MDB 10-Q Quarterly Report April 30, 2018 | Alphaminr
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MDB 10-Q Quarter ended April 30, 2018

Balance Sheet
Cash Flow
Income Statement
MONGODB, INC.
10-Q 1 mdb-043018x10q.htm 10-Q Document

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, 2018
OR
☐
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.)
229 W. 43rd Street, 5th Floor
New York, NY
10036
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: 646-727-4092
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒ 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
¨
Accelerated filer
¨
Non-accelerated filer
ý (Do not check if a small reporting company)
Small reporting company
¨
Emerging growth company
ý
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 ☒
As of June 4, 2018 , there were 24,766,963 shares of the registrant’s Class A common stock and 25,864,505 shares of the registrant’s Class B common stock, each with a par value of $0.001 per share, outstanding.


Table of Contents
Page




PART I—FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS.
MONGODB, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
April 30, 2018
January 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
111,617

$
61,902

Short-term investments
159,371

217,072

Accounts receivable, net of allowance for doubtful accounts of $1,235 and $1,238 as of April 30, 2018 and January 31, 2018, respectively
32,475

46,872

Deferred commissions
13,155

11,820

Prepaid expenses and other current assets
9,101

5,884

Total current assets
325,719

343,550

Property and equipment, net
63,335

59,557

Goodwill
1,700

1,700

Acquired intangible assets, net
1,406

1,627

Deferred tax assets
323

326

Other assets
7,744

8,436

Total assets
$
400,227

$
415,196

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
1,429

$
2,261

Accrued compensation and benefits
14,773

17,433

Other accrued liabilities
8,518

8,423

Deferred revenue
119,936

114,500

Total current liabilities
144,656

142,617

Deferred rent, non-current
1,397

925

Deferred tax liability, non-current
19

18

Deferred revenue, non-current
21,909

22,930

Other liabilities, non-current
59,739

55,213

Total liabilities
227,720

221,703

Commitments and contingencies (Note 4)




Stockholders’ equity:
Class A common stock, par value of $0.001 per share; 1,000,000,000 shares authorized as of April 30, 2018 and January 31, 2018; 23,635,144 and 13,303,028 shares issued and outstanding as of April 30, 2018 and January 31, 2018, respectively
24

13

Class B common stock, par value of $0.001 per share; 100,000,000 shares authorized as of April 30, 2018 and January 31, 2018; 27,061,251 and 37,371,914 shares issued as of April 30, 2018 and January 31, 2018, respectively; 26,961,880 and 37,272,543 shares outstanding as of April 30, 2018 and January 31, 2018, respectively
27

38

Additional paid-in capital
646,973

638,680

Treasury stock, 99,371 shares (repurchased at an average of $13.27 per share) as of April 30, 2018 and January 31, 2018
(1,319
)
(1,319
)
Accumulated other comprehensive loss
(274
)
(159
)
Accumulated deficit
(472,924
)
(443,760
)
Total stockholders’ equity
172,507

193,493

Total liabilities and stockholders’ equity
$
400,227

$
415,196

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

1

MONGODB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended April 30,
2018
2017
Revenue:
Subscription
$
44,565

$
29,187

Services
3,657

3,203

Total revenue
48,222

32,390

Cost of revenue:
Subscription
10,070

6,550

Services
3,679

2,649

Total cost of revenue
13,749

9,199

Gross profit
34,473

23,191

Operating expenses:
Sales and marketing
33,889

22,145

Research and development
18,645

13,077

General and administrative
11,227

7,771

Total operating expenses
63,761

42,993

Loss from operations
(29,288
)
(19,802
)
Other income (expense):
Interest income, net
959

137

Other income (expense), net
(368
)
204

Loss before provision for income taxes
(28,697
)
(19,461
)
Provision for income taxes
467

229

Net loss
$
(29,164
)
$
(19,690
)
Net loss per share, basic and diluted
$
(0.58
)
$
(1.50
)
Weighted-average shares used to compute net loss per share, basic and diluted
50,350,052

13,164,559

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

2

MONGODB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
Three Months Ended April 30,
2018
2017
Net loss
$
(29,164
)
$
(19,690
)
Other comprehensive (loss) income, net of tax:
Unrealized loss on available-for-sale securities
(82
)
(9
)
Foreign currency translation adjustments
(33
)
67

Other comprehensive (loss) income
(115
)
58

Total comprehensive loss
$
(29,279
)
$
(19,632
)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

MONGODB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended April 30,
2018
2017
Cash flows from operating activities
Net loss
$
(29,164
)
$
(19,690
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
817

897

Stock-based compensation
7,508

4,454

Deferred income taxes
4

63

Change in fair value of warrant liability
—

(100
)
Change in operating assets and liabilities:
Accounts receivable
14,312

4,755

Prepaid expenses and other current assets
(3,246
)
(2,953
)
Deferred commissions
(576
)
749

Other long-term assets
(70
)
(640
)
Accounts payable
(639
)
1,154

Deferred rent
472

(113
)
Accrued liabilities
(1,967
)
(3,041
)
Deferred revenue
4,500

2,744

Net cash used in operating activities
(8,049
)
(11,721
)
Cash flows from investing activities
Purchases of property and equipment
(367
)
(712
)
Proceeds from maturities of marketable securities
58,000

47,230

Purchases of marketable securities
—

(64,620
)
Net cash provided by (used in) investing activities
57,633

(18,102
)
Cash flows from financing activities
Proceeds from exercise of stock options, including early exercised stock options
288

