Elastic (ESTC) 31 Aug 232024 Q1 Earnings call transcript

Good day and welcome to the Elastic First Quarter Fiscal 2024 Earnings Results Conference Call. [Operator Instructions] Please note, today's event is being recorded.

I would now like to turn the conference over to Janice Oh with Investor Relations. Please go ahead.

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

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

we their take Following will questions. remarks, prepared

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

and statements, uncertainties forward-looking regarding could results as We on include any These differ unless actual of will disclaim may our include that and expectations materially. date discussion to law. by Our are our factors information. our only estimates, which to statements to these call forward-looking us, and the revise the products risks update and required based predictions, or known forward-looking statements other for obligation this cause demand speak currently future solutions to and of are subject revenue

Please slides with the issued Commission. in in more filings release described included press and earlier Securities Investor today included that the uncertainties refer fully in risks on website and we the our Relations those to Exchange the posted the and

slides. our measures. available link. Relations webcast We GAAP be with and under non-GAAP the the replay also measures in will The most of website call on can certain will The non-GAAP measures, the discuss release financial press comparable regarding this disclosures including reconciliations Company be Investor found

XXXX, Communacopia be in begins Our September October close XXXX. of will second the business participating at X, Tuesday, period Sachs XX, Technology quiet Goldman XXXX on On the Conference. quarter fiscal we

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

all Janice. today. us And thank for joining Thank you, you

our start XX% revenue Elastic we margin. expectations We I'm QX, stated In operating our performed to across grew exceeding performance, this year-over-year. strong with Cloud XX% quarter. pleased fiscal growing revenue both non-GAAP year, with and with our a had how year-over-year,

with customers $XXX,XXX. than quarter ended the more annual over contract We X,XXX with values

As search to deliver Elastic margin the Elastic that their has adopt data in to X.X%. mission, with at-scale. to data everyone matter, multiple of non-GAAP as cases. real-time analytics we use business continue continue find had platform singular addressing enabling answers a to of the real-time customers And discipline from operating choice all for always manage

The natural capabilities our customers ESRE versatility or as data as to of all Elasticsearch and excel and our Engine a our on of stack. have built-in at observability, our choice ability platform, use for real-time IT the AI analytics such multiple across platform Elastic core a Relevance element search, security made cases the their

remains continues saw Our our business. land long-term In well two and opportunity we our and expand distinct strategy trends robust. us serve within to QX,

information driving first massive interact of of processes of recognizing use Businesses is various AI search. in the and are intuitive opportunity around efficiencies resurgence The approach to amounts and generate is content around create AI-powered through with excitement and a business employee new drive new AI. customer the its experiences generative Generative and search. to enterprise

AI own applications can models generative generate work from businesses real-time and or doesn't This that that context in data, This violate to to data, their to embeddings models third-party do platform a businesses or is type the with that data. allow so or a way to to irrespective in proprietary accurate policies. their of language their ability build LLM. privacy security requires for the ML Elastic. of their opportunities their opening And use within new provide To large up environment need

takes data vectors context into Store this privacy ensure LLM needs factors real-time retrieval augmented and in search account. responses as vector to other context, these and user embeddings that and efficiently store providing enhance vector by privileges, permissions personalization, platform generation. such geolocation, at large then scale retrieval enforces these using very The with to document-level across

set platform needs possible. of enough Elasticsearch, vector, delivers so a to with that in flexible does ESRE techniques symantec, search in of real-time capabilities of same being results combination enable and the single a cases. platform. by using hybrid to of already to entire be ensure organizations relevant is thousands this also use most The textual It platform search worldwide used for tens search the

makes built-in performance, scale, an choice highly differentiated level features and permissions, generative Reciprocal advanced Rank proven Our search use AI security, document these ideal enterprise for Fusion, like with us hybrid cases. and a

as generative the ESRE and QX, In number applications, with search their building we hybrid our generative AI customers for using capabilities. search around of AI saw choosing platform activity significant vector

as example, customers. large an integrated a and technology their from has model hosted ticketing own to their contextual questions ESRE now company media locally U.S.-based deliver answers As their Fortune language system to with to global enable XXX

enable the power to their automation, tickets AI. projected to of possible team made by is generative of This XX% through this their solve about helpdesk

that and search, their search file-sharing to AI-powered Another tool. search using service all across to Elastic's new a bring textual is and leading search capabilities example vector them search experience customers applications. a of subsidiaries is hybrid power to combination universal enables The a superior significantly

alongside capabilities its generative improving continuously they its use and Elastic With and core, AI its users, tool it. machine-learning at learns as evolves

AI. Labelbox possibilities compared in capabilities, time search accelerate through the a Elastic to tools, unstructured is Elastic on of catalog, of search its undertake most to leading ultimately Labelbox With fraction machine-learning can Labelbox rich search streamline popular optimized solution, AI to teams data the enabling uses customers model them its experiences. searches previous which example helps to power and that platform Another the one and development of fast capitalize

also with company using at to to telecom analysis security. is language video One and things solution, Elastic their enabling their enable model them bad forensic video scale. actors better are leading to power large real-time equipment Elastic companies capabilities like search Similarly, own using vector Search identify cloud-based provide coupled

customers for and popular customers data. as based us their of many generative of contextual they on choosing Elasticsearch These build for naturally to provide are examples context relevance generative AI ESRE is most Elasticsearch private and the today. using are search just platform applications, and AI a the few

Today, we have for about use business. space. as with confidence conversations ESRE tailwind be continuing that start into will us we're for put And in more cases the customers We using our anticipate gives to of hundreds more this production, these customers our vector customers traction AI a real having generative paying of our and search.

by without total innovation from trend sacrificing In more distinct onto incumbent to ways customers as QX, multi-year the business large continued Elastic second they consolidate other to use continued bringing The sought for to commitments workloads cases. our multiple make by push platform the onto in is spend solutions lower their customers Elastic.

