Elastic (ESTC) 30 Nov 232024 Q2 Earnings call transcript

Good afternoon, and welcome to the Elastic Second Quarter Fiscal 2024 Earnings Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Anthony Luscri, Vice President, Investor Relations. Please go ahead.

Thank you. you Elastic's us Financial Second 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

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

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

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

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

Global participating begins December Barclays Technology XXXX, on January On Wednesday, quiet the Our X, third business quarter be will XX, fiscal at Conference. the of period close XXXX we XXXX. in

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

a how us consumption as continued pleased back you challenging and welcome external revenue thank exceeded In the still cloud We well year-over-year AI. growing Cloud success and all in revenue Elastic, with fueled across year-over-year, by for in margin. today. joining both operating our Thank our performed non-GAAP quarter improvement is grew generative XX% second you, environment. what Anthony, and expectations QX, XX% I'm and in we Elastic with as to

our all exceeded mission XX%. scale. is we real from everyone is answers matter data non-GAAP margin at of And of Search the operating searching at to in goal, find whether to are that Search is of everything time Elastic's core we your solutions profitability the or enable in our AI. for searching organization. the critical you a all security and do, also website threats for infrastructure a part delivering

of supported proud users. that We is tens by search customers of leading by large Elastic are community a and platform thousands the of used analytics

Our thoughtful QX. investment our and innovation continued and in was in this in and to drive with Elastic, excitement visible AI has customer engagement business

trends During the we momentum in our see drive continued quarter, to business. recurring

geographies customers all The to and generative these dozens I recurring AI. strong being was Relevance first AI of to of desire met across a with or use build ESRE, applications. Elasticsearch a theme generative Engine,

provides search the models ESRE these is and cases. Generative use language private resurgence customers for most search, interest as platform search comprehensive ground vector in AI a use large context business their search hybrid and with of driving to semantic enterprise-ready and

While of long-term revenue, our it for generative will take AI are very become excited spend about some a significant we opportunity. to time driver the

and X.X life more X users multiyear leader a contract example, over marketplace than solutions. billion smarter, more customers easier As and eSignature management DocuSign, DocuSign use to cycle make an million we signed doing XXX world secure. in countries than with the in business and solutions deal More

its an and is DocuSign's will capabilities. DocuSign essential capabilities enable semantic search with advanced of Search and our extend component product vector to

is platform Rank Elastic a AI, leading Reciprocal millions videos, hybrid offering Fusion, Google vector search, search of platform share Elasticsearch search, serve recommendations its sharing vector We edit to millions core database Engine the metadata. The embeddings and to Cloud as a watch of video in for the the videos to for semantic stored created vector order provide create, also blending provide in search the will using and company Elastic users enables leading signed a via ultimately Marketplace that list that a or has better with Relevance a RRF, and company and associated contract to experience.

the also is bring model we for significant own saw QX, ESRE semantic in proprietary our ability learning database, machine to your a includes and a ESRE. own In in the ELSER, increase which use vector built-in machine learning search. of models

we launch. quarter, This first which we of ELSER, with adoption released saw ESRE rapid a

ELSER, quickly use AI search model training implement are to With semantic able cases. generative any without customers to power

With to see more expect this earlier of we even ELSER the efficient this X month, the release continue. momentum Model

saw starting search use additional the also vector to building momentum hundreds of ESRE We in cases QX, on customers first use for from quarter. our

this and pleased we the We front. with the are also have growth are on very innovation excited been making by progress

for is support delivered up which embedding we to greater what X.XX, dimensions, XXX already than require. models vectors with Elastic dense In

We first our overall version learning with experience building improve API to when developer also Elastic. the machine delivered applications the of inference

quickly stack AI, hallucinations while remain applications extremely the search modern the prospects reducing Elastic's generative generative When powers of at a customers are for component build able lowest strong. IT possible key as to AI cost. AI

wins even customers for continuing we use to helped We Elastic spend platform for their consolidate IT in cases. and gaining while innovations. displaced QX and we value multiple save our through Observability trend key many on had customers incumbent overall security The onto where greater second saw many was the solutions

deeper volume Having to in as scalability and wealth previously Security For generative data capabilities our AI sophistication. legacy are well X-figure capabilities. cloud a for example, well Elastic technology SIEM a order in the Elastic threat our threat as multiyear with confident up vendor, management moved leading for native hunting company as a keep we as and closed growth used global deal company. They to of speed, flexibility the with

stood signed their Europe company out their organization multiyear their subscription strengthen fortify a cross-cluster against such security as protect from the security replaced on their its glass of to as and single leveraging our preferred By us solution Elastic unified now and posture. risk a in security leading pane threats environment and and Additionally, provider. can with capabilities transfer a search, platform. SIEM Elastic complex large one monitor advanced company into effectively tapping legacy

As piped migrate in Query we Elastic. customers powerful continue X.XX, for solutions make to Language, consolidate to to platform, from onto our or language, that have it customers ES|QL. incumbent a In Elasticsearch capabilities launched new query been we investing possible easily

query enables incredibly data powerful alike. enrich ES|QL a operations and analysts reliability center analysts, of a engineers it tool analysis is transform aggregation and variety across sources from making and site an simplify for designed investigation to ES|QL processing. single with data concurrent data security data

been preview technical The excitement on customers our tremendous. capability this from in has