4,650

Repurchase of early exercised stock options
(152
)
(4
)
Net cash provided by financing activities
136

4,646

Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(8
)
67

Net increase (decrease) in cash, cash equivalents, and restricted cash
49,712

(25,110
)
Cash, cash equivalents, and restricted cash, beginning of period
62,427

69,412

Cash, cash equivalents, and restricted cash, end of period
$
112,139

$
44,302

Supplemental cash flow disclosure of noncash investing and financing activities
Vesting of early exercised stock options
$
533

$
216

Costs related to initial public offering included in accounts payable and accrued liabilities
$
—

$
650

Construction in progress related to build-to-suit lease obligations
$
4,225

$
—

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
$
111,617

$
44,193

Restricted cash, current
$
522

$
109

Total cash, cash equivalents and restricted cash
$
112,139

$
44,302

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

4
MONGODB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


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 our platform at scale in the cloud, on-premise, or in a hybrid environment. In addition to selling its software, the Company provides post-contract support, training, and consulting services for its offerings. The Company’s fiscal year ends January 31 .
2.
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim condensed consolidated balance sheet as of April 30, 2018 and the interim condensed consolidated statements of operations and of comprehensive loss and interim condensed consolidated statement of cash flows for the three months ended April 30, 2018 and 2017 , 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, 2018 , its results of operations and of comprehensive loss for the three months ended April 30, 2018 and 2017 , and its statement of cash flows for the three months ended April 30, 2018 and 2017 . 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, 2018 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2019 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 (“SEC”). 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, 2018 (the “2018 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 and assumptions that affect the reported amounts of assets and liabilities, 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, 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 property and equipment 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. Actual results could differ from those estimates.
Emerging Growth Company Status
As an “emerging growth company” (“EGC”), the Jump-start Our Business Start-ups Act (“JOBS Act”), allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. As a result, the Company’s financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make the Company’s common stock less attractive to investors.

5
MONGODB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)


Significant Accounting Policies
There have been no changes to the Company’s significant accounting policies described in the Company’s 2018 Form 10-K.
Related Party Transactions
All contracts with related parties are executed in ordinary course of business. There were no material related party transactions in the three months ended April 30, 2018 and 2017 . As of April 30, 2018 and January 31, 2018 , there were no material amounts payable to or amounts receivable from related parties.
New Accounting Pronouncements Not Yet Adopted
Goodwill Impairment. In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-04— Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard will simplify the measurement of goodwill by eliminating step two of the two-step impairment test. Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new guidance becomes effective for the Company for the fiscal year ending January 31, 2022, though early adoption is permitted. The Company does not expect the adoption of the new accounting standard to have a material impact on its consolidated financial statements.
Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. Depending on when the Company loses its EGC status, it may be required to adopt the new lease standard as early as its interim results for the period ending April 30, 2019, but no later than for its annual results for the fiscal year ending January 31, 2021, though early adoption is permitted. The Company is currently evaluating adoption methods and whether this standard will have a material impact on its consolidated financial statements.
Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing accounting standard for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount to which an entity expects to be entitled when products are transferred to customers. Subsequently, the FASB has issued the following pronouncements related to ASU 2014-09: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations ; ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ; ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients ; and ASU 2016-20, Technical Corrections and Improvements to Topic 606 , which clarifies narrow aspects of ASC 606 or corrects unintended application of the guidance. The Company must adopt ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20 with ASU 2014-09 (collectively, the “new revenue standard”).
The Company plans to adopt the new revenue standard using the full retrospective transition method when it becomes effective for the Company. Depending on when the Company loses its EGC status, it may be required to adopt the new revenue standard as early as its annual results for the fiscal year ending January 31, 2019, but no later than for its annual results for the fiscal year ending January 31, 2020, though early adoption is permitted. While the Company continues to assess the potential impacts of the new revenue standard, the Company currently expects unearned subscription revenue to decline significantly upon adoption. Currently, as the Company’s subscription offerings include software term licenses and post-contract customer support for which the Company has not established vendor specific objective evidence (“VSOE”), the entire subscription fee is recognized ratably over the term of the contract. However, under the new revenue standard, the requirement for VSOE for undelivered elements is eliminated and, as a result, the Company is required to identify all deliverables in a contract and recognize revenue based on each deliverable separately. The Company currently expects that the portion related to the software term license deliverable will be recognized upon delivery, which may result in greater fluctuations in its consolidated financial statements. The Company is in the process of determining the revenue recognition impact for the other deliverables of each contract. The Company continues to evaluate the effect that the new revenue standard will have on its consolidated financial statements and related disclosures, and preliminary assessments are subject to change.

6
MONGODB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)


3.
Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities that have been measured at fair value on a recurring basis as of April 30, 2018 and January 31, 2018 , and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):
Fair Value Measurement at April 30, 2018
Level 1
Level 2
Level 3
Total
Financial Assets:
Cash and cash equivalents:
Money market funds
$
94,300

$
—

$
—

$
94,300

Short-term investments:
U.S. government treasury securities
159,371

—

—

159,371

Total financial assets
$
253,671

$
—

$
—

$
253,671

Fair Value Measurement at January 31, 2018
Level 1
Level 2
Level 3
Total
Financial Assets:
Cash and cash equivalents:
Money market funds
$
45,918