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

solution, unified through all results As previously compliance and QX, And AWS. meeting in competitor's They their of high deployed without on their a a licenses. Elastic business a their from Elastic The and and ease-of-use Cloud moved needing an we chose rapidly a and for multi-year data, closed secured effectively costs requirements. to in deal Elastic to search multiple speed for challenges. platform, enabling example, search Elastic analyze customer platform security and relevance observability. use all them university data solve single optimizing Texas to while for for with University but of A&M The

standard for largest deal Elastic its communications They deployment of with observability multi-year a for closed in entertainment but the Elastic and next enterprise multinational a of onto observability started a become competitor's companies the also with to small solution, Elastic the one world. platform. We to consolidated

advanced This such company Elastic. data scalability and features Elastic leverages across machine-learning as and and approach searchable snapshots chose to them its AIOps help to data the for types taken ingesting into flexibility they're different

of world's to web a expanded hosting previously for multi-year competitor leading but Internet also business A with Elastic Cloud and a This renewed QX domain Elastic companies. and the customer, in solution, on quarter, contract used moved the one we Elastic and long-time AWS. signed company registrar

company across as while continues for its of Elastic resolution tools thousands to online scale. monitor business to and in The streamlining to and consolidated has APM effectively logs, observability costs services operational metrics, meantime reducing customers, multiple

have AI-power platform with advantages customers in well discussed our tell much us than analytics higher delivers to environment. value routinely are we innovative very enabling us As along this that competitive a these and compete previously, our data our platform offerings

products, QX, platform our we to our continued our capabilities and on key several onto on our Now, in delivered focus innovation solutions. and

beta of in guide for powered technical the which in significant AI-Assistant and security QX and observability. the One announcements most was release Elastic in AI-Assistant, for the preview by is analyst remediation investigations This of helps ESRE.

speed and enhance for keyword, We're capabilities hybrid new delivered of Reciprocal industry-leading Elasticsearch and or results. the RRF in the We to techniques Fusion continue improving implementation ESRE with continuously also the and better of to combine vector, capabilities Rank semantic platform. performance search

faster for dense area, search instruction work throughput. in and search. and indexing in did XX% QX in search of aggregations SIMD sets, using for we and outcomes greater more faster this And vector resulted yields for search for which relevant support hardware-accelerated queries cross-cluster that even native included implementations This vector

data In general integrated metrics Lambda, movement Elastic for Security, advanced by availability as the Series or the Kinesis, area of such Data capability observability popular and Time AWS potential with Nginx, Streams Elastic Kubernetes, we enabling observability, our TSDS Elastic for of analytics XX%. lateral with needed extended storage of reduce the we the to area to entity support up detection. In integrations,

I'm on our to partnerships continue hyperscalers the we AWS, that pleased earned cloud accolades we front, go-to-market and highlight Microsoft, top of Cloud. the from focus with On Google recently hyperscalers, and to three the each major

And Microsoft week, to Year AWS Partner Rising Specifically, we Google Marketplace Cloud, the the Technology we Global year. the Year of and were were the ISV U.S. this award. named the Partner just of honored the Star receive of Partner Commercial

Elastic, our for with market. observability, growth of across from multi-year These together security. platform through deep platform our in have we cloud use and product as a are these three the these are as commitments cases multiple making them relationships cloud strength integrations, businesses our in marketplaces achieving cloud awards driving with we leverage significant AI-powered built to for real-time Customers analytics the hyperscalers of they search, data The the partners. and reflection are an success all the

operating expectations deliver remain would the significantly our with to demonstration full margin was quarter, to managing which for our on a fiscal commitment that X.X% was non-GAAP to like continued again operating non-GAAP Finally, I on-track business the of target year. margin for than of highlight QX we and our We better discipline. delivered a the

our dedication continued focus I execution. for also want for thank to team and closing, and thank investors continued In I support want our their confidence. and to customers, partners, in their

stabilizing, opportunity in opening up is front the new customer our of based remain Our confidence strength and It innovation Generative of us opportunities relentless in AI the continued conviction is on Elastic. long-term strong. in is that expect coming quarters goal we optimization we our for years. us on growth on expect making as the in driving And stated capitalize of with to to continue profitability. and cloud progress

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

Thanks, Ash.

the the quarter with quarter, results our excellent the in year. pleased high we the growth. very yet new and first that both the QX, are line. We we year-over-year for delivered of Elastic topline total start with We for strong marking again XX% growth to once year-over-year driving came XX% in our again guidance Cloud in our fiscal end an bottom above delivered revenue our In with results

operating the model. of inherent operating Importantly, our our and both margin non-GAAP investment X.X%, business in we delivered demonstrating discipline strong leverage

levels deeply engagement with As being to cases use first Ash increased led mentioned, quarter, generative customer highest which we the in AI topic. the on at dialogue the engaged C-suite around the saw

benefits enable real-time our search to revenue drive use analytics we vector capabilities well coming to advanced native for years. in platform exceptionally the they AI capabilities its believe leveraging cases. be ultimately us will long-term, the as a meaningful generative of build And Our AI address us solutions, leader generative including in data customers positions multiple this database which