We are be we our allowing continue in our Assistance power aid our of Observability the in AI AI involved have leverage believe even tier, the for humans subscription to leadership the something in this and in AI Assistance, AI to to that in investing also security it make us will diagnosis are for leverage us. workflows a to areas is tailwind that and security. These in and enterprise the security. possible and Observability remediation detection, customers been for Observability which And of

consumption their focused driving around quarter are cloud have cloud on trend on generally where but optimized deployments drive in now improvements Elastic they continued final Customers consumption, costs, revenue focused helped the and The remain new was continue growth. and out our workloads in time. an customers customer lean and approach to to to get over area engagement most is This Elastic. Elastic. This satisfaction where customer-centric we increases the help improved of drives

troubleshooting and AutoOps, improved drove resolve insight cluster monitoring, performance This interest are search costs. and a health, our creators They that reduce Opster. Opster acquiring in hardware managing and the Elasticsearch platform provides products deep issues develops OpenSearch. powerful detect and with for to of

joining deployments more satisfaction to will with we By consumption. even and customer greater get their customers be out and our forces drive Elasticsearch of Opster, help able

we even will progress about on of journey very capabilities our As resilient monitoring make I'm platform and easier built feature. to kinds more this the towards and management our serverless offerings, Opster our excited that has use, and

product our to QX. innovations in on many Now

use across In Assistance. SQL integration addition This and AI capabilities innovations with mentioned, chat ES|QL delivered the explain the added syntax, to provide the a to team prompt and the to AI I've Elastic We amazing query AI our to Assistant what query the language the customers ES|QL provide that have a run does query. and allows requested already capabilities natural query generative the platform. to explain the

or issues. system performance issues And across With reducing APM. quickly When users all system with Profiling Observability, monitoring, Universal In switch search from able the this functions it context needing we with application without greater engineers powers underlying became capability, new will to have also APM types, signal visibility to Profiling. to time application Observability, Universal resolve correlate site performance be generally reliability integrated to available.

our And Elastic Security AWS. we delivered their security, In now in on workloads their customers Cloud. Posture can for Cloud use to to Google Management addition Cloud on workloads secure Google

also out-of-the-box the power to have of in the get search make threat remediate Elastic into analysts to a to visibility view entire greater time We easier Wiz threats. detect threats, When it integrations Prisma Cloud Palo delivered reducing difficult and with Alto security and landscape to the hunt platform. SOC

build customers Finally, LlamaIndex as delivered the with with generative simplifying in further our developer search LangChain, experience providing AI, applications. Bedrock, flexibility we Amazon AI and and they generative integrations and greater

We investments. a tremendous for search Now ahead modern a on of analytics stack focus IT our GenAI and us the opportunity our see becomes as part key applications. to go-to-market of platform building

using that collaboration success will future. large Web Amazon relationships. environment that Elastic the major enabling continuing to strategic our Services. AI model, believe and our factor And data relevant a and agreement preferred X-year end, new announced firmly into Assistant, in Bedrock the to a global just relationships these sets. IT hyperscalers in accelerate integration cloud more the the invest results with proprietary richer the are with key we will organization's their We get unique of by We and customers in This coupled contextualized with be language Amazon towards

joint Cloud. and and joint activities on our with building are extending Google, we go-to-market integrations Also, technology Google recent success with accelerating our

includes collaboration generative AI privacy-first scalable powerful to AI of and set the the Google build combination applications. Cloud's empowers Vertex Engine Relevance Our tool which with developers Elasticsearch a platform,

user and Americas, conferences to Beyond hyperscalers, in reception partner ElasticON we XXX investments major in-person our are attendees we our we and in over across customer to cities XX broadening the date, events. customer across on the X,XXX amazing with Elastic these speakers also APJ. than have EMEA participate global cloud expect more XX Based in reach investing seen with and

to managing XX% for of non-GAAP about margin which deliver to our this discipline. on delivered We our full target better operating further for would I fiscal record in operating business track expectations, non-GAAP the year. the remain a with than the to talk margin our Janesh Finally, like moment. and commitment we quarter, on reiterate a was will

I we excited with with on and business half had quarter. year. we I'm how the second pleased the recap, To manage our excellent am the very discipline, strategy, of an executed about

At to generative ways and innovation, a for our will reduce especially that in generative to view without companies choice AI, are massive continue business to come. years these efficiencies Elasticsearch becoming sacrificing a the platform natural looking benefit costs the around We time AI is as tailwind when gain for businesses. Analytics

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

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

Ash. and Thanks, line. of that despite the We we on once quarter, the driven were again the in came a strong pleased guidance above execution line by delivered external both end We complex our for bottom environment. the top a quarter high consistent

