addition, our customers expand their subscriptions to our platform as they migrate additional existing applications or build new applications, either within the same department or in other lines of business or geographies. Also, as customers modernize their information technology

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infrastructure and move to the cloud, they may migrate applications from legacy databases. Our goal is to increase the number of customers that standardize on our database within their organization. Over time, the subscription amount for our typical Direct Sales Customer has increased.

We calculate annualized recurring revenue (“ARR”) and annualized monthly recurring revenue (“MRR”) to help us measure our subscription revenue performance. ARR includes the revenue we expect to receive from our customers over the following 12 months based on contractual commitments and, in the case of Direct Sales Customers of MongoDB Atlas, by annualizing the prior 90 days of their actual consumption of MongoDB Atlas, assuming no increases or reductions in their subscriptions or usage. For all other customers of our self-serve products, we calculate annualized MRR by annualizing the prior 30 days of their actual consumption of such products, assuming no increases or reductions in usage. ARR and annualized MRR exclude professional services. The number of customers with $100,000 or greater in ARR and annualized MRR was 1,379 and 1,057 as of April 30, 2022 and 2021, respectively. Our ability to increase sales to existing customers will depend on a number of factors, including customers’ satisfaction or dissatisfaction with our products and services, competition, pricing, economic conditions or overall changes in our customers’ spending levels.

We also examine the rate at which our customers increase their spend with us, which we call net ARR expansion rate. We calculate net ARR expansion rate by dividing the ARR at the close of a given period (the “measurement period”), from customers who were also customers at the close of the same period in the prior year (the “base period”), by the ARR from all customers at the close of the base period, including those who churned or reduced their subscriptions. For Direct Sales Customers included in the base period, measurement period or both such periods that were self-serve customers in any such period, we also include annualized MRR from those customers in the calculation of the net ARR expansion rate. Our net ARR expansion rate has consistently been over 120% demonstrating our ability to expand within existing customers.

Components of Results of Operations

Revenue

Subscription Revenue. Our subscription revenue is comprised of term licenses and hosted as-a-service solutions. Subscriptions to term licenses include technical support and access to new software versions on a when-and-if available basis. Revenue from our term licenses is recognized upfront for the license component and ratably for the technical support and when-and-if available update components. Associated contracts are typically billed annually in advance. Revenue from our hosted as‑a‑service solutions is primarily generated on a usage basis and is billed either in arrears or paid upfront. The majority of our subscription contracts are one year in duration. When we enter into multi-year subscriptions, we typically invoice the customer on an annual basis. Our subscription contracts are generally non-cancelable and non-refundable.

Services Revenue. Services revenue is comprised of consulting and training services and is recognized over the period of delivery of the applicable services. We recognize revenue from services agreements as services are delivered.

We expect our revenue may vary from period to period based on, among other things, the timing and size of new subscriptions, customer usage patterns, the proportion of term license contracts that commence within the period, the rate of customer renewals and expansions, delivery of professional services, the impact of significant transactions and seasonality of or fluctuations in usage for our consumption‑based customers.

Cost of Revenue

Cost of Subscription Revenue. Cost of subscription revenue primarily includes third-party cloud infrastructure expenses for our hosted as-a-service solutions. We expect our cost of subscription revenue to increase in absolute dollars as our subscription revenue increases and, depending on the results of MongoDB Atlas, our cost of subscription revenue may increase as a percentage of subscription revenue as well. Cost of subscription revenue also includes personnel costs, including salaries, bonuses and benefits and stock-based compensation, for employees associated with our subscription arrangements principally related to technical support and allocated shared costs, as well as depreciation and amortization.

Cost of Services Revenue. Cost of services revenue primarily includes personnel costs, including salaries, bonuses and benefits, and stock‑based compensation, for employees associated with our professional service contracts, as well as, travel costs, allocated shared costs and depreciation and amortization. We expect our cost of services revenue to increase in absolute dollars as our services revenue increases.

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Gross Profit and Gross Margin

Gross Profit. Gross profit represents revenue less cost of revenue.

