Dec 13, 2017
Executives
Brian Denyeau - IR Dev Ittycheria - CEO Michael Gordon - CFO
Analysts
DJ Hynes - Canaccord Sanjit Singh - Morgan Stanley Heather Bellini - Goldman Sachs Brad Reback - Stifel Mohit Gogia - Barclays Mathew Spencer - JMP Securities
Operator
Good day, and welcome to the MongoDB Third Quarter Fiscal 2018 Earnings Call. Today's conference is being recorded.
At this time, I would like to turn the conference over to Mr. Brian Denyeau.
Please go ahead, sir.
Brian Denyeau
Thank you, Brian. Good afternoon, and thank you for joining us today to review MongoDB's third quarter fiscal 2018 financial results, which we announced in our press release issued after the close of market today.
Joining on the call are Dev Ittycheria, CEO of MongoDB; and Michael Gordon. MongoDBs CFO.
During this call, we may make statements related to our business that are forward looking on federal securities law and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Including these statements related to our financial results, trends and guidance for the fourth fiscal quarter and full fiscal year 2018, industry and market trends, our go-to-market and growth strategies, our market opportunity and ability to expand our leadership position, our ability to maintain and up-sell existing customers, our ability to acquire new customers, and the anticipated benefit of our platform.
The words anticipate, continue, estimate, expect, intend, will and similar expressions are intended to identify forward-looking statements or similar indications of future expectations. These statements represent our views only as of today and should not be reflected upon representing our views upon any subsequent date.
We do not plan to update these statements except as required by law. These statements are subject of variety of risks and uncertainties that could cause actual results to differ materially from expectations.
The discussion of the material risk and other important factors that could affect actual results, please refer to those contained in the final prospectus related to our initial public offering and our other periodic filings with the SEC. These documents are available in the Investor Relations section of our website at www.mongodb.com.
A replay of this call will also be available there for a limited time. Additionally, non-GAAP financial measures will be discussed on this conference call.
Please refer to the tables in our earnings release and the Investor Relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. And with that, I would like to turn the call over to Dev.
Dev Ittycheria
Great, thank you, Brian. I would like to thank everyone joining us today on our first quarterly earnings call as a public company.
MongoDB successful IPO in October was a major milestone for us and for our industry. The database market is one of the world's largest software markets and MongoDB was actually the first database company to go public in over 20 years.
Our disruptive technology, unique business model, and proven track record with customers has enabled us to deliver rapid growth at significant scale. In the third quarter, we generated revenue of $41.5 million representing a 58% year-over-year growth rate, and an analyzed revenue run rate of over 160 million.
We had over 4,900 customers at the end of the third quarter, which is up 88% compared to a year ago. Our success to-date clearly demonstrates that MongoDB is the leading modern general purposed database.
Before I review some of the operational highlights of our third quarter, I want to take a few minutes to reiterate the investment thesis we presented during the IPO road-show since this is our first earnings call as a public company. MongoDB was founded by developers who were tired of working on constraints of relational database.
They started with a clean sheet of paper and built a database they always wanted, a solution by developers for developers to allow them to more easily and efficiently build mission-critical applications. As software becomes more strategic, organizations are choosing technologies that drive developer productivity.
In fact, the increasing importance of developers was giving them disproportionate influence on how technology is evaluated, adopted and ultimately monetized. And because database is at the heart of every soft application, slicing of database has become a highly strategic decision.
But most of the applications today are built on database technologies that were introduced over 40 years ago and a lot has change in that time. Organizations are moving applications away from legacy computing platform deployed on-premise to modern as our architecture that can be deployed either on premise or in the cloud.
These changes made to database market right for disruption just as we've seen at the application layer, the management layer and the infrastructure layer of the IP stack in recent years. That’s what we think with MongoDB and is only scratched surface of the opportunity in front of us.
MongoDB was built to address the needs of modern applications and to maximize development productivity. Our unique platform combines best of relational and non-relational databases.