XX% results delivered growth in second quarter, our Elastic accelerating year-over-year with to year-over-year driving growth. total We strong in XX% the revenue Cloud

margin improved We profitability, our discipline leverage reflecting in delivering record trends and QX continue consumption business. and to operating our another scale with continued versus our non-GAAP the inherent we the demonstrating focus strong business quarter model investment on XX%, of as

strong see generative cases. around mentioned, AI Ash to customer use we continue As engagement

on our technical We seeing leadership make select position. customers based product are to decisions Elastic increasingly

leader The making beginning cases long-term AI impact positively to our space. are investments we especially in generative multiyear search specific we a go-to-market, have this positioned and are around to in use been be

it coming While generative revenue significant. for will GenAI from become take present the meaningful opportunity to the will we a in AI time we some believe revenue for us years, expect

increase geopolitical customers an second commitments improvements and the patterns monitor backdrop saw quarter, their cloud as With During previously had of continued macro that we in environment. we made. said, patterns continue that against consumption to against evolving consumption they the consumption

their in of use consciousness market. While and through gone themes to see cases, consumption customers the have we already optimization many management continue cost spend do as

an was I the basis, quarter. prior a XX% of just revenue the reflecting quarter $XXX or results in million, total in revenue, represented for basis. million, from total constant as-reported million, year-over-year consumption derived basis deeper constant $XXX in currency the constant Cloud a Elastic into totaled our from revenue. year-over-year or the revenue up XX% up quarter, arrangements Subscription growing year Elastic same year-over-year year-over-year XX% and outlook. or currency ago. month-to-month Total currency subscriptions, $XXX revenue trends Cloud second get second XX% in on Within QX and XX% up on the year-over-year revenue Let's mentioned. Elastic the XX% of comprised revenue contributed total quarter from in on the stronger XX% XX% of as a XX% Cloud XX% was year-over-year

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

services said on of fluctuate quarters vary before, the in significantly we do it services and we've to time. As timing professional across may revenue not expect over mix delivery, based

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

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

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

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

quarter. is lagging was XX-month indicator a rate, the in our line expansion know, trailing which, with approximately XXX% for as net you expectation Our

a Now measures. in mix. Gross in higher XX.X% margin discuss turning slightly profitability for to which I'll reflecting subscription XX.X% was prior quarter non-GAAP versus the quarter, the

revenue operating quarter as thoughtfully margin Our share focus expenses operating was performance was per our was our continued the in on outperformance second future the our driven in XX%, we by was $X.XX. and The better which earnings expected. to strong drive managing margin quarter growth. Diluted invest than

Our flow free adjusted an free the with expectations X% million basis cash margin, we quarter flow shared. previously adjusted on had in negative cash negative was line or in the $X

the well As our related between some payments payment acquisitions. timing previous collection movements we call, first were and million as QX second onetime that to cash on of stated as and completed in there $XX quarter previously

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

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

Turning to guidance.

were very subscription climate, year. the fiscal expect revenue. and the half be the that continue growth in do both of cloud We first macro to we Despite for broader with in we will plan our in moving as to prudent we pleased business parts the outperformance the we self-managed largely of unchanged. While see anticipate rest many conditions 'XX, remain

ramp anticipate customers term. with consumption seeing believe to we consumption, fluctuate that the it to that trend, may very is are in pleased their been continue we appropriate though near Additionally, patterns and we've

an business year, as second with of year. In we year expenses, be continue operating an exit success to for our terms the discipline profitable with we will on execute of the it as appropriate we annual in us next increasingly invest half for level in secure to investment growth to drive of Therefore, important the this basis.

approximately engineering related benefit In timing seasonally million investments event. and second expenses the higher of our organic to of the employee addition model costs all-hands in quarter incremental the our to fourth half, in assumes $XX

were initially out years, laid year. the guidance the prior similar that experienced have expenses had and seasonality anticipated for we in We these in

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

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

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

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

overall continue faster year, further fiscal fiscal we revenue beyond 'XX, than to in grow expanding margin. Looking non-GAAP this expect our operating expenses to

outlook with In of ahead our our first summary, rest And take the we the with in are pleased and let's half the in for and strong go Operator? performance questions. confident are that, year.

first Instructions] from is question with [Operator Jefferies. The Brent Thill

new just with expect Janesh. how a you lower, you give logo strength the of curious And also for I'm better AI of view quickly NRR impact in just and revenue what us Ash, questions good talk was little if apart but Can to you're cloud. could a that seeing you break unfold? that and around about slower, client timing There growth, now seeing? few

question, the Brent. for Thanks

all position kinds in that. just, the the all first saw the and native that there use are and also talked going them we that in for kind just as particularly, kinds very know, cases. the is in driving well. that with help leadership AI of their And And cases, customers of I the seeing overall we seeing looking making remarks, are And much that incredibly customers all, not have that of generative capability our of to innovations at quarter in purchase adopting vector about use decisions but we like includes of ESRE So the you so pleased we ESRE search QX. adoption in prepared are more performance beyond really

still the say it's take the these It's monetization, what of days. early of generative some is customers I'd terms to ramp workloads. time for AI going to usage In

time, are to from So pleased cases. use GenAI with it that already the contribution seeing these these in consumption significant this contribution we're at phases we isn't early but a revenue to

to turn me the question. it Let second Janesh for

overall it's a on know, rates net with on us there pleased be cloud and expansion net overall, as when XX-month the the lot indicator, very you lagging back on trailing look cloud so growth, first and look we Brent, revenue to When QX and for measure. trends, consumption our rate, is step numbers are happy at off, was about. The just and expansion at I a performance. you a

