ESTC - Earnings call transcript Q4 2024

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Operator

Good afternoon, and welcome to the Elastic Fourth Quarter Fiscal 2024 Results Conference Call. [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

Thank you. you Elastic's us Financial Fourth thank call today's Results. and discuss to Quarter afternoon, for on joining conference Good Fiscal XXXX

and On Chief Officer have we Chief Janesh Officer; and the Financial Moorjani, Officer. Ash Operating Chief call, Executive Kulkarni,

we their take Following will questions. remarks, prepared

posted to the release is the at also found issued on call, Investor market was Slides, Relations ir.elastic.co. website. press after the can our Our of which Elastic website close today and on are supplemental be

and statements, uncertainties forward-looking regarding could results as We on include any These differ unless actual of will disclaim may our include that and expectations materially. date discussion to law. by Our are our factors information. or only estimates which to statements to these call forward-looking us, and the revise the products risks update and required based predictions, or known forward-looking statements other for obligation this cause demand speak currently future solutions to and of are subject revenue

Please posted the the issued the our fully with release in including press Exchange earlier and Relations today, included that slides uncertainties refer described in risks the and those we Investor filings website more to Commission. Securities on the and

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

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

turn the Summit week Technology and over Mizuho and to in and of the X, and Conference I'll the Consumer the it Ash. Global With of Technology week Rosenblatt participating Global June Bank Conference be will Technology that, XX. the the of We Services June during Conference during Technology Baird America

Ashutosh Kulkarni

revenue once again Anthony, grew the we today's our and outperformed quarter Elastic We you, cloud finish fiscal and both yet grew delivered a QX, revenue to great by everyone, on by for us of operating X%. profitability guidance call. XX%, on thank joining and an another year. and margin you, and In XX%, Thank delivered strong against metrics. revenue

motion, We our the $XXX,XXX also over customers X,XXX. grew and of number with consolidate continued to over we spending us land, and expand on to execute

now generation, have well building A happy position sparse engine, we for with 'XX GenAI values retrievable of year encoder seeing off over our ago, vector we pleased our customers FY building continued we with to augmented GenAI releasing this over I'm or all share by applications. and we more as AI you Elasticsearch customers kicked our customers largest already GenAI of annual XXX than Throughout platform past ELSER. and RAG, among the XXX,XXX, database I'm capabilities. GenAI choice or with paying distinct strengthen of database our our of real-time applications. are particularly And our year, our our model, using to the relevance using vector strong capabilities including for with generative adoption X,XXX that contract

represents this new the in capability have we pace and tripled major for have category customers GenAI has in play market their of the term. long that big than year, any last past. the seen time, that power number The businesses. opportunity this will more introduced and adoption transform we in of AI We of us organization, out in to is believe for the This over will the every small, significant leverage a fastest

customers explore involved seeking actively interaction had to benefit. use for in QX GenAI and I business Every customer

digital the includes and native mature some largest the from Our in customers to enterprises, newer GenAI improve employee Roboflow and customers are like to including experiences. of customer using companies This companies kinds more of processes to business all Fortune transform XXX.

tremendous deploy at engineers scale vision models of speed. platform is and using applications. is store create and train models Elastic thousands used to of innovative for of sets, Roboflow extreme Elastic embeddings GenAI billions computer uses vector search by data at building database to Roboflow platform in hundreds The the Roboflow vector the production.

of The AI-based in excellence QX, the The search In application the world's a cases uses clients. using financial business. use deal the search X-figure a for is in Elastic expanded within a valuable vector accurate multiple observability for capabilities with to largest institutions managers with enterprise center segment, one organization's multiyear Elastic. provide most services to wealth company strategic support and real-time of now across new Elastic's recommendations company the with highly

for time in technology to expertise new value case generative technology, because support. this managers will wealth service to that vendors only this of our other double able AI can use over Elastic interactive clients to cutting-edge they to innovative better number The use clients will from company Not the receive managers application. the ability their chose and existing in-house be of superior but deploy quickly

large expanded electronics product a in to Asia, LLM-based their is example both power augmented quality. Q&A for is system or system. search for existing international semiconductor generation, to chose RAG, internal new improve and The their division which and the Elastic of employee productivity support retrieval Another expected and use vector company Elastic employee

deal productivity signed procedures. employees complicated, regulatory the capabilities interconnected posture. and organization's helping and quarter business Another well for an efficiency use policies company as will global find across GenAI improve This all this the help the to understand overall large as increase search, bank financial regulatory policy services Elastic's expanded and

GenAI. expands by our about for seeing of beneficiary area being wave of AI transformative confidence of so adoption AI, a precision generative search competitive the We the are to the pace we help strong The brings. uniquely sustained is be continuing our and As together bring GenAI capabilities long-term and innovative of reinforces our the in transformation intelligence applications. on the build moat our can of this in that and ability search positioned to innovation our business customers massive capitalize AI Elastic brought company, our that possibilities customers

the by security observability and us intelligence areas search strength, are observability of platform. organizations automation customers and AI observability security, observability to to we their harness incumbent more help AI more their the bringing helping security make and Elastic power customers In displace security including of and assistance, our onto solutions. and the In for and consolidate AI our vendors continued QX, to resilient

to As has a consolidate with increasing beneficiary. innovation relentless few while with be onto pace a customers continued obsession on AI, to customer look to innovation, of reduce costs and Thanks platforms our focus Elastic their our to centricity.