We preserve aspects of legacy databases that developers have come to value like sophisticated access to the data, guarantees for data integrity and comprehensive management functionality to operate monitor management database platform. We combine this with the flexibility, scalability and always on reliability of modern approaches.
The developments of platform that enable organizations to build and deploy mission critical applications on-premise during the cloud for an incredibly broader array of use cases many times fastest than they could with the legacy products. This approach has completely changed the game for application developers and we believe this is reflected in our adoption and mindshare.
Our premium community service has downloaded more than 30 million times since 2009, but more than 10 million just in last 12 months alone. Focus on research and industry out of analysts firm that study that found more developers list MongoDB of scale and lengthened nearly all other next generation database is combined.
And according to stack overflow, a leading develop forum, developers want to work with MongoDB more than any other database. In addition just two weeks ago, AWS CEO, Andy Jassy noted that MongoDB is kicking butt on AWS.
These steps establish MongoDB as the modern leader in the massive database market. IDC estimates in a most recent report from November 2017 that the database market is 44.9 billion in 2016, growing to 63.3 billion in 2020.
We believe we’re well positioned to go after both net new applications as well as existing applications there will be modernize and in many cases move to the cloud. In fact, approximately 30% of our new business already comes from migration of applications from legacy relational databases.
As a result, we believe we’re well positioned to address the large part of this massive market. A key element of our success is licensing model.
This model combines the adoption benefits of open source with the economic benefits of a proprietary software business model. Our AGPL licensing model provides significant benefits versus a traditional Apache License model.
One, we own the IP. Two, we control the roadmap.
Three, we define the wall between free and paid features. And four importantly, AGPL limits the appeal of other companies including cloud vendors, a monetizing version of software without licensing it from us.
We believe this provides the strong defensive modes for the Company. We used our premium community server product to drive developer mind shared adoption and then monetized to our commercial products.
As a result of this, our business is recurring software subscription license business evidenced by the fact that 90% of our total revenues made up of subscriptions. Our primary enterprise offering is called MongoDB Enterprise Advanced, which includes our proprietary database server, advanced security, enterprise management capabilities, analyst integrations and more.
More recently, we have extended our reach with the instruction of MongoDB Atlas, our database-as-a-service offering. Atlas enables our customers to consume MongoDB as-a-service without having to manage the database.
And they paid for it with a consumption based pricing model. This is a core component of our run anywhere strategy, which enables customers to develop and run MongoDB in any computing environment, including laptop a datacenter, private cloud as well as the public cloud.
Atlas is available on AWS, Microsoft Azure and Google Cloud Platform giving customers a flexibility to deploy on the public cloud, platform of their choice and to avoid vendor lock-in. This model allows us to directly monetize the value of our community server offering.
For our go-to-market perspective, we have three distribution channels. First, we built a world-class sales and marketing organization that really choose to acquire customers quickly.
Second, we have a low friction sales drove channel for MongoDB Atlas. And third, we leverage partners from large global system integrators to IPs and other technology companies to stand our reach, add value to our products and identify new market opportunities.
We have established a world-class go-to-market team that’s driving strong growth in both new customer wins as well as expansion. We have a land and expand model and this is reflected in our net AR expansion rate, which has consistently been over 120%.
With that background, let's take a deeper look at our third-quarter performance. We saw a broad-based strength in acquired new customers and expanding relationships with existing customers across all of GOs.
During the third quarter, we added new enterprise customers such as China Mobile, Centers for Medicare and Medicaid Services, DR Horton and 7-Eleven. We also expanded our relationship with enterprise customers such as Axiom, Auto, Pitney Bowes, Samsung, and Square Enix, the Company behind the game, Tomb raider.
I would like to take a few minutes to review a couple key customer wins in the quarter that demonstrate our success. A great example of the Company choosing MongoDB to support highly mission-critical business initiatives is the Washington Post Company, which has transformed from a traditional news provider into the global digital media company.
