ESTC - Earnings call transcript Q4 2019

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Operator

Good day and welcome to the Elastic Fiscal Fourth Quarter 2019 Financial Results Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference call over to Mr. Anthony Luscri, Vice President of Investor Relations. Mr. yours is floor the sir. Luscri,

Anthony Luscri

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

Executive Shay Officer. Founder have Chief we call Janesh Moorjani, the and On Chief Officer; and Financial Banon,

remarks, take questions. prepared will we their Following

and press issued can Slides webcast. remarks close at of at with which this webcast after A viewed downloaded of posted in is live simultaneously and release ir.elastic.co. the is also website our being was be the conjunction webcast on this website where Elastic the be market can this call accompany Relations Investor conclusion on

this be the securities laws. On estimates might considered predictions, forward-looking include statements U.S. federal Safe discussion today of call within may provisions that or other information the our Harbor

statements materially. judgment could uncertainties and the these on to are differ represent that they While current to what subject results our holds, future risks cause actual forward-looking

uncertainties we including with our the filings the the Forms include and described and in in and those filings forth today, These filed as make XX-Q other those prospectus fully X-K SEC as the Commission, Exchange time. earlier we risks SEC well time Securities from to issued and and more set that our with release with press as

or not to undue this required Please to of these presentation. ourselves You and which events are that place keep as revision results release information of obligating date law. cautioned publicly in in not forward-looking reliance are forward-looking statements, these light we only on any by unless the to revise new reflect our the of mind statements or future opinions

for performance financial of in will non-GAAP isolation GAAP we call are measures be to, a in These measures. from today's measures. addition Elastic's considered used substitute as financial as not during discuss certain or which addition non-GAAP measures should In

related expenses acquired our measures acquisition and employer employee on rate adjustments. of amortization GAAP transactions, of effect stock-based non-GAAP tax results intangible Our stock compensation, the of exclude assets, taxes payroll non-GAAP

in You for release webcast including these on the our will Investor disclosures months measures our call replay non-GAAP press two the website The can the GAAP this company Investor and this under comparable available link. Relations of additional and slides measures, and webcast. accompanying website be find on regarding slides reconciliations with Relations

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

Shay Banon

Thank motivated to here team Global you, Three our have where accomplish the the ago held All whole the we in I personally Welcome year. Anthony. from kicked Hands a everyone. by event, It's everything new the fiscal be great walked today. off year away humbled QX and we and as company. experience, fiscal weeks full

year-over-year In QX, currency basis. revenue grew XX% constant a on

XXX%, than over at value have contract end was subscription including our of over of net maintained which a with now. for XX And expansion We we've the customers quarters in rate XXX more more annual $XXX,XXX. quarter, than row the X,XXX

like results business. about detail all be into employees Looking financial revenue constant cases, the to and innovation at was strong differentiation geographies the currency not quarter. over But of our delivered the proud could performance. past dive further Janesh the highlights that I first the will of cover year. more the I'd some from increased our and of to and products expansion grew XX% on at a growth fueled new by full all levels fiscal adoption year, This features, across use our mindshare continued and performance basis.

and releases. continue updates at in at our the breath impact. and QX, relevance minor look users. over dropped the releases I'm maintaining in time every XX of I delivered including released. while we it to speed major in scale We all behind at rate features to engineering the shipped minor I with say XXXX, X have major fiscal we do and out of to We that We innovation efforts

its and failure unique sets for releases. allows value even We generation of It's differentiated nod in distributed resiliency more formally deliver from to shipped that coordination our We ability and and creator, TLA+, cases scale, ways the is in Elasticsearch, to cluster catastrophic relevant expanding and TLA+ our the fast and into easier their in even to makes scalable, the X.X algorithms. hardens the especially in it several further language layer X.X find data face the a for got even quarter, honor. mission-critical technology approving resilient These addresses. backed feature our foundational which by also a use Elasticsearch validating is way next during demonstrated We QX. which

multiyear detect of a people in help was the better to from looking them tens place. and present them journey This users involving recover failures, first

made is a that search about that working with supercritical This that across along also CCR feature have only enables is feature is our strategies. cross-cluster also platinum this because who further generally CCR cross-cluster us resiliency been available. the reality. cloud story. makes better level a cloud replication exciting We and we asking customers hybrid This This provide providers expands or multiple

faster. offering. in our site made Now our applicable huge if quarter we Elasticsearch to app especially fast the we speed, move customers, from search speed with resiliency This faster. feature is Top-K feature, self SaaS users queries boost or time results a running it returns got many e-commerce took prioritized many which and manage to and to times over

website, based U.S. will Drive, single search beta recent also from across and part product Elasticsearch They Enterprise for The SaaS common with survey the for GitHub, such XXXX sources new the as release community the manage economics easily us also XXXX are Search. which example, data content Elasticsearch Elastic the their for American to Google their ability Dropbox, and renewed offers our business from search use These quarter This Bureau, all logging uses census. data a self to box. XXXX release separate Salesforce of of Census in improvements census, eventually for case. a

the I enterprise Now amazing. probably see if wouldn't this is problem taken market about have that there's than come. at ago in you space and We’ve different to beginning, look it's slightly told team today. a that fresh truly the search, exciting the What And excited only me believed created what work something I'd more seven you. has done years you be

