ESTC - Earnings call transcript Q4 2021

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Operator

Good day and welcome to the Elastic Fourth Quarter and Fiscal 2021 Conference Call. All participants will be in a 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 and discuss us results. you. thank Elastic's XXXX fourth

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

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

at fiscal quarter period quiet Friday, business, first Our July XX, XXXX. the close begins of XXXX

The With I'll Consumer will The over June turn and we Services. to Shay. Insight Cross Global of Bank America participating of that, Technology Technology week and Baird the During Global the Stifel in Conference, Sector be X, Conference it

Shay Banon

cloud. of to strong Hello, year Thank our you our quarter today you, broad fourth performance welcome to Anthony. continued delivered happy robust Elastic once everyone. once including the annual over fiscal by and driven acquisitions metrics. I'm year-over-year, We all of share adoption and QX again full with XX% customers, offerings the and with and more more subscription results. of We here be and we revenue value again growth than grew contract than $XXX,XXX. customer In ended of quarter with saw XX,XXX XXX expansion

strong features, Companies becoming full they to technology creating threats observability enterprise levels interact an cloud for enables are a to to increasing World stack. Elastic search preventing, across to what adoption The performance the our is and Elastic this into security to and deep people our with Elastic solutions. is they're platform, new applications, website, at as of continued all Search for solutions most the generating Customers data infrastructure critical monitoring looking a at and built growth box quickly are data search, turn to use anywhere, more way Class data increase detecting for. of our customers data. single to to ability to and they adding from across natural and find anytime, across organization. the unified Search Looking strategic amount digital fiscal our relevance geographies was cloud. revenue and are and their world company's any the experiences responding They search across in expertise services XX%. move The distributed, believe search throughout of the and And success. all fueled observe grew We the especially search, differentiation by and ever year, protect every expansions and to cases, business.

like would share our the I unified we of to made have search innovations some platform. in Now,

Data than the will notice the and to of exponentially, in do delete to easily temperature. search at forced of They power the is I'm data always store moment's they by powered tier be need easily the storage. available. on With cost now regardless accessible able balance fully generally just searchable snapshots minutes be First, of can to petabytes new frozen customers want. it. to searchable searchable data costs frozen of with reduce and to share data the results speed more our data snapshots growing tier, is happy with that customers now anytime must and a just in be to They not

and snapshots one companies largest volume with our fact, with to frozen data gear started a and customer high needed data cost events. up logging keep basic growing world's manage data storage of free and telecommunications and effective requirements. In reliable searchable launch the will better major and ways The the during their to leverage volumes

upgraded started they seven, an subscription there provided days take XX value they snapshots. searchable of loving tremendous new instead addition, requirements to In after demanded to the advantage by enterprise business of

the requirements. more growing while in meeting Now, Elastic data their effectively manage volumes customer the can data retention

to to choice of without write differentiated fields. what on data schema it is they searchable. run-time can with onboard in can we speed the data also implementation from speed In immediately integrated switch and on call field fields Run single an and click, benefiting available. a now blazing of read, power search and interact easy Our the flexible platform. Users and provide time generally enrich defined one schema way their make of

workplaces. Moving powers on websites, which applications search, to enterprise and search across

customers search use, scale. and implement, modern continue connect our experiences to for We powerful easy to that are build

with to They functionality to a customers evolve agreements. looking to major is electronic enabling noise. in platform give we customers this footprints and find search can within a another user generate As to that them search search a Elastic the enterprise to Leveraging of so of continue the In deal QX to and manage faster example, in longtime anywhere, and the and and customers closed the of and meet were a they financial global enables agreements. the demands more digital of power growth. growing line the everything contracts more their way signal top grow example across their companies data, the their a search through capabilities, expanded qX. to able services customers is customer considerably in more us we're one One customer, with friendly world, largest banking business their their scale

API. in search, also exciting time with to enterprise Search value The in deliver at our see is seeing other Then, engine. Magic this internal customer in groups challenger within integration industry more we're looked logging as analysts, QX and custom participating in their observability XXXX Quadrant. as with Quadrant one source this from the and of they the for in to between As their pricing one for recognition organizations to started the power recognition Elastic Elastic and with gratifying And as excellence. our insight enhanced search, platform. recognized stack, connectors company. These are of our resonates how of deployment the It's And We're ability it's move model, a technology see realize Dropbox to within of the space, power first growing continuing Elastic, large with this a a to they observability new us the center elastics company broadly including their This with they solutions. saw workplace solution. enterprise new was innovations innovate expanded Gartner search Magic customers.

ingest Now, team custom and easily content source, the any development content more of can applications. and manage legacy including

to It retail delivered Gartner's digital over the company mobile and supply expand national who environments. chose platform. than seeing XXXX the the of evaluation our any better the The simplify was data space faster and APM space respond and from applications. in as major XXXX and on and speeds complex keep we applications, data. announced support onboard In And They ability their into a improvement last need logs monitor first in used looking Elastic enterprises better APM and QX, the helps footprints their home industry management We well. solution, sale respond chain in-store systems observability of by visionary even retailer applications manage cloud happening any ever to native operations management locations. performance We're the to across to Gartner's monitor are continue closed metrics, Quadrant was own performance types time was easily to and digital and significantly we and events XX providing these and Elastic the to monitoring. order logs, analysts named more to the event integrations enables because business and to a and insights flexibility point better available to to date allows customers them for the to happening in observability their with data to more continue recognized and current recognition observability. vendors for into critical. Now, environment. other infrastructure and This board OpenTelemetry, more in application the a for of visibility like of provider APM customers over for customers their single in digital any Magic These anywhere data. we an into Elastic to observe gain search observability APM ecosystems more becoming applications is cloud at increasing unifying various pace. performing to move

