ESTC - Earnings call transcript Q2 2022

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Operator

Good day and welcome to Elastic's Second Quarter Fiscal 2022 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Anthony Luscri, Vice President of Investor Relations. Please go ahead.

Anthony Luscri

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

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

questions. Following will their we prepared remarks, take

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

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

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

will business will Shay. XXXX With participating at Our I be that, Conference, December quiet Friday, in turn we X, period of to it begins third XX Barclays the TMT XXXX. quarter Global On January close the fiscal over

Shay Banon

the customer endless volume revenue that from you increased solutions, use relevance more of with total broad of customer growth contract our XX% $XXX,XXX. the saw quarter happy was including XX,XXX annual year-over-year, adoption Elastic grew everyone. The subscription again and delivered today than results. we robust to our second ended continued acquisition be again the Thank QX, We And by all Hello, the data. data power across day. results our I'm accelerate We And transformation will and reflecting welcome, over and search XX% quarter differentiated XXX once performance be driven Anthony. plan, expansion digital metrics. more search continue In our once accelerate possibilities. and grew of revenue their continued of creating adoption to With organizations, our of that help unstructured. as much of data their our results. as with possibilities And solutions, these customers strategic world we XX% exabytes employees comes powered data to platform by everyone that massive is XXXX, per for we the endless leading estimates base. to generating than Cloud. value Cloud year-over-year. with strong At XXX into IDC offering fueled you, and Organizations by customers, organizations Elastic, here of share of performance across matter. people we with Elastic turn of help their strong

need security critical what against Our protect people keep help observability and they running faster, applications find cyber and search, solutions for enterprise threats. mission smoothly,

their person something business in that get again cloud heavily I again, that to customers, with I'm time is and strategy hearing their on for many spending As organizations, relies strategy.

clouds, it on and it, next powered working also existing the This workloads is workloads to heterogeneous. flexibility, times still drive new because search cloud the become more embrace business deployed on-premises. to organizations across solutions gravity And as and having with while to data critical. agility might across distributed deploying is seamlessly are systems IT cloud, run As many it

Our needs. it to our expect we which with invest resonating Cloud revenue of these address Elastic our years. the we in next And in geared in exceed And customers. exactly to is Elastic investments Cloud, continue are XX% three will

We Dataflow Google announced analysis with we Cloud Google and allows powerful are in marketing marketplaces. our and are partnerships from leverage hyperscalers. within each integrations with of new the console. product, And the significant strategic to cloud customers that to expanding field. is In search QX, we our provider traction thanks investments seeing This with cloud capabilities the Elastic cloud happening in the the

added regions and support to AWS and ARM across regions ECX and new instances, Google also for it now based Cloud. three Amazon AWS expanded We XX Azure, have we

easiest of released all results cloud and is major while across also enhancements all improved data enabling all to network deliver of fast We reduced and to data way across only our best, customers our that resiliency providers, solutions. access transfer costs. Cloud latency the innovations Elastic reducing

because risk. example, customers need and They organization's power detect, prevent, to threats website, our threats to another on access is cyber For find while for increasing global to reputation minimizing risk on-prem ever moved respond your growing The longtime migrated leading area. innovations lowering with open using to is business or logs risk global customer cost. on to surface and security search clusters suspicious Elastic to illegal the organizations they Elastic cybersecurity the job Elastic helps of reason these job free data the Elastic and attack Cloud. scale, functionality of sophistication risk overall are complex sites, quickly to monitor turning and online the is activity. our cyber across Cloud one to world's and an and the scale Managing protecting free a their Elastic user, at enterprise here

is change unique something to space in Openness core use collaboration. we detect prevent, openness. is invest open security with missing why One architecture cybersecurity ability starts open and actively and That's we to customers' respond Security is Elastic data. pillars are to of integrations to content open deeply working believe their that. the in in threats. open extend cyber it From to we to data and the our data protect to to and

announced HashiCorp, Palo quarter, from This integrations Cloudflare, endpoint Elastic cloud with Alto When with often we and natural get as security they Networks. their started customers of CrowdStrike, adoption protection, evolution a and Black, products Carbon across SIEM, we see Elastic, XDR. expand

free search believe naming of the XDR our before XDR In done and was customers a will the strong open such we fact, as this first was And use cases. launched of searchable driven in SIEM a are customizable, even analysis SIEM to industry's analysis power us Elastic first contender platform, open for which including recognize for our this our security believe learning, changers capabilities offering. and cases. snapshots Typically, use We start vendors. use by game security machine partially we

they cases. easy requirements. security data meeting we closed with business the replace in they and global leader QX, They an in SIEM. management to example, were our documents, start growing times, cost retention Other manage product their option observability For looking effective SIEM use data to deploy, new security continue customers their a for because volumes while to data commercial as electronic operations. while That legacy open with driven innovative is extend chose and and to an

major data data endpoint we deploy the Elastic They They currently first for their leads replace security trend the example, to during leverage their closed to observability. me with quarter legacy another, U.S. our for and security, and tier a and across and dev XDR. needs. seeing seeing, to are adoption high-volume hand, workflows. system similar rely traces and cloud continued adopted platform, SIEM, laying we On us university on expanded their data and the together metrics and and solution they we're with one a in At foundations together observability because time, observability. public center. one the research frozen as operations endpoint platform university. and choosing customers had bringing snapshots operations In new the convergence development, our of customer with security, are logging customers another product For same yet to storage again, same across manage security the unified QX, unified choosing application are extended a security. business with sec-ops a better growing and then convergence and from across logs, security unified within with devices to Elastic the coming Which on SIEM searchable And

evolution We heavily this in are market. the in investing major

ability last Optimyze eliminate allow This and ecosystem on complex time. vision continuous with customers addition observe into their forces explicitly customers Cmd furthers to enhance gain profiling and and joined which with spots Optimyze build.security, entire the native I we to both about applications. instrument further to capabilities Along for will customers spoke always workloads. needing cloud our environments. of distributed insight in enable the example, to have to protect blind to IT For without The

the help But customer the and with registration story pane while more single across the hosting world's of security example extended network vendor pricing With data of glass our displacing and achieve QX, doesn't instrument stop internet the to you with One unified as than SIEM, more In observability, modern a observability based and to previously in protect. vendors. another web is QX, keep customer there. company They and respond this. not we say, resource have applications is Elastic features correlation to wanted searchable with our implemented dependencies for because other a of and APM grow. chose organizations security. GA applications They running. metrics and logging largest within able to great continued Elastic overcome complex like DevOps, Cloud the trace mean snapshots, why bring a In APM. to observe, domain cloud operations And faster time to capabilities

the leading added most patients platform competitive are in improve in Elastic logging platform extended for and the their customer so customer business for for and differentiator last us Elastic common be APM expand. case observability with they providers. use customers observability, can for adopt is insight User land experience APM and better cases they overall still provider and both to While logging, Already the experience to can over into gain telehealth Demand environment. operating understand A new months. an of their XX user skyrocketed use growing QX enterprises.

Enterprise reliably to and way turn retool our their as across of apps search was on develop to custom uses as diversified with content enterprise a central our search, States. capabilities Retail shopping the one audit crawler, to website. Elastic in to search meet And announced United pickup. well customer when of for need case, demand and general report wonderful example fast the to a from taking workplace directly organization. they use using native employees solution and as services web to it. curbside Search Search. data cloud to multiple efficiency flexibility of data like Our search largest web first a traditional to customers Elastic the publicly added what developing Elastic sources QX, ingest use are search and to workplace and brick solution financial to a to is the out-of-the-box our search businesses our users search look use across ATM QX, experience. customer customers user centralize crawler they In the for a find customers closed monitor the Customers their accessible promote In mortar with need availability approach institutions the offering and new the their empower The continuing they we for observability online repository. as they business this application A efficient

search scalability our requirements. specialty in our QX. on nearly making able in largest we're has and business the not was the We're website in global particularly Their with at And epicenter keep on endless. last With results joined of all General Cloud stage Elastic on investments Vice our years. expanding in manage home Elastic they're leverage And improvement and is are provide on scalable Google customers, world's which on is learning Elastic the the partnerships, approach President the and the the speed marquee were which for additional online of data Global. few to our people us doubled to AI, That's continue availability our at trend, able capabilities, with all of in deployment. digital expanding search business up inside the our retailers of Motors, to for functionality with Elastic transformation invest all and Guthrie, infrastructure in And programmatic to expanding us One existing including is over sales, Microsoft's possibilities Cloud, their functions. their And customers. business customer Global Elastic solve Elastic helping more and me the product and without the having these their in Google suggestions search User how supports Cloud coverage able geographies, sponsors machine SAP Elastic scale and Azure of to relevant to on field. why our virtual Cloud Scott Twitter, Executive to of Conference. generation, Cloud. IBM, revenue we cloud showed challenges. and And also Adobe, focused significant invest them

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Janesh. you to over Now,

Janesh Moorjani

capture quarter, execution the investments additions market with Cloud robust great highlight Shay. was once of trends. strong Thank, and another our ahead opportunity to strong and QX Elastic of large again the us. new momentum was customer consumption continuing

term. the how volume that tailwind and solutions continue the use broadly, around effectively data. resonate continue cloud enterprises longer We data remain secular More to will on that clear tailwind capitalizing the expect to our customers. And a with for of both more we're

continued numbers. consumption our in view we better the XX% long-term distribution was pleased which up rates of expected year-over-year, Let's in reflecting performance, get into came successful as States, XX% outside Elastic from the Total the continue second very strength strategy. than again revenue We're expected, year-over-year, driven with $XXX model. our our from the of revenue $XXX.X Within Cloud. usage. was to in and million, quarter The XX% was from execution than stronger the strong a $XX XX% Cloud revenue our total geographic of Elastic QX a United strong growing million, vast at Subscription customer approximately revenue business revenue. from XX% Elastic growth revenue million totaled up subscriptions comprising year of XX% was majority consumption-based ago. total of arrangements. Elastic derived revenue Cloud Cloud of is now by with

customer no a As you faces consumption platform. model on know, can the limits into bring may much data how our

and that capacity, amount considerably demand as have flexibility purchase compared it and make believe Cloud, cloud with as using consumption, Additionally, radical credits so Elastic To customers higher if credits and saw the we sets revenue Within reduce they also business without a or we revenue full and at based this consumption our a future. on business on expected. business. on Also, to superior the customer our expansion purely have friction us running being traditional monthly in nicely and up the to strong credits based strength we to metrics growth recognized than the model. consume for limit actual in credits rates on cloud both revenue actual ramps, model annual well plan again once faster as usage, purchase flexibility they up on they consumption wasting without month. the They consume the flexibility on for each penalized

quarter in cloud QX in a across customer they and over monthly total both mainly the $XX.X route $XXX our new remains to approximately in by revenue new million, APJ features strength momentum fastest segments of additions total quarters commitments year-over-year, on of in and business multi-year the services lengths EMEA. XX% versus XX% increased The This terms we quarter year-over-year. of onboard Americas specifically obligations years Calculated expect revenue be significantly Federal year. million. increasing stream exhibited The deal At in Professional paid broad enabler growing customer totaled grew across XX revenue find slightly new to market business revenue can then increase flow in and grew approximately year-over-year. value Services and XX% QX by product based businesses. up in continues driven deferred and reflecting to ongoing Monthly end solutions average. was Services geographies, bring the QX. XX% and as us existing to make This QX, acquire $XXX approximately delivery. do our professional across year-over-year relevance revenue of to in quarter. not a three and consumption. to mix billings way performance the the was strategic $XXX we projects to fluctuate For over quickly performed XX% the depending and continue on well in Remaining followed million, million our cloud Contract Professional approximately timing was customers, their was up support. great to Customers remained X.X growth the

remaining not no deferred manage across we target business length, a quarters. a the to fluctuate do so As business monthly contract revenue cloud actively Also obligations. this reminder, our performance can or has

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

of a this QX, row trends. the XXX marks the at with quarter more contracts compared reflecting momentum such strong than $XXX,XXX in in category. more continued above of than third end ended with to also This expansion annual quarter strong value We the customers customers XXX

than with enterprise ACV customer and we over segment. customers crossed the additions of our the over now end at and both reflects pace ACV And over and in 'XX. of fiscal fiscal success believe also The ACV in to $X XXXk X and XX stages 'XX have greater enterprise such opportunity end we're the only categories million the of customers XX greater another over such unlocking at the customers motion. the million growth selling milestone in compared early than important still XXX of of We

expansion slightly rate compared Our remaining below net roughly to was flat QX XXX%.

XX-month slower current trailing give at remain measure fiscal is bit take expect points net this the a in know, to level 'XX. rate you a and we to few expansion a therefore continue As or moving, percentage

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

will remain headwind it we overall to Cloud as Elastic our invest increases and continue ahead, Looking to drive margin a gross growth. to mix modest

business at driving the we we sales to as XX recent our Looking QX, prior core expenses unchanged. of remains portion strategy company investments out in operating marketing added adoption significant investments and call. our enterprise the XXX then these people initial were up to from the A laid of in We but scaling increased the included in in acquisitions. which and

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

we to to market ahead. the look investments these expect functions all capture in fiscal opportunity across continue as We 'XX

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

given using shares from per to lower share We Loss and QX travel $X.XX average expected weighted continued event pandemic. spending XX.X outstanding. also was million benefit the in as

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

issues we said variation. and flow timing cash As quarterly can lumpy be before affected and by seasonal

the fiscal primarily at we cash look So flow for year. full

million cash and with unlevered QX an free acquisitions Cmd. positive margin sheet. totaled ended to flow our $XXX strong recent equivalents 'XX. slightly on Cash and We expect approximately the to balance remain after basis continue a fiscal build.security cash have in We

out both and Turning business to we is expected perspective. The an as guidance. execution environment year playing from

Cloud customers of Elastic Specifically And this to fiscal faster first through on overall mentioned, our half consumption Elastic we exceed that trend remain and the next Shay the Cloud, expect have three expect year of the revenue Elastic confident grow to will continue revenue We patterns as continue. total we in XX% than Cloud business. to been robust the years.

calculated fluctuate greater our and second believe a half calculated traction. and cloud billings with we which and business continue gained also mentioned on We consumption those can correlated in RPO less of half The to as revenue patterns. or duration consumption has be better as revenue investment the also previously, the continue as That mix to that no due the said, revenue timing indicator in are billings deferred our to to these business, our associated the Also than expect trends our of variability recent to remaining first contract. was growth customers increasing customer model monthly I has performance gradually obligations. metrics been based

you headwind as in of dollar be the been recently, rates at the the a year. to current half revenue know, Additionally, expect second FX spot has reported we strengthening X% to roughly U.S.

of to opportunity. aggressively very invest remain against about opportunity continue long-term the half us, ahead that in we excited we'll ahead, and Looking second the

that model also operating expenses As to related midpoint. improve, representing fiscal in travel Even environment million at demonstrate the With full expect we continue the QX, rate a the investments, with for year. expect leverage to will revenue growth million, to XX% of we we of in range for events. these business the increased background $XXX the and the continues $XXX to year-over-year

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

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

year $X.XX, non-GAAP of X% ordinary half is strategy ahead net go between excited a range about take per $X.XX million long-term and of And XX and in are to negative In us. of fiscal loss opportunity the operating shares with of non-GAAP using and margin towards range and XX in the share expect We we to X% had let's outstanding. summary, Operator? ahead negative market great investing our questions. remain million And We that. first the we that, the working nicely.

Operator

We session. begin will Raimo question now Barclays. today with Lenschow from the comes Instructions] [Operator question-and-answer Our first

Raimo Lenschow

what's very had Thank you that cloud about I Shay growth. you like look broadening versus congrats all little bit of Can one you adoption follow talk for strong the up seeing quarter. are and the the seeing on strong little scale? like a of that can like you're patterns a after. like I it competition out actually the bit very, And notion seems then talk there? into this industry, the Because at vendors whole market broadening a And up a of market? about that Janesh driving if

Shay Banon

it. at answer in parts two Happy for question. Thanks it will I course. answer to my of least end. the on Yes,

to they're that moving very which enterprises, they looking But excited on about the presented running definitely cloud. enterprises, a move the have and traveled strategy some them more for about in the obviously new but integrations our U.S. support is hyperscalers, still the more when the they're companies, them But I they best-in-class running our is and large on many part first them. opportunity we for in run for cloud with our both especially multi-cloud the the have small and on-prem. offering. and they on large the investments the the to And I that in in model, talk we're workloads workloads Europe running delivery and obviously making This to The And are existing strategy. workloads all that see on-prem, visited have investing cloud. cloud, sure cloud, on various and when Cloud we is customers

comes best observability, the when and that our most Our to of to front Enterprise cloud workloads, solutions to a well the are the the security search, add on-prem your growing the ability cloud and and are -- solutions threats. and workloads are ability three opportunity us. three search integrated, as monitor I in that to the box your on to delivered we those offering. as website And prevent well cyber it your think obviously infrastructure to have ones detect ability

be few them, of optimistic markets midst them last geographies three me All Yes, highly future. verticals haven't years convergence. seen of to about delivered that of and been, across combination in honest, so the that in clouds And solutions by remain makes excited. I've the I across these are I, that the over the expansion engaging that applicable are very

Raimo Lenschow

of revenue. doesn't a get as metrics Janesh, talk the lot RPO, more stuff. I your And less perfect. in will maybe like, kind ARR like, lot and Because cloud really Yes, captured about and billings be a your mix, we thoughts well, none like clouds billings, can of of, in think to captured you think gets of the like, an really cloud in business with and you -- relevant, billings should in terms what's more what less the of forward going of terms

Janesh Moorjani

And think question, in full cloud is vast includes formats revenue the of effect a technology us runoff we It our And on look majority at, of arrangements. Raimo. the end our great why, historical as at there of reflect particularly in to that consumption Yes. no reflects since the is the kinds these to day, not measure the a businesses, of consumption best deals. a it's different of business model, the across It's revenue perfect for offer. indicated time-based I've patterns, measure is business. performance based consumption-based measure best our which now, of It's the is also the current before, of the I adoption all customer's

or of billings in monthly about, business measure calculated consumption RPO. of the not bit a very backlog affected So a RPO and revenue of billings cloud a is revenue have And various view you especially in fact, factors they but business any talked and customer because does activity. that a the deferred current are provide by

when given at as that business look So at a measure continue internally. I primary the revenue look to I

Raimo Lenschow

Perfect. congrats. Makes you and Thank sense.

Janesh Moorjani

Thank you.

Operator

comes from Brent Thill with Our next question Jefferies.

Brent Thill

everyone pretty is de-sell that? don't or billings have mentioned to I you think, still away I expected that? be anticipating you'd there that you mentioned a did sharp first DR. the Janesh, But on take half. you you year-on-year curious, know higher anything Are focus you current I second from think DR. half billings the than And was on

Janesh Moorjani

Yes.

We Brent. are

the So the are the on with we and quarter QX, they in pleased outcome. reflect back very performance

obviously, I you think growth successes across of and the XX%. metrics. different at the were and But see at customer the when there revenue that team headline numbers did the business metrics revenue on many in really expansion look fronts, many terms you cloud well the growth

there billings, was we lot be expectation. pleased this shared fruit continues to that to start started And should in be that stronger that expected to already fiscal in quarters previously us to year. the second had we the We the half make couple a our back past of given the for in about of a quarter. half So investments that bear in

see about we year. rest reflected of the feel year. and is expected to guidance looking the the we're playing that We as ahead. So year really forward the good raise and out And business you looking just for the confidence to

Brent Thill

seeing think pattern, you security commitment area the for one agreements. like commitments about bigger, license bigger seeing seems And adoption? growth just area platform maybe engines it in this us to Elastic to to Are enterprise-wide it have commitment versus platform Talk relates the you standardization, about what of enterprise search. when another to Shay, adoption you're where kind or as the you're seeing, the for just these of for the taking numerous platform, you

Shay Banon

happy course, to. Yes, of

specifically, of start actively to our observability, now. through playing been space, that three experiences observability XX security almost are be and we security logging, more our Observability Security. we've through Enterprise in all, the used before main first So years Search, is even more focus to for user curated within build on We've professionals. started solutions, and the for space I'll that invested And

are suddenly, capabilities them is unified natural example, developed of platform implemented line, all single benefit Observability those That us have and the product into them, we means platform. other. So to we cloud compress Security. reduce them first in very area our in all then reduce and of that And to solution. I search across and fact from we our that Enterprise the player costs. can and the second least each that we evolution at latency, mentioned, all are or was to That helps did, efforts Search, data of by enterprise them my customers impact market, immediately believe a our of first I way, storage apply the ability also have market. in Like our the ambitions network once implement perspective, our with one which the play for certain become

invest to continue we there. So heavily, heavily

Brent Thill

Great. Thank you.

Operator

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

Unidentified Analyst

are any the for the the Hedberg. [indiscernible] Great. assuming additional environment talking my new This your end and you of limited, model? And of you taking variant is Thanks could Matt for questions. COVID details by in although start health conservatism about are secondarily, your macro Maybe market. the

Janesh Moorjani

Yes, maybe take that. I'll

So ahead just in Shay. go the of terms --

Shay Banon

environment, the happy talk will to. I about market

I solutions before. that all, we examples that help bit really through customers. the customers our way, by of of the They into three works address worked single a And chance to a first mention needs about talk So the platform. didn't the of get that us I'll

total exciting. think our that think north Together software we we excited $XX with expansion customers' And reflects market growth, very and very, it. we're our the day. addressable billion. of every single applicability very we're our of that's serving about it and is needs Our And cloud

As every of few challenges solve to also today's next of help years. the to their I have day, and single speak we customers

vendor and usage offering. that wonderful security then they road, observability our to supply security endpoint I'm there, experience home use to within observing our challenges, just it their cloud optimize sure making APM, largest help in uses breadth with the security can And with company incumbent one and expand us, use excited had to also And and cases. existing us of from them that they then now and their and that very chain We space. [indiscernible] down customers. case, help with they've displacing it exciting. full offer improvement start We adopt and their of expanded the and their customers, the will thanks serve logging That's our

of So makes the At end day. about of that we build. all me what very the excited

as that volatile market changing I volumes digital, more variants And we is obviously, ahead end to I become and providing of us conditions, the and companies be the new a we to employees rules. up large making massive What they focus have us. of consider difficult these think sometimes we remain is, move go search safe, very opportunity the data. keep customers coming we through serve on our this they our type COVID, huge data. are or times, situation, comes on, countries all, for they cloud, As And that generating in applicability of turbulent When and a of first represents on you're leader to the our trends across whether experiences any solutions, focused hopefully sure times, as passes. secular when what there, to not. addresses The doesn't or COVID during COVID of COVID that find exist change soon, ability looking which it

Janesh Moorjani

to then of modeled COVID, just into in how maybe And terms out guidance. the that we've round specifically

expect We improve plan course the things to the Shay are to a out backlog expectation that And better at over the year. environment of was laid slightly see fiscal in when will the our we start we of that as the continue continuing said, 'XX. gradually

Unidentified Analyst

Thank How that adoption? a for level are quarters three then, you And durable consecutive could was drivers one trend? net adds from last then net impacting new customer question few customer changed the licensing for talk you me. the then this And about strong And how you. quarters positively Got of reported ago it. of adds? now,

Janesh Moorjani

Sure.

with been those. with of customer I customer So take we've to our can in very metrics, pleased And terms the start metrics.

I then expansion significant solutions. think us. use of data for drives And their sources, to solution, more that fundamentally, volumes additional the into our data start from is for grow, needs ingest they extend grow as all they strategy customers one working, us

count, an we're So not nicely where been lot XXXk ACV expansion And that the also calling come strategy and but We greater there talked is higher us, which well. a seen categories. area monthly within cloud meaningfully. of million-dollar on we've we to total investing our also the than in working about enterprise, quite greater terms as quite is the just metrics, in than customer which format of the

that helping the So in been And the then, customers, the think the customer sustained total we've opportunity for of million-dollar in drive us additions, to greater we've is terms the partnerships in large and growth driving categories. investments part as it's the and And business we question. continuing XXXk both I as new we that have, making motions other the including been terms the internally than as well historically, that that cloud us of are your invest. for of than expansion about are greater

expansion. terms this of customer we out to In back is to that terms of opportunity acquisition investing again, the the and looking good business. rest before, of rich in the really as we customer pretty year. comes that, feel making, heavily And it there. motions about forward the investments the sustainability talked of We're have fiscal about we're the in we're We

Unidentified Analyst

Great. Thank you.

Shay Banon

in for it's I relevant chime license I maybe very can quickly, think can change the a question. Yeah, I chime in,

with first license we've of the license all, change, So, been change. happy very the

I happened for there's change in clarity This deserve. way. also based innovations we it it's take that we and that how most clarity in is our collaborative is that areas, very the type customer, to our single with sense. to products be the that of metric up way CISOs the a naturally as way excited. to track, tailwind us plays there, out like download practitioners, out when the clarity The showing increasing by the a a this when And things continue comes talking I us of and access it total which few users, the last have the makes fact CIOs that especially and company SREs become one now you and very community And license first wonderful with cloud think market, When developers, all it The of business. obviously, market. over to cloud only this me few it. to next they working is adopt is every end in that, the our numbers actually, our clarity And our more all from operations, you is for access important part expect over makes that years, on clarity that of to a some And additional in quarters. our software

Unidentified Analyst

Thanks.

Operator

[indiscernible] question with from next comes Our Citi.

Unidentified Analyst

Hello?

Operator

your Again, [indiscernible], is that's line open.

Unidentified Analyst

guys, you Hi, all me right? hear can guys

Shay Banon

Go ahead can. Yes, we please.

Janesh Moorjani

Yes.

Unidentified Analyst

on that question, currency, slightly given some constant for surprising curious Sorry. of kind seen of customers' yes. Hi, trends it bit? think see slightly on slowing the seems there provide seen on of you the there any TLS the of looks down Cloud, if would strength decelerated And Thanks. to wondering be guys And numbers, some effect Elastic customers? certificate of current so the Yes, momentum taking is it in completed your we've end search as the what thanks you the just we've that follow-up October? from be to expansion post guess we to colors just are. on you little Search And new of that competitors. is regarding I'm blog the could a trend was change the actually, the there I usage some like some or a on which do website Elastic

Janesh Moorjani

I'll Yes, on first the of can touch question your maybe take I part. the Shay second part and let

In well we as constant in reported, of performance, very rates. as terms currency pleased as change, of growth revenue outlook, cloud XX% terms both at growth QX, were in the in actually the with that cloud

well our the net with number I partnerships, investments had integrations a as very perspective. that new positive that the very all from is on the very expansion, additions just also the We of think for fronts. that think us. go-to-market a I nicely was about hyperscalers, we've made many talked driving, We outcome large customer working So, of the I and executed we're investments that

at looking business a So the row. in we've for robust cloud several now growth delivered overall, quarters

cloud expect Cloud Given do will in years. and touch to overall faster they out about on do blog as the our to of revenue Shay, want course post. to focus the XX% laid of adopt we and start few Elastic than that the over business, grow exceed Cloud, you the and continue we significantly as Elastic next our to the customers' expand preference bit

Shay Banon

about think excited drives are and next a believe Yes, of in our I that that cloud we as about and And the business he years. our change, it's it. all license to the it that we excited we look it speak, previous market believe is going business, referred question, course. as I for we the how clarity remain driver over the at a we answered be which our in for few to about you future what asked tailwind

Unidentified Analyst

you as coincidence because certification the it of traffic, and we certification website licensing certificate the commenced for for that saw the some might there's figured I the we website, website, change, there change kind that's Elastic was know then on or was like the just decelerated change web that a a doing Cloud your TLS Not think just meaningfully, Elastic a October, change. it Elastic it it on tracks in be of just Search server? the And guys I Search

Shay Banon

There's traffic Oh, our or in change business no web company. really see. a as I

continue monitor haven't and our it on any to change seen we end. We

Unidentified Analyst

Okay, thanks.

Operator

comes next from Our Mark with JPMorgan. Murphy question

PinjalimBora

of seems like Oh, for to does of native/micro-services-based from with Splunk? observability great. a compare entirely This that and products Mark. Hey, workloads. the you about cloud competitive thank questions. Optimyze. like in SignalFx behalf on and you It is I you that it ask takes taking solution, the wanted into sitting Is Shay, Datadog cloud Pinjalim how

Shay Banon

Yes, of course.

overhead profiling of today, Optimyze metrics, top and the we'll low built logging and So, very we're only called APM our is the first application. of but of profiling and customers emerging explicit acquisition. about on the is technology. and that to the like system infrastructure technology that is do evolving make emerging allows monitoring at what on not that of technology very without technologies. excited continuously operating Optimyze on It's need This all, investments Linux eBPF, continuous also expected

workloads. obviously, heavily workloads both -- containers server it. that And revolve to that to of and any around container applies runs Linux it on and used native called runs applies it's So tools top it cloud Kubernetes in

of our low as we speak a peer on containers in the yes, that we year. and at we're model ability the as a same the excited It's evolves help people usage can users overhead. of happen it workloads native platform and it at we technology it about most under a continuously into very pace, expect especially to So workloads, it profile next the offering over and proxy -- to to adopt integrated rapid into have our already that cloud

PinjalimBora

of that to of the Does versus some takes parity you competitive Understood. kind products?

Shay Banon

believe very parity the we that observability or the us think is very, excited is it's something the think fact the say because I newer in use is that that core of foundational not. whether to technology, that early to whole going the about to foundation I so thing technology moving for building there's we're hard aspects around beginning, like forward. of continuous that it's observability. is aspects be the profiling I'm one And a This of

Pinjalim Bora

the terms year, any helpful? maybe in comparing mix at revenue QX sequential at when linearity prior your based versus quarter mean, make sense be in unusual anything to of or higher a Is X%, prior And look Understood. look one Janesh. there seems previous for seems bit Janesh, I the if lower year. about even I I like now would doesn't consumption color in subscription growth

Janesh Moorjani

things the about where or mix at Yes, this happy the of out. Fundamentally nothing to a are to we've look us at business unusual that, look also quarter-over-quarter made. as obviously, year-over-year terms they terms think growth, when at growth, business linearity sustain, the the in as the year-over-year remarkable played the the but I bigger, talk or of for rates XX%, I but results that's look investments growth been you the lot growth that of in hardest of at gets Pinjalim.

pleased with very performance. So actually we the were

laid it the back mentioned, the quarter, quite nicely out I the we higher that's platform the consumption for the even us was on usage of the sets year. than so or very start nicely up expected and at As and half of

PinjalimBora

Understood. you. Thank

Operator

from Reback Stifel. with comes question next Our Brad

Brad Reback

fairly free this your moved long-term prepared customer from free you as Great, cloud, one-off? or SaaS self-managed opportunity to a something remarks, during a going as thanks much. that Shay, to to pay conversion, product. the excuse about a me, very see your large Is talked more you a be

Shay Banon

for deeply this our I is yes, there's business, especially that into it. cloud playing a with a long-term believe opportunity factors us, few

to have their the focus The as people develop better proud and first it's on so And that that our cloud run is very they obviously and them our companies is vast, they an bottom-up we them well users have And into that that cloud the to vast the move cloud. let downloading adoption one of products the driver opportunity run and that business. can the think are much to a the themselves. that that to started us we're And on as in and tap software business. there's and of I for to community running build move realizing with

say breadth When comes that The I help we is other it -- I to company to and or point why that our license Search that as the seeing. full was as and capabilities already users service license there and a in of go already the want expect users, customers cloud, and that to move to the I'm us market that the that reasons change drive I that provides that's solutions very our changed as then free is part the of would clarity Search very, Elastic and only they with of company and is use Elastic on-prem, well. and clear

that something I that's excited about. remain So

definitely over for is as next tailwind a out that I play think I to view it few going the this business. years, but our

Brad Reback

Excellent. very much. Thanks

Operator

Ikeda question next of with comes from Koji America. Our Bank

Koji Ikeda

my a I hey, questions. got for Janesh, you. for taking Shay, thanks Hey, couple

use running in I saw Search I this blog to versus The was September up. announcement crawler within you right, that the that how it of the used the an it if I workplace how first an wondering want data process past? updated or continuously, Enterprise thought or I type within one about the cases the base? was this X.XX different Search many an when release be talk could up like I done And of a web with GA there organization search could becoming on an fast e-commerce was wondering get that in can end where first the crawler for was back a for crawler and if is organization. bit And maybe could App being Elastic technology anywhere reading be release, follow internal then self-service a, like little at thought post,

Shay Banon

convert Search used tend trials stick in use we, web web our as the and from compared significantly that paid space. our businesses, customers usage on Yes, of -- of our onboarding course, we're excited investments technology. ties do of And our simplify great that a products we about and and our example the web that's our to do also three crawler. that cloud Definitely across more to to crawler crawler customers Enterprise to the This ease adopt solutions. our around continuously data into haven't efforts and customers

the use over that releases, to and indication our we company Elastic that able simplicity X.XX ease we few number have the including invest customers a ability on the the in a experiences of biggest just we release. And over ability will about they consumption that's in use comes last data. onboard great when So focuses the ease is the part of our and increase thrives the a time. with big build means data. to X.XX, be focus that of upcoming And that was as all to part and have search of it's increase of of on It's products, interactions that a us of it that one to that we big for early the have in it