So QX, best like in expansion saw even as that revenue indicator as when look be some performance. business, current cloud consumption I up time usually for here to ramps reflected rate. the why And we will it in the consumption the take think about that's of fully at I net

expect And we to that the quarters. of some move rate the near in either the generally, But over expansion expansion the so in can rate I continue a points pressure think alleviate trends downward net past had the over should in time we experienced consumption few net the few in direction term. that

piece If overall. healthy across on geographies. across I and think industries it patterns consumption about broad-based. just the step was back we The that consumption trends other pretty mentioned was you of saw, some and

stabilized. as are generally, where that sense Our has optimization. I they still be conscious, Customers the want is on optimization to cost mentioned. think they we But are

of realize towards the value to pleased able their them are solutions. customers that usage commitment very and our we we And their ramping we're help their consumption So levels. see scale

the are some rest we're and of forward and QX the to the with quite of those and looking puts happy year. So takes,

Barclays. with from The next Lenschow is question Raimo

for and as for questions, Congrats Ash Two one from me well. quick one Janesh.

et client to to the installed there? because like more there obviously see able of kind strong of reengage And kind you kind you search. ESRE, pipeline, a you think and that capabilities seems big you're cetera, Like a revisit if terms opportunity now of to overall search Ash, the just nice base kind that and seeing be lot with customer player of of and are with that clients the with AI reengaging in in base. do what conversations, in revisit it, like reviving what kind you're of them about here? And

Janesh trends. And talked for the the second question consumption you like about

specific that look that small on for guidance just conservatism? the I that Just there in additional there. very does note, of like if QX, implied anything Is in number coming QX? is kind look Or at

Yes, for Raimo, thanks the question.

in is search. like resurgence driving AI a mentioned in on And in think meeting recently, road I even generative many prepared of So Francisco, We the events, in customers, hundreds then my remarks, customer a quite months few here just I Frankfurt, customers. multiple our Amsterdam, really past first the of this I've interest been bit, speakers. literally then San in ElasticON in with had

meet with I the clients there. of many to So our had opportunity

some earlier our into is are we lot category change was we meeting customers completely with Reinvent of a a experiences, generative at I'm interest to would is we use Also customer And the AI. in interest experiences. And bucket completely what it lot board, board vertical. is the change of And what And that search. across around in thing to the is there's AWS this across are the there trying every hearing, of seeing use cases around week, traditionally the cases trying support that seeing I significant partners. person and our in of a

the haul, we that TAM of view something search. in it what in good the long-term expansion the for us. really And of and of terms terms about do overall in over really, that's So area feel can position long-term long the

right are a being seeing facing. is I'm put the other internal that what now, are that say The of use I'd thing production lot cases is into

because believe of employee something in portals ability Elastic either really in time, that hallucinations that models value are or over lot by find see and comfort also are lot are is or building of provides their the they their that's from of so businesses end these we viewed the that are user-facing reducing or on. customers of cases terms And and their context another a on. their large then, applications for to again, because ground largely going SRE building overall engineering large it so that's models. And to internal a language support that's with they Elastic level of to language then in So value these a is expand experiences getting that to they use And chat teams teams internal internal customers going to external opportunity. that And possible expansion them make of the -- where be

very that this And leaning is on. excited. something So we absolutely, in are

Janesh And let second me it turn your to on question.

if unpack guidance Raimo, so about the was think second we I and touch commenting that that, maybe strong way half, I'll just seen then the just approached on trying for the consumption on to good, well. theme second said, half as Overall, customers. up and first, committed as it their in the QX market we've recognizing we are consciousness and to to external macro is a environment, important I stable. their cost think scaling And is But customers patterns the the usage continues levels. generally the about be as for

to past as commitments the can made degree But from cause drive a fluctuate customers changes. us. have that greater customers to if seen So we've to that, we that benefited also operational in consumption

potential fluctuation guidance. the we So as considered possibility future we've of in that built simply our consumption

And think it's just really best but seen plan big in excited. executing we not shift external prudently. any environment, clarity, well. the we've for to We're We're just actually

instead quarter QX, XX QX, for us, year. that thing have will rest unique is I'll specific We a are that about to the leap days just only we'll there's of XXXX slightly XX it's given the the out of shorter year, about be a days. point And confident QX

bit So headwind QX. that's of that just a in something creates a

from The question Kidron Ittai with next Oppenheimer. is

Can you This is me? hear for Harshil on Ittai.

Yes.

it. Got

target with But ago, stable, I'm on a months consumption you time is share can you're forward? starting time now more has earlier and So curious, macro. the guys on you this is momentum $X anything to generative extended gave revenue that a challenging just been bit bit has the that a with seeming there improve how an year, line bit line billion us moved seeing versus and environment that the AI, maybe update and the with X

Harshil, Janesh. this is

So to we that a but that ahead sometime and got working opportunity. this that opportunity billion of think $X back, we with hard the through goal is us, are way fundamentally about we've we significant prosecute

from tremendous the momentum opportunity. the business here of You've that standpoint address of as and we growth particularly in seen cloud terms overall

fueled And by momentum is generative AI. all of seeing additionally that in the we that are

this no are at we that. to and scale don't there's So good we predict we'll at executing question on go to this appropriate future. beyond you on revenue now, start minds far year working ahead in we we company feel the half year build multibillion-dollar our But to the and with want this growth provide hard are in stage. future that And get too about for in back But focused of very year. updates as the a

as it we then you back NRR get that And 'XX, up what That's fiscal to Is historical helpful. And on of XXX% it. out? an Got the level? see just a NRR. levers we could bottom expect look should to this do kind this level? Is to area where

Yes.

be indicator, I consumption reflected expansion net rate As minutes ramps, in expansion to even the lagging ago, takes for because it just of just net mentioned a couple rate. is the that as a time cloud

future. that and our will consumption pressure overall of think as as And of term. forward, -- previously, progress into a we help the I in over can in of but the couple will consumption will And in points downward it So move the growth had some consumption. as net either help near alleviate time, rates is direction expansion increasing drive cloud rate we what we experienced the ramps, move that and

next The is with Bora Pinjalim from question JPMorgan.

