Elastic (ESTC) 1 Jun 232023 Q4 Earnings call transcript

Hello, and welcome to the Elastic's Fourth Quarter Fiscal 2023 Earnings Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Nikolay Beliov, VP, Investor Relations. ahead. go Please

afternoon, today's Good and you joining for XXXX Thank call and to on conference results. quarter discuss us financial you. thank Elastic's fiscal fourth

and Ash On we and Kulkarni, Janesh Officer. Moorjani, Chief Chief the Operating Chief have Executive call, Officer Financial Officer;

prepared we remarks, their take questions. Following will

ir.elastic.co. Our Relations found Slides, of the which and press call today website, on posted is can close was the issued be the supplement Investor Elastic on at release also after market our website.

We will statements, demand date estimates, our uncertainties materially. are actual and on our forward-looking discussion in based our currently to expectations information. risks issued products that to and fully on required included could filings subject differ Relations revise cause predictions, unless Our may include update Commission. to statements the earlier risks to and Securities uncertainties forward-looking are those known other and us, in include which solutions the website forward-looking with this Please Investor and described any regarding for these results future and posted our that slides was disclaim to the speak in press of call statements Exchange release and law. or factors by of These only the our today obligation revenue more refer and the the included as

the reconciliations press discuss also comparable the with including will certain measures We most measures, can Disclosures non-GAAP measures. slides. found non-GAAP GAAP financial and release in be regarding

link. our Investor be call of website Company under this Relations replay webcast on will The the available

will On participating X, Monday, participating at Bank in Rosenblatt Conference. Summit. the America in July Global on XXXX, XXXX, period we the first Our XX, of close begins we be X, quiet business June XXXX the And Technology be of Technology will quarter on June XXXX. fiscal

to turn I'll that, over it Ash. With

environment, aligned the and thank the prioritized year. with this results our given I'm pleased and our be market opportunity us. about for of and remain of how customers, for pleased confident joining full you quarter, to Nikolay, completely the ahead needs you, our performed have we for global with to Thank all fiscal the business us. continue areas I'm focus We

always singular the processes find has from insights answers everyone for had scale. matter services chat-based in to more at enabling to customers, all their information mission, opportunities AI data data. systems, up efficient time Elastic opening a and new real to is intuitive make businesses from that Generative approach their drive new offer to their better and its

and area and ML investing Elastic AI and search, customers our successes we demonstrate has been for across existing in capabilities and security. in observability this cases years, have use many that

or Our emerging component a Engine AI their stack democratize newer the including vector generative to language with and to own capabilities, of Relevance a ESRE models us in key to way. the be enable enabled and secure customers data have search large Elasticsearch AI optimize

We are this long-term represents Elastic. the opportunity excited for very about

in constant platform. XX% with in year-over-year consolidate and XX% revenue. continuing customers Cloud to QX, currency most turning We recent to saw revenue In onto Now year-over-year growing contractual quarter. total constant commitments solid total representing our of currency Elastic customer grew with XX% our

X.X%. business a non-GAAP to with the stronger-than-expected operating of managed again discipline We deliver margin

in For the growing Cloud full fiscal with year-over-year XX% constant XX% year, XX% Elastic constant total currency, currency. revenue year-over-year XX% and grew in and

our again over X,XXX working. than contract million, values ended contract with and customers more land-and-expand annual values customers once $XXX,XXX XXX that annual over highlighting than is strategy with We quarter the $X more with

spend to ways commitments to without use the time, for their onto At quarter, as lower more make multi-year focused cases customers same During sought consumption. they platform the continued on optimizing the consolidate total remain their to cloud Elastic sacrificing customers innovation. large

in strengths core competitive analytics We log our strategy. to land-and-expand of to and leverage search, drive areas our security our analytics continue

we seven-figure XXX firm and that and payment deal services three search. financial uses technology a Elastic observability, solutions digital This the renewed of Fortune with security our multi-year for quarter, across all

The excellence payment to detection, Observability of in around built Elastic Elastic and ensure for to remain customer-facing management its applications systems an enterprise-wide and access transaction has identity cyber company leveraging addition internal center its hunting, threat healthy anomaly power search. and

to previously, is total the tell of dramatically discussed platform have lower us enabling we well Like than this our offerings, environment. in of our us ownership routinely compete cost very competitive customers

this are We motivate have displace to incumbent and our success been with approach. customers to also seeing and driving tools onto platforms campaigns consolidate

we county solution, logging of QX, capacity where we XX% them value solution. and to what close prior they deal large displaced the signed on incumbent with spending more a Xx save doubled their ingest existing California, their were Basically, in than vendor. total than higher In a their still

gross compelling and ownership sticky cost to strong Our platform our total of quarters. and retention to prior QX, differentiated in us rate platform capabilities similar maintain make have allowed our incredibly

like our widening I'd Now three growth, growth. fueling growth. with focus competitive and areas: Starting durable our driving share across key profitable durable to moat progress our

is pillars. Our by three durable growth driven

First, platform enables access the including $XX addressable total giving in strength markets, security, that search, billion observability and to versatility to succeed multiple market. us of our us and search analytics

the that and APM like that Elastic track they AIOps, with capabilities give confidence engine innovation trust cloud of cloud engagements expand with our our a in customers vector the as to future value. security record the and to continue marketplaces continue strong in partnerships. now can And innovations us. search, hyperscaler We Second, partners momentum and analytics, their customers delivering our delivering with our see third,

for a with relationship accelerate migration of our go-to-market the streamlined that help and easier strengthened globally Elastic strategic with make on-premise AWS. collaboration workloads cloud adoption customers to further on journey we AWS activities integrated agreement will through Cloud QX, In

continuing help through Our their work with large our deals hyperscaler partners is us marketplaces. to close

two Cloud Google journey ago, Marketplace. a In we with analytics the absorbability three-year years us provider, expanded to its leading a property with information, solutions Elastic QX, and CoreLogic, deal Cloud began global and renewed moving data-enabled which migration via