Gross Margin. Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by a variety of factors, including the average sales price of our products and services, the mix of products sold, transaction volume growth and the mix of revenue between subscriptions and services. We expect our gross margin to fluctuate over time depending on the factors described above and, to the extent MongoDB Atlas revenue increases as a percentage of total revenue, our gross margin may decline as a result of the associated hosting costs of MongoDB Atlas.

Operating Expenses

Our operating expenses consist of sales and marketing, research and development and general and administrative expenses. Personnel costs are the most significant component of each category of operating expenses. Operating expenses also include travel and related costs and allocated overhead costs for facilities, information technology and employee benefit costs.

Sales and Marketing. Sales and marketing expense consists primarily of personnel costs, including salaries, sales commission and benefits, bonuses and stock‑based compensation. These expenses also include costs related to marketing programs, travel‑related expenses and allocated overhead. Marketing programs consist of advertising, events, corporate communications, and brand‑building and developer‑community activities. We expect our sales and marketing expense to increase in absolute dollars over time as we expand our sales force and increase our marketing resources, expand into new markets and further develop our self-serve and partner channels.

Research and Development. Research and development expense consists primarily of personnel costs, including salaries, bonuses and benefits, and stock‑based compensation. It also includes amortization associated with intangible acquired assets and allocated overhead. We expect our research and development expenses to continue to increase in absolute dollars, as we continue to invest in our platform and develop new products.

General and Administrative. General and administrative expense consists primarily of personnel costs, including salaries, bonuses and benefits, and stock‑based compensation for administrative functions including finance, legal, human resources and external legal and accounting fees, as well as allocated overhead. We expect general and administrative expense to increase in absolute dollars over time as we continue to invest in the growth of our business, as well as incur the ongoing costs of compliance associated with being a publicly-traded company.

Other Income (Expense), Net

Other income (expense), net consists primarily of interest income, interest expense, gains and losses on investments and gains and losses from foreign currency transactions.

Provision for Income Taxes

Provision for income taxes consists primarily of state income taxes in the United States and income taxes in certain foreign jurisdictions in which we conduct business.

We account for income taxes and the related accounts under the liability method. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted rates expected to be in effect during the year in which the basis differences reverse.

We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. We have maintained a valuation allowance on U.S., U.K. and Ireland net deferred tax assets, as it is more likely than not that some or all of the deferred tax assets will not be realized.

We continue to monitor and interpret the impact of proposed and enacted global tax legislation, such as the Coronavirus Aid, Relief, and Economic Security Act, and the impact of such legislation on the effective tax rate and tax provision thereunder. In addition, the Tax Cuts and Jobs Act of 2017 ("Tax Act") provided for significant changes to the U.S. tax system including the mandatory capitalization of Research and Experimentation costs starting in the 2022 tax year. The Company is still assessing the impact due to lack of Treasury Regulations, however the legislation is not expected to have an

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impact on the Company's financial statements due to the net operating losses and full valuation allowances. To date, based on the full valuation allowance against our two most significant tax jurisdictions, the United States and Ireland, the impact of global enacted and proposed legislation has not had an impact on the tax provisions of the financial statements. We continue to monitor to ensure both our financial results and our related tax disclosures are in compliance with any tax legislation.

Three Months Ended April 30, 2022 Summary

For the three months ended April 30, 2022, our total revenue increased to $285.4 million as compared to $181.6 million for the three months ended April 30, 2021, primarily driven by an increase in subscription revenue from our Direct Sales Customers. Our net loss increased to $77.3 million for the three months ended April 30, 2022 as compared to $64.0 million for the three months ended April 30, 2021, as improvement in gross profit was offset by higher sales and marketing spend and research and development costs during the three months ended April 30, 2022.

Our operating cash flow was $11.6 million and $10.2 million for the three months ended April 30, 2022 and 2021, respectively.

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Results of Operations

The following tables set forth our results of operations for the periods presented in U.S. dollars (unaudited, in thousands) and as a percentage of our total revenue. Percentage of revenue figures are rounded and therefore may not subtotal exactly.