MongoDB, Inc. (MDB) Q3 2026 Earnings Call Transcript

Atlas performance: Accelerated to 30% year-over-year growth, up from 29% in Q2 and 26% in Q1. Atlas now represents 75% of total revenue.

Voyage AI: Acquisition highlighted as a key enabler for AI-native applications, providing embedding models and vector search capabilities.

Customer expansion: Added 2,600 customers in Q3, totaling over 62,500 customers, reflecting 65% growth in customer additions year-to-date.

Enterprise penetration: Serves over 70% of the Fortune 100, with significant room to broaden footprint within enterprises.

Revenue growth: Total revenue reached $628.3 million, up 19% year-over-year, exceeding guidance.

Operating margin: Achieved a 20% non-GAAP operating margin, demonstrating profitability alongside growth.

AI positioning: Positioned as a foundational platform for AI workloads, leveraging its document model and integrated search capabilities.

Focus on innovation: Plans to deepen customer relationships, advance innovation, and scale go-to-market efforts to build a generational modern data platform for the AI era.

Atlas Growth Dependency: MongoDB's revenue growth is heavily reliant on Atlas, which now represents 75% of total revenue. This dependency could pose a risk if Atlas growth slows or if competitive pressures impact its adoption.

Seasonal Variability: The company highlighted seasonal holiday patterns as a potential source of unpredictability in Atlas consumption growth, which could impact revenue projections.

AI Adoption Uncertainty: While MongoDB is positioning itself as a platform for AI workloads, the adoption of AI applications in enterprises is still in its early stages, with many customers only experimenting and not yet deploying AI agents at scale. This creates uncertainty around the timing and magnitude of AI-driven growth.

Competitive Pressures: MongoDB faces competition from relational databases like Postgres and other vector database solutions, particularly in the AI-native and enterprise markets. This could impact its ability to capture market share.

Customer Concentration: The company’s growth is driven significantly by large customers in the U.S. and EMEA. Over-reliance on these customers could pose risks if their consumption patterns change.

Regulatory and Governance Challenges: In regulated industries like financial services and healthcare, MongoDB's customers face stringent requirements for AI applications, including governance and auditability. These challenges could slow down adoption and deployment of MongoDB's solutions.

Operational Margin Pressures: MongoDB is making strategic investments in engineering, marketing, and sales capacity, which could pressure operating margins in the short term, even as it aims for long-term growth.

Supply Chain and Resource Allocation: Delays in planned investments, particularly in sales and engineering, have shifted into future quarters, which could impact the company’s ability to execute its growth strategy effectively.

Atlas Revenue Growth: Atlas revenue is expected to grow approximately 27% in the fourth quarter of fiscal 2026, higher than previous expectations of mid-20% growth. This reflects strong momentum, consistent consumption growth, and broad-based strength in EMEA and the U.S.

Non-Atlas Business Growth: Non-Atlas business is projected to grow in the upper single-digit percent range year-over-year in the fourth quarter of fiscal 2026, supported by steady ARR growth and visibility into several large multiyear deals.

Fiscal 2026 Revenue Guidance: Full fiscal year 2026 revenue is expected to range between $2.434 billion and $2.439 billion, representing 21% to 22% year-over-year growth.

Fiscal 2026 Operating Margin: Non-GAAP operating margin for fiscal 2026 is projected to be approximately 18%, with non-GAAP income from operations expected to range between $436.4 million and $440.4 million.

Free Cash Flow Conversion: Free cash flow conversion for fiscal 2026 is expected to exceed 100%, reflecting strong operating profit and improving working capital dynamics.

Strategic Investments: The company plans to continue strategic investments in engineering, marketing, and direct sales capacity to drive growth, with some investments shifting into fiscal 2027.

Long-Term Financial Model: MongoDB remains committed to its long-term financial model, targeting 100 to 200 basis points of margin expansion on average and 80% to 100% free cash flow conversion.

Share Repurchase Authorization: During the quarter, we spent $145 million to repurchase approximately 514,000 shares which was executed under our previously announced $1 billion total share repurchase authorization.

Share Count Management: We began settling the taxes due on the vesting of employee RSUs with cash instead of issuing new shares. We also expect to receive over 1 million shares of stock for the cap calls associated with our 2026 notes that mature in January 2026. All of these actions will help us manage share count for the long term and illustrates our commitment to being good stewards of your capital.