Good day, ladies and gentlemen, and welcome to the MongoDB 4th Quarter Fiscal 2019 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Brian Denyeau, ICR Investor Relations. Please go ahead, sir.
Thank you, Keith. Good afternoon, and thank you for joining us today to review MongoDB's fourth quarter fiscal 2019 financial results, which we announced in our press release issued after the close of market today. Joining me on the call today are Dave Isacharya, President and CEO of MongoDB and Michael Gordon, MongoDB's Chief Operating Officer and Chief Financial Officer. During this call, we may make statements related to our business that are forward looking under federal securities laws. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our financial guidance for the first quarter full year fiscal 2020, our fiscal 2020 priorities, our market opportunity, database market dynamics, the anticipated benefits of our products for our customers our ability to expand our leadership position, our growth strategy, the impact of the adoption of ASC 606 on our future financial results, and our ability to generate margin and similar expressions are intended to identify forward looking statements or similar indications of future expectations.
These statements reflect our views only as of today and should not be construed as representing our views as of any subsequent date. We do not have plans to update these statements except as required by law. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to those contained in our annual report on Form 10 K filed with the SEC on March 30, 2018. Our quarterly reports on Form 10 Q filed on September 7th December 6, 2018, 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 on the Investor Relations portion of our website for a reconciliation of these measures to the most directly comparable GAAP financial measure. And with that, I'd like to turn the call over to Dave.
Thank you, Brian, and thank you to all of you for joining us today to review our fourth quarter and full year results. The fourth quarter was a tremendous finish to what was a milestone year for MongoDB. Our results reflect broad based performance in all geographies across industries and among small, midsize and enterprise customers through our sales led and self serve channels. Will be discussing our results for the fourth quarter and full year on an ASC 605 basis only. Later, Michael will review our results under ASC 606.
To quickly summarize our 4th quarter results, we generated revenue of $83,100,000 85% year over year increase which was above the high end Atlas revenue grew more than 400 percent year over year and now represents 34 percent of revenue, and we ended the quarter with over 13,400 customers up approximately 130% compared to a year ago. For the full year, we generated revenue of $253,800,000, a 64% year over year increase, which was above the high end of our guidance. We grew subscription revenue 67% year over year, and Atlas revenue grew more than 400% year over year and represented 24% of annual revenue. While we constantly seek to get better at what we do, we are quite pleased with our performance last quarter and last year and are well positioned for fiscal 2020 and beyond. We have established MongoDB as the next generation database platform of choice, and our goal is to maximize the massive market opportunity in front of us.
We believe our wide appeal, the success of our customers and our financial performance continue to clearly highlight that MongoDB's document database offers the best way to work with data. Documents correspond directly to objects and mainstream object oriented programming languages so developers can store and organize data according to the natural relationships among entities in the real world. This enables developers to focus on building applications the way it makes the most sense, not on working around the limitations of their database. Our document based architecture addresses a broad range of popular data models enabling a wide variety of use cases. As a result, MongoDB is experiencing accelerating adoption with developers.
The total number of MongoDB downloads from our website alone is now more than 60,000,000 with more than $20,000,000 occurring the last 12 months, up from more than $12,000,000 in fiscal 2018. It should be noted that there are between 20,000,000 to 25,000,000 developers in the world today. Clearly, developers, customers and the broader market are now starting to understand what we and MongoDB have known for a long time that documents, not tables are the future of this market. Because of our enormous popularity, there are other solutions that now try to emulate MongoDB's capabilities. However, none of these imitation databases are built on true document architecture.
Because there are fundamental architectural differences between MongoDB and these other imitation databases, customers have to deal with severe feature and performance trade offs in addition to the deep vendor lock in with these imitation offerings. Using MongoDB dramatically increases developer productivity, enabling organizations to innovate more easily and What was particularly exciting about our results in the fourth quarter fiscal 2019 was the breadth of customer adoption and the wide variety of use cases employed. The common theme we see across our customer base is that businesses today are incredibly motivated to find new ways to innovate, either to pursue new market opportunities or to respond to new competitive threats and need a platform that lets them do so quickly and efficiently. Increasingly, the answer for customers in nearly every industry and geography is MongoDB. I'd like to spend a few minutes highlighting just a small sample of the customer wins and interesting use cases in the quarter.
Last quarter, we added another business unit of IHS Markit's Financial Services division, the fixed income pricing business selected MongoDB Atlas to support its migration from legacy services and provide a data platform with rich querying capabilities multi region distribution and end to end encryption. Wireless car, the world's leading innovator of connected vehicle services, migrating core components of their IoT platform, which gives automotive companies real time visibility into vehicle performance. Mongodb Atlas will help reduce the time it takes to bring new features to market from weeks to days and dramatically cut onboarding times for new customers. Line, one of the biggest messaging platforms in Asia is in process of expanding its offerings to financial services. They chose MongoDB for the scalability of the platform and how easy they can develop and manage their applications.