The to tools ability AI part any onto efficient aggregate kind all assistant. Cloud and of observability to accurate. example, be AIOp of For using more strategy, and largest data, Elastic consolidated annuities data competitors as insurance, employee one allowing deal on platform a signed on of company more its of multiple as Azure. one providers new global benefits faster, and for the the teams was because of chosen correlate over automate as Elastic Elastic ingest our well Elastic

In offering, came Lake launched continued Now Search turning capabilities moat team anticipated a our QX, Cloud new the products. offered Serverless data highly which to security. lakes is competitive built observability of of for expand deliver AI storage, to the was Lake the to Data our time. some and first-of-its-kind to architecture. relevant there technical of and real past preview information in on the Search search in when and announced We further ability to top search, durable speed in a areas our but all Elastic low-cost, GenAI, the across data the it the AI in of compromise lake

an real-time including applications. lakes inhibited for database and historically data that and use optimized scale, exabyte innovation with significant vector a Elasticsearch applications, need. architecture is security. of observability It's the built-in capabilities. has this It RAG, low-latency cloud-native real-time This is Lake AI for search addresses

AI the offerings serverless on technical our Search available and Our Lake currently are AWS. of preview

several cloud geographical at to new Over greatly this X hyperscalers expect offering of a see plan we across major offering exciting the inference integration Cloud this significant AI make enhancements available. all will These Cohere's growth next API for API. Elastic overall in and open we be for offering, with which couple experience, this APIs years. starting of as our and to cloud embedding an GenAI, for to differentiate and open driver the capabilities the on include further expand we user chapter this and vector we simplifies We coming Elasticsearch well regions, the point as Azure. to the with Reranking new In area embedding additions delivered as generally Microsoft the quarters, it major search to as

to database, improvements Cloud delivered support Microsoft our to vector contributed core on native We types released to graph and completing effort Azure, profiles speed. hyperscalers. and query vector significant search also improvements vector search all on X including concurrent to instance Platform search Google code our optimized optimized that optimizations hardware We both multisegment

learn based on trained to to Elasticsearch. native relevance rank custom allowing user data directly models released also in We behavioral customers models, support such that for improve deploy

In addition, platform Elastic added of supported telemetry. augmented Hat become In a Red customers an search are vector open announced standardizing Elasticsearch supported support technology vector store Microsoft and for in store officially Elasticsearch OpenAI that data. area retrievable as who Similarly, choice announced on for of as an also has service your the observability, Azure was OpenShift. their officially for on

we've its it or Earlier project standard Schema, Computing CNCF's for contributed and donated Cloud approval. or Foundation, And to their 'XX, pending Common profiling License now FY we to the under open CNCF, sourced telemetry agent Apache our the Elastic ECS, the in Native logs. schema as open X

AI increasing AWS customers. choice Claude Additionally, we in also our observability experience the improving for delivered assistant support and Anthropic AI X overall the our and Bedrock for model assistant,

as In noise focuses our AI way a triage platform, Conference. the It analysts the process. to RAG of correlates, the have reducing intelligence alert and powered attacks Security the unique enriches, relevant alerts, matter attack and of actionable at using Discovery view than into underlying alerts the newest from prioritizes by the signal. the through effort investigation SOC an which capabilities our Discovery, that have with sits security, innovation, opposed search on few significantly we to flood more RSA Attack can unveiled Attack that user put presents

jobs remain slip teams more Elastic's to we our thousands received their while leaving average, AI-powered of AI manually Discovery Attack spent assistance, prevent leveraging with efficiently, helping threats security On triaging and By to daily less these and portion alerts, hours alerts customers effort. ways to attacks. through and many practitioners less resilient remediate significant other potentially cost of issues, critical SOC a do or enable

told have are evolution. Our leading innovation and evolving see the security AI-driven as customers is this space platform, that we analytics again, an us changer SIEM game to this The patent-pending in this true time the stock. for charge they a

attacks injection Labs Elastic delivered prompt Security large the rules to our and of customers safety threats and detection technologies. LLM security, to with other adoption models themselves in protect language along other Lastly, also secure GenAI assessment, help from

In strategy closing, our executed throughout proud discipline have way our more business the the I team managing while couldn't and with of 'XX. be FY consistent we on

We as continue customers choice and displace incumbent for position use real-time we more to more consolidate see the platform increased applications, momentum cases. for solutions and as Elastic and strengthen GenAI of onto our building

Our customers, focus our partners and drives fuels and the innovation. communities are what our developer

advantage our it As take more the is financial over in. to to Janesh the that, search I'll AI generative company, assuring go AI that technology detail. Elastic through in turn With transformative is shift exceptionally positioned results well of to

Janesh Moorjani

the guidance QX high to our pleased year, continuing strong Ash. finish am Thanks, execution. our that exceeded I a measures. momentum the of all once we end across of was again great

onto we quarter Elastic of healthy to and As quarters, in value customers realize had and business see cloud we consolidate a the prior consumption. to yet number of strong platform continue another innovation,

growing million, million, the XX% reported and subscriptions, Cloud of Total revenue the in as the and revenue revenue totaled in Subscription up in $XXX XX% Elastic as in Elastic reported currency. quarter and reported constant total as was million, $XXX up from was in constant constant year-over-year $XXX year-over-year quarter. in revenue currency. currency. represented fourth quarter Cloud XX% Within year-over-year XX% fourth

to similar quarter. to continue patterns the see consumption We prior

experienced platform we level consciousness for are preferred not our why them, important seeing themes ago, quarters some customers picking to are on optimization customers continues we consolidate focus the their cost by While a and reason remain operational be workloads. to efficiency that Elastic of which as

month-to-month Cloud at based revenue. revenue in Elastic on came total of XX% arrangements

quarter on is Cloud shared the revenue services in remains motion million, a month-to-month growing Professional driven reported in in was we've Elastic as year-over-year mainly which revenue segment, self-service and challenged. SMB fourth As the $XX arrangements based constant currency. before, by X%

the add vary fluctuate significantly Although healthy on flow values more professional not the The time. strength context similar of during solutions delivery, was the quarters solution continue to across across followed services quarter. grew also it annual may quarter, geographies contract in by to a over across we maintain prior versus balanced mix around APJ. in expect the and To saw mix Americas where fastest, do services and timing based balance a our we quarter's EMEA the deal

make preference their to business. consider our strong continue for multiyear Customers to Elastic to platform consolidation reflecting their we relevance increasing reflecting as commitments us, and