quarter, strong larger continued saw among they the on our the also during platform. our value of as cases customers We consolidated particularly benefited contractual use from Elastic and commitments

commitments their customers made. In had addition, against we that the previously began increase to patterns as consumption improvement consumption see they in signs of

a trends, we which are the We the this out, saw might against the but early broader pleased take ramp optimization couple still quarter. during play of will of with quarters signs to we backdrop consumption monitor

continue we've strong with we drive momentum. for for we the our As year, value compelling platform, engagement overall will of expect our proposition over look the combined that out the of generative seen the rest AI business customers to

in the constant XX% in totaled revenue. deeper $XXX QX up get revenue basis. year-over-year first the XX% Let's first our revenue an results of year-over-year XX% quarter for million, as currency, and XX% and or year-over-year, into on reported Total constant million, total was quarter currency and in $XXX outlook. up the Subscription comprised

total and month-to-month revenue cloud XX% Elastic Cloud year-over-year on the based total constant represented reported of contributed Cloud Within currency subscriptions, Elastic quarter, arrangements revenue from in XX% revenue XX% in growing a ago. quarter. XX% up of as basis. from million, Elastic compared $XXX the to year was XX% revenue prior on

first in the XX% year-over-year on reported currency services revenue basis. was quarter and million, Professional $XX an constant as growing

Although the over of expect services do and EMEA to fluctuate timing professional during we time. in APJ. quarters vary grew may not followed based mix by To more fastest services it deal add context overall around Americas, flow. the on across the quarter, significantly delivery,

verticals and geography, We healthy based popularity continue business a reflects our see solutions, this on and of balance platform. to the breadth the across and diversification

than over with more $XXX,XXX. X,XXX on We contract Moving is customer to with the quarter value customers annual metrics. ended

additions the and total in X,XXX XX,XXX subscription with Looking customers. more ended quarter customers above we approximately $XX,XXX over customer at broadly, ACV

expansion you expectations net lagging and with indicator as which approximately rate, our with is a consistent the for in-line know XXX% quarter Our prior was comments. our

cases. Overall, across continue platform on and analytics globe and industries choice Elastic, us. the their and Elastic Elastic search multiple excited remain are use to ahead Customers the Cloud growing customers particularly adopt about for adopting opportunity of we AI-powered data addressing of real-time across as

our margin quarter efficiencies quarter. profitability discounting during versus to I'm measures. the infrastructure. in managed running the drove I'll non-GAAP in the Gross how team pleased prior for with quarter XX.X% in operational turning also was Now very XX.X% the discuss field and which the in

per margin the operating first performance our managing revenue quarter focus than and earnings was was margin strong the X.X%, was which operating was quarter outperformance continued driven expected. better by share in Our our The $X.XX. our expenses. in on Diluted

partly flow focus in in XX% margin. flow in that expected and cash an quarter, collections the the flow Free cash quarter approximately the strength of to adjusted but flow adjusted continue or free business. to the highest quarter. occurred to related $XX benefits during The free was was to of in we our previously $XX cash date, cash adjusted timing represents on operational million, primarily due as margin adjusted cash the had first basis This timing million free second payments drive we

impact from adjusted at Looking the flow, flow cash this QX to outlook adjusted in second free free the cash QX cash flow for shifting quarter, timing QX. will of

relate acquisitions in the million to completed due that $XX quarter. will of anticipate we Additionally, be one-time payments second that previously

we usually given cash and we two range cash breakeven, of these $XX the be a current quarterly Although approximately don't specific to QX, in provide the on in flow share outlook reflecting takes flow, puts free adjusted million that some negative to of in I'll items. expect quarter the

around flow As outflows, on impacts. given a quarterly will and as well as inflows cash we've basis issues timing seasonality before, fluctuate said

flow So full-year primarily we look continue to cash at on basis. a

an no for is fiscal margin 'XX. be outlook margin free on 'XX fiscal slightly the basis above operating expect adjusted change prior to there flow in continue cash year, fiscal we non-GAAP to the and full For our for

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

unchanged. Turning continue pleased climate we that to our we conditions year. in be stable, we macroeconomic for with while has the continue will very rest remain outperformance as QX, guidance, to to macroeconomic so we of plan prudent The been assume the were

onto are is we continue Elastic, that appropriate the although fluctuate consumption we're Additionally, anticipate may their we seeing consumption term. in new to customers it near patterns for the workloads ramp to consolidating believe

Since our is outlook. of in time, at us raising before $X year, the trends increase in an fiscal low our by we going early revenue quarter are $X fiscal resulting monitor full the the million total it are for the to still for at another million further of we guidance Accordingly, midpoint. this year for end these evolving

In to continue the terms business. discipline operating of invest in we expenses, with

At will the generative several space. invest continued see in past leadership the marketing not in AI to Over we in drive opportunity development change. and efficiency that we've focus and this business solidify we quarters, our as the same an around time, to

monitor profitability investing for we'll against quarter. balance continue growth progress We each and to carefully our

points guidance We XX are this time. our basis margin mid-point the non-GAAP at raising operating at by

we For both each operating than margin faster revenue our year. to expect fiscal overall 'XX non-GAAP and expenses, fiscal grow 'XX, expanding

quarter fiscal of for a background, representing range the at that in we revenue currency With the XX% $XXX total the to of 'XX, or second midpoint $XXX million, year-over-year basis. growth constant expect on million XX%