BBVA, a global banking group, has 37 applications running on MongoDB, including a financial aggregator, customer data hub, and analytics. With MongoDB, BBVA is able to easily offload applications from their mainframe, develop new capabilities more quickly, and leverage valuable data such as data and customer buying behavior in real time. Ulta Beauty, the largest beauty retailer in the U. S. Chose MongoDB Atlas support a new artificial intelligence application.
Transix, a WABCO company, develops fleet management systems for truck, driver, trailer, cargo and subcontractor management. They are using MongoDB as a platform for the IoT data hub. Bruninger, a German top retailer, migrated from a monolithic legacy system to MongoDB Atlas in order to support their omnichannel integration plans. Catapult Sports, which creates technology to help athletes and teams reach their true potential, is migrating their IoT monitoring platform to MongoDB Atlas, Atlas Global Clusters are expected to improve overall application performance and increase customer satisfaction in each region. Nationwide, the UK Financial Institution And the World's largest building society built an open banking mobile app and a data speed layer that has improved data resiliency and increased speed to value for new applications on MongoDB and MongoDB Atlas.
Mazuo International relies on MongoDB as an integral part of its core backbone to help scale large amounts of trade data and provide a secure platform for risk reporting. The flexibility, dynamic schema and extensive querying capabilities allow Mizuho to make greater use of their own data. As you can see from these examples, the common theme is that customers are increasingly selecting and expanding their use of MongoDB to innovate more easily and market demand for MongoDB Atlas. We achieved a significant milestone in the quarter as MongoDB Atlas is now at an annualized revenue run rate in excess of 100,000,000 dollars and growing rapidly. The growth demonstrates the wide popularity of MongoDB and the strong product market fit of Atlas.
Before we move on to our 2020 priorities, I wanted to provide an update on the licensing change we announced last October with respect to MongoDB Community Server, the free to download version of our database. Unlike other open source companies, we have full control over how we license our software. As big believers in open source, We introduced a server side public license or SSPL to address their risk facing companies wanting to make significant investments in open source in the modern cloud era. In the months since we launched SSPL, it has become clear that many others in the open source community share our concern. However, there's not currently a consensus around how to address the issue of open source strip mining.
In lack of this consensus, we recently decided to withdraw the SSPL from the OSI license approval process. Have decided to focus our efforts on working with other stakeholders in the open source and broader tech community to either refine the SSPL or develop an alternative license that addresses these issues. To be very clear, current and future versions of MongoDB Community Server including patch releases to prior versions will continue to be offered under SSPL until there's a broadly accepted alternative license that is designed for even more confidence about our ability as a modern general purpose database, expanding our different go to market channels, including adding sales capacity in our field and inside sales channels, along with growing our self serve business. And increasing the number of partners and deepening our relationships with our existing partners to further increase our reach and improve our sales efficiency. In fact, in the fourth quarter, we deepened our partnership with IBM by expanding our technology and go to market agreement on the heels of a number of customer wins, including Tality brand, a notable bank, a large government agency, and a recognizable healthcare company.
Clients are responding to the combination of IBM's product suite, and MongoDB as a modern multi cloud data architecture. We are fortunate to have a to continue to generate operating margin expansion in 2020. To build a world class software business, a company needs a large market strong product market fit and a highly effective distribution channel. While the first two elements are evident for MongoDB, we are also very proud to have built formidable go to market organization that has yielded strong results. To lead our sales organization for the next stage of growth, we were pleased to recently announce the promotion of Cedric Pesh to the role of Chief Revenue Officer.
Cedric previously led our EMEA sales team which has delivered compelling results over the past few years. Prior to joining MongoDB, he was a CRO at Fuse, a cloud communications and collaboration company, Earlier in his career, Cedric worked with me at both Blade Logic and BMC. He is one of the bail best sales executives I know, and I believe he will do a terrific job scaling our sales team to drive sustained growth. To summarize, the fourth quarter was a great finish to a terrific year. We entered 2020 in our strongest position yet.
We are at the early stages of a once in a generation shift in the database market. We are confident that if you continue to execute at a high level, MongoDB will be one of the clear winners. With that, let me now turn the call over to Michael.
Thanks, Dave. As mentioned, we're very pleased with our 4th quarter performance, which reflects strong continued growth at significant scale. I'll begin with a detailed review of our 4th quarter and full year results and then finish with our outlook for the first quarter full year fiscal 2020. Before I jump into the numbers, like to take a minute to explain the impact of the adoption of ASC 606 that we'll have on our financial results. We've implemented ASC 606 on a full retrospective base which means we have recast our prior results for There are 2 primary ways ASC 606 impacts our financial results.
1st, revenue recognition. Enterprise Advanced Transactions will now have a portion of the contract value recognized upfront, while the remainder will be recognized ratably over the contract term. As a reminder, most contracts are annual however, for an illustrative 3 year contract under 606, we will now recognize the term license component for all 3 years upfront. This will result in greater variability and reduced comparability in the quarterly in our quarterly revenue results. It's important to note that the adoption of 606 will not impact how Atlas revenue is recognized.