CoreLogic to such and APM capabilities Observability uptime as an business-critical customer, leverages As applications. monitor Elastic

CoreLogic Elastic Search retrieval indexing Enterprise relies also heavily its on data for and capabilities.

now this company log deal uses them We for as shopping Cyber renewed Elastic with Security pay data SIEM. for the marketplace, costs their to contract and expanded QX signed AWS monitoring via as grow, for buy their The Elastic leading such to and quarter a Monday. seven-figure continues multi-year a well Cloud in as Observability Elastic peak as usage optimize provider. also a later enabling Friday accurately Black especially scale during environments and We seasons

our competitive to mode. widening on Now

to ML driver for our capabilities. driven the over subscriptions Our of tiers. XX% higher solutions observability continue We customers a platform, to in already search, by and our ML our be security. Elasticsearch subscription for major adopting continues using bolstered innovation functionality on AI or by part cloud our machine be have annual learning

on For United example, retailers Elastic we States improvement for home in a Cloud. Search, in three-year Enterprise with expanded the largest the deal of Google one

platform to and vector A retail are discover leveraging Elastic at the experiences as customers our uses their cases well machine to company single like learning a business, solutions. capabilities products using for online longtime They customer, multiple to scale for in power to use use search search, legacy Elastic compared cost-efficient observability testing its efficiently. search and enhance browse as enabling customers capabilities

perspectives models large in and expectations. AI particular, customer on focus increased shaping is language business and The

and possible everyone that copilots Our applications with businesses AI for to and are build goal domain-specific to generative is their to make and their proprietary democratize relevant it optimized generative AI data.

enterprise Elasticsearch and announced own power built-in search of Elasticsearch. in is innovation models the models our transformer to proprietary their offer models addition or learning by have allowing of core data. the learning AI to integrate specifically natively into ESRE, leveraging Relevance to to vector it's the recently part approach been customers to that by integrating we key Engine Our machine machine of our and powered designed that bring A

We of is areas. in have AI features enabled This without resources. new to solutions of solution a strength a can to companies invested advance have our big that of competitive customers for This Elastic lot each our that Elastic. thousands initiatives date additional means ML-based across adopt

our last and well announcement week Our customers the has alike. very partners been of Conference ESRE received Build Microsoft by at

share Security cloud Application to AWS, modernize container will delivers management. need analytics complexity security vulnerability now Management and attack and details This complete CNAP and that some comprehensive we solutions. for solution they with expanded improve about capabilities surface vendor security additional cloud operations, includes Native or for Protection security in AWS, Cloud a Posture their past quarter, power workload providing security accelerate Elastic the Elastic reduce visibility, remediation. for Cloud including I Now innovations observability Security, organizations

Foundation also highest also announced logs telemetry the security for committing observability is and to as the or and emerging data, contributing logs. the CNCF that for velocity development common industry We Elastic in ECS, Schema, a and OTel, to second Common Computing schema metrics, joint Native OpenTelemetry Cloud encompassing project of or we is OpenTelemetry, known traces. are and standard

in Schema basis advance help and analytics value and platform. the adoption merging Common for investments log Elastic for OTel will of our of the and as analytics from choosing their broad reflects OTel's continued area. incredibly The ECS for increasing our logs in our the security their Elastic adoption this leadership OTel CNCF help schema customers and get

and of customers such beta latency, launched SLO performance against track help or performance define alert we in Observability, these custom-defined and and on quality let levels. Elastic SLOs, new monitoring These deliver capabilities key Objective monitor capabilities as service violations addition, a In on monitor service Level Service customers to availability the other or measure SLOs metrics. new SLO which

profitable to last Now my moving on key growth. point,

are in to QX discipline. target our the As of we margin we've this a XX% delivered demonstrated with for on business committed operating and non-GAAP managing X.X% deliver quarter, on are to FYXXXX. We track

expect to fiscal expansion continue further We XXXX. in margin

delivering continuing remain strong. our fundamentals strategy Our while committed profitability. remain We growth to increasing

for support want confidence. and to our closing, partners customers, contribution continued to also to their for I In I and our dedication their performance. thank investors want employees our thank and

the in customer in Cloud conviction front is continued product in of on innovations Elastic. strength our It of remains Our opportunity long-term unabated. the and based us, exciting confidence especially Elastic many in

focused We on are execution.

that amount used that is more opportunity. this finding critical, data and generated generational Elastic data being of becomes and from advantage As all positioned need of increases well to for the the answers take matter

more Janesh financial results With that, detail. I'll go turn it through over to to in our

in solid finishing Ash. good quarter, delivered current the the environment. economic despite for fourth Thanks, Elastic We a results year

the XX% growth above bottom once and Elastic are constant and high-end currency. in in guidance In QX, came of pleased year-over-year constant again we total Cloud topline quarter. grew delivered XX% line in that our for we year-over-year both the revenue We currency

goal Importantly, Customers we overall to with for achieve X.X% do to are our delivered want non-GAAP the operating remained XX% of more quarter fiscal we and with margin on saw XXXX. Elastic. quarter. consistent the in trends of The track prior

There are three business current in compelling reasons customers Elastic the pick climate.

of kind any First, innovation our with to multiple on stack. platform a drive single data cases use