$
—

$
—

$
45,918

Short-term investments:
U.S. government treasury securities
217,072

—

—

217,072

Total financial assets
$
262,990

$
—

$
—

$
262,990

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. As of April 30, 2018 and January 31, 2018 , gross unrealized gains and unrealized losses for cash equivalents and short-term investments were not material, and the contractual maturity of all marketable securities was less than one year.
4.
Commitments and Contingencies
Operating Leases
The Company has entered into non-cancelable operating leases, primarily related to rental of office space expiring through 2029. The Company recognizes operating lease costs on a straight-line basis over the term of the agreement, taking into account adjustments for market provisions such as free or escalating base monthly rental payments or deferred payment terms such as rent holidays that defer the commencement date of the required payments. The Company may receive renewal or expansion options, leasehold improvement allowances or other incentives on certain lease agreements. Total rent expense related to operating leases was $3.1 million and $2.1 million for the three months ended April 30, 2018 and 2017 , respectively.
Other Commitments
The Company has also entered into certain other non-cancelable agreements primarily for cloud infrastructure capacity commitments, as well as subscriptions and marketing events.
Legal Matters
From time to time, the Company has become involved in claims and other legal matters arising in the ordinary course of business. The Company investigates these claims as they arise. Although claims 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. From time to time, the Company is a party to litigation and subject to claims and threatened claims incident to the

7
MONGODB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)


ordinary course of business, including intellectual property claims, labor and employment claims, breach of contract claims, and other matters.
Although the results of litigation and claims are inherently unpredictable, the Company believes that there was not at least a reasonable possibility that the Company had incurred a material loss with respect to such loss contingencies, as of April 30, 2018 and January 31, 2018 , therefore, the Company has no t 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 customers, 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 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.
5.
Equity Incentive Plans and Employee Stock Purchase Plan
Equity Incentive Plans
The Company adopted the 2008 Stock Incentive Plan (as amended, the “2008 Plan”) in 2008 and the 2016 Equity Incentive Plan (as amended, the “2016 Plan”) in 2016, primarily for the purpose of granting stock-based awards to employees, directors, and consultants. 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 nonstatutory stock options to employees, directors or consultants. The 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.
The following table summarizes stock option activity for the three months ended April 30, 2018 (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, 2018
12,637,435

$
7.63

7.72
$
246,227

Stock options granted
—

—

Stock options exercised
(40,723
)
6.36

Repurchase of early exercised shares
—

—

Stock options forfeited and expired
(123,781
)
9.22

Balance - April 30, 2018
12,472,931

7.61

7.44
353,927

Vested and exercisable - January 31, 2018
5,540,858

6.33

6.63
115,122

Vested and exercisable - April 30, 2018
6,236,117

$
6.46

6.51
$
184,152


8
MONGODB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)


Restricted Stock Units
The 2016 Plan provides for the issuance of restricted stock units (“RSUs”) to employees, directors and consultants. RSUs generally vest over a period of four years with 25% vesting on the one year anniversary of the award and the remainder vesting quarterly over the next 12 quarters of the grantee’s service to the Company.
The following table summarizes RSU activity for the three months ended April 30, 2018 :
Shares
Weighted-Average Grant Date Fair Value per RSU
Unvested - January 31, 2018
245,746

$
26.20

RSUs granted
1,050,660

39.52

RSUs vested
(125
)
28.87

RSUs forfeited and canceled
—

—

Unvested - April 30, 2018
1,296,281

$
37.00

Employee Stock Purchase Plan
In October 2017, the Board of Directors adopted, and stockholders approved, the 2017 Employee Stock Purchase Plan (“ESPP”). A total of 1.5 million shares of the Company’s Class A common stock have been authorized for issuance under 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 Class A common stock at a discounted price per share. Except for the initial offering period, the ESPP provides for separate six -month offering periods. The initial offering period will run from October 18, 2017 through June 15, 2018.
Unless otherwise determined by the Board of Directors or a committee thereof, the Company’s Class A common stock will be purchased for the accounts of employees participating in the ESPP at a price per share that is the lesser of (1) 85% of the fair market value of the Company’s Class A common stock on the first trading day of the offering period, which for the initial offering period is the price at which shares of the Company’s Class A common stock were first sold to the public, or (2) 85% of the fair market value of the Company’s Class A common stock on the last trading day of the offering period.
During the three months ended April 30, 2018 , no shares of Class A common stock were purchased under the 2017 ESPP.
Stock-Based Compensation Expense
Total stock-based compensation expense recognized in the Company’s interim unaudited condensed consolidated statements of operations is as follows (in thousands):
Three Months Ended April 30,
2018
2017
Cost of revenue—subscription
$
359

$
151

Cost of revenue—services
184

72

Sales and marketing
2,218

1,215

Research and development
2,206

1,245

General and administrative
2,610

1,771

Total stock-based compensation expense
$
7,577

$
4,454

6.
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 stock equivalents outstanding for the period, including stock options and restricted stock units.

9
MONGODB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)


Prior to the Company’s closing of its initial public offering in October 2017, the Company calculated basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for companies with participating securities. The Company considered all series of redeemable convertible preferred stock to have been participating securities as the holders were entitled to receive non-cumulative dividends on a pari passu basis in the event that a dividend had been paid on common stock. For further details on the Company’s historical participating securities, including warrants to purchase redeemable convertible preferred stock and common stock, refer to the Company’s 2018 Form 10-K, specifically in Part II, Item 8, Financial Statements and Supplementary Data under the Notes to Consolidated Financial Statements.
Under the two-class method, basic net loss per share attributable to common stockholders was calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. The net loss attributable to common stockholders was not allocated to the redeemable convertible preferred stock as the holders of redeemable convertible preferred stock did not have a contractual obligation to share in losses. Diluted net loss per share attributable to common stockholders was computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period. For purposes of this calculation, redeemable convertible preferred stock, stock options to purchase common stock, early exercised stock options, and warrants to purchase redeemable convertible preferred stock and common stock were considered common shares equivalents, but had been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect was antidilutive.
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 antidilutive.
The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to 10 votes per share. As the liquidation and dividend rights are identical for Class A and Class B common stock, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):
Three Months Ended April 30,
2018
2017
Numerator:
Net loss
$
(29,164
)
$
(19,690
)
Denominator:
Weighted-average shares used to compute net loss per share, basic and diluted
50,350,052