2nd, sales commission capitalization. 606 broadens the scope of capitalized commissions. Now under 606, All incremental costs, including commissions and payroll taxes, as a result of closing a deal, are capitalized. Previously, only direct deal specific commissions were capitalized under 60 as compared to 605. This has the impact of modestly lowering our reported sales and marketing expense.
For fiscal 2019, the adoption of ASC 606 resulted in a $13,200,000 increase in revenue, or approximately 5%, a $6,600,000 reduction in sales and marketing expense, and a $19,900,000 increase in both non GAAP operating and net income loss. There are additional dynamics that investors should keep in mind under 606. First, when we sign multi year enterprise advanced deals, we will need to recognize term license portion of the future year license revenue upon initial delivery, regardless of whether they've prepaid the entirety of that contract. 2nd, as a result, our year over year growth in any given period may be more variable when the year over year when the year go compare and a greater amount of upfront revenue due to the timing of multiyear deal signings. To be clear, this would not be indicative of slowing business momentum, but a function of revenue recognition accounting dynamics.
One example of this will occur in Q3 of fiscal 2020 which faces a very difficult compare under 606 as we signed several very large multi year deals in Q3 of fiscal 2019. 3rd, revenue will more closely follow the pattern of historic bookings trends. Q3 has historically been our largest quarter for new bookings. And consequently subsequent renewals, with Q1 historically the lowest. As a result of this, sometimes Q1 revenue under 606 will decrease in the prior Q4.
This happened in Q1 of fiscal 2018. I'll turn to our 4th quarter results, which I'll first review on an ASC 6 fixed basis. Total revenue in the quarter was $85,500,000, up 71% year over year. Subscription revenue was $80,600,000, up 73% year over year, and professional services revenue was $4,900,000, up 37% year over year. This was the 1st quarter results that included the acquisition of MLab.
We were pleased that Mlab performed modestly better than our expectations for the quarter. This is on top of very strong organic results, which drove the large majority of the outperformance relative to guidance, reflected accelerated organic revenue growth rates. Our revenue performance was strong across the board and also benefits from stronger than expected Atlas consumption including a number of cell activity by enterprise advanced customers, as well as the rapid adoption of Atlas. Atlas represented 32 percent of revenue during the quarter, up from 10% in fourth quarter last year and up from 21% last quarter. During the fourth quarter, we grew our customer base by over 5000 customers, bringing our total customer count over 13,400 customers, which is up from over 5700 in the year ago period and over 8300 at the end of last quarter.
This reflects the broad appeal of MongoDB and a diversified customer base across industries and geographies. Of our total customer count, over 1750 are direct sales customers, which compares to over 1700 at the end of the prior quarter, and over 14.50 in the year ago period. The growth in our total customer count is being driven in large part by Atlas, which had over 11,400 customers at the end of the quarter compared to over 6200 at the end of the 3rd quarter. This includes approximately 4200 customers acquired from Mlab. The growth in total customers includes growth in our enterprise advanced customers, as well as new Atlas customers.
It is important to keep in mind that the growth in our Atlas customer count reflects both new customers to MongoDB as well as existing EA customers adding incremental Atlas workloads. We continue to see healthy expansion from existing customers, Our net AR expansion rate in the 4th quarter remained above 120% for the 16th consecutive quarter. 7 customers with at least $100,000 in ARR and annualized MRR, which is up from $490,000 in the third quarter and $354,000 in the year ago period. We also saw a significant increase in customer spending more than $1,000,000 annually, which increased from 22 last year to 39 this year. Driving expanded adoption and spend among existing customers is a key component of our growth strategy and has been a consistent area of success.
Moving down the P and L, I will be discussing our ASC 606 results on a non GAAP basis, unless otherwise noted. Gross profit in the 4th quarter was $61,000,000, representing a gross margin of 71% compared to 76% in the year ago period. As expected, gross margin in the quarter was negatively impacted by mLab, which has a lower gross margin than Atlas. This impact will dissipate by the end of fiscal 2020 as we migrate Mlab customers to Atlas. Overall, we're very pleased with the continued gross margin improvement of organic Atlas during the fourth quarter.
However, we continue to expect that we will see some modest reduction in overall gross margin as Atlas continues to be a bigger portion of our revenue. Our operating loss was $9,700,000 or negative 11% operating margin for the 4th quarter compared to a negative 29% margin in the year ago period. The more than 1800 basis points improvement in operating margin reflects the significant operating leverage we drove in the business this year, while investing in our continued growth. Net loss in the fourth quarter was $9,100,000 or $0.17 per share based on 53,800,000 weighted average shares outstanding. I will now quickly review our results on a 605 basis.