Second, a and lower total consumption cost of the third, our flexibility ownership model. of

In of all our addition, conversations Elasticsearch new ML years and sorts adoption is generative cases search many AI use and of for the enabling experience AI. our analytics on customers with of broad in

time, our customers same Being them are consumption long-term. we in the in the the importance our challenging customers a to At for strategic optimize to near-term. partner increases helping reliable current times

As greater they see customers more which for over bring data drives the substantially, turn time platform Elastic and nicely onto for long-term. sets us in workloads business us. as up This benefits, growth volumes the grow

results constant XX% XX% total XX% year-over-year quarter, Cloud fourth Cloud up XX% of up in or XX% subscriptions, or constant currency. million, currency, in growing $XXX was in revenue $XXX in Elastic in up get was Elastic revenue QX. in year-over-year revenue. the represented Let's $XXX from of Total constant million, XX% revenue quarter into revenue the comprising a million, XX% quarter the totaled fourth year-ago. total Subscription Within the XX% or currency. from year-over-year XX% for

in based Elastic compared month-to-month to total quarter services $XX and revenue on year. in same XX% the similar to in Professional million, constant continue XX% XX% quarter prior be currency. last was or fourth the Cloud revenue growing revenue XX% the quarter of arrangements to year-over-year

mix in based on it the of we professional time. expect quarters do delivery, services not to fluctuate vary may services over across significantly timing Although

around and APJ. flow, followed grew add EMEA deal fastest, by To the context more the Americas

a quarter. a the solution similar across mix saw also the to We prior healthy solutions and in balance annual continue contract maintain versus values

such fourth Moving the as over us the In $XXX,XXX on of customer end bringing X,XXX category, the customer added approximately customers, over ACV to XX to quarter. metrics. customers of we

end build to before, end As category customers over foundation our year compared of reflected XXX over customers as provides land-and-expand a strong at motion we the the over of a strength time. which in number $X is of such over customers customer we've ACV million prior this was the also at this XXX said of this the for company year. multi-billion-dollar motion The

to broadly. $XX,XXX more additions in over customer above end XXX approximately customers at X,XXX ACV customers. at added such We Looking

end customer subscription approximately the count of total Our at the quarter. was XX,XXX

the Turning to net expansion rate.

rate Our approximately with was in was net our which line expectation. expansion XXX%,

consumption shared net expansion not and we've for a couple more consumption quarters a it expansion rate actual a prior our net Also, As before, rate measure, as of their as will arrangements, reminder, since customers off. roll the on their only reflects for XX-month higher periods expansion trailing decline from commitment. rates is

growth Our of can consolidate to within customer solutions, working. growing model. their scale metrics indicate Customers focusing with propensity over that a can flexibly our commitments is workloads time. our our with for strategy they customers Moreover, and consumption on Elastic both higher across

XX.X% discuss quarter, was versus sequential driven gross improvement margin I'll Gross which services Now by in both gross quarter the non-GAAP with and professional in measures. turning margin. profitability the better prior subscription better XX.X% margin the to for

before, As can services service professional based on timing we've fluctuate said margin gross of delivery. the

expenses. margin earnings was higher the quarter operating and managing focus gross quarter Our margin revenue $X.XX. our per on Diluted continued better X.X%, in the the share expected than was outperformance, given fourth in was which

an on our with consistent fourth approximately million, basis year against the cash was margin X% or flow We the year improvement. with the which $XX ended $XX prior improvement free profitability in operating of cash flow was adjusted Free substantial overall a adjusted million quarter.

million. with the maintain and cash, sheet. We securities $XXX a fourth balance marketable to of We continue equivalents cash strong quarter ended

guidance. to Turning

XXXX on overall fiscal outlined on guidance is for framework assumptions those the we our in prior predicated similar call. had to Our

unchanged. We will remain conditions are assuming macro

near While secured and our prudent we that We anticipate customer pattern quarters. momentum, the have trends to will consumption commitments timing consumption may as similar stay reflected that in the contractual may it already fluctuate. in to translate of to believe revenue, term recent is

growth expectation comparisons against the to expect first first lower revenue we than reflecting our be for slightly quarter. half of full-year guidance in are this tougher in Further, fiscal the as for year-over-year We earlier, shared given first we've expectation our the XXXX. total half

us We continuing of progress terms further with investing sales are our our fiscal further but business outcomes discipline XXXX This business. operating margin XX% and us XXXX as are In carefully operating help drive we expenses, capacity. for up intend only in goal and will leverage quarter for investments in grow commercial getting each the natural to enterprise margin we not in we in as non-GAAP achieve fiscal the also inherent to expansion the are set right operating ensuring business. the consider monitor we

Additionally, as quarter margin, the over non-GAAP the on our QX seasonally in low considering expenses operating point before, and first the will we've higher ramp revenue year. be said given

fluctuate operating to margin timing full-year seasonality, are so on given Finally, continue to non-GAAP for this margin basis don't flow we will we expecting the on though XXXX. we look at guide and basis a free basis. flow primarily adjusted cash cash fiscal fiscal formally on a for XXXX flow, to quarterly slightly an Cash above be issues

first $XXX XXXX, currency. we that $XXX million for of the midpoint, on million. at constant year-over-year growth as-reported fiscal represents background, revenue expect and XX% quarter total in the With the This of both range an basis in to

using per earnings expect of and XXXX, first XXX.X XXX.X X.X% million operating shares of between to weighted fiscal the ordinary quarter We $X.XX of and share in non-GAAP range the to range the outstanding. non-GAAP diluted X% for average margin million in $X.XX

to represents the full basis at an of both we total the year-over-year XX% $X.XXX XXXX, in as-reported $X.XXX fiscal range This on constant midpoint in billion. currency. and expect billion For revenue growth

range XXXX XX.X% in to earnings the non-GAAP operating shares margin ordinary X.X% of range in using for non-GAAP expect weighted share per and million to $X.XX full outstanding. diluted XXX $X.XX and the of between million fiscal average We XXX

