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Section 1: 10-Q (10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________________
FORM 10-Q
___________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         
Commission File Number: 001-38240
___________________
MONGODB, INC.
(Exact Name of Registrant as Specified in its Charter)
___________________
Delaware
 
26-1463205
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
1633 Broadway,
38th Floor
 
 
New York,
NY
 
10019
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: 646-727-4092
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Class A Common Stock, par value $0.001 per share
 
MDB
 
The Nasdaq Stock Market LLC
 
 
(Nasdaq Global Market)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ  No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  þ  No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
þ
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes       No þ
As of June 2, 2020, there were 50,682,490 shares of the registrant’s Class A common stock and 7,443,035 shares of the registrant’s Class B common stock, each with a par value of $0.001 per share, outstanding.
 



Table of Contents
 
 
 
Page
 
 
 
 
 
 
 
 
 




Table of Contents

PART I—FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS.
MONGODB, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
 
April 30, 2020
 
January 31, 2020
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
700,645

 
$
706,192

Short-term investments
276,372

 
280,326

Accounts receivable, net of allowance for doubtful accounts of $4,327 and $2,515 as of April 30, 2020 and January 31, 2020, respectively
80,760

 
85,554

Deferred commissions
25,737

 
24,219

Prepaid expenses and other current assets
16,892

 
16,905

Total current assets
1,100,406

 
1,113,196

Property and equipment, net
57,914

 
58,316

Operating lease right-of-use assets
32,965

 
11,147

Goodwill
55,830

 
55,830

Acquired intangible assets, net
32,650

 
34,779

Deferred tax assets
680

 
615

Other assets
56,397

 
54,684

Total assets
$
1,336,842

 
$
1,328,567

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
3,184

 
$
2,849

Accrued compensation and benefits
33,649

 
41,427

Operating lease liabilities
4,005

 
3,750

Other accrued liabilities
27,112

 
26,860

Deferred revenue
173,067

 
167,498

Total current liabilities
241,017

 
242,384

Deferred tax liability, non-current
821

 
821

Operating lease liabilities, non-current
29,625

 
8,113

Deferred revenue, non-current
19,954

 
23,281

Convertible senior notes, net
923,098

 
911,075

Other liabilities, non-current
59,286

 
60,035

Total liabilities
1,273,801

 
1,245,709

Commitments and contingencies (Note 7)


 


Stockholders’ equity:
 
 
 
Class A common stock, par value of $0.001 per share; 1,000,000,000 shares authorized as of April 30, 2020 and January 31, 2020; 50,358,480 and 48,512,090 shares issued and outstanding as of April 30, 2020 and January 31, 2020, respectively
50

 
48

Class B common stock, par value of $0.001 per share; 100,000,000 shares authorized as of April 30, 2020 and January 31, 2020; 7,738,326 and 8,969,824 shares issued as of April 30, 2020 and January 31, 2020, respectively; 7,638,955 and 8,870,453 shares outstanding as of April 30, 2020 and January 31, 2020, respectively
8

 
9

Additional paid-in capital
785,730

 
752,127

Treasury stock, 99,371 shares (repurchased at an average of $13.27 per share) as of April 30, 2020 and January 31, 2020
(1,319
)
 
(1,319
)
Accumulated other comprehensive income
998

 
225

Accumulated deficit
(722,426
)
 
(668,232
)
Total stockholders’ equity
63,041

 
82,858

Total liabilities and stockholders’ equity
$
1,336,842

 
$
1,328,567

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

1

Table of Contents

MONGODB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
 
Three Months Ended April 30,
 
2020
 
2019
Revenue:
 
 
 
Subscription
$
124,856

 
$
83,994

Services
5,473

 
5,394

Total revenue
130,329

 
89,388

Cost of revenue:
 
 
 
Subscription
30,625

 
22,595

Services
7,052

 
5,577

Total cost of revenue
37,677

 
28,172

Gross profit
92,652

 
61,216

Operating expenses:
 
 
 
Sales and marketing
69,125

 
46,120

Research and development
45,632

 
30,868

General and administrative
19,935

 
14,805

Total operating expenses
134,692

 
91,793

Loss from operations
(42,040
)
 
(30,577
)
Other income (expense):
 
 
 
Interest income
2,727

 
2,303

Interest expense
(13,795
)
 
(4,689
)
Other expense, net
(625
)
 
(415
)
Loss before provision for income taxes
(53,733
)
 
(33,378
)
Provision (benefit) for income taxes
234

 
(138
)
Net loss
$
(53,967
)
 
$
(33,240
)
Net loss per share, basic and diluted
$
(0.94
)
 
$
(0.61
)
Weighted-average shares used to compute net loss per share, basic and diluted
57,649,524

 
54,710,746

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

2

Table of Contents

MONGODB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
 
Three Months Ended April 30,
 
2020
 
2019
Net loss
$
(53,967
)
 
$
(33,240
)
Other comprehensive income, net of tax:
 
 
 
Unrealized gain on available-for-sale securities
848

 
58

Foreign currency translation adjustment
(75
)
 
13

Other comprehensive income
773

 
71

Total comprehensive loss
$
(53,194
)
 
$
(33,169
)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

Table of Contents

MONGODB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
 
Class A and
Class B
Common Stock
 
Additional Paid-In Capital
 
Treasury Stock
 
Accumulated Other Comprehensive Income (Loss)
 
Accumulated Deficit
 
Total Stockholders’ Equity
 
Shares
 
Amount
 
 
 
 
 
Balances as of January 31, 2020
57,382,543

 
$
57

 
$
752,127

 
$
(1,319
)
 
$
225

 
$
(668,232
)
 
$
82,858

Cumulative effect of accounting change

 

 

 

 

 
(227
)
 
(227
)
Stock option exercises
373,394

 
1

 
2,994

 

 

 

 
2,995

Repurchase of early exercised options
(79
)
 

 

 

 

 

 

Vesting of early exercised stock options

 

 
42

 

 

 

 
42

Vesting of restricted stock units
241,569

 

 

 

 

 

 

Stock-based compensation

 

 
30,567

 

 

 

 
30,567

Conversion of 2024 convertible senior notes
8

 

 

 

 

 

 

Unrealized gain on available-for-sale securities

 

 

 

 
848

 

 
848

Foreign currency translation adjustment

 

 

 

 
(75
)
 

 
(75
)
Net loss

 

 

 

 

 
(53,967
)
 
(53,967
)
Balances as of April 30, 2020
57,997,435

 
$
58

 
$
785,730

 
$
(1,319
)
 
$
998

 
$
(722,426
)
 
$
63,041

 
Class A and
Class B
Common Stock
 
Additional Paid-In Capital
 
Treasury Stock
 
Accumulated Other Comprehensive Income (Loss)
 
Accumulated Deficit
 
Total Stockholders’ Equity
 
Shares
 
Amount
 
 
 
 
 
Balances as of January 31, 2019
54,321,810

 
$
54

 
$
754,612

 
$
(1,319
)
 
$
(174
)
 
$
(488,607
)
 
$
264,566

Cumulative effect of accounting change

 

 

 

 

 
(4,103
)
 
(4,103
)
Stock option exercises
831,901

 
1

 
6,437

 

 

 

 
6,438

Repurchase of early exercised options
(3,981
)
 

 

 

 

 

 

Vesting of early exercised stock options

 

 
127

 

 

 

 
127

Vesting of restricted stock units
126,346

 

 

 

 

 

 

Stock-based compensation

 

 
14,009

 

 

 

 
14,009

Unrealized gain on available-for-sale securities

 

 

 

 
58

 

 
58

Foreign currency translation adjustment

 

 

 

 
13

 

 
13

Net loss

 

 

 

 

 
(33,240
)
 
(33,240
)
Balances as of April 30, 2019
55,276,076

 
$
55

 
$
775,185

 
$
(1,319
)
 
$
(103
)
 
$
(525,950
)
 
$
247,868

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

4

Table of Contents

MONGODB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Three Months Ended April 30,
 
2020
 
2019
Cash flows from operating activities
 
 
 
Net loss
$
(53,967
)
 
$
(33,240
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
2,864

 
2,298

Stock-based compensation
30,567

 
14,009

Amortization of debt discount and issuance costs
12,023

 
3,221

Amortization of finance right-of-use assets
994

 
994

Amortization of operating right-of-use assets
1,372

 
220

Non-cash interest on finance lease liabilities

 
905

Deferred income taxes
(290
)
 