Please note that we will no longer be reporting our financial results under 605, beginning with the first quarter of fiscal 20 20. Total revenue in the quarter was $83,100,000, up 85% year over year, subscription revenue was $78,300,000, up 87% year over year and professional services revenue was $4,900,000, up 54% year over year. Again, we were pleased with the modest beat in Mlab, but the organic results powered the quarter resulting in an acceleration of our organic growth to the highest year over year rate in our publicly reported results. Gross profit in the fourth quarter was 58,600,000 representing a gross margin of 71% compared to 73% in the year ago period. Operating loss was 14,600,000 negative 18% operating margin for the 4th quarter compared to a negative 46% margin in the year ago period.
Net loss in the 4th quarter was $18,000,000 or $0.26 per share based on 53,800,000 weighted average shares outstanding. Turning to the GAAP balance sheet cash flow, we ended the quarter with $466,500,000 in cash, cash equivalents, short term investments and restricted cash. Operating cash flow in the 4th quarter was negative $9,500,000. After taking into account approximately $3,100,000 in capital expenditures, Free cash flow was negative $12,600,000 in the quarter. Short term deferred revenue on a 606 basis was $122,300,000, up 45 percent year over year.
Please note that the adoption of 606 had a material impact to our deferred revenue balance This is a result of some enterprise advanced revenue that was previously deferred under 605 that is now recognized upfront at the time of the subscription start date. We have provided recast balance sheets by quarter for fiscal 2019, which reflects changes to deferred revenue, as well as modest changes to other assets and deferred commissions. We've also provided deferred revenue balances for the past eight quarters on a 606 basis. Also, keep in mind that Atlas is a usage based model, and generates less deferred revenue than enterprise advanced. As a reminder, Atlas is often billed monthly in arrears versus the annual and advanced billing terms we see with our enterprise advanced customers.
Lastly, quarter to quarter comparisons of deferred revenue can also have some level of variability due to timing. I'd now like to turn to our outlook the first quarter full year fiscal 2020, which, as a reminder, is being provided on a 606 basis. For the first quarter, we expect revenue to be in the range of $82,000,000 to $84,000,000. We expect non GAAP loss from operations, to be negative $14,000,000 to negative $13,000,000 and non GAAP net loss per share to be in the range of negative $0.25 to negative $0.23, based on 54,500,000 weighted average shares outstanding. For the full fiscal year 2020, We expect revenue to be in the range of $363,000,000 to $371,000,000.
This includes an updated revenue forecast from customers acquired from MLab of $20,000,000 for fiscal 2020, up from $18,000,000 to $18,000,000 we had indicated at the time of acquisition. As mentioned earlier, year over year growth comparisons and quarter to quarter results, will likely be more variable under 606 due in part to the timing of multi year contract signings in prior periods. As you will notice, when you update your models for 606 results, we are facing notably larger compares in the second half of fiscal twenty twenty, particularly in the third quarter. We expect non GAAP loss from operations to be negative $59,000,000 to $55,000,000 Non GAAP net loss per share to the range of negative $1.06 and negative $0.98 per share based on 55,200,000 weighted average shares outstanding. As Dave mentioned, we are investing additional resources into our product development and go to market efforts in 2020, given the size of our market opportunity the strength of our product market fit and the attractiveness of our unit economics, we believe these investments will generate strong returns for the company.
We expect to again generate operating leverage in fiscal 2020, even as we make these investments, which underscores the inherent scalability of our business model. In closing, MongoDB finished fiscal 2019 with its strongest quarterly performance in years. We are executing at a high level and generating best in class growth. The database market is in the early stages of a transformational shift, Mongo to be as well positioned to be one of the primary beneficiaries of this call. With that, we'd like to open up to questions.
Thank you. You. We'll take our first question from Raimo Lenschow with Barclays.
Hey, guys. This is Prie Gavi for Raimo Lenschow. Congrats on an incredible quarter here. My first question, can you talk about the product evolution for Atlas in terms of enterprise features? What you've achieved so far?
And where do you see Atlas evolving to in fiscal 2020?
Yes. So, thank you for the question. So, obviously, we are really pleased with the growth of Atlas. I think what it really speaks to is the popularity of MongoDB and the strong product market of Atlas because customers really want to focus on differentiated work, being able to focus on innovate and build interesting applications and not have to deal with the burden of operational and database management. In terms of the enterprise features, we've added a number of security features.
And I think we've signaled since the IPO that we were in the process of moving a bunch of features in Enterprise Advanced to Atlas And we've done that, including a lot of security features, things like auditing, access control, authorization, etcetera, including things like monitoring and auto scaling and so forth. So all those features now are embedded in Atlas, And there's a variety of different, service offerings depending on the SLAs and the features that customers want.
Okay. And as my follow-up, a little bit more of a boring question, but on 606, What percentage of the total contract do you are you recognizing upfront for the enterprise contracts? And does your guidance assume a similar percentage of multi year contracts for FY 2020 versus FY2019?