In on summary, revenue growth a focused multibillion remain delivering we build we as dollar business. profitable

And of Operator? growth this with take confident are that ahead the in early still We stages questions. journey. go let's that, we and are

very much. you Thank

Hedberg [Operator now question first begin Capital Today's comes Please ahead. question-and-answer will Markets. the go session. with from We Instructions] RBC Matt

you there? Are Hey, Matt.

me you okay? Yes. hear Can

Go Yes, can. please. we ahead

guys. Sorry

Okay.

about muted. Sorry that, double

So density yes, to AI. see vector wanted opportunity seems to I guys it a like higher on the models into search for us, To platform. Elastic and large dig you

curious of has seeing about interest early as Are what relates activity any the it kind to you vector? Just been. increased

Yes. Hey, Matt. talk This about is Ash I here. can this.

has daily So two having ever of generative wonderful that applications announcements been interest just when AI, basis. vector – really are Engine aspects the to build since literally, we the Elasticsearch AI but there you made on customers it's the a even important. think Relevance are been with with to search, it's conversations about see. And to generative incredibly we've Like

can't without components. either do You of two these

model models is of what But it's are businesses these data, first private concept the language or trained proprietary on have models Bard or large publicly itself. you. So the available have Whether GPT-X data. these no and

if and private to you contextual business needs for and so language are for you these the and context context application, really you're make AI a models a generative the that And to business. your to trying sense to provide need answers build your those to business in be large of to it

where really in. that's And comes Elasticsearch

textual we've the importantly, made, year it last So that bringing vector on more and in the BMXX a functionality in doing all together functionality the that search announcements past, same around search, hybrid the had half developments we've search capability vector the we've functionality, done with platform. the the providing the all that that and

functionality a with huge like vector a APIs, and same to don't this used just use customers functionality So that's in product is different the to differentiator. start to machine technology. can need they have the don't get They and our learning the to the purchase new anything

uniquely when especially we space, a enterprise. the AI positioned our winner be this perspective, generative we in it in so And believe to from comes to are that

So in we're conversations. seeing that momentum customer of terms

about into are of expansion this how We total excited translates opportunity the addressable long-term, the very in the this what represents market.

I think all lots sense of a how things model do your data privacy, are handled data we a a about do security that your to that good biases. going How in in you you working do that customers think there progress these are of we're get as because is things through. way way,

new So of there's to typically tend the a early getting emerging. platform of that stuff worked a out you lot in the see days

expect what is we So going to I in this be long-term, are and take that's strong seeing the going believe and be that is I to But position what in advantage now happening. are really right a massive, to of this. really, we

see you Maybe to to effort; just one start think Like of even maybe growth monetization of macros? a growth think you sort Cloud to that regardless you a inflect broader that. of Do is could of to and depressed rebound sort macros you than things a trends start these more Cloud quick of that sooner? do Elastic Elastic start in of follow-up of sort could stronger when that some the are see the

Yes.

about be know, functionality and AI And And search So learning in drive you other to we're that all the consumption in monetize additions, factors right? all pretty our the compute us. this is think tend to tend these intensive. we here, when vector as both premium for way thing capabilities I the which machine talking it's about

trying ChatGPT like cases, want mostly what So cases using for to from a use are kinds generative the stage. customers own are businesses something of build they build, they AI want at use cases to kinds as to and are that use individual it's are today, move understand their for that the what still and of obviously, applications fun all we consumers

it's us. point this become this turns is very this really we and for when we be will for to But to not it's significant this this production, at as believe are now run, hard to that focusing about It's long this us. where on how appropriately And when meaningful predict the I'm into and and much going execution move, still in just turns into going is impactful the fast very significant. confident too tailwinds right thinking actual

guys. Thanks

Please go ahead. The next Tyler from comes with question Radke Citi.

Yes. Good afternoon.

last Ash, at have this up new the these question I'm just AI of announced? come that your about you which using you Elastic new any AI. about generative So I curious kind cases generative from used? could next-gen for was maybe on look composition think another as you added companies the platform Elastic you kind use seeing the companies customers XXX that Are of seeing quarter. the of and your XXX technology AI within If the kind on just you're you these to some quarter, technology where using customers of of products next-gen the of you talk and new

Yes.

talked deliver using relativity, even their with cases our about talked Build, use we customer at week, about looking are we last us for of functionality customer that's conjunction language Microsoft search we – when right? search announced in vector kinds gave deliver there, what customers. conjunction using large use So us the to the to they in models that some even examples, We for cases

customer my the store I be all just in terms also cases, improvement mentioned, be the the that's remarks, kinds for for large there, for going going They're to search their of use closely improvement something And Elastic just today, So do tech organizations of right? out about believe, In kinds platforms. the just product the talked these business use to similar. if looking prepared they U.S. not us. very working are home every about I home of with they're think to first in you I that on

like what's go relevant to search show them. website best on miter and what's a for you like you hammer, search actually the to their for that's product product it's Elastic most the or figuring you to saw out if So

user I tremendously answers I'll interested and this very I Like is of store experience to effectively would ChatGPT my you're to a give Like particular interactive they're this going has powerful. you irrigation an ask on to build be an want the and you which says, website website what do if because question chat kind if idea backyard, in Now generic their sells. to comes what two-acre get what Now example. for no their ChatGPT, need? system