Congrats on the quarter.

say, more a customer lot you a something conversations. these of There's positivity. Ash, it than seems expanding conversations AI up Do into far think like lot the How Observability? understand Security, one is the in in point ESRE of opening then just motion are consumption that QX? to way entry deals far Janesh. accelerate drive growth? the is to cloud the a so larger could And for as in board your trends across Any November AI,

for the question. thanks Pinjalim,

people use something search, going going we is is in going So to momentum material. happen to to the of starting areas the cases that both kinds imagining is expansion be the term seeing, search, TAM likely very there interest in are clear it in the the that of resurgence the we that's to is the of feel we're see that that given long and a and of that just build, way be

use believe change just really of observability going launched queries In commands we brings Security. and incredibly have automatically the ease and through are and prompt improve to them our so they whole engineer for the that the something then our of to with that security the analyst and demonstration, through very that through that, around Assistance the the sales and really delivered, we overall the natural positioning for site That SOC auto-generate language remediation, capabilities our work in actually have having will the diagnosis to with everything to areas their reliability observability feel of understand compelling, the both easier. They that and are and help to guiding to that security, from them we then to it is teams platform AI ES|QL or the ability life have that's do a the makes detection what and of able journey, is and we've security. powerful. to system, kinds conversation much compelling when that's lead execute often Observability And mean system Observability a us competitive a

are we seeing. And that's that something

onto discussions -- where I A platform, our wins many about showcase lot we AI incumbents. and displaced talked the we we Assistant that our we competitive are We those consolidate customers had the how lead with of platform. fact

that excited something I'm So that's very about. definitely

little there to of fluctuations within And tell before, a too early And even said we the over a month yet. the isn't I November, as it's can Pinjalim, on think single in be as of terms look we've November at customers. observations pool

we So of rely to not much on month data. tend a too single

the in earlier I tell in on very view that trends So that we share felt described yet. good But that the just you can't that quarter specific about were broad-based, QX. a can we I experienced November and I

with question next Brad The from is Reback Stifel.

increase to really should quarter? commits. think their as a about last quarter comp this year, began for strong I booking How think Janesh, you had we customers the

you a your bit comps think little but commitment a about year-over-year was muffled, standpoint. asking from I Brad, were voice

I And think way the about...

Yes.

think to we the all about provide just that commitments Great. that Ash have engagement Elastic. We've think teams are the deal execution our strength field that we seen I have make that a as of continuing them, think customers with as The are about trends commitment and in ongoing talked to to is AI that. generative continuing we wind about to way about that good

very position front our feel of customers. we So good overall about in

to good for commitments specific to into continues that for provide revenue very us oriented provided, translates think the that I aren't sort it's the too how to commitment measure of primary tell outlook again, We And QX, feel of booking or terms the about views early be we that. going in and In measures. on business. forward for we've

their Are That's committed great. And SaaS you to are on earlier that? the in And permitted quick something levels just those at to as on are to scaling that? customers follow-up they levels. excess Or consuming move below said still opportunity one higher? their side customers

customers. broad obviously of pool Yes. It's a

matter, The that we've that then will drive levels a levels. But have there to continuing has us they are to -- for stages. different as seen and I different a it approaching conversations expansion be customers and quarter those ramping, levels, good was those balance, at above customers customers still progressed. of opportunity go ramp they becomes are obviously is And the are within commitment some there them. that had. with the point below are are customers on making as that consuming general as some We So earlier been that, customers

Matt with is RBC The Capital question Hedberg from Markets. next

me well. from as Congrats

at GenAI there on initial what wondering, lot a roll of the was choice, that have it there's interest, Is security? versus the obviously, Is curious, this of I'm -- level with sort very just out thus sort competitors factor point? others curious, of other of that it some commonalities faced there just some why when is far? I'm I customers tipping are the Ash, Elastic solutions. of are

platform say break there the the X roughly evaluate and our it product us down categories and all see us reason clear keep that options our why I'd Yes, of out choose they to against as telling absolutely. in they they customers us. differentiation

absolutely this consistently hear our First is and that very is that and find -- foremost stellar. database I functionality they vector

of the into it's built years. scales in that you it of other it's a the the deep that fact terms in way the get over and terms all functionality the In how built platform, we've such benefit of built that

So foremost, and that hear again. over that's, we something and first over

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the is big set so that is that's there second that capabilities of So because compelling. reason

around we've being of areas is just company, of say right? mindset a -- sort I'd openness, choice. are had we as third lot of open always So customers very our The a very providing this