announced Azure Azure services agent just unified to their collect use same stack, in a clicks. send Customers Conference to the agents our observability can easily Microsoft Microsoft organizations by directly just the I'm featured also onboard week. data directly to our using Elastic that monitoring excited we for Azure OpenTelemetry send enhanced and during and cases, to integration was for addition can deployment. Build few mix logs collected data solution that last In with to the now support in now share to extended an Elastic which demos

the from and the such the themselves are generate data more to continuing companies by center their security SIEM, to and security ability a Elastic helps to hunting data as security data respond searchable more data this our protect search and making single attack. equipping in threats. plays security to prevent, And cloud. unifies solution, endpoint protect critical to actionable capabilities seamlessly threat Moving all It a detect in analysts endpoint and to role this platform, everywhere. from of to companies

a security just Elastic in few customer center workforce the offered operation employees. closed easy developer and deal launched a using to SIEM on a simple protect structure. XX,XXX in more security security to major that drive their Using their months established solution operations. large our a Elastic estate a pricing They cloud, quickly we were real and the with looking with to quarter, maintain Japan This than scalable remote

teams take security to expand the also scope the platinum include learning We Their in and quarter university The sync and capabilities major a been public the with in this Hospital. gold advantage a campus subscription subscription learning under our the to and University machine customers business our expanded our research upgraded capabilities. of have to using US. a both

data and of practitioners more need even are before, scope threat. correlation flexibly top Now, with are for to grow the provides the stay than critical customer's great This type tracks analysts they has able need see are they a far the entire proven they examples new added of of solutions EQL. hunting they them general to it. It's on were identify capability with though availability by environment. of and world across to how giving ingesting our investigation functionality expanded, We customers, able correlation accelerated still search to their real the experience quickly powered when they

security ID integration Additionally, reach out customers of to we management for rapidly and deployment allows a growing operation everywhere. search and is large central effectively our platform. learn source and in open It threat folding useful hunters to hosts into them to endpoints search and This is project. [indiscernible], support them, analysts

our if it Chrome extension, the report along across away. Now, it malicious who just query comes from organization, has a installed finding search simple

experience. Cloud closed providers U.S. our simple expanding cloud and of and of customers QX, partnership to the free automatic cloud offering, strategic We continue largest with with accessories. the invest to a In easy supporting one worry deal parts with and retailers we use in

with to and value Elastic security supporting are usage as different them many over time, across Elastic Like to starting in expanding our decision logging business APM the We to the and of our with search leveraging so all us and customers, their move has the enterprise groups cloud. grown company of and their platform.

the Elastic of the adoption within has Elastic they managed our grown, company service. worry-free have value As recognized of cloud

partnership if can Azure can Customers monitoring with We as cloud also we working Microsoft enable team with to where together bring our service. all if and The forward experience momentum building first partners to to no our have thrilled Elastic it service. joint to was resides. all understand of an partnership I'm search our deep also it They their deserve. as expanded our Elastic Microsoft. was we data, a customers a with and look native it enjoys now and party continuing with customers it our bring to the are Azure data matter ship strategic closely deploy they integration the native

think continued for best of our customers very the program million product to our program. more all organizations hours across I'm I our time service around as market. us Elastic about who business enable people differentiation to Elastic the users help 'XX, in Our of I'm investments and part the rapid Also, the make innovation, partners. and the experience incredibly that all drive and fiscal world. build employees customers to possible volunteered as community, us our XXXX bring to humbled, than it off in $X.X proud Cares share charitable raised employees And volunteer from strong

insights Moving customer I'm leverage forward looking as that, over I actionable our and further 'XX, power on $X of search that the looking their supporting I'll And 'XX revenue billion execute base growing into And I'm in a hand with plus way they ability to to Janesh. our in believe our fiscal to data. confident we're to becoming company to with fiscal gain forward. style. it from

Janesh Moorjani

economy. to our of continuing momentum finish the global of the against was year, Shay. Thanks, backdrop execution improving strong a great gradually QX

of Our momentum the was and against strong, our solutions us. to resonate continue with customers, ahead to continuing market are cloud invest we opportunity rich

growth total Total finished in into reflecting year-over-year. million, fourth quarter in scale. 'XX revenue year-over-year, XX% strong We revenue $XXX.X $XXX.X million with fiscal up get numbers. at revenue Let's up the the was XX%,

strong year-over-year, in once our for as We total at cloud million, both from total our revenue annual usage, revenue cloud and we well strong very execution. are comprising growing subscriptions $XXX.X with driven million, revenue again Elastic pleased XX% expected $XXX.X monthly as strength strong was the again given of customer 'XX by in up year fiscal business our our cloud significantly XX% Subscription million Within ending performance, better growth revenue. saw comprise business. XX% and year-over-year, was than totaled QX of Elastic revenue. cloud XX% $XX.X

revenue another passed $XXX XX% growing cloud Elastic milestone million now QX run as business significant an was our also annual of of QX. year-over-year. has We rate over in million. Professional $XX.X services

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

$XXX end to At million. quarter the in billings new and the year-over-year quarter early a than customer our strong expected across by in of The demand on calculated make increasing $XXX.X recovery. up to signs growth $XXX.X Customers was three bring across we Contract their million, us continue were Remaining to slightly compared multi-year remained years strategic year-over-year. as up and length XX% of on approximately well XX% performance as obligations shorter totaled average, reflecting year-over-year. to quarter relevance to million, QX over prior compared of to QX calculated and broad better geographies. grew we environment QX as out fiscal billings, The businesses. the segments strength based driven the existing revenue 'XX. Moving was commitments deferred solutions, X.X XX% total experienced played to

actively and a no revenue manage remaining cloud we performance business or reminder, the target has contract not a As monthly business our do length, deferred to obligations.

customer Elastic saw XX,XXX total QX ended metrics, customer momentum customers, in in cloud. we additions by we significant for QX strength with new subscription customer to Turning driven over

contract customers customers than the annual increase with with strongest years. compared more $XXX,XXX, such above the was in continued sequential values XXX ACV $XXX,XXX to We The than more QX the XXX reflecting two at of trends. quarter end over strong ended also expansion in customers

broader expansion consistent rate net environment. Our dipped QX but reflecting relatively the XXX% below was slightly with

strategic of customer XX technology 'XX important enterprise. We go-to-market with the over $X our such ACV over also success have further customers as milestone the unified We now model within the we at move our fiscal another XX end increasing and of versus the in importance stack achieved reflecting million QX. of customers up over

profitability, gross turning of $XXX.X million, quarter representing was fourth overall margin in a the Now year, manage the margin is gross despite well the to which gross increase XX.X%. in our non-GAAP, mix. cloud profit We during the

we drive Looking continue modest to growth. margin ahead, a to gross Elastic to overall cloud as will remain invest headwind

in expenses call. were increased our spread investments in in we across QX, the Looking out at prior investments operating business all we as These the functions. laid

an quarter in expected quarter. was which X.X%, with due revenue than margin the reflects strong better our operating loss operating the primarily the model. significantly to business performance negative inherent million, the operating in $X.X was This Our leverage of in

benefited $X.X the expected QX per and during million was QX year. loss Free $XX.X event free given million average cash in also negative was We $X.XX travel from cash as outstanding flow the lower spending pandemic. weighted positive and Net flow. using for shares the share XX million in

We this another cash scale. free year, are milestone yet flow as turned to positive have proud important we

We position to the more operating cash an 'XX, as the touch in the remained free We with to on approximately our equivalents. remain ended flow slightly cash and cash $XXX investments we minute. in expect long-term perspective. invest opportunity. cash million We our in a from year capture positive comfortable I'll with aggressively margin fiscal

long of remain discuss I very for We I overall about our fiscal excited Before moved the ahead term briefly us. to framework XX. guidance, opportunity

all in functions. the believe opportunity to to investments accelerate plan accelerate near-term. the our path capturing best the in continue is investments We further to to long-term We

sales growth and initial be enterprise been a of that long-term It's scaling adoption investments us 'XX, us Some significant successful get more others our in core nature. investments model marketing, in A reach where has scale. these portion massive will and highly through will up of then our be fiscal driving and in while of will remains the allowed for strategy unchanged. support to

We our to our within cloud business. our field are across that motion velocity well expanding At up investments solution same drive as scaling on segments, enterprise and with the further time, our sales as to further support moving focus strategy. geos continuing the capacity we're

outlook improvement waited year second the gradual fiscal also macro assumes full in environment a in half of Our 'XX. the

to hold our first greater Further, the than expect Elastic and growth our investors Given overall partnerships. confident that remain combination we offerings second investments billings time, our advantages in be business, cloud will half. this continue other over half the year-over-year faster growth backdrop, to greater expanding taking our with deliver over reach our we than and given our in calculated and feature and

we a expecting but in travel spending half year, addition, in second first to of such In this in to and of year. half return meaningful do the expect the are not person events increase the

to slightly of fiscal taxes number Finally, in higher as be our international we we cash expect scale a subsidiaries. in 'XX

in to based number compared is that inputs to uncertainty Turning to guidance, there of now at we approach year continue guide we broader terms and on last in the a environment. to different what's know guidance, of what our look economic is less

QX growth to confidence $XXX that rate year-over-year reflected XX% range and we context the visibility at a for With expect in in revenue million this we the better representing million, midpoint. So of $XXX guidance. our of

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

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

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

we that. into towards look the longer and confident term are opportunity we further remain in As the future, investing

X let's take Shay operator. believe we on with go fiscal company well to and are As 'XX. said, questions, we revenue that, ahead becoming a plus our way in And billion

Operator

first today will question We Markets. RBC [Operator begin with come Hedberg session. And now from Matt the our question-and-answer will Capital Instructions]

Matt Hedberg

me record the Elastic there's new mean, business. when your to fiscal Great to 'XX positives, spend, the what data all I customer some a And following 'XX have and progress increasingly I guess about it going out With the to customers plus maybe dollar of power or fiscal target. important billion about the yes. cloud guess, to ability lots decisions? think, think make consolidate like seems really security be we I it add, Shay, even security we obviously, feel start harnessing growth, was quarter. an that the perhaps target. really data these that is strikes now billion secure, part to a I of more you all Can breaches, your help smarter there, security of problem. dollar solutions talk

Shay Banon

to. Of course, happy

search, we at critical all, but I and protect happy ability why the feature product use don't to security is we And can as treat Elastic, to companies. customers act mentioned data of and go think you we that's capability as that order aspects growing. are problem, First observe about of in our specifically a a with what better and and

that XX%. same towards business. as the we data it's fastest growing than Security business security of segment as believe greater center less for of we corporate you are can on chains. around observability of data, all the data. to And, launched observe a tied well. but of endpoint protecting more endpoint to the IT XX% and used generated and better prey are that quarter, into and observe data we the the these a companies now, solid mentioned, ransomware as represents all last our links Observability is our protections by the similar Enterprise opportunities is all and bringing, operations with customers our production, north you all our systems presented help protect and while And that just, harnessed the as represents heavily on supply itself, Now, Even systems. in our fastest example, [indiscernible], growing, search they're we treat And and critical to of cloud. proportion XX%, Search be within and to