We QX, confidence see and also in we renewals than continued typically saw a higher customer our early volume commitment reflecting to platform. of

a early there quarter. revenue not this renewals from in As was of do benefit the reminder, so no the timing revenue impact recognition,

more Our than quarter as metrics. our a evidenced with working in with ended annual X,XXX growth with focusing strategy is of higher over customers customers on $XXX,XXX. fourth for the values propensity customer contract We

provide greater than motion as category multibillion-dollar strong company for foundation a time. we over as customers our build are this land the larger quarter's $XXX,XXX We with these and in additions expand a customer pleased

also customers the such customers number of this at XXX over of was the in of strength The motion customers the end $X XXX in end over contract fiscal reflected 'XX value, year. million prior to over compared annual is at the of which

data reminder, this ACV million of we over $X a provide point customers generally annually. As

subscription more additions broadly, at $XXX,XXX in XX,XXX ACV Looking approximately with customer X,XXX customers. over above quarter total ended we and the customers

Our was for which net was line the expansion quarter. approximately rate with in expectation our XXX%,

abated. some is have you XX-month consumption that the measure largely As prior optimization of the headwinds the quarters effects know, a trailing now this impacted and of

flow in to cash XX.X%, I'll profitability for turning and the with Gross in our discuss quarter line margin measures. which was expectations. non-GAAP Now

quarter driven margin better operating in than was by the Our was which X.X%, revenue expected, our outperformance.

flow We in approximately quarter margin the XX% adjusted the million, improvement. adjusted Free quarter. million overall per year with cash profitability earnings a free ended the which with consistent or $X.XX. prior fourth in $XX the $XXX flow operating substantial year, fourth of an cash basis share was Diluted against our was on improvement was

flow Finally, above we cash cash we guide non-GAAP 'XX free though margin operating are don't fiscal for formally for margin flow, 'XX. slightly be fiscal to the expecting adjusted to

will seasonality, similar basis a to fiscal continue on a we Cash quarterly is fluctuate in flow and at timing primarily we on full 'XX. what This to so given basis. this experienced look issues year

guidance. to Turning

believe are for that we 'XX, and well focused on As profitability. we growth look remain execution into fiscal and positioned we long-term

'XX. Our prudent that We guidance near current stable. and philosophy in assume remains business unchanged the from remain fiscal will remain conditions term

to Our customer whether is or commercial competitive for on enterprise both sales strategy we on self-managed offering believe remains focused choice preference. cloud on in subscriptions annual the us. momentum expect Accordingly, that differentiator the and and across depending deploy on-premise segments where cloud to the we continue customers continued a

long growth continue As AI Ash the term. will strong customer we in mentioned, generative interest are and this around cases a use to be significant seeing for believe us driver

cycle. opportunity the adoption early us, the of market are This in significant is still but for stages customers

growth continued significant from GenAI fiscal this not contribution revenue year. anticipate modeling in are we While 'XX, we

will the before, of in be As reinvest back particular for some we 'XX GenAI a investment the us natural leverage in year fiscal focused operating our business, opportunity. as we've of shared towards

basis at These investments the year-over-year of to on marketing that the in This first will currency. total we on and $XXX XX% fiscal the reported of sales revenue growth be background, and million range as represents constant 'XX, activities. engineering, both focused million. With an quarter $XXX expect for midpoint, in

fiscal outstanding. and $X.XX, average operating range diluted share XXX.X in between XXX.X $X.XX the quarter diluted million weighted non-GAAP We in the to earnings first per the range margin of ordinary using million of X.X% X.X% to expect non-GAAP shares for of 'XX and

we the as-reported to billion. revenue 'XX, fiscal $X.XXX total and $X.XXX growth year-over-year billion represents in range both an full of the currency. This For in XX% basis expect at midpoint, on constant

between to full average for margin the non-GAAP earnings 'XX of share to operating XXX and range in non-GAAP $X.XX, range expect XX.X%, weighted $X.XX ordinary of outstanding. the using We and million fiscal shares diluted diluted in million per XXX XX.X%

In growth we that our are early journey. in summary, the of we confident still are stages

in with year. Operator? go are and in that, fiscal We our first and with outlook 'XX our for ahead and let's confident questions. the fiscal are And performance quarter strong pleased take

Operator

today from Instructions] Our Hedberg Capital is question Markets. with first Matthew [Operator RBC

Matthew Hedberg

divergent results. a the had selling good here. database Obviously, some lot tough you, a Elastic consumption but this points acceleration. the results Even to is Cloud on And for really a I Congrats either tonight, recently. of environment, been see of data guess companies vendor there's on

You strong guys it Cloud and for you. are like seem GenAI is delivering a doesn't results. also of It Elastic much tailwind -- doesn't

could kind provide trends than differently of of more that you're a bit maybe And you seem your little on color others? favorable I'm curious maybe consumption than sort model seeing that a that why impacting the if So others? is bit more

Ashutosh Kulkarni

get I'll that commitments to tends commitments, terms consumption steady. of those in explained consumption our towards the in that consumption sell we maybe And started were as add saw and specific nicely. quite customers consume, continuing And we ask consumption largely and towards be model was the their in ramps Ash, then just is saw we've Customers the that QX This that they've and past, related the commitments environment, happening Janesh to to was to to projects we what overall it. it. increase for made. But

there. argue that's position. it search, displacing than especially because a and everything fact of opportunities in that when strong of because before competitive where ever I'd GenAI more now innovations driving, fact we have and the comes In areas we've important that we incumbents and security, happening very to is the search, been the of The that win observability we have able are been to

through everything that saw different based QX. very saw we steady were on in QX, seen from we had the not So what we that trends consumption that

others were don't haven't I know reported. had a we look chance played QX out. it, quite but pleased what have to I how with at

Janesh Moorjani

Ash. that nicely, sums up I it think

Matthew Hedberg

follow-up about about sounds Maybe the baking full in much Janesh, continues I revenue from think contribution like year of it actually have GenAI year? not you customers Elastic Cloud are we guess to accelerate. fiscal tailwinds Elastic then. just vector into really it Cloud And when progression that GenAI, growth how a yet like you're for kind 'XX, when might X,XXX paying RAG? sounds thinking using maybe already we of the you this given and see

Janesh Moorjani

Yes, Matt.