(557
)
Accretion of discount on short-term investments
(193
)
 
(1,509
)
Change in operating assets and liabilities:
 
 
 
Accounts receivable
3,637

 
10,960

Prepaid expenses and other current assets
234

 
(260
)
Deferred commissions
(3,063
)
 
(2,987
)
Other long-term assets
(170
)
 
32

Accounts payable
219

 
(268
)
Accrued liabilities
(2,779
)
 
3,324

Operating lease liabilities
(1,126
)
 
(195
)
Deferred revenue
3,349

 
6,267

Other liabilities, non-current
451

 

Net cash provided by (used in) operating activities
(5,878
)
 
3,214

Cash flows from investing activities
 
 
 
Purchases of property and equipment
(1,505
)
 
(389
)
Proceeds from maturities of marketable securities
165,000

 
140,000

Purchases of marketable securities
(160,283
)
 
(139,024
)
Net cash provided by investing activities
3,212

 
587

Cash flows from financing activities
 
 
 
Payments of issuance costs for convertible senior notes
(4,154
)
 

Proceeds from exercise of stock options, including early exercised stock options
3,000

 
6,437

Repurchase of early exercised stock options
(1
)
 
(30
)
Principal repayments of finance leases
(1,135
)
 

Net cash provided by (used in) financing activities
(2,290
)
 
6,407

Effect of exchange rate changes on cash, cash equivalents and restricted cash
(593
)
 
19

Net increase (decrease) in cash, cash equivalents and restricted cash
(5,549
)
 
10,227

Cash, cash equivalents and restricted cash, beginning of period
706,706

 
148,347

Cash, cash equivalents and restricted cash, end of period
$
701,157

 
$
158,574

Supplemental cash flow disclosure
 
 
 
Cash paid during the period for:
 
 
 
Income taxes, net of refunds
$
553

 
$
735

Interest expense
$
884

 
$

Reconciliation of cash, cash equivalents and restricted cash within the condensed consolidated balance sheets, end of period, to the amounts shown in the statements of cash flows above
 
 
 
Cash and cash equivalents
$
700,645

 
$
158,060

Restricted cash, non-current
512

 
514

Total cash, cash equivalents and restricted cash
$
701,157

 
$
158,574

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

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MONGODB, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.
Organization and Description of Business
MongoDB, Inc. (“MongoDB” or the “Company”) was originally incorporated in the state of Delaware in November 2007 under the name 10Gen, Inc. In August 2013, the Company changed its name to MongoDB, Inc. The Company is headquartered in New York City. MongoDB is the leading, modern, general purpose database platform. The Company’s robust platform enables developers to build and modernize applications rapidly and cost-effectively across a broad range of use cases. Organizations can deploy the Company’s platform at scale in the cloud, on-premise or in a hybrid environment. In addition to selling its software, the Company provides post-contract support, training and consulting services for its offerings. The Company’s fiscal year ends January 31.
2.
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim condensed consolidated balance sheet as of April 30, 2020, the interim condensed consolidated statements of stockholders’ equity for the three months ended April 30, 2020 and 2019, the interim condensed consolidated statements of operations and of comprehensive loss for the three months ended April 30, 2020 and 2019 and the interim condensed consolidated statements of cash flows for the three months ended April 30, 2020 and 2019 are unaudited. The interim unaudited condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position as of April 30, 2020, its statements of stockholders’ equity as of April 30, 2020 and 2019, its results of operations and of comprehensive loss for the three months ended April 30, 2020 and 2019 and its statements of cash flows for the three months ended April 30, 2020 and 2019. The financial data and the other financial information disclosed in the notes to these interim condensed consolidated financial statements related to the three-month periods are also unaudited. The results of operations for the three months ended April 30, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2021 or for any other future year or interim period.
The interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and accounts have been eliminated. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission. The condensed balance sheet data as of January 31, 2020 was derived from the Company’s audited financial statements, but does not include all disclosures required by U.S. GAAP. Therefore, these interim unaudited condensed consolidated financial statements and accompanying footnotes should be read in conjunction with the Company’s annual consolidated financial statements and related footnotes included in its Annual Report on Form 10-K for the fiscal year ended January 31, 2020 (the “2020 Form 10-K”).
Use of Estimates
The preparation of the interim unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, revenue recognition, allowances for doubtful accounts, the incremental borrowing rate related to the Company’s lease liabilities, stock-based compensation, fair value of the liability component of the convertible debt, fair value of common stock and redeemable convertible preferred stock warrants prior to the initial public offering, legal contingencies, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment and accounting for income taxes. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events.
The COVID-19 pandemic has resulted in a global slowdown of economic activity that is likely to continue to decrease demand for a broad variety of goods and services, including from the Company’s customers, while also disrupting sales channels and marketing activities for an unknown period of time. The Company currently expects its revenue to be negatively impacted by the slowdown in activity associated with the COVID-19 pandemic in the near-term and, at least, for the year ending January 31, 2021.

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


Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or adjust the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s financial statements.
Significant Accounting Policies
There have been no changes to the Company’s significant accounting policies as described in the Company’s 2020 Form 10-K other than as a result of the adoption of the new accounting guidance related to current expected credit losses, effective February 1, 2020, as discussed in “Recently Adopted Accounting Pronouncements” below. Further disclosures with respect to the Company’s credit losses are also included in Note 3, Fair Value Measurements and Note 8, Revenue.
Related Party Transactions
All contracts with related parties are executed in ordinary course of business. There were no material related party transactions in the three months ended April 30, 2020 and 2019. As of April 30, 2020 and January 31, 2020, there were no material amounts payable to or amounts receivable from related parties.
Recently Adopted Accounting Pronouncements
Goodwill Impairment. In January 2017, the FASB issued ASU 2017-04—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard simplifies the measurement of goodwill by eliminating step two of the two-step impairment test. Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new guidance, effective February 1, 2020, did not have an impact on the Company’s condensed consolidated financial statements.
Cloud Computing. In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40, in order to determine which costs to capitalize and recognize as an asset and which costs to expense. The Company adopted ASU 2018-15, effective February 1, 2020, prospectively for implementation costs incurred after the date of adoption. ASU 2018-15 did not have an impact on the Company’s condensed consolidated financial statements upon adoption.
Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, which includes the Company's accounts receivable, including unbilled receivables, as well as certain financial instruments. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. Effective February 1, 2020, the Company adopted ASU 2016-13 using the modified retrospective transition approach, which requires a cumulative effect adjustment to the balance sheet as of February 1, 2020.
As a result of the adoption, the Company recorded a cumulative effect adjustment to increase the accumulated deficit by $0.2 million, which represented the accelerated recognition of credit losses under the expected credit loss model of calculating current expected credit losses compared to the previous incurred loss impairment model. The following two significant accounting policies have changed from the Company’s 2020 Form 10-K as a result of the adoption of ASU 2016-13.

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


Accounts Receivable and Allowance for Doubtful Accounts
The Company records a receivable when an unconditional right to consideration exists, such that only the passage of time is required before payment of consideration is due. Timing of revenue recognition may differ from the timing of invoicing to customers. If revenue recognized on a contract exceeds the billings, then the Company records an unbilled receivable for that excess amount, which is included as part of accounts receivable, net in the Company’s condensed consolidated balance sheets.
The Company is exposed to credit losses primarily through the sales of subscriptions and services, which are recorded as accounts receivable, inclusive of unbilled receivables. The Company performs initial and ongoing evaluations of its customers' financial position and generally extends credit without collateral. Accounts receivable are recorded at amortized cost, net of an allowance for doubtful accounts, and do not bear interest.
The allowance for doubtful accounts represents the best estimate of lifetime expected credit losses against the existing accounts receivable, inclusive of unbilled receivables, based on certain factors including past collection experience, credit quality of the customer, current aging of the receivable balance, current economic conditions, reasonable and supportable forecasts, as well as specific circumstances arising with individual customers. Extensive judgment is required in assessing these factors. Due to the short-term nature of the Company’s accounts receivable, forecasts have limited relevance to the Company’s expected credit loss estimates. Accounts receivable are written off against the allowance when management determines a balance is uncollectible and the Company no longer actively pursues collection of the receivable. The Company’s estimates of the allowance for credit losses may not be indicative of our actual credit losses requiring additional charges to be incurred to reflect the actual amount collected.
Marketable Securities
The Company’s short-term investments consist of U.S. government treasury securities. The Company determines the appropriate classification of its short-term investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for its short-term investments as available-for-sale debt securities as the Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. As a result, the Company classifies its short-term investments within current assets on the condensed consolidated balance sheets.
Available-for-sale debt securities are recorded at fair value each reporting period. Realized gains and losses are determined based on the individual security level and are reported in other income (expense), net in the condensed consolidated statements of operations. Unrealized gains on these short-term investments are reported as a separate component of accumulated other comprehensive income (loss) on the condensed consolidated balance sheets until realized.
If the estimated fair value of an available-for-sale debt security is below its amortized cost basis, then the Company evaluates for impairment. The Company considers its intent to sell the security or whether it is more likely than not that it will be required to sell the security before recovery of its amortized basis. If either of these criteria are met, the debt security’s amortized cost basis is written down to fair value through other income (expense), net in the condensed consolidated statements of operations. If neither of these criteria are met, the Company evaluates whether unrealized losses have resulted from a credit loss or other factors. The factors considered in determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis, changes to the rating of the security by a rating agency, any adverse conditions specifically related to the security, as well as other factors. An impairment relating to credit losses is recorded through an allowance for credit losses reported in other income (expense), net in the condensed consolidated statements of operations. The allowance is limited by the amount that the fair value of the debt security is below its amortized cost basis. When a credit loss exists, the Company compares the present value of cash flows expected to be collected from the debt security with the amortized cost basis of the security to determine what allowance amount, if any, should be recorded. Unrealized losses not resulting from credit losses are recorded through accumulated other comprehensive income (loss) on the condensed consolidated balance sheets.
New Accounting Pronouncements Not Yet Adopted
Income Taxes. In December 2019, the FASB issued ASU 2019-12—Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application and simplification of GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective

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


for the Company beginning February 1, 2021, although early adoption of the amendments is permitted. The Company is currently evaluating the impact of ASU 2019-12 on its consolidated financial statements.
3.
Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities that have been measured at fair value on a recurring basis as of April 30, 2020 and January 31, 2020 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):
 
Fair Value Measurement at April 30, 2020
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial Assets:
 
 
 
 
 
 
 
Cash and cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
631,466

 
$

 
$

 
$
631,466

Short-term investments:
 
 
 
 
 
 
 
U.S. government treasury securities
276,372

 

 

 
276,372

Total financial assets
$
907,838

 
$

 
$

 
$
907,838

 
Fair Value Measurement at January 31, 2020
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial Assets:
 
 
 
 
 
 
 
Cash and cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
623,856

 
$

 
$

 
$
623,856

Short-term investments:
 
 
 
 
 
 
 
U.S. government treasury securities
280,326

 

 

 
280,326

Total financial assets
$
904,182

 
$

 
$

 
$
904,182


The Company utilized the market approach and Level 1 valuation inputs to value its money market mutual funds and U.S. government treasury securities because published net asset values were readily available. As of April 30, 2020, unrealized gains on our U.S. government treasury securities were approximately $1.0 million, net of tax, related to securities that the Company purchased as early as July 11, 2019. The decline in market interest rates as of April 30, 2020 has resulted in unrealized gains on those securities the Company previously purchased. Accordingly, the Company concluded that an allowance for credit losses was unnecessary for short-term investments as of April 30, 2020. All other unrealized gains and losses, as well as gross realized gains and losses for cash equivalents and short-term investments, as of April 30, 2020 and January 31, 2020 were not material and the contractual maturity of all marketable securities was less than one year as of April 30, 2020 and January 31, 2020.
In addition to its cash, cash equivalents and short-term investments, the Company measures the fair value of its outstanding convertible senior notes on a quarterly basis for disclosure purposes. The Company considers the fair value of its convertible senior notes at April 30, 2020 to be a Level 2 measurement due to limited trading activity of the convertible senior notes. Refer to Note 5, Convertible Senior Notes, for further details.

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


4.
Goodwill and Acquired Intangible Assets, Net
As of April 30, 2020, there have been no changes to the carrying amount of goodwill from the balance presented as of January 31, 2020. The gross carrying amount and accumulated amortization of the Company’s intangible assets are as follows (in thousands):
 
April 30, 2020
 
Gross Carrying Value
 
Accumulated Amortization
 
Net Book Value
Developed technology
$
34,700

 
$
(12,860
)
 
$
21,840

Domain name
155

 
(155
)
 

Customer relationships
15,200

 
(4,390
)
 
10,810

Total
$
50,055

 
$
(17,405
)
 
$
32,650

 
January 31, 2020
 
Gross Carrying Value
 
Accumulated Amortization
 
Net Book Value
Developed technology
$
34,700

 
$
(11,495
)
 
$
23,205

Domain name
155

 
(151
)
 
4

Customer relationships
15,200

 
(3,630
)
 
11,570

Total
$
50,055

 
$
(15,276
)
 
$
34,779

Acquired intangible assets are amortized on a straight-line basis. As of April 30, 2020, the weighted-average remaining useful lives of identifiable, acquisition-related intangible assets was 4.0 years for developed technology and 3.6 years for customer relationships. Amortization expense of intangible assets was $2.1 million for the three months ended April 30, 2020. Amortization expense for developed technology and the domain name was included as research and development expense in the Company’s condensed consolidated statements of operations. Amortization expense for customer relationships was included as sales and marketing expense in the Company’s condensed consolidated statements of operations.
As of April 30, 2020, future amortization expense related to the intangible assets is as follows (in thousands):
Years Ending January 31,
 
Remainder of 2021
$
6,375

2022
8,500

2023
8,500

2024
7,825

2025
1,450

2026

Total
$
32,650


5.
Convertible Senior Notes
In June 2018, the Company issued $250.0 million aggregate principal amount of 0.75% convertible senior notes due 2024 in a private placement and, in July 2018, the Company issued an additional $50.0 million aggregate principal amount of convertible senior notes pursuant to the exercise in full of the initial purchasers’ option to purchase additional convertible senior notes (collectively, the “2024 Notes”). The 2024 Notes are senior unsecured obligations of the Company and interest is payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2018, at a rate of 0.75% per year. The 2024 Notes will mature on June 15, 2024, unless earlier converted, redeemed or repurchased. The total net proceeds from the offering, after deducting initial purchase discounts and debt issuance costs, were approximately $291.1 million.
In January 2020, the Company issued $1.0 billion aggregate principal amount of 0.25% convertible senior notes due 2026 in a private placement and, also in January 2020, the Company issued an additional $150.0 million aggregate principal amount of convertible senior notes pursuant to the exercise in full of the initial purchasers’ option to purchase additional