LLM agnostic. are we So

cloud Google Azure AWS We vendors with with partnerships with major the have all Vertex with AI, excellent Bedrock. OpenAI,

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to is saying sort compelling becomes able right? all clusters very Elastic the now thousands in in easy of on that use GenAI literally applications of proposition. customers, it ingested it. already that makes just and of a of tens And that data button. them, it already platform, on They're top lot our use built data A So of for that these they've

obviously, at customers? and guess, mean hasn't Splunk there in conversations been from for I'm if to gone still just feedback I'm customers that of show that curious Splunk you're existing And acquisition But early the And up comprehensive. customer I that's Super initial seeing? then sort on it's of curious, has any yet. through any might starting all what

competitors said operate in it's it Look, I play we analytics think at many we for that in our Security in, whether that few or markets have scale. when this times Observability core comes log those markets, Security, to for I've SIEM Observability analytics very and security the that or

by offering. that to I about one share talk any from that our generative having customers consolidate that ability to the Assistance going our have scalable platform, But a we AI say we move not I'm have are platform are with with we our really AI And will is take more we built. because our to offering onto very differentiating given of few others competitor. what particular one

things has Elasticsearch that Language, phenomenal And is not the is one just because interest probably right, uptake the of Query been easy and in the it to ES|QL, only absolutely the most exciting use, work, ability Elastic. making onto it's this of super easy the solutions to language incumbent iterate migrate it them their that for gives customers it's over and piped off existing query to

the very now, is to in supporting feel strong we right continue our So really a market future. everything to have that's ability happening

is Kash next from -- with is Sachs Goldman question Citi. question from Tyler excuse the with next Radke The Rangan me,

Wong a looks here. drill guess great is little really for a to quarter. This the like high. Is numbers cloud I $XX Tyler I on Yitchuin record a million almost bit on in Congrats strong on that want

Is this kind be at revenue the it going the of cases contribution GenAI customer Just here? to onetime drove use here? cloud is million $XX that sustainable we look not that that how would cause or that like consumption more And more factor of kind easing forward?

we across great And different geographies mentioned talk Yitchuin, I to as from customers segments. saw across -- in consumption healthy X you. to and earlier, the

in caused or to have trends seem any broad-based. are customers that relatively they optimizations. nothing what generally while terms There So of focused terms to it and their think still kind distortions. was making investments, wanted out of stand of value they is on of optimization was they get in I'd are X customers Overall, those that where sure in terms I X be stabilized say

But And will of in overall think GenAI, customers their so still we days take and saw ramping customers ramp consumption. we their for it to workloads, for terms GenAI early it's time to grow with from are of will over to And those that workloads. these continue quite expect for But do initial contribution GenAI consumption time. we some pleased usage we the newer GenAI.

as the potential broader consumption half. do can consumption, in I the fluctuations simply strength we've execution the tried said that outlook what is fluctuations. we I've the there as against about before, potential think be on half second And or I as first in out there concerns that So about might think some the to guide, seen macro be in balance

So about half, we approached back that's it. really good way and we've feel the the

but Got quarter of the new front I sense. on kind the view That of you consumption [indiscernible] GenAI in makes GenAI? net of with new it. total guess bookings how the kind that do the the on

Yes.

us. business GenAI-specific overall broad-based. good as examples of terms prepared more provided As those for we to broadly a strength remarks. our It's of -- couple for the that commitments his Ash of have pretty said, saw And customers overall, workloads That's and in I well. for in made

So we about good that. felt pretty

Rangan with Kash Sachs. from Goldman is question next The

compelling the quarter. -- how thing, GenAI At looking strategy Ash, that one thoughts, your for Elastic it more you have, monetization On on Congratulations makes on updated at accessible. this explanation what's get the level, curious the GenAI? to

natural to it's to language use system easy start So search. the using

Or it Is avenues, new use is right cases a cases? you the TAM that think the is that GenAI a incremental becomes on Or do efforts. the one about And opening use gets the which brand-new with architecture so it you platform up Elastic better, of your target way there. What the how accessibility existing opens opportunity? Two more generative up AI where becomes and So monetization the otherwise accessible. is the market put could just not easier? more ES|QL of is tag with price to that it? the questions lot

the cases address thanks to the for Kash, then the first let and question. me get use And monetization. Yes, I'll

think cases, two categories. the about use into I'd So break you if

is the not not what we're the So of both lots are things And possible is were There become or and implementation. in broadening in search, of possible area of easy seeing the suddenly now one TAM. that really AI generative relatively that for is search. were capable past

lexical not be or kind with video search search So much That's vector of hybrid stuff with search. search but would so traditional example well scale. the incredibly just one at that search, image and works

search trying think these would are when are the kinds past. And be just exciting. use hybrid the even the the and Another are with now, just in of with overall search the not build experience really, experiences interest that fact possible in that examples really we search and and of example with implementations GenAI, combination of that that's that kinds believe improve now the you driving can cases is build these applications the or service people about to search, you now of semantic future and customer kinds service conversational customer to

it of users platform. rather of get to observability platform quarters and TAM customers And AI. Then of the TAM we How to now We'll don't but lot and sense term. solve easier through types we've use better use the make progress allows going a it's talked on and increasing, wave much It's, search for platform a generative security TAM it's by And I the newer about the I us as bow that think, generative So for better security our both long also can area, when Elastic AI you the created think observability to TBD. the as to it Elastic to years we an how this the in cases. much it use because think just making of open easier gets in differentiate this. about up expansion much? of the

a on is very our focus making usability AI platform just overall the that improving strong just generative have We better. much of and

tier. you then in using are our in learning of remind are And you platinum learning then our you our -- AI jobs enterprise these also our time And lot in terms any Assistance And monetization, are fundamentally only which these jobs for for what compute more be to ESRE, intensive. using is Observability I'll and machine platform, a machine at the generative paid Security are available AI, capabilities tier. they tend