We our also available previewed story is data evolved subscription. Elastic visualize We Elasticsearch. Elastic Maps users called basic location-based through in the Maps, a quarter. experience which new a analysis to data Geo our in for product delivers curated

a is this pew a a a to example, network for geo you [ph] access, a mobile finding visualize fence pew land looking on app. map a physical or location For relevant with for useful want to spots if IT breach bad defining

already will use product value expand further excited from them ones. help I'm these super existing expressing customers their about this derive and are then cases how new because into

information, Elasticsearch about and delivery captured of example, every For our product and shipped They Elastic status APM can operations XX generate network. and service points more leading India a data in are logistics Canvas. X day and customer resolve Delivery, helps and use issues service of field deliver excited packages Elastic is They is ours. XX during peak every from a which about a visibility exploring than their based also the the longtime second. five million in seasons package These the delivery streamline new and are Maps geo-location

layers, the development this map need. our all From our is from of And especially vectors, important also is trees which Elastic own rule mode, progression users to operation quarter, for space. network in efforts building compatible the Maps a base with recent ongoing natural shapes is the of the service maps BKD first a also analysis experience, dark work that with centers. and new with Maps in feature and addressing user gremlins. to super security those GeoShape or

of in own curated experience Elastic and way, internal quarter. case to called the created and Now a many customers external services product SRE leaving What seen find uptime use run applications, evolved our team internal This the by monitor for common monitoring, the shipper them. users by as has provides proactively is of Uptime. users. ability for a product into before for monitoring, data this This problems a and into uptime we’ve a a our progression context similar monitoring started

log is and running Kubernetes of things Key across their services using their OpenShift X,XXX and performance us on their monitor Banc, all the They who uptime example XX,XXX workstations use systems They collection. expanded renewed Metricbeat and data business Elastic by branches with Elastic, infrastructure, with kinds metric Heartbeat. An for in for and quarter. APM and

also forward I looking to monitoring that understand they're adopting new product. our Uptime

It's observability space, in about excited fourth we’re metrics those this if and logging, will, to we basic APM. joining So spaces improvements continue which the product, And as pillar, in available well. through our see you is subscription. our

use quantum what’s case. example, their to million level a data. going into logging shipped and in metrics times like knowledge precision nanosecond users For timestamp give more into granularity we It's

You happened that these of for if to trade before the insight. also can scale need imagine new know critical how be It's example. businesses can other, one a whole to

We've simpler data educational wide a we analyze also makes and and can of It with including the common different with using institutions just Rogers the language. easier users sources call events Schema what centrally from it made users sources or time metrics onboard Common logs, ECS and Elastic it to for they've ECS. to new like Tech content Communications, impact companies closed like in developments quarter. across users, both meaningful Georgia business security telecommunication analytics range or us have a new all These works. develop

space another are in this I about institutions context. Government think

deploy recently who Elastic as informational in Force maintain protect enables cyber Force, and integral multiplier proven them For to a operations. Air bringing by for order example, US an capabilities Elastic force speed that of defensive adopted has at its an advantage. teams and to also be the better to scale. Air part networks Elastic automation data and rapidly cyber

solve of adoption using a about is of of the Kubernetes and trend cases. orchestration software. this customers how talked Elasticsearch number use we’ve and our for solutions products is seen of rapid many orchestration management our and to Kibana. aspect And An are for another of I’ve

of have space Helm and our a our history Kubernetes the in CNCF. Kubernetes with monitoring with continue Charge. release partnership the We

that release experience. on running we We available operator enterprise of pattern, KubeCon, Security Barcelona integral like user Google ECK Elasticsearch I’m basic announced our our the weeks the and Hat. Cloud we Kubernetes. this, previewed the more. with and environments operator Kubernetes. Kubernetes of best ECK is And Elasticsearch part Using subscriptions. shared multitenant at Kibana or much and support back Kubernetes Elastic Red the especially down on through an official So or is so few to on excited is from ECK, possible really product doubled for providing for and share

core with subscription. our further This levels. X.X control differentiates This our features in includes security made at in features role-based certain authentication and proprietary and available our encrypted native and index distribution. releases, So access communications we’ve our cluster X.X basic the default free

capabilities free. security a story possible portfolio. enrich stage, secure We advanced everyone can part around of the to our providing existing is to the our feature [indiscernible] fully are opening cluster run to hassle from now evolving also continuing invest in This where best experience,

As consume they choose service, managed Staff, across or see, simply cannot as somewhere are around can use strong level on and you capability, the staggering. work a between. achieve matter cases and that No in how really we And self value the be provides users. of wide knowledge to imitated range differentiated It's building this foundation Elastic of in Elasticsearch replicated. our a to us, or experience the

Looking are in R&D. our investments we down ahead, on doubling

opportunity positioned are well market, and are We we capture security such investing and many as reach APM that. against across to

experience our partner the Elasticsearch simplified a partnership Cloud space service management, within will have to We a this integration quarter. Elasticsearch users in means also with discovery, of service expanded our Google with native order billing We bring console. cloud Google the saw This more development our support in GCP. on and exciting

our architecture about warm are unique operational We who running like features power use our this Elasticsearch this GCP with development us new They’re closed quarter. their to business customers on log excited analytics using for Etsy, service case. heart

Enterprise. with Brazil providing quarter Another in with analytics they MSP our and highlight Elastic Originally small by notable now semantics. partnership solutions search from powered the an is are in to Cloud data businesses reseller, expansion advanced