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


convertible senior notes (collectively, the “2026 Notes”). The 2026 Notes are senior unsecured obligations of the Company and interest is payable semiannually in arrears on July 15 and January 15 of each year, beginning on July 15, 2020, at a rate of 0.25% per year. The 2026 Notes will mature on January 15, 2026, unless earlier converted, redeemed or repurchased. The total net proceeds from the offering, after deducting initial purchase discounts and estimated debt issuance costs, were approximately $1.13 billion.
On January 14, 2020, in connection with the issuance of the 2026 Notes, the Company used a portion of the net proceeds to repurchase $210.0 million aggregate principal amount of the 2024 Notes (the “2024 Notes Partial Repurchase”) leaving $90.0 million aggregate principal outstanding on the 2024 Notes immediately after the exchange. The 2024 Notes Partial Repurchase were not pursuant to a redemption notice and were individually privately negotiated transactions. The 2024 Notes Partial Repurchase and issuance of the 2026 Notes were deemed to have substantially different terms due to the significant difference between the value of the conversion option immediately prior to and after the exchange, and accordingly, the 2024 Notes Partial Repurchase was accounted for as a debt extinguishment. The Company used $479.2 million of the net proceeds from the issuance of the 2026 Notes to complete the 2024 Notes Partial Repurchase, of which $175.1 million and $303.9 million were allocated to the liability and equity components of the 2024 Notes, respectively, and $0.2 million was allocated to the proportional interest paid.
Refer to Note 7, Convertible Senior Notes, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of the Company’s 2020 Form 10-K for further information on the 2024 Notes, the 2026 Notes and the 2024 Notes Partial Repurchase.
During the three months ended April 30, 2020, the conditional conversion feature of the 2024 Notes was triggered as the last reported sale price of the Company's Class A common stock was more than or equal to 130% of the conversion price for at least 20 trading days in the period of 30 consecutive trading days ending on April 30, 2020 (the last trading day of the fiscal quarter) and therefore the 2024 Notes are currently convertible, in whole or in part, at the option of the holders between May 1, 2020 through July 31, 2020. Whether the 2024 Notes will be convertible following such period will depend on the continued satisfaction of this condition or another conversion condition in the future. During the three months ended April 30, 2020, the Company converted an immaterial amount of their 2024 Notes to a certain holder, unrelated to the 2024 Notes Partial Repurchase. Since the Company has the election of repaying the 2024 Notes in cash, shares of the Company’s Class A common stock, or a combination of both, the Company continued to classify the liability component of the 2024 Notes as long-term debt on the Company’s consolidated balance sheet as of April 30, 2020.
During the three months ended April 30, 2020, the conditions allowing holders of the 2026 Notes to convert have not been met. The 2026 Notes were therefore not convertible during the three months ended April 30, 2020 and the liability component was classified as long-term debt on the Company’s condensed consolidated balance sheet as of April 30, 2020.
The net carrying amounts of the liability component of the 2024 Notes and 2026 Notes were as follows (in thousands):
 
April 30, 2020
 
2024 Notes
 
2026 Notes
Principal
$
90,001

 
$
1,150,000

Unamortized debt discount
(18,465
)
 
(282,386
)
Unamortized debt issuance costs
(1,475
)
 
(14,577
)
Net carrying amount
$
70,061

 
$
853,037

As of April 30, 2020, the total estimated fair values (Level 2) of the outstanding 2024 Notes and the 2026 Notes were approximately $193.5 million and $1.20 billion, respectively. The fair values were determined based on the closing trading price per $100 of the 2024 Notes and 2026 Notes as of the last day of trading for the period. The fair values of the 2024 Notes and 2026 Notes are primarily affected by the trading price of the Company’s common stock and market interest rates.

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


The following table sets forth the interest expense related to the 2024 Notes and 2026 Notes (in thousands):
 
Three Months Ended April 30, 2020
 
Three Months Ended April 30, 2019
 
2024 Notes
 
2026 Notes
 
2024 Notes
 
2026 Notes
Contractual interest expense
$
169

 
$
719

 
$
563

 
$

Amortization of debt discount
970

 
10,547

 
3,033

 

Amortization of issuance costs
65

 
441

 
188

 

Total
$
1,204

 
$
11,707

 
$
3,784

 
$


Capped Calls
In connection with the pricing of the 2024 Notes and 2026 Notes, the Company entered into privately negotiated capped call transactions with certain counterparties (the “Capped Calls”). The Capped Calls associated with the 2024 Notes each have an initial strike price of approximately $68.15 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2024 Notes. These Capped Calls have initial cap prices of $106.90 per share, subject to certain adjustments.
The Capped Calls associated with the 2026 Notes each have an initial strike price of approximately $211.20 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes. These Capped Calls have initial cap prices of $296.42 per share, subject to certain adjustments.
Refer to Note 7, Convertible Senior Notes, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of the Company’s 2020 Form 10-K for further information on the Capped Calls.
6.
Leases
Finance Lease
In December 2017, the Company entered into a lease agreement for 106,230 rentable square feet of office space (the “Premises”) to accommodate its growing employee base in New York City. The Company received delivery of the Premises on January 1, 2018 to commence construction to renovate the Premises. Total estimated aggregate base rent payments over the initial 12-year term of the lease are $87.3 million and payments began in July 2019. The Company has the option to extend the term of the lease by an additional 5 years.
Operating Leases
The Company has entered into non-cancelable operating leases, primarily related to rental of office space expiring through 2032. The Company recognizes operating lease costs on a straight-line basis over the term of the agreement, taking into account adjustments for market provisions such as free or escalating base monthly rental payments or deferred payment terms such as rent holidays that defer the commencement date of the required payments. The Company may receive renewal or expansion options, leasehold improvement allowances or other incentives on certain lease agreements.
In December 2019, the Company entered into a new agreement to lease approximately 40,000 square feet of office space in Dublin, Ireland, which commenced during the three months ended April 30, 2020 for a term of 12 years with two five-year renewal options. This agreement was determined to be an operating lease with total estimated aggregate base rent payments, excluding the renewal options, of approximately $27.0 million.

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


Lease Costs
The components of the Company’s lease costs included in its condensed consolidated statement of operations were as follows (in thousands):
 
Three Months Ended April 30, 2020
 
Three Months Ended April 30, 2019
Finance lease cost:
 
 
 
Amortization of right-of-use assets
$
994

 
$
994

Interest on lease liabilities
884

 
905

Operating lease cost
1,823

 
967

Short-term lease cost
793

 
395

Total lease cost
$
4,494

 
$
3,261


Balance Sheet Components
The balances of the Company’s finance and operating leases were recorded on the condensed consolidated balance sheet as follows (in thousands):
 
April 30, 2020
 
January 31, 2020
Finance Lease:
 
 
 
Property and equipment, net
$
38,418

 
$
39,411

Other accrued liabilities
4,698

 
4,633

Other liabilities, non-current
58,057

 
59,257

Operating Leases:
 
 
 
Operating lease right-of-use assets
$
32,965

 
$
11,147

Operating lease liabilities (current)
4,005

 
3,750

Operating lease liabilities, non-current
29,625

 
8,113


Supplemental Information
The following table presents supplemental information related to the Company’s finance and operating leases (in thousands, except weighted-average information):
 
Three Months Ended April 30, 2020
 
Three Months Ended April 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
Operating cash flows from finance lease
$
884

 
$

Operating cash flows from operating leases
1,297

 
1,032

Financing cash flows from finance lease
1,135

 

Right-of-use assets obtained in exchange for lease obligations:
 
 
 
Finance lease
$

 
$

Operating leases
23,375

 
2,269

Weighted-average remaining lease term (in years):
 
 
 
Finance lease
9.7

 
10.7

Operating leases
8.7

 
4.8

Weighted-average discount rate:
 
 
 
Finance lease
5.6
%
 
5.6
%
Operating leases
5.0
%
 
6.1
%


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


Maturities of Lease Liabilities
Future minimum lease payments under non-cancelable finance and operating leases on an annual undiscounted cash flow basis as of April 30, 2020 were as follows (in thousands):
Year Ending January 31,
Finance Lease
 
Operating Leases
Remainder of 2021
$
6,055

 
$
3,625

2022
8,073

 
5,524

2023
8,073

 
5,557

2024
8,073

 
4,512

2025
8,445

 
4,125

Thereafter
42,829

 
18,180

Total minimum payments
81,548

 
41,523

Less imputed interest
(18,793
)
 
(7,893
)
Present value of future minimum lease payments
62,755

 
33,630

Less current obligations under leases
(4,698
)
 
(4,005
)
Non-current lease obligations
$
58,057

 
$
29,625


Excluded in the lease obligation table above is a new agreement to lease an additional 21,000 square feet of office space in New York City, which will be recognized as an operating lease upon the lease commencement date. The Company entered into this agreement in October 2019, but the lease has not yet commenced. The term of this new lease is five years with no renewal period. The total estimated aggregate base rent payments are $8.4 million with payments beginning four months subsequent to the commencement date. Also excluded in the lease obligation table above is a new agreement to lease approximately 16,000 square feet of office space in Palo Alto, which will be recognized as an operating lease upon the lease commencement date. The lease term is eight years with one option to extend for an additional five years. The total estimated aggregate base rent payments are $14.2 million with payments beginning four months subsequent to the commencement date. For both the New York City and Palo Alto leases, the lease commencement dates are uncertain given the impacts of the COVID-19 pandemic and associated construction and occupancy restrictions.
7.
Commitments and Contingencies
Non-cancelable Material Commitments
During the three months ended April 30, 2020, other than certain non-cancelable operating leases described in Note 6, Leases, there have been no material changes outside the ordinary course of business to the Company’s contractual obligations and commitments from those disclosed in the 2020 Form 10-K.
Legal Matters
From time to time, the Company has become involved in claims, litigation and other legal matters arising in the ordinary course of business, including intellectual property claims, labor and employment claims and breach of contract claims. For example, on March 12, 2019, Realtime Data (“Realtime”) filed a lawsuit against the Company in the United States District Court for the District of Delaware alleging that the Company is infringing three U.S. patents that it holds: U.S. Patent No. 9,116,908, U.S. Patent No. 9,667,751 and U.S. Patent No. 8,933,825. The patent infringement allegations in the lawsuit relate to data compression, decompression, storage and retrieval. Realtime seeks monetary damages and injunctive relief. In August 2019, the District Court approved the Company and Realtime’s stipulation to stay Realtime’s lawsuit against the Company pending the outcome of Realtime's appeal of the District Court's decision to invalidate two of the asserted patents in a separate action.  
The Company investigates all claims, litigation and other legal matters as they arise. Although claims and litigation are inherently unpredictable, the Company is currently not aware of any matters that, if determined adversely to the Company, would individually or taken together have a material adverse effect on its business, financial position, results of operations or cash flows.