As part of this process, the Washington Post needed a comprehensive database platform for its online publishing system. They chose MongoDB Enterprise Advanced after a highly competitive sales process where they closely evaluated a number of other alternatives due to our proven ability to drive increase developer productivity while also helping these high SLAs for up time and disaster recovery.
We also signed a significant multiyear deal with the top five global telecommunications companies who have set out to transform, how to engage with customers on mobile. Historically, this customer's application development was the centralized leading to an inconsistent user experience, licensee development times and high cost.
The goals were to decrease overall operational costs, unified strategy across regions, and improve customer experience to reduce customer churn and attract new subscribers. The customer chose MongoDB to replace its legacy platform because we offer a significant reduction in both infrastructure and application development cost, significantly faster application development cycles as this customer now be able to build a single application that could be reused across regions and a much improved performance at scale compared to what they were able to achieve with their relational database.
We also had a very strong quarter with Atlas, which now represents 8% of our overall revenue and included several six figure wins. We also continue to see significant expansion from existing Atlas customers most of whom have been on the platform for less than a year.
This validates our belief that Atlas can serve both as a low friction on-boarding solution that can attract new customers as well as a solution that customers can quickly scale up overtime as they look to build more applications using an as-a service component. We also continue to push the pace of innovation into the market.
To that end, we recently introduced significant new product capabilities and enhancements with the release of MongoDB 3.6. These will further improve developer productivity, scale and time to insight.
I'd like to highlight five key capabilities. First, most applications increasingly have real-time requirements.
For example our credit card application that notifies you when you make a big purchase or a trade system that initiates a buy or sell order when a stock hits to specific price. To help make it easier for developers to build these kinds of event driven applications, we launched the feature called Change Streams.
Think of this as push notifications for the database. Second, since day one MongoDB is architected for high availability.
Now, a new featured called Retryable Writes takes it to the next level. It ensures that even if the database servers goes down for millisecond, the user won't notice because the database will retry the operations at the background, another big time saver for developers as they don't have to bring work grounds in their application code.
Third, new capabilities in our management platform Ops Manager make it easier than ever for ops team to inspect and improve database performance in real time. For example, we added performance advisor which finds slow running queries and auto generate recommendations to improve performance.
This makes it incredibly easy for ops team to ensure a high quality experience for the users. Four, allowing customers to run MongoDB anywhere is a key adoption driver for Atlas, and as an extension of the strategy, we launched Cross-Region Replication.
This new capability provides two key benefits. One, it ensures that an application stays up even if the entire cloud region goes down.
And two, it lets customers put data closer to the users for better application performance. Fifth, we continue to make it easier for customers to extract more value from their data, by making significant performance improvements to our Connector for Bi in this release.
We're hoping data scientists and business analysts analyze their data by connecting any sequel-based business intelligence tool directly to MongoDB without having to move their data to a separate warehouse or data lake. Additionally, we expanded our relations with a number of key partners.
We launched a mainframe offloading solution with Infosys that help customers accelerate their digital transformation and application modernization efforts. We announced the MongoDB Connector for Bi as a certified named connector in Tableau, helping customers to analyze rich modern data structures directly from MongoDB, and we announced the availability of MongoDB as part of the Accenture Insights platform, Accenture's analytics as-a-service solution, helping customers to address analytics at any scale as for wide-range of use cases.
So, in summary, we had a great quarter and now to review the financials, let me turn the call over to Michael Gordon.
Michael Gordon
Thanks, Dave. As mentioned, we're very pleased with our third quarter results.
Before reviewing the details of our financial performance and our outlook for the remainder of the year, I'd like to provide an overview of our financial model, given this is our first call as a public company. MongoDB primarily generates revenue from subscriptions, which typically run at 90% or more of our total revenue.
Subscription revenues come from subscription licensed packages primarily our Enterprise Advanced offering as well as our database-as-a-service offering, MongoDB Atlas. We also have professional services revenue which is tied to service offerings, designed to increase our customers' success, retention and expansion.
Enterprise Advanced is priced on a per server basis and typically has 12 months contract. We invoice customers annually in advance and generally recognize license revenue ratably over the term of contract.