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

'XX, revenue to range the at of representing billion, in total currency full basis. constant or For midpoint the XX% $X.XXX growth we a $X.XX year-over-year fiscal on expect billion XX%

shares for operating margin in full range $XXX $X.XX the fiscal of non-GAAP and start $X.XX, to we million about average non-GAAP the XX% and year, expect 'XX $XXX to between this earnings strong We in and ordinary a share to diluted fiscal and In XX.X%, are year the million using well of summary, executing outstanding. range of had are per beyond. excited rest the weighted we we

take let's ahead that, questions. with And Operator? and go

question comes with go first Instructions] Pinjalim Please ahead. And [Operator from JPMorgan. Bora our today

on this Pinjalim. questions. our guys, is Thanks for for taking Hi [Noah]

both the follow-up. I against and Thanks.? this up if maybe curious observability the practices quick and on that's performance expand Just had point could at you competition and the just of how stacking a security

that. is Thanks for that Yes, can take Ash question. this here, I

security on our observability very in of market strong. and continues stay in differentiate So ability both to terms and the to that compete

consolidation seeing consolidations we're tend in around lot the even - our the like be quarter business I that security. this and to one in Just those a observability continued is platform, about, onto talked of of trends

we the the differentiated data not all The functionality were them that. driving and as that of that see this that's we've but like just prepared of beta my are well for that early an aren't newer towards examples preview capabilities very in other insights we've strengths. in a their AI security, way play AI-Assistant remarks can especially and now able things really they customers get it's the analyze manner, a area, I platforms do give our for built, take functionality what's that excitement in to to - advantage our some and them in been in help delivering continuing lot generative gave around of the those observability, The

So win about both very the strong be segments to and rate excited us. continues very for I'm these

just far And Thanks. it a a quick consumption positive seeing could be incrementally question, sounded update so there as Thanks. are the of that of year, and - sort thinking the fluctuation the trends the bit then about remainder around totally understand second that guidance the the little for understanding more for of some you still the you rest but year? how you're

Yes, I can take that.

it's the look, for for we way about think us. early So, as year, guidance the the relatively I mentioned,

just We The as But the to the across nicely this do QX. little momentum that happy bottom prudent. topline, the us said be line. is in are we out quarter to I think the year, the still in bit a saw thing best for early with across continue because at very we played to stage it's earlier,

the continue build protection we know. guide don't things in we on We also know based to for we some continue and what that to

here the in positive that signs term. ramping some saw it's we near customers fluctuate QX, consumption although may of in And conceivable

outlook, So think guidance. to I as our to best year. And we for out year, the consider half. for year. look in of early beyond any the here done QX, measured full year the to second our the to the it's that's anticipate we've want that and QX we in We what possibility it's just in And since simply half in full approach back the don't worsening be

because likely by likelihood we as here So no lower-end no had will in guidance - the that were longer see we range. on at the that longer given the $X end of results which strong, quite that we QX, you raised we low million end the saw, the

the end we'll you the of why So update forward rest we the looking next raised bottom call. We're and of to the year QX range. the on again and that's

today Thank you. Citi. Please And comes our question go ahead. next Tyler from Radke at

having know much on can hear kind terms the Could question. hundreds enterprise of in the for of monetization the Yes, you. and using the of expect about next thank capabilities. customers But several how kind terms you is year to you you new you of there's year in ingestion be turn Great to of taking a ways product. about just Thank that? the of revenue? driving being of significant this to see very monetize or ESRE talk event? of this some the impacts that the Would I more on could

Thanks all Tyler. I'll for can the that. I question, - address

So, this is Ash here.

consumption that Vector the they're our machine-learning They're model, vector textual you like turning effectively doing about search They're that their it into Fusion think combining taking functionality, hybrid functionality. about search tasks search they're customers you data vector using as them data as and the semantic is, in way search, should So, Rank multiple and ESRE search then our use think there. Embeddings, using with Reciprocal then for storing and things

this be of tends machine-learning all compute-intensive. the especially be stuff tends to - quite So to

is one that So aspect.

our the is Platinum have or one for the The machine either to premium of you be on so aspect tier. tiers, second learning, Enterprise

be So to tend consumption both in grows. the ways those of which

say right? is second journey, first The in and beyond think about it are customers foremost, you is, where I'd as exciting, this what is

having, domains a becoming having their that for It's search is we've just ways different it's many kinds really across kinds So and to it's in processes, customers, that to experiences efficiency of ways conversations to to way you for of reduces that cost, with looking clear able and that business and the do different a AI employees in a the this conversations such improves very customers of your it is resurgence driving the are in everybody the company. I'm your C-Level discussion, deliver possibility that to this so absolutely been of the generative accelerating. in your do

their starting that control might cases that are the make bit is relatively things, applications, all these over to language they Now employees little the with models capabilities gives are which internal them of functionality, in get in facing where accessing, large generation sure really new. of applications with a be them they comfortable most allows

So we that's where are.

into these data that As all production, systems, the of drive and from in as to of go grows the that volumes also it. more comes and more is consumption going workloads revenue the

So we look in terms are way of are it, it, the we way at at looking early the in very the I journey.