[ph] tour. event, They speak seen momentum we've delivery to for quarter global also an present Paulo application another Sao the who from on-demand our Sao Elasticsearch happened our at Paulo Latin American one where in events the win startup of excitement. I at tour were Rappi Also six uses service market, mentioned search. and our great

localized We And were the We announced best region. users the service wanting the a acknowledgment service for been which and our provider with to brings that the native it's make reach of time to users Elasticsearch with especially Kibana users to Chinese in Cloud. by our in step an This our accessible from a China, work another to in cloud a products expand retention, China. Tencent huge internationalizations partnership our humbled us to efforts of now release, more request is exciting popular their to has X.X language. in our

not Last announce is This our acquisition us company. we security least, step are but to for endpoint proposed as a of company. excited a an Endgame, natural

we’ve on Beats of is the based endpoint detection, opportunity that the at Over This years, with threat agents stuff. satellites technology an circle Elastic aging our of developed our products and remediation and Stack strengthen this prevention and events the shipping raw level. security with also focuses to to development helped Elastic the

the for SIEM space ability and to excited do we about very space security. our also the to is I'm the model opportunity to same bring the the have endpoint adoption bottom-up

a team to with lot wonderful forward to working shoulder and the security best look in don't the intend of bring fiscal match feels are ground the to a Lastly, market. to We cultural slowdown. are the like to year, we members These team QX product possible and with, our covered elastic. shoulder Endgame throughout

the existing new the for market, and all products With accelerate our development investments to we continuing of to across and forward our cases of look of adoption parts business. continued use

I opportunity their on and in The have to our the it ability people us. execute in amazing of such front trust behind company.

I'll it that, with to And hand Janesh. over

Janesh Moorjani

Thanks, Shay.

growth, with We net dimensions, which across growth a and all performance crisp performed fourth We customer geographies. expansion strong strong reflects growth across execution our again high the are pleased rate billings all in we quarter, scale robust well and as further. revenue once and

and I $XX.X on currency fourth a million saw the go across we We full-year the as globally. XX% quarter outlook. the for constant XX% invest results Americas, against our market reported continue opportunity revenue quarter a will growing the our first as growth through discussing APJ and EMEA, or for strong for year-over-year before to the was basis. Total

source open model. Given distributed business the our is roots diversity model, of one in and our globally geographic strength of our

our outside year-over-year In we the U.S. basis from related revenue quarter the stronger headwinds. US reported the total Since QX, during on a XX% million, year-ago XX% of totaled of to an our the period, came experienced revenue. and $XX.X Subscription was increase constant XX% meaningfully currency XX% as revenue FX compared dollar or of comprised

XX% an products ahead SaaS as same faster excited us. $X about of year-over-year Within of million increase the quarter again, strong currency the subscriptions, both rate revenue on Professional basis. the our year. also million, services SaaS consulting remain and opportunity XX% constant strength subscriptions. a at and and saw from growth than Once last $XX.X training over our was growing was We reported or we overall business. the period XXX% revenue In very

can quarter revenue and quarter to services professional reminder, a projects fluctuate As timing. based delivery from on

as our will We remain overall expect revenue our services portion professional business a small of grows.

I the increase cash in revenue less quarter of revenue quarter recognized basis flows, $XXX.X in unbilled we QX on very or in that fourth XX% having fiscal year-over-year in performance of year-over-year highlight strong XX% a grew currency will XX% quarter was when to XXXX, as calculated increase Calculated presented statement on receivable. calculated Moving sequential accounts the billings growth. total plus performance constant deferred to billing We QX any year-ago, despite our for a delivered on this billings. the define in a as sequential million.

quarter-to-quarter renewals said based duration and on As can larger customers. the calculated we’ve for fluctuate billings before, of billings from timing

total revenue, trailing XX% mix ending $XXX Trailing approximately the activated deferred At XX% deferred of the billings was longer provides obligations end performance were short-term business. QX of an QX, view XX year-over-year. month calculated totaled XX So remaining revenue of million, the billings the term up alternative growth growth month of XX%.

XX% months. vectors, by additions, this at use new we array a this, cases XX growth as momentum The pleased We new expect Of project were demand with over to including broad our underlying customers the is existing that growth was customer driven recognize expansions. and deployments larger QX of revenue the strong driving overall of and next business. in quarter our

paying had of customers X,XXX we the compared customers the over subscription to X,XXX end over such end of QX. of at As QX

strength in in as quarters. we new saw customer prior We additions QX similar in have

with than value $XXX,XXX compared to the above We end also customers annual customers of XXX more than quarter contract with the QX. XXX ended an at such more

Our continue cases. reflecting existing customers with to of their cases us use expand existing and for relationships adoption increasing use spend new

with enormous ahead the consecutive indicative of were we of additions In these very pace opportunity XXth QX, customer our market pleased metrics the rate the our for XXX% viewed and of expansion. remained Overall, net execution customer are against over When expansion collectively, us. quarter.

profitability, which to quarter representing SaaS fourth subscriptions the was margin gross continue $XX.X Now in to as slightly was Gross margin investments sequentially gross XX%, we turning the Total in planned profit a make XX.X%. non-GAAP. down is million, of business.

well in we near-term, tracking a overall. to are relative We In will to remain margin the our headwind modest business gross and to our it SaaS will expectations. continue invest

gross small, services margin the Our amounts margin is direction. was insignificant Since services can gross X%. either the in swing relatively business professional professional even

we expect fluctuate quarter-to-quarter. gross and services from the that So professional margin significantly will

I scaling line XX% of focused to and expense hiring the We Turning XX% In operating was year-over-year proud related was expenses. of for QX, QX and marketing revenue. to investing of million, our now overall of business. representing drive the total pace remain top $XX.X execution to on growth. up Sales

Our overall unchanged. here remains approach

gradually term and and scale as expect expand growth market business. We realize we will we to coverage the continue leverage longer over capacity as to add drive sales the

a expand we and fiscal Shay was in representing total provided both innovation our XXXX new million, remains of QX number about R&D continue revenue. I'll XX% and to as of area in we talk theme XX% major be a as year-over-year This in expense earlier investment up a R&D a minute. $XX.X products will existing for heavily well, and features. that examples invest that advantages.