I about year played I as very it nicely from really year. prior we're the as So out think us. our fiscal the the To in overall we've think follows. with, not changed that way philosophy, for framework guidance start about think 'XX, quarters. confident If this about for And and outlook I

continue we we on that what So maintain to and know guide based prudent stance.

If seen, midpoint I at both think compared we we that momentum will cloud. expect year for the self-managed as see just XX% XX% full well to we'll the that, of initiated as you've breakdown full the the guide about for at the year we 'XX. fiscal reported in As

Depending not that's fundamentally, and a the choice, to the we to us the segments where choice. of about strong are GenAI be either focus think that we -- terms competitive it from the in and by to when subscriptions. actually I driven growth self-managed assuming we or of of If upside from enterprise a think meaningful guide, revenue annual in customer focused we segment on cloud perspective, offer a strategy terms in are see cloud. continues about continuing commercial preference, ability sales our that's progression in Also, each on think in customer of those, our differentiator for

know, we're as offering, from And our perspective. which will serve, that self-serve we challenged the expecting segment, a that, macroeconomic cloud SMB you monthly remain through

of inflection progression as in the puts this but I significant those point. to So takes. expect -- we're And some there, any of general see are said, and not Ash GenAI, think continue see -- we we terms to modeling at

a for I think play that's us. longer-term

Operator

Fill Jefferies. Brent Question next from with The is

Brent Thill

Matt's just in environment. on something's question demand seems follow-up industry. it going on the a on I Ash, the like mean

there And You've of sell to heads I trying you out back be think the an everyone's seems happening. pocket best our front air and office, in figure with scratching to demand. seen Mongo, what's in office where

you're said, just clearly, pretty around budgets? hearing of benefiting AI demand sum that in One with seems investigation explanations we coming like a of I clear not your to that. Matt maybe up the or the causing the pause? the you're it? sudden a is conversations change seeing type seeing guess Though Is and some clients to and if industry, you environment software from you're degree are it what through signal there's had And that's as some

Ashutosh Kulkarni

use AI trying And the the question. And for of kinds some felt AI really thanks bank XXX in are individual you experience are towards. for their AI high of that the generative it environment characterize they Brent, net talked see can customers for QX. really generative the way leverage Fortune I the Yes, large on clients. about focused cases, they And apply cases the throughout their is the I'd generative how to in stable improving can demand use business. using that's and worth it

these of to designed improve the that kinds efficiency, their customer they of deliver. improve All are experiences

of make And taking mind real So lot to definitely value funding trying share. they're a and those there's fund it initiatives. that they can is sure those, there they're

we leaning how the stuff off, because it. that about themes really We in prepared and talked it are we've In said, cost innovations past, for and I've important in those into have, last And we have based us, lean how security. capabilities, optimization been in actually that to on And GenAI observability security. are the apply And believe many this search the for efficiency leveled remains terms my operational in AI and in deliver the of into but about level game we like we we that offer we both changing talked we our customers. quarters. generative the that and towards able that remarks also of consciousness had but you've seen for

deliver area, customers helping compete from us better. a said, we better that definitely, now. displace value helping been But happening. flat. It SMB incumbents, whereas It's are Janesh things from to and are us a the They're price. are quarters at All of helping has us few for that remained benefiting some flat greater has these those of apart

cost the of our We benefit to differentiation are customer our amongst better drive a base. ability seeing at

Brent Thill

follow-up. just quick a Janesh,

Just think when Are terms more you of growth in XX% a the in slowdown? you little point? about conservatism change uncertainty from or the you for gave that are -- in year, guide and any you assumptions macro headwind embedding SMB how you're setting

Janesh Moorjani

the Yes, shifting, that very last with them. when That's are prudent and learned now Brent, priorities way of I'd important it we've the in exactly to for our couple close years really customer that prudence are over is it's characterize that outlook spending to right we us that and it's success in teams. maintain reflected we our also And what is our really sales guidance. important customer doing stay

forward. move to So at this obviously good we outlook, as things feel we we update we'll point, about carefully to as monitor continue we're But and you going our go.

Operator

next Bora is Pinjalim The with JPMorgan. from question

Pinjalim Bora

congrats the guys. on And quarter,

XX to XXx. kind like move of obviously, seeing great the are cost own around done search, I When it to shoots Ash, about ask GenAI capabilities. that talk on people by you of have when vector we a lot, seeing a search? you the you to seems -- the want uptake vector somewhere Elasticsearch ROI you're Can the research, our around

leaning what encoding people So are on general? ROI you around dense? versus hearing are And sparse wondering, more if anecdotally, in

Ashutosh Kulkarni

Yes.

the thanks for Pinjalim, question. So

related like in the are many customers, at efficiency of but we We both getting are seeing are supporting use funded internal that seeing sparse customers. either initially supporting, vectors. are of that dense projects models of usage also our that ELSER are external processes the what both least improving is And involve -- and model, encoded them to the supporting

quickly them number Fortune enabling they drive clients experience affects individual worth bank reduce takes portfolios on but supporting what's net number that information It's XXX manager is becomes of what way high provide of possible. clients. of faster that effect, clients, the as happening employees to to -- I trying that wealth are the it to internal overall a of deliver precise talked about for the better. their as the The kind more per time their that information In also to to

or at look tend of are those CBC they we had you're you does customers, have on lot whether projects Bank, Stack spending in that calls was when clear that metrics favorable, past kinds So we've I presented the benefits and kinds those and are Overflow, -- be and conference customers have in them about of that to seeing. Elastic the the mentioned talked more the our cost certain dynamics, and Cisco more at events specific And that a although of it seen overall had ROI. technology

expect that see greater journey So their up use more we what in trend. we'll and seeing But are that's of we greater and that exciting, revenue over over it's show a time capabilities, meaningful as Obviously, very adoption our go through going that cases, really have largest will because long benefits us. for some more that very, up we and customers and as seen, adopt And ramping excited very for they our the are cohort of as I'm that's be GenAI our the customer that's XXX,XXX about effectively customer us amongst cohort that customers. in the to run. they especially