Janesh, The traction hundreds see become be of in customers this this? want in that at and you we real strong in don't tremendous confidence if gives tremendous ability the how continue terms the have leader know us to quarters a today confidence of just me anything our I to coming gives and you're to tailwind seeing, a we're for me add that to and years. looking

just salespeople, is out excitement mentioned. AI customers, from I'll you of reiterate When No, the tremendous. level gen our the I excitement same around folks - level just there, opportunity of hear that around the

I it's a for think So great potential revenue opportunity us. long-term

consistent that August? in of the you just you. continued but when in comment Thank August? we're Great. just the quarter environment, on played some of stabilizing saw trends the on a And improving linearity bottom, and sense or have stabilization Janesh, of obviously, encouraging Could you and timing saw of of the give you on it out not been calling how any signs like if sounded kind there a macro and the just us kind those improvement. Just

different. affected you and Tyler linearity specific within quarter always know, of no as deals the timing the by was be this time can Yes.

the With to the up we again, consumption be saw I well think did bit during a that the a little given on some business any we monthly quarter. before looking was trends consistency end consumption we the we quarter. go the patterns the can customers basis, close really to noisy. respect table did see saw, it on down, of In but month, and that at

the nicely had starting to. terms But customers to we in committed against out overall, the the terms played consume August. as they contracts of of that described And themes previously in

customer has haven't general early to even a seen interest to stayed of yet, similar lot in share I tone with think gen we've AI. it's the that just we will August I too tell, that but closed of conversations QX

Great. Thank you.

next Ikeda Thank you. Koji with ahead. of Please our from comes Bank question go And today America.

growth there, than thanks at for question quarters. cloud wanted revenue revenue in number Elastic about here monthly net then looks of number but a And ACV, the XX%. grew questions. the the taking Really low-single guys, lower Hi that customer when strong looking into the I that a digits. ask was bit ads $XXX,XXX digging the Cloud to prior like new

of well color kind Cloud, mean tread, there for of are So or just from it thinking a both, $XXX,XXX some above $XXX,XXX, coming customers Elastic more strength growth looking customers through or is that's that here? combination driving the just does that that is the below that cloud maybe it's

a about as terms of well in cloud talked that as Koji, there's the there of monthly sizes. elements couple in Yes, you customer

of try me unpack both you. and let those So for

self-service not worse, nor business compared In different, to motion we and be monthly better as know of quarters. past the our of the terms SMB. continued stable majority couple meaningfully was neither It that is you cloud, cloud monthly of that is to predominantly the was That as so expected. and

So we anticipated those results.

What then drives that cloud started actually all increase annual the and the of performed then motion that seeing from the in reflected that you're consumption revenue and in is workloads consolidation really in subscription the about cloud our mix annual talked well. see We revenue there to that's the really of mix has we

to strategy that nicely. on a higher our have focus So is customers propensity quite for working growth

nicely seeing larger expand, quite make that's that customers and are for actually been are working I We commitments we those seeing us. think

pool at strong although of were terms in the to numbers at greater customer $XXX,XXX, of results was of we step to saw us commitments. And earlier again, to continuing cloud than ACV terms that revenue bit strong make mentioned maybe accounts as and then larger that both that as overall expansion look for strong quarter, really the the in Ash, for more the the are commitments well when if see metrics back I total those overall and But Elastic, did I look lighter. just as We the for contractual accounts, little customers in a $XXX,XXX the reflects customer than additions growth.

with saw it there dollar bit, any a to might QX lot continuing number we it from net-adds of the So talked consolidation the so strong a in customers, and continue theme rest little strength the in quarter, and perspective, of about these the underlying the from and consistent us move very of confidence outlook but gives remain for around our too, a we that commitments that's year. drivers in of

we've had time. expect will and that good historically, trend in growth we think I our that over consistent customer So, metrics continue

Thanks it. looking we here it one be thinking revenue net at early Is should potential retention too a net visibility Janesh. much, going we how revenue of into to XXX%. call about bottom And the - Got just bottom retention of or forward? do follow-up how so

it net had the the Yes, it expansion moved rate as we expected first quarter, in would.

earnings net think had we this had we and the that mentioned decline that earlier in And it consumption. had expect would rate two to themes the the recall down. that expansion on commitments on the we call well, and as covered I prior reflects You'll said go we

towards cloud the for count while rate, don't generally contracts does. expansion So commitments net consumption

naturally the committees that over committed ramps the time are So the consumption rate but And as is. the help number, time. the slower then against strong will net over the consumption expansion contracts not in

see very about gross a change remain rates different quarter. angle, our retention strong from versus and If that prior didn't the we any I think

net So rate expansion has the been from expansion. slower slower

the you the ramps, the number. rate finally, measure. that indicator, net will as a trailing And know, expansion committed help a consumption as XX-month mentioned is contracts it's I that naturally lagging as So expansion against

take to So in rate. time some will it expansion as fully the consumption ramps, reflected that for net be

We will continue as previously so to had playing it's monitor go, we we predicted. out as but that far

you the Super much helpful. so Thank taking questions. for

today Please And ahead. you. Jacob our Roberge from with question William Thank go comes Blair. next

great my results. taking questions for the and thanks Hi, congrats on

new of upgrading hundreds platform is actually more to customers? characterize in Just starting well? customers would as activity and existing drive profile you going vector you - rates or seeing those that how back ESRE those some to SKUs to kind expansion of using paying lifting that from Elastic logo kind customers Are search, of of

motion. mix that Yes, motion has a a always seeing mind of expand right? so So and land in both, keep our we're been

them sort motion from will to using typically there. customers subscription cloud expand with as contract to we're we grow, them and seeing. consistent, come start as annual use Cloud even motion, cases and to Elastic Elastic monthly seeing of grow, use new That So, engage to us the the they onto and the propensity new they in for then remains continue an that monthly move to use cases they

we all tend to annual when think We using in win generative and about use are I'm of the in seeing mind customers we is remarks. value The us us the reasons customers do were gave from you area that I four for use rates why I AI, hearing prepared my really mentioned. with that well. that that there And keep why to AI that the bring tend generative examples cases what we key very in customers are like contract

customers implementation. really database simply success, our is we to so and incredibly and really, have is, vector performs very well, that scales it. It key something good it are well appreciating First that's

personalization, in implementation, stop Fusion retrieval is, capabilities for a don't using et vector in allows cetera, search. invested as The for all sure Rank second making we've that vector invested generation, hybrid like incorporate in have we using invested a in functionality functionality needed a but you lot Reciprocal search the that thing We've we to geolocation, at functionality, just context augmented context.