XX% total representing infrastructure of the future. expansion for scale revenue. This our includes costs and to to continuing with $XX.X was G&A global expense the XX% build million, year-over-year up associated

operating to in shares share with the operating incur an and impact in performance expenses as loss Since was revenue $XX.X of loss XX.X distributed hedges operating we’ve insignificant. on as the company. given share This strong Our The quarter of year was FX last quarter. Net outstanding. XX%, per compares of natural expected margin the in million was was negative margin than which we $X.XX. $X.XX diluted loss million net QX globally per using QX a basic in a better

to Full-year flow. cash can our fiscal negative cash flow $XX.X improved cash They flow period in couple also improvement million $XX flow at lumpiness year-over-year million to year an the cash points seasonal leverage percentage a flow Free Turning Since demonstrated percentage cash negative free to years QX XX%. was model quarter. negative flow same are few of be indicating primarily XXXX free basis. in outflows. we each free to points business compared margin, for and timing look the a margin in some We've there now and year-ago. both annual We margin scale. inflows in a cash and a five of free any on free effects as

cash the operating million We approximately ended in quarter and remain comfortable We with cash perspective. from our equivalents. an position cash fourth $XXX with

quarter in employees X,XXX across XXX with the people functions. quarter the ended we Lastly, all adding

investments meaningfully mentioned adding across the are quite had of the our I to count the head and support last call, people board accelerated As related growth in business. we

Before talk about turn me Endgame. to guidance, let I

signed an that know announced we agreement have you As today Endgame. acquire to we

million, of currently in the outstanding awards consideration largely which the towards small paid million. assumption at cash we the amount of debt, $XXX price in equity expect stock approximately paid with $XX in stands repayment a total be purchase For of to

expect transaction may the approval trailing million. we have in close conditions. $XX transaction year, earlier. to of We of and your the sooner XX close this closing the other seek will regulatory Endgame subject approximately fiscal QX Billings month since of approvals If

is to our However, apply our opportunity Therefore, product the the term integrate in revenue investment it. thesis and primary longer into go-to-market their nature. is model Stack to us for Elastic

includes fiscal purchase of impact revenue forecasting closed. Our approximate the year this of for insignificant fiscal impact we particular, timing the operating negative anticipated impact given the anticipating in effects full-year two financial the half price second of rest transaction guidance are an of accounting for percentage the margin. year, on We're the point the also of

address We the team accelerate are Endgame are security to to looking welcoming to to excited opportunity. forward and further Elastic our market ability

quarter order to growth approach the to for entire in guidance to to drive Turning as the across disciplined investing revenue the and XXXX, business to future full-year maintain expect globally. we a fiscal we continue scale first

last and accelerate our call, in to in R&D and investments count head mentioned to growth. related coverage we capacity plan As globally sales drive

be secure intended remains to this us long-term. Some for and we particularly of modest leverage and over significantly others a the while will marketing these investments driving will invest R&D drive in top G&A. growth year, in will Innovation R&D, growth to help while in sales priority and continue

in the For XX% representing midpoint. a fiscal XXXX, first million, at expect of we revenue of rate quarter growth $XX the to million $XX range year-over-year of

expect ordinary $X.XX margin shares loss $X.XX in net range XX% and to of per outstanding. XX We negative operating between the and XX million using of non-GAAP range in XX% to negative share the non-GAAP

timing are timing not May. the certain change in our corporate internal prior our fiscal does expenses heavily events As the more all impact total. XXXX in meeting QX The a hands expense reminder, years. shift full-year weighted global and then in Orlando holds towards of and We in

the expect in to $XXX For of at fiscal rate year-over-year XX% XXXX full-year a of $XXX revenue growth the representing million, million midpoint. we range the

margin dilution between the XX expect in We million net margin range to X% XX share outstanding. includes Endgame loss of to XX% and shares from XX%, using per of range non-Operating negative Non-GAAP the $X.XX in ordinary and operating approximately negative which $X.XX

free the XXXX. demonstrated past we’ve improved two we same as to have Finally in do years, margins we flow over expect the cash fiscal and

we to in margin be expect Although compared XXXX. negative, free improvement XXXX fiscal to still modest fiscal we cash expect flow

XX% finish XX%. the to a QX of We growth year. for margin year with was non-GAAP In of terrific revenue negative fiscal a delivered operating full strong closing,

delivering show forward. to continue executing use as look move margin. sharing so in growth we in to opportunity of cases. I ahead the with investing address and We're different while to improvement We many well rich free market flow you our cash progress us forward

let's With for open up questions. Operator? it that,

[Operator sir. first you, Instructions] go Thank Bank Kash The come have we question Please from ahead. America. of of will Rangan

Kash Rangan

search, Thank much. away distribution much. I on change back note, talk could you particular. quarter, come Janesh curious of towards to security And seeing or if if a you in the very Congratulations gentlemen. for the shift strong Thank cases. was And to are use I get the relative you. norm, then search a you so wait your Actually will to it till maybe one pipeline from historical will Any one, through that more first operations, the towards for I second. of IT you etcetera. trend you in was

Shay Banon

the and compliment. is Shay Thanks question here. the Kash. This for Hi,

be can't and I’m your to from that various use Arlington all, shift to go and seen First the with the I significant of in coming here then. and officers we team news talk Endgame between wait we the the Answering share a have. question, cases happy and haven't at out

have use announcement search the in obviously Obviously, and strong the app and news. various logging Endgame remain following site that we enterprise as we our the cases And staff of observability metric search, security space. use excited and also in about the space. Our APM search our opportunity cases remain

Kash Rangan

And What just either worker this or from year it's answer specific you number, grow Janesh guess but That’s Terrific. don’t you are Thank it growth maybe me, to wants have rate count? beyond. the Shay your And for plan give is tell much. to that and head planning I percentage fiscal and sales it. so who me. to you

Janesh Moorjani

Hey, Kash. is that Janesh. take This Happy one. to

think I R&D, can I building expect consistent in rate And I look also as think out, past. laid will sales prepared we’ve to will that at you we said be also when in the that heavily coverage but we quite quite aggressively the broadly that’s invest a we’ve numbers you He the think globally. out at remarks. done for in rate the invest that So in

Operator

Next we have Raimo Lenschow of Barclays.