Yes, sure. So there'll certainly be some variability. We have not seen any major changes in terms of the mix, although certainly extent that that mix varies, that will impact the results. It varies in terms of the question of how of the upfront license. Obviously, it affects on the duration of the contract as well as on the product mix, but generally roughly in the area.
Of a quarter is the current estimate, although obviously as things continue to move change, we will update that accordingly.
Awesome. Thank you. And as you can see from
a macro perspective, if you look at the full year, it has, in fact, about 5% on overall revenue. Okay.
We'll take our next question from Sanjay Singh with Morgan Stanley.
Excellent. Thank you guys for taking the questions. This is actually Keith Weiss sitting in for Sanjit. Two questions, one kind of looking backwards on Q4. That was a pretty amazing quarter, really strong acceleration.
Anything in particular kind of turn on for you guys? Any kind of catalyst to that acceleration in your performance, that you could point out to us on what happened in Q4. And then the second part of the question, kind of looking forward in FY 2020, with Pesh now sort of taking that Chief Revenue Officer and heading into new fiscal year, any significant changes you guys are making in sale structure or go to market strategy, with sort of the new sales leadership into the new fiscal year?
Thanks, Keith. Glad to have the big dog on the call. I just wanted to respond to the 2 questions. So I would say our performance was really function of the flywheel effect. I think we've seen a number of advancements on the product.
And so that's given customers a lot of confidence, especially around asset transactions and the fact that we are now, it's clearly understood that we are truly a general purpose database and a wide variety of use cases that customers employ us for us clear evidence of that. I think the fact that we have notable marquee references across a wide variety of industries to give customers even more confidence. And I would say the efficacy of our go to market channel has just gotten better and better over time. Clearly, there's a little bit of seasonality in our business. And so the fourth quarter tends to be a big quarter in general, but we were quite pleased with the performance that we saw.
And I still believe that there's lots of things that we can get better at over time. And in terms of Cedric's appointment, I was quite thoughtful about looking at a successor for our last CRO. And, I did talk to a number of people outside the organization, but as I looked at how quickly our business was changing and the complexity of our business, it made much more sense to promote someone from within. Cedric is also someone I've known for a long time. He did a fantastic job in really driving the European business.
And since his appointment, he's really won over the rest of the sales force. I would say that there's going to be no major changes to Salesforce. We have a really strong bench in North America and Asia and the rest of the world. I think what Cedric is really going to focus on is just taking our sales process and our ability to scale the sales organization to the next level to drive stay and grow. So you're not going to really see any wild changes in terms of how we go to market.
Got it. More just about scaling the current organization.
Exactly.
Got it. Excellent. Great quarter guys.
Thanks Keith. Thank you, Keith. We'll take our next question from Heather Bellini with Goldman Sachs.
Great. Thank you so much. I was just wondering if you can share with us. There has been a lot of debate in the market about, about MLabs and customers, customers potentially leaving. And just was wondering if you could help us set the record straight and just kind of walk us through whether or not you do expect some tumor migrations.
I mean, there's been different versions of what's going on in the market. I was just wondering since we're on this call, if maybe you could just kind of level the playing field for everybody and kind of tell us what you're expecting from that acquisition? And if you did have 1 or 2 customers leave, what would be the driving force on that and kind of any other feedback you've heard from their installed base? Thank you so much.
Thanks, Heather. The reason we acquired MLab was really they were the pioneers in the MongoDB as a service offering and they did that way ahead of us. And the other thing that they did a really good job of is to build their entire business on a self serve basis. They didn't have one salesperson. So Those two things were really a big reasons why we acquired that business and the talent that we've acquired from Will Schulman on down has been very impressive and really pleased to have the team as part of MongoDB.
When we did our diligence, there was clearly some understanding that there were some customers who may be moving in different directions. Candidly, some of those customers were working on really old releases of MongoDB. They had not upgraded to more recent versions of MongoDB. And so we factored in some of that attrition into our guidance and estimates. And so we don't see any material impact to any of the potential changes that you may have heard.
And we are now starting to build relationships with many of these customers. Obviously, some of the very small customers, some of them are larger customers. And it's going to take some time for us to get them to understand the benefits of upgrading to the latest releases of MongoDB, and we shall see about how those relations evolve. But we have taken a very conservative posture and there's no impact on our guidance. Yes, the only other thing I would
add just so that people understand is we just shared the customer count for MLab, which is approximately 4200 customers. And when you look at the revenue that that's driving math for that works out to be around $5000 a year. So these are typically not large customers. Yes, there are a couple of outlier customers. That are larger and have brand names, but the vast, vast majority of the customer base, is of a much smaller level.
And clearly, we've been pleased. There was a modest beat in Q4. We upped the fiscal 'twenty guidance just on this call from the $18,000,000 to the $20,000,000 So I think it's going sort of well and better than expected. And so that's all, I think, very healthy.
Okay, great. And then just one quick follow-up would be Is there any way you can share with us, and how those initial lands might be increasing, especially with some of the new enhancements to the product over the last year?
