MongoDB

Prospectus Summary

MONGODB, INC.

Overview

MongoDB is the leading modern, general purpose database platform. Our platform unleashes the power of software and data for developers and the applications they build.

Software applications are redefining how organizations across industries engage with their customers, operate their businesses and compete with each other. To compete effectively in today's global, data-driven market environment, organizations must provide their end-users with applications that capture and leverage the vast volumes and varieties of available data. As a result, the software developers who build and maintain these applications are increasingly influential in organizations and demand for their talent has grown substantially. Consequently, organizations have significantly increased investment in developers and their productivity has become a strategic imperative for organizations of all sizes, industries and geographies.

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. We built our platform to run applications at scale across a broad range of use cases in the cloud, on-premise or in a hybrid environment. Our platform addresses the performance, scalability, flexibility and reliability demands of modern applications while maintaining the core capabilities of legacy databases. This allows software developers to build or modernize applications quickly and intuitively, making developers more productive and giving their organizations a competitive advantage.

Relational databases were first developed in the 1970s and their underlying architecture remains largely unchanged even though the nature of applications, how they are deployed and their role in business have evolved dramatically. Modern software development is highly iterative and requires flexibility. Relational databases were not built to support the volume, variety and velocity of data being generated today, hindering application performance and developer productivity. In a relational database environment, developers are often required to spend significant time fixing and maintaining the linkages between modern applications and the rigid database structures that are inherent in relational offerings. Further, relational databases were built before cloud computing was popularized and were not designed for "always-on" globally distributed deployments. These factors have left developers and their organizations in need of more agile and effective database alternatives. A number of non-relational database alternatives, sometimes called NoSQL, have attempted to address the limitations of relational databases, but they have not achieved widespread developer mindshare and marketplace adoption. Based on DB-Engines' rankings, we have been the leading modern database by popularity worldwide since 2013. When we refer to a modern database, we are referring to a database that was originally commercialized after the year 2000 and that is designed for globally distributed deployments.

Our unique platform architecture combines the best of both relational and non-relational databases. We believe our core platform differentiation is driven by our ability to address the needs of organizations for performance, scalability, flexibility and reliability while maintaining the strengths of relational databases. Our document-based architecture enables developers to manage data in a more natural way, making it easy and intuitive for developers to rapidly and cost-effectively build, modernize, deploy and maintain applications, thereby increasing developer productivity. Customers can run our platform in any environment, depending on their operational requirements: in the cloud, on-premise or in a hybrid environment.

We believe we have a highly differentiated business model. Our platform is offered under a software subscription business model, with subscription revenue accounting for 90% and 91% of our total revenue in fiscal year 2017 and the six months ended July 31, 2017, respectively. To encourage developer usage, familiarity and adoption of our platform, we offer Community Server as an open source offering, analogous to a "freemium" offering. Community Server is a free-to-download version of our database that does not include all of the features of our commercial platform. Our Community Server offering may be downloaded multiple times by an individual user prior to any subsequent subscription purchase. This allows developers to evaluate our platform in a frictionless manner, which we believe has contributed to our platform's popularity and driven enterprise adoption of our subscription offering. Our software has been downloaded from our website over 30 million times since February 2009 and over 10 million times in the last 12 months alone. We provide our platform under a licensing model that protects our intellectual property and supports our software subscription business model.

We have experienced rapid growth. As of July 31, 2017, we had over 4,300 customers across a wide range of industries and in more than 85 countries, compared to over 1,700 and 3,200 customers as of January 31, 2016 and 2017, respectively. Our customers include over half of the Global Fortune 100 companies. As of July 31, 2017, we had over 1,350 customers that were sold through our direct sales force and channel partners, as compared to over 900 and over 1,200 such customers as of January 31, 2016 and 2017, respectively. These customers accounted for 96%, 95% and 92% of our subscription revenue for the fiscal years ended January 31, 2016 and 2017 and the six months ended July 31, 2017, respectively. For the fiscal years ended January 31, 2015, 2016 and 2017, our total revenue was $40.8 million, $65.3 million and $101.4 million, respectively, representing year-over-year growth of 60% for fiscal year 2016 and 55% for fiscal year 2017. For the six months ended July 31, 2017, our total revenue was $68.0 million, representing a 51% increase over revenue for the six months ended July 31, 2016. We believe our net annual recurring revenue, or ARR, expansion rate, which has been over 120% for each of the last ten fiscal quarters, demonstrates the attractiveness of our platform to our customers. See the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Cohort Analysis" for a description of ARR and a discussion of net ARR expansion rate. Our net loss was $76.7 million, $73.5 million, $86.7 million and $45.8 million, for fiscal years 2015, 2016 and 2017 and the six months ended July 31, 2017, respectively. Our operating cash flow was $(62.0) million, $(47.0) million, $(38.1) million and $(26.9) million, for fiscal years 2015, 2016 and 2017 and the six months ended July 31, 2017, respectively. Our free cash flow was $(64.7) million, $(47.4) million, $(39.8) million and $(28.5) million, for fiscal years 2015, 2016 and 2017 and the six months ended July 31, 2017, respectively. See the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Non-GAAP Free Cash Flow."