experience – three so you're sprinkler based going the you're And to these you're trying this need something going effectively for is wants live, where that to lines you heads, the kinds company to this deliver need build store along of pipes what to and ship you that for the you can that are way, in store the to live are hours, the on. available rated right is temperature for you next And XX by so where wanted in and that. these if on click here

you issue of interesting in performing security experience that I if do get effectively and that's wanting customers about prescriptive the that's in ESRE to well, kind this? their for related business observability very of have helps we improve kinds not and here? I but a for cases, an and performance alert talking them what way. observability and an need That's do in – an all imagine know, I a – search, some steps even just set own I that cluster powerful of Kubernetes are my once about follow you significant not And use can to there to if see "Oh, something logs for hearing monetize to Is

hunters. to interest be of you notion that seeing this are helpful, to security copilots incredibly remedial threats action And can we sophisticated on in threat that able see take without needing be very like

I lot amount the one that learning active working seeing for are customers we've now. that's years across on and about are also tremendous and of of been have use with And board. a interest talked is experience seeing of cases the a machine we we fact the many with And we learning. machine interest reasons there So why

the it level. So next this taking just is to

helpful. That's

Janesh, just on the cloud here. So revenue

So by could any what guidance headwinds just to FYXXXX, for in And Thank you acceleration that's certain you assuming missed see implied? And Elastic second think revenue year-end? the get the are if Are then a just about, is to you. then about of did as percentage talk you you – Cloud targeting that it. quarter? you incremental I macro apologies and half

Hey, Tyler.

in back would. at quite our QX, step us it in many There I played were the to answer earlier, number actually quarter same we customers for expected QX. the fourth on of as a We macro in quarter. out from saw when overall, your look the in that customers So just generally the The quarter. than and the saw They to we saw question, pleased. continued were trends category. greater we we standpoint highlight the touched $XXX,XXX into We – performance positives generally

and they optimize So to the They're continue significantly bring with also our more And emerge we time, TCO as better Elastic, that to do scale bring we just to greater over the from faster partners the near time. that more didn't closely value. this belief business can if even are they consumption on Elastic to And term. workloads focus see at workloads at to different customers much we're ways time, continuing get them we they us their helps They to engage And is savings us. help them. but looking looking more platform. relevant because with continuing to in to both anything with actually are that this same to drive on that business on work in which the

folks bit a in that would of so quarter effect of is QX, growth that's have So way. for the not also did consistent say of QX. I we change any reminder And expected what in what a does we that sort quarter. shorter rate just was than earlier, QX on was the also a It consistent an saw. throughout was pattern. as a happen. the it And said sequential I'd it course It meaningful

and contracts earlier then if we're have longer already that contracts we've we're We're – mentioned mind think I contracts given their they commitments how strong they enjoying we of have as the our with Keep annual ahead, have entering that or those looking our And of if secured. of typically then base about just they one-year nature excited contracts breakpoints. the structuring pretty are And the the term, momentum about remarks, that year the with in a customers. prepared in our

we very as natural to half that signed half as contracts of XXXX, here embedded there of XXXX, anniversary fiscal the particularly those So fiscal in certain of revenue amounts think have in within are the that get XXXX. of recognized do that you mechanisms the second ensure fiscal second we've in the base contracts about

for the XXXX, second the the that, that we will deferred you revenue dollars you fiscal in of in growth substantial it's a And second in previous total half to and look the total at dollars you year, the can we you of had see that that added of see example, increase. half if that the short-term compare added

So we built pieces thought we one as for the the of that's about that year. plan the

about as I the finally, execution enterprise feel before, amount reps. have right sales we other sales good capacity with the talked we and capacity as pretty And ongoing commercial things that business, about in the continue we've of sales increased to our both we fiscal as got and team, think within hire just XXXX entered about we

the good good coming year we and quarter, when expected overall, step so a back look it macro out we be played at turned year overall feel pretty would, it fiscal about the and this despite I as up. climate, pretty And out to

ahead. question Ikeda go with comes Please of America. from next The Bank Koji

ask Thanks search. And guys. the case to use taking for thanks examples. vector wanted Ash, on questions. Hey the so so much, on much I one another

number checks out when differentiated. then from version, vector and couple your just helpful. search. I on on a vector the wanted just available open free my mean too. simply that other the explain you of all here I I base, premium questions or two, hear one. think on search But that search that's that maybe feature it's super it I'm And I to you on source totally wanted question paid Elastic confirm to differentiated number mentioned very a how vendors help think there? there's the in the doing vector I being One, only is is from the search there, you vector Elastic's ask no edition. hear user And vector in could time out only I I

them of both great Yes, in respond to order. question. Koji

actually learning, that and functionality announced, creation premium is editions, the we ingestion of in of all of in we capabilities those product the how So in the of the itself hybrid the but vectors, all are do of that announced, that terms machine all ESRE and the the the monetization, search the functionality, vector features searching all do model you editions.

all you practical on purposes, editions AI for able platform. So generative the applications to need to build be premium our

that's So model. monetization the

AI Stack, can ways, in like Now a mentioned, are when going of you two I to for definitely So there I it you're the about in is, the few the that things thing right, terms first think you down emerging right? break differentiation, need.