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


The Company accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. Although the results of claims and litigation are inherently unpredictable, the Company believes that there was less than a reasonable possibility that the Company had incurred a material loss with respect to such loss contingencies, as of April 30, 2020 and January 31, 2020, therefore, the Company has not recorded an accrual for such contingencies.
Indemnification
The Company enters into indemnification provisions under its agreements with other companies in the ordinary course of business, including business partners, landlords, contractors and parties performing its research and development. Pursuant to these arrangements, the Company agrees to indemnify, hold harmless and reimburse the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company’s activities. The terms of these indemnification agreements are generally perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is not material. The Company maintains commercial general liability insurance and product liability insurance to offset certain of the Company’s potential liabilities under these indemnification provisions.
The Company has entered into indemnification agreements with each of its directors and executive officers. These agreements require the Company to indemnify such individuals, to the fullest extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of their affiliation with the Company.
8.
Revenue Recognition
Disaggregation of Revenue
Based on the information provided to and reviewed by the Company’s Chief Executive Officer, the Company believes that the nature, amount, timing and uncertainty of its revenue and cash flows and how they are affected by economic factors is most appropriately depicted through the Company’s primary geographical markets and subscription product categories. The Company’s primary geographical markets are North and South America (“Americas”); Europe, Middle East and Africa (“EMEA”); and Asia Pacific. The Company also disaggregates its subscription products between its MongoDB Atlas-related offerings, which includes mLab, and other subscription products, which includes MongoDB Enterprise Advanced.
The following table presents the Company’s revenues disaggregated by primary geographical markets, subscription product categories and services (in thousands):
 
Three Months Ended April 30,
 
2020
 
2019
Primary geographical markets:
 
 
 
Americas
$
81,538

 
$
57,756

EMEA
39,009

 
25,320

Asia Pacific
9,782

 
6,312

Total
$
130,329

 
$
89,388

 
 
 
 
Subscription product categories and services:
 
 
 
MongoDB Atlas-related
$
54,170

 
$
30,863

Other subscription
70,686

 
53,131

Services
5,473

 
5,394

Total
$
130,329

 
$
89,388


Customers located in the United States accounted for 58% and 60% of total revenue for the three months ended April 30, 2020 and 2019, respectively. Customers located in the United Kingdom accounted for 9% and 10% of total revenue for the three months ended April 30, 2020 and 2019, respectively. No other country accounted for 10% or more of revenue for the periods presented.

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


Contract Liabilities
The Company’s contract liabilities are recorded as deferred revenue in the Company’s condensed consolidated balance sheet and consists of customer invoices issued or payments received in advance of revenues being recognized from the Company’s subscription and services contracts. Deferred revenue, including current and non-current balances, as of April 30, 2020 and January 31, 2020 was $193.0 million and $190.8 million, respectively. Approximately 52% and 50% of the total revenue recognized for the three months ended April 30, 2020 and 2019, respectively, was from deferred revenue at the beginning of each respective period.
Remaining Performance Obligations
Remaining performance obligations represent the aggregate amount of the transaction price in contracts allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligations include unearned revenue, multi-year contracts with future installment payments and certain unfulfilled orders against accepted customer contracts at the end of any given period. As of April 30, 2020, the aggregate transaction price allocated to remaining performance obligations was $209.7 million. Approximately 54% is expected to be recognized as revenue over the next 12 months and the remainder thereafter. The Company applies the practical expedient to omit disclosure with respect to the amount of the transaction price allocated to remaining performance obligations if the related contract has a total duration of 12 months or less.
Unbilled Receivables
Revenue recognized in excess of invoiced amounts creates an unbilled receivable, which represents the Company’s unconditional right to consideration in exchange for goods or services that the Company has transferred to the customer. Unbilled receivables were recorded as part of accounts receivable, net in the Company’s condensed consolidated balance sheets. As of April 30, 2020, unbilled receivables were $5.9 million.
Allowance for Doubtful Accounts
The adoption of ASU 2016-13 on February 1, 2020 required the Company to shift from an incurred loss impairment model to an expected credit loss model. Accordingly, the Company is required to consider expectations of forward-looking losses, in addition to historical loss rates, to estimate its allowance for doubtful accounts on its account receivables. The following is a summary of the changes in the Company’s allowance for doubtful accounts (in thousands):
 
Allowance for Doubtful Accounts
Balance at January 31, 2020
$
2,515

Adoption of new accounting standard
50

Provision
2,075

Recoveries/write-offs
(313
)
Balance at April 30, 2020
$
4,327


The Company is closely monitoring the potential impact from the COVID-19 pandemic and associated global economic uncertainty on its business. A higher allowance was recorded during the three months ended April 30, 2020 due to the potential adverse impact the COVID-19 pandemic may have on factors that affect the Company’s estimate of current expected credit losses, including possible financial difficulties faced by a portion of the Company’s customers.
Costs Capitalized to Obtain Contracts with Customers
Deferred commissions were $80.0 million as of April 30, 2020. Amortization expense with respect to deferred commissions was $6.5 million and $4.4 million for the three months ended April 30, 2020 and 2019, respectively. There was no impairment loss in relation to the costs capitalized for the periods presented.
9.
Equity Incentive Plans and Employee Stock Purchase Plan
2008 Stock Incentive Plan and 2016 Equity Incentive Plan
The Company adopted the 2008 Stock Incentive Plan (as amended, the “2008 Plan”) in 2008 and the 2016 Equity Incentive Plan (as amended, the “2016 Plan”) in 2016, primarily for the purpose of granting stock-based awards to

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


employees, directors and consultants, including stock options, restricted stock units (“RSUs”) and other stock-based awards. With the establishment of the 2016 Plan in December 2016, all shares available for grant under the 2008 Plan were transferred to the 2016 Plan. The Company no longer grants any stock-based awards under the 2008 Plan and any shares underlying stock options canceled under the 2008 Plan will be automatically transferred to the 2016 Plan.
Stock Options
The 2016 Plan provides for the issuance of incentive stock options to employees and nonstatutory stock options to employees, directors or consultants. The Company’s Board of Directors or a committee thereof determines the vesting schedule for all equity awards. Stock option awards generally vest over a period of four years with 25% vesting on the one-year anniversary of the award and the remainder vesting monthly over the next 36 months of the grantee’s service to the Company.
The following table summarizes stock option activity for the three months ended April 30, 2020 (in thousands, except share and per share data and years):
 
Shares
 
Weighted-
Average
Exercise
Price Per
Share
 
Weighted-
Average
Remaining
Contractual
Term
(In Years)
 
Aggregate
Intrinsic
Value
Balance - January 31, 2020
6,178,999

 
$
7.60

 
5.7
 
$
965,860

Stock options exercised
(373,394
)
 
8.03

 
 
 
 
Stock options forfeited and expired
(16,389
)
 
10.06

 
 
 
 