Raimo Lenschow

it where have from congrats and of I a your that to questions this couple me, frame announcement I on I I kind saw on of if and security with context. that new may. giving mean, opens security for have source for like investors Shay, picture first How quarter one -- quarter. he can And then more obviously a questions we just about you And reaction. lot us. what’s of great you, to is the around Hey, just gross like think got for in a do thinking around its open a and to bigger DBS, doing follow-up. you

Shay Banon

to Yes, of it, Happy about course. Raimo. you talk

one of you project most We product announced on of that few Kubernetes. probably we’re a Kubernetes, the that deploying Elastic on is, we’ve So we and dealing orchestration. more seeing users Elasticsearch open-sourced successful and Cloud is made. our points about with Kubernetes out and And which are there, aware Kibana excited more very

providing get it. product, the features an multi of comes a of this official users aspects of be a head part to when to of official security part to expect and happy the product. we’re In So it especially curve tenancy as here

like encryption things ones, foundational or and authentication Some authorization.

product, part things, source. These our including They’re Kubernetes our license. not are of basic open

motion the sales provide open-source Cloud that free, go-to-market provide. to of version. but obviously and We going Follow-up just first also this of ones these SaaS and the our that will the comparing, our build it to only bigger are the and features, that security not have develop the over our on other top come they anything from allows And more specifically a have significant played on to obviously quarters. features core it what’s and that open compared and I’m in few about but service, in source all, we are product that do. bigger, mode And Kubernetes making role, bigger a motion. increasing still are vendors differentiation to us vendors excited So proprietary that, go-to-market believe there strongly we past fact that else

Raimo Lenschow

Perfect.

That on makes Okay. sense. total Endgame, then And

kind You how of of like how it you overlay another your want of market you how you like of them opportunity there. go Elastic positive do it, sell but to the of Elastic motion? me, Do approach, go also probably have to think an sales the I do economy experts that’s kind can about to you get and in kind area. for like child's going like platform that from in kind do so everyone of plan or to kind you’re with the expansion kind of need mentioned handle --

Shay Banon

Yes, I plans we until need closes. mean, wait Obviously, detailed here. we haven't made to it

So thoughts could I have. initial some share that I

this first -- technology, been The in base with how metrics. that people other sales have products And the is whether agent type joining and forces people don’t our very as used is What we’ve just based years much Beats been natural. comes context feel of down realize technology of Endgame, selling of for our using security now, events. it's logs agent collecting part

of on some that up significant space suspect natural speed. very top always to the reason require this and go of pick the the and I a a I and So Endpoint and specifically a that I try in On to think, up as protect is and our any go-to-market to there SIEM some But remediate that smooth don't it. to endpoint salespeople efforts extension will don’t effort will is would the see in as be it prevent be of ability to why got relatively and to efforts us security to one which motion is top directly and our from well get and on immediately market. That event, it the aspect able know tell. sell training

Raimo Lenschow

Perfect. Congrats. Thank you.

Shay Banon

you. Thank

Operator

we Next John DiFucci Jefferies. of have

John DiFucci

I guidance but on guidance revenue something -- really guys, strong a as expect over have on that I’m that. just sort crew the to down we implies you I it and follow-up large the revenue of into growth question bigger should why and as bigger. just like curious then acquisition the get comes time acquisition. of the a little a numbers constant annual the had bit as of throughout it which sort sort year, seen you and Is playing

Janesh Moorjani

Hey, is John. Janesh. This

me one. let So that take

the in In insignificant we're terms acquisition expecting the of relatively back the of revenue I itself, year. half think

There is have we is So drive to play that investments continue that make factors into doesn't growth. to One meaningful a couple of impact. it.

So be as mentioned nature. fueling growth that’s term some will some longer of of that see also in obviously we but I here, what

in And look is the control. balance with at way one so I our think main appropriately broadly, where way that of But more own as that past obviously approach a which the not we the guidance we about we've sales done be the see, that drivers. it's risks including the we in inputs of against consistent may I our think pipeline, then number

as year, quarter. And go there so here that's the with way over the we through we then And every year. approach both will well you update as the as the course for fiscal it full QX obviously we

John DiFucci

But unexpected were and just this consensus us I cunning understand little from at to after that to span to certainly this and I and it maybe a out a to growth. that I generous, this there. numbers accelerating we the drive sort little year opportunity think think bit you’re just is of go least -- understand

see it So grab opportunity, offensive? of thought out that driving it. there. you be is it see out of sense, something Is I there? thinking was at the little competition you’re growth? just should the remarkably What’s curious that to going more its this or like an it was more greater to You we increased a you How time is That’s than that? bit

Shay Banon

where changed is that really we were invest, ago. opportunity. the Yes, to We nothing market days about market XX broadly, days believe saw it John, excited We capture that need ago. I XX would we quite opportunity say from

and the we side of to and we’re opportunity capacity sales on model where ad that us. of for pretty and certainly confident market offensive overall terms as more coverage in us the prosecute room ahead There's So grow. large

committing approach. And we that's that's said, exactly to what here. the So would doing we and do over what we're that's

days this We guy ago of the exception with are of course saw then XX the anything and seeing we that acquisition market not in fundamentally the announced. different given that the terms we opportunity