13,164,559

Net loss per share, basic and diluted
$
(0.58
)
$
(1.50
)
The following weighted-average outstanding potentially dilutive common shares were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been antidilutive:
Three Months Ended April 30,
2018
2017
Redeemable convertible preferred stock (as converted)
—

26,899,852

Redeemable convertible preferred stock warrants (as converted)
—

54,604

Common stock warrants
—

122,043

Stock options to purchase Class A common stock
3,539,338

910,513

Stock options to purchase Class B common stock
9,001,291

10,340,401

Early exercised stock options
234,646

128,609


10
MONGODB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)


7.
Income Taxes
The Company recorded a provision for income taxes of $0.5 million and $0.2 million for the three months ended April 30, 2018 and 2017 , respectively. The provision for income taxes was primarily due to foreign taxes. [The provision for income taxes is based upon the estimated annual effective tax rates for the year applied to the current period income (loss) before tax plus the tax effect of any significant unusual items, discrete events or changes in tax law.]
On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation significantly revised the Internal Revenue Code of 1986, as amended. The newly enacted federal income tax law, among other things, contains significant changes to corporate taxation, including the reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the deduction for newly generated net operating losses (“NOLs”) to 80% of current year taxable income and elimination of NOL carrybacks and one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated. The Company is required to recognize the effect of these significant tax law changes in the period of enactment.
Also on December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allows the Company to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Given the significant complexity of the Tax Act, anticipated guidance from the Internal Revenue Service about implementing the Tax Act, and the potential for additional guidance from the SEC or the FASB related to the Tax Act, the Company’s current estimates may be adjusted in future periods. The Company expects to complete its analysis within the measurement period in accordance with SAB 118. Any subsequent adjustments to current estimates will be recorded to tax expense during the quarter in the Company’s fiscal year ending January 31, 2019 in which the Company’s analysis of and accounting for the Tax Act is complete. The Company has not recorded any further adjustments during the three months ended April 30, 2018. For information on the Company’s initial provisional estimates recorded during the year ended January 31, 2018, refer to the Company’s 2018 Form 10-K, specifically Part II, Item 8, Financial Statements and Supplementary Data under Note 11, Income Taxes , in the Notes to Consolidated Financial Statements.
For the Global Intangible Low-Taxed Income (“GILTI”) provisions of the Tax Act, the Company has not yet completed its assessment or elected an accounting policy to either recognize deferred taxes for basis differences expected to reverse as GILTI or to record GILTI as period costs if and when incurred.
The Company assesses uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainties in Tax . As of April 30, 2018 , the Company’s net unrecognized tax benefits totaled $4.3 million , none of which would impact the Company’s effective tax rate if recognized. The Company anticipates that the amount of reasonably possible unrecognized tax benefits that could decrease over the next 12 months due to the expiration of certain statutes of limitations and settlement of tax audits is no t material to the Company’s interim unaudited condensed consolidated financial statements.
8.
Segments and Geographic Revenue
The Company operates its business as one operating segment as it only reports financial information on an aggregate and consolidated basis to the Chief Executive Officer, who is the Company’s chief operating decision maker. The following table sets forth the Company’s total revenue by geographic area based on the customers’ location (in thousands):
Three Months Ended April 30,
2018
2017
Americas
$
31,275

$
22,402

Europe, Middle East and Africa
14,400

8,929

Asia Pacific
2,547

1,059

Total
$
48,222

$
32,390

Customers located in the United States accounted for 61% and 66% of total revenue for the three months ended April 30, 2018 and 2017 , respectively. Customers located in the United Kingdom accounted for 11% and 10% of total revenue for the three months ended April 30, 2018 and 2017 , respectively. No other country accounted for 10% or more of revenue for the periods presented.
As of April 30, 2018 and January 31, 2018 , substantially all of the Company’s long-lived assets were located in the United States.

11

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, 2018 (the “2018 Form 10-K”). All information presented herein is based on our fiscal calendar , 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. 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 I, Item 1A of our 2018 Form 10-K and in our other filings with the SEC. 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 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. Software applications are redefining 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.
We generate revenue primarily from sales of subscriptions, which accounted for 92% and 90% of our total revenue for the three months ended April 30, 2018 and 2017 , respectively. Our primary subscription package is MongoDB Enterprise Advanced, which represented 66% and 69% of our subscription revenue for the three months ended April 30, 2018 and 2017 , respectively. MongoDB Enterprise Advanced is our comprehensive offering for enterprise customers that can be run in the cloud, on-premise or in a hybrid environment, and includes our proprietary database server, enterprise management capabilities, our graphical user interface, analytics integrations, technical support and a commercial license to our platform.
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. As a result, our direct sales prospects are often familiar with our platform and may have already built applications using our technology. We sell subscriptions directly through our field and inside sales teams, as well as indirectly through channel partners. Our subscription offerings are generally priced on a per server basis, subject to a per server RAM limit. The majority of our subscription contracts are one year in duration and invoiced upfront, although a growing number of our customers are entering into multi-year subscriptions. When we enter into multi-year subscriptions, we typically invoice the customer on an annual basis.