Balance - April 30, 2020
5,789,216

 
$
7.56

 
5.5
 
$
894,828

Vested and exercisable - January 31, 2020
4,693,273

 
$
7.08

 
5.4
 
$
736,034

Vested and exercisable - April 30, 2020
4,635,511

 
$
7.11

 
5.2
 
$
718,616


Restricted Stock Units
The 2016 Plan provides for the issuance of RSUs to employees, directors and consultants. RSUs granted to new employees generally vest over a period of four years with 25% vesting on the one-year anniversary of the vesting start date and the remainder vesting quarterly over the next 12 quarters, subject to the grantee’s continued service to the Company. RSUs granted to existing employees generally vest quarterly over a period of four years, subject to the grantee’s continued service to the Company.
The following table summarizes RSU activity for the three months ended April 30, 2020:
 
Shares
 
Weighted-Average Grant Date Fair Value per RSU
Unvested - January 31, 2020
3,281,431

 
$
102.30

RSUs granted
1,077,847

 
148.52

RSUs vested
(241,569
)
 
86.41

RSUs forfeited and canceled
(87,213
)
 
103.95

Unvested - April 30, 2020
4,030,496

 
$
115.58


2017 Employee Stock Purchase Plan
In October 2017, the Company’s Board of Directors adopted, and stockholders approved, the 2017 Employee Stock Purchase Plan (the “2017 ESPP”). Subject to any plan limitations, the 2017 ESPP allows eligible employees to contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of the Company’s Class A common stock at a discounted price per share. The Company’s current offering period began December 16, 2019 and is expected to end June 15, 2020.

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


Stock-Based Compensation Expense
Total stock-based compensation expense recognized in the Company’s unaudited condensed consolidated statements of operations is as follows (in thousands):
 
Three Months Ended April 30,
 
2020
 
2019
Cost of revenue—subscription
$
1,827

 
$
988

Cost of revenue—services
1,146

 
593

Sales and marketing
10,823

 
4,940

Research and development
11,759

 
4,520

General and administrative
5,012

 
2,968

Total stock-based compensation expense
$
30,567

 
$
14,009


10.
Net Loss Per Share
The Company calculates basic net loss per share by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. Diluted net loss per share is computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period, including stock options and restricted stock units. Basic and diluted net loss per share was the same for each period presented, as the inclusion of all potential common shares outstanding would have been anti-dilutive due to the net loss reported for each period presented.
The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to 10 votes per share. As the liquidation and dividend rights are identical for Class A and Class B common stock, the undistributed earnings are allocated on a proportionate basis and the resulting net loss per share will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data):
 
Three Months Ended April 30,
 
2020
 
2019
Numerator:
 
 
 
Net loss
$
(53,967
)
 
$
(33,240
)
 
 
 
 
Denominator:
 
 
 
Weighted-average shares used to compute net loss per share, basic and diluted
57,649,524

 
54,710,746

 
 
 
 
Net loss per share, basic and diluted
$
(0.94
)
 
$
(0.61
)

The shares underlying the conversion option in the 2024 Notes and 2026 Notes were not considered in the calculation of diluted net loss per share as the effect would have been anti-dilutive. Based on the initial conversion price, the entire outstanding principal amount of the 2024 Notes and 2026 Notes as of April 30, 2020 would have been convertible into approximately 6.8 million shares of the Company’s Class A common stock. However, the Company currently expects to settle the principal amount of the 2024 Notes and 2026 Notes in cash. As a result, only the amount by which the conversion value exceeds the aggregate principal amount of the 2024 Notes and 2026 Notes (the “conversion spread”) is considered in the diluted earnings per share computation under the treasury stock method. The conversion spread has a dilutive impact on diluted net income per share when the average market price of the Company’s Class A common stock for a given period exceeds the initial conversion price of $68.15 per share for the 2024 Notes and $211.20 per share for the 2026 Notes. In connection with the issuance of the 2024 Notes and 2026 Notes, the Company entered into Capped Calls, which were not included for purposes of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive. The Capped Calls are expected to partially offset the potential dilution to the Company’s Class A common stock upon any conversion of the 2024 Notes and 2026 Notes.

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


During the three months ended April 30, 2020, the average market price of the Company’s Class A common stock was $146.81, which exceeded the initial conversion price of the 2024 Notes. As of April 30, 2020, the Company had not received any material conversion notices for the 2024 Notes. For disclosure purposes, the Company calculated the potentially dilutive effect of the conversion spread for the 2024 Notes, which is included in the table below. The Company excluded the potentially dilutive effect of the conversion spread for the 2026 Notes as the average market price of the Company’s Class A common stock during the three months ended April 30, 2020 was less than the conversion price of the 2026 Notes.
The following weighted-average outstanding potentially dilutive shares of common stock were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been anti-dilutive.
 
Three Months Ended April 30,
 
2020
 
2019
Stock options to purchase Class A common stock
1,646,894

 
2,471,439

Stock options to purchase Class B common stock
4,326,300

 
5,700,441

Unvested restricted stock units
3,866,970

 
2,561,471

Early exercised stock options
10,157

 
47,550

Shares underlying the conversion spread in the convertible senior notes
707,613

 
1,945,081


11.
Income Taxes
The Company recorded a provision (benefit) related to income taxes of $0.2 million and $(0.1) million for the three months ended April 30, 2020 and 2019, respectively. The provision recorded during the three months ended April 30, 2020 was driven by an increase in foreign taxes as the Company continued its global expansion, partially offset by a tax benefit related to current period gains recorded in other comprehensive income that resulted from unrealized gains on investments and a tax benefit related to true-up adjustments from the adoption of ASC 842. The Company no longer benefits from excess tax deductions in the United Kingdom as those deferred tax assets were reduced by a valuation allowance as of April 30, 2020. The calculation of income taxes is based upon the estimated annual effective tax rates for the year applied to the current period income (loss) before tax plus the tax effect of any significant unusual items, discrete events or changes in tax law.
The Company assesses uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainties in Tax. As of January 31, 2020, the Company’s net unrecognized tax benefits totaled $5.3 million, of which $0.1 million would impact the Company’s effective tax rate if recognized. The Company anticipates that the amount of reasonably possible unrecognized tax benefits that could decrease over the next twelve months due to the expiration of certain statutes of limitations and settlement of tax audits is not material to the Company’s interim unaudited condensed consolidated financial statements.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The CARES Act includes provisions relating to refundable payroll tax credits, deferral of certain payroll taxes, technical corrections to tax depreciation methods for qualified improvement property, net operating loss carryback periods, alternative minimum tax credit refunds and modifications to the net interest deduction limitations. The CARES Act did not have a material impact on the Company’s interim unaudited condensed consolidated financial statements for the three months ended April 30, 2020. The Company will continue to monitor any effects that may result from the CARES Act.

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ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Unless the context otherwise indicates, references in this report to the terms “MongoDB,” “the Company,” “we,” “our” and “us” refer to MongoDB, Inc., its divisions and its subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our interim unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2020 (the “2020 Form 10-K”). All information presented herein is based on our fiscal calendar, which ends January 31. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years ended January 31 and the associated quarters, months and periods of those fiscal years.
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations, including our expectations regarding our future growth opportunity, revenue and revenue growth, investments, strategy, operating expenses and the anticipated impact of the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic on our business, results of operations and financial condition. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part 2, Item 1A of this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Our corporate website is located at www.mongodb.com. We make available free of charge, on or through our corporate website, our annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with, or furnishing such reports to, the Securities and Exchange Commission (“SEC”). Information contained on our corporate website is not part of this Quarterly Report on Form 10-Q or any other report filed with or furnished to the SEC.
Overview
MongoDB is the leading modern, general purpose database platform. Our robust platform enables developers to build and modernize applications rapidly and cost-effectively across a broad range of use cases. Organizations can deploy our platform at scale in the cloud, on-premise, or in a hybrid environment. Software applications are redefining how organizations across industries engage with their customers, operate their businesses and compete with each other. A database is at the heart of every software application. As a result, selecting a database is a highly strategic decision that directly affects developer productivity, application performance and organizational competitiveness. Our platform addresses the performance, scalability, flexibility and reliability demands of modern applications, while maintaining the strengths of legacy databases. Our business model combines the developer mindshare and adoption benefits of open source with the economic benefits of a proprietary software subscription business model. MongoDB is headquartered in New York City and our total headcount was 2,020 as of April 30, 2020, an increase from 1,331 as of April 30, 2019.
We generate revenue primarily from sales of subscriptions, which accounted for 96% and 94% of our total revenue for the three months ended April 30, 2020 and 2019, respectively. Our primary subscription package is MongoDB Enterprise Advanced, which represented 49% and 54% of our subscription revenue for the three months ended April 30, 2020 and 2019, respectively. MongoDB Enterprise Advanced is our comprehensive offering for enterprise customers that can be run in the cloud, on-premise or in a hybrid environment, and includes our proprietary commercial database server, enterprise management capabilities, our graphical user interface, analytics integrations, technical support and a commercial license to our platform.
Many of our enterprise customers initially get to know our software by using Community Server, which is our free-to-download version of our database that includes the core functionality developers need to get started with MongoDB without all the features of our commercial platform. As a result, our direct sales prospects are often familiar with our platform and