More recently, we've seen a growing number of customers making multiple agreements as MongoDB has become increasingly strategic, but even for these agreements, we typically invoice these customers annually. Pressing invoicing for Enterprise Advanced is the same whether our customer chooses to deploy it on premises in the cloud or in a hybrid environment.
As Dave mentioned, we have a land and expand model. We drive growth by expanding our subscription within existing customers and acquiring new customers who are just starting to use our platform.
We launched Atlas about 18 months ago in the middle of our fiscal 2017. Atlas is currently based on the feature set included in our community server and provides us the way to monetize our premium offering directly.
It is an elastic offering and is priced on the consumption metered basis, consistent with typical cloud offerings. Now, let me turn to our third quarter results.
Total revenue in the third quarter was $41.5 million, up 58% year-over-year. Subscription revenue was $37.9 million, up 59% year-over-year; and professional services revenue was $3.6 million up 44% year-over-year.
During the third quarter, we saw continued momentum in winning enterprise customers and expanding our relationships within existing accounts. We also had a very strong performance related to Atlas, not only due to the rapid growth in new customers, but also resulting from expanding use by existing customers.
In the third quarter, Atlas represented 8% of total revenue, up from 1% during last fiscal year. In addition to our strong net customer adds and expansion activity, we also recognized approximately $1.3 million of revenue that we had not anticipated during the third quarter.
The largest portion of this was related to bundled services subscriptions where we sell software and services on a bundle basis, we do not begin recognizing subscription revenues from customers until the services have commenced. In Q3, this let us to start recognizing revenue from these customers in the third quarter versus our expectations that they will begin in the fourth quarter.
We continue to see strong global demand for our offerings. During the third quarter, we grew our customer base by approximately 600 customers, bringing our total customer count to over 4,900, which is up from over 2,600 in the year ago period and over 4,300 at the end of last quarter.
Of our total customer count, over 1,400 customers are direct customers up from 22% in the year ago period. The growth in our total customer account is being in large by Atlas which had over 2,600 customers at the end of the quarter versus 1,900 at the end of the second quarter.
It should be noted that we are seeing existing enterprise advanced customers expand their relationship with us by deploying Atlas for additional workloads. We also continue to see healthy expansion from existing customers.
Our net ARR expansion rate in the third quarter remained above 120% consistent with prior quarters. We ended the quarter with 320 customers as at least $100,000 in ARR and annualized MRR, which is up from 296 customers in the second quarter and 220 in the year ago period.
Driving expanded adoption and spend among existing customers is a key component of our growth strategy. For example, as outlined in our S1, our fiscal 2013 new customer cohort grew their ARR with us by 4.1 times through fiscal 2017 while our largest customers have expanded multiple times more than that.
Moving down to P&L, I will be discussing our results on a non-GAAP basis, unless otherwise noted. Gross profit in the third quarter was $30.7 million representing a gross margin of 74.1% and the 70 basis points improvement over the year ago period.
Gross margin was ahead of our expectations in the quarter driven primarily by the revenue out performance and the initial impact of optimizing infrastructure cost for Atlas. As a reminder, Atlas represents incremental dollars of gross profit given its monetizing community server.
As of now, Atlas is still gross margin percent dilutive and that will be a near term headwind as Atlas continues to grow, but we are continuing to execute against our Atlas plans and are very pleased with how things are progressing so far not just with the top-line growth but with the margin profile as well. Sales and marketing expense was $26.3 million, an increase of 50% year-over-year and representing 64% of revenue, which is down from 67% of revenue in a year ago period.
R&D expense was 15.1 million, an increase of 25% year-over-year and representing 36% of revenue also an improvement from 46% of revenue in the year ago period. G&A expense was 7.6 million or 18% of revenue, which was consistent with a year ago period.
Our operating loss was $18.4 million or a negative 44% operating margins in the third quarter, which was a meaningful improvement from a negative 57% margin in a year ago period. We’re pleased with our ability to generate the strong operating leverage, while continuing to make investments to grow and expand our business.