So there are are monetize various different we doing. us that to work vectors the for

Bank Koji question of next Ikeda from with The America Securities. is

a sense a a to of acquisition? a the question here. more Two wanted strategically, at revenue Opster And acquisition. bit give such Opster also scale in the little maybe little sense. bit then website, health for But things as like performance. sounds the cannibalistic when hardware looking us could it reduce be that cash you used the saw ask Could improving I parts which cost, and on visibility saw I a Opster I and cluster helps search

from should a long-term Opster So strategy standpoint? the how be we thinking for monetization about

you maybe order. Koji, Hey, can in take reverse those

financials. I'll then on can you first, touch maybe and touch Ash, the the strategy on

Yes.

Koji, when you way, great So question. by -- the

acquisition. best and do really reduce you Make they that in able So and optimize I'm happen. it said, it's running you possible, before sure Like it's lets it, and monitor AutoOps is the the lets to what the right? overall excited manage way cluster issues Opster detect the system, both about super you

our make very stay very, healthy So you're you're customers. have scale, able that to able which massive to the for is sure at system important

our And customers and that's more drive something consumption. that with encourages that platform something drives It's to do customer then more satisfaction.

in customers us. a really platform around with consuming them do ensure it's is good that and to is good our way that consumption more for are a keep play to for and able So

in we in the is general a higher by tiers our we monetize and believe key to something adopt these and optimizing part is about Elastic And in paid Cloud. adopt having cloud. monetize strategy because we our customers it point your Now both way through lot hardware. a also that also to capabilities of drives Look, the of is that, tiers that

our less spend that And to customers of infrastructure, Elastic be tiers which constantly we by move on having but because we spending want their of on to them monetize all increases. higher

for a us, customers. a win-win and it's a such win-win makes that believe this that's It's we what proposition. So compelling for

And terms are from in meaningful of in size, Opster any a expecting revenue team. is Koji, revenue, Opster. contribution small not but of And terms we mighty

that really terms Ash expenses, the broader that is fold technology And of described, the provided. Opster model Elastic even already Stack. in we've built into just intent As to the into the we've

The question Owens is Rob Piper Sandler. from next with

was could you the guys I drill others market down hear hoping and to cycle? specifically SIEM Security on applications starting bit replacement we're of a as from a SIEM

question. Thanks Has for the

or So strong. look, SIEM, our it, position as you remains in Security analytics very called

talked that consolidate customers remarks So in platform, in to had I lot success in prepared we quarters the this of the of incumbents. our onto we've displacing a and getting that about fact seen several the past the quarter,

to And just in we've it's favor. we seem us compete And playing platform, And of very GenAI our very, both the functionality newer effectively. of some market scale really the our dynamics the the the through delivered. seeing be capabilities, that in functionality helping are the benefit assistance

good very So I about feel it, the are excited about we future. and very

Nowinski Wells Andrew The next question Fargo. with is from

I quarter. it's tiers. only Nice want that in ESRE. enterprise available just platinum ask I more about Okay. specifically to know

those are in sort of uptick with you wondering, tiers? already customers seeing those I'm are any that Or landing tiers? So to X logos upgrading new

increase will of we've the And drive Elastic Cloud seen continue the growth ahead. help a we expect higher Andrew, that tiers to in steady this enterprise for tier. over on adoption so time, particularly generally looking our

be additions As the Assistance enterprise tier. Observability, the generative all what that higher of lot the Security customers tiers, the tiers in The of a and in to drives about helpful I is think AI regard. to the AI clearly, will only and functionality

matter, But subscription in higher and that is that's ML like searchable nicely. our and tiers added only to more for general we've more snapshots example, platinum. been consistent working a to then as done And over that, even in platform the features time features quite level tiers. strategy in beyond overall continue enterprise, to monetize so provide that's value our that value with higher But

we've As over a mentioned, I continued our tiers. adoption increase to higher of steady in time see

an I then know a appealing search, Elastic use them, vector had maybe Okay. to search storing it quick just as feel And on I question more their makes where it in -- felt I you've data had relates your for data security are your customers to vector of like a number it specifically And actually case. like lake, a years.

So use where vector with cases like you are specifically I'm looking wondering, search for MongoDB competing in they're vector search?