John DiFucci

do. be. guess it I there it something in And sort It I ending. of at given just a very some what brings quickly just disrupting they into like are suppose players acquisition an to crowded space. bit anyway of a And a new enough. to seems call we odd appears very on least like, and competitive you They of Fair just kind already little in nature way, me,

did, figure I’m to what light I So trying you don’t a something on to I’m why -- there's just just I lot of know, I’m and can guess, was this just done this. -- if you I like mean, a little out shed trying could things you to have it. do

Shay Banon

I -- that. can I could John. Hi, Maybe take

So in that a area. few points

I is a a natural for market endpoint us. and one mentioned as first before endpoint as product is that the The extension very

I in around The stop. to being shipping We our some have Elastic capture like big that we heavily a work have events these security the starting security front on been Schema, to creating -- us. it events in opportunity Obviously, mentioned part community efforts quite of of able endpoint. is in of into the the elastic and investing security

and forces ability we’re the security Elastic if there capturing the a security events join the to we shipping out to with Stack. an raw comes of company best, them our that So what market go not events, product call it and endpoint excited today into one when has best in about

to a this So that. product lot that's we that using be endgame sense. to and have don't It investments event capturing able point do makes go one that and of means to early in just the

threat a to events, The towards the action it. second you natural extensions you that have being provides, part perform extension security is capabilities hunting once once a all able the there's SIEM our that natural product

that over from part reach endgame feature that provide time. you ability endpoint would the the to of provides us to That’s to operations the prevention product there. and and set expect mediation out another natural So that the

Some something search a in as excited spaces. crowded about space we’ve in and market. the very into playing a is space market the that been this future is market us to I that crowded. But ability I will admit these quite in forward new getting say company not and enterprise outer to pull the logging these in the

go-to-market of share to our see and have combination the creates we excited this a towards which unfolds. that Endgame, with differentiated am how approach amazing pretty think an or and product product markets great we I

John DiFucci

Fair enough.

Okay. Thanks a lot guys.

Shay Banon

John. Thanks,

Operator

JP Mark Next Murphy Morgan. we’ve of

Mark Murphy

think Shay, thank security Yes, you’ve I features how they in context my had past, for gold we to made any of interested subscription. required I that features believe the some core renewals, freely security have you. congrats. been customer And million should customers those will available who everyone. about paying Elasticsearch that the you them in a taken the add I for from of I'm guess,

you help maybe mass So work could or that direction us one other? how might understand the

Shay Banon

to happy Yes, that. cover

put or that would we’ve like taken high-level mentioned I fundamental numbers. before, expect authentication encryption what basic I say on features. security and into free Based which things is tier. our basic our this, renewal as So are our These authorization expect like we and at analysis, you don't them proprietary.

features We our security more customers features anomaly level, like have enterprise-level higher of real our as using been machine they’ve well director been the learning with as terms a much features active detection engaging at capabilities. like both commercial advanced in that LDAP and

anything significantly don't expect rates, business all. or So our affect renewal that to our we’re -- at we renewal

Mark Murphy

on in noticed in intense or the or a activity was there I And the a follow-up, announced top again or its open looks difference funnel tangible It you way positive back like distro the is customer business kind very Amazon But which any changes any buying since difference other? year. just either as you March. or in believe negative any for have Elasticsearch, the one in strong finish to Okay. of developer AWS of embrace noticeable had

Shay Banon

any way or I haven't one seen significant another. know we movement

them of expect our our to distribution download we products are and are Our as numbers usage be.

our goes and our set feature features. call our means see they includes with features uses and We including are and the that product very that proprietary out-of-the-box. excited time someone of or basic get distribution this download they our about what value that distribution, every this default free This our can we full stack

not have now as effect a result For we of of seen it. type any

Mark Murphy

feel One caught are properly one. for you're this in Okay. you like Janesh, to fully point headcount fully year? up at now last fiscal this staffed

Janesh Moorjani

in and guidance adding marketing numbers the into and into every will model look expect So you model. the And significant profile, we people sort at can the would the the continue in hiring quarter terms number we've back the of obviously keep of there, evolves. I investment that as of that you effectively add spending build do as it embedded of the people. can guidance increases sort math see to profile, to what anticipated are you year a

Mark Murphy

that. sorry, throughout I the that more I’m I be clear people will on you Yes, wasn’t year. adding understand

curious and I kind on just like that you little I And behind were up to guess, period. quarter. I'm back feel you’re whether plan of a think hiring you last since caught

Janesh Moorjani

in being the And in it's time a in talent. blip significant think seen I any which not a people. the over recruiting challenges has was experienced of that. last Yes, holidays just job our We've bringing months -- few attracting of we done marvelous number that

now, as up we’re So like well. we’ve to we progresses hiring but as the do caught fully feel year obviously lot got a more

Mark Murphy

Thank you.

Operator

Capital Markets. Hedberg Next RBC Matt with we’ve

Matt Hedberg

some you looks the another great obviously, taking with I’m hasn't wondering for Shay, the question -- what the you base questions. on you do plan start yet, closed code of but think you guys. Thanks to base. Just do forward. I open like do source Hey, my with wanted of general, mean, how Endgame, all It about technology sort sort it? on though. of I kind intentions it, there. your to going a deal of code of

Shay Banon

good a it's Yes, question.

way and closed and sit to plot really chance start Endgame So hasn’t a forward here. as down to said our deal haven't first we of the had you team with the all

I future. and the -- have with to honestly you. So I the plot past to to we be see share able that, don't anything would don't concrete can you say

proprietary unrelated we managed self part feature managed and that house. Obviously uses paying of comes self us, the to and product or the free not. whether the up significant our order our on to the is when made have the commercial a to features it anybody so ends SaaS have basic, that's is our in expectations obviously We to But which convert drive investments go paying to in ability customers adoption. bottom-up

Matt Hedberg

Got it. Sure.

of module with you're as a one on there success a if your of of cross-selling there. but Okay. a quarter? -- the that curious I really leading In then selling little sort sort more. of on per inside don't you the APM, prepared efforts are se, this you more us of believe I’m remarks, you APM having wonder can the progress about give detail And bit bit some Any that. you base. notable your I talked it are progress

Shay Banon

Yes.

quarter the that also like we’ve languages the we’ve we're support managed advanced the we're distributed over but this team APM and more is features in the has past progress. tracing. So language more But investments significant made definitely supporting in We like getting for already, the a amazing featured where space. the is for I to what APM made an slowly, fully self feel programming a the point APM space. getting point surely mentioned a to product

security to cases. act sell our is to product APM We -- are the we still or that a way as second use logging

for point. they to mostly And So future start use then to start APM. for at will our update to already when now that existing we to an we additional with us we in logging, to are they’re for just them move us we're APM, but lead intent you targeting get our it's and definitely customer start if happy value -- using then the definitely to giving base them

Matt Hedberg

Great. guys. Well done,

Shay Banon

Thank you.

Janesh Moorjani

Thanks, Matt.

Operator

question have come will with Bellini Goldman we Heather Sachs. next from the And

Mark Grant

Mark for Its Grant Hey, thanks. on Heather.

Just one for me.

think think when So obviously a competitive? this in the about think about are use releases where fiscal could you the continuation see you can or you a that of standpoint? fiscal talk in cadence You you opportunities you you additional a case 'XX, product just particularly or Do be cases are coming use of there strong fiscal 'XX. had is pace investment from greatest where priorities

Shay Banon

Yes. happy that. take I’m to

opportunity we proud basically past our the over new either can versions products engineering made products 'XX. on all excited case like has we the of us of think or in I’m that efforts all, front very the FY a releasing team is we been new that on So, for as positions investments major have It you year the see I keeps Kubernetes that well a about that constantly our Elastic I first use of us and thrive. I'm and in that guiding Cloud of of towards of single look the one app, stages, why search think future reason this That every together services on but that's the all it when is just we've and to I innings is the early is a enterprise early R&D market, fresh released whole bringing investments. an enterprise sites, enterprise search SaaS been what product use terms how product, it’s that any guiding our of the and impressive. like we’ve the and especially been company that comes search these Whether cases uses. mentioned today

it when the and build APM. security SIEM to a community doing comes space, we metrics And obviously, develop the build an together that’s Elastic marrying I to to in and now to the space able products Elastic data area the of bringing believe logging, and of start investments shippers to with we the and have Elastic opportunity that an with our security Common Endgame. emerging point endpoint to foundations around go-to-market So that observability various an investments being obviously Schema -- product to stack and product getting it and where it

Mark Grant

helpful. That’s Thanks.

Operator

we Next have Citi. Tyler Radke of

Tyler Radke

the to how in quite how here. still the other big a around asked were be overall about that in the investment priorities pretty on acquisition kind the the is that investment of here, one talked earnings just are already. it's been things a that pigeonholing you. avoid is area. if a you’ve with and yourself of time I well. Shay, just And think focus market. but, calls about too that seem to security has Hey, Obviously, of one doing you to around apologize mind, relatively And question in narrow of -- of you areas are the thank balancing security looking But sizable my relative thinking this I’m I IPO things the and hopping you

Shay Banon

Yes, that. happy take to

with team forces features building eventual on part within products. focuses that a even joining Elastic is and security our Endgame, us first the -- have before So that we SIEM

today. are investments we So making

them when do for basically We we've we enormous the it that know build things about and in all foundational level we allow invested Stack. this people these Elastic on them now like to to our a context we Schema. That's to months circulate things that are community bring think at a and comes the in Elastic few features to go-to-market, trying it of security that foundational and the why want comes our features allows As is use basic Elastic and to of developers in level. Common a more bottom-up, foundational to and of

moving I’m more are market SIEM next it up data and the on comes thing. really information ability about has the then also Alto events from curated release people starting we security dev seems again, to and because or the of know you to to at it mention Endgame also product networks, be should researchers in developing security excited the we I been and bring obviously to am done like it see a moves same this endpoint expect looks security the security our us put the will type but out you space. are honest, a and opportunity. excited nginx that we firewalls whether into once not comes the you market ops experience of Palo a and the [ph] Stack capabilities Exactly there. all scale So SIEM Elastic -- over And all networking the and product efforts the the empower host level shift you and firewalls, world. that concrete to in across search to Cisco about I year Endgame of same users when integration, what the and of ops the We've some engine, product

there provide that's user markets, it's able new for this by acquisition can look about security to have SIEM is to excited forward out single two any And any really merging market together type compounding you user that. that deserves. products you doing and asking there a best we’re that you the out endpoint. these So to tough work goal the do at when and to start like our together effect see there give of with really be you wonderfully that to user product the moving questions experience And why security and

Tyler Radke

then And a Great. maybe follow-up.

that guidance made about know help the help more your changes offered think think context expectation the customer growth with you I pricings, the understand we But revenue next business. I we us for year, on about just the based some year. in line as architecture, memory for the favorable next that us of hot for their As maybe usage. SaaS understand think one which just

Janesh Moorjani

Hey, the ahead we remain is Overall, Happy bullish Janesh. that us. so of opportunity very we about to see this do SaaS that.

continue future. to self than I the don't You to trend would SaaS do that see tries has Broadly, another. business. way influence behavior grow we would will that in for few business quarters past or our expect the continued one to We faster anything the managed say that customer

are regard. to that comes We it agnostic relatively preference in when customer

grow them, we've And the but in that a way for the that best so little will we than will continue business bit makes we do that expect customer sense what to before. serve seen faster

talked The about that other we in point here quarters piece, three And around with out is the conjunction to I take ago. you the opportunity architecture made changes that will that, just of that our of headwind to revised fiscal. before lap model, pricing launched we quarter got pricing had this go one that at we QX so we’ve of start still and the

Tyler Radke

helpful. It's you. Thank

Operator

of Oppenheimer. have Next Ittai Kidron we

Ittai Kidron

of any Thanks. did we can you Janesh, level on give stability is clearly Congrats, basis? XXX%, How Couple on a questions or first all, expansion quarter. us Good there of the slight guys. but for of basis? the me. stable, year-over-year year-over-year directional above the rate color deterioration

Janesh Moorjani

with to Happy you again. to Nice speak Ittai.

the continue So quite strong. expansion business broadly renewal to and the in overall economics be

continue expense so the growth So of be compared with that really I consistent got say you of expansion we’ve or to of the multiple there. customer at cases was spend and with rate The to shift will, similar with any not base, that in that vectors you’ve expansion above will pleased customer prior levels in over expansion if we’re customers expansion QX QX seen the net earlier, very and amount within projects themselves -- patterns overall quarters and they use broadly significant us. the XXX%. remaining it within

that And play so we’ve of seen out. all

So meaningfully no It significant moved down. shifts. hasn't up or

Ittai Kidron

the follow-up the guess guys, in Very guess And you, as the Relic New itself. a like we’ve then monitoring [ph] good. for even to log of many I market and Shay, I year recently most performance seen last Datadog moving

this, think So they making it comprehensive logs a question now do quite of noise going is out the the picking the you. and of you customers they there are making many, metrics about many above past the noise? guess the you sense do to here? fragmentation customers options. the what market by about out about like seems do also think offer of do which How breadth you go because sense is have think solutions about think out you How I there? how How

Shay Banon

questions. great Yes,

there first to our it been case. fact the the when makes about the I APM, the cases fact So sense collapsing in part lot leading and three excited these metrics start way the use say actually realize logging has and I'm to observability that company the that we’ve will from comes that a been of use --

one starting, ones. the not from the if there been first we've So of

things the proud product actually line all use the cases. exactly I’m is same of really about One to the what ability use done has three for that the team

in and and Elasticsearch. natural is something when same UI So logs very using that data questions you’re the APM, and storage Kibana metrics is weave same between the ability to go in the

we’ve first been that's fact of features one as think company. to that top the on to a first one of it market the it. of level the I differentiated the that when we’ve product comes On

is provide the to second optionality I'm users, we which really The happy our part that about.

only our offering, have the solutions that to capabilities vendors provide on-prem the we’ve have quarter two ability as to our over business. way with all and go a or We last SaaS mentioned the and you SaaS APM users So self-managed well. exposed

that with would we user So that base. able vendors well can and things either resonates we optionality store end doesn't And it on that I’m I really our that to that between lastly that’s -- being provide. say or about is vendors, of cloud on-prem, cloud That there. something excited that

to we data is that to of in to have us the once that gets all core these compounded these the example as of level that features the machine that materialize think combine streams investments can expect FY the to ability your we moving three have in to features fact even able into 'XX. make good I have A our provide cases Thanks features and all they decisions. you you better that that can access use context. be learning and three together of

Ittai Kidron

Very guys. luck, good. Good

Shay Banon

you. Thank

Operator

Next Richard Davis we of have Canaccord.

Richard Davis

and that of that workloads one guys you that -- Hey, user kind And analytics about attractive security APM. the run it direction pretty the moved logging found maybe do speaking I that going? seems base how of think machine things that can what or your but interesting is learning. functionality is I and queries that mean, in slick easily pretty you you finds that's unsupervised or learning and is on of

Shay Banon

Yes, great question. it's a

Tencent day. would and the community building implementation there a this So from learning this we’re learning I being on and other in integrations with the of tools that machine by product say seeing we the our Flow out how bit are type built foundation to maybe first is every machine part about about are we thinking company, integrate to any

algorithm. any just strong of a can about foundational exposes So very used capabilities I’m type learning excited our machine be that by that search engine where are

to and I of count one the capabilities Our the people bring then definitely to myself in them. trying learning machine while to as learning common extends -- focus we'd machine say

result mentioned on you machine learning go anomaly as supervise which rid and data basically an point results and the they just -- have then just supervised the wonderful and to is not like that that go detection of of of it. and So ability algorithm can to

quarter-over-quarter with especially get and in unique this more use capabilities increase as to our we they in weave is are this -- service, and into And users I of good brand but in have you learning ties feature. commercial a need you the convert a customers. and fact them call the and to themselves features, more the will security a self We like have all some customer, feature cases. is exposed way SaaS free, engage managed is our features detection, in to help using It in our more feel context we the machine subscription us way more our anomaly seen are that a it and if features making learning our it, that we context retain about that what and into our have this of by that each on mentioned by there machine

Richard Davis

Thank you much. very Perfect.

Operator

no questions sir, time. further at this Well

will remarks. Banon, We would Sir? any ahead to to question-and-answer conference like Mr. now for go and our I turn over Shay session. conclude the closing call back

Shay Banon

in and thank was for updating the forward ending you look Yes, to financial call. We next look bye. We you. good you fiscal XXXX. to much the you thank a strong very you great XXXX. momentum to a QX all continuing joining thank Yes, forward Thank quarter. and

Operator

you thank time, everyone. disconnect you a rest now day. Again, team. is the today lines. wonderful your the call the Take care At concluded. time you management to may of sir And Thank your conference and also and for this have we

Elastic (ESTC) 6 Jun 192019 Q4 Earnings call transcript