Net loss in the third quarter was $18.5 million or $0.44 per share based on $41.7 million non-GAAP weighted average shares outstanding. Turning to the balance sheet and cash flow, we ended the quarter with $289.1 million in cash, which includes approximately $202 million of net proceeds from our initial public offering.
Short-term deferred revenue was $92.4 million, up 66% year-over-year while total deferred revenue of $114.8 million was up 55% year-over-year. We believe long-term trends and deferred revenue our directionally correlated to the underlying momentum in our business.
That said, as Atlas continues to become a larger portion of our business, it is important to appreciate that its usage base model does not generate meaningful deferred revenue. In addition, quarter-to-quarter comparison to deferred revenue can also have some level of variability due to timing events that may occur.
Operating cash flow in the third quarter was negative $10.3 million after taking into consideration $88,000 in CapEx free cash flow was negative $10.4 million in the quarter. I’d like to turn to our outlook for the fourth quarter and full fiscal year 2018.
Beginning with the fourth quarter, we expect revenue to be in the range of $42 million to $42.5 million. Non-GAAP loss from operations is expected to be in the range of $21.5 to $20 million and non-GAAP net loss per share to be in the range of $0.43 to $0.42 per share based on 50.4 million weighted average shares outstanding.
For the full year, 2018 revenues expected to be in the range of $151.5 million to $152 million. Non-GAAP loss from operations is expected to be in the range of 76.5 million to 76 million and non-GAAP operating net loss per share to be in the range of $1.77 to $1.76 based on 43.2 million weighted average shares outstanding.
To conclude, MongoDB delivered strong third quarter results in our first quarter as a public company. We’re going to make key investments in sales, marketing and R&D to drive growth as we are in the very early stages of capitalizing on the large opportunity in front of us.
We feel great about our business and a very well position for the future. Now, let me turn it back over to Dev for a few closing words.
Dev Ittycheria
Thanks Michael. So, as you’ve heard, we got off to a great start in our first quarters as a public company.
We further demonstrate our position as the leading modern general purpose database with a massive $45 billion market. We continue to see a positive response from customers and continue to generate best-in-class growth.
I joined MongoDB as a CEO over three years because I believe there was a unique opportunity to build the special category-defined software company. Three years later, it's clear we have a huge market, strong product market fit and a long runway for growth.
Finally, I’d like to take a moment to thank all our employees to their hard work and dedication. We built an incredible business and culture.
I couldn’t be proud of what we've collectively accomplished and I know the best is still yet to come. With that, we’d like to open up to questions.
Operator?
Operator
Thank you. [Operator Instructions] And we will now take our first question from Richard Davis with Canaccord.
DJ Hynes
This is actually DJ Hynes on the call for Richard. I want to ask you about new business generation.
What percent of new business is coming from incremental workloads versus legacy migration? And I guess how do you see that trending overtime?
Dev Ittycheria
Yes and what we have said in the road show during the IPO was that we saw about 30% of our business coming from legacy migrations, last quarter was again consistent around that figure. So about a little less than third of our business is migrations and the rest is around new workloads that customers are deploying.
DJ Hynes
And you think that, that stays pretty steady for the foreseeable future?
Dev Ittycheria
Yes, it's not necessarily a metrically track explicitly to manage our business tube because obviously where we see such a big opportunity in front of us, but we don’t see -- there maybe some variability based on some large deals, but we definitely see that to be generally in line with how the business will come in the future.
DJ Hynes
And then one follow-up on Atlas. I mean from all of the kind of qualitative commentary, it sounds like there was another good quarter for Atlas with the customer.
I'm curious some of the trends in the metrics that we had been seeing that were caused by Atlas right with subscription revenue per customer trending down and gross margins trending down, kind of reversed in the quarter. So wonder, if you can give us some color on what drove kind of the reversal on those trends?
Dev Ittycheria
Yes so in general, we have seen strong performance really across the board as a strong quarter for both new customer adds as well as expansion within existing customers. To your point certainly, it was a particularly strong quarter for Atlas in particular as customers -- with our growing number of customers embracing are as-a-service model.
I think that we've seen both new customers adds in terms of raw customer account of Atlas growing, but we are also seeing even though it's early days very attractive underlying cohort expansion within Atlas. We are seeing actually even greater land and expand characteristics than the already strong behavior that we see in our annual subscription business.
So, we are benefiting from that as well and then I would also say we're seeing a number of customers who are already enterprise advanced customers expanding their relationship with us and adding Atlas and managed offering for additional workloads of theirs.
Operator
We will now take our next question from Sanjit Singh with Morgan Stanley.
Sanjit Singh
I have a couple of questions for Dev and then maybe a couple for Michael. Since it’s the first quarter Dev, maybe if you can give us a sense of historically, what have been sort of the use cases/workloads that have driven business or accounted for the big chunk of revenue on historically?
And the types of use cases that are coming on board today and where -- what are some of the use cases that could come on-board in the future, if you can sort of any thoughts on where the growth is coming that'd be helpful?
Dev Ittycheria
Yes, so, we typically see three types of applications in most enterprises. We see systems of record which could be your HRIS, your payroll, your journal ledger and maybe custom apps on your billing system and so forth.
We see systems with engagement that tend to be typically how customers engage with their users, their customers, their partners, and they tend to be in many cases revenue generating applications. And then, we see systems of that is new genre of applications called systems intelligence where people are building machine learning and AI- based application, and that obviously you know is still a very small footprint today, but an exciting new area.
Historically, we engage with customers around system engagement first, around the new workload. The obvious reason one is system engagement applications tend to have a high rate and pace of change.
People are adding new features to respond to new market opportunities, to respond to new competitive threat, so like e-commerce system and so forth, mobile application et cetera. And then as they get used to -- and that's typically for new workload because obviously by definition it's less foresee with the new workload.
And then as we get more and more comfort and experience with MongoDB, we start seeing them deploy out for systems of record applications, typically those tend to be migrations of existing workloads. So, it could be a trading app on Wall Street, it could be an order booking application, how people capture orders, it could be something in that genre.
And they tend to be migrations of existing use cases. And I would say just the no real change, we still see that same pattern happening and the more we penetrate a particular account and that's why our model is a land and expand model, as we continue to further penetrate our position in particular accounts, that tends to be more high predisposition to start migrating existing applications.
Sanjit Singh
Just a quick follow-up there. Is there anything from the technical architecture perspective where you can't address the use case a day, but may address in the future?
And then any sort of -- just sort of a roadmap gap today that you're planning to sell that would open up you the more use cases down the line?
Dev Ittycheria
I mean, no, we definitely believe that we are and as you -- there's a wide breadth of the use cases, wide breadth of customers, wide breadth of industries that our customers are part of that. So we feel like we're a general purpose database today, but clearly there's some, maybe some unique set of features and capabilities that we don't have today that we can address.
But the way our product planning process goes since we see that demand coming in and that we prioritize where we think we're going to make the biggest impact and we try and bridge that gap as quickly as possible. In some cases -- and we tend to come out with major lease every year, so our rate and case innovation is quite high.
Sanjit Singh
And then Michael maybe one for me and it gets back to Atlas again. I appreciate the heads up on the gross margin.
Can you sort of review as Atlas as 8% revenue today, but as the increased as percentage of overall revenue mix? In terms of the impact on metrics such as billing, revenue, and cash flow.
Could you review what the impact to be there? And again any sort of comments on what type of the annual rates you guys have been seeing now that's it's been after 18 months?
Michael Gordon
So, Atlas just ground everyone, the main difference while it's still a subscription product as it's still monthly based on usage as opposed to flat fee for term license just to ground everyone in that. So from a revenue recognition standpoint, it's fairly straightforward, it's consumption based, it's based on the actual usage as opposed to a ratable revenue recognition treatment, but assuming the same amount of usage over a period, the revenue recognition would look pretty similar.
