ESTC - Earnings call transcript Q2 2021

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Operator

Good afternoon, and welcome to the Elastic Second Quarter Fiscal 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Anthony Luscri, Vice President, 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 second

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

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

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

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

over We'd Barclays Technology to on of that it begins the period I'll TMT Our Sachs participating With Friday, XX, Conference January third be December inform you turn close and XXXX to January like the Internet Global and the Goldman XX. quarter business in that, also virtually fiscal on on Shay. X we will at quiet XXXX. Conference

Shay Banon

Thank quarter. results today to here fiscal has a upon be everyone you, glad end it with share XXXX The what and is Anthony. second year and been. the our of I'm of us,

out resilience with I for empowering customers, strive of importance company. as of same users the partners a As reflected on QX, we and our we closed the community

customers We the how are alone. done building the us. the total a our of including great run, as XX% ended well I'm more team business quarter ACV feel for mixed proud We an executed to tomorrow. revenue business say grew delivering is We today way. there $XXX,XXX. ongoing we on that And year-over-year. believe a quarter long a quarter, strong demand and over more I XX,XXX for fortunate subscription that This can't environment, customers for our I XXX than than are with of with well second the in had be

help a partners Thomas to strategic have how I signed have to as Kurian, to Google this presenters sponsors In had up countries XXX and thank quarter, virtual We participate for were event. solutions showcased to registrants We come the and XX,XXX to more more sessions So the than excited especially customers action. pleased together was users you of ElasticON with many XX Global, from that than entire and global conference, our developer it just openness our CEO, community. insights our Google mindshare their Cisco, on QX in customers than day first transparency, our Fargo, and journey. speak keynote. as community starts happen during joining the us of whom It our more outcomes see and all Global, overnight. and data, have business us participate. opening Microsoft of fantastic wonderful on so their It's of our Wells with at scale drive was they Achieving Cloud's continued champion Homes at every partnership to earned with Audi, I as many our see level ElasticON technology. so executive and of during the doesn't engagement of We stories shape renewed that well. also with including level happy our engagement. power all share was about speak this adopt, to Rocket our

any actually simplicity turn, QX in unified it's for data us enterprise and X.XX the Analyst local agent, in Lens security Security on-premises and level expand anyone And search, flexibility, And super this on in all the of of currently we've unified able excited talked Enterprise can innovations few Meeting, the to built our became data for environment, three way to release. paid Search, from searchable power is to use the value cases observability to underpinned go to click. adopt customers am and agent, storing possible insights collection unlock when It powerful Financial apply everywhere. a fastest like our are make they model, about in or and the beta options performance. pricing feature visualizations available one with with a kind applied for to to they appropriate customers. across now of storage built Combine innovate customers' this will choose drag-and-drop is not more one by which SX for in where then It Our capability single data. I into data In snapshots I there friction. a power hybrid a to are Elastic solutions with action. once our create that beta. cloud, Observability, in with is run, built our the which comes At it available about it's and easier grow There delivers Kibana on stack Stack with generally single and Elastic allows solution another. that intuitive in -- for everywhere.

QX, our portfolio with well customers, of like search a saw In share just U.S. capability to and the It and you. start sector. websites The Our including strong public great few Search results global beginning. to of across productivity broad-based connect. federal highlights our Enterprise to delivered business executed our all I'd is across we journey which diverse with engagement. use, across sector easy team with demand this easy to across and It's solutions. increase easy helps our workplaces. and applications, scale power and solution customer I'll new improve

connectors easier consumer search for to We what out a can Drive, our including Microsoft Security enterprise. personalize clicks, XXX capabilities. your delivered more our few content We proprietary delivered experience across security This Slack, are to for built creating customers. for can customers Search. access also things more. box controls Google now capabilities service release Workplace to matter in who With find lose more solution, paid with Elastic to than In of this a enhanced admin and it's slacks sources. them, the X.XX release for the our

us and security public for For to prominent needed U.S. multi-year right controls surface example, internal to granular a content the the government in applications. their the both with facing QX people, entity and they closed business right

aircraft else email This experience search find they and because viral to of by team for To search their safely. opens program. all we aerospace comes company. with flying where QX, parts, potential capabilities repair Another to for historical recently without Once example from Elastic enterprise our the we're goodness, renewed us from object this searchable up consumer-like aircraft across is by their searchable. a customers, application unlocking years They content across that the SX. bank, quickly stores snapshot business a our anything making effective function records need and maintenance U.S. is schematics built add possible the new like released helps making cost leading keep being workplace powers the search the breaking