you're LLM. you're this The language relevant to some want business, that context, don't first to ship a need they LLM, private is is the important is all because and data to model. need large most allow you to of to that second going for the provide thing piece going And the an will every the their system

to built moving able It's be real-time. on LLM data in changing. everything the time, everything constantly use is your So having in won't even because not they importantly, right? are private more real And

surface, a for is need for language a given key the the people the context. from the many, actually any recently, just query need vector two – At large at interaction you times textual cases. times, functionality. you the is functionality many to in the of relevant provide And and with this discovering combination search So different search any need more model, are you what

you these practical incorporate And things of use like to as able to building be results. aggregation need applications, things cases, then for these filtering, like you're

one consistent advantage in of them you all reason, database, ability including from is to you are external run Elastic's other, to to like the platform. our consistent bring of The PyTorch APIs you be all or if these with each for on – take capabilities, case, – can of we've technology models it actually in and built a any Elastic. combine then vector need HuggingFace model directly with So in this to together, have you able if some still everything that all bring get and

complete enterprises. more real that there a solution on reason for confident the capable opportunity so just in So much that's space AI than to about that's we be the it's And and have generative why unique of we winner much anything the more a feel the out market.

Thank Ash. clear, and you Loud just it. Janesh. And Got much. so here for one follow-up

was revenue guide XX% fiscal just of the XXXX cloud, quarter. the it in in about fourth thinking Just

So that, – for it goes assume does it down of up mix throughout that does the mix, guide, go guys. that assume XX% that flat or stay year? the Thanks

question. Yes, Koji, great

we've the investments faster across we've will the are of growth rate overall given in I don't cloud, just the given overall, making, fully pieces. momentum cloud grow had product the But go-to-market all in would had, disaggregate we that given we focus significantly that expect So of than guide the that business. the the

the So that, we expect happen. not mix we course in quantified just cloud will the should a shift but of fully year. that over We've it, see

Got you much so much. Thank you so guys. Thank it.

you. Thank

forward to Looking you next seeing week.

from ahead. comes question Pinjalim next JPMorgan. The Bora Please go with

question. ESRE. Thanks guys. on for another Shockingly, AI, Hey question taking the generative

for help maybe known is understand Ash, obviously, Elasticsearch developers. – us by

using For Elasticsearch, Can ESRE? shift and this how become generative them with to for guys towards familiarity advantage opportunity? that pivot somebody who kind AI an you could that that deploy working become implementing as be and has deploying, been difficult Elasticsearch, for of that kind would you now of

for us, Pinjalim, – a massive you right. It's It's the thank for question. Yes. differentiator

functionality, that about able part think are all fact a the you going means it of together you common enterprise. huge with Elasticsearch to that the to And of last way of platform hybrid of – to the like in with it's brings about vector the facto is two naturally APIs. consistent effectively consistent functionality, all textual all easily. capability be because APIs things is the now search have the advantage when engine And you all think Elasticsearch you that with if familiar all the are those BMXX that within along relevance about together. the capabilities of And these these to take we de ESRE the If platform functionality search built bring the

new to APIs. You completely learn don't have

it. to to figure how have out don't You manage a monitor new system and

why And be and you we customers are this is into you reason Elastic seeing conversations start sort whether Like about of good very like businesses it as about with what effectively, The how the like I things to it. these Cloud means said, you having from immediately. future. we just excited this that reflecting how in with in get Elastic, to what example, have for feel the could production. started that's like key And move very this an excitement. have going us And evolves this the is I'm personally

And Janesh, for looking about is in growth at I'm subscription guide, talked Janesh. the helpful. Very it. sequential the Got growth one when the sequential you it, QX, flat. basically

from that second It second it's consumption you so But gives trying You're have that see. help a to Help kind you half that to far guiding of the But like us that maybe you're in half? the reach sounds build of to understand And you're what understand with I'm QX are like can't strong there saying, the sounds contracts it confidence obviously, RPO. understand the of second in just guide more for trends the confidence a kind that XX%. story. half seeing? about guess on some I we what mechanics us

a as little couple Pinjalim, I I'll on elaborate full-year, a a bit the and but touched about things, earlier, this I of bit further. think Yes.

and contractual pleased QX customers way So a in And we the over have were work, we you and up. breakpoints. contract typically actually overall, commitments course we mechanically because we have quite have with that even this that outcome if the have the quarter multi-year here our contracts, that given to wrapped have you of we think either strength made one-year QX, in saw if contracts just the or about we – us annual

actively mechanisms over Elastic are consume them on quarter-to-quarter to that at they've contracts this revenue. those with effectively to actually working ramp. to that fluctuate translate of But depending in that to the year, and We're course those made look I As all will so bring customer happens those for contracts we activity. with can commitments against there on that see customers consumption from embedded consumption as workloads natural to respect of those commitments, that see what

those to similar trends hit in contracts if consumption the the built are model if first the second see start So way thinking even we've breakpoints ramps, and those consumption the on stay they great. just the overall, to first about half the anniversary, will in and we where then But guide, I'm half, that's the QX naturally based half. that's we'll

visibility are to will amounts there fiscal recognized gives XXXX. that in that revenue So be degree ensure of us of certain that a good

the second a and the second of of looked we've last And So fiscal see deferred I contracts. around of if year. short-term significantly that's aspects the and the confidence it's we And to you'll half short-term added that's was higher the in short-term look revenue mechanical in much me you XXXX, referring deferred than you comfort the added why that the revenue at – full-year. degree half of deferred gives revenue how at the

fiscal XXXX, with other And with the we've to expected capacity have. the respect then we've is to of that sales entered adding, been we the that piece right capacity amount

in back the continued of fiscal XXXX. hiring We half

also to we their will that naturally the productivity have in salespeople start those achieve so And business. thresholds

all that for outlook we together, the year. So our about good putting feel really

of top what seen year, in QX internal of the looked have happen. and in and kinds so funnel generally month because what typical have in of of I'd have would the off, consistent of In what we terms always activities the May sales of example, the on some activities. the activities had like in top-of-funnel May, other that the of our of first we've based has been May fairly that May. been kick our general, May activities But we expected for fiscal terms month with there's it's past. far, it's say some We've month in general very the of a

you. Thank it. Got

ahead. comes question from with Oppenheimer. go next The Please Ittai Kidron

now? up color Harshil you Elastic bid how on about you this AWS there will What to wanted maybe Ittai. from I how to Is you go-to-market how is for expect of look? any dollars? this with ask different do is to can AWS bring activities the give And then integrated on This in collaboration. guys. terms to Hey, the new