Industry Background

There are a number of important industry trends and market dynamics that are transforming the ways organizations utilize software applications and leverage the underlying data. These include:

Software Applications Are Transforming Business

Software applications are redefining how organizations across industries engage with their customers, operate their businesses and compete with each other. Disruptive companies are leveraging software applications to redefine large global industries such as entertainment, financial services, healthcare, hospitality, lodging, retail and transportation. At the same time, more traditional companies that historically have not primarily relied on software innovation as a key differentiator are increasingly modernizing their operations by investing significantly in software application development and hiring developers to differentiate themselves competitively.

Software Developers Are Strategically Important to Organizations

As software applications have become essential to all businesses, the software developers who build and maintain these applications are increasingly influential in organizations and demand for their talent has grown substantially. Consequently, organizations have significantly increased investment in developers and their productivity has become a strategic imperative for organizations of all sizes, industries and geographies.

Corporate IT departments have historically dictated the technologies that developers could use. With the rising influence of developers and the prevalence of cloud-based software solutions, developers are increasingly able and empowered to make their own technology choices.

A Database Is at the Heart of Every Application

Every software application requires a database to store, organize and process data. A database directly impacts an application's performance, scalability, flexibility and reliability. For this reason, the selection of a database is a highly strategic decision impacting application performance and organizational competitiveness. Similarly, as developers modernize or upgrade an existing application, they choose whether a new database can better meet their requirements. Large organizations can have tens of thousands of applications and associated databases.

The Volume, Variety and Velocity of Data Today Complicates Application Development

The volume, variety and velocity of data generated and accessed through applications worldwide is increasing, driven by the rise of cloud computing, the increasing prevalence of mobile, social and Internet of Things, or IoT, applications, and the low cost of storage. The Cisco Global Cloud Index estimates that 600 zettabytes, or ZBs, of data will be generated annually by all people, machines and things by 2020, up from 145 ZBs generated in 2015. Accompanying this explosion in data volume is an expansion in the variety of data, including data with different structures, often called semi-structured data, and new patterns of data, such as time-series data. This places increasing pressure on the developers who build and maintain software applications to select the right database for an application, to ensure that the database can accommodate the required volume, variety and velocity of data to deliver the desired end-user experience.

Organizations Are Modernizing their IT Infrastructure and Adopting Cloud Architectures

Organizations worldwide are undergoing a fundamental modernization of legacy IT infrastructure and rapidly adopting cloud or hybrid architectures. As developers re-platform existing applications, they have the opportunity to re-evaluate the underlying database platform that the application is built on to ensure that it will support the functionality required today and is flexible enough to adapt to future requirements. In addition, organizations prefer solutions that do not lock them in to any one public cloud provider, which limits their flexibility and exposes them to potential cost increases over time.

Limitations of Relational and Other Existing Databases

Relational databases were first developed in the 1970s. These legacy databases became the foundational technology for mainframe and client server-based applications, providing sophisticated and efficient access to data, guarantees of data integrity and valuable enterprise-oriented features, including management tools and integrations. These core capabilities remain important today.

The underlying architecture of relational databases, however, remains largely unchanged even though the nature of applications, how they are deployed and their role in business have evolved dramatically. Relational databases were not built to deliver the performance, scalability, flexibility and reliability required by modern applications. These legacy databases use rigid, inflexible schemas, where data is stored in tables of rows and columns, and where even simple schema changes can be complicated. Modern software development is highly iterative and requires flexibility, and this rigid structure makes it costly and time consuming for developers to build, maintain and update applications as required. Further, relational databases were built before cloud computing was popularized and were not designed for "always-on" globally distributed deployments. All of these factors hinder developer productivity and reduce organizational competitiveness, leaving developers and their organizations in need of more effective, more agile, lower cost database solutions.

A number of non-relational database alternatives have attempted to address the limitations of relational databases. However, in attempting to solve the challenges of legacy relational databases, many of these vendors have made architectural choices that compromised many of the core capabilities of relational databases, limiting these vendors to a relatively narrow set of use cases. As a result, they have not achieved widespread developer mindshare and marketplace adoption.

Our Market Opportunity

The database market is one of the largest in the software industry. According to IDC, the worldwide database software market, which it refers to as structured data management software, was $44.6 billion in 2016 and is expected to grow to $61.3 billion in 2020, representing an 8% compound annual growth rate. Legacy database vendors have historically dominated this market. We believe this market is one of the few within the enterprise technology stack that has yet to be disrupted by a modern alternative, creating our opportunity.

Our Unique Approach to Our Opportunity

We believe that there are two important and highly differentiating aspects of our approach to the large and highly strategic database market.