big third cases enterprise-class implemented an that for these they we about permissions, actually is fact it's is area something critical the them it. the others is built-in putting like that for hearing where we've that security or document-level - use haven't many implemented into keep afterthought that's capabilities reason are And like The production. an

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touch upon Yes, first so let me question the maybe first.

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production lots So there of are use cases already.

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full quick. Yes, and some earlier reflected of development. the increasing investments provided. that operating guidance on And that AI in marketing in the oriented our real that's margin we just for to mentioned are I I touch gen investments the all particularly and in towards year the prepared remarks

and that you'll you the for the in guidance implied same of that in current the year providing, the that total it's about the see total in implied if at that to Within that year model look the guidance at start spending the this was you compare full spending our aggregate. in the we're

being parts and room So some what like to areas you we're really in the gen AI and efficient in doing see saving of that's the is in create to what invest business growth reflected guide.

for Great. the and results. again taking Thanks congrats great on my questions

Thank you.

Markets. Hedberg And our you. ahead. Please Thank Capital next Matt RBC from comes go with today question

I'll Matt is Swanson as This you. Hedberg my thank Yes, echo congratulations well. Matt and for on

things And gen wondering search now they was these these the come you of future? terms to C-level up kind who in having the it much the to and how the Basically, conversations, then interrelated this when I gen talk want we things you're things future-proof they're maybe two how trying during focused on vector in prepared maybe could those was consolidation. consolidate just when kind like Ash, decisions? are to or AI to and of know AI if You of two remarks,

at way gen the question. with. brand in us just many recognition, very not AI audience a we've differentiated helping the with it had capabilities, And That's to a great way we and I generally really with past too effectively provide is C-level significant that able is the look are in conversations a

in believe tailwind that do and the really why and us of for is it we with I as value including to search whether to years becoming that story that's to a or things discussion that as that there wonderful real-time infrastructure, key the allows it'd observability security work the able very security. we tremendous how this AI because are when to us and the gen is cases, thing that that, do And well, everything many something their observability organization then coming will continue of because can for by are platform and it IT element platform we meaningful quarters be to affect be the a add up builds their in going comes use so that

and value streams helpful. data of series was core That's when like products that's and proposition to just go-to-market? could the thing you being other you in the broader new ROI talked in this conversations cost important storage, maybe talk the One how a time about development either value about time kind advancements, thinking savings for macro about or product if or influencing and customer the

Yes, incredibly important. absolutely, is

that in want are it innovation. care they about the stabilization prior without the optimizations even making that they But place really customers that quarters. as are that's spending that today but to had is leaning sort we they reality Janesh And thoughtful So in seen wisely, sure seen we spend, with. do they are we sacrificing consumption about mentioned how the in of have being

be that over to value our tremendously tends we heard the offer again. and price - We for Our that capabilities. We over differentiated offer strong. incredibly

of you to We costs like more things your in at the like allow fantastic. scale, types, you we with to data different performance it snapshots. real-time do searchable data your is streams, series analyze bring all time in things with the And optimize help

these is that their that else, all cost, be it'd itself they're matter, a things that allows overall or just something cloud improvements do with value because to from the able platform hardware platform, that proposition. for And to and whether that your important on you like be the reduce helps making them what in providers. single spend to them Even great search reduce of vector infrastructure to incredibly leasing we keep a is or

and we this that time driving the That's of a opportunity and market incumbent to in we've Elastic a do an lot a doing talked get more the we're side to this about share. because seeing, how large for the our absolutely been customer are go-to-market side of see results from they commitments that. the now were to in can share into with leaning just displacement take couple time, product that because over I've some what's of we as really that quarters in this, and this we both able and a that see increases

you. Thank

Thank comes you. question Barclays. Lenschow today And with our from ahead. Please Raimo next go

speak these using And newer there, consumption it? the what resource I to is one clearly for to customer then missed - vector terms earlier, it do but does have - compute with get because ad can there have before, terms bigger thank And is guys guys to think to in more and and a of customers than seeing like and of technologies? one that customer if it it search that about seems And what them mean Hi, I like consumption you momentum semantic are you what So resources, working please? you search you. that I could with lot might be you trends Janesh. obviously speak signs - from involved you contract search, follow-up like you vector in for are a

Yes, I sure, can that first Raimo, one. upon Ash this touch here. is

based that So through significantly vector that that right doing is what requires search exactly terms to and search the than on opposed take just dealing compute it to that storing data you model have of with when you that meaning about and text or as even semantic search, in ML an is search you're work you're and run to and the do semantic higher really model effectively ML data that doing is just all

the to your searching to that for take textual use might everything you've search vector textual tends information embeddings, and And whatever information you be information. be then model, search. semantic more to create an that all using through built than then that ML to much that just as it traditional effectively, have you're against run But compute-intensive data, opposed that

you fact as that it's consumption, paid tier. just the And also is higher in not it's ML about know, for a us, but