turn use, Grab, one lowers metric is which to cost company Singapore-based an and QX. with delivery our services. associated Let's use drop sharing business to and into They renewed multinational log latency off resolution. monitor to time and customers eliminates and the This silos waiting analysis grocery easy data with pick in unifies taxi, place. up search ride their meantime and delivery ride-hailing Elastic APM us logistics, solution, and food data to for why like food across expanded It's observability analyze analytics and log,

renewed from long cases continue from against of core a business from experience Kibana. released, payments and example comes us. in use made global single global innovate even unified to monitor customers. into digital vitals real-time And our shoes user website to help more experience volumes it monitoring to QX we that with In in we business pricing. Elastic end multiple who APM multiyear interpret experiences a this app our transactions company, with technology Another digital analytics and company invested helping power the high value stack adding space, signals. with across also our measure and user's owners step to to easy We've organizations their X.XX developers web in helps

Additionally, released one-click to our traces to [indiscernible]. logs searchable new snapshots longer. learning observability like prebuilt infrastructure data common detect help that metrics machine capabilities And workflows we online from jobs enabled CPU for spikes issues to and keep searchable

a the company at In taking analytics to U.S. searchable line workloads very met financial can It logs opportunity all them impressed longer for They long for to we're several also at multiyear other log a their business lower APM. senior fact, by large cost. immediately like cases They add who with use leaders analytics. with us value by the tremendous services see with with snapshots. journey I allowing recently and were renewed on keep

in scale. our ever equipped security practitioners to advice investments our stop Moving this better X.XX solutions, number with Security Security at a of to space made we release. than are

invested their correlation security with hunters our Google search blind alert spreads, threat eliminate for high snapshots, stores like searchable in analysts with cloud disposal adding while stored object and more data help and Azure, on And of volume for at Zoom. remote historical prioritization long-term Cloud fatigue. We years automate and SX security complex and detection have analysis. for users New reducing helping of and prebuilt spots by detections rules

compliance saw customers you with in of not unified reservations. while and and why QX approach renewed environment, outcomes a ownership is for the After a protect. investing network helps value We saw all, QX. continue to expansion mechanisms. multiple multiyear online cost business to global internal in Elastic for in for theme We agency business and of them security solving Bell lodging the rapidly on auditing an in well. in security. alive allowing total that Canada see Even travel and use us And observe and cases focused while they with operations at manage adopt challenging this for security a

observability and closed reduce insurer used The driver U.S. search a costs complexity. case in in multiyear Additionally, address with workloads business a security. business their ability Elastic. helping for in needs and with single with These them new large multiple to been property, technology us the optimize existing and complement casualty auto a QX enterprise has

Now, use easy and management to Cloud our Cloud adopting Elastic is cloud making Cloud, deploy comes it ease and to our The Microsoft of and business. solutions resonates available Azure. customers. our with We're on Google with with Elastic AWS, which simplified that scale

have amounts application For They market, features. two is QX. speed whose in us order to and renewed current their on They across is parent literally ecosystem compete. Companies in relevant massive our with speed with of the Cloud results expanded example, Rocket company from to additional of housing Rocket and With power remarkable management the value to search property proprietary and surface name the Elastic They simplify to Homes, in of data. get COVID game. customers cluster Elastic run use order their business

into invest new to two and expanded Mumbai AWS Iowa in offering South in regions cloud our and continue QX. New Azure We regions, Wales. including We

a In Azure We consolidate for our remain buy work ElasticON held engine for inclusion environment diversity marketplace diversity for great and received company for as billing at place panel their scale success. to also committed technology. third-party we in Global it at and business customers technology In at supporting better for equitable deal. a use integrations to a QX, and on announced inclusive looking program with and creating announced making case large, we and women to we simpler their recognition

we and sources Diversity company. many continue applies want. single Diversity distributed uniting unified cases our our portfolio applies us to to multiple whether solve of use and a from give strength data customer being where the on stack Elastic they run We to customers diverse model. distributed build to disparate also how a and levels to enable our pricing and into

solve them to continue and where will users they We be face. help to are the will our challenges continue

before opportunity market us. a have We large

to businesses see solutions all spending sizes. validated continue and We across our geographic of line This priorities. is industries, customers with regions

ACV at used customers $X But our during over over just million or if you As more over two when Meeting, we ACV, discussed solutions. our used to $XXX,XXX solution. XX% we one Analyst get look XX%

in Search, As reminder Observability are Security. this and a solution context Enterprise

is For I analytics Janesh. hand to not now opportunity instance, that counts am growth and in Taking strong vectors if quarter. we This our this for long-term. resilience execution us. it all, have the to [ph]. APM key a the the their strong shows to significant together as uses over solution log proud Observability, customer and in capture of one the I'll to of team before

Janesh Moorjani

again an was Analyst once quarter to some our and again joined strong weeks thanks Meeting for all on ago Elastic. and Shay, Thanks, for key who growth us Inaugural our We delivered on profitability QX Financial and joining performance everyone excellent today. metrics. us

second demand first the similar quarter. generally quarter, remain environment the the to During

we spending our cycles expected, related offset pre-pandemic COVID-XX to slightly headwinds by solutions. and longer some and levels, compared cloud as As from to saw adoption tailwinds of overall in sales

against execution this backdrop consistently Our strong. remained

SAS Let's that quarter total The Cloud $XXX.X of model. geographic for Within us. million pandemic revenue Observability well to as Enterprise second in strong year-over-year. continues year-over-year. was on be both XX% monthly from a We the jump at Cloud a $XX.X outside the customers Total the United subscriptions, business revenue in XX% be our came Subscription revenue. revenue from strength Search, States. growth solutions. Elastic importance SaaS year-over-year, We revenue area subscription Security long-term XX% our for again despite growing our $XXX.X and million at growing to business. of annual was saw demonstrates of strength totaled numbers. revenue into the believe XX% key continues strength comprising XX% distribution place our Elastic as our strategic the million, business, our

in cloud offerings to revenue comprising feature invest total $XX.X expanding in rich growth in remain have other Cloud ahead. We our looking Elastic advantages confident our revenue. was services We of reach and X% over and Professional strong continue million partnerships. continued

before, of on projects As quarters timing across delivery. services fluctuate revenue I've depending the and can said

billings Moving on XX% in to million. calculated QX to grew calculated billings; year-over-year $XXX.X

terms of followed APJ. geographic fastest EMEA In the the growth, then by grew Americas and

federal also we quarter. business performance the strong the saw Within in the during US Americas,

our end up built million, performance proud of the of We are in obligations we've totaled in revenue was execution year-over-year. the the presence deferred million, QX, $XXX the segment. and up federal total At space sales XX% Remaining $XXX.X XX% approximately year-over-year.

not Although lengths on little a X.X compared average. contract we the ago, manage year business with were do Target to years actively over a slightly were longer length, and contract

deferred As no a reminder, our performance monthly revenue or has SAS remaining obligations. business

customer to Turning metrics.

contract QX, subscription we XXX XX,XXX total of As end of $XXX,XXX. over had the with customers customers annual over and above values

couple a ticked QX, net XXX%. of to above rate points modestly expansion remained but down Our compared

model and business Elastic and grow Elastic data strength the strong multiple customers our over extend multiple as our continuing demonstrate And of as time. spending to with then us overall their growth. metrics we footprint projects as Our customer solutions adopt initially

in which Gross Now, non-GAAP. turning was gross XX.X%. profitability, to representing first the of is $XXX.X million, a quarter margin profit

overall We remain continue track margin to a well In our modest Elastic gross relative drive to to near-term, to continue headwind invest we to growth. will as Cloud the expectations.

in we our investments the in and our increased we expected laid as out we QX, in expenses calls. operating at Looking business as prior

revenue business was operating share in quarter. $X.XX $X.X million the due using the model. performance inherent in reflects X.X%, of loss Net per to outstanding. with in was operating weighted than loss which the average $XX.X operating negative This leverage in was our shares QX expected better Our the million margin an quarter primarily strong

free to Turning in cash negative $XX.X flow cash free million was flow, QX.

first an As free was 'XX, Through reminder, making flow are fiscal cash half positive million our cash flow positive. the effects flow being lumpy. on any a annual cash both we flow free they and $X inherently seasonal basis look cash of quarterly and at timing reflecting flow margin, free since towards free primarily cash progress in quarter,

year so cash X% fiscal margin continue in and to X% progress this margin flow approximately fiscal 'XX. negative are free expect cash 'XX, and in with flow free negative We our to of far pleased positive

I we framework Before the overall I'll guidance, the out you of year. that remind for move to laid

of we then beyond improvement As see we calculated year, shared quarters assumed that a at likely would the fiscal in would that. COVID-XX to we headwinds this and start our model that of billings for gradual create couple

of fiscal played has as out terms of patterns. half we The demand first those expected 'XX in

half current continue global that improve of gradually our environment situation with gives the to time, to revenue pandemic, environment fiscal execution will and were level first given continue And opportunity we At year. of we in the confidence strong in the in the to in growth our the the commensurate business, we this demand profitability the investment same of the experienced the the the term. However, year mixed fiscal expecting second assumption increase rest the see we Previously first half. that us year. is the with during long for outlook the raise full for the the our half

see have We year-over-year 'XX. expect travel range $XXX of fiscal for in to in also at rate $XXX our midpoint. significant remind With year. the we as we expect growth revenue levels in a I'll we in from spending the half representing of XX% you previous to to million expect events that return million, to that savings fiscal QX, the of this and first these continued areas

$X.XX fiscal million, the $XX.X 'XX, rate representing using shares range ordinary non-GAAP of of $XXX in And a we negative net between revenue year-over-year the expect the the share growth in range to $XXX for per XX% of non-GAAP million $XX.X and outstanding. of at to expect loss negative million margin and X.X%, million X.X% operating $X.XX We range midpoint. in

operating the net strong share per expect $X.XX million using X%, of the non-GAAP In non-GAAP summary, quarter shares the outstanding. in had we range second in range negative loss We between well margin X% a current $XX executed million environment. and and $X.XX ordinary to $XX to negative and of in

Although well from believe fiscal strong trends, and questions. broader built tailwinds of foundation COVID-XX cloud take that this We've market to of that, ahead position continued spending tremendous capture the beyond. and adoption from rest opportunity we us With and we headwinds us. let's our customer for Operator? year which the solutions of a expect the

Operator

session. now first today comes will We begin Jefferies. from the question-and-answer Our Instructions] [Operator Thill question Brent with

Brent Thill

Thanks. through in are more kind the feeling afternoon. you Thank of the off could if seen Curious the of signatures saw you you characterize for where sign behavior, demand you. went has October, curious you've in if quarter just the Good later the and to you I'm And same customers seen changed dynamically how terms earlier environment? anything of you've extra what in or year? as

Janesh Moorjani

Brent, maybe that. this Janesh, is with and I'll start

So just across as segments on and really saw first half we strong execution reflect I QX, geographies. back

with were really we So that approach. pleased

I'd In positioned. environment, form customer with slightly and what it generally before sales to longer terms are as similar where tailwinds we've headwinds in cycles, but very to spending about steady, mix talked well generally areas it was shifting say it demand was expected very solutions the of we remained the towards our and QX, similar of

the we've continued business. in momentum so And seen

the the quarter. take expect of in our ahead all and course back the half of And will also as similarly activities, good year, expect pace the we of continue approach they've a first of Our half. we top be in they'll careful pipeline that pretty at looking the similar continued throughout that customers been to funnel a

far far. had the remarks [ph] so we half has so the expected, year as that we I will to prepared do seen back the and So in largely let's what stay Macro that the mentioned as in played out expect say, similar we've

any of is for have August usually that third a out followed the federal little well. bit And other In terms software is year-end. September company, because -- quarter as with normal us patterns. bit a the out, of a it played slower little a we linearity and faster than how stronger bit QX, and little typically month. played pretty

we and normally looking about it and the it. strong So ahead again quarter was feeling pretty played half saw really it we out we're back good a But as and overall, expected. to

Brent Thill

exceed color maybe a just And give helpful? federal, would the just be expectations? of us Thank sense, kind overall Any meet or you. execution follow-up quick on that your on a there did

Shay Banon

to it think is a did delivering federal Yes, we all federal quarter for in and despite yet these job. remarkable really bit fiscal the as The know again. not of congrats was strong our our can lumpy types as a a team I be team and business performance Fed year. But that, well,

also we QX. In million fact few a business put in [ph] of in was dollars that expected

team that the so a And of team the Overall, proud really are delivered. good way the we front. did on has job

really the We and opportunity are us. but in I about to for continuing public invest federal excited and just globally sector Fed not

Brent Thill

Thank you.

Shay Banon

Yes.

Operator

with question next comes Barclays. Raimo from Our Lenschow

Unidentified Analyst

looks Hey, about are grades. some like but strong, pretty peers your Raimo this It to been is fall those your of rates I seeing [indiscernible] off. for they've ask wanted Lenschow. you

how kind the of of the you're seeing e-commerce So is much from strength some [ph]? coming that tailwinds of wondering

Janesh Moorjani

Janesh. This is

of part, just the You question? Can cut in part the rates. repeat the some earlier mentioned earlier you off you

Unidentified Analyst

your dollar Sorry, expansion rate? net

Janesh Moorjani

Yes. it. Got

dynamics the over that beneficiaries transportation about similar adversely The demand net spending what the looking couple continue in will half expansion as and did ACV the of our impact to more continues The soft, the the a that broader base XXX% the that customer that rate first strong to in of referenceable in pretty rate to headwinds to and that tailwinds. customer that overall, dynamics But have [ph] We've we've mineral net verticals, once can in be be XXXK we just across expansion as half. and new well think come, more points are terms can saw happy about of strong. we broadly. just a seen driving trends e-commerce growth pandemic over with QX, being as of expansion second I'm expansion ahead in talk like expect customer again. So been and the the dip reflecting that we've that. track renewals customer But got I had both we be impact count hospitality QX, -- again by the business, customer like within and and verticals verticals impacted that areas in COVID spending record

So I'm aligning specific in our not the thinking about really in discretely how about solutions about time. as and a business they of But number the those priorities or are just the think good of percentage we at areas. any well aggregate, with we just feel customer relevance this

So we opportunity good we longer-term feel pretty about have. the

Unidentified Analyst

competitive could you that's And you. give helping hoping deals. update How you having much dynamics security I win around was the pieces Thank on of us an that area. observability you

Shay Banon

Yes, it. I'm take here. to happy Shay Hi,

is it of all, of comes we the it will, about the use to when of market, question broad-based if to APM IT consolidation multiple pack, first to you applicability feel it. our from when comes leading historically we're to So cases, the which monitoring. observability logs feel the infrastructure good We market very observability

it have been investing in We years. for

be need, the We I'll aspect. and they so one they is have; of not We're them some it the the the act it. see and then challenges that's the with the as ability Whether because have absorb that sometime, model the as product our base pricing customer goes in might of single with same, on to sadly technology unified front wrong infrastructure when invested outcome heavily and really really resonates something stack, the features treating stack. on technology

we do overlap you observability see the also As and mentioned though between security.

company If also where Every a event is now. the were where as you strongest event. look started we logging operational we at and security log

a investing why the data. and get fact stack ability And can of by users delivering the query in would being adoption in what that to same that's in and single heavily reflected that's is datasets customer we're the security talk to in a extremely market the our as do and technology investments really is, this of powerful. stored to treat it lead that's we you customers software. security excited thanks Peter that you seeing through search observability that kind our kind we're And observability asked about using about actually security everything or they whether them our we're So of the base place single being

Unidentified Analyst

Thank results. And you. the great congrats on

Shay Banon

you. Thank

Janesh Moorjani

Thank you.

Operator

Our Morgan. next comes with from Murphy question Mark JP

Unidentified Analyst

Pinjolim on I and behalf the is just [ph] Schema to of Shay, Congrats you our Mark. you on questions. on results, thank taking for Hey, Read. want ask this about

for have heard is platforms something ease that Read. have on now that of Schema does of a that in kind Elastic in results Sumo Elastic. better We Schema and has on always have not Read Splunk those versus use But you

latency audience should first. of you about it think increases or that. use how actually So it to versus investors the of elevates mean do the the competition ease non-developer it platform I think and makes does much more consumable

Shay Banon

Yes, on it. to touch of happy course,

and it, our be in runtime mention ElasticON fields yet. we mature to in our very them slated we that we completely start over implementing the Schema always fast. easier haven't go way investments about on to released it Read, our then announced and to they And they're Global and we really Conference. to to Read. It's investment to So it It's just it's start in call released the fast fields from and on Schema It's to slower. and are go it next Read in few teacher a can these comes the you a with When done Read Schema transform able from be Scheme whether start Write. on click on fast. being if on it then indexed will, hard we slow or on and user, use to principal, that about seamless they query because excited whether are quarters. single We're go I'll

flexibility some on We the that. versus it time. But with it system fast It's and schema our it's So read to We and other fast. we've been in and of fast bit snap, still index it speed, help with And provide, experience write being a complete hunters write I course, always that type out the when we for aspects flexibility a that dashboards does ease with innovating everything bit to to say our by more can best magical. aspect. it's on powerful deeply it it but by being think able of between will it. that quite when aspect. on are. and user a our we capabilities in an we use, believe default. indexing them boxes level there. how by loaded comes would No the start make ease that we I schema of wait you that comes everything to responding in as provides default to And find that on reflected slower start when technical comes give to use, interesting threat we one attacks choice will add not doing in we I of users milliseconds, having will that give even That's schema and of being usability investments

doing going and to considerably other and we compared optic this the now on more SSDs. write, something active cost-effective we any similar cost object and going like that Elastic But that's stores, as to same structures store same searchable provides announce not still stores, this fact be It's on have slower on the like faster measures SSDs that the due is snapshots search, even it's SX also data, not obviously something system that's the have be of ability responses. you schema fact uploaded that SX. to in to We the to and on snap to that

for beta the is itself, on long-term write for but is it storage. itself also snappy benefits and schema on dashboards, it or only fast reflect hot effective cost it reflect the not how when comes it how in to So -- of

Unidentified Analyst

Janesh, Understood. you. Thanks for question for that in at obviously explanation. looking And you When this quick quarter. one I'm guidance, above your came guidance well the

seems be the You seems it But the quarter. you're in a came would slowdown, in in that in first the big for guidance second like well the calls like last half environment that similar above half half. saw back but the you saying

guidance I mean what were what half you is, that first October happen? positively both Maybe in -- second then surprised slowdown what in put So the to quarter, in question the you I'm that caution your for but together. and you the of trying expecting half was kind what gives to and of the

Janesh Moorjani

step first as I strongly, main here in and we the drivers was and I think as we the well. that one think half, delivered great about second quarter it's really question. a Yes, executed Overall, performance back of the that the over for

see year, at well. business. proud we you in strength to saw know, little quarter-over-quarter there the back the that QX saw of SaaS and also We the the what as despite continues stronger services all as bit step unchanged. monthly back be included success here I and in We growth is look revenue But SaaS a the of and that, of dimensions out we're really the half we environment had in across demand that overall

the of we the to second -- said point, that macro year, this You first quo of our were in we of at just will terms backdrop. that are improve. we half status start it had modeling when would year will at that laid we stay we the expecting And recall the the out guidance,

But So, with very we've We're seen bit we longer our are customers priorities. with prior about to where spend their way there cycles little bit relying expected with get that. more us. to quarter. sales the them a take longer little bit solutions are a were and as the similar were in they thoughtful a it continue does comfortable they to little And

those into around of quite be. than back year I the the as full said, more all excuse -- the the But thought by me, raised guidance. the QX lead -- guidance a more bit we've So half certainly factors QX

back and actually half the prior we've the the of just to effectively first relative the performance expectations had, we we that year the had that raised half. in So reflects that

the the well opportunities back think that the we long-term excited the in near-term overall suitably and confident So near-term opportunities about year that as the have. balances we the risks, outlook are for and half we for as quite guidance the

Unidentified Analyst

Great. Thank you much. so

Janesh Moorjani

Yes.

Operator

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

Dan Bergstrom

Thanks questions. for Hey, for Bergstrom on Hedberg. it's taking Dan Matt our

funnel customer the ticked nicely strong. I of quarter up the top first new ticked up -- additions know back had So quarter. remained this versus

number proved higher here the number Is second that seasonal specifics out. of strength that called just You it around customers in there the versus the out, Are more quarter? quarter? of new last

Janesh Moorjani

with light that our was we to It in add Yes, customer the business. we Elastic especially actually both consistent many had self-managed we've pleased quarters, additions the in in quarter, of Cloud on new are continued prior well quite COVID-XX. with customers as as

the was fairway. again of saw it quarter we In in I'd pretty a of trends straight that say, the down clean quarter, middle terms the

monthly business, A our new with were we pleased that. In terms are of of customer we saw consistent new adds the on SaaS also trend. adds, where customer quite pretty lot

to seasonality. specific So nothing in terms call out of

job I have continued business the that a just think pretty continue we and we team to playbooks bringing sales home. remarkable do to execute

Dan Bergstrom

then towards new would you customers? adoption that the million about those then XXX,XXX thanks. product customers? bit product Great, work $X categories ACV little maybe is help adoption does talk or more levels for installed for What's more driving opportunity And the And what driving a plus of customers, how ACV could the in the of base? multiple type

Shay Banon

Hey, this take it. to Happy here. is Shay

So they first and there's note hunters, heavily are download and go with We developers, our go, And adopt the that of communicate on work. up adoption started on value, engage security value that keyboard go-to-market the use to it's cloud people people to around all, they threat model. then happens our as like to the and to distribution class, that some they and and software, call them. level we do go doing security go us important and to to that open start actually practitioners, it. up deployed and brings us, it's And make hands thanks choose or on the implement the the do adoption thanks the grow work and and and needed hands run keyboard a make creator the a our free in, that company those they sure adoption products or hunting, We mainly But sure to what right, they SRE the bottom search on or DevOps, box implement are to they that. that it through the happened that is that it. there infrastructure right because website, -- that the stays relies threat level

factors. As multiple we we grow, grow in

is, to we example, projects to grow are gets for you that, We cloud, thanks know using and on The our become be being first with resources more start aggregated the projects, one and And more it. to mature. then used more more data customer. within the then

same the application, because is one case example grow for only being used, not applications. multiple sometimes logging also use We but for for

So and adoption they up it because the with as have. where past it use and well. that's that And That user logging, for decided that's to another love. vector can't what APM. use for provide we value see stands we now of significantly We of grow. value growth years for very is the decides more us, to happy has and we're us us with We matured they we someone spend to that spike start exciting, the see can over growth because growth associated two that our

and to way logs is clinical for a that single APM enabled they is that's All more by from to technology us. security for vice from one or they of can observability and that there, the the enterprise that versa. or exciting And And stack the have single from like either be example solutions move can click, across experience solution like moving by search company. then

growth experience see adopting solutions because drive it's exciting we tools, the user growth start to made that that's they're So, UI, and use XXXK single pricing all environment, for they and the mostly and company, ACV of for for these are the them further but for a customers those solution, about I'll us. a for tend Typically remind and same be $X more same across other they ability more a them to they're same vectors than you -- that as just same same API, them to And might to ones. a the get same excited us model. us million for they're But me investments consider deliver it logging single the be solution, see based different and using APM even then very customers, we we to within that still one same before. of

Dan Bergstrom

Great. Thanks so much.

Operator

Radke Citi. with question next comes Our from Tyler

Unidentified Analyst

guys good quarter? and growth of plant going the is This quick question like the stop shifted let's Tyler guys competitively anything Hi, the not looks on competitively, you holding seen growth in with is now, decelerated steady afternoon. dialing is for rapidly it I been Splunk for meanwhile you like Have some and like have so number, up. [indiscernible] like it for this missed today. a

Janesh Moorjani

few adopted did remained we we the that whether the where we're fronts the do the the have same. have as that SIM set for and has for to we incumbents, next full product solution logs matured Observability our feature Splunk efforts our Generally stand logging where call Splunk, are in earnings security happy the it's actually replacements you side, a being markets in in very but see with that to IT already. with wholesale quarters and GA tend our evolved Yes. which the in dynamic operational believe noticed two We're market or competitive in we to the we an

have. that that about bullish aspects, very So the we're in we capability

a the that cheaper single to heard experiences. continuous right also with treating the stack the pack ability Endgame ahead of our to choice be to We cost them store of continue Security, like our invest the such reflected innovation really when on with within storage at before the with I example, of combination versus unified or to for leverage a comes the super give deliver, about think acquisition. to whether it object with security, user able only markets products a innovation Observability levels Schema that that on in and product data they're to not pull in and customer mentioned into pricing being multiple and security able that with unified And base, excited we're our we it's also single and was multiple endpoint more Read SX. but

is reaction So customer these delivering in our that are the good. up team and reflected just all the adoption products and amazing delivering of value innovations that's and is ends on