Matt Hedberg

also guess, on little your you're governance And in strikes then helpful. sort to with a really me a being on in it, growing information, whether monitor your to of cloud to data or right super with really, it's for could risk, stores, wherever success search that double able good That's I help premise engine, be position data am that access sit a it search, you to sensitive maybe further, forward? that trend identify might this, in in thinking click this organization a that looking I enterprise

Shay Banon

It's definitely most data something in able as that provide sources though, would like workplace Google is on have to access that we which the Microsoft they make more become additional can or Currently, easily content we these type of time. to a distributed, with data, searchable, over critical popular all workplace, we data value products we're to Salesforce. SaaS today, and long-term, onboard workplaces Once thinking towards sources say. have and search actually base the specifically that to focusing focus I the be of any

us in because what implementation that know for of we on at For search moving idea the content long we what it's forward. searchable, being There's able But make so about, example, data definitely who to changed a build access of relax what know term it, time, thinking crawl areas we're single it it it. the platform. a we would more

Operator

will from Barclays. with And our next Raimo question Lenschow come

Raimo Lenschow

questions. quick Two

a in customers you is with your I to base Janesh, you. snapshots Can about there? for been And the And step guidance a lot, you've you, very better, where saw very, what's the of CFO. at a your SKUs? bit the customer that to then of looks First, very or better, good. lot you one of different you here of searchable And in it's enterprise And that benefits a because bit seeing the out looks talked terms terms the a What's the drives etc. SKU sounds sound a move value optimism kind Shay, -- opportunity look about stuff you're this conservative points the higher services. actually. Thank little etc, that added data almost guidance, if a change, you lot talk the adoption from little

Shay Banon

about Yes. enterprise I'll SKU. start talk the to

few about bit a ago, of mention provide A enterprise SKU to we I'll prime managed SKU. products. or own So enterprise years cloud the introduced our the the self history

product was part provided So our orchestration as the SKU. of enterprise

endpoint of it just to I it. we value one start believe to more of value in And add take frozen be will be started small the we enterprise capabilities. us. features consider aspect our it, frozen tier. relatively add recently business searchable think [GA-ed] users there some to there, searchable to biggest starts snapshots really cloud, of significant enterprise we will advanced snapshots most probably provide thanks It SKU suspect tailwind greater more on to value more when as the be [ph], see tier. a more and what and to especially is SKU and would at will to enterprise our But represents it protection these As SKU the really out I shine customers is SKU, applicable amount available more The a cloud. enterprise only to more we the That's the time snapshot to for we And I that see searchable customers, to time, of specifically. as which over on adoption

Janesh Moorjani

we solutions. than my to ACV only or dollar about solution. that then the base, far And have that about are statistics adopted from think the half that of distribution Raimo shared one more plus customer the our is if that adopted just so more million customers maybe two of before one over is think our I XXXk customers, they've across lens, that bit we've of And I when also a point add solutions

at for we've to a when pandemic, that. difficult customer as approaches, the way in guidance example, fiscal my hiring productivity you'll we the then core of patterns. and was greater much would Nothing how our it we I approach inputs cross number guidance the in well, to were stages that very what terms on fiscal early time, QX back us. those sell, So landscape guidance more did the think customer changed this year, me And continue different that from of patterns earlier characterize were predict economic to initiating last about I'd the 'XX, represents the a our year. the all for incredibly the conversion then inputs And be plans, to in We and fundamentally we drive guide has based and and was value impact rates, look guidance. how ramps, that look, we funnel, got to of evolve. year will though, on upsell general include, of opportunity what remarks We roadmaps, and 'XX know, generate very spending the economic recall, question, and at for would for as of course, product spending strong

to quite how us naturally, different for customers, compared practices, What's that just much with Customers improving. So point, there's was is global year business that they it us initiatives. work is appropriate 'XX. gradually adapted we focused now saying digital the And less are their to at for on for last know guide cautiously to uncertainty. fiscal transformation have economy

and visibility into we provided. so all this confidence better we've the And reflected that guidance of

Operator

will come Jefferies. question with And our Thill from next Brent

Brent Thill

target is 'XX fiscal dollar CAGR. roughly implying XX% billion The

years. What's are the kind So of a XX% around at couple what next you confidence for this of you that confidence in milestone and around Can that's drivers the unpack the target? point? that giving

Janesh Moorjani

number traction aligning take execution. their can so we just about continue the we're focused, our customers that market that capturing long-term, We've where all of areas that and us demonstrated the Brent. spending indication that's the I seeing indications with is are of that, of investing in think that clearly those the confidence the we're opportunity course give ahead strong for milestone. maybe our us, when to I in fronts. to tell the happy solutions opportunity the the magnitude that fact strongest of a achievable through And And are towards pandemic an us different significant Yes, us of think priorities

trends cloud, in to how momentum that we've of further our the think exploding adopt for advantage market solutions and are ability strong enterprise. quite usage and up volumes data seen are progressing their to there. continuing from expand our a multiple ingesting investments from move to think underlying sources about different our including number more and When where continuing of within data we're dynamics customers technology. incredibly to dimensions, fact I nicely I are the and the And playing just us about

all the long it's around term So give of things conviction those the us future strength the company. for and that

Brent Thill

hitting your mentioned give Can you're And you where add quota the quick pace. as you'd build hiring out a you overachieving, accelerate to sense side, just a are just follow relates it on goals, a the of, rep carrying go-to-market? your you us you up, of

Janesh Moorjani

Yes.

with that think opportunity say thought need about So great that partnering field, to want QX, be a changes ahead, said we past about Paul, really than What that's I'd what looking it we partnering across and we and was was in as think revolutionary. the pace the will you the off, where And ahead. will the faster make we of planning over to not people Elastic, we're and the added the is, process fantastic that great I the it we see XX if any him those earlier, as make first to company went where investments with looking we that couple and making is investments evolutionary, make quarters. about through addition he's also broadly been we investments,

marketing a is in And so the consistent function, also core organization. overall in We're which with field just go-to-market we're of that all investments the in the strategy. areas investing part making

not heavily covering and enterprise make roles around the public them We're forward. them successful. the in that velocity also investments all sector also scaling model and sales will the are reps, but commercial accounts, be business the that as in just sales quite drive in So cloud we

we're all the So fiscal of, 'XX. over investing in investing of those of areas and all course

there. quite optimistic the about we're So term longer

Operator

Radke And our from question will next come Tyler Citi. with

Tyler Radke

was over adds customers. XXXX in you business, adds I the coming net if you number those curious, new I your saw was I wanted through if are of to indeed, ask adds majority see this record the impact that's pretty net -- did a, think a understand and you. about SaaS a made little viewed, on that record you one, do think some, quarter, net any curious and And that? think quarter two, the had you what just that I change Obviously, positively is to wanted record Thank in that if net licensing you you driving business. a by number adds saw? SAS just

Janesh Moorjani

Tyler, this is off, Shay licensing Janesh. us talk Well, maybe fee. and the I'll kick then you about can

business in it as quarter, new really to prior of a both on cloud add much of in self in So Tyler, strong lot especially in the as trends. fact, COVID-XX. well than many stronger the were pleased we've Obviously, our customer were managed. customers the on quarters, on light with additions cloud the customer Elastic And where seen was we've continued quite we logos, new additions new

As been in out. the product investments well terms of both on you Shay, encouraging the maybe quite in partnerships cloud, to invested you these as see side, it's of results on we've really touch marketing, know, as And the play I'll heavily let fees. clearly, licensing

Shay Banon

course. Yes, of

under due our of to that the license. our out were terms So first exchange are downloaded very just fee IP, of of And the licensing ability that to software, our using vast going, tier, only protect our product, feel the license open and they're proprietary our remind made I journeys all, were our customers against majority how users our about it. free you impacted perspective. our and the Elastic execute they none and distribution from confident we to overall, the in change. brand We of well, of going

there for there And cloud that. And Tactically, no business. to tailwind impact is over as excited a we're our we this expect So about the well. towards quarter, long-term see do do will versus over another. directly we during one-time or that think one we correlate change, time this our haven't been bump to able play it quarter a to or out licensing

Tyler Radke

particularly Thanks. talked wanted of kind half XXX%. recovery and onboard that to macro the That's implying year, you half, use ask I billings of helpful. kind year, selling half of just And, up, rate, trends next kick first strategic quarter in second they talked the which stronger you guidance more have for below to incremental you. I expect the about as would net in anticipated. the cases Janesh, about than think versus you the sales remain Would I kind about you you're think seeing back of back capacity? you just stronger that should reaccelerate. Thank expansion

Janesh Moorjani

general touch us. about if I'll fiscal for on Yes, things that very there's QX I'll strong And overall, to much that touch think expected. Tyler. I 'XX than And 'XX, and of couple we I Fiscal a out And had driving think turned you're seasonality, billing stronger be on. outlook, the the are right. was which

is the the one a improve will globally. bit other So parts right the but really U.S. and of are signs world encouraging general the gradually Obviously, is little environment have direction. behind headed in the thesis showing we economic

So and to the macro the that course generally we the year. our is continue also second of the will investments hold. expect greater take that with things And improve will piece

also QX deal into had the of from a last transaction that had think front of of it million, of 'XX $X billings multi-year of we One back is, you $X pulled up really point other we a little of then is pieces, which million bit a QX had recall 'XX. that from benefit a and year, if out QX billing that and in built modeling might more --you

does that again, overall how and rate the underlying business the some there, of expansion of growth a a QX in headwind individual billings I So on metrics depend this unfolds. year. present net the about little to that think But thinking bit drivers

as I strongest remain least they're our customer As us that years. in and we've been just points it's the strong playing ACV drivers underlying greater data the been with to you earlier, at a of see And solutions. traction volumes our that the than of the strong, well, explosion seeing, data of XXXk customer in adoption for couple the advantage, that's counts which was mentioned

So give the long-term time. of in expansion how net the and opportunity all us the over those see rate confidence we'll unfolds

seen fiscal the great on overall of is metrics that I over business of the unfold will we've in net just how 'XX, And think all the expansion the based rate this strength overall, expansion unfolds. our course dynamics. of one

Operator

Goldman Kash Our with Rangan next from question Sachs. come will

Kash Rangan

as up cloud the cloud it respect with I Shay business was for ultimately Janesh. for and you is company do the Shay granted to cloud a -- the use for But word that that is to endgame. future, pivoted doing your the want to strategic the XX%. the One outcome to don't believe well,

on get question that much. Thank I the So stop in so with platform, everybody I'll And cloud you do question. what kind ultimately, base opportunity to the of see you your installed Janesh's ask in future? before

Shay Banon

Sure, happy to.

can how our definitely upgrade them provide being manage almost we help build products we user provide I to and cloud them efficiently And builders like automatically and that worry-free our creators, where when them ability everything for our service service the look else best our cloud for maintainers, are manage that So of for -- experience service to know a know our the example, them, and to equal, to we base. we the how our customers, scale at features best well. dedicated customers, we believe

run everything suddenly the ability years, various cases few And to and them. about happens, want for happy And to immigration during ever provide the self-managed might our obviously, still go reasons. to there's cloud. next Sometimes the where to customers I'm moves it

our I to even multiple our happy same options. that able to customers, same the Microsoft to they And announced to be -- customers base therefore big cloud the for been So on-prem experience with by received more products, and that exactly an Azure behavior joint customer provide I'm well cloud has provide providers partnering Microsoft from team. the That's And customers expanded only and give why they with with exactly strategic is across our as there about I'm strategy to our our excited all integration our a to think do be cloud. we migrate are. part we're the recently the wherever cloud providers.

Kash Rangan

managing any the there's transition you should congrats the the if you'd for should we for how about and transition all, Janesh, going the been the as about model the of on quarter. expenses managing and business how consideration? transitions public at as and And cloud, company to we guidance How to be the company, you, think part Thank -- you're visibility. much, think you've how so one managing a be fantastic, your as whatnot, Wonderful. probably, good

Janesh Moorjani

Thanks, Yes. Kash.

QX, cloud here pleased So performance in XX%. obviously, we the growing very were with

just about. large had that we a net customer also new We number of talked additions

saw the self-managed lot the that cloud of of of side also the was customer from new a on QX. business not you transitions think here strengths in course, we adds. the saw any net And was I strength base, in So that

in workloads our think reside. preferences So, will said before, and I we've growth their cloud customer as where generally mirror

And the them think but us as the between the the way both our cloud wherever they in product marketing of we side of to sales But to a the well well the the to just you're that an as strength opportunity lot actually customers is as speaking, with building by out enormous it, of will do like presence. side existing reflective our the workloads in for are. on grow we've our and help made and partnerships about they the business, house, we side house, providers, our there's is some side customers move generally that will seeing promise on cloud sometimes cloud cloud as investments the being that the of self-managed the of

their are customers One usage more continuing that that that consumption model better we've of is uneven the accommodate other a the based things letter, also patterns. to seen

at that's another factor play as so well. And that's

is at half usage on of revenue this annual point, over our model. cloud pure fact, In now a

we So continue large, are self-managed think to opportunity the is the still will is that overall. But quite it our low. penetration that way business I think about rates faster the do grow than cloud

the of side. got plenty both room still we've grow self-managed cloud and in to the So

Operator

question Mark from Murphy come JPMorgan. And with our will next

Unidentified Analyst

wanted Shay, behalf on [ph] I about [Benjamin] quarter. Mark, Microsoft is relationship. of on talk the to the This congrats

can you think console consume the go-to-market alluded was there credits use on for Azure I is to customers any within think deployed sellers focus understand and And Elastic? Does in that place that be account actually Elastic? to Azure now to Azure But buy itself. I can if Elastic it. trying to incentives I mean

Shay Banon

our Elastic, a working to system, integration, all can When closely a yes. product still their integration, based used ways. of Yes, through in level when that and the customers integrate vast be thanks. we answer take it it with And and But bit we is and all, marketplace to credit to a able we the go left those to our under perspective, providing team spend Microsoft of Microsoft do our at services Azure from about be very done credits we least have first with cases of yes, expect varying it's road Azure it -- can with of of comes majority I'm to three the thinking but I'm thinking it. the about

one deploy Microsoft the now it an integrated as if service. on Elastic in is into Azure first native experience Azure The Elastic a cloud was [indiscernible] user log and directly console. And the Azure can

the various is ship content observe of obviously second all type certain make from and that protected ability us Azure services and to data directly The helps into Azure the searchable. one Elastic

that date. last -- they usage case. that integration. billing that's to also And well. consumption within making do enable Azure all of experience, that And model is doesn't the of model ship sure console full the do marketplace Microsoft data and closely already can that yet, XX% type Elastic, able you across support and can to there's people we're that last monthly about of their the into annual, spend part, credits can used any So -- to also services be with as with That it part obviously, only working now but Azure and all

at Microsoft. closely Microsoft field working we and sell benefiting that, very up very working deal Obviously, team. time we we're every with end with Beyond the Microsoft, a closely

of value and Microsoft And us Our our have for to working searchable any enjoys we team. and provide with of team think opportunity ahead great a Microsoft we data joint the customers. field tons make

Unidentified Analyst

Janesh, And helpful. Understood you. for question very one

because expansion the there. it's but bit, I mainly is think map metric, downticked the of it On a

cannot since the a commentary you metric, it or actually absolute guess at is degradation retention which side? any on seeing there see, I it's gross we you DTM look any qualitative If the value, improve and

Janesh Moorjani

little math a declined trailing and that rate, [ph], is net Yes, metric. XX it fundamentally a it's are of months through it's quarter question full just expansion a on the each XX now it And bit question you [Benjamin] we've anniversary great it's come up effects, encapsulates the that. that a now on because the months it And the right, because of pandemic. pandemic to only

it points, moved I'd consistent was So as say does QX expansion it quarter. a net just every and with the rate few

call I churn they've thing expansion the there In terms of in stayed very underlying speaking, our out over think to would Generally particular underlying terms versus dynamics, been I metrics upsell. there's or the of in where similar past. no

when expansion. out consider strong particular, dynamics, see drive, about in just net also expansion I I the continue the expansion metrics rate, as pretty nothing So of call would customers I customer but to expansion we've that think seen. look I indicative at not that we are

for more customer backward and strong ACV the So said, think math that fiscal I in set it start a metrics that XXX% a of rate dollars we probably be on more trailing XX-month growth and at more expansion as some a to expect it us. been effects I of the composite But, are But have off. XXXk average all of in look than these around customer some metrics looking, the I of 'XX, of since will other as of how work basis. range to and and any incredibly expansion XXX% as a than million the composite around net

Operator

And Reback our Stifel. next Brad come will from with question

Brad Reback

you of the growth the couple the there's sales mentioned to than you in growth call. that opportunity grow that with times customer revenue a again? guys think On investments had get velocity Do to faster

Janesh Moorjani

Brad. Yes,

a slight we And but we as time, there's about if on the I think of a got a revenue drive, company, it, But maybe and of think the the that to a side, delay, including marketing keep expand then start I go Shay, Brad, attracting look board grow in out factors expand time. can their then overall, some their lot beyond come over number velocity is there's us. the of just number we that on additions, additions would can sorry, the and I count of sizes, that add you the customer those go for usage and side customers a initial more they lower the -- think overall naturally of when those and that strengths factor land self-managed I product eventually customers spend versus have thoughts you've from expand additional that. how we well. but just generate, to see are customer some just you customers as perspective, audio the field then can and I with of it as comparison, those as into It's at lot So well. investments when think made into over investments, seen a dynamics we've a -- that both maybe play are on the customer the that Overall, touch those of because that the as about of there cloud that I we've side

provided. and and So I But you've think how fronts for just were on the those that seen us outlook we've reflect both in customer comparison, we the revenue year count play depends out. optimistic on that dynamics the two

Brad Reback

in Great. And a XX% revenue a then of maybe when fiscal hit answer should dollars? up, you'll we billion think a quick you But 'XX, it. about if follow sure cloud not being

Janesh Moorjani

continuing will Well, just excited be by And Elastic as grow to that I continue customers to we for continue the said, for cloud than to us. super demonstrate preference self-managed are faster cloud.

there it put overall mix fiscal that potentially than faster what for of business. just yet that the expect be. we do could 'XX, number out But So in we 'XX, a fiscal will won't in grow terms

fiscal up. And move 'XX see so the you'll mix in

Operator

will question Ittai Kidron come next our And with from Oppenheimer.

Ittai Kidron

of numbers great affect the make that put the increase we you for numbers instituted in can in guys. quarter? February, themselves us the the Really price the also me, how you Thanks. Couple to want in tell results did first, context that Janesh, sure

Janesh Moorjani

a number it's overall, in enterprise increased to. maybe we on But the enterprise I very reminder with February. out I'm tier a as look, of expected. for the we we've our subscription played folks, the And, said, still here back progress days. think very pleased been as Yes, on just prices had happy that that's early And just

platinum So the gold not has tier. as subscription has. been the enterprise tier around and as That long

feature part have in did reception so of enterprise. increase, business That underlying didn't And features a the searchable well are said, security therefore as the effect that in large on we a course, price the excellent not of snapshots and And the it's quarter. the today. meaningful really total customer see embedded revenue of

tier with in of So traction as level, on of we where enterprise we're that storage. created at value more the see you customer who remarks, searchable Shay overall. paying but an given free the the using X.XX, prepared only proposition example seen provided even a have in that seeing directly snapshots. introduction of may recently, then became compelling frozen customer And value in they was the a there an tiers more enterprise great his was version,

storage that search frozen who are those subscription customers can snapshots well. now on enterprise as enterprise across tier using So across searchable

the subscription of itself. QX of remain in but time, have business over meaningful So much about excited the enterprise say more very overall, didn't we part effect becoming tier I'd a an

Ittai Kidron

follow on wider going to Help sales of changing of me the Okay, absolutely more region, named to about how focused bit up marketing in very what priorities priorities you back be investments do or going it type marketing, it think going to Xk maybe marketing you and and side. a than about regarding good. looking getting accounts? can driving think investments, priorities on forward, then, as help in deeper and engagements? it's a be more with why that. is are or But you'd your by little Are how clear respect customers, different your you sales would deploy want your your way kind going And forward the new going sales me

Shay Banon

the marketing we sales to had I'm invest investments areas it, more to in our said, in our that fact to go-to-market, our And and the on based cloud. and self-service, that across pricing model we more I I'm interested correlated velocity We through very business, board executives. investments it. businesses our simpler is that and about, and on it through making the is about our believe sure here. the that that and want business, especially happy especially as to product, either to strong elastic account success. with usage we're data thanks and of becoming or that amount heavily directly of data expand, have customer more customer business Janesh the excited are store. in very If marketing more increase to land monthly making characterize duality cloud, of take simpler on we drives add on two we the cloud, surrounding it And There's velocity and opportunity we're fact to which the sales make success users to

enterprise, The grow other products and start within other side an of the equation we as up. we grow to

markets two to the to needs. going to these customers years, we as up next space, all based in you that factor, within observability believe converge build observe and the when selling that the [indiscernible], interesting we than you the few the that the things security over the CIO enterprise to value-based but we grow would things are the by I security find is in our want of way that go the way the our CECL by space. market motion up One value while you provide We reach reach the

Operator

And our Nowinski Davidson. from come question will D.A. Andrew next with

Andrew Nowinski

wondering good you're call in just put than in past self-managed the some well. the Splunk And I'm the now you very as if cloud more So side? up on have seeing Splunk strong revenue

Shay Banon

Shay is This here. Yes.