So and you which second is that we the in or Enterprise, either monetize. Platinum way need

for picture the for those So both come that's us search where into and really semantic either the of vector we're progress. seeing or search

that of vector using hundreds our us customers us. search really that's for I like capabilities mentioned, exciting now So we have and are very for

of lot through we need this the like real cetera, as these people cetera? example how much need of guys, through as profitability very And do macro a That well. about about how then because about kind for sales exciting. side, me year? into - think et like Because little on you bit, as about investments the if think about you marketing, if and than should the to think evolution stabilization investments of from investments, the coming Thank be on and earlier the go of maybe revenue side Okay. Janesh, think think kind going live, Thank we like you. about sounds go do et progression you I congrats we talked how you you

Yes. Thanks, Raimo.

margin I quarter. So back as QX, pleased operating with look, the result the look are very in at we

we've was we just that I here think to the we in and before, results. the our that's work employees hard inherent that visible leverage the and focus and manage business ensure model with all operating shared of in reflects as of the have natural discipline QX that

this we for was business, of a year terms area as and you'll focus of with But a sufficient slower couple near-term that for that investments grow for as goal entered in on 'XX. us the right We'll a to amount will to capacity in year invest in our we fiscal quarters be basis, of ago expenses then this continue business help than revenue and full recall. selling year fiscal us achieve the

in appropriately and opportunity also we AI I We're commercial continue mentioned. selectively the invest here as investing gen capacity. And to selling enterprise against

and don't the what is continuing we're rest committed growth, investments So we're and best-positioned into that to and on make it year appropriate topline doing. balance profitability about business want the We to growth are we compromise obviously feel and in but that's to areas throughout are that growth to 'XX. ensuring drive fiscal this of

Thank a Makes of sense. Perfect. Okay. you. lot

you. Thank

comes from next Thank go Please question you. ahead. Fargo. Wells our And Andrew Nowinski with

you've the to Thanks is geo? This tend customers ask, Andy. about is commonality to in for in of Schwartz consolidate in either vertical who taking with there the wanted vendor that consolidation of I for question. terms or among any talked seeing, my size Stephen terms

see seen solutions of when much just in driver high with specific they is verticals do, incumbent and that more handle. built much we of terms to do. to can geo's. capabilities trend multiple kinds we've able becomes of be rates across more trend functionality that multiple no differentiated, are generative I machine-learning can that There not geo. mean, across paying The a these kinds in tends only for playing performance. then which of analytics data, Elastic is The kinds customers extremely we what What typical any we've like the capable in it The the no-brainer. AI is now is

and cost controls customers to also spend And are and that's for that areas get and where their That would really of of sure continuing constraints, their from the incumbent vendor is mindful usually the do price inflection that they're driving meaningful current point what they with needed they it's inflection in to to effort but it And us. is. setup move see and it be they a want to where make the innovation, get the conversion that value justifies the is thoughtful perfect they point us. the the would enough environment

congrats. and much very you Thank it. Got

Thank you.

Brent our Jefferies. Thank And Please from Thill comes ahead. with you. next today question go

taking the Yin guys, question. Thanks Hi this Brent. for Bo on is for

to the their and TCO or Elastic these thinking about workloads you consumption, workloads but about optimizing I offset also So, Is on bring near-term on about to ask should between drive these to optimizations by customer dynamics? workloads increasing focusing talk more that optimization dynamic behavior. how customers be wanted Can on saving? we being

this is You here. Ash it's know -

people point. what want few sort to seeing do. tease that exact are these it on where and we it they're as cases aggregate in, done that when apart So things difficult continues of that the I'd to it's to a one point quarters were in optimization know, in the they a kinds generally important. gotten all the the play to consumption be where what is incredibly dynamics grow, generally the to - how things at we've need to we're talked are but ago moving, it's customers started customers doing, any be of use really majority customer It generally tend you they that say is, they Data that about believe the to have of this comes

So away walk from it's not them. they like just can

our last so of At see stabilization And with current about kind are drive bringing in our workloads do platform to customers really multiple really quarters, the that's And all we've optimization newer leaning been consolidation that that we up. several the platform, in onto same you reflecting consumption and customers can things. in people environment the have consolidating on workloads resulting we the this been time, to now new that's those have - talked that also ramp showcase starting things doing. as in

nicely sets up look as quite that us and in playing are ahead. we factors those both So

you. Thank

Thank you. ahead. with question from And Owens our next today Rob go Please Piper comes Sandler.

functionality? you. ESRE the evolve? selling This Ethan Thank you ask gen thanks these important I to channel taking organizations the Hi, wanted - selling you comes Especially when my for to Rob. really is, is on large and AI how think for fees question. into and it about just if going get we when these around

some so we that can broker tend these with where areas but conversations like in be this, the are channel is often and have for us keep to tends to mind channel newer areas important, the these that the Yes, direct customers tend of is a reality we partner the and But the so cloud it's of tend we hyperscalers. relationships wonderfully become conversations. we - us, relationships the have the Where have the helping those are to to experts, relationships these with important conversations. really lot be help

this the in you won As about accolades that call. we that some from of earnings saw we talked

the believe us - that have And Google, with really have to that when it they customers of and means with to have are relationships those looking things to talking phase, strength. are they're strong we lot partners jointly and do grow there our the critical leading are Microsoft, with where conversations, just these that and And at AWS, edge. are allows on and we are to these relationship with a of customers kinds go that's continuing where them, this stronger. are We

I'm So about excited that.

