Slide 1: Corporate Overview and Q2FY24 Financial Results
Corporate Overview and Q2FY24 Financial Results November 30, 2023
Slide 2: Forward Looking Statements; Use of Non-GAAP Measures
This presentation and the accompanying oral presentation contain forward-looking statements that involve substantial risks and uncertainties, which include, but are not limited to, statements regarding our expected financial results for the fiscal quarter ending January 31, 2024 and the fiscal year
Slide 3: We live in a world powered by data
We live in a world powered by data 3
Slide 4: But the Mountain of Data is enormous
But the Mountain of Data is enormous People can’t find what they’re looking for 480EB 1 EB = 1000 PB = 1,000,000 TB Data produced daily by 2025 *Source: IDC Global DataSphere and StorageSphere Forecasts 4
Slide 5: A new inflection point has occurred
A new inflection point has occurred Mainframes Microprocessor Databases Modern OS WWW Cloud Mobile, Social & IoT AI 5
Slide 6: Generative AI will disrupt every business
Generative AI will disrupt every business n 100M 300M 10 Chat GPT growth Jobs automated Technology shifts User adoption in less Forecasted impact of Personalization, than 2 months Generative AI* automation & productivity *Source: Goldman Sachs Economics Research, March 2023 6
Slide 7: Search is critical for Generative AI
Relevance & natural language understanding Search is at the forefront of latest advancements Optimized to scale large data volumes Search is critical Search delivers results with speed and for Generative AI at a lower cost Foundational framework for AI apps Search is an investment in harvesting data
Slide 8: Generative AI is revolutionizing search
Generative AI is revolutionizing search Excels at human-like, iterative content creation Natural language processing of large data sets used for creating human-like conversations, writing content, and providing code examples Limited by public training data, generic context It’s only as good and as u
Slide 9: Elastic enables everyone to find the answers that matter
Elastic enables everyone to find the answers that matter. From all data. In real time. At scale. 9
Slide 10: Meet Elastic - The Search Analytics Company
Meet Elastic - The Search Analytics Company Out-of-the-Box Solutions Build Your Own Elastic Observability Elastic Security Elastic Search Elasticsearch™ Platform Ingest Secure & Scalable Visualization Workflow AI / ML Search Storage Automation 10
Slide 11: A Comprehensive Observability Solution
A Comprehensive Observability Solution Out-of-the-Box Solutions Build Your Own WHY CUSTOMERS CHOOSE ELASTIC OBSERVABILITY Any Data, Elastic Observability Any Source Logs, APM, Tracing, Metrics, Synthetics, Profiling, RUM Traditional Signals Elasticsearch™ Platform Logs + Ingests 400 terabytes of tel
Slide 12: A Comprehensive Security Solution
A Comprehensive Security Solution Out-of-the-Box Solutions Build Your Own WHY CUSTOMERS CHOOSE ELASTIC SECURITY Any Data, Elastic Security Any Source SIEM, Endpoint, Cloud Bring Your Data Detect, Investigate, and Respond Elasticsearch™ Platform Cloud + Over 1,000 pieces of internal Network network e
Slide 13: The Flexibility to Build Your Own Solution
The Flexibility to Build Your Own Solution Out-of-the-Box Solutions Build Your Own WHY CUSTOMERS CHOOSE ELASTICSEARCH Any Data, Elastic Search Any Source Generative AI Apps, Product Search, Workplace Search, Custom Search Apps Native Connectors Elasticsearch™ Platform + Customers worldwide searching
Slide 14: The Speed, Scale, and Flexibility of the Platform
The Speed, Scale, and Flexibility of the Platform WHY CUSTOMERS CHOOSE THE ELASTICSEARCH SEARCH ANALYTICS PLATFORM Out-of-the-Box Solutions Build Your Own Elastic Observability Elastic Security Elastic Search Generative AI Apps, Logs, APM, Tracing, Metrics, + One of the world's leading digital trave
Slide 15: The Performance Today's Organizations Need to Win
The Performance Today’s Organizations Need to Win Speed Scale Relevance Millisecond Response Times Multi-Petabyte Scale AI Powered Relevance Engine across Solutions Across Environments - ESRE 15
Slide 16: Elasticsearch Query Language (ES|QL)
Elasticsearch Query Language (ES|QL) Elastic’s new piped query language and query engine Improves SRE, Transforms, enriches Unifies data exploration, security analyst, and and simplifies data transformation and developer productivity investigation visualization 16
Slide 17: Elastic and Opster Join Forces
Elastic and Opster Join Forces Automatically detect and resolve issues with cluster health, improve search performance, and reduce hardware costs + 17
Slide 18: Years of ML & AI Expertise
Years of ML & AI Expertise Foundational 2018 2021 2022 2023+ technical building Support for Bring your own Native support Support for blocks within the supervised and transformer for vector search domain- specific Elastic Stack unsupervised models (e.g. and embedding generative learning Hugging Face
Slide 19: Foundational AI tools — why Elastic?