Pinjalim Bora

'XX. deceleration. hypothetical of RPO exiting in employ did you this constant now, guidance. currency revenue growth year XX% a to Janesh. your in And in on look the Understood. question seems currency. at follow-up more fiscal in like Seems Yes. constant is 'XX but RPO accelerating XX% back fiscal the One the growth revenue the is growth exited fiscal 'XX in I numbers, for Janesh, But

reason dispersion. ARPU be follow longer maybe. that of not revenue duration about is driving any But talk year? will which this because growth there that maybe might So And directionally there is that's you reason RPO any

Janesh Moorjani

about Yes, I'm to that. talk happy Pinjalim,

where couple things of part is Cloud heavily about One continues the it. there business arrangements RPO does a The there's any we starting from degree think SMB, So That pressure. about a weighted month-to-month is Elastic to consider that have the as more not macro you matter. as greater just towards be a of of talked RPO that in to performance. maybe

to And so piece consider that's model. one in naturally the

-- I a also renewals we I that that see generally would above just in see. touched a were we other million other more prepared piece a in continuing little did little $XX highlight, the to commitment of any the it what confidence most slightly in and QX typically platform here QX. customer and our volume that's I contracts than we early think bit just bit remarks that on those see during this due QX. And reflects was higher of than And

think In related those were single-digit into I some price effect our the May. products increase self-managed that for went in to instances,

wanted customers renewed recognition. this they had in on the that and early, do when we mentioned price early anticipated the well -- those lock revenue renewals, a just that's something timing on we that the announced call script lower the reminder, Some prices increase. obviously as of And they as and impact not I to

that benefit and So 'XX change no anything either. for there doesn't it in quarter, revenue the fiscal revenue from for was

commitments translate to us customers Many saw in I that is and And commitments, other a thing revenue would long-term obviously but necessarily create The us. multiyear commitments. they QX fiscal new don't elected multiyear sign multiyear we point contracts these to super are into very those 'XX. all with and these of renewing they out strong in valuable because are

the and thinking of the revenue. as of call connection that some you're would those things I RPO RPO to about So are out

Operator

from question Radke next is Tyler Citi. The with

Tyler Radke

in know year? on preview increase serverless. up the of of talk technical released recently Janesh, you the just you're just about the embedding full And equation, for I what can price side the you then following

you the guide are models If and to talk in cloud in just well? extent the serverless being different could that about considered pricing as

Janesh Moorjani

Thanks, Tyler.

So did maybe the which with not meaningful reasons. increase the single-digit a It that percentage starting was of platform. in not enhancements I'll the first this be all it, self-managed a for start few based those that the and delivered that for month. the may near technology off And piece, self-managed term for did. raise was a That's we've with driver our familiar prices revenue in price on primarily actually products we increase we

be a limited have it off, multiyear start of self-managed not come number 'XX. waterfall time it's given those into is contracts to And and then, contracts, substantial. in we at a that signed will renewal only of course, here increase, so recognition you the due of top that. to And obviously also, fiscal only, of that And percentage on not renewal. it First all single-digit it's revenue of will the

over to pay increase the to it's So value impact term. are bring that our revenue, the will value was longer and in we eventually continue to customers a of not a revenue deliver but them tremendous for out willing do the to price that we play significant to who reflection and

as serverless serverless, of And terms we hosted calendar additional a this serverless reminder, that offering. offering does year. to In is It's an not later going GA the only go have replace today.

into model. we the of expect will be again that over play that the adoption So will time, and gradual

meaningful in upside time guide. any the in point we've in not from baked this serverless revenue either So at

Ashutosh Kulkarni

we Yes. the Hosted, add It up we'll has today. So itself. more model customers, to Elasticsearch, have Cloud that, about. more more there the And pricing metrics it that of we'll search on even and consumption-based, on it but talked pricing the serverless, just will of based a queried. to stored from what us Elastic and to the be to Tyler, it's it choice top amount from more be current in control data we interested And the of right? in in the based believe have on would allows data AI gives their that amount of -- end are And it of Elastic Cloud store I to serverless, model calling over terms seeing fully itself have ingested pricing continue managed customers technology offering. the terms customers and that sits With that that offering, the Lake they also seen

to going more And in so going unlock Elastic. with workloads. to to flexibility more and it's them more optimize ways types to them give allows more choice for really do more It's that It's workloads customers. those of

that very the from the available couple excited that's next for given said, Janesh will modeling it But benefit generally we going not of mean term only long 'XX. I'm quarters, Cloud. what after So to in be any that are about as Elastic FY for

Tyler Radke

And appreciate here? on of And ARR can helpful. that that Very you Do timing context where Janesh, given if perspective, easing, drove -- renewals Okay. a back a follow-up, explanation feel side. are upsells could ahead the from to at now the strength. expand your just was just of from an tying how price I like on optimization bookings point to that we little early improve some I the bookings I'm and the if like the in you seeing there increase have But the may, NRR a even see bit earlier? of rate, been is the trajectory the comments bookings curious contracts we're expansion start net