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may have already built applications using our technology. We sell subscriptions directly through our field and inside sales teams, as well as indirectly through channel partners. Our subscription offerings are generally priced on a per server basis, subject to a per server RAM limit. The majority of our subscription contracts are one year in duration and invoiced upfront. When we enter into multi-year subscriptions, we typically invoice the customer on an annual basis.
We introduced MongoDB Atlas in June 2016. MongoDB Atlas is our hosted multi-cloud database-as-a-service (“DBaaS”) offering that includes comprehensive infrastructure and management, which we run and manage in the cloud. During the three months ended April 30, 2020 and 2019, MongoDB Atlas revenue represented 42% and 35% of our total revenue, respectively, reflecting the continued growth of MongoDB Atlas since its introduction. We have experienced strong growth in self-serve customers of MongoDB Atlas. These customers are charged monthly based on their usage. In addition, we have also seen growth in MongoDB Atlas customers sold by our sales force. These customers typically sign annual commitments and pay in advance or are invoiced monthly based on usage. Given our platform has been downloaded from our website more than 110 million times since February 2009 and over 40 million times in the last 12 months alone, a core component of our growth strategy for MongoDB Atlas is to convert developers and their organizations who are already using Community Server to become customers of MongoDB Atlas and enjoy the benefits of a managed offering.
We also generate revenue from services, which consist primarily of fees associated with consulting and training services. Revenue from services accounted for 4% and 6% of our total revenue for the three months ended April 30, 2020 and 2019, respectively. We expect to continue to invest in our services organization as we believe it plays an important role in accelerating our customers’ realization of the benefits of our platform, which helps drive customer retention and expansion.
We believe the market for our offerings is large and growing. According to IDC, the worldwide database software market, which it refers to as the data management software market, is forecast to be $62 billion in 2020 growing to approximately $89 billion in 2024, representing an 9% compound annual growth rate. We have experienced rapid growth and have made substantial investments in developing our platform and expanding our sales and marketing footprint. We intend to continue to invest heavily to grow our business to take advantage of our market opportunity rather than optimizing for profitability or cash flow in the near term.
Impact of the COVID-19 Pandemic
In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. This pandemic continues to spread throughout the U.S. and the world and has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. The full extent of the impact of the COVID-19 pandemic on our future operational and financial performance will depend on certain developments, including the duration and spread of the pandemic, related public health measures, their impact on the global economy and their impact on our current and prospective customers, employees, vendors and other parties with whom we do business, all of which are uncertain and cannot be predicted.
We have adopted several measures in response to the COVID-19 pandemic, including temporarily requiring employees to work remotely, suspending non-essential travel by our employees, and replacing in-person marketing events (including our annual developer conference) with virtual events.
While the broader implications of COVID-19 on our results of operations and overall financial performance remain uncertain, we currently expect our revenue to be negatively impacted by the slowdown in activity associated with the COVID-19 pandemic and global uncertainty at least through fiscal 2021. In addition, we recorded a higher allowance during the three months ended April 30, 2020 due to the potential adverse impact the COVID-19 pandemic may have on factors that affect our estimate of current expected credit losses, including possible financial difficulties faced by a portion of our customers, in accordance with the recently adopted accounting standard for credit losses.
During the three months ended April 30, 2020, we experienced a decrease in our travel costs due to global travel restrictions and stay-at-home or similar orders in effect as a result of the COVID-19 pandemic. We expect those lower travel costs to continue in the near-term. We intend to invest a portion of these expected savings in additional marketing program spend and research and development headcount.
We will continue to evaluate the nature and extent of the impact of COVID-19 on our business. For further discussion of the potential impacts of the COVID-19 pandemic on our business, operating results, and financial condition, see the section titled “Risk Factors” included in Part II, Item 1A of this Quarterly Report on Form 10-Q. Other factors affecting our performance are discussed below, although we caution you that the COVID-19 pandemic may also further impact these factors.

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Key Factors Affecting Our Performance
Growing Our Customer Base and Expanding Our Global Reach
We are intensely focused on continuing to grow our customer base. We have invested, and expect to continue to invest, heavily in our sales and marketing efforts and developer community outreach, which are critical to driving customer acquisition. As of April 30, 2020, we had over 18,400 customers across a wide range of industries and in over 100 countries, compared to over 14,200 customers as of April 30, 2019. All affiliated entities are counted as a single customer.
Our customer count as of April 30, 2020 includes customers acquired from ObjectLabs Corporation (“mLab”) and Tightdb, Inc. (“Realm”), which acquisitions closed on November 1, 2018 and May 7, 2019, respectively. Our definition of “customer” excludes (1) users of our free offerings, (2) users acquired from mLab who spend $20 or less per month with us and (3) self-serve users acquired from Realm. The excluded mLab and Realm users collectively represent an immaterial portion of the revenue associated with users acquired from those acquisitions.
As of April 30, 2020, we had over 2,200 customers that were sold through our direct sales force and channel partners, as compared to over 1,800 such customers as of April 30, 2019. These customers, which we refer to as our Direct Sales Customers, accounted for 79% and 77% of our subscription revenue for the three months ended April 30, 2020 and 2019, respectively. We are also focused on increasing the number of MongoDB Atlas customers as we emphasize the on-demand scalability of MongoDB Atlas by allowing our customers to consume the product with minimal commitment. After launching in June 2016, we had over 16,800 MongoDB Atlas customers as of April 30, 2020. The growth in MongoDB Atlas customers included customers from mLab and Realm, as described above, as well as new customers to MongoDB and existing MongoDB Enterprise Advanced customers adding incremental MongoDB Atlas workloads.
In an effort to expand our global reach, in October 2019, we announced a partnership with Alibaba Cloud to offer an authorized MongoDB-as-a-service solution allowing customers of Alibaba Cloud to use this managed offering from their data centers globally.
Increasing Adoption of MongoDB Atlas
MongoDB Atlas, our hosted multi-cloud offering, is an important part of our run-anywhere strategy. and allows us to generate revenue from Community Server, converting users of the free-to-download version of our database to customers. To accelerate adoption of this DBaaS offering, in 2017, we introduced tools to easily migrate existing users of our Community Server offering to MongoDB Atlas. We have also expanded our introductory offerings for MongoDB Atlas, including a free tier, which provides limited processing power and storage in order to drive usage and adoption of MongoDB Atlas among developers. Our MongoDB Atlas free tier offering is now available on all three major cloud providers (Amazon Web Services (“AWS”), Google Cloud Platform (“GCP”) and Microsoft Azure) in North America, Europe and Asia Pacific. In addition, MongoDB Atlas is available on AWS Marketplace, making it easier for AWS customers to buy and consume MongoDB Atlas. Our business partnership with GCP provides deeper product integration and unified billing for GCP customers who are also MongoDB Atlas customers and offers GCP customers a seamless integration between MongoDB Atlas and GCP. In 2019, we announced an expanded relationship with Microsoft. The new availability of MongoDB Atlas on the Microsoft Azure Marketplace will offer unified billing for joint customers of MongoDB Atlas and Microsoft and will make it easier for established Azure customers to purchase and use MongoDB Atlas. In addition, MongoDB will be part of Microsoft’s strategic partner program.
We have also expanded the functionality available in MongoDB Atlas beyond that of our Community Server offering. We expect this will drive further adoption of MongoDB Atlas as companies migrate mission-critical applications to the public cloud. The enterprise capabilities that we have introduced to MongoDB Atlas include advanced security features, enterprise-standard authentication and database auditing. We have invested significantly in MongoDB Atlas and our ability to drive adoption of MongoDB Atlas is a key component of our growth strategy.
Retaining and Expanding Revenue from Existing Customers
The economic attractiveness of our subscription-based model is driven by customer renewals and increasing existing customer subscriptions over time, referred to as land-and-expand. We believe that there is a significant opportunity to drive additional sales to existing customers, and expect to invest in sales and marketing and customer success personnel and activities to achieve additional revenue growth from existing customers. If an application grows and requires additional capacity, our customers increase their subscriptions to our platform. In addition, our customers expand their subscriptions to our platform as they migrate additional existing applications or build new applications, either within the same department or