Yes, I would say, our lands are definitely increasing. I think it's for a number of factors. One I would say is we've clearly made some pretty significant product enhancements over the last few years has given customers more confidence to, use us for mission critical workloads. I would say 2, I think I mentioned this in prior calls. We've become clearly viewed as a very strategic partner to many customers.
So the level at which we engage with in these organizations tend to be at a quite a higher level. And so that allows us to go after bigger deals. And then I would just say in general, the efficacy of our go to market process where we try and do a lot of discovery early on in the engagement the customer, but then use that information to go behind the organization, to present the potential benefits we could offer a clear understanding of a pain that they're going through, whether it's trying to consider building a new application or they're struggling with the performance, or the brittleness of an existing legacy application, all those things are impacting our ability to get bigger land. So that is definitely happening. But this is still a land and expand business because, this is not a winner take all market, we still have a very small percentage of wallet share of some of the largest customers that we have.
And we still have to go and earn more business from them. But we feel very, very confident of our ability to do so given our track record to date.
Thank you very much.
We'll take our next question from Brad Redback with Stifel.
Great. Thanks very much. Dave, with respect to the DocumentDB announcement, have you seen that have any impact in your ability to build top of funnel pipeline?
We've seen no impact, Brad. In fact, I think it's frankly raised MongoDB's awareness awareness I have to remind people that 98% of the market today is built on relational database a technology that's over forty years old. So when you have people now trying to emulate MongoDB, what it really signals is one that we've become incredibly popular. And the reason we've become incredibly popular is that the document approach is now being viewed as the best way to work with data. And so now if customers are starting to say, well, instead of using relational databases, I want to use document databases they want to do a bake off, we feel very confident about ability to go head to head with any other alternative out there.
And, and so we think that actually this has been, great for awareness, great for customer education, and we see no impact on a negative basis whatsoever.
Great. And just one quick follow-up, and I know we sort of asked in aggregate, but the Atlas business accelerated 100 basis points sequentially to 400% growth from 300% last quarter. Is that function of some year end true ups with customer contracts or just a function of that level of acceleration in the installed base?
Yes. So, Atlas benefited from a number of dynamics and we're very, very pleased with the quarter. Obviously, we had the addition of MLab for the first time in the quarter, but even if you stripped that out. It was a very strong and accelerating quarter from an overall Atlas performance. It's strong addition of new customers.
It's consumption of existing customers. The other thing that we did try and call out, in the prepared remarks though, was that we did benefit from a number of customers in Q4 who were consuming Atlas at rates in excess of their contracted amounts. And so, we always keep an eye to that in terms of like what is the relative run rate and how does that compare relative to the contracted rate And so, we don't have enough history with Atlas yet to know as to how much of that is, sort of pulling forward or actually a South a new run rate level. And so we just we want to keep an eye on that and want to make sure that sort of expectations don't go out of control as you all extrapolate things. Because I do think that that's a dynamic that's at play, but it was really very, very strong across the board.
Great. Thanks very much guys.
We'll take our next question from Brent Bracelin with KeyBanc Capital Markets.
Thank you. And I have one for Dave and a follow-up for Michael. Dave wanted to drill down on Atlas. It's kind of hard not to discuss just given the momentum of the business here. Few businesses we see at $100,000,000 run rate growing this fast.
And even if I back out M Labs, it looks like growth accelerated again. You talked a little bit about kind of consumption, but I was wondering if you could just drill down a little bit more relative to why this business is accelerating now, and at this pace. Is there something that happened in the quarter? Are you seeing higher attach rates of the add ons security services. Any sort of additional color on Atlas?
And I know you talked a little bit about customer spend over $1,000,000 going into 39. Are there any Atlas customers now spending $1,000,000 plus on that category. So any color on what drove the momentum in Atlas would be helpful.
Yes, I would say the fundamentals, thanks for the question. I would say the fundamentals are the following: 1, obviously MongoDB has become incredibly popular And 2, the product market fit of Atlas has been incredibly strong. I mean, we've seen high growth rates since we launched the product about two and a half years ago. So, it's just exceeded our expectations. I would say what's also now kicked in is 2 things.
1, our sales organization, it took some time for our sales organization to know how to sell a cloud service. And what we're seeing by the result is that the sales organizations acumen around doing that has become better and better. And the other thing is the introduction of the enterprise features. The enterprise features have allowed 2 things to happen. 1, allow us to get bigger deals and also has given comfort to a certain type of customer who's very, very concerned about, say, things like security and data security in the cloud.
In fact, we had a very large notable financial services institution who basically, contracted a quite a large deal with Atlas, and they tend to be pretty conservative that moving very slowly into the cloud. And this was a consumer facing application, so it had a very, very sensitive consumer data and they spent an enormous amount doing a lot of, assessment and, of our technical architecture and they got convinced about the strength of the product and the best in class security features. And that resulted in a large transaction. So that's just one anecdote, but there's very lots of anecdotes like that where large sophisticated customers who now want to move workloads to the cloud are moving towards Atlas. And the other big benefits for customers is that there's no lock into any particular cloud provider.