Foundational AI tools — why Elastic? Advantages of Machine Learning with Elastic Comprehensive Enterprise Scale Fast Time to Value Vector Search Automate and Manage Custom HNSW, Approximate Nearest Neighbors ML APIs , Data Frames, Inference Code: Train, engineer and (ANN) Pipeline, Model Management,
Slide 20: Elasticsearch Relevance Engine, Democratizing AI
Elasticsearch Relevance Engine, Democratizing AI Out-of-the-Box Solutions Build Your Own Gives developers a powerful set of machine Elastic Observability Elastic Security Elastic Search learning tools to build Logs, APM, Tracing, Metrics, Synthetics, Profiling, RUM SIEM, Endpoint, Cloud Generative A
Slide 21: Four key investments that add up
Native support for fast similarity search in vector Vector space, alongside the existing retrieval models Database built into Elasticsearch Bring-your-own Create vector embeddings from natural language Four key Transformer Model text directly in your Elasticsearch deployment investments that add up
Slide 22: Broad scope of capabilities needed for Generative AI
Broad scope of capabilities needed for Generative AI Most Vector Databases Hybrid Search (text + vector) Store & Search Vector Some Vector Databases Embeddings Choice & Flexibility of embedding models Filtering & Faceting Elasticsearch Create Vector Embeddings Autocomplete Search Optimized for text,
Slide 23: Enabling the creation of new contextual Generative AI applications
Enabling the creation of new contextual Generative AI applications TRADITIONAL What material list and tools do I need to build an irrigation system for my 1 acre back yard in Detroit, MI? pvc plumbing t-joints pvc AI-POWERED Elasticsearch™ Platform What material list and tools do I need to build an
Slide 24: Partner and customer testimonials on Elastic's enterprise search expertise
“ “The expertise of Elastic in enterprise search is evident in the way the company thinks about how to incorporate generative AI into it. We’re working closely together to help companies leverage the power of Azure OpenAI and ChatGPT over all of an organization's proprietary data in Elasticsearch to
Slide 25: AI Expertise Built into Each Elastic Solution
AI Expertise Built into Each Elastic Solution From Observability to Security to Search Observability Security Search Anomaly Detection Threat Intelligence Semantic Search AIOps Automated Alerting Image Search Interactive Root Cause Analysis Security chatbot Sentiment Analysis Integrated Case Managem
Slide 26: Generative AI in Action
Vetor Database webinar Generative AI in Action ESRE - Executive Intro IDC Market Perspective - Elastic Customer Story - Relativity Generative AI in Retail webinar ESRE - Demo AI-Powered Search with Elastic Elastic AI Assistant Demo - Demystifying ChatGPT Blog Security Elastic AI Assistant Demo - Obs
Slide 27: Generative AI Integrations
Generative AI Integrations Strategic collaboration Integration of the Elasticsearch agreement to accelerate the Relevance Engine with Google integration of Amazon Bedrock Cloud’s Vertex AI platform with the Elastic AI Assistant 27
Slide 28: Leadership in Security Analytics, Log Analytics, and Search
Leadership in Security Analytics, Log Analytics, and Search Observability Security Search Strong Performer in The Forrester Leader in The Forrester Wave™: Leader in the Gartner® Magic Wave™: AIOps, Dec. 2022 Security Analytics Platforms, Quadrant™ for Insight Engines, Visionary in the Gartner® Magic
Slide 29: Trusted by Organizations Around the World
Trusted by Organizations Around the World AUTOMOTIVE / TECHNOLOGY FINANCE TELCO CONSUMER HEALTHCARE PUBLIC SECTOR RETAIL TRANSPORTATION Airbus 29
Slide 30: Why Elastic Wins
Why Elastic Wins Power of the Platform Power of the Community ● Solving problems from a search and AI lens: ● Millions of developers with billions of speed, scale, relevance downloads ● Strong foundation in AI/ML, with support for AI ● Facilitates bottom up adoption within across solutions enterpris
Slide 31: Elastic's Growth Vectors
Elastic’s Growth Vectors New customers Customer data Customers adopt adopt Elastic volume grows more use cases Customers adopt Customers adopt Customers adopt higher more solutions the cloud subscription tiers 31
Slide 32: Distribution and Monetization Model
Distribution and Monetization Model Elastic Cloud Paid Standard Gold Platinum Enterprise Self-managed Free & Open Paid No Support Platinum Enterprise ● Resource-based pricing model ←> Consumption-based subscriptions on Elastic Cloud ● Subscriptions generally 1 to 3 years, invoiced annually in advanc
Slide 33: Low-friction Go-to-Market Model
Low-friction Go-to-Market Model Customer Segment Coverage Model Enterprise Direct Sales Services Partner Ecosystem (Cloud, OEM/MSP, GSI, Resellers) Commercial SMB High automation, self-serve product-led motion 33