Janesh Moorjani

it's Tyler, Yes, question. a great

And you about of So expansion one, net we know, Number net the the things as it played trailing a as we XX-month think expected. couple expansion as about measure. rate, out a rate. it's

to optimization not effects of started just net in expansion rate headwinds the bookings orders, off consumption. the about business, on terms commitments. based on have wear consumption largely So the actually actual mind have based the now is or cloud and the in that And for It's thinking piece keep of

rate So immediately. that affect expansion doesn't the net

year. we And in customers side, overall, think the rate that out to QX finish playing strength a see and motion But had the the made on is great to about include obviously have land that to that will if expand business net nicely. We I full the and quite expansion the commitments our self-managed here us.

the will it, expansion what the seen means nicely, that don't forward, just that on view cloud, of we think as sort motions good we I in printed. in specific and feel self-managed our so provide but about working numbers And expansion rate we I that you've say and very net that a about in going both

for that the about the rest of excited year. we're So

Operator

from with Piper The Sandler. next question Owens Rob is

Ethan Drake Weeks

ask overall base are spend wanted portion specific to due larger Rob. commitments in customers the their their you plus to on This any on your Elastic? Ethan relative of about now. for you're to how And this Can customer XXX,XXX spend for material uplift to I speak if is that seeing big right are adopting

Janesh Moorjani

I'll and can Maybe start that. Ash to add

seen of pleased our we than of overall very cohort are more customers are actually So that in XXX,XXX. the that GenAI with functionality that option we've

it's pool As that's us -- one you primary know, in that that just reflects the using business. our our that higher-value already that's and of of is with the expansion rapid those for of phenomenally more driver customers GenAI, the than XX% And being -- category. primary customers,

still about If there I what dollar that it's of think way in means by adoption the a level contribution, and small. terms of of

that of the our small we've GenAI. opportunity customers adopting ramp, model. the very built most is As still near stages we've early to will revenue think the see the that's And I continue term, longer to and in to way time the are overall of term relative and said, contribution some we our take in

As use just to adoption enterprise they're customers of we've guidance external in internal I a on the than overall of for GenAI. variety this we into cases said terms cases. that's from just But customers of the in the different those tend meaningful it's that Most of more upside not rather them the a terms few of are us, the use minutes their is which things nature But adopting any built ago, industry exposed think yet. point at of be focused that. to where

really cases so use across population. across traction in and types seen geographies different And that we've of strong

Operator

next is UBS. Austin Dietz from with The question

Austin Dietz

growing growth XX% little like a mid-XXs just cloud -- up bit the picked this XQ. XQ and the the to annual at in it's in been cloud XQ, impact in it and the XQ, looking to past Janesh, annual in business business, it looked further

guess, what's into of then how cloud annual stability the about business? we in in seeing the you're as of driver that 'XX? biggest move the And growth feeling So been that durability cloud annual you are I fiscal

Janesh Moorjani

take that. to Happy

nicely. the I quarters about fundamentally, talked drive about the motion, quite nicely. to land on out the been playing we've well. So strength Elastic think had quite as been been the strength consolidation a making it's we and of that working the to commitments over that platform, the seeing and obviously expand We've here and our investments all strong several as We that's QX of that in and are finish last the

the and by cloud I weakness monthly segment. and that's those the the play so side bit, strength, in continue offset to segments enterprise SMB that fundamentally, the And And motion. commercial are macro we from drivers on some both a in broader seeing out, selling little as of mentioned,

continuing our But and in GenAI move platform and we're to for like in plays, and focus consolidation. as sales fiscal forward areas expansion us. we continuing 'XX, enterprise to those commercial And that's quite working I like actually efforts with drive into think nicely particularly areas

forward rest we've the performance with QX cloud looking so of the the So of been far, and pleased and we're to year.

Operator

The with next Cikos Needham. question is Mike from

Unknown Analyst

This for over Cikos is on Needham. at Mike

'XX? year? And be is will far anything past in on you expected seasonally consumption to as that fiscal call shape a quarter-to-quarter. can or clear to been expecting strong vary out that have guys there XQ this are consumption seasonality as But you You note,

Janesh Moorjani

fiscal the X actually execution the that. at had of across take I very all the as how back 'XX. delivered. fiscal Very maybe I'll look consistent Mike, And of I'm whole with that team 'XX, we sort of happy proud quarters

think year about I to revenue 'XX, and nicely that full I continue the year-over-year fiscal As obviously XX% year. at just guidance year-over-year growth at we've over growth. initiated the QX for for of the course ramp XX% expect will

And the QX think we so as specific it's too beyond, tell. about and think to for numbers I early

over the that you the end will ramp course get revenue on we of with a of the we to provide nicely year. better specifically QX view as we QX, expect but So

Unknown Analyst

you softness doing in Okay. you are to That And what mentioned SMB quarter-to-quarter? this change a was of And makes any sense. softness? the continued there couple then counter but times segment,

Janesh Moorjani

Yes.

over experienced was the of we course the what of quarter, terms in it So stable. remarkably

We're that continuing We from state the the of a in continues broadly. investments. taking segment standpoint. monthly terms operating of business, important I And SMB to any shifts big to us the if part about business are think make that cloud in be an to growth self-serve that we haven't of fundamental actions appropriate the seen

investments product for growth naturally the and that self-service scaling that made ultimately make adoption make in in seamless users product that serverless and segment very motion. a example, we easier For will supports more will

X offerings on serverless making available all towards this working year. hyperscalers later are We our

addition enhancements, to focused to the that driving gen motion demand appropriate In us And for users is the we're working well. to to some on nicely product. drive investments continue of product as also quite

we in the product and So of to it's continuing it, that we motions serve more continuing efficient our a But a continue that terms can I well segment we're profitable cost model so way right work as both macro are that make an to through impact of to investments the as SMB in in of through. think to broader kinds applying way.

Operator

Lenschow from is question next Raimo The Barclays. with

Raimo Lenschow

about other versus to And like forward else, the you congrats customer and if numbers -- you The from guys are well think everyone and you these like think of going compared me Ash, like like if are to kind where guidance. if about amazing understanding as as play all trying the guys in do And going understanding you what of your competitors' like of I are conversations where that to see oh, like, terms cetera, say, customer coming that adoption you where course this, offering? on out of there you like in are see do that do you like can et offering

Ashutosh Kulkarni

the thanks question. Raimo, for

from say using I'd I've what customer cetera. they single had customers in et more spoken just observability AI security, absorbability be that to And single their to automated, more primarily general quarter, something efficient, all, processes this is those make conversations is when of to thinking of their up in last every involved their better, for make how generative the systems, the every have that first and I've Elastic one even So every coming has use conversation side that's customer about AI. seems to can because been generative offerings

think our what it into immediately as we capability, the an tier platform, our say long vector And functionality done understand usage. good not an that very a our we've in as of In customers of because job of I of this all our fact right I'd we're database inherent is awareness terms platform. or benefit the of the of get our customers add-on to proud adjunct, the the that's as getting built have they

or started so now get both sitting their And generative they're these having us delivering dense Elastic have that usage kinds the we data parties, of models out sparse language are without to for the they for ability to the vectors with there. vector of able to integrations breadth just the and learn encoded keep that of large third cases, all using on functionality, quickly things, and AI already is use skills, these use new

but evolving advantages. awareness, the the need more have integrations early last talked for are of includes hybrid both we and database been differentiation platform this not all about, And these that includes ability the the and GenAI, but so and comprehensive strengths tremendous phases for customers that search, is year landscape. to customer the understand they of terms better been I'd those much of clearer that in vector on, All I and What are has becoming clearer. a still of just overall a in to why a say journey reranking the journey

and that do build work them but the having with I'm define to having us explanation really where discussions fewer are to asking So more together applications art customers where these of conversations them help for possible. only I'm not to the

about it. excited momentum nicely, working quite So very is I'm the and

Raimo Lenschow

-- should us can fit how customer a you look, you is gave like it search with in you as of upsell vector what scheme? And search then, theory, a and overall et just numbers, it's go your the using but a I percentage if Janesh, like in was cetera. that one be part very never can Like like if about different you for give it, proper hybrid I like meaningful easy -- think say, the as you. you Like search, in that a know did? of you remind The into workloads? does

Janesh Moorjani

across security the search in seen very course generally the solutions in think consistent we've for last terms over with observability, us and ACV. QX Yes, was Raimo, what year I of mix of the

of solutions nicely are us. All the for growing

a little higher ACV, of roughly be to of of search continued observability numbers, makes XX% to terms or in of a up continued than and more the then it. bit security mix be terms rest XX% In bit the

will and but drive opportunity motions the GenAI, time, also that we've we in security consolidation to over And that growth search the seeing. from with benefit see observability think obviously we been

feel our very we solution about overall So good

Ashutosh Kulkarni

in customers The in something solutions interesting it's AI The willingness and change has that also I'll search to that than we to is seeing customers their people looking before seeing at conversation I'm for their observability how thing it a becoming very only And Elastic interesting invest the security look can change that of to ever generative because for better. are search -- AI. add to are more and on. is

reason to So from fundamental that seems this area in really be everything that's the work the benefiting have we of why search. done

Operator

The Oppenheimer. next question is from Ittai Kidron with

Ittai Kidron

guys. results nice And

that give of paying was already X,XXX congrats have correctly, if customers. of and But I remember adoption Is I if X with any wondering more with behavior Ash, been there quarters. I of few at can us you ramp the all, of for you reaching the more mean, first color them a you've customers. of little bit profile GenAI hundreds growth? on on than had pattern least a

the us Can pace by those applications the on And which then to pace you driving it? the incorporate you the side, you are demand? they color expect by -- on grow? how we with is What customers more here give in usage there are can seeing -- flip any used should on which

Ashutosh Kulkarni

first think terms and that's a that's they how almost in -- customer should is about Yes, choosing we technology you the about of journey, really question. always as adoption, the of are where platform it choice, think step customer stat And it's if What great X,XXX-plus it. the right? the the

the the are customers. to indicator those customers largest well XXX,XXX-plus leading tend because most of in the are as appropriate customers the -- So that traction our as it's the category they XXX-plus really,

that's future. So we potential where revenue see the in the greatest

I few have into earlier, that And at Now many we've production. ramped their everything of and applications But they And are it's implementation our Elastic Cisco conferences. put once or putting customers this other whether in the Stack names talked during they up. had that production, to technology have those many to mentioned on ramp. cetera, I come earnings phases. choose call, customers customers on et company, have customers and go it's their us, and Overflow start time, bank, the mentioned the a so so forth. And going over electronics into

consumers One consider AI to the enterprises when generative of comes hallucinations context to when a to the like lower willingness an it would that ChatGPT. things have is you because tend to accept have you're something in than using enterprise, much of

that So deploying do to takes time the comfortable longer. tends and amount it and to with feel on customers natural be testing these of so

our is opinion, this at curve. you're have that in ROI ROI a So there why that's of the in, slightly matter about the it one seeing is because of the once customers this with longer they and reasons But have seen, kicks talked clear conferences associated that have when. that spoken

total And our it's is very way it's just and a a going matter we've this addressable the -- FY is to to in run. which but not guide, of our it into why increase that 'XX meaningful timing, feel significant be we in modeled market long strongly going

Ittai Kidron

business the question second lot you are on question in then being how my Palo you? with last And Splunk But Alto clearly of course, landscape happening main the has developed is, area of selling together, months, Awesome. opportunity. of success closing IBM X Splunk. the market. good. to guess specifically the SIEM in big and Cisco LogRhythm coming competitor. things a see for Very in this and been I SIEM on for This do you a for years,

see either displacement pricing, those go-to-market product you internally are a on to the big anything very what capitalize XX, XX the and market, you how when things opportunity be in months? over all reorienting happening try And next could