So while they may choose one cloud provider today, they recognize that those relationships may evolve over time and they like the flexibility of having to being able to move from one cloud to another cloud. And so that gives and frankly, moving that application back in house without having to rewrite one line of code. So that gives customers enormous amount of comfort optionality in terms of what they can do in the future. So all those factors are driving, I think, the acceleration of MongoDB Atlas.
Very helpful color there. Encouraging to hear some larger opportunities pop into Alice as well too. I guess for Michael as a follow-up, Gross margins kind of looked like it did downtick. I know this is the first quarter with M Labs. Is that the big contributor there?
And how should we think about kind of the gross margin here in the low 70s. Is this kind of the sustainable rate or do we still have a little bit of a mix shift we need to think about relative to that gross margin profile going into 2020 fiscal 2020?
Yes. So, thanks Brent. Yes, there will definitely continue to still be mix shift The higher percentage that's driven by Atlas is acting as a short term drag on the overall gross margin. And so that's a particular kind of incremental drag, that by the end of the year should dissipate. But we I would not say that this is, this is not the bottom.
We'll continue to see as Atlas, assuming it continues to grow faster. We will see some short term gross margin compression, but we continue to see increases in organic Atlas, AtlasXM Lab gross margins. And we've been very pleased with the performance there, and we'll continue to work towards driving those higher over the next several quarters.
Thanks. That's all I had.
Thank you. We'll take our next question from Richard Davis with Canaccord. Thanks very much. So I think you guys recently partnered with Datadog. I think it was on Atlas, but just could you talk briefly about that relationship, but just more broadly, could you provide some like color as to kind of what are obvious places where future technology partnerships make sense?
Because obviously you don't need to build every single item out there. So, thanks very much.
Yes. So, thanks, Richard. Just in full disclosure, I am actually on the board of Datadog, and I've been there for quite some time, but frankly, the this announcement we just made was really a function of organic interest by our customers, obviously Datadog, has done incredibly well as a private company and their monitoring tool has become, very popular. And so being able to get visibility into, MongoDB database statistics because the database is probably the most important layer any application is critically important for customers. And so provider integration made a lot of sense for customers.
And so in terms of other partnerships or potential integrations is integration to other complimentary management tools that may help customers. For example, we integrate with Kubernetes that has become the the container of choice for lots of customers to orchestrate and virtualize their application environments We built that integration. So customers have a Kubernetes operator to basically invoke MongoDB and all the functionality where the MongoDB. So there's a bunch of other types of integrations that we've done. And so we feel basically we work backwards from what are customers looking for?
How can we help customers better manage their infrastructure? Or how can we do it better on their behalf and make it easy for them to, build new applications and that drives our integration priorities.
Perfect. Thank you very much. We'll take our next question from Atya Kidron with Oppenheimer.
Thanks. It's it's Ty. Congrats. Great quarter, guys. Couple of questions for me.
First on the services revenue, now that I don't want to nitpick on something. It was such a great quarter, but growing only a miserable 37%. Help me understand the disconnect between that and subscription. Is it just because Atlas is a little bit more self-service than the rest of the business? How do I think about the correlation of that going forward to subscription revenue?
Thanks, Ita. I think the most simple explanation is the subscription revenue is recurring revenue, whereas the services revenue is typically one time. And so you're really sort of starting all over again. And so when you think about the amount of services that you're delivering, in the aggregate. It's actually a pretty healthy growth rate given the fact that you're usually starting over.
That's probably the biggest factor. Qualitatively, we do also see a little bit lower services attach rate on Atlas, but the principal driver, really is around how much of this is, recurring revenue versus one time revenue.
Very good. And as a follow-up, Dev, just want to make sure I understand your IP comment about SSPL, your withdrawal from the OSI approval process, Can you explain the, are there any implications for this outside of just a headline that you, I guess, you cannot call yourself right now for yourself officially? What's the implication this?
I would say the implication is the following. We own all our So this is important. So like any other software who owns our own IP, we can control how we license our software. We are also big believers in open source. And so, it's clear that the concerns we raised and we tried to codify those concerns in our new license called SSPL, There's been a lot of receptivity to that, but it's clear that the industry needs more time to coalesce around what the right answer is long term.
So rather than trying to force people to use SSPL as the answer, we say, let's rather be a good partner to the rest of the community. We want to work with the community and come up with an answer that makes sense for everyone. And so long story short, SS, our software is still licensed under SSPL, not only current and future versions, but also any patch releases to prior versions when we under SSPL. So that's an important point. And we believe we're still open source.
Whatever name you may want to apply to it, source available free to use. We still conform to the 4 software freedoms that the open source principles, point out the freedom to run for any purpose, the freedom to study change and have access to the source code the freedom to redistribute copies and the freedom to distribute copies of modified versions. And all those freedoms still apply. So from that point of view we are still an open source company.