Unidentified Analyst

just see thinking I and here we to up, you thinking year, question. next... that the or stay on next margins you than go want before. [ph] you also want way are for are you're to to faster should for looks you. the how It going Thank cadence back on be of margins these going going touch back if how guys down I guys ask

Janesh Moorjani

So, talk for I'll about philosophy a our year. investment little this bit

that we adding done the for over to here quite quarter. that's about across the signs at aligning bit slowed more thinking drive to next looking terms and pace In are talk solutions. we talk invest of fiscal well which start pandemic. the the spending investments think the in in year and a even speaking, invest priorities more ready back of all that QX, that continue to is about the increase our But to the in the longer-term I the scale will continue about we customers are business had we've Broadly it people would as about were their 'XX. of functions said months to what to growth about continue when then out future of to our we in decided for as we deliberately we year, will of this investments, into do, what back as opportunity. we exactly is And market from half pace when talked early then We the we the we second the heavily prosecute we and

operating invest continue to the direction. in as revenue a investment increase So to on it said will us we that would. was and here strength we of for beat, really had margin in that QX saw we business out of makes sense in to I the function continue the we pace point that the the

important think headwinds the we it's to pandemic. that we faced through this So the us pandemic, despite invest for from

the be that So opportunity. on other of to this, longer-term capture better the side we'll positioned even

in a and execute little about term later. here near will continue the to FY 'XX talk we a bit more bit then So

Unidentified Analyst

All right, thanks. Congrats on the results.

Janesh Moorjani

you. Thank

Operator

[Operator from with Iwanyc next comes Instructions] question Oppenheimer. Our George

George Iwanyc

balance And broad about you for comment you sales? most between hiring your the up doing plans? my following Janesh can you're give feel of maybe R&D question. just us continuing invest, kind of taking to a you your and feel where addition on to Thank about this that

Janesh Moorjani

Yes.

drive back, So, to at as the I we're growth, and all functions the sales a investments that to of includes first I well. and stepping includes we've long-term investments as near-term well in investing our growth, big across scalability, as look coverage half, part seen strength in the drive the in investing product the marketing and go-to-market R&D is investing think, in G&A right functions for as that

if I so, approach investments, And step nimble and back in about that be think in we've the of the level we've we investment proven hiring business. overall can around and taken dial the

to continuing are We that looking do ahead.

As G&A back both on the and to in for secure you appropriately investing half, well scale investing the as about we think future. see the go-to-market as will us R&D the functions

so is as a global, well continue and well global demand see, globally universal it's board. as COVID-XX across terms market in our -- the demand as as prosecute distributed about So as opportunity longer-term think that it perspective, well If it's the environment the is the see. reflecting that of we From to geographies the I we really phenomenon that. invest opportunity to we've we really see,

George Iwanyc

health providers, of Yes, you AWS how thank evolving can maybe perspective and kind some share you. other of the service partnerships? dynamics competitive And Shay, from the cloud capabilities on of about and you the balance feel versus the the

Shay Banon

course. of Yes,

three comes will have all to double of with with So strong and I down run it them. Google saying that Microsoft mean and integrations Azure. is our and Google start three all integrate partnership very and providers Azure, even when better we on strategy Cloud cloud We AWS, these them on with Cloud I to cloud with

happy our of of them, So we integration have with are the very that the obviously we with capabilities with and all products.

on the on it feel to areas well it. all resonates the customer happy single search to of comes on the with a And hybrid put our search it we're needs box we a a and our we're website, able of we want take the requests across whether imagine, future to reflected, to it. maturity that forefront across customer and the and the it. as As and company run readiness want really it's ability your take to as you base well to ability you And that our when and on-prem, absorb across it the of all I and put are like box can it. it ability usage to if very pack infrastructure ahead on as of a think with search put provided ability all to The search them to we that's we the providers three by the of box about of think well search at protect a the place a companies, I fact cloud products the to

George Iwanyc

you. Thank

Operator

And concludes turn closing back to call over question-and-answer any the session. This for remarks. Banon to I'd our Shay like

Shay Banon

quarter Thank excellent Elastic. you all today. for for joining us was QX an

We future. customers continued near Stay you healthy, ahead large see spending us. to forward priorities opportunity our with up of the us. stay solutions, catching to aligned safe. joining look a Ciao. with and We Appreciate in market you

Operator

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

disconnect. You may now

Elastic (ESTC) 2 Dec 202021 Q2 Earnings call transcript