Yes.

search solution it really solution. think whole about look, when build what vector component to you AI a applications, the is So takes of the not overall generative

bring to connectors effective this all you unstructured we need what environment. is see build generative and So of building you're AI data your when applications, into

You are all personalization and that search things be just things a to geolocation need providing and There search. capabilities, search of like that relevance capabilities. reranking of hybrid is for and semantic to able vector all capabilities provide and for kinds way other these need context filtering go about often beyond like

that And looking increasingly have platform. it capabilities possible that build a have one complete of breadth seen our we are because what for AI them to makes on applications customers we platform is to generative

showing that see say will we in I as that the is fundamentally what competition. Now space, up vendors don't database

particular likely. be, some might you simple of in and want capabilities very of search using that as some in if a native there to data, you where the data your and that's that an database particular in is Now is if all have vector you're data example, use all a just data of case store, your transactional across database, very basic

a particular in don't customers simpler we frankly very use much that play that that right? in platform. That's native that's case really space, to And

generative build the and soup-to-nuts. us, vector way a store, requires just customers what to provide much data we are than and of going more that's that market trying broader we AI that after applications, are For

The with next Robert question Kothari Shrenik from is Baird.

Welcome the execution, Janesh. on Anthony. great back, Congrats Ash,

engagement about the you talked efficient of Elastic's shift and Ash, kind before and So CRO. partnerships in go-to-market vision the unified strategy under and customer more of recent including the evolution for and towards realignments light consolidation

AI generative impact to positively go-to-market the highlighted you search. today, then is And beginning around

of you beyond And about of Of relationships spreading are in conference. Can the that, partnerships, go-to-market, in factors and course, spoke global bigger of like you the AI the strategic directly major user which positioning user effectively investments with about terms awareness into you hyperscalers now? drivers landscape realignment broadening talk currently? how reach are conference the hyperscaler these

with and able very Shrenik, ecosystem thanks effectively. that service the of like these would customers to ecosystem very, we them partners to for the right? doing reach Because to the from the we relationships hyperscalers provide the end customers are all partners allow question. are with What the say that, of us look, satisfy comes all differentiated ability cloud have and the is that things I integrations the we best functionality with those unique, that our matter, day, at fact our

right? that about And excited strategy, has just of that been year very having that the very also and we the team on fact feel off, our cohesive And about proud it's all but paying not on both very So future. a commitments, the I'm second doing. the work the of consumption, half is the focus, really I'm well. good about of been they've executing very and

Kingsley is Canaccord. with from question next The Crane

just quarter. to quick Congrats Great quarter. on cloud. ask on want a I performance the one this

optimization cloud we in I at last the think seasonality look year should last we versus cost year? levels expect April? when started of similar As QX, was

first Kingsley, half approach that. when been commitments. continued the them of had, had make see we their Overall, that that performance -- they seen Maybe in We've look Janesh. to strong had consumption and customers to this this take strong is towards we've we've levels year. the we've committed, the start I'll really ramp at

about the consumption still was is economic As earlier, that approached room consider for I there I simply similar stable, it's fact when guidance, it to fluctuations patterns. we've it potential that mentioned the is but an talked to way in what before. And there's environment out

of make might So And risks our just again, the execution as for of that we've year. clarity, the we to our against not half first that we're experienced for build but we're plan that we just seen balance potential thoughtful abundant in so just trying be there. far being out strength any the anything actually we've different sure yet, the year

is Cikos Mike Company. question next & from with The Needham

I anticipate could I if what know guidance versus have what construction Janesh, question there. into of for asking been build and quarter? widening gap guess was in guidance my a your means said does Elastic this Kingsley's commitments And the off just consumption Cloud. the there the number it get delivered I who that the people pro about as we question of currently second plainly, second between half and were year

level unpack QX I detail. I'm to QX, going of that for level depend mathematically on and that think the question what to answer would of we not assuming commitments are and

we nicely We're that work is next we hard doing continue It's quarters ramping derive and few what towards beyond. the that think last end seen everything can us of couple consumption value. that help I for customers quite to nicely. is will we've quarters, worked for and for the to

understand enterprises And them. workflows intensity to that be some evaluations still natives the compute Got curious it. -- larger our how we be these is up to hear adopt GenAI, reason what nimbler? asked that of are or potentially And organizations if the are generative just behind to But could, adoption, of the you I quick digital a Ash. orchestrate in the these just checks seeing more for picked given follow-up I'd might on I running are kind AI maybe midsized customers

would flavor helpful? customers really technologies starting that on these of are So to anything incremental the be adopt

for Thanks the question. Yes.

We in DocuSign. large the are Those both one examples noted customers. as least X seeing we my across are I those large natives prepared across as at -- customers board, as -- I success digital well Like One verticals. gave and were remarks.

And why success because we The that in of one those proven reasons are what larger the the having the is generally, right? environments, would environments say we I is sharing other organizations, was those video platform. even in are

on The platform that past. functionality our And value fact process to able faster all it's kinds and much in trust are of our incumbency, large-scale -- they GenAI applications doing the applications in the the that for the we a been see platform, innovations than search productive of they've other them it's now very they and get be places. driving, to build our as platform

choose need where our over platform. over they pure start our than realize that platform they some again And and we've playing seen and and around they vector that they to database, that with and they quickly might look more

I not than good it's natives, actually So broader just much digital it. about And that. really feel it's the about

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

platform. Well, joining our thank very AI-powered call the analytics not opportunity could for all leading in a much our unique be as in excited today. I search about more position you AI generative

our Have and forward we rest progress half thank the about We to our the you. go. on you half and year. strong updating with performance of as We second look pleased great a in the of confident evening first the are

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

now disconnect. may You