Thank you.

next And at go comes question ahead. Kingsley our Please from Canaccord. you. Thank Crane

this wins. And I is often often And Hi, that through wanted up leading process? thanks for motion? then, would you question. how is taking to a my talk in logging picking consolidation potentially see APM case for you? customer consolidation then Are these during the adopt how

more we've save market. we The definitely that been been They quarters, a strong consolidation like doing getting about as in see while have them have my And to the that technology even that, in where the at and envelopes. people out proposition fact more couple with do looking has about. to of last to of it, trend they - same innovative the are become that in we've thoughtful opinion, spend do value CIOs as can and lot time and allows have bringing has talked companies of their a kinds the

in it's working favor. our very So nicely

be talked Analytics, about to lead be Security right? there, in be tends we've Log to Now we what like And past, to with, tends progress Search. from and Analytics, the we then tend typically to tends

then traces over bringing have eventually those moved And are with, for things and picture other - could logs on and better logs, we observability see get and that many pattern us and with that's so we by begin metrics that user started us now realized from into APM deal Thousands that just bringing of they are using landscape of logs APM. lots and customers much on. using of over customers us. overall but bring that of And then that's will and all metrics they again. lots to their So not Elastic and the a they also with customers

observability elements with pattern Analytics one we and elements onto other and will Security security to where start Log of go consolidation the then and invariably, So but so tends Analytics other and be might on. Search, of

that It for Great. and how be fare one in Ash. does but makes Janesh, walk sense consumption QX the prudent may. then you you, And to Thank far could month-by-month-in follow through how us guidance, August? up has on then if brief so trended I

from a I Hi, Kingsley, going is bit think it data. as be month. in bit mentioned There I've month always vary the to of monthly can little to a earlier, little noise

for I of the share the what the described as over specifically I and was QX. so think mentioned, so for themes just played we it yet, August, with conversations about was as that, hard out done but. customer consistency tone quarter. aren't of where And, that was will we general overall, to similar through saw in course the me talk And August the course I generally to QX we then of

Okay. Thank you.

Kothari with you. Baird. today's go Thank And last comes ahead. Please question Shrenik from

Hi, thanks question. quarter. for taking my Great Congrats.

you quite our prominent capabilities. share leveraging So the the subscription of motion annual the touched since the service, organizations, upon and performing highlighted cloud Fortune leading well, Ash, XXX and some

point also partnerships working the was earlier bit think strategy then, to hyperscaler net sea-level adds So it your that and I engagement well. appears But to lighter. that your a on the Janesh mentioned [XXX,XXX] the quite

you a if kind are guys quick quarters I can is just have few perhaps the enterprise-focused back and moving down you of currently and how this or much then like reconcile help that help strategically kind driven of motion guys highlighted businesses So that being by you follow-up? top unpack of towards

we quarters continued now. just It interest to of touch and Elastic strong in for to few quick to trend. commitments that We've see real in a that seen I'll continued time. here on the saw QX. We've contractual Yes,

partnerships that's in expand the to nicely. in quite mind enterprise selling small think to including I'd on investments so then overall, with to land touched motion, forth the customers - we the Keep I everything we and very and and be working that tend our actually initial that time. So you our that in bring tend over motion lands say, expand and

number strong bit of commitments. in see And so the and the mentioned, although reflects that lower, XXX,XXX you customers additions those within it we larger over a that accounts did of was expansion a very pool

good expect all very customer this how do growth over in been driver good felt And the our out. - I about It's we will a have played continue time. time. trend for we So us good that I in expect over consistent that metrics do will past and

verticals, very about motion there in lot, was just to and And down accordingly? was you just of a Thanks and mean, with of cases, but you use And as well? targeting of it. kind kind fashion, in strategical target enterprise kind correlation just direct Got top or terms I said, consolidation seeing just AI. larger consolidation focus around commitments I like, trying of Janesh. I industries including not quickly, gen guys are of of as are question kind a going know also like this earlier kind correlation I multiple wondering with

Yes. in I prior so to fact on a grow strategically well, we've we've about includes that us. segment. been mean, includes on as been focusing that and in that strong the in have customers And Enterprise calls segment, customers like greater the - customers propensity that very about, our talked has the Commercial with we've talked right focus enterprise selling

on have incredibly because whether security to deliver and search our observability for it we platform an real-time its strength customers that of deliver for value to use ability cases, been price of differentiated be And on the the our is at one well. search multiple incredible of our highly ability focused really levers or

so as of been into motion, we've And a irrespective vertical leaning that and geography.

organization So in we've more that benefits commitments. been driving in with our coming platform and onto reflecting paying now our share the some seeing larger paying sales revenue. in it's we're It's that's and off It's off and off. that of it's taking motion in paying workloads

closing question-and-answer and Kulkarni concludes the turn this I'd for to Ash ladies session. to And our like you. conference remarks. gentlemen, Thank over back any

AI-powered in about to really as All our excited call multiple market right. Thank year you a cases. real-time all opportunity and fiscal the very position the use much leading for strong platform start analytics the today. had I'm joining our search our We for and data

we forward the we this about in AI on you. am and there Conference all few of seeing doing our I in We will Francisco space. are customers evening. Have the hosting weeks, our in a talk things be San looking as to Elastic great Thank exciting rest a

concludes This call. for presentation. conference you. thank all Thank you today's We attending today's

lines and may disconnect a day. You your wonderful have now