12

We introduced MongoDB Atlas in June 2016. MongoDB Atlas is our cloud-hosted database-as-a-service (“DBaaS”) offering that includes comprehensive infrastructure and management of Community Server. During the three months ended April 30, 2018 , MongoDB Atlas revenue represented 14% of our total revenue, reflecting the continued growth of MongoDB Atlas since its introduction. We have experienced strong growth in both self-service customers of MongoDB Atlas and customers sold by our sales force. Self-service customers are charged monthly based on their usage while customers sold by our sales force typically sign annual commitments and pay in advance, for the entire year or monthly. Given our platform has been downloaded from our website more than 35 million times since February 2009 and over 12 million times in the last 12 months alone, our initial growth strategy for MongoDB Atlas is to convert developers and their organizations who are already using Community Server to customers of MongoDB Atlas, enabling them to enjoy the benefits of a managed offering.
We also generate revenue from services, which consist primarily of fees associated with consulting and training services. Revenue from services accounted for 8% and 10% of our total revenue for the three months ended April 30, 2018 and 2017 , respectively. 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, and we have experienced rapid growth. We have made substantial investments in developing our platform and expanding our sales and marketing footprint and 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.
Key Factors Affecting Our Performance
Growing Our Customer Base
We are 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, 2018 , we had over 6,600 customers across a wide range of industries and in over 100 countries, compared to over 3,600 customers as of April 30, 2017 . All affiliated entities are counted as a single customer. As of April 30, 2018 , we had over 1,550 customers that were sold through our direct sales force and channel partners, as compared to over 1,300 such customers as of April 30, 2017 . These customers, which we refer to as our Direct Customers, accounted for 87% and 93% of our subscription revenue for the three months ended April 30, 2018 and 2017 , respectively.
Increasing Adoption of MongoDB Atlas
MongoDB Atlas, our hosted cloud offering, is an important part of our run-anywhere strategy and allows us to generate revenue from Community Server, converting users who do not need all of the benefits of MongoDB Enterprise Advanced to customers. To accelerate adoption of this DBaaS offering, in 2017, we introduced 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. In December 2017, we announced the availability of MongoDB Atlas on AWS Marketplace, making it easier for AWS customers to buy and consume MongoDB Atlas. We have invested significantly in MongoDB Atlas and our ability to drive adoption of MongoDB Atlas is a key component of our growth strategy. From its launch in June 2016, we have grown MongoDB Atlas to over 4,400 customers as of April 30, 2018 , which includes new customers to MongoDB, as well as existing MongoDB Enterprise Advanced customers adding incremental MongoDB Atlas workloads.
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 subscriptions to our platform. 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 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, which can include offering centralized internal support or providing MongoDB-as-a-service internally. Over time, the average subscription amount for our Direct Customers has increased. In addition, self-service customers have begun to increase their consumption of our products, particularly MongoDB Atlas.

13

We monitor annualized recurring revenue (“ARR”) to help us measure our subscription performance. We define ARR as the subscription revenue we would contractually expect to receive from customers over the following 12 months assuming no increases or reductions in their subscriptions. ARR excludes self-service products, including MongoDB Atlas not sold on a commitment basis. ARR also excludes professional services. For customers who utilize our self-service offerings, we measure the annualized monthly recurring revenue (“MRR”), which is calculated by annualizing their usage of our self-serve products in the prior 30 days and assuming no increases or reductions in their usage. The number of customers with $100,000 or greater in ARR and annualized MRR was 394 and 268 as of April 30, 2018 and 2017 , 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.
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 ratably and is 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 up front.
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 if sold on a stand‑alone basis and ratably over the contractual period if sold as a bundled element along with our subscriptions.
We expect our revenue may vary from period to period based on, among other things, the timing and size of new subscriptions, 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. Certain of our services agreements are sold as a bundled element along with our subscriptions. In those cases, when the delivery of services commences later than the start date of the subscription, no revenue is recognized until the delivery of services commences. As long as all other revenue recognition criteria have been met, once delivery of services commences, we record a cumulative catch up of revenue that would have been recognized over the period from the beginning of the subscription term until the commencement of service delivery.
Cost of Revenue
Cost of Subscription Revenue. Cost of subscription revenue primarily 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. Our cost of subscription revenue for our hosted as‑a‑service solutions includes third‑party cloud infrastructure and overhead. 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 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.
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.

14

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 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 channel program.
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 and incur the costs of compliance associated with being a publicly traded company.
Other Income (Expense), net
Other income (expense), net consists primarily of interest income 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. As of January 31, 2018, we had net operating loss (“NOL”) carryforwards for federal, state and Irish income tax purposes of $209.5 million, $166.5 million and $182.3 million, respectively, which begin to expire in the year ending January 31, 2028 for federal purposes and January 31, 2021 for state purposes if not utilized. Ireland allows NOLs to be carried forward indefinitely. The deferred tax assets associated with the NOL carryforwards in each of these jurisdictions are subject to a full valuation allowance.
Three Months Ended April 30, 2018 Summary
For the three months ended April 30, 2018 , our total revenue was $48.2 million as compared to $32.4 million for the three months ended April 30, 2017 . Our net loss was $29.2 million for the three months ended April 30, 2018 as compared to $19.7 million for the three months ended April 30, 2017 . Our operating cash flow was $(8.0) million and $(11.7) million for the three months ended April 30, 2018 and 2017 , respectively. Our free cash flow was $(8.4) million and $(12.4) million for the three months ended April 30, 2018 and 2017 , respectively. See the section titled “Liquidity and Capital Resources—Non-GAAP Free Cash Flow” below.