Our Unique Platform Architecture. Our platform architecture, called our Nexus Architecture, combines the best of both relational and non-relational databases. Our Nexus Architecture delivers the benefits of relational databases, including sophisticated and efficient access to data, guarantees of data integrity and enterprise management tools and integrations, while providing the scalability, flexibility and always-on reliability required for modern applications. Our design choices allow us to support a broad range of application use cases and increase the appeal for organizations to standardize on our platform, further contributing to the broad scope of our market opportunity. In fiscal year 2017, approximately 30% of our new business resulted from the migration of applications from relational databases.

Our Unique Business Model. We believe we have a highly differentiated business model that combines the developer mindshare and adoption benefits of open source with the economic benefits of a proprietary software subscription business model. To encourage developer usage, familiarity and adoption of our platform, we offer Community Server as an open source offering, analogous to a "freemium" offering. Community Server is a free-to-download version of our database that does not include all of the features of our commercial platform. This allows developers to evaluate our platform in a frictionless manner, which we believe has contributed to our platform's popularity among developers and driven enterprise adoption of our subscription offering. Community Server has been downloaded from our website over 30 million times since February 2009 and over 10 million times in the last 12 months alone. Unlike software companies built around third-party open source projects, we own the intellectual property of our offerings since we are the creators of the software, enabling our proprietary software subscription business model. Subscription revenue accounted for 90% and 91% of our total revenue in fiscal year 2017 and the six months ended July 31, 2017, respectively. 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.

Our Solution

MongoDB is the leading, modern database platform, built to run applications at scale across a broad range of use cases in the cloud, on-premise or in a hybrid environment. Our primary subscription package is MongoDB Enterprise Advanced, our comprehensive offering for enterprise customers that can be run in the cloud, on-premise or in a hybrid environment. MongoDB Enterprise Advanced includes our proprietary database server, advanced security, enterprise management capabilities, our graphical user interface, analytics integrations, technical support and a commercial license to our platform. We also offer MongoDB Atlas, our cloud hosted database-as-a-service, or DBaaS, offering that includes comprehensive infrastructure and management of our Community Server offering. The key differentiators of our platform include:

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We Built a Modern Platform for Applications. Our founders were frustrated by the challenges of working with legacy database offerings. Our platform was built to address these challenges while maintaining the best aspects of relational databases, allowing developers both to build new, modern applications that could not be built on relational databases and to more quickly and easily modernize existing applications. Core features and capabilities of our platform include:


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Performance. We deliver the extreme throughput and predictable low-latency required by the most demanding applications and leverage modern server architectures, delivering millions of operations per second.


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Scalability. Our architecture scales horizontally across thousands of servers, supporting petabytes of data and millions of users in a globally distributed environment.


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Flexibility. Our document-based architecture easily accommodates the variety of data required by modern applications.


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Reliability. Our platform includes the critical, advanced security features and fault-tolerance that enterprises demand. It was built to operate in a globally distributed environment for "always-on" applications.


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We Built Our Platform for Developers. MongoDB was built by developers for developers. We architected our platform with robust functionality and made it easy and intuitive for developers to build, modernize, deploy and maintain applications rapidly and cost-effectively, thereby increasing developer productivity. Our document-based architecture enables developers to manage and interact with data in a more natural way. As a result, developers can focus on the application and end-user experience as they do not have to spend significant time fixing and maintaining the linkages between the application and a rigid relational database structure. We also offer drivers in all leading programming languages, allowing developers to interact with our platform using the programming language of their choice, further increasing developer productivity.


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We Allow Customers to Run Any Application Anywhere. As a general purpose database, we support applications across a wide range of use cases. Our software is easily configurable, allowing customers to adjust settings and parameters to optimize performance for a specific application and use case. Customers can run our platform in any environment, depending on their operational requirements: in the cloud, on-premise or in a hybrid environment. In addition, customers can deploy our platform in any of the public cloud alternatives, providing them with increased flexibility and cost-optimization opportunities by preventing public cloud vendor lock-in.

Key Customer Benefits

Our platform delivers the following key business benefits for our customers:

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Maximize Competitive Advantage through Software and Data. Our platform is built to support modern applications, allowing organizations to harness the full power of software and data to drive competitive advantage. Developers use our platform to build new, operational and customer-facing applications, including applications that cannot be built on relational databases. As a result, our platform can help drive our customers' ability to compete, improve end-user satisfaction, increase their revenue and gain market share.


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Increase Developer Productivity. By empowering developers to build or modernize applications quickly and cost-efficiently, we enable developers' agility, accelerating the time-to-revenue for new products.


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Deliver High Reliability for Mission-Critical Deployments. Our platform is designed to support mission-critical applications by being fault-tolerant and always on, reducing downtime for our customers and minimizing the risk of lost revenue.


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Reduce Total Cost of Ownership. The speed and efficiency of application development using our platform, coupled with decreased developer resources required for application maintenance, can result in a dramatic reduction in the total cost of ownership for organizations. In addition, our platform runs on commodity hardware, requires less oversight and management from operations personnel and can operate in the cloud or other low-cost environments, leading to reduced application-related costs for our customers.

Our Growth Strategy

We are pursuing our large market opportunity with growth strategies that include: