ESTC - Earnings call transcript Q2 2025

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Operator

Good day, and welcome to the Elastic Second Quarter Fiscal 2025 Earnings 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, Investor Relations. Please go ahead.

Anthony Luscri

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

Janesh Prengel, our On Chief Interim CFO. and have we incoming Operating Moorjani, Officer; Chief Eric the Officer Chief and Ash Officer; Financial call, Executive Kulkarni,

Following remarks, take we questions. their prepared will

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

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

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

Friday, of XXXX. period the close January XXXX begins Our third business fiscal quiet XX, quarter at on

on Global Technology We will XX, Conference and on Conference the XX. participating Growth Needham in January December be Scotiabank's

With to turn it Ash. I'll over that,

Ashutosh Kulkarni

for Thank call. on you, you, and today's us thank Anthony, joining everyone,

XX% all In guidance we Elastic delivered execution meaningfully and non-GAAP quarter commitments. sales across a supported year-over-year. revenue delivered metrics. XX%. Cloud of by and Revenue margin a solid grew and grew customer we QX, XX% second year-over-year, by strong operating profitability exceeded by revenue

over We number also increased with customers us X,XXX. $XXX,XXX of to the spending

start the on enterprise are the mid-market and changes sales unexpected we increase disruption benefits key changes see year, to customers. of take hold. we At this performance focus in made our the After segmentation to high-potential the now sales some fiscal of we made in starting QX,

performance that pace our past. to on Our are QX we shows execution well strategy way in that demonstrated of in our sales in have strong confidence the to reaffirms we the our and returning

In QX, we AI. saw strong key in customer powered generative search our wins across areas, especially of by commitments with all solution

platform. with We also products Elastic saw AI customers continued displacing and onto legacy security our many migrating search the platform for consolidation onto observability, and incumbent

AI. generative Turning to

momentum Our QX, applications. adopted for continues in demand search saw strong RAG database area or building for we In to our customers vector and increasingly Elastic build. augmented this generation retrieval semantic as

helping Our relentless choice innovation natural clear product building us for GenAI is become of and differentiation pace our customers applications. a

different many industries for variety seek processes. automate wide We to and a and across business adoption cases seeing deals use are winning that of

cohort amongst X,XXX contract $XXX,XXX Cloud have XXX cases greater use We on value. or in more of GenAI deals dollar QX, In with from what tailwinds us over new GenAI us of in significant these we customers QX, business, customer QX, saw to In using doubled our now with of commitments almost annual saw in search we we signed acceleration our GenAI. with with spending customers million being annually. in with as $X continued than X over volume Elastic for the compared

internal company answers applications. by organization's selecting has global with and real-time generation standardized productivity clusters retrieval For vector driving multiyear over platform. example, The powers Elastic in a industry the vector database efficiency for both X-figure Elasticsearch used this U.S.-based in by for its and expanded Elastic's relationship backbone leader on XX quarter, chatbot workforce. database deal as a their providing AI Elastic's automotive for improved the customer-facing and relevant interactions the support employee augmented chatbot to enhance our

Beyond Elastic's company and leveraging for is semantic broader combining capabilities, hybrid chatbots, search the search keyword applications.

to by and America in improve an Elastic their support expertise Elasticsearch for the and margins integrated in will chose all leading search search online. AI company retailer with learning learning search search platform, adopting to the AI AI signed like a rank also platform. machine goods within capabilities capabilities, We transformation using our retail deal and advanced The experience. improve to Using expansion deep sporting omnichannel a in our relevance profitability store retailer and relevance and semantic North single

In for GenAI, platform our use we the tailwind that addition is secular customer multiple been benefiting to from other consolidation onto have cases.

of Our help an onto for ownership invest and by customer is easily use ability capabilities continue to consolidating lower us And incentives cost reduce infrastructure. customers multiple efficiency become for platform the in increasingly and helping secure and IT to strong a customers Elastic migrate that incumbent solutions from part their commitments total cases Elastic. we make to to of at strategic complexity it possible drive

Program Elastic to we customers functionality. who from say seeing our Last consolidation. QX, win offerings of And Express off AI-powered leveraging XX quarter, incentives in and new deals the are offerings import migrate that displaced and momentum us search onboarded critical significant I These in onto to incumbent over competitive through I'm solutions talked helping are or we pleased legacy either were about platform. automatic where our Migration platform workloads these

replace more grows. This inefficient up our and Cost towards positioning key detection. for scale, SIEM shift selected a will us next-generation its as AI-driven short- existing were replacing features data threat a efficiency marking their in long-term security strategic AI AI This Assistant online Elastic infrastructure. and landscape security and in help to ESQL solution, accurate the ensure marketplace threat more its and as including at an and X-figure the streamline platform, unable security advanced and involves a homestays seamless scalable complex deal choice security solution, quarter, AI Elastic, their Elasticsearch a factors of company and keep The expansion faster, partner company's significant integration to approach. footprint operations

another efforts. threat company of deal, Attack and AI we strengthen agreement and In leveraging insurance for vulnerability provider, our displacing X-figure signed Elastic a cybersecurity management incident solutions new The as competitive Security, to response, digital transformation their Assistant with Discovery their detection, broader X operations. part an their chose

QX. improve a our steady that including vector of significantly performance features innovations a number Now in addition database. AI capabilities, product as turning We introduced to of a new

vectors, tech is XXx to acceleration lower trade-offs offer the is performance. for maintain storing from Elasticsearch in and full improve vector database database quantization, now quantization like quantization, Elastic. to a surpasses binary navigating available showing time. compromising It most the vector at to to continue traditional search between is are on delivering INTX it, our without a to Initial also searching We compared faster to vectors. better innovate product methods precision and accuracy. game only now benchmarks quantization footprint market. and as supports changer Elastic the vector search refer position and This less we bit the accuracy lower cost usual vector preview. now costs And memory as first XXx BBQ, SIMD downloaded offers

real By of paths. general the deliver detection AI-driven evolving Elasticsearch configuration AutoOps, recommendations, issue announced of cluster utilization patterns, for with security insights also insights, analyzing and analytics outcome an real-time in AutoOps of metrics, of which modern continues We time and management security, the as fast Opster, performance SIEM the usage AI solution resolution and and and recommends the that significantly costs. In transform Elasticsearch acquisition savings cost SIEM landscape monitoring well hardware to availability to our with SOC. administration operational simplifies resource the as hundreds

unified providing AI-driven of to expect separate our subsume users. or detection recently traditional already new analytics only solution, and We Cloud security consolidate also cloud and of of tools. such investigation detection generation one and threat parts solutions a into protections but familiar to today the to for which response infrastructure, area SIEM functionality that require CDR, extended of within protections SIEM IT various response, extended set this contextual is not protect environments, all we our workflows integrated

this can this yet data relevant integrated informed logs users other telemetry part can events by now benefit As into SIEM, streamlined is collected and areas capability, relevance-focused combine that our benefit in SIEM unique of query from speed, users the with CDR all differentiators of from cloud AI. from context management, perform entities and detection correlating Elastic's the Since investigations. and rules other to of from gained our capability fully

In OTel-native. is now the area or Elastic XXX% OpenTelemetry Observability, of

users an to Observability standard mechanisms enables open data As format. from you OTel ingest know, move to proprietary

now which SRE is data of in As removes data QX, worry formats. data teams to stored about Elastic OTel-compliant without the for all need translation,

Our Observability now suite data. for the works out box OTel-compliant of ingested entire

any In and logs without and clusters traces, integration need all OTel-based instant addition, metrics, Kubernetes into we configuration. dashboards, users application providing our manual and introduced with the visibility for

observability patterns include comprehensive OpenAI. as we support to for models usage and Bedrock of our usage this, well announced we dashboards With Elsewhere, model expanded Azure previously insights Bedrock. capabilities our visibility costs. detailed foundational the provide to into performance, LLM into from Amazon and performance adds as This and

have held off our QX events in New San Munich, Francisco, ElasticON go-to-market date, the and On kicked in we to events York. and, front, Bangalore,

us Our with hosting globe and Elastic ElasticONs QX attendees, give events of ElasticON thousands showcase looking we opportunity and events thousands to share innovations. the and customers, across ideas forward meet are X to during partners, to have unparalleled prospects, fiscal more of developers and the QX. drawn

critical role in success. play a our Partners

transform, working Anthropic, OpenAI, of launched we Amazon build Galileo, Web Confluent, AI ProtectAI, including how Dataiku, leading LlamaIndex, and NVIDIA, as LangChain, ecosystem RedHat, quarter, Google, the accelerate Alibaba Hugging with simplify, and Elastic vision deploy Cloud, new Microsoft, Services, and generative applications, our AI to Face, developers technology Vectorize. Unstructured Mistral, enterprise part DataRobot, providers, Cohere, This

our of We comprehensive developers Elasticsearch have up with database help the GenAI set speed vector time applications. develop to built a integrations to

we a I IPO some And forward leadership as recently Janesh that business to mark. leading a number organizational that milestones announcing all leaving included a colleague with seeing first a last the pursue are has for Now been the will past and years he switching back and company, part Janesh as Elastic December me, tenure the more for key day opportunity, X his friend can of Janesh Moorjani here be new over here. to years, time our the Elastic to team has over in him CFO his personally looking major will ahead. XX. thank news. and COO. of a all has during want be CFO and years, his accomplish done that the more he and to I'm in helping recently, and billion been our XXXX across has trusted $X to the guide including Today, Personally

have with Finance, business broad in permanent replacement. worked FP&A I JPMorgan has was during this then, closely Prengel, And responsibility effective past Elastic, role. confident a in Prior for With having Vice Eric worked Group have a December spent his significant ability time with this at has involved the search contributions on to nearly for company IPO. Officer taking and joining leadership role our Chief Elastic's partnership on President X Eric and investment the happy for XX Financial Elastic excel banking already and disciplined various made leadership in functions. Eric of to of change, I'm roles. his while Elastic here years interim with to the with conducts years XX Eric various to he been even I'm and Elastic

a Eric also as surprisingly, considered will process. not and our such, candidate be search As in

to and our partners, their our support closing, pleased for strong investors their thank I I'm want execution. team I And want this In continued for also focused thank and quarter. confidence. to our with performance customers,

building returning momentum are with consolidating to time. is and are seeing strong way progress. are performance well confidence a great the are generative The in search business positive our our our we multibillion-dollar seeing future to of execution, onto our ability we and are we this our levels our us a of our We of innovations indication traction that build AI over historical terms into on gaining signs and we platform, QX pace the AI to around platform customers in in gives

I'll that, Janesh more results to to it go With our in financial through turn detail. over

Janesh Moorjani

never grateful that kind words. Elastic those deeply track Elastic's for of the have Thank you, partnership and friendship. to believe for an am part been years. for your incredible brighter. Ash, future I trust and privilege I you and past been of the journey a record, for growth am firmly It's X our personally, has been I been proud successful with It's

a now next to and in exceptional leave confident excited leader. While the am about hand with I'm talented sad be be He himself for friends, disciplined behind my will are years my of whom right I team, good been such business Eric. and great proven I'm hands to has many that opportunity. an almost X has

say a get into our him before results. let I'll I few words

Eric Prengel

Thanks, I and Janesh. appreciate Ash really it.

to even In I've my truly years culture a that impressed it time I Since become the partner to clearer Elastic IPO, a was opportunity me both be of we you. company. X and the with at almost have has. technology differentiated that pleasure generational has the been joining, Elastic, strong to working an has From been on it with

Elastic, got the very into of work I with wish that in your in to with best this absolute front I much opportunity role I'm closely stepping so excited and to and that shaped have of the appreciate you all next role, Elastic. you I be much you. Janesh, is

Janesh Moorjani

Thanks, knock out of you'll Eric. sure the it park. I'm

challenging outperformed behind also up second we get we in quarter us, quarter revenue Ash customer XX% results. first quarter second high and constant our of execution with With improved revenue as in currency. Total and end million, in the strong our year-over-year profitability that the sales pleased $XXX the our XX% commitments, was reported both as year-over-year and up Let's described, guidance. against into QX a were

represented among quarter up XX% currency. in Elastic million, anticipated from quarter. Cloud of customers totaled total subscriptions, with consumption constant was as commercial second revenue XX% and the as of generally trends and commitments $XXX Elastic growing in constant $XXX stronger-than-expected in year-over-year against to Subscription quarter Cloud revenue consume the million, our XX% and reported continuing revenue reported in as Aggregate their enterprise Within the larger some consumption second with and year-over-year remained currency. in customers. healthy

Revenue seen self-service and month-to-month past and our with revenue. our such dollar this coming was we driven closely. by remained can in Cloud quarters Elastic XX% of consistent we've from across Consumption to the which fluctuations at so fluctuate total monitor motion, mainly revenue is customers, SMB flattish will in continue terms, expectations in

and in services as constant Professional was $XX revenue million, currency. year-over-year growing X% reported

may revenue delivery. services As the quarters a reminder, across of based services on professional fluctuate timing

performance quarter, To add more quarter. context execution sales to we around deal flow compared had the prior solid during improving with the

year-over-year, our are saw our far We with grew made the strength We Americas also given Ash diligence focus that pleased execution. fastest, across seen in and search geographies the the progress have solutions we and EMEA sales followed so growth The where strong across by traction described. and intend healthy where to continue GenAI the was around the APJ. fastest balanced quarter's we've grew

not as quarter. to We in the they any did see commitments Customers environment increasing the continue business. to for Elastic our consolidation changes and reflecting during multiyear relevance competitive strong reflecting make preference consider to their their us, platform significant

ended customer more customers the X,XXX contract values metrics. than second quarter with We $XXX,XXX. Turning with over to annual

be with a to target such focused as and and to and customers segments. enterprise customers in These for propensity continue provide a foundation larger on the motion continue We we strong higher customers for our expand scale. land commercial growth

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

XXX%, net which rate in expansion was our expectations. approximately with Our was line

Our quarter remained during also customer rates retention the strong.

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

driven spending, than some taking and with strong continued coming had discussed than in quarter primarily was efficiency XX.X%, Our earlier expense in previously of than was we revenue our actions that by also anticipated. in hold we operating significantly quarter margin discipline better expected our had expected, larger outperformance which in the the and

to quarter, earnings full on XX% quarter which timing Adjusted we this Diluted fluctuates, a primarily second given cash to $X.XX. the continue basis. on in look quarterly translated in cash at $XX margin. flow per approximately was a the second flow million seasonality and free year so Cash basis share adjusted issues was free flow

expect above to Although we be 'XX. don't guide margin for we to for flow, cash free the fiscal slightly continue adjusted 'XX to non-GAAP operating cash flow formally margin fiscal

know, is our you cash an on unlevered free adjusted As flow basis.

Turning to guidance.

opportunity market Elasticsearch our large. traction our is customers AI consolidate The are ahead, remains differentiated, platform Looking GenAI continuing our strong to and onto platform. highly is workloads

are opportunity and our raising we full outperformance the the Given our quarter total revenue our year ahead, second in revenue around outlook. conviction

the the to the remain and As and well we focused second half that for of we execution 'XX, year. half are business similar positioned of we believe remain current look fiscal on that profitability. growth first into will environment assume We the long-term

third of revenue both In compared in I'll considered slightly quarter, annual to terms the the grow in dollar we to second cloud and the we quarter. expect guidance. our self-managed some highlight factors

recent while quarter shortfall commitments in year headwind in performance First, a back gives this our our growth year-over-year half this improving execution, sales of the the revenue first customer experienced of us on most year. we in to will remain confidence the

we revenue such have Since Second, been considered contracts have for on annual consumption prudent before, rates contracts both and can year. month-to-month that fluctuate. the in seen consumption motion of we on we've the assumptions our remainder in fluctuations on annual the

of somewhat to expect revenue from on our continue year. We flat Elastic motion for Cloud also month-to-month the rest will this remain

considered the U.S. we from revenue the the in Third, strength headwind dollar. have recent

the third holiday typically professional in quarter, revenue services is terms Finally, effects the seasonal season. of in by impacted

pace our in of remarks, as GenAI, interest leader this market in generative remains technology of a space. use The position strong. cases described his our innovation Ash as very respect around and With AI to our customer strength underpins

opportunity, continue early substantial to very significant the will be and market the a growth we capturing driver believe in over rapidly term. and stages of still for us this are growing long the We

for As plan business, profitability. we continue consider revenue in growth the to balance investing with we investments to

we sales half in are selectively execution increasing the our some in investments the year. improvements the saw in of second Given the quarter, we second

GenAI. particularly continue areas We investments to growth, to in towards prioritize drive will intended

operating With years. guidance drive leverage the profitability remain positioned we business operating scale in inherent We we raising our business well as model, year. future our higher for to the in also the are margins

year-over-year million. With growth to currency. year-over-year XX% the that on expect 'XX, we of background, $XXX revenue and represents as-reported This the XX% at of quarter an in $XXX in the at fiscal for basis range midpoint the third total million midpoint growth constant

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

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

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

we second the performance quarter in our in ability and to remain confident growth In are drive profitable summary, forward. with our pleased continue going to

let's that, with questions. Operator? ahead take and go And

Operator

[Operator Instructions] from question RBC Hedberg Markets. with comes Matt Capital The first

Matthew Hedberg

of nice a to things bounce-back the on quarter. Really stood results. lot that out me. Congrats a There's

there on I'm success the there you any enterprise, double-click that that cross-selling, wondering could trend? think you consumption about commonality was also particularly I there that. patterns Is any accelerated. said drove their -- something but in Janesh, if larger

Janesh Moorjani

just digging was consumption QX. that across quite into so number, consumption strong Matt, overall

use was that solution they're very the are our commercial. across We was that of across for AI some across And their well, as that to the platform saw. among see with was enterprise geos and did encouraging workloads. both Elasticsearch the expanded larger that different strength It areas. We we customers the pleased And continuing accelerated and really new because some consumption. results

periods terms so stronger well, to in consumption of some or necessarily was have variations not that as any whether seen it's the stronger similarity In we always commonality but be there be are particular same there customers past, prior there can the there.

to obviously if pleased monitor into read much that or results we We there's carefully any wouldn't with I see but that. So patterns to emerge. were particular the will it too trends continue

are have in -- our for with QX, consumption pleased in from the although we fluctuate second we quarter, saw we seen these now From our standpoint, rates the guidance the we rates very as that past. built

prudently. quite change the any so for we've far. we business actually seen So clarity, And built our just guidance in not

We that patterns prior are consumption what previously simply possibility the may we considering to experienced revert to QX.

we approached way it. that's So the

Matthew Hedberg

are changes lot XQ. quarter. continued thoughts a was you'd there execution? Well, Maybe is trends that's I'm improvement But Well, seems was Janesh that about conservative can you, that there, Ash, know night. change finger being I talking but And factor on great to you like of put just your anything of that sales curious others guidance, opportunity here. there. in to force better on just, sort it see the understand for I consumption bounce there was from in sales this great. better is positive the half it sort that your what the of last there's also curious drove wondering, if for know back back

Ashutosh Kulkarni

Matt. for the Thanks Yes, question.

the last the had beginning were in seen in at at earnings we call, making happened been pretty that even pipeline the to. of felt made earnings the confident things is QX with rigor, the discipline, mentioned, have year doing we've And with them what few changes the are right that sure the like I pace had or a that the we So that we've call, are all we we inspecting happening as want already right and changes. things

that. about that the and pipeline pace have progression creation to normal we pipeline come are has really of so First, back levels, we seen happy

is were started time thing work confidence hold. made to the all right we with the have just to really segments, direction. we reason that the reps in accounts, the had why were begin on said, lot changes, work on the the QX the our And the second segment, are forward. those behaviors have the focusing of more really going enterprise we've benefits mid-market we impact, with that their expecting take to high-propensity a changes more The a to was about to and and as delivered on starting have just their what thing in seen all that's kinds gives team moving that I'm in to of we accounts, and near-term happy the happened and of that right me see, as we QX see are And now

Matthew Hedberg

it's Janesh, luck working And endeavors. Great. great Best future been in your you. of with

Janesh Moorjani

Thank you, Matt.

Operator

from Bora The with next question comes Pinjalim JPMorgan.

Pinjalim Bora

a Great. Congrats on Ash, the interim best, role. the quarter. binary Janesh, like from you me Elastic perspective. want as But a ask from is all quantization. my congrats understanding understand well, and trade-off use across D me between on is kind I Eric, differentiation of different to how going of cases? GenAI and to cost. great on be working pervasive quantization the with Help and that for vector you, it's accuracy is kind Seems a

Ashutosh Kulkarni

I excited about. very is am that something personally It

amazing it it little takes delivers an or And you to Like accuracy. what it. on always pointed actual out, about even all is binary trade-off the very between really much and first And absolutely do the are of with quantization, from performance. quantization those excited everything query the it to does is quantization to deliver is how efficiency capability. this of impact a very is better performance correctly and accuracy time level team required Our efficiency, to memory we

will the about changer. phase, whole want the a algorithm. gain that feel, this game great of in phases delivering asymmetric way Like the very this, it. so are it, revolution, market. I share And maximum at my us is what's true early sure see this make we is remarks, we really to see the are I the when AI way prepared the kinds to This that we innovations this of we And we still mentioned time in that's in allow

personally going The broad excited. to applicability pretty this is are and I'm drive so And just very hard. we

Pinjalim Bora

RPO look Yes, especially It question bit on when cloud of seems understood. quarter. out deals sequential you. the a trend, little But a at very seems consumption given numbers, I Janesh, of muted, the one like it quarter. for that strong last pushed a number

those. closed You lot had of noted had a you

at yet. bookings maybe versus changes are the given So of see? characterize we there you but the kind how point that this It's cadence improving would historical not you norms,

Janesh Moorjani

measures we Pinjalim, and and additional the are taken in that that we to they actually new having with very team Really back QX. happy were sales following sales our time effect pleased more also QX, have the execution with reps their to engage bounced had desired overall see the accounts. had

So played think all that I quite nicely for of us.

many were driver the those QX, second QX out in quarter. we there that of closed deals strength that not While moved main were us of for in the

the what probably delivered slightly ago before than have you But the higher overall, we the sequential good about to think quarter. and, the for feel even consistent that of in and looking I in fact, change year. we've respect the pretty ahead, RPO the with the seen in timing With outlook rest quarter-over-quarter changes may year was RPO, that

felt we well. pretty So about as good that

Operator

Radke with comes Citi. question Tyler next The from

Tyler Radke

the you great best. note leave been working Good it's Janesh, with and all on here. a high to you, see

of GenAI use the go some to to wanted I back cases. Ash,

quarter-over-quarter. agents cases you're just with XX in backbone cases vector chatbots It those of seeing use curious like around types quarter other being supporting I'm commitments, use referenced terms strong of then kind of But doubling search. sounded of different and very terms of you're use in some where a database cases the use Sounded the like cases semantic and how unfold. some kind you the

go-to-market give evaluation of you the standardizing are flavor us cases? and go-to-market discrete sales GenAI help around orienting use force particularly those you're a of us understand, here? of motions, kind around maybe kind So of the serve kind Just GenAI use how case to

Ashutosh Kulkarni

that's Yes, question, a Tyler. great

I'd depend through from that unstructured be processed manually one all of processes, business step. are to the next much generative automated moved AI. every upon there the as that what is say thing across market pretty a broadly, at is every of and first the look industry data ability the have lot we and processes of being those step see to And we vertical, So the process

So strategy anybody platform we generation, effectively, of that. building that for applications. at generative be looking are runtime for to retrieval those augmented kinds our is And AI

first then building just just that to automate all semantic the techniques data those implementing get platform Now foremost, underlying relevant from kinds process. the then and there like of begin, search search, those cases for some of and through for better use applications their And by the to that the precise generative will of be we evolve things. their underlying and somebody layer, chatbots And most they'll want search applications. hybrid to

taking basically instead so very, very very really has something been taking approach. around the as approach, motion in this us worked a vertical-by-vertical And past. you that well is our for of platform simple. a that's And we're know, And

and and about a And blend applications. external a starting past, Our how augmented and is, as that simple of goes generation vector you from see search vector now databases? you're And the of like either search internally-focused a field both And of you see, I've sale to these tend internal-focused we said to semantic are there hybrid naturally or leads in about to question thinking search. database What are it retrieval using? or But are just are semantic more search talks just sale lot to comfortable. getting in more a the kind opportunity. people be starting a

I exciting. think that's

Tyler Radke

not to strong this new kind saw, clarify as -- just that the use was do the trends about clarify, that. cases? trends I you're Or going you, these you customers of in into you're that around nature? you in guidance? guess onboarding consumption saying you're Just the would embedding wanted just commentary And kind onetime just the large the think for you it of continue, seeing say quarter. Janesh, you that stronger-than-expected that back to to was

Janesh Moorjani

strength absolutely, onetime. in we of saw, as and so yes, at pace we terms of some to really Tyler, wouldn't what broad-based. consumed a saw characterize I see. larger faster that encouraging accounts was the be it was just our It

We've then seen the that several that the the get been and I talked into reflective in think about commitments past talked doing quarters that GenAI. momentum we've of reflected we've that's over consolidation. of about the all platform things customer ultimately consumption. We've translate in that driving

of higher So the I which terms what think has of that driving, there's translated teams been have rates. goodness a consumption in into lot

expected was we wouldn't it onetime. higher characterize than it as what So I but

for In right. future, the terms using future the and that what means assumptions that of you're for the we're

any the seen business. in not have We change

anything We that think in just have just adverse, we of seen our we of get but fluctuate, careful have with ski we're rates consumption forecast how ahead we and build be to not prudent tips. terms and being can our seen not because want we historically,

Tyler Radke

the guess quarter. before so lot first the Thanksgiving in Yes. I guiding for days a more you're time

Janesh Moorjani

That's right. right. exactly That's

Tyler Radke

Janesh. Thanks, right. the All All best.

Janesh Moorjani

Thank you, Tyler.

Operator

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

Koji Ikeda

the forward Janesh, best thanks And for working All to you. you. everything. Eric, with to looking

the it is ramped second to a get ask organization, are So keep guess you needs are what fourth would fiscal back implied if a But fiscal I org? on at than happen on new XX, scale being reason today results the sales with I where to rate of it's and exit you and how that the fully to growth I XX at why strategy. quarter staring have XX%. question X today? on question really rate XX? Where I strong. The you quarter in the of is to business the less And are sales XX,

the out is massive just over effects there Or could org in coming wondering quarters. if conservatism just So the still the we embedded I'm change see of sales guide? playing

Ashutosh Kulkarni

for Koji, much thank you question. very the

of here's scale, So I'm on not fan what putting a but say. anything huge a I'll

performed not way at the are those of think come seen happy internally at -- only strategy. pace we And really I both And pace are I'm of creating that our our we and pipe really to but right, when pipeline we in pace? creation that's at pace? all, effectively, your pipe fundamentals, sales progressing at has look win and our are of continue progression pipeline about back the that to right the areas, those be incredibly of strong, right I've normal. Also, the rates metrics are First the you

things working of where QX from a All of confidence those that results lot perspective And they me are we give are. should. as about the

of ask terms so Janesh weigh on, don't and Eric in maybe guidance Now why the in? to I

Eric Prengel

take I'll this. Thanks, sure. Yes, Koji.

of you mind of to year, the on the going have growth, rest year-over-year by is, driven our commitments we're impact very in What said revenue keep as commitments ongoing the terms for about of revenue on as effects think that the in quarter, both And in business. has an our call, pleased on customer the the quarter said you and the of Ash need year-on-year Janesh and which our of guidance as was to the I'd shortfall consumption. are with levels second growth in outperformance say the first stronger strong

months in shared similar. For given will going in we it is takes increased and so is ramp self-managed, that's cloud it something and we've be through for and usually the This already to second it. several headwind quarter But an dynamic considered be our second to outlook anticipated fully in consumption. we've playing cloud, there's it as the half,

importantly, the slight think So the I'd is that can on year-over-year in we the effects. headwind commitments. and saw so secure momentum execution back customer sales our focus There's we also currency to it our that's the it. I half continue growth QX to way way a Most about from continue positive maintain was year-over-year in think that

Janesh Moorjani

we Ash about you add determined specifically. here I'll it's will But by to where think QX. early Koji, Yes. QX are sales just from 'XX largely we year about next that, good about trajectory too be pretty that and our rate, said. exit talk activity as as growth that feel in out on revenue And on obviously,

Koji Ikeda

here. And just Okay. X follow-up

value. are prepared come. The for is, is here generative remarks, that talked to I'm understand X question you about trying these your been waiting generative what for AI million being there. projects? to Super And impressive annual AI these in big specific in Ash, we've deals, commitments contract deals $X

generative of so to these I projects? specific AI for X-figure experiences contracts, big, beneficiary AI generative fruition, Elastic specific a imply these for if are deals really come be mean, could generative X-, And as experiences, very of does big that lots that AI

Ashutosh Kulkarni

fact generative question. what is of in a of like of that's a business And in Yes, we all, great AI this now I'd and part lot sort design are that say in design those the then there we don't into metrics with and the over We've very are metrics talked the reason, because -- from nicely that know, we the commitments of and AI have on in X,XXX that you shared, it. because, starts we it now are wins cloud, we've we Then you even Keep our discrete that. point, you actually the traction metrics sharing making The is, are And now first with fastest-growing SKU, of at that about giving really customers. grow that translates that we have past, a And seeing it color wins. of directional to that customers as we commitments the Koji, as look moves seeing generative we're are you right? sort meaningful know. revenue. mind, at some

is about did execute progressing. for this why that in So keep feel QX, why we This is on sales keep the I to we focus and is continue building exciting. business. up the now to that's reason so like can And front the really good like long-term the trajectory our

Operator

Brent from with Jefferies. comes question next Thill The

Brent Thill

I On guess the confused. I'm go-to-market,

QX your pleased you're that team, say sales with RPO is flat your You QX. to yet

twice growing the are you. RPO of speed competitors Your

in just make And what yet? this. So you're want a you by pleased sure Is that's so reconcile I'm pipeline to back it it backlog that. to mean building I'm with because just -- I the trying clarify we hasn't converted

Janesh Moorjani

maybe Ash I'll Brent, add. can and then in jump

math the point-in-time year-over-year year-over-year RPO, a of it's in is behind at roughly of terms cumulative RPO the measure if all RPO look terms, keep terms, the activity. flat. you But prior mind that in In in

you current growth, about QX from rate And QX RPO you in from So QX, consider sequentially, more growth year-over-year gone has bit. a the and sequential in QX up if activity it the down. impact is shortfall the commitments little does think RPO. usually But

look was for in lower a last than little So if bit year, in you at QX. example, RPO QX

in the So the of that. in the we that with reflected business sales just you we're the execution mission pleased, the we of indicators see terms as our side. progress that We've these one And and at and said of of actually you are see the all declaring indicators reflected pleased look again, that return made several collectively. RPO other that not in we to all quite well, numbers, were we've business on accomplished that of being

Brent Thill

or total roughly percent changed? it that Okay. revenue And versus broader is a when you think observability, about search is of split as XX-XX still a

Ashutosh Kulkarni

from it Eric the in. an weigh has touch definitely for the takes me also upon to for But Janesh while of quarter-to-quarter, mix let the I'll happen. QX. in accelerating about and I've changes level, that in overall to QX. but look, a at and business mix Search same annualized It Yes, us talked and maybe shifts that, was been ask

more, that in grow, When generative This feel quarter, grew. I share, is are good areas, definitely commitments we at solution benefiting all parts our that taking customer we we seeing way given all are are search of AI. in the the X business actual our but the look I seeing that business we and got trends

Operator

comes from question next with Barclays. Lenschow The Raimo

Raimo Lenschow

of maybe kind one think just how do that's like, all question? on you started them out, to base going you terms think very stay offering large Ash, to in we back the in search and okay, about Can have installed you there of about now. you search the where more guys and lot of I or because look, there, search saying, if a a hybrid of kind and opportunity of have them

of the offer You still and client of like feel base where one? are you for around on better outcomes can get Because working on what more But does GenAI of now journey like we can very than a early. whole that understanding kind kind doing as it that point starting stuff it's anyway.

Ashutosh Kulkarni

the can is us. in Yes, data you as Raimo. And Elasticsearch. What I'd our motion is imagine, for the say that base, natural is already that customer for

to get can So for relevant that thing. a now make results more go us to they pretty case even that better, straightforward them and is

good see are a that's in is are we that So that because We're you in seeing that. to, have data Elasticsearch our that teams, motion, And go. to seeing for motion because the sales them for naturally. place success you happen. is that do seeing part of when like teams natural of big you AI a natural, a already, relate sales generative A we customers your when already a is see that the setup sales where just

$XXX,XXX motion we So where that if the base, see you now have team quickly we've And made, gotten know. as the journey? are are Cloud greater there We've in is large cohort. got that driving. this customer we of you that part because in Elastic than have And that that overall sales that customers a we progress XXX is our

to very the about more lots happy excited go and So but progress.

Raimo Lenschow

the around a for earlier takeout, me perfect. Ash, with seeing talked Obviously, opportunity. terms been mentioned, there disruption it customer the SIEM? the Janesh, you you And follow-up there about X market you. has guys an of in was SIEM was cetera. of honor of lot you with in you then et What are And working with engagement Yes, some

Ashutosh Kulkarni

of They my that prepared remarks, you security-related. I question. for that thank consolidation won. a were we couple Yes, SIEM, like both talked on in even deals about Even

made people and but In we've And analytics we looking database are are AI core with SIEM. seeing nice-to-have in about SIEM, were given leaning and at not in to strengths and opportunity on, momentum terms vector security a we're is becoming improve must-have into which a ahead remediation happening and in detection point, seeing think can just like our that foray in process. And of be so to your tremendous people used early now is AI, of when ways fundamentally we that seen AI the build. the almost given most just this, we really like what a entire

are where Things opportunity. but helping ones about these excited some are opportunities, are program greenfield like it. quite I'm displacement we also of Express there them launched Migration many is because the that a of So

security area whole AI continue in So expect into win. would should expect I to to allow this leaning the us hard also space that you and to in pushing us

Operator

Kidron The comes with Ittai next Oppenheimer. from question

Ittai Kidron

thanks my next on good . Janesh, move. and well, luck to you as the

how of nice. or the perhaps back of customers to right getting were you quite the tell you added the capabilities AI. us search historical ask company? search search And about just that's what's impressive AI these customers, customers, again the and to new X,XXX wanted AI I quite I sorry, within penetration But many net to base? were I'm now this. Ash, your can mean,

Ashutosh Kulkarni

most customers. our new the motion numbers. as to efficient them imagine, of meet are number in At you them thing go are these expand large sales a the natural way you sales-led of the And do. motion the end think the for customers. It's can team, day, for their when the for and Several of existing about is them most to

we to search the customers naturally have happen. But are important capabilities. an our we that customers in new just platform, come And our the is see because seeing vector sense, So like platform. motion, that self-service this then of opportunity come why reason our to to

terms way opportunity of capability, search growth. our customer across that's in mix, us to for of part to go and this start to for entire our base best a it's installed the still especially continued So And using expansion the a base, there's lot describe and it. get room the of them

Ittai Kidron

here toughest the the the call. competition the frequently? Like think can about displacement now? on the who X that of vendors elaborate on the you talk you you What greatest that context bit see competitive I about maybe and displacements, you then see Very talked the good. GenAI when most more? And side your And right front, little on the SIEM? are you more are opportunities in do SIEM or it a Where view is you X on

Ashutosh Kulkarni

there's part Yes. it describe Splunk Like the generation ArcSight, been to like early adhoc vendors. in players host customers succeeding analysis displacement back product. of mean, as to a end, way space. of about differentiated. that's our incumbent in think players, I about are I ourselves, to pretty our why AI-based large of are QRadar from next-generation us, big And of our a Look, the is whole And of data the to a do this there's everybody way in of flexibility SIEM. we that ourselves the on sort modern when this area. something just is from everybody. bring are for of We And set incredibly a to a platform able of have a opportunities, to because security think way analytics comes we it SIEM we The are that's we able

When are models, it with we we about our have right? GenAI, partner So comes everybody. to -- language don't look, we own large just

ecosystem. announcement the the AI saw about that we You made

that lot a So are of large players language we models. their partnering own provide with

retrieval the is Our to vector around position for core as want We ourselves also it. we choice and the platform of generation. provide some place, want augmented the to then capabilities database be of the way

is pure-plays heard own aren't And town. So to opinion, we have functionality. only likely you of. out are the might there that my have their every in platform vector going in data database There vector then

of our when kinds strength into data, those is of And use it And to that cases. best whether comes product core it's it's best logs, whether right, messy And database it's Elasticsearch. whether data exists in we the have unstructured is that's company. documents, that data support every to Word massive vector descriptions, bring suited amount is to a always

innovate as continue the way focus that we what feel been, on to as opportunity is -- are we that the I doing and we area long have market huge. in we So

Operator

with Ma Guggenheim question comes The from next Securities. Howard

Howard Ma

and/or is question My Eric. Janesh for

half maybe despite the make full being just true? that still you're factor have before maybe shortfall you QX back. were your sounds sounds Or back known a the quarter? you cut achieve commits you you the quarter, revenue the lowered conservative with in year QX with acceleration just you consumption like trends, bit consumption, last not Is customer your and like on the did, in QX had bounce did it way, that you and assumptions. performance commits you last when that would up in track back would it another guide So targets both for But your asked in

Eric Prengel

think I'd QX strong headwinds was impact lowered our QX. saw say is and we're that full QX, with that But I still the And we going half guidance. going versus happy unfortunately in obviously Thanks, in over very outcome would customer QX to commitments. said play have a of before, we is think Howard. that happened the as is and year what it's have to the what rest I a given the of to the QX, given had going cloud in back timing more headwind little the the year. it what particularly, to specifically the of out And in we in

we while the still have decision performance that the happy very So are made QX, same with we we would in did.

Howard Ma

you Okay. describe for Thanks the you how a of that, cases? pace When for database, that GenAI Eric. how the adoption the search And hybrid pace X%? that compare clarifying X%, next last I for AI had ELSER, look to use the of of just quarters, follow-up XX Like could in adoption total vector over XX months, Ash. to expect you play maybe the would next months? quarter revenue, the could quarter you, related a of X%, And is disclosure over on we few the when it hits after, note, in seeing perhaps next out works? or contribution start a will

Ashutosh Kulkarni

Yes.

me and Janesh the and also talk then touch the So let first second invite about to might upon piece. I Eric

trying the in are of So sort the to work phases like adoption and in prototypes on. build so lot that not computing starts of adoption, of with people design from generations, all first. phases other of There's different in. adoption of that terms It a that I'm the cloud technologies goes seeing of prior

are many that full-scale so not. then, out months those figure many people baked lot still XX started People actually see trying You We of those production want designs. and of versus production. into to to Since to on. how about into into be a go these of take saw we've ago

was applications. internal-facing it First,

pattern it's would the similar to also applications. external-facing very that This Now have expected. we is

happening it's a is say I'd much What time frame. in more compressed

and being time applications faster to it's from happened anybody have much these it's would of them, people sort expected. now the than So this deploying taken early building

So part. that's exciting been the

really but actually in thoughtful because not efficiency, put like Now very, very large-scale like what want things it about customers they put being things in we production. performance, it things only very see to scale production like is

we We're things, from And on. kinds quantization like basics so so better past in those stuff, that innovations it's of right? that the are more the working binary now which terms related kinds are we see us all you and on sophisticated of of the and into even are capabilities the to delivering

keep terms just with second -- or that the that of like, In right? mind Eric, I'll SKU, question, any But separate one a have Eric in say this don't thoughts, metrics, Janesh? your thing we that,

Eric Prengel

a have around we've who always seeing don't we SKU. we to generative separate is are traction what indicators the of point, color X,XXX, Ash's using in customers. customers To Yes. that give those AI. that our generative We have that AI have we them $XXX,XXX-plus tried cloud and appropriate we're are XXX shared and X,XXX of And of done

than with Ash doubling generative traction we we that the what the in saw more saw of AI already this QX. also shared to some relative quarter commitments almost

specific share what that that have So be it we to evolving will but SKU something a it is is point. something that we not on

Howard Ma

see the bounce great And great. back. Okay, to

Operator

Austin from The question next UBS. comes with Dietz

Austin Dietz

about relative trajectory RPO. Janesh, And question motion talk the felt we you half to on of possible, year? more especially business half, sequential seeing? what maybe QX Maybe uptick QX. the that Could to good it dollar time in as an have you're sales the to of last the on a it just like in execution kind second RPO basis growth another sounded you and especially on is see for improve, could continue second

Janesh Moorjani

to that. Austin, talk yes, happy about

I here. all RPO continue used including we about. as as the But And that only that all fundamentally, you won't in not in to in them the of I the but them and talk If you're I've we for half right. I the of execute if we see laid execute will assumptions earlier revenue. in well, guidance all repeat guidance, about out well, in necessarily other metrics the we the reflected reflected building the So specific metrics, you look, so execute see year, talking will back was especially that

Austin Dietz

Ash. last, then And great. Okay, just

a changes, that's focus As on of go-to-market was progressing? us of Can new how those part logos. there greenfield like a more on it you seemed update opportunities,

Ashutosh Kulkarni

question. Yes, thanks the for

worked, So of accounts said, there turned assigned that that was was like them of a territories did being one really and you to things lot the into we greenfield pursue go the sellers took those. distinct we we weren't and --

a it typically, know, you pipeline longer and opportunities. convert build lot takes greenfield As those to to in territories

I seen And -- to pipeline what the of make the we're at and But very keep it the feel overall is look we sure good in we territories, tracking are still build creation keep So those about that what area historically. progression, areas. greenfield and early I continue to when I'd pace we've coming days. say in the the going that to just momentum back

Operator

Sachs. next Goldman Rangan comes The from question Kash with

Kasthuri Rangan

right trying not instance-by-instance. does platform you, back is a Do emerging the force talk gig So go-to-market a with they you to that have for the maybe the a Janesh, cases, is for One okay, about come next use GenAI do whatnot? into not fine-tune a here. happens also about we at One that tell a for us, that sales for, that you you bookings versus we Microsoft tracking? sometime makes revenue talk how you Ash, how what X know the case? GenAI disclose metrics the SIEM progress, cases AI, not the having things. sell talking you, do in to relative to you. what implemented know be so you observability the it's granted luck percolate to you success is say, out really we that and use to what then you not and are you say good do are when the How AI granted So know look another find go-to-market but versus define the motion, as a question how the that When you for search GenAI can articulate way go-to-market or hunting is and when sale would about or understand you that bookings? And ServiceNow if implementation and -- GenAI versus use that seem do later, strategy? sense strategy

Ashutosh Kulkarni

a question. asked great I'm That's you glad Kash. that it,

we generative have see know AI, first because the exactly for that on. cloud Yes, So telemetry so metrics specifically clarify. let AI they vectors in have first look many the look there me using indexes foremost, us at that let us we me so we question. the -- at, specifically using and When see foremost, internal perfect generative and your they're are address we how how we first dense for can customers because and we created and

the that that customer AI that made related The cases. second at thing to generative we is look are commitments use being are

related we from or right? information that teams deal in search we the company on closure, based chatbot several somebody our at talked all is it a particular is that of the a there, related Now that I or that deal semantic get So chatbots. know about it's the sales building to to time

is So at time the of the commitment what to. know customer related that sale, we

some they what think compute, But piece. they want customer search from observability has are say, related we us Elasticsearch, that cluster piece running let's RAG know of versus GenAI up point purchased they to commitments. is are that the once or have do a something decide they -- now, revenue, that cluster, semantic when to and you that, would time, workload observability Now that out and about cluster. stood at of on doing consumption, is do some not of also the If parse that exactly that to actual they percentage of on same might they how the customer

to all to effectively because disambiguate. have So same time. the hard are have, a it's that And if cloud, sale other SKU, comes on we cluster we don't when than cloud, data things in it it's separate even the at

true at commitments. And other we our is for that's look what solution customer even So areas.

there, also that clarity. the do motion. information That that's based absolutely go-to-market So solution our about And it's always we teams. mix, why when we we that talk from say reported guides sales our on have

are seeing opportunity know make us. working, success, we information, are guide of that exactly that's that what on sales based to the how where teams So we is we ahead our maximizing and we sure

Kasthuri Rangan

for in whatever, we I'm with bundle evolve Analyst your and bundle. management Got to So curious evolve? the does a and discussion the but this strategy Day go the at another -- actually how long use the case or term, can it. can product you maybe go-to-market product And market marketing save

company but the out I better. sales like real there. But you throwing work up accelerate don't have growth you growth wanted to like to, need address it question the feel rate? you do the this to at I'm You would of Because point to now, follow what can with be the add or the just things was, out clearly, if way capacity

investing just you need currently? of look the another faster curious revenue have in versus sales capacity, the trade-off round For that I'm how also to you that happen, you margin to enjoying do structure of at growth rate go-to-market.

Ashutosh Kulkarni

Kash. Thanks, Yes.

actions, we near-term see we our continuing. when capacity. at to were even So very of of opportunity going said did our growth clear, cost selling just be are that be the some And to as control we such QX, we all that them affect end taking not

make are to the to possible. room the in continue sure continuing give We grow to ourselves we that best way

But let Janesh. it those turn on, about of some to to and investments me actually talk so

Janesh Moorjani

investments. as seeing sure do And in will investments. And look our of actually outperformance as course capacity strength given the second including the on quarter, the know, at so in this little we important for 'XX of operating to year, investments which, productive right to Ash us as given as model, leverage investments we capacity, just towards second bit. well. the the are inherent a fiscal the as in amount a we we're revenue go well the variety those in with mentioned, enter able as are you we functions, selling the increase to Kash, second the half of make add increasing selling half margin is our of both, And fact, the

it. keeping appropriately that growth the investing and So we're definitely towards towards future in an eye

Operator

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

Ashutosh Kulkarni

Thank all today. us joining you for

forward extremely excited driven continuing to and in about momentum are continued our our we strong business, look execution. We the AI, generative by

to re:Invent, day. those there. of you be at forward great For who a AWS Have you will seeing look I

Operator

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

now You may disconnect.

Elastic (ESTC) 21 Nov 242025 Q2 Earnings call transcript