15

Results of Operations
The following tables set forth our results of operations for the periods presented in dollars and as a percentage of our total revenue:
Three Months Ended April 30,
2018
2017
(unaudited, dollars in thousands)
Consolidated Statements of Operations Data:
Revenue:
Subscription
$
44,565

$
29,187

Services
3,657

3,203

Total revenue
48,222

32,390

Cost of revenue (1) :
Subscription
10,070

6,550

Services
3,679

2,649

Total cost of revenue
13,749

9,199

Gross profit
34,473

23,191

Operating expenses:
Sales and marketing (1)
33,889

22,145

Research and development (1)
18,645

13,077

General and administrative (1)
11,227

7,771

Total operating expenses
63,761

42,993

Loss from operations
(29,288
)
(19,802
)
Other income, net
591

341

Loss before provision for income taxes
(28,697
)
(19,461
)
Provision for income taxes
467

229

Net loss
$
(29,164
)
$
(19,690
)
(1)
Includes stock‑based compensation expense as follows:
Three Months Ended April 30,
2018
2017
(unaudited, dollars in thousands)
Cost of revenue—subscription
$
359

$
151

Cost of revenue—services
184

72

Sales and marketing
2,218

1,215

Research and development
2,206

1,245

General and administrative
2,610

1,771

Total stock‑based compensation expense
$
7,577

$
4,454



16

Three Months Ended April 30,
2018
2017
(unaudited, dollars in thousands)
Percentage of Revenue Data:
Revenue:
Subscription
92
%
90
%
Services
8
%
10
%
Total revenue
100
%
100
%
Cost of revenue:
Subscription
21
%
20
%
Services
7
%
8
%
Total cost of revenue
28
%
28
%
Gross profit
72
%
72
%
Operating expenses:
Sales and marketing
70
%
68
%
Research and development
39
%
40
%
General and administrative
23
%
24
%
Total operating expenses
132
%
132
%
Loss from operations
(61
)%
(61
)%
Other income (expense), net
1
%
1
%
Loss before provision for income taxes
(60
)%
(60
)%
Provision for income taxes
1
%
1
%
Net loss
(60
)%
(61
)%
Comparison of the Three Months Ended April 30, 2018 and 2017
Revenue
Three Months Ended April 30,
Change
2018
2017
$
%
(unaudited, dollars in thousands)
Subscription
$
44,565

$
29,187

$
15,378

53
%
Services
3,657

3,203

454

14
%
Total revenue
$
48,222

$
32,390

$
15,832

49
%
Total revenue growth reflects increased demand for our platform and related services. Subscription revenue increased by $15.4 million primarily due to $9.6 million from sales to new customers. The remainder of the increase in subscription revenue resulted from sales to existing customers. The increase in services revenue was driven primarily by an increase in sales of professional services to new customers.

17

Cost of Revenue, Gross Profit and Gross Margin Percentage
Three Months Ended April 30,
Change
2018
2017
$
%
(unaudited, dollars in thousands)
Subscription cost of revenue
$
10,070

$
6,550

$
3,520

54
%
Services cost of revenue
3,679

2,649

1,030

39
%
Total cost of revenue
13,749

9,199

4,550

49
%
Gross profit
$
34,473

$
23,191

$
11,282

49
%
Gross margin
71.5
%
71.6
%
Subscription
77.4
%
77.6
%
Services
(0.6
)%
17.3
%
The increase in subscription cost of revenue was primarily due to a $2.2 million increase in third‑party cloud infrastructure costs, including costs associated with the growth of MongoDB Atlas, as well as a $0.9 million increase in personnel costs associated with increased headcount in our support organization. The increase in services cost of revenue was due to additional investments in headcount for our services organization to support global expansion of our business.
Overall gross margin remained flat. Our services gross margin for the three months ended April 30, 2018 was impacted by the additional investments in headcount in anticipation of future revenue growth. Our services gross margin will continue to be subject to fluctuations as a result of timing of sales of standalone consulting and training services and the timing of hiring, as well as the timing of revenue recognized for previously sold service agreements as a bundled element with subscriptions.
Operating Expenses
Sales and Marketing
Three Months Ended April 30,
Change
2018
2017
$
%
(unaudited, dollars in thousands)
Sales and marketing
$
33,889

$
22,145

$
11,744

53
%
The increase in sales and marketing expense included higher personnel costs of $5.8 million and higher commission expense of $1.4 million, driven by a 36% increase in our sales and marketing headcount to 403 as of April 30, 2018 from 296 as of April 30, 2017 . An additional $2.6 million of the increase in sales and marketing expense was attributable to increased travel and other expenses related to increased headcount and higher spend on marketing programs, including for MongoDB Atlas.
Research and Development
Three Months Ended April 30,
Change
2018
2017
$
%
(unaudited, dollars in thousands)
Research and development
$
18,645

$
13,077

$
5,568

43
%
The increase in research and development expense was primarily driven by an increase in personnel costs and stock-based compensation as we increased our research and development headcount by 35%.