Ashutosh Kulkarni

if focus always That's question. market are becoming as seeing, you know, this about in our this to as a talked about clear We've where when is the what security at is you security even using security. we need in And any we volumes to And security or something platform exceptionally market, able the which and is been. correlate the at like technologies -- of that I've security be very data. quickly especially to in ingest growing, customers moving problem, if all data core customer end data have of past, and else's a back cloud in a as able at. good security That's very, it products, -- bring kinds that's SIEM, great to it comes data very been endpoint we need somebody speed. looked data that other in especially to somebody it's have across The a from that to we're that's all all our

security the have seeing done, are the of been and play, a it, you is we kinds second of very of market results our expand with using of The all about. the to beneficiaries incumbents work in land we've and talked dynamics way, the playing discovery this AI we that the the assistance, that to area been in Attack of processes that kind displace that AI able consolidation it. direction We've with in thing consolidation this play work out moving is nice the done analytics, we've automate around of

excited the means, on very side this. So we in product and about I'm leaning on go-to-market and what are this

Ittai Kidron

of and on on benefits. a have enhancements you this? product Can elaborate is what Because lot on and you to go-to-market changed go-to-market the capitalize you've side? But try what the described side

Ashutosh Kulkarni

just Yes. our of excited kickoff teams the areas ago, sales out our this Look, most sales one are got of and a that we couple about. weeks of is

to what can that this haven't you database of talk to innovating? security So every And success imagine. using clear you the second, these questions customer. opportunity, seeing we vector been And you are been incumbent are haven't question motion. we have as that the asking going using analytics should value, sales is way our is, that need log That's or be the Literally, are campaigns team be after two any with we one, the we are technologies delivering that we to that asking.

and something focus Mark is So for everything just is about. the is our very that excited us. discipline up-leveling Dodds, big of doing I'm just it absolutely And go-to-market a CRO the

Operator

The Kothari Shrenik is next from Baird. question with

Shrenik Kothari

execution. the Congrats on great

and course, and you highlighted, the global to Cloud that Elastic of about, deal course, mentioned signed data, on you on the of guys non-Microsoft an Azure you all in Ash, insurance Azure. So strong which with which gives you the entity conversations provider involving Elastic itself implement And GenAI advantage. recent the highlights and being first you given OpenAI the Service, of partnership consolidation kind that ingesting of But relationship. context highlighted your

Service it it strategic a on you then can of I OpenAI quick particular move have how the the is And Can importance elaborate and in and this follow up. needle?

Ashutosh Kulkarni

and a Yes, all tends the of a a to vector prevalence just And already isn't with lot because is to be in of partnering provide just our enough. on that us fact Elasticsearch given value are Shrenik, see the the the in customers. the We spaces that the they out lot database generative there in choice so market. context hyperscalers -- data we of play AI in,

we've why need search You the XX the our us one technologies hyperscalers great very over closely have all that other to integrate of worked the the of that's a so reasons last capabilities years. customers experience. built with very nicely, And get

the also it's you're market. faster we deals out seeing that in it that that to to. us that building out easier I remarks, database Elasticsearch like interface integration through one the prepared a our be for are for in applications, to which and customers, referring The available makes and makes there the talked get vector going way Azure for in AI play about And my functionality

hyperscalers. in all great across So things X

Shrenik Kothari

But evolving. the still mean, option then it's kind of question displacing GenAI, Janesh. And that executing like, competitors the leveraging also are seems still you course, for is of AI go-to-market, quick course, in just you continuation in on And And highlighted it. workload phase. particular, a Got and guys new follow-up I kind of very also expanding programs. the GenAI It's of it of partnerships. on like looks design the earlier last and have early pilot

it kind these of share financial does kind of are starting that data things phase to internal programs can like? terms it So of like like still kind up? or Is which like or look move of initial and design how in informing very do a you standpoint, innings are your models anything of from inflect kind

Janesh Moorjani

interest brief. just Shrenik, of built it we guidance I'll in the things time to that keep just recap our prudently we that out know. considering

not modeled meaningful upside in in model have from GenAI. our We any

continue growth was will we contribution that to small 'XX. in some see there fiscal expect We because some

not well, we that in modeling. we terms serverless, amount modeling are see contribution some meaningful as upside of we general will in also from it's later fiscal its significant So happens obviously in we're And year expect not 'XX this much that any availability. a but which

approach we've been that's And so taken. the

Operator

from is with The Blair. next question Roberge William Jake

Jacob Roberge

expand in X,XXX terms drive you new activity paying incremental also those to the customers some customers and in seeing upgrade capabilities funnel new the of top of the of to you? existing you're to that now logo or Just starting have largely are premium solutions

Ashutosh Kulkarni

through motion easiest address Existing then also paid convert. the We're answer. obviously, simple ones to new are coming maybe That's cloud seeing especially are that. seeing But being both. monthly a and to then the I'll we customers. translating customers, in ones Jake, customers,

board. across So the

Jacob Roberge

follow-up Is you done annual increases. you've a And on push price on those a self-managed increase base? the to just then is it out first basis? the price this Great. the for Or Okay. years? How quick an do few that often

Janesh Moorjani

It's few one a basis. Jake. do We deliver. changes it the annual first price value years, up in tie We we that to on an don't generally

the when that's have getting, adjust they've we so go much we at in prices that point. it's of and when standpoint will what that's And added see the a from customers and when in easier the been significant value value to subscription because tiers, shifts conversation

practice standard So this annual is not a for us.

Operator

over session. Kulkarni This Ash concludes our back conference would closing the remarks. question-and-answer to turn I like any to for

Ashutosh Kulkarni

and really We you had great customers. bring providing Thank I'm today. call for all innovations and the fiscal much All to our team right. joining Continuing very to XXXX, of a how value exciting our executed. proud

great Thank excited. are the of rest and evening. you, a have We

Operator

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

now disconnect. may You

Elastic (ESTC) 30 May 242024 Q4 Earnings call transcript