Cash flow is a little bit different while it is more monthly in rears less of deferred revenue. Treatment doesn't generate meaningful deferred revenue as opposed to a customer who's paying annually in advance for subscription, and then billings which is not a metric that we as internally but I know externally is valuable would have that knock on effect of it knocks on due to deferred revenue in the way that we just discussed.
On the renewal rates, we're seeing very strong cohort behavior for Atlas business. It is still early days, so we don't want to give specific numbers, we want to get some more seasoning in the cohorts, but we are seeing much broader, much higher net expansion out of a cohort of customers.
And that's a lot of what's as one of the manufacturers that's contributing to the strong growth of Atlas.
Operator
And we'll now take our next question from Heather Bellini with Goldman Sachs.
Heather Bellini
You've talked a little bit about AWS and nice comments that Andy Jassy made, but obviously you also run on. Have you mentioned GCP and Azure, just wondering if you could share with us and maybe some of that cohort analysis you're doing or just of where you're seeing the greatest adoption of Atlas and kind of I know you need to love equal, the all of the platforms equally, but kind of anything that would stand out in terms of just customer traction and where maybe the friction might be least to adoption of Atlas?
Dev Ittycheria
So, there is no question that greatest amount of adoption is on AWS just as a function of fact that AWS is always and actually bigger than Azure or GCP. We are seeing significant uptick in both of those two other cloud platforms as well.
I would say I think GCPs are little bit ahead of Azure today, but it's still very early days. But the nice thing is that we're seeing customers transact and run Atlas on those cloud platforms, so they've really buying into the run anywhere strategy.
And that gives customers comfort. And then I think as we introduce new features, today we have Cross-Region Replication in the future in part of a roadmap will be across cloud replication, you could have workload expanding multiple cloud providers as well.
But right now the bulk of the business is coming and being provisioned on AWS.
Operator
And we'll now take our next question from Brad Reback with Stifel.
Brad Reback
Dev, as you look down the road couple of years, what percent of revenue you think Atlas represent?
Dev Ittycheria
Yes. I mean it's really hard to sit here and give you any kind of definitive number.
We are very bullish on the Atlas opportunity for a number of reasons. One is just appeal of these as-a-service models.
These just customers want to consume infrastructure as-a-service. Two, the product market fit of Atlas has been really strong.
Obviously, we wouldn't be seeing these kind of growth rates if it wasn't so strong. And three, it really gives customers optionality, optionality in terms of running [indiscernible] building environment and optionality on kind of any consumption model that maybe certain application-as-a-workload that people still want to manage directly.
And then maybe sort of an application of workload that people want to deploy as-a-service. And we have seen that actually today it happened pretty quickly.
So I think this is not about just only betting and investing in one offering. We’re continued to innovate aggressively on our Enterprise Advanced product portfolio.
And in fact many of the features we’ve build on Atlas, we’ll continue to be embedded back into option manager to enable customers to do more sophisticated things when they want one of our proud clouds. But this is really all about, really offering customer’s choice on environment and consumption model.
Brad Reback
Great. Maybe one quick follow-up for Michael, if that was grew faster than potential expected given the cash flow dynamic with the product.
Does it matter that it might push out getting to cash flow neutral in the future?
Dev Ittycheria
Yes. So, it obviously depends on the magnitude of how much order grow faster that certainly are some underlying cash flow dynamics.
I think in the long run we have enough levers that we’re playing a lot of attention to the relative dynamics and the relative performance of the business. We’re certainly making investments across the board in sales and marketing to grow the top line in R&D for the product roadmap.
All of that is in the context of more than fully funded business plan, and so we think about everything in the context of our steady progression towards cash flow profitability including developments that they unsold, but market uptake whether it'd be an Atlas or anything else.
Operator
And we’ll now take our next question from Raimo Lenschow with Barclays.
Unidentified Analyst
It’s Mohit Gogia for Raimo. Even Mike appreciate, there'd getting question here and congrats on the quarter.