18

General and Administrative
Three Months Ended April 30,
Change
2018
2017
$
%
(unaudited, dollars in thousands)
General and administrative
$
11,227

$
7,771

$
3,456

44
%
The increase in general and administrative expense was primarily due to 37% increase in general and administrative personnel headcount, in part driven by the increased compliance costs of being a publicly-traded company, resulting in higher personnel costs of $2.1 million. We also incurred higher rent expense of $0.9 million to accommodate our growing workforce.
Other Income, net
Three Months Ended April 30,
Change
2018
2017
$
%
(unaudited, dollars in thousands)
Other income, net
$
591

$
341

$
250

73
%
The increase in other income, net was primarily due to an increase in interest income derived from our larger average cash equivalents and short-term investments balance during the three months ended April 30, 2018 as compared to the prior-year period. This increase was partially offset by net losses from foreign currency transactions.
Provision for Income Taxes
Three Months Ended April 30,
Change
2018
2017
$
%
(unaudited, dollars in thousands)
Provision for income taxes
$
467

$
229

$
238

104
%
The increase in provision for income taxes was primarily due to an increase in foreign taxes as we continued our global expansion.
Liquidity and Capital Resources
As of April 30, 2018 , we had cash, cash equivalents, short‑term investments and restricted cash totaling $271.5 million . Our cash and cash equivalents primarily consist of bank deposits and money market funds. Our short‑term investments consist of U.S. government treasury securities.
In October 2017, we closed our IPO of 9,200,000 shares of our Class A common stock at an offering price of $24.00 per share, including 1,200,000 shares pursuant to the underwriters’ option to purchase additional shares of our Class A common stock, resulting in net proceeds to us of $201.6 million, after deducting underwriting discounts and commissions of $15.5 million and offering expenses of $3.9 million. Previously, we financed our operations principally through private placements of our redeemable convertible preferred stock. We have received net proceeds of $345.3 million from the issuance of shares of our redeemable convertible preferred stock. We believe our existing cash and cash equivalents and short‑term investments will be sufficient to fund our operating and capital needs for at least the next 12 months.
We have generated significant operating losses and negative cash flows from operations as reflected in our accumulated deficit and consolidated statements of cash flows. As of April 30, 2018 , we had an accumulated deficit of $472.9 million . We expect to continue to incur operating losses and negative cash flows from operations in the future and may require additional capital resources to execute strategic initiatives to grow our business. Our future capital requirements will depend on many factors including our growth rate, the timing and extent of spending to support development efforts, the expansion of sales and marketing and international operation activities, the timing of new subscription introductions, and the continuing market acceptance of our subscriptions and services. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition would be adversely affected.

19

The following table summarizes our cash flows for the periods presented:
Three Months Ended April 30,
2018
2017
(unaudited, dollars in thousands)
Net cash used in operating activities
$
(8,049
)
$
(11,721
)
Net cash provided by (used in) investing activities
57,633

(18,102
)
Net cash provided by financing activities
$
136

$
4,646

Non‑GAAP Free Cash Flow
To supplement our interim unaudited condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we provide investors with the amount of free cash flow, which is a non‑GAAP financial measure. Free cash flow represents net cash used in operating activities less capital expenditures and capitalized software development costs, if any. During the three months ended April 30, 2018 and 2017 , we did not capitalize any software development costs. Free cash flow is a measure used by management to understand and evaluate our liquidity and to generate future operating plans. The exclusion of capital expenditures and amounts capitalized for software development facilitates comparisons of our liquidity on a period‑to‑period basis and excludes items that we do not consider to be indicative of our liquidity. We believe that free cash flow is a measure of liquidity that provides useful information to our management, investors and others in understanding and evaluating the strength of our liquidity and future ability to generate cash that can be used for strategic opportunities or investing in our business in the same manner as our management and Board of Directors. Nevertheless, our use of free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Further, our definition of free cash flow may differ from the definitions used by other companies and therefore comparability may be limited. You should consider free cash flow alongside our other GAAP‑based financial performance measures, such as net cash used in operating activities, and our other GAAP financial results. The following table presents a reconciliation of free cash flow to net cash used in operating activities, the most directly comparable GAAP measure, for each of the periods indicated.
Three Months Ended April 30,
2018
2017
(unaudited, dollars in thousands)
Net cash used in operating activities
$
(8,049
)
$
(11,721
)
Capital expenditures
(367
)
(712
)
Capitalized software
—

—

Free cash flow
$
(8,416
)
$
(12,433
)
Operating Activities
Cash used in operating activities during the three months ended April 30, 2018 was $8.0 million primarily driven by our net loss of $29.2 million and was partially offset by non‑cash charges of $7.5 million for stock‑based compensation and $0.8 million for depreciation and amortization. In addition, our accounts receivable decreased $14.3 million due to cash collections and our deferred revenue increased $4.5 million resulting from the overall growth of our sales and our expanding customer base. The cash inflows from our accounts receivable and deferred revenue were partially offset by an increase of $3.2 million in prepaid expenses and other current assets and a decrease of $2.0 million in accrued liabilities, primarily from the payment of bonuses and commissions that had been accrued as of January 31, 2018.
Cash used in operating activities during the three months ended April 30, 2017 was $11.7 million primarily driven by our net loss of $19.7 million and was partially offset by non‑cash charges of $4.5 million for stock‑based compensation and $0.9 million for depreciation and amortization. In addition, our accounts receivable decreased $4.8 million due to cash collections and our deferred revenue increased $2.7 million resulting from the overall growth of our sales and our expanding customer base. Our accounts payable increased $1.2 million . The cash inflows from our accounts receivable, deferred revenue and accounts payable were partially offset by a decrease of $3.0 million in accrued liabilities, primarily from the payment of bonuses and commissions that had been accrued as of January 31, 2017, as well as an increase of $3.0 million in prepaid expenses and other current assets.