representing it our the doing product business a around be full security single hasn't fastest observability the experience. consider ourselves is Splunk to see observability quarters. we what Obviously, We're business. Actually, of realizing leading of space. of this as in experience leaders comes past the and or we the of to the over significantly space, growing probably value XX% the search today Our same one few our one changed of when products thing single in the security

start business excited typically and start and we very about to -- is for replace much both. In customers use and and start the adopt we base, us us self-service, except to we're it. monthly practitioner that we're vast our So Splunk user our to there when opportunity so just see our don't

out we and been to around see we're very go enterprise, Splunk As we ability with start happy our superior using more. Splunk the replace obviously, and and our excited more and has Splunk for about go longer to And product. speak to

Andrew Nowinski

they And big with improvement any just around thank color I I'm they then, and chose Okay, in think And that the you? of deal you why major chose current the in that more or that Elastic the said vendor. who the market. observability you you could provide if beat you home out called you. win over or replace one vendors wondering

Shay Banon

Yes. It market, was on in focused specifically a relatively player observability logs. the well-known

take One of the APM reasons they why we loved data. the and fact logs that is our product

log application provide product into suites, applications themselves heavily single we doing the thing the applications with investing spent experience build few that has the a unified experience. reflected technology user last search the monitoring that build generate, single the take customer last or generate, observability years in a that that's put platform We a that data say the We we cohesive and adoption. that app. suite with single don't and them like to information across visibility performance infrastructure and generate So

Operator

Koji Bank And Ikeda of our America. with from next come question will

Koji Ikeda

question Hey, a and X.XX, of the release see guys, finish here Thanks my I the question. to X.XX the congrats story with to great Maybe definitely first Shay. year. on for and for two most board. about a Being that new I just one the within could was bunch new features you maybe or view wondering, maybe those excited about talk what of you're across of releases? features the as you taking

Shay Banon

-- welcome. very which and would one It's to want Happy feature you to those want it's -- of choose hard would you to highlight.

snapshots on I'll First and touch tier. of all, data frozen searchable maybe

logs slightly to year's you that a a enterprise now data, of to in of the as we whole to audit living slower. archiving off that the you your search that breadth attackers called take cost, use land. be is the And if are something while can and search, others enterprise allow of happens common as -- that email And But moving make in suddenly, capabilities to of that three can way our connect think Take to searchable. to with able data worth to there that best staying low Take platform years news worth go can see it around you And store where at use are into a means to solutions protect to be system. retrieval built for the crisis security, search the to able you now much and going longer speaks obviously, and and opens of be search observability store for very you connect be data order is can that and it. be dots longer, I much security able up store an against these obviously, is means and speed That petabytes slower. an cases need able new worth our into dots. Elastic do. system observability you much

cloud. that. to we last about and and to things only week folded as our searchable to saw our talked to the you Endgame the and I'm ransomware acquisition's to into and about the our you the search organizations this frozen the the ability snapshots of years protection technology more two more ability And provide security. in endpoints data ransomware about excited about becoming So ago it is for -- to protection. stack, level In critical center around I see bring also as this super just world, recently, tier excited malware mentioned platform. folded I'm our quarter, our We maybe the protection

Koji Ikeda

Thank it. for Got one up you. And follow just Janesh.

you is our abnormal any overall the of seasonality bit for you seasonality we thinking QX should for year and or could of the maybe pandemic. expenses the talk maybe speaking taking operating out full questions. be Looking a just wondering margins was in of there I throughout the operating Thank the direction about transition guidance into about because pandemic sort the at for the models? my margin of playing that year, operating about if

Janesh Moorjani

no worries. Yes,

which of that half that would we progresses. gradually out as seasonality keep the So that first terms will second events, other pick I'll year. the But in fact course, that and other earlier I well, call adding up investment covered in nothing mention the that than, the year half. my the to what we of is way as that in more really then, terms not is will we're of unusual I And meaningful the in in start expect expecting travel ramp of a to remarks in one

Operator

Baird. with Ruykhaver Jonathan from come will question next Our

Jonathan Ruykhaver

congrats relates the the it question for you just you made really security performance. past comments terms some in of And just and are build strong vendors. could Yes. with of where I needing the some features, both to maturity to have before more the one feel SIEM EDR, in really around on go time Hey, functionality about some guys, SIEM specifically head-to-head on front. you you other

could an you wondering update provide if So I'm just there.

Shay Banon

more the here. SIEM [C] that provide Shay the they a solution the be ago, markets starting be is it we're our years more the able proof see ransomware the malware to When And the out provide I'm there at to its progress in in in process the to players we're comes ability financial market folded And security, go about that This go about made technology mature excited excited our that in have -- EDR customers following in do like by planning market, now as now. very two the that of that in and Endgame -- into to top. to to also the ability with we solution. in about it as of to the was we with in still future and Yes. replace existing to capabilities capabilities And feel ability need. and SIEM very the the market [ph] and folding the ourselves set the able out features reminder fact our is about in the and them. year endpoint basically security We to got converge. the because market. we we'll When within system. quarter to our next that next into excited other We're always is SIEM and reach we parity hopefully the endpoint the to security comes obviously this

Operator

over like closing conclude will question-and-answer conference Banon to any the for our this And session. back I'd Shay turn remarks. to

Shay Banon

us today. QX an for an excellent look to the Ciao. continuing in XXXX. was very you forward fiscal momentum And Thank you to we joining ending Thank exceptional much. year.

Operator

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

day. disconnect may lines have your and great now this You time at a

Elastic (ESTC) 3 Jun 212021 Q4 Earnings call transcript