Just thing on Atlas, one thing I found interesting from a comment was that, Atlas you guys are seeing it option not just in terms of landing new customers, but also customers who are or you have been using your Enterprise Advanced offering, having using Atlas, which is as only sort of hybrid cloud sort of like negative we have seen from other companies in the space. So just curious as to if you can give more color and as to what sort of like workloads are use cases you've seen from customers who are already using Mongo on frame, while they used Atlas is just sort of like new born the cloud application workload?
Is it actually they're migrating some workloads on-prem to the cloud and using Atlas along those lines? So, just any color there would be helpful.
Dev Ittycheria
Sure and typically in the Enterprise Advanced product, you typically see a more production environments and some test environments, but mainly they're mission critical production environments that people are transacting with us to help them run and manage those environment using our proprietary capabilities. When it comes to Atlas, Atlas is basically the monetization of our community server.
So what we saw from the early customers do just move development workloads, people who are doing prototyping ScrumWorks et cetera. We have many customers, even large customers say, they don’t want to have development workloads on-prem anymore because there's such a high degree and variability and usage of the compute platform that they want to get the benefit of elastic platform like Atlas.
But then we've seen as people done comfort with Atlas that we've seen customers' transacted highest six figure kind of commitments, where people are really moving you know important mission critical workloads doubtless. So I think it really depends on the customer and what their issues or constraints are.
Some customers are constrained by just their own operation support capabilities. Some customers are constrained by just provisioning not compute capacity in their own data centers.
Some customer customers want to move very, very quickly from a time-to-market point of view. It really depends on what's happening with that customer and what's driving the decision to move to Atlas.
So, the nice thing is that we are seeing broad adoption of Atlas and broad adoption of Enterprise Advanced. And again and the benefits of the development organization is they don’t have to develop the application differently whether they run it on prem or in the cloud.
So in some ways, they're future proving their application by betting on MongoDB.
Operator
[Operator Instructions] And we will now take our next question from Pat Walravens with JMP Securities.
Unidentified Analyst
This is Mathew Spencer on for Pat. Thank you for taking my question.
Would you mind talking about some of the investments you're making in the sales force specifically how are new sales reps ramping? And also could you remind us that what your coverage model looks like and maybe where are you hiring most aggressively?
Dev Ittycheria
Sure, so we have put a lot of thoughts and structure around our go-to-market model. As we mentioned in our prepared remarks, there tend to be three channels.
There are the, our direct sales force, there is a self-service business, and there is a partner organization. In terms of direct sales force, we are hiring in all markets North America, Europe and in the Pac Rim.
And candidly, it's lot of it -- because the market is so large it's really gated by the leadership we put in place because we just don’t want to hire a rep in the market without both the coverage of enough leadership to give them the support as well as technical resources to support them in the sales process. As you can imagine, we tend to focus on where we see the biggest demand set.
So like in the North America, we tend to focus on NFL City, but even today we don't have coverage for every NFL City, and we continue to trying to expand our coverage over time. The same is happening in EMEA, we've historically had a very larger presence in the UK, but a limited coverage in the rest of the continent.
Now, we have hired some new sales leaders who are helping us grow our footprints in places like France, and Southern Europe, and places like Spain and Italy as well as Germany, which is massive market onto sell. And then we also hired people in the Benelux area and we are looking to add more people in the Nordic.
So again, we see -- this is a truly business that’s not constrained by market, so it's really one finding, the right quality of people and making sure that we have the sales leadership in place to support them in the ramping process as well as the technical resource to help them prosecute a deal.
Operator
And with no further questions in the queue at this time, I would like to turn the conference back over to Mr. Dev Ittycheria for any additional or closing remarks.
Dev Ittycheria
Well, I'd like to thank everyone for joining us on our first call as a public company. We appreciate your support.
Thank you again. Take care.
Good evening.
Operator
And ladies and gentlemen that concludes today's conference call. We thank you for your participation.