Harshil. Maybe that one. take I'll Hey,

the to significantly to the so of I integrated Cloud partnership There's and There the – integrations. contracts, areas go-to-market relationship on as globally like And on migration with areas. we're workloads practices kinds and both commercial of the workloads incentives enjoyed activities builds marketing investments greater some until itself then signed, in those drive Elastic embedded as a are So that are adoption now. and that we AWS Through we for partnership AWS we've we including some just AWS. The in have extending few that that forth. are technology covers about of cloud it think contract overall committed these parties co-marketing, these them campaigns, workshops well. the broad There I on-premise guides, activities. that mentioned, of to further

And performed there's us within to drive additional being certain for also work designations. that, competency

already the security announced. competency saw that we designation You

So comprehensive on additional the reference on it's It focuses integrations. and focuses a technology in architectures go-to-market. It partnership. terms better of side

proud But partnership come, bear pleased we the we've to forward and when will and both further from back time. providing investments with the and look evolution And far sides of over will I happen relationship been we've you some over with the how look step of they updates and these go. progress as on the time, at overall, we fruit and really

Got it. Thank you.

ahead. is go Please The next from Baird. Shrenik question Kothari with

on the are the you – commitments. do you customer just course, hearing optimizing strong of out. how we dynamic the commitments was guys see between like Congrats lot. a customers the Thanks execution consumption that called wondering the I strong Hey. and versus

prior Of course, these are all there innovations.

the and the You ESQL been relevance well, has search, as transform vector guys announced the the models strong. engine and feedback

just go-to-market terms, value your existing flexible mean I pricing more of kind if solutions, packages. more involved strategies, into curious on driving and product it So

some unpack the can there? of strategies you if curious Just go-to-market

Maybe here. is This this. Ash Hey. I at can a take crack Yes.

we Elastic, right. what this optimize within in cost is looking fundamental conscious the current you're now and And So right aim, customers is towards are seeing is workloads platform they market being very our their to are sort describing our of strategy, on what that is to right? everybody

in from be that is than as see often And largest tends object low-cost amazing. data offering of hear moving that's really customers customers where often storage. more tier faster stored data lower-cost competitor. So will we hot our their our the we lot which And an customers a to to example, storage pretty tier, of frozen

move are commitments of not even consolidate current reasons far their to one more are as they workloads, are on customers – only to competitor value customers of be onto we cost but the on why able terms cost. lower of our at the deliver that's much optimizing workloads greater making to to a ownership, able in and total larger also our save platform So other Elastic. are Elastic to that currently products And

really in And value. of are the example prepared into this where that little seeing. we fact we seeing. California that kinds a total concrete a are excited. and kind takes actually really these the very to cost get anecdotes of was of but those the able terms very This ownership, materialize get it. I time have the The bit I is data Effectively, gave my that like of moving Now of to county workloads amazing commitments where, really in and that in over, is are leaning strong, of this Xx are we we remarks are the

strong for into So translate as going continued really that revenue, workloads that's our we into up come us and platform, to nicely know set more that's to eventually, going growth. very

Appreciate Ash. lot, it. a Thanks it. Got

ahead. question The comes Please next Securities. Rosenblatt Blair Abernethy go with from

Thanks very much.

I'm of solutions of through guys built here in services on relevance I a at important full Ash, professional path really customers few this? looking years, and Is a Is step-up how the go-to-market guess technology from are your might, a to standpoint, there your very significant back part? but this question, get a look it engine. security. Is if I and you on wondering, looking similar around just And helping leverage you eventually? more kind you I'm training? if going powerful through at partnerships, it one out observability very quite

Yes.

bottom-up in that our strongly enterprise effectively, we commercial always way go-to-market the the combination developers a really on teams top-down to think both about and go-to-market So is, driven through this of best with motion the it's and our motion we've drive the segments. that

of blogging seeing a lot from us. So terms like you're in developers, of

involved seeing on. business. capabilities. And like AI You're every of be new to see large these mid this very and with in driving, terms meet-ups now, in really developers business, who to from right so all and the And kinds are in in more early you're playing we and community every and ahead who that because they more small that's developer phases, applications. going is build right, of the these experimenting, that us leaning and are it's are in the events us stand-ups And and of are are generative ones these stepping of –

are we center So that sure, front making with and and we are foremost, community. first that

out leveraging them. this the they making understand fact known are and is using customers At search same mean new Elasticsearch time, our so sure well the what going We it. sales observability are for are into us either for and our there really can that security, leaning and capability or large that all teams or that it

the are doing what with that unlock opportunities We your on, are sessions having hey, this for enterprise brainstorming customers within you. kinds our could where of we're

on amazing an in terms there top Elasticsearch to be search. of to both we brand so the up the what going that and continue out it's But build of top And bottom in has down. will is

you. Thank Great.