Thank you. Thank you, Ittai. We'll take our next question from rishi Jaluria with D. A. Davidson.
Hi guys, this is Hannah on for Rishi. Thanks for taking my questions. First question I was just wondering on functionality, if you've gotten any feedback from customers or if on your end, there's any sort of functionality you'd still like to build on the core enterprise advanced product?
Oh, yes. So, we have, I mean, obviously, we have a very strong and robust roadmap. We're investing a lot in R&D. And so for example, we are introducing asset transactions for asset for sharded clusters. So that adds another level of asset capability.
We have field level encryption coming out. We have something called retrialable rights that adds more resiliency to your patients. So you don't have to worry about, if right fails, you don't have to worry about building and logic to deal with that. That's going to be built to the database. The whole bunch of features that are coming out with in our 2 release later this summer.
And we're very excited about that release. Obviously, we continue to innovate on the Atlas front. We also have products like Stitch that enable developers to more quickly build applications. So you're seeing us continue to expand the aperture of what we do to help customers use MongoDB for more and more use cases. And I won't comment on this now, but I think you'll hear some really interesting announcements of something that we're going to be expanding into that we are really, really excited about.
And I'll save that for another time.
Okay. That's really helpful. Thanks. And then second question, I was just wondering if you could expand a little on your deepened partnership with IBM and if the go to market strategy changed at all and how the partnership differs from what it was in previous quarters?
Sure. So, one of the reasons we struck an agreement in IBM is, while we're growing really quickly and we're building out our sales force, Relative to the market opportunity in front of us, we still have a fairly small sales organization. So one of the things that we are trying to solve for is reach. Because we see this once in a generation shift happening in the database market and things that we worry about are deals that are happening that we are not even privy to. And so the things the thing that IBM does for us is really expand our reach and especially in markets that we don't have presence in or accounts that we don't have presence in.
And the other way they help us is that because of the deep history and knowledge of key IBM accounts, they can also accelerate deals and make deals bigger more quickly than say we could do on our own. So both those factors has really allowed us to have a really a win win relationship. As I noted in my prepared remarks, we've closed a number of deals momentum is very strong. So we further deepened our relationship and we feel very excited about what that relationship can deliver for us in fiscal 2020 and beyond.
We'll take Tyler Radke with Citi. Please go ahead.
Hey, thanks. Good evening. I was wondering if you could talk about the impact of the licensing changes. Have you seen that obviously the companies that were using your software and, reselling at like scale grid composed object rocket Have you seen a positive impact from those customers actually moving over to Mongo or any other companies you're aware of where customers transition because of the licensing change?
So I would say that we've had some fruitful conversations and expanded some relationships with certain cloud providers who, did not have a commercial relationship with us and were engaged with some of the others and hope to do so in the next few quarters. I would say that in general, the receptivity of SSPL has been very positive. And I would also say that if you're a customer of MongoDB, SSPL doesn't really matter because you end up having commercial relationship with us. So this is really for the people who are using our free to use download version of our software. And so, as you can see from our results, we feel really good about the business today and how it's positioned for the future.
Great. And then a follow-up, just as you look at next year ahead, how big do you think Atlas could ultimately be as a percent of revenue and Sorry if I missed it, but are you making any changes just from a sales incentive plan around Atlas? I know you were comping on the same on dollars previously, but given that Atlas is typically 2x the ASP of an enterprise advanced deal, just curious if you're making any changes there?
Again, I want to remind people that one of our philosophies is to help customers run their workloads anywhere. So you literally could run-in MongoDB on your laptop. If you're developing application, you could run it on premise and use enterprise advanced. And you can run-in the cloud using Atlas. And so we are very committed to enabling customers to run those their workloads wherever they want.
Obviously, you can choose your cloud provider depending on where you want to run your workload in the cloud. And so that will not change. And we have not given incremental incentives for our sales people to sell Atlas over enterprise advanced. I think what we're seeing is that, obviously, the megatrend is people are moving more and more workloads to the cloud and clearly our customers are following that trend. And they like the fact that MongoDB Atlas is the most widely available global cloud database in the world.
Where it's available in over 60 regions as a virtue of being able to run on AWS, Azure and GCP. And so the fact that customers not only have choice of cloud providers, but can really choose to run their workloads almost anywhere in the world that makes, along with the power and the benefits of MongoDB's document model and the query language. And so given all those benefits, there's a reason why Atlas has become so popular.
Ladies and gentlemen, this will conclude today's question and answer session. At this time, I'd like to turn the conference back to Deb Idichuria for any additional or closing remarks.
I want to thank everyone for joining us on our fourth quarter call. We really appreciate all the support. And we thank you, and we look forward to speaking to you again. Take care. Bye bye.
Ladies and gentlemen, this does conclude today's conference. We appreciate your participation.