20

Investing Activities
Cash provided by investing activities during the three months ended April 30, 2018 of $57.6 million resulted primarily from the maturities of marketable securities.
Cash used in investing activities during the three months ended April 30, 2017 of $18.1 million resulted primarily from purchases of marketable securities, net of maturities.
Financing Activities
Cash provided by financing activities during the three months ended April 30, 2018 was $0.1 million primarily due to the proceeds from the exercise of stock options partially offset by the repurchase of early exercised stock options.
Cash provided by financing activities during the three months ended April 30, 2017 was $4.6 million primarily due to proceeds from the exercise of stock options.
Seasonality
We have in the past and expect in the future to experience fluctuations in our revenue and sales across periods. Our recent growth and the ratable nature of our subscription revenue make these periodic fluctuations less apparent in our overall financial results.
Off Balance Sheet Arrangements
As of April 30, 2018 , we did not have any relationships with any entities or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off‑balance sheet arrangements or other purposes.
Contractual Obligations and Commitments
During the three months ended April 30, 2018 , there have been no material changes outside the ordinary course of business to our contractual obligations and commitments from those disclosed in our 2018 Form 10-K. See Note 4, Commitments and Contingencies , in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
There have been no material changes in our critical accounting policies from those disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2018 Form 10-K.
Recent Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies , in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
JOBS Act
As an “emerging growth company,” Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We have elected to use this extended transition period under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of public companies who are required to comply with the effective dates for new or revised accounting standards, which may make comparison of our financial statements to those of other public companies more difficult.

21

ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes to our market risk during the three months ended April 30, 2018. For a discussion of our exposure to market risk, refer to our market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the 2018 Form 10-K.
ITEM 4.
CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of April 30, 2018 . Based on the evaluation of our disclosure controls and procedures as of April 30, 2018 , our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

22

PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition or cash flows. We have received, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights. Future litigation may be necessary to defend ourselves, our partners and our customers by determining the scope, enforceability and validity of third-party proprietary rights, or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
ITEM 1A. RISK FACTORS.
You should carefully consider the risks described in Part I, Item 1A, “Risk Factors” in the 2018 Form 10-K. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, also may become important factors that affect us. If any such risks materialize, our business, financial condition and results of operations could be materially harmed and the trading price of our Class A common stock could decline. There have been no material changes to the risk factors described in the 2018 Form 10-K.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
(a)
Recent Sales of Unregistered Equity Securities
None.
(b)
Use of Proceeds
On October 18, 2017, our registration statement on Form S-1 (File No. 333-220557) for our initial public offering (“IPO”) was declared effective by the SEC. The net proceeds to us from our IPO, after deducting underwriting discounts and commission of $15.5 million and offering expenses of $3.9 million, were $201.6 million. There has been no material change in the planned use of proceeds from our IPO from those disclosed in the final prospectus for our IPO dated as of October 18, 2017 and filed with the SEC pursuant to Rule 424(b)(4) on October 19, 2017.
(c)
Issuer Purchases of Equity Securities
The table below provides information with respect to repurchases of shares of our Class A common stock during the three months ended April 30, 2018 :
Period
Total number of shares purchased (1)
Average price paid per share
February 1 to February 28, 2018
—

—

March 1 to March 31, 2018
7,500

$
8.40

April 1 to April 30, 2018
3,006

$
8.82

(1) Under certain stock option grant agreements between us and our employees, in the event an employee’s service with us terminates, we have the right to repurchase shares of Class A common stock that were acquired by such employee pursuant to the exercise of stock options that have not yet vested as of such employee’s termination date. Pursuant to these agreements, we may repurchase all or any unvested shares at the lower of (i) the fair market value of such shares (as determined under our 2016 Amended and Restated Equity Incentive Plan) on the date of repurchase, or (ii) the price equal to the employee’s exercise price for such shares. The shares set forth above were repurchased pursuant to this right of repurchase.

ITEM 3.
DEFAULTS UPON SENIOR SECURITIES.
Not applicable.

23

ITEM 4.
MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5.
OTHER INFORMATION.
Not applicable.

24

ITEM 6.
EXHIBITS.
Incorporated by Reference
Filed Herewith
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
3.1
8-K
001-38240
3.1
10/25/2017
3.2
S-1
333-220557
3.4
9/21/2017
4.1
S-1/A
333-220557
4.1
10/6/2017
4.2
S-1
333-220557
4.2
9/21/2017
31.1
x
31.2
x
32.1*
x
32.2*
x
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
*
This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.


25

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MONGODB, INC.
Date: June 7, 2018
By:
/s/ Dev Ittycheria
Name:
Dev Ittycheria
Title:
President and Chief Executive Officer
( Principal Executive Officer )
By:
/s/ Michael Gordon
Name:
Michael Gordon
Title:
Chief Financial Officer
( Principal Financial Officer )


26
TABLE OF CONTENTS
Part I Financial InformationItem 1. Financial StatementsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits

Exhibits

3.1 Amended and Restated Certificate of Incorporation of Registrant 8-K 001-38240 3.1 10/25/2017 3.2 Amended and Restated Bylaws of Registrant S-1 333-220557 3.4 9/21/2017 4.1 Form of Class A common stock certificate of Registrant S-1/A 333-220557 4.1 10/6/2017 4.2 Fifth Amended and Restated Investors Rights Agreement by and among the Registrant and certain of its stockholders, dated October 2, 2013 S-1 333-220557 4.2 9/21/2017 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. x 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. x 32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. x 32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. x