ahead. comes Lenschow question go Raimo Please next from Barclays. The with

in there? with more more little through but now I Is can question you where less there tend future. any kind little little is as pushing terms update and hyperscalers, Where it done Thank of a We lot there in. versus they that? the it talked you a a to about you impact kind comes of clients? are start are If you're current we on of up think identifying me does bit about journeys your see most can optimization for of the talk the you of from more that spending people you're Elastic the of like it's situation, well. in a kind as squeezing terms obviously you? seeing of bit they for that see Can a what with probably on, talk we It's efficient in are where at customers what bit spend as seeing could AI,

to Janesh to our existing feedback may of Raimo. Yes, that right, common in is then Maybe of one mentioned, here. we most tier that that of it. But faster than kind some doing Ash frozen – is frankly, the common that moving storage, to most that's we getting Like our the like customers want optimization This tier. and are more to leaning like most our the competitors. seeing more actually practices. is we And terms object off and common tier lead is data of add with the workloads helping are frozen we are and them are into I hot of because the I'll

And so a advantage. that's huge

limits to itself data to of what journey? reality the is you of in not we we're that asking grow, terms this right. Like are only when the do continuing move like and there's to that optimization. fundamental that – is it seeing can natural terms are Now you're in also there tier that comes can where increased pressures, much question The any fact what to on so frozen the you

are we where mentioned, in we quarter Janesh like as well. like is last the So saw roughly today what

grow coming are just beyond. what that just to that's means and workloads offset because platform in into platform on we're But the to volumes the volume, onto the share. data customers also year to that fact newer going leaning coming and the as that us market allows are fact to be consolidate our our the it continuing data take And that's

become better to people spending are us market for going up to be in – the by like So such going future. of nicely it's very terms to be just when going that their that set of time, in in we position share a comfortable that's more patterns, really terms

Yes.

Okay. you. Perfect. Thank

question Jefferies. ahead. Next from Brent comes Please go with Thill

making following kickoff. pretty into tweaks go-to-market? year, is there year? Janesh, you that you fiscal you fiscal on next it this sales you're the When are playbook mentioned followed any same major Or go the the or last much changes May

fundamentally place, us the quite I same. continue think Hey, the will it's in model about Brent. to model The go-to-market we've that If for that the we've largely nicely. structures put and had working be

commitments cloud. focus to force with building on success we sales are see on that and We in our the coverage. enterprise focus and effectively selling We've continuing strong cloud, much on the sales is and commercial focused also had more

We as bit. are consumption our on increasing focus little a well

to the And year, actually small sales as a piece starting fiscal included this plan we've consumption well. compensation

future. overall think And we those our as elements I of the think hyperscalers the I marketplaces, all and us the about nicely business if partnerships well. scaling will the other for our that are about think go-to-market very cloud help with in around as working the

As you the from with this a with putting saw AWS, announcements area. energy we're of lot into –

structure, in of looking good forward and the feel we but about here So overall our go-to-market year. the executing QX rest to

of expect monetized. do real the But back be solutions. the AI timing? fiscal When do to kind can't of top quickly be will half of half just How the on you you an give that maybe for the And know year? the I on solutions the able stand-alone Ash, fiscal exact front you monetizable year, GA about is date. of platform think

Yes.

are terms of they features, like actual available In the now.

any not We've delivered announcement The the these about core about into them production, right? about platform, was less it's themselves announcement putting right? building GA, So So ESRE key like us it's customers functionality. delivering there. applications the and it's more

they and they about our they are applications point on the right, today, things shortly. And those from co-pilots, with will very of all same today. to to generative coming customers it's Now observability fundamentally, functionality, more into But security building sort and things where AI for are also that there put moving production. be where we for playing platform top things, trialing are built own of ESRE around are the they're getting building where

opinion, emerging when And seen a happens, platforms swings of – you've curves pendulum the as big that's way. we've that in my technology to like in natural seen going where some very but that's major the follow the it that in past swings

but this what in So the in ability I feel be both winner and timing, a our for good can't represents space. quite predict the this us long-term about to very

Thank you.

with The last from Owens Piper ahead. comes Rob question go Please Sandler.

on or cohort Ethan of to in the on be ask what for mix NRR XXX,XXX of consistent to growth revenue to that's wanted the here adds I in relative is rest relative was of This like helpful? plus kind I to question. quarter, Janesh, year of It that for whether my seems be revenue again taking for Any around wanted around for terms kind this you'd from base. year, to customer from color the Thanks Hi. Rob. would able customers ask provide you. the the net Thank recent the the years? base these but

the can benefits platform of tell the we've dollars a I consumption talk break the you to They is bit. of that They revenue that larger model. customers see about. little or size see We quarterly basis. what discretely out are a talked about from increasingly focused benefits the don't Happy of in the But Yes. on that the space to consolidation. terms on the

core nicely. continues So quite you land-and-expand work our when think motion, that to about

than these then a category. plus started off And of sales in course, team, in this grew the did the of less eventually deals as category that to meaningful the and Most then XXX,XXX customers into well we added also close XXX,XXX of quarter. number

progress business of It's So forward. a we side. that going in and we commercial indication will motion is that indication continue our of it's drive to part enterprise good that expect expansion. a And of the a good the the

to remarks. session. like This Ash for turn Kulkarni closing concludes back the would now our to I any question-and-answer call

and position forward growth to We mentioned, AI. to joining I unique evening. both we excited our as confident Like our we demonstrated and go. about our look for all progress you Thank updating generative great today. Have in in drive us on ability you are remain a profitability as we've

today's The you concluded. Thank for has attending presentation. conference now

may now You disconnect.