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in other lines of business or geographies. Also, as customers modernize their information technology infrastructure and move to the cloud, they may migrate applications from legacy databases. Our goal is to increase the number of customers that standardize on our database within their organization, which can include offering centralized internal support or providing MongoDB-as-a-service internally. Over time, the average subscription amount for our Direct Sales Customers has increased. In addition, self-service customers have begun to increase their consumption of our products, particularly MongoDB Atlas.
We calculate annualized recurring revenue (“ARR”) and annualized monthly recurring revenue (“MRR”) to help us measure our subscription revenue performance. ARR includes the revenue we expect to receive from our customers over the following 12 months based on contractual commitments and, in the case of Direct Sales Customers of MongoDB Atlas, by annualizing the prior 90 days of their actual consumption of MongoDB Atlas, assuming no increases or reductions in their subscriptions or usage. For all other customers of our self-serve products, we calculate annualized MRR by annualizing the prior 30 days of their actual consumption of such products, assuming no increases or reductions in usage. ARR and annualized MRR exclude professional services. The number of customers with $100,000 or greater in ARR and annualized MRR was 780 and 598 as of April 30, 2020 and 2019, respectively. Prior to January 31, 2020, ARR related to Direct Sales Customers of MongoDB Atlas was based on their contractual commitments, regardless of their actual consumption. To better reflect actual customer behavior, we modified our ARR calculation related to Direct Sales Customers of MongodDB Atlas to incorporate their prior 90 days of actual consumption. The impact of this change on prior reported periods is immaterial. Our ability to increase sales to existing customers will depend on a number of factors, including customers’ satisfaction or dissatisfaction with our products and services, competition, pricing, economic conditions or overall changes in our customers’ spending levels.
Components of Results of Operations
Revenue
Subscription Revenue. Our subscription revenue is comprised of term licenses and hosted as-a-service solutions. Subscriptions to term licenses include technical support and access to new software versions on a when-and-if available basis. Revenue from our term licenses is recognized upfront for the license component and ratably for the technical support and when-and-if available update components. Revenue from term licenses is typically billed annually in advance. Revenue from our hosted as‑a‑service solutions is primarily generated on a usage basis and is billed either in arrears or paid up front. The majority of our subscription contracts are one year in duration and are invoiced upfront. Our subscription contracts are generally non-cancelable and non-refundable. When we enter into multi-year subscriptions, we typically invoice the customer on an annual basis.
Services Revenue. Services revenue is comprised of consulting and training services and is recognized over the period of delivery of the applicable services. We recognize revenue from services agreements as services are delivered.
We expect our revenue may vary from period to period based on, among other things, the timing and size of new subscriptions, the proportion of term license contracts that commence within the period, the rate of customer renewals and expansions, delivery of professional services, the impact of significant transactions and seasonality of or fluctuations in usage for our consumption‑based customers.
Cost of Revenue
Cost of Subscription Revenue. Cost of subscription revenue primarily includes personnel costs, including salaries, bonuses and benefits, and stock‑based compensation, for employees associated with our subscription arrangements principally related to technical support and allocated shared costs, as well as depreciation and amortization. Our cost of subscription revenue for our hosted as‑a‑service solutions includes third-party cloud infrastructure expenses. We expect our cost of subscription revenue to increase in absolute dollars as our subscription revenue increases and, depending on the results of MongoDB Atlas, our cost of subscription revenue may increase as a percentage of subscription revenue as well.
Cost of Services Revenue. Cost of services revenue primarily includes personnel costs, including salaries, bonuses and benefits, and stock‑based compensation, for employees associated with our professional service contracts, as well as travel costs, allocated shared costs and depreciation and amortization. We expect our cost of services revenue to increase in absolute dollars as our services revenue increases.
Gross Profit and Gross Margin
Gross Profit. Gross profit represents revenue less cost of revenue.

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Gross Margin. Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by a variety of factors, including the average sales price of our products and services, the mix of products sold, transaction volume growth and the mix of revenue between subscriptions and services. We expect our gross margin to fluctuate over time depending on the factors described above and, to the extent MongoDB Atlas revenue increases as a percentage of total revenue, our gross margin may decline as a result of the associated hosting costs of MongoDB Atlas.
Operating Expenses
Our operating expenses consist of sales and marketing, research and development and general and administrative expenses. Personnel costs are the most significant component of each category of operating expenses. Operating expenses also include travel and related costs and allocated overhead costs for facilities, information technology and employee benefit costs.
Sales and Marketing. Sales and marketing expense consists primarily of personnel costs, including salaries, sales commission and benefits, bonuses and stock‑based compensation. These expenses also include costs related to marketing programs, travel‑related expenses and allocated overhead. Marketing programs consist of advertising, events, corporate communications, and brand‑building and developer‑community activities. We expect our sales and marketing expense to increase in absolute dollars over time as we expand our sales force and increase our marketing resources, expand into new markets and further develop our self-serve and partner channels.
Research and Development. Research and development expense consists primarily of personnel costs, including salaries, bonuses and benefits, and stock‑based compensation. It also includes amortization associated with intangible acquired assets and allocated overhead. We expect our research and development expenses to continue to increase in absolute dollars, as we continue to invest in our platform and develop new products.
General and Administrative. General and administrative expense consists primarily of personnel costs, including salaries, bonuses and benefits, and stock‑based compensation for administrative functions including finance, legal, human resources and external legal and accounting fees, as well as allocated overhead. We expect general and administrative expense to increase in absolute dollars over time as we continue to invest in the growth of our business and incur the costs of compliance associated with being a publicly traded company.
Other Income (Expense), net
Other income (expense), net consists primarily of interest income, interest expense and gains and losses from foreign currency transactions.
Provision (Benefit) for Income Taxes
Provision for income taxes consists primarily of state income taxes in the United States and income taxes in certain foreign jurisdictions in which we conduct business. As of January 31, 2020, we had net operating loss (“NOL”) carryforwards for federal, state, Irish and United Kingdom income tax purposes of $659.7 million, $475.3 million, $258.8 million and $7.2 million, respectively, which begin to expire in the year ending January 31, 2028 for federal purposes and January 31, 2020 for state purposes. Ireland, U.K. and the U.S. federal NOLs for the years after January 31, 2018 are allowed to be carried forward indefinitely. The deferred tax assets associated with the NOL carryforwards in each of these jurisdictions are subject to a full valuation allowance. Under Section 382 of the U.S. Internal Revenue Code of 1986 (the “Code”), a corporation that experiences an “ownership change” is subject to a limitation on its ability to utilize its pre-change NOLs to offset future taxable income. Utilization of the federal NOL carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Code, as amended and similar state provisions. The annual limitation, should the Company undergo an ownership change, may result in the expiration of federal or state net operating losses and credits before utilization, however the Company does not expect any such limitation to be material.
Three Months Ended April 30, 2020 Summary
For the three months ended April 30, 2020, our total revenue was $130.3 million as compared to $89.4 million for the three months ended April 30, 2019. Our net loss was $54.0 million for the three months ended April 30, 2020 as compared to $33.2 million for the three months ended April 30, 2019.

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Our operating cash flow was $(5.9) million and $3.2 million for the three months ended April 30, 2020 and 2019, respectively. Our free cash flow was $(8.5) million and $2.8 million for the three months ended April 30, 2020 and 2019, respectively. See the section titled “Liquidity and Capital Resources—Non-GAAP Free Cash Flow” below.
Results of Operations
The following tables set forth our results of operations for the periods presented in dollars (unaudited, in thousands) and as a percentage of our total revenue. Percentage of revenue figures are rounded and therefore may not subtotal exactly.
 
Three Months Ended April 30,
 
2020
 
2019
Consolidated Statements of Operations Data: