ESTC - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Elastic First Quarter 2020 Financial Results Conference Call. 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. ahead. go Please

Anthony Luscri

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

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

remarks, prepared questions. take will we their Following

and posted being can Our release remarks simultaneously at of at with which this webcast is webcast. viewed downloaded after website in where live of market the ir.elastic.co. the Slides also press our close this be the conjunction webcast issued this website and Elastic was be on can call is 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 time. our other from the the make include XX-K, described we in in and those filings forth today These X-K and to XX-Q, SEC those forms fully with filings as Commission, Exchange earlier time risks well Securities issued the and more set that our with release and press as

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

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

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

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

that, over to it I’ll With turn Shay.

Shay Banon

Welcome fiscal the of It's strong here momentum year. great Thank you, Anthony. our call. results in to XXXX. fiscal and new start saw be we to first growth. everyone great Overall, the quarter our to share a and With

they strategy, portfolio well to is continued of customers, resonating adopt our with and which our broad products. as execute We rapidly on our users

revenue of XXX%. on than basis. In quarter, and year net XX% contract year value at QX, grew over a the the customers over to continues rate expansion more subscription be than XXX over end with our annual included currency We of more which constant $XXX,XXX X,XXX had

Janesh covers X.X performance thought But our the highlights, our with our some before quarter, from like preview and I from I'd Elastic SIEM I'd financial of about to release. talk start

hosts, DevOps including Kibana KPIs you over more. datasets, To exciting number about various can security sales new analyzing, [indiscernible] simply find users security X.X, with related the and of to have value Elastic is version overview thing One SIEM it. logging to that ingesting, you're doing say logins, an be in This data. is analytics from analyst visualizing don't and automatically Elastic a a to accurate experience click for that see you a of product security gives get I for and

just just all or there You didn't have it's configure anything, and to works. install

automatically Platinum teammates single can our level events unusual share as can go use release, to You a then X.X alert can like events an detect with a on UI with from document a from you further login of cyber features threats activity. even deconstruct of and originating that interactive drag and drop our step and to experience you machine timeline learning or

working ASA enterprise Zeek and community detection release, source extensively a with popular integrations and on network level Networks For been with of Cisco to to and like collaborated level intrusion this open like contributions. Suricata. systems firewalls we humbling monitoring see initial from It's Palo data Alto the sources

seen space. threat like product, joining also validation We've operations Perched expand are our to in will companies analytics and from Endgame, be consulting, we training security other capabilities and Elastic [indiscernible] company that further a the and excited and hunting

to the attended what There's handful a few it approach community within But A a back, weeks commercial although product sense is on I I'm a premiere market. had Blackhat, as security I well. of conference Las Vegas. lot the still the of I magicians expect, cybersecurity saw was for excitement see fascinating how to and closed in floor. actual processing the the conference prevalent in

subscription offering as I find Elastic and users gold free Cloud. Customers well SIEM can our paid it Elastic value additional learning, we to both our SaaS is is open run subscription. machine features it product refreshing that and offering, proprietary platinum with a that are to a a get as as like for support, same available from basic looking or through only

Endgame’s we from was about a the focused event. of throughout product. users while SIEM where what initial booth an at demoed at Elastic questions engagement for top of There at the So, release, lot on saw run can also booth visitors integration host data. those of our I new lot was network including was a excitement endpoint Stack, and experience on a our Endgame’s our data, integrations noticeable the with endpoint Blackhat of around our security demo

imagine to analytics me security cases. leads customers their this use enhance existing and all to and streamline new for the possibilities So

French with logging the Navy in sheet, their institution expanded company whom business replacing Zealand, ASB US and for or software with in smart New primarily effectively or analytics, closed the use security of this apply financial example, who BPCE, QX, this For of or SIEM. us group use-case all this could to us existing for Bank even business quarter,

regional the DoD the is we a of network They strategy with agency. business globe. attack situational surface, the delivery analytics security staff information sector, around with timely In US This new reduce Elastic the security Systems Information power their Defense part US and joint to replaced SIEM solution legacy program. for public and improve to modernize the security, improve critical war awareness, to insuring of fighters closed

CDM asset the to and security, network visualizing And increase management. every was and the identity by cyber for posture insights partner Security data civilian protection security Department management, analyzing, to tools that provides Diagnostic their agency US Elastic into selected access use management, ingesting, data proposed and our also dashboard, Continuous as or with by part solution of ECS. CDM Homeland deploys Mitigation of

of and is there for over already continue us our customers and grow with they're So more our to it, doing opportunity with get tremendous users what to quickly time. value out Stack, take

analysis, with it's over SIEM user still days Elastic it features, detection intelligence While early for rules, time more get only like integration. SIEM, better threat will

for deploy product hunting, very development logging a have in suddenly monitoring and ATM to Our Elastic where the infrastructure single this goal or threat experience use context or other cases approach of with SIEM effort. can you you is magical little The iterative. do is and UI, through

with continuing to streamline easily and we're this, the use started achieve cases. to seamlessly get to transition between And ability

Elastic X.X Elastic is version Data, long in is our iterative XXXX. in release development exciting geospatial quarter. because has back We Geo of history it Search This generally product. analysis Maps, X.X.X this made with with approach going example a this our Another available to

coming a to my and look real are Elastic information use We're are delayed network like our their and questions with orientation my it's And the floats delivers in we pew that custom or of time. exciting. curated on where Kibana up salesforce seeing a or at using business, when these points scale enriched users shipments map attacks emerge in need a where map allows from their a sales single that I today, Maps map cases experience territory to among to do answer using customers where

Elastic only And is dynamic Elastic if is wants to started that hosted experience customizable, Elastic with. that provides to get Elastic Cloud. proprietary is available run through offering, user layered a SIEM, powerful it product Maps as it also Like easy free our highly a a embeddable, a Maps and open. and is and

rolled quarter. commitment Services in region providers. Cloud and Elastic a region And Tokyo London, our a Google strengthens combined of topic we where with are. This Platform expands Web our major out our Tencent this with cloud presence these our Alibaba, the On new in Amazon new two partnerships users to Cloud, across and being

the is as In the these use and the market that convergence cases. trending spaces, uptime observability known monitoring APM, space, logging of also metrics, towards

model we've made Instead features. all I place users that and experience simple analyze advantage. UIs excited our an powerful users customers for to can with all one even to our instead together of a our data, resonating they products plays UI. user solve tools a pricing removes from one And more friction the separate and with trying from in and gluing signs by providing early store, base. adopting and unified see search, of new problem, their this these This to am

even even more of quarter, such monitoring products our to tighter the Elastic between .NET more observability the products, highly This as for the APM. included applicability capabilities and broadens to requested Kubernetes Logs More and APM In we added these Elastic integration which agent, products. users. tooling our Elastic

us quarter, replaced environments like us adopt their and Dutch online take They analytics closed deployment Nvidia, to their electronics or TomTom, renewed in Elastic the to of And business for we Splunk applications. consolidate who who cases see and their new all us. customers with with business continue expanded for with use logging the company observability

collection, logging Freddie an visualization and example. company solution platform. with Mac, business replacing enterprise They loan this metrics who infrastructure is Elastic monitoring Mortgage the logging and application with and for are quarter new closed for another incumbent analysis, us

powerful the more enterprise the and more use example, and for With This true fast, and applicability Confluence get also get Enterprise experiences Search, So, Jira, users as search space Maps, even use application behind Elastic to this of ongoing and addressing to easier SIEM Similar is these us products connectors you as for previewed many and this easy in such the for to building This a can more quarter. Elastic experience just better will Atlassian, sense to continue iterate. broadens momentum we products. and simple, cases. we audiences.

to available it developments our already they a experience flexibility products we're how This for makes choose. opportunity sense run in like this giving made for way is took users to our With that yet Elastic example provide customers case, the ease It's users more to environment adopt these Search, the that use a App us them. experience in search tailored using app of the another on-prem. SaaS-based our run to and and we

inventory vehicle visibility financial include few with their application. their managers, their in Atlassian, best business the General search help from us the Asset who new A Confluence to And decisions Elastic renewed platform. to for examples the us make quickly Management, Japanese closed internal embedded for who applications search power with Mitsui quarter Motors clients. DS business search their possible the fund who institutions to uses across Sumitomo

is to on ECK. to I'd easy of product run preview at newest on this many investment the like ECK This engineering touch last One case The release applicability broadens scale. to or Kubernetes users. on use quarter our makes it is more latest and Elastic Kibana manage for orchestration one or Cloud that Kubernetes and Elasticsearch

ECK through engine. enables Amazon's beyond Hat Google Kubernetes Kubernetes. to Container Vanilla and Service, distributions consume Service, Red release users Elastic Azure Kubernetes OpenShift, This more

is and APM offering, another and our enterprise Elastic for security ability to custom support ECK to product paid that extend the includes through basic support. is capabilities features. level also with available It

on All investments that significant Maps, have of about I've app proprietary SIEM, are logs, search, Elastic monitoring, infrastructure talked the search, today enterprise occurred engineering the under so and APM, things license.

Our continue features. significant a products company to proprietary as to is investments into put strategy and

them a and indicative basic to our them particularly our of strategy Cloud. SaaS this software on under user wanting our via it. strength run is is means can and available default to our Many We only quarter working deploy Elastic deliver are to This a free of this subscription. believe

on and quarter, be to by continue and ever I the strategy how position. it's look they've horizon, more I about confident there But been than and well executed. what's market Overall, I ahead. team's work am forward first exciting more an our is to and the humbled

Janesh That's you. over me, all from to

Janesh Moorjani

Shay. Thanks

metrics performance in pleased quarter, market against customer reflects again strong once with overall strong execution growth. metrics and our large billings and are first growth We our demonstrated expansion opportunity. and delivered the We continued which revenue

United our a year this increase XX% States, XX% Total reflecting outside revenue of our strength year first totaled up geographic on was our a $XX.X million the revenue reported, as growing currency basis. for or of revenue. as quarter as a total currency million, and our on constant over view reported, of over basis, distribution $XX.X from model. XX% based business the came the bottom XX% year year adoption community long-term of revenue XX% comprise or constant We Subscription model. of XX% and strength

SaaS We subscriptions. in We XX% basis, faster from over heavily continue of $XX.X currency rate on Within opportunity. our growing Cloud subscriptions, or SaaS Elastic XX% at products strengthen opportunity the against saw remain offerings strong large growth that about ahead was some again accounts. us from revenue year very overall reported, our once continued in excited year than as to constant million, including and the a enterprise invest also

over same increase an of Professional last period services $X.X million, revenue year. XX% was the

on services of from seen fluctuate Overall, enablers revenue subscription our be which delivery professional projects this can of based offerings and saw quarter. continue reminder, a strong that we've to training quarter and timing. of consulting quarter We to As adoption some growth.

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

Moving over or year constant XX% year, calculated billings, $XX.X QX currency million. buildings a to on basis grew onto in calculated XX%

reminder, of conjunction revise we more that. As SaaS headwind much significant we and pricing in our with launched year, changes to a model customers QX a offering in growth update billings to last a services Those present calculated year flexibility, our last

It's in of mid-single hard was headwind, of year quantify terms hard digits digits estimate estimate that was It's it growth. over we mid-single that that in in we over precisely your precisely year the quantify but that to to terms in but the headwind, growth. it year

higher. been of of the last the was correspondingly billings have headwind. these Excluding impact quarter billings changes, would calculated growth QX this

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

was growth So provides longer ending the alternative billings billings of view an XX%. the calculated trailing growth XX Trailing QX months months business. calculated term XX

$XXX At of the the of mix performance next months. XX% recognize revenue approximately revenue. deferred deferred up XX revenue year the XX% Of million, we was to Remaining XX% end short-term of QX, as year. this, totaled total over expect over obligations

continues the business with and do approximately length contract manage years Although we actively half not target length, be on to average, a contract one

customer metrics. to Turning

customers QX strength customers year. We as As in the compared of end over the X,XXX X,XXX in QX such additions of end to over QX, we customer of had subscription new last prior at have similar in we saw quarters.

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

were execute use continue In relationships expand of customer reflecting net existing expansion the us, use continue to opportunity over adoption with our Overall, pace remained we expansion and existing of Our rates customers spend enormous customer increasing cases their ahead XXX%. and market new with against cases. to us. we pleased for additions the QX, as of

million, was in the up gross non-GAAP, is which XX.X%, of margin margin first profitability, representing sequentially. subscriptions profit XX.X%. quarter gross Total to gross turning a Now, slightly was $XX.X

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

gross Our margin professional timing service services direction. associated can in small, professional insignificant is earlier. amounts referenced X.X%. even was swing gross I the with business negative Since services margin the delivery relatively the the fluctuations either of

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

to business. operating of relation and well top-line in remain on in Turning overall growth. continue to focused hiring scaling In expenses. investments QX, we to the now to We investing drive execute

of was impact in and reflected shift operating This full-year hosted the Orlando in lines. As total. changed in all-hands timing not towards expense we This does global events our in all May. QX meeting a certain timing reminder, the expense the

over Sales and year, was of QX million, XX% expense in total $XX.X year revenue. marketing XX% representing up

Our marketing unchanged. overall remains and to investments approach sales

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

QX up in million, XX% representing $XX.X XX% over was expense of total year R&D revenue. year,

heavily continue before, invest our new both investments to features. said year products and we existing we as in we As this in R&D are increasing and

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

with negative since the loss of margin expected, operating on as natural a company. margin the hedges we distributed insignificant in was XX%, strong Our FX quarter globally have The operating was $XX.X as an impact better quarter. revenue in operating than we million, performance to expenses incur due which primarily the was

a in shares was year This in loss $X.XX to $X.XX. net XX.X average using outstanding. million of of share QX loss share Net compares last per per QX weighted

shift flow negatively Turning year We historical in Free compared both and negative timing flow annual given margin to ago. positive quarter. impacted flow and since cash free free the cash million Cash earlier. a to effects in primarily QX are mentioned an was cash I versus cash seasonal in the in period basis the timing a of there same free look flow on expenses flow. $X.X $X.X at million any was seasonality

There lumpiness and remain million ended comfortable can also and perspective. an with equivalents. operating We be approximately quarter some $XXX first our cash outflows. with We from in position cash the cash inflows to

consistent employees ended in we X,XXX see. opportunity we XXX market quarter term all the the making approach with longer to the address Lastly, with of adding functions, investments people quarter our across now

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

if of sooner, approvals transaction closing may is and this to transaction close fiscal year. regulatory other earlier. continue subject in QX conditions approvals expect the The We transaction and will secure the we close to

of half of timing price of to this forecast accounting impact the impact the fiscal year, of Our revenue particular, for the the the and close. year. insignificant for anticipated the fiscal purchase transaction continue given rest effects second guidance In we the includes financial

We margin. an ability to Elastic are also security points percentage approximate and operating excited impact our continue address the welcoming team Endgame full We're year looking negative to opportunity. two to market anticipate accelerate to forward further of to the

the Stack revenue to for in As discreetly integrate longer primary thesis current to and go-to additive reminder, future Endgame years. Endgame the levels opportunity term into is for Elastic investment Therefore, is us and much our revenue our of product not model to a the it. revenue are the nature, apply community-based our market

the and the Turning quarter XXXX. fiscal to guidance for first full-year

to invest to continue to expect scale. as in We the growth continue to we future order revenue business drive across entire

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

of over these growth in intended Some will will to be investments year, particularly the growth R&D secure while long term. this drive help others,

Investing eye our to current for revenue and on an In political economic continue a global remains innovation in us. top global keep particularly priority we landscape, mix. parallel, given the

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

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

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

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

closing, QX strong was to fiscal In XXXX. a start

different sharing while cases. so We of use address we and opportunity market growth move rich progress to delivering with look are the ahead as to I many our forward us forward. executing in you well investing

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

Operator

Raimo And our Instructions] first question from Barclays. comes Lenschow of [Operator

Raimo Lenschow

you bit efforts, that security around is sales of et cetera, new Shay, sales start. follow question and little congrats up? about the support, those had you’re force my and the and I have lot and a that can there, given a evolution a one including going seeing like great taking for of thanks you initiatives newer in of the pipeline terms where supporting to then these Hey, you areas talk -- Can on [indiscernible], talk

Shay Banon

Yeah.

the Of course, for Raimo. question. hi, Thanks asking

are single to APM start about these the of a have competitive Thinking I'll APM believe logs So to going the that couple converge moving a years and security and with into support trying trying product and ago, and these features space. to we're being model. company pricing a one, fact that packaging called markets, into APM add I able APM, line. advantage with [indiscernible] to single line, a of features, metrics single ahead the it and acquired space, product product using stack the we

from In in the I probably progress mentioned, made that to APM, last perspective. was as language dotnet environment. supporting as needed support we significant an we now major APM That an

we're So that. very about excited

versus customers our additional especially users, market logging going data way to change. logging. them to they add see since we're and APM APM can the But led and go that users Our value, doesn't starting to to is existing still for now, that see mostly leads set where to telling and model us that closing being deals pricing the

the to security phases the in we it our comes it opportunity last extreme market always pretty are the released that big. is working We've in but for been is -- last year. We've the think on we market early just product. space, When space,

markets that. investment is or converge So also you endpoint we're releases. And converge iterative believe very excited about excited we SIEM a know as left. a one. data we first have in and very of very release, we since but But can I'm into Endgame endpoint probably the about acquisition, our should And obviously obviously bit have valuable. we quite very us, are

specialized highly ability in to analytic They very context it about excited of across dedicated even the to products customers, volumes security I'm quickly. seen Fed professionals, security. to and the comes stack we before of us adopters, wrote large see advanced it. well, search especially hunters data our value the think it with call scale you the very speed, I or -- analyst on heard we've like as adopting people security early the the When in

out well closing but into for Endgame we're a are -- us we have cut work integrate still last our extreme as So mature as to product deals, our stack.

to to first, comes model market free our our we bought and salesforce -- and now, applying which these that them the excited about I'm have, whether same is it that to we're it's it When the APM we market, SIEM markets you have, and of open market. the one community taking to the go go markets, and Endpoint areas up, and that

to This allows when to it comes efficient our sales more motions. us be

we of so And sales haven't far, specialization -- we don't something or those lines. type along really or have dedicated any people

people sales to easily our market having We users moving Our go it's talk to products. we use super sell them can we laterally type and very critical by generalists same are see we the service between any that our the of think to and person. best think cases because

Raimo Lenschow

market? favor do sense. then or of around And kind guys its like whatever of see in see open like you. you any own Yeah, source that, to obviously one Thank okay. maybe like there? offer Makes one you the word, the Do cloud tried impact hyper that

Shay Banon

Great question. Sure.

we, So an effort. there's

which additional company it many since our an together source One our a of one AWS recent there was something by we've called repackages open plugins. pure Open years source, the to effort few seen most the open create for an started, with solution, Distro,

folded proprietary I'm especially encouraged in certain increase one, single And the this I very really area that on that mode investments call I'm it and and about it of also code affect competitive excited what us more invest even our free adoption, cloud about distribution, we numbers. the seen We in our Actually, haven't to downloads, see tier, community obviously which or comes our it. as the and our our helps about versus a to metrics, when sales mentioned you any open providers. significantly

Operator

Rangan next America comes Merrill question Lynch. of Our Bank of from Kash

Kash Rangan

of sequentially me the just these how giving business to had we've of business, you've same And be did cloud? but consumption, let seems How are subscriptions broader just time be a we're indirectly term, your see seeing self-managed in seen way add congratulations your self-managed seems thinking I'm your we last design, it forward? if get a shifts is great a beginning at longer certainly so by in significant mix increase forms in to little other modeling be quarter maybe course, it’s you business curious a year, given the the and decelerate point the quarter. the house going on re-accelerate. the to cloud, to and of Hi, which side items thoughts that's on that wanted I positive larger and license my some the faster much. Thank shift, in this different of of about see what bit line licensed to that quarter or you the call do turn changing, sequentially? to of pretty should the

Janesh Moorjani

one. that This Maybe take I'll is Janesh.

out. pleased broadly, the the way turned we’re So with quite quarter actually

we really a business some the seasonal we're quite see There that SaaS us perspective been in growing in how SaaS from strong about. for in about Broadly of are pleased for us was think business and that's the increasing gradual the mentioned, revenue has shift and you business, shifts the really terms mix. actually I of mix something effects. As terms as the

artifact business, QX the if just perspective, a I'll on from much mix an you at look So of piece, just really that usually license the point out license of accounting. smaller. that's will be But

a From revenue look for our not is a the based on, or total really side, we at because primarily business subscription focus recurring subscription number the our business. ACB self-managed it's perspective, number look at we

less And so line. we that tend focus license on to

a picks of up, oddities that down. mentioned One license the around that that SaaS as license exactly is business number you what number goes

continue thing. positive side some a actually to emphasize on that's, the speaking, sense, SaaS in the And so But broadly we house. of growth

continue see retention SaaS to and customer and self-managed. more customer demand towards We then

is That the and self-managed side on said, house. of lot the of the a self-managed are workloads customer business share our lion's of

reflected to And in we what on-prem agnostic higher our SaaS be So that we to customer see continue with you be demand the from business. demand than customer are that's respect a just perspective, preference, for seeing deployments. of mix but

Kash Rangan

are the modeling trajectory margins has feel Great. and in And mix, the margin the of you the do all you suppose, or managing gross us I takes. gross to the like business the change accurately implications and puts how other there mix are

Janesh Moorjani

good it's Yeah, question. a

improve of in business, that to will that's to of to associated SaaS as the as as in there's investments a SaaS bit make and the think headwind starts will of and there, a on near to efficient other drives a we as SaaS. become on side, I gross costs costs get the And the couple more as see we professional we term more scale, of we reflective tailwind. that then a SaaS businesses, bit And you itself, just profitable business fixed more with continue course, scale, invest us to margin. continue be gross that we once the the drivers then margin a services

comfortable it So near where I term, a we now. with there in think headwind we the playing we're continuing and is as out plan is expected right would. are The

Operator

Markets. Hedberg comes Our Matt of RBC from next Capital question

Matt Swanson

for This as is I'll on and Matt congratulations actually well. Matt Swanson my echo

SIEM more I excited to product. really think about everyone's hear talk the you

were internal perch go how much much maybe acquisitions? So you of think what plan? if deeper future talking on development the And roadmap, of coming how this little as from when we’re we that, should this about on a brings and

Shay Banon

Hi, course. take I of Matt. that. can Yeah,

So a few things.

forces significant know, probably that you acquiring there's we care cultural making that already that's with Elastic integration. a made. investment and sure And going through one we think product us step. it so product a user is market. the as call acquisitions, intelligence, our When the integrations, like that's And and an endpoint analytics, on to joining after we're very and it on and home roadmap the lot We And threat, our and behavior, our to excited comes things integration company, endgame and to about for obviously comes it when a all company that forth. the potential find Endgame. on they internal pretty when a out the development about first cultural, so mentioned employees way acquires from as well, the the I cut at good just planned We have SIEM

we that's comes just when out quite year, sure to the bit So for a us it making work have next successful. of that cut

threat when They When it a materials a it They're take people. personally. the at hunting in significant our build delivering were stack our first fight XX have in being it ones the threat than were one of they with small to Perched, of around comes staff less Perched build and it, forefront company, capabilities. They known able really the to great deep have been space. go hunting, mostly investment to training the I to really comes people

it. about and these services with that's comment And capacity excited future on joining to hunters, I we're will. can't obviously, any mostly you go smaller of we business, by around have train that aspect, forces that's our them. make the all really much consulting that. beyond But Nothing a So if more the training. and sure acquisitions. threat way, And I

Janesh Moorjani

from not subcontract amount Perched any as anyway. -- Yeah. of modeled was them And, acquisition, a of additional Matt, to than used to actually, people less it that, of revenue and the the I'll fair standpoint our as part just it's Perched XX business said, Shay we out we've from add

So there's really no all for revenue from Perched. this year impact at

Matt Swanson

line can about up help on questioning, on could Kash’s what I us just if the you follow mix remind shift And could be just of impact billings?

Janesh Moorjani

specific SaaS and… to You mean

Matt Swanson

Yeah.

opposed as a to particularly self-managed revenue SaaS subscription. being Additional

Janesh Moorjani

Yes.

a our business well, is our monthly for then front, SaaS even don't portfolio, there's annual offer both we SaaS discretely. and up which as out broadly, business break paid subscriptions which self-managed that a very similar we are So to component

that's really self-managed. the behavior the is same annual the a the as billing standpoint portion, from On portion

revenue. shouldn't you there the and see of any deferred So billings from standpoint differences

Operator

Murphy question comes Morgan. JP Mark from Our of next

Mark Murphy

congrats. isolate just and my fed beyond going where a I'll Endgame of integrate add you all look process have gets meaningfully coming to off you along or Shay, that as stop what is think that, data you wondering lines? remediation think combined Elastic is I'm for increase into Elastic, that how of the these a a into thank overall the volume endpoints. Yes, you do can something you And host those maybe to then vision we like

Shay Banon

a it’s Yeah, great question.

whether probably all, the If the or with to way types so more. Endpoint a days, system. it want want two of X or someone to heavily they more result way, to aspect you why data also store fact time on of that we're is there's whether that depend the and to the convergence it will Endpoint years year you to datasets. critical, when data, the slowly to a can first realize data SIEM and Market it the tends data, go or by create of the Especially the obviously in threat deploys Endpoint theme they other in hunting, combine and stored, because being comes the reason advanced that one centralized of a streaming by starting actually to is for So things provide want

also investments is Elastic. called the more capability. of cheaply data I ability think at part mentioned more our we're license. that building our notes to That into basic I and significant store more

people as hopefully, have So which new where I is but to the we in learn data not the to ever SIEM to obviously Endpoint get begin relatively won't a even concept point market. market, from throw away

that's help don't significant deployments to the our we increase involving going way, to Endpoints. volumes definitely it data portion also, Typically Elastic. of a when by So see comes

desktops. or laptops like things So

have some customers being have common. all to that Endpoints I'm from but to ship able of not Elastic. ship We And to agents about data, data our that bring it's ability excited deployed into the

Mark Murphy

I for have your products. simplified I recently, well? all been changes that might you least doing currently can time, the a something core based pricing, at think prop, in your of part up, about upcoming preferred and unified think has so your Shay pricing more, pricing into competition perhaps described a long learning ability pricing and be or we'll versus is view passing What Janesh, mentioned provide and value customers a toward you've which think your environment for of superior model, this Splunk some As I for model the follow you need to

Janesh Moorjani

well. a summarize time model, some the in strategy pricing provide now. is model based same case. from use a a in model really competitive had unified the there's compelling I to been that a standpoint it, us quite logging Yeah, the logging disruption. in It's standpoint, market capacity customers as base or nicely. alternatives our that And we which particular really they've the pricing working allows in And sentence the level of from all has there short had dissatisfaction We've the customer to is terms And had or the out past. Mark, based know it some among if of two, node to for of the of pricing I for been ripe just regardless see

believe perspective, From And our so continue deliver the we that's playing to that enormous value customer. to our nicely we to advantage.

about just if being cost a provider, not will. it's you So low

anything, we of in that's actually transactions if many win In realization, aggregate level of that the at fact, we because that customer. can higher the we to value instances, believe significantly deliver levels

the that seen, of In of discounting recent shifts sizes, just not particular same. or more deal I've of anything terms that highlighted, of in I've else business, our trends trends, terms seen any we've in terms own or

to Our to strategy is execute just working nicely we're continuing and it.

Operator

of comes next Our question DiFucci Jefferies. John from

John DiFucci

if I your team any with out for to is to doing. here, is questions free about AWS that with that Janesh some they AWS about Raimo’s all, is and proprietary comes heard of I it when up we of AWS but The talking initial that offer, to displace one because here Are and see Shay. the because as are from The always the perhaps do they probably out your their base, strong customer haven't but I numbers field, all from this follow comes on hearing on seeing top are be, Conversations investment things that look this about out things to lot hear community a is of a sort should offering and you technology considerations, to they there I at worry customers, they something, too. guess where about continue really the or wonder And community. waiting there. worried this Elastic investment own of that, is the have talked you're just in what at we

Shay Banon

I Yeah. that. John. can take Hi,

we very be compete seen Open able about the actual us be another. pure I'm especially that we believe really the is will seen license the that I versus the whole haven't Distro source What seeing feature see you've significant So implementation to And with version the proud stack. itself the -- control to sets, proprietary one anybody to talking it have. product versions on I our between that that and way find hard significant just on that not pretty we lines, honest, open of when or and differentiation investments prove to just we're it level, do to

I Elastic on So it mentioned new seem call, a but the whole product.

working users. mapping differentiation create these logs, team about that product default them, to most SIEM them new have immediately we have X.X are product has level our not that to every day, our very Once our our the between of version and for resonates more with continuously two of access that Elastic very, all of distribution of maps, capabilities, also of GIS almost we release if comfortable I it free. which now a every developer is upgraded Elastic whole a on single theme, on just feel and lines single APM, improving proprietary and and Elastic features these all

more about any excited through of to competitors that between that, bringing more can then base, I'm the So our differentiation do. user and our and realizing anything

John DiFucci

all That makes sense.

which is And deferred thank that we may all or follow get questions I on looking Like I were just for get revenue, lower than is current guess think bit So we that. you on might number the The a Janesh, numbers all up I good. look questions what I you. for. a tomorrow said, one

to going I'm -- is anything I mean, there So were billings that strong. in unique number?

can it. know is of But I on mean, that's make part anything, that? comment any you I So there

Janesh Moorjani

general in particular deferred term year-over-year. call would deferred consistent of is, we've revenue The say say. What was the line, broadly I growth seen historically, XX% that XX% nothing No, in short I’ll with rate would there I range revenue John. was that's out the total there,

too. pretty with So, obviously pleased that

we for There way. or impact which request actually caused to for there customers budgetary But this had transaction, one revenue. transactions deals in particular Because any growth that the upfront up time past the long out term before, other there wanted doesn't short billing be opposite in time, calculated them to the did invoice one from that's transaction, there what in see billings which offset direction. significant reasons. And partially might out term by entire side, differences did. rate billings in timing the customer slight for actually a deferred that who us was upfront bump was quarter. we We As said they might that the

out, in were in still that year-over-year short call which we is XX% pleased but revenue, the quite term something deferred that I’d growth particular nothing So with.

Operator

Radke comes Our from next Tyler question Citi. of

Tyler Radke

to RPO Maybe there And an if in anything you math know, that bookings see that mix about impact that implied number. or you SaaS I underlying nice out, growth the that, the would number. it's call around doing SaaS about just business triangulating in out doing uptick is an a could and talk whether math. you from talked shift as as the would quarter, we're we're around duration an call thinking that and the did terms anything -- about we should but business, this you self-managed of of

Shay Banon

contract actually and Yes. duration annual values it annual punch Tyler, don't on manage subscriptions. TCV, based the or line based on business contract we the there is we manage

a really And that focus bit much, sort elaborate me little said, of but let billings on RPO don't so we further.

a As remain high same. more customers you've I acquiring at sizes broadly business the the seen, about rate think we're as broadly, sustained deal

to be Our XXX expansion customers expansion than continuing largely migrate rate remains And to economics net the we're TCV. remain unchanged, more strong.

a are to from mission more earlier, to speaking. quarter continue duration. than years. one critical And ago speaking, contract bit our Contract mentioned can the quarter, and average by environments. one period. that little contract year half links shorter said, using deeper, customer get here in vary to us a durations continue as I business relations half roughly but I the were QX similar customers Broadly again They years, last And and we to a as don't because in quarter, manage was around

in And the you're volatile duration. can very quite on to based RPO referring billings be calculation actually small that changes just

that another growth at actually if to don't we just look metrics reason XX% that. RPO even look I other we and between and that customer that year-over-year, yet pretty as overall composite attention for metrics do billings calculated the you are RPO we've all growth all that's mentioned provide of the at So If well. aggregate pay the that strong balance, the

we business, it way the the broadly look pleased the and were way So at the we we with board. metrics run our across

Tyler Radke

And Shay. then maybe a for question

security a that's direction, market. to in you you call improving anything I'm So opened If anything talking positive the that terms use could share that's tied could cases or business share? up of are win wondering that lot new if there's with a about you your or SIEM moving product. the of rates that in percentage new

Shay Banon

Sure.

are new space or products fact good it naturally where the of customers you and space proud talking cases we early space, executing to similar When that year and because win the SIEM our space. used can't or any the not same and though you to logging security out capabilities are all mostly achieve it, just fundamental rates it's so because security and we’ve along other if we then in I'm to. just we one use go for very with start space, space, in been cases don't and APM of but something in results best I’ll on our has, the is search the just it threat and building It something almost the end something usage and on. excited comes thought of that end the of So adoption, it users lines, the one features just the it's get across towards those a it will, even that takes see market, nobody in there. great where or experience user in product, hunters data with product. year it's And worth one ability take today products we to And like by or apply, have core see those the to, to the that leaders that believe that that a has else releasing those about the now wins vision out so in advanced simply about milliseconds, very advanced see we're just the

not analysts get It's advancements like the for the the Now, advanced halls different. spaces, commercial, and of XX excited attention put our conference product and resonates, as seems all to used start our walking like walking products, is security there. hunters and lines about see these and it only that and was but It a to the alerts year and to trying hat black tons of to out in source threat expect mature like grow combining of to fascinating other and the -- investigations seeing we I'm also bringing opportunity I old something we things of for things our booths, me. that the where think compete with we, remediations gifts closed by of the that into box our to there attendee

can't Now, us. talk and to users wait to to come us

that space, but So the go about time. security market obviously that I’m excited to also takes to bringing

Operator

Our comes next question Goldman Heather Bellini of from Sachs.

Dan Church

changes overall you or color just cases Thanks on APMs, the differentiate incremental able on my for additional then quick yourself traction really field? one seeing? any This And for relatively crowded to Church a Bellini. is a Heather that and taking use how in you're of percentage are Dan question, any on

Shay Banon

Yeah, that. to take happy I’m

few So, things. a

feel on a our missing, be or before, something but we As missed is we're line why will minor that where roadmaps. level the is just fully features another That's or there I have There's feature a product. product always some are like I being to that one roadmap. mentioned APM maturing complete

the market, Our lends widespread changed our not go add it. existing to to space adoption going in customers. simple that to have with in terms customers APM very to discussion has having The and sales in itself logging motion to of specifically terms of we go just our a

the our differently pricing that and APM, apply and is charge other and APM model simple. the we our In also of not way. cases, metrics, of based no you it same and infrastructure converge, logs maybe and that a for hurts pricing, bought type and uptime, only that that super software pricing you host based those markets logging, use take supporting in there's the it's fact don't to like believe along you that to you on We for also various companies, another compared and if Users lines. There's but we product dataset have and pricing adoption. these something to single a where go no case, one single or for we it can it really stack add and our store APM type bought just all logging,

resonate to of starts already adoption really our that user So next other with APM us. to or you've with investments that helps to and the obviously base next logs made

APM. early leading with customers see to I start did I that mention

to come you and heard you and an they monitoring. say, in we plot, logs So them then And have would talk we we to that, with engage us love APM. about APM through start to to

of a with We field is early we it point same So we still Yes. with now. do need that I signs that where can see to the But that also start get we to do logs. to early see way lead stages. can APM

Dan Church

seems quick And bit impact impact it we and little anything up, to operating were the were marketing there. little follow And from particularly in anticipating although or it like call anticipated as looks sales higher a any expenses, than out quarter, a a Perched, small.

Janesh Moorjani

the of little lines a into our seasonality that's else the why call but from that Yeah, think, small. of typical expenses you than in increase seen broader shift That the really increases particular about QX, in from we all-hands I the there. the moved is past, expenses, our were nothing out to reflective so relatively timing Perched. in so earlier comment I really made as is us pattern The in global bit the saw nothing in fiscal all different meeting you've that

and the see of invest out continue marketing, grow that, that laid plan and we we the we start do long as said, to we the based sales the business. We quite heavily the year, on would will at we as as in opportunity to continue to and

Operator

Our Richard Canaccord. next comes Davis from question of

Richard Davis

of that's a guys, Aaron So that good but could one places organization is you of and your enter means salesman to I everything, directions. an or as lot also also the you're Elastic you good or have people at of whether if that keep things in a kind about different focused, means after, management, run because to go they guess with bad things whether XX sales sales or off your it has otherwise right, Justin things

your kind go is sales do on them there philosophy just the them. of people your kind say, of guide price, get what you So eye a is on the keeping way that you with hey, or

follow quick So and then I have a up.

Shay Banon

that great and we Yeah. a lot. think It’s a about question something

multiple from have think potentially cases we have adoption that that open up other we use and tried up go vectors bottom of model. companies our the I have is that one to differences of

introduce don't really degree, and people opportunities. we our to use So or new to users rely to our new a on sales cases go

user’s our self-discover to have that. goal Our is

So, us other SIEM. getting they APM or already logs and or the for the side or can using of to then respective metrics, if go they're add even for equation, example,

every threat message they Elastic that event I'm fact they it. product is before call, suddenly single they person up, SIEM they made security a up a mentioned the DevOps there with now to out the about single just open just SIEM. products I in that we hunter next log a Elastic very and is As open also have stored once upgrade, excited Every and in our

that any something out be there. to almost to, other with used not they're honest, That's vendors

so You chance to in that us would try to a see to overseas, get over in fighting mail people line the subject have area. the inbox

you and double the the go to So that's our market right the me account that want that managers. I when sales making mode upward down that's using figure another I'm the on motion. them, our And it chain. successful being and to use users case. now explain or be like our aim to for we telling Help case management it to go and default fact it. work definitely decision. our and goal to and hey, people coming to I sure made that's out to towards our go want I use if would I comes our salespeople, help to our want I'm one

Richard Davis

new business? you sauce there workflows, don't you to the of SIEM I is one over so of of kind you're , can just the better simple not example, for or that Elastic last the search rules, system the discovery can APM report that whatever it. whatever is can asset you And do is, a get sometimes of because think you that's AI modules question understand for that, your parts or Thanks. component, other the reuse maybe of it’s maybe reuse, then this reuse helps language around things know, like, secret the you using is outcomes, it. technology, capability you quick can't there you I look, that and foundational technology other But use AI can and AI the guys that using. some or you're That's But it's

Shay Banon

think that, take wonderful question and can it's one. I think If I a great I a

So one everything. you haven't, of that quickly the of solves the you can hunters various the up all advanced that you question everything the have, I’ll Elastic fact might context with come thought the various At us why and opportunity not then start to and just the to ask can you at threat saying but in if end you permutations the react we the have AI reasons security adopt that the actually attacks might with that is quickly. and think you all have of don't the that of day,

So at having acquire at a more great of for were specializing a days it that's days, go And and all XX fast, the At all, company XX and to business. in anomaly be to about very fingerprints, the first on the time, just years the your any detection the search to to they engine. average time data we and security a build few for is actually, last, able [indiscernible] same more ago, did they critical space. called least

them, we years let's or we make engine. three generic and about ago, a degree two a a half build that So and went team detection anomaly told to the sure hey,

So use we of data can type across it any in Elastic.

the that's team done. has And what

our also detection So integrate integrated if things points you open only anomalous lines. not we those down APM just transactions our CMAP, but and well ability can D&S as to login to or engine within that along up find Nova and our to our so APM the anomaly on. to app today, you you Elastic security transactions, data various traces or And or have data can to engine anomalous into we've drill space know you visible detection find the use where events,

goal all to context everything being use data I'm able the and because can laterally apply Elastic take a Our that and AI it's same and that the cases way between have. and we that various of use in is excited take to about cases all develop machine we in the to that move in learning build it

Operator

Our will Bracelin of final question from come KeyBanc. Brent

Brent Bracelin

here. start I'll you with

what's script, quick consolidation, of one with most repository wins. customer And to these Mac, single Freddie the for for enabled it new model, Wondering video, APM log? with some wins? customer pricing by in new TomTom resonating insights what's costs Is in follow-up most resonating the about Janesh? a those the talked opening You then

Shay Banon

Sure.

So, we're far and established the innovative the by logs. where most place that is space in

the are today, environment. in best most We comes when storing to popular, it out product any logs, there

basis de and We basis see a all facto time. only the there. even that we're and because better there the in either are products competitive now the solution a we on And one better non-competitive open or our get and reflected better source playing

about I'm that. excited So

APM, their single already single they with adopted the us about go since is infrastructure using. they're all to all does excited of with for especially adopting us it. making a initially It insights decision of products. able and a still of a And significant that logs vendor. can resonate it vendors these most consolidate to the comes big Then ability all these also But a their our gain customers customers spend the use them, data and fact the also that they're being for more and go to then APM in of logs when of even have and monitoring part and aspect vendor into

jump need critical command another truly operational also application. level them need the just go and exhausting. enable excited users something just that beyond overhead the just and vendor by were they're and when go goes of and super that's efficiency products, single And to area between to excited the a remembering to to in the this switch and go day go a is be talk practitioners the -- need an have It’s And resonates where and of or customers I'm successful. when about. that's to And do that And to to the making that have with not, the the mental it's it. that go and I actual I that them There's is to to you able back the mode. about work ability between day whether to you're

Brent Bracelin

of lot the you giving demand on linearity up, plus internationally XX US saw or concern you outside follow a macro over last up as just days. activity the of Janesh color business any on XX about you then international, XX% to and And the the talk the can

Janesh Moorjani

great question, Brent. a It's

We the XX XX to those or US, haven't on continue buying we’re terms days. seen but eye things in anything coming last pretty of seen given behaviors your have outside close moving haven't we on, or And eye the quickly. in keeping fundamentally shifts from fundamental keep amount different the something a close a last XX in that's any in days. shifts just quite that that we XX of we business point, developments demand Obviously, are the or to and

Operator

back Chief any conference the for remarks. Executive Mr. would to over question-and-answer This closing concludes Officer, like session. turn to I Shay Banon, our

Shay Banon

momentum Thank much you move start was thank with for continuing the year. and all a sharing progress QX the to to you goodbye. very and as the call. Thank joining forward and our you look strong we you forward. We

Operator

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

You now disconnect. may

Elastic (ESTC) 28 Aug 192020 Q1 Earnings call transcript