Koji Ikeda

bookings X% the follow And about Janesh, one against the I then high quarter, guide, was was should it the loaded looks the maybe in guide, the be revenue backend just Got against against the two got high upside of of in second -- like it, revenue you. quarters results, end up it, end thank we whereas of? last believe quarter the here just note for at were aware else looking Thank numbers curious you. on anything or the a it that anything the to double-digits. maybe

Janesh Moorjani

we call and we Hey, that lean did a specific we so entered as into to so about bit were the the year, out will visibility have to out. fact though more. little that I talk point going nothing we better that

to we played strong bit it customers. better that than trends out on we as respect for and expected saw would the So and I cloud we the patterns usage with given think it a expected little consumption consumption

I compare that's helped that QX, that this what saw if saw the you So here and to professional QX, other that Cloud that you'll recall really of really so in numbers in in in benefits number. we Elastic forth numbers. QX. had the And we But some reflected the services strength was the in consumption

Koji Ikeda

Appreciate you taking it. Got my guys Thanks, Janesh. you. Thank questions.

Janesh Moorjani

you. Thank

Operator

comes question next Kingsley Markets. Berenberg Capital Crane Our with from

Unidentified Analyst

questions our answered. Kingsley [indiscernible] Crane. is This for have Hi, been on

Thanks. floor. the cede we'll So

Operator

will our And question come SMBC. Steve from next with Koenig

Steve Koenig

that XX% to you which you ahead appreciate very operational next Hi, Cloud got pricing, you've goal reality? Koenig I'm exceed go-to-market, I those et The of goal in Thank to eminently are to total doable. here. in few going you you'll what of be this Elastic. whether need years, to a to years much. getting the cetera, that looks or product, next in. look Steve key that thank three you'll initiatives Elastic you, -- me have wondering, to challenges squeezing changes it's undertake when make make, or revenue

Shay Banon

take happy it. to Yes, I'm

that we've year cloud Our XXXX, I'll for us. or side. mentioned years, the been invested of But started in we've a the then. is definitely with year this in over cloud product more, significantly we two journey investing past and investment start year since and

our the resonates implement, cloud data engines, various part and sorry, and side with Amazon, hyperscalers, all customer with a providing that's of enterprises. a search Azure, effort that of these to our those single thing all work first running is location, them cross-cluster all the across providers, Elastic and on single capabilities pane The sources, not Cloud, that's glass an provide integrations cloud with of especially really base, a the that Google from all AWS, on around natively marketplaces, data sources of search the Microsoft product of with billing ability to across the large lot they easy Cloud of and from

itself. to in The in use and other ease when there's part more invest Elastic data continue data terms of more We is of shine in Elastic. to onboarding

in and store it when to capabilities like still ability data over We UI. snapshots, have long-term the exists more and advanced using Elastic, the such more being data and to searchable same same able API search

data which the more customers our into the consumption but cloud in is So is driven more the comes value more Elastic, see. our great,

So we use continue onboarding to of service. into invest of data our in ease cloud

mention. solutions The go-to-market, that other aspects some our innovate, I spoke them few when making and that it about of our we other -- of is comes things a lead sure can invest and tons we there. comes part continue that our various then to and to to When it

I three think well through that working us, We of solution across that additive in the marketplace as cloud love significant offering, result having cloud a and partners, joint it, We to our joint we continue mentioned. love is a investments we The business both first the goes them. all the, that a hyperscalers part is investments with three. all of make a

it just Those we in all also our C-level executives, in us comes company companies some we function Forrester we've a means change and together a Waves. sure our and us excited example more up becoming a going that the continue that that in mentioned analyst the a by field Forrester of inside over they growth our -- on is year about self-service, year. of Quadrant that then the that capacity good customers way our analyst increased investments only invested that the something also moving of our Magic impact take when going time just inside business. helped comes succeed million digital support in we're making, exciting. we use invest which journey products, they're becoming it sales across is to that of big that all investments really supporting enterprises, we up And tied and the and for relations going on together. it results to customers Our increasing kick-started is we of And investments cloud product-led A heavily them. to help together sales our and tailwind the and to last cloud, you or license the already consumption, the function, year our But within that our the with continue that half are with making our and part Gartner think ago. that's our that relations with of that includes over have investments we're this But north of as to see it software dollars

will Beyond mention simple our in fact is and that, that I that customer cloud the better experience. just use every hands have better

our refer a get best run by because not Elastic. provided that versus experience to we on our level, the we'll think cloud very So on they natural customers

Steve Koenig

Thanks Shay. very much,

Shay Banon

Sure.

Operator

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

Shay Banon

Thank was everyone. for today. quarter great Elastic. you, you joining Thank a us QX for

our market of ahead differentiated us, for to you Appreciate and customer a large joining solutions ciao. continue opportunity us. see We strong momentum

Operator

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

now may disconnect. You

Elastic (ESTC) 2 Dec 212022 Q2 Earnings call transcript