Slide 34: The flexibility to deploy wherever our customers are
The flexibility to deploy wherever our customers are Public Cloud Hybrid On-Premises Amazon Web Services Google Cloud Microsoft Azure 34
Slide 35: Scaling with Hyperscaler Cloud Partners
● Multi-year strategic agreements with co-investments Scaling with ● Powerful technology integrations to Hyperscaler Cloud accelerate Elastic Cloud adoption Partners ● Preferential access and relationships under ISV programs ● Joint sales pursuits with sales incentives for hyperscaler sales teams 35
Slide 36: Sustaining the Cloud Momentum
Sustaining the Cloud Momentum Track record of Organic Growth Strong customer Robust growth at scale acquisition expansion Strong Sustained, Organic GTM Momentum Thriving Hyperscaler Consumption Mix Shift to Cloud Partnerships Patterns 36
Slide 37: Q2 FY24 Results
Q2 FY24 Results 37
Slide 38: Q2 FY24 Results At a Glance
Q2 FY24 Results At a Glance 17% 31% 13% >1,220 Total Revenue Elastic Cloud Non-GAAP Customers Growth Revenue Growth Operating with ACV > year-over-year year-over-year Margin $100K 43% of Total Revenue 38
Slide 39: Revenue Highlights
Revenue Highlights $ millions Q2 FY24 Y/Y Y/Y CC Total Revenue $311 17% 16% Total Subscription Revenue $288 19% 18% Elastic Cloud Revenue $135 31% 30% Subscription % of Total Revenue 93% Professional Services Revenue $23 (1)% (3)% CC = Constant Currency 39
Slide 40: Strong track record of driving growth
Strong track record of driving growth 28% 23% 17% 17% 17% 50% 38% 28% 24% 31% 34% 27% 19% 17% 16% 52% 40% 30% 24% 30% As Reported Y/Y Growth % 39% 40% 40% 41% 43% Constant Currency Y/Y Growth % As Reported Y/Y Growth % Constant Currency Y/Y Growth % Cloud Revenue as a % of Total Revenue 40
Slide 41: >$100K ACV Customer Trend
>$100K ACV Customer Trend Change from Prior Quarter 50 60 70 50 40 60 50 30 30 41
Slide 42: >$10K ACV Customer Trend
>$10K ACV Customer Trend Change from Prior Quarter 110 70 130 90 80 100 100 70 60 42
Slide 43: Healthy Net Expansion Rate
Healthy Net Expansion Rate Trailing twelve month measure ~110% Includes only consumption, not commitments, Q2 FY24 for customers on Cloud consumption contracts 43
Slide 44: Driving Profitable Growth
Driving Profitable Growth Non-GAAP Operating Margin 10.25% - 10.75%* * Guidance provided on November 30, 2023. See appendix for reconciliation. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures for operating margin and net earnings/(loss) per share is not available on a f
Slide 45: Non-GAAP Income Statement Highlights
Non-GAAP Income Statement Highlights $ millions, except per share amounts Q2 FY24 % OF REVENUE Total Revenue $311 100% Gross Profit/Margin $239 77% Research & Development Expense $57 18% Sales & Marketing Expense $114 37% General & Administrative Expense $27 9% Operating Income/Margin $41 13% Earnin
Slide 46: Select Financial Measures
Select Financial Measures $ millions, except employees Q2FY24 Adjusted Free Cash Flow* $(3) Cash, Cash Equivalents, and Marketable Securities $966 Total Deferred Revenue $536 Remaining Performance Obligations $1,117 Employees 3,055 *See appendix for reconciliation to GAAP 46
Slide 47: Q3 and Full Year FY2024 Guidance
Q3 and Full Year FY2024 Guidance Q3 FY24 FY24 Total Revenue $319M - $321M $1.247B - $1.253B Year-over-year growth % 17% 17% Constant currency year-over-year growth % 16% 16% Non-GAAP Operating Margin 11.5% to 12.0% 10.25% to 10.75% Non-GAAP Net Earnings Per Share $0.30 - $0.32 $1.06 - $1.15 Diluted
Slide 48: Appendix
Appendix 48
Slide 49: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Operating Margin FY21 FY22 FY23 GAAP operating margin % (21)% (20)% (21)% Stock-based compensation 15 % 16 % 19 % Amortization of acquired intangibles 2% 2% 2% Acquisition-related expenses —% 1% 1% Employer payroll taxes on employee stock transactions 2% 1% 1% Restru
Slide 50: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Gross Profit and Gross Margin $ in millions except percentages Q2 FY24 GAAP gross profit $231 Stock-based compensation expense and related employer taxes 5 Amortization of acquired intangibles 3 Non-GAAP gross profit $239 GAAP subscription gross margin % 79 % Stock-b
Slide 51: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Operating Expenses $ in millions except percentages Q2 FY24 GAAP sales & marketing expenses $133 Stock-based compensation expense and related employer taxes (19) Amortization of acquired intangibles (1) Non-GAAP sales & marketing expenses $114 Y/Y 3% GAAP research &
Slide 52: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Operating Income (Loss), Operating Margin, and Earnings (Net Loss) per share $ in millions except percentages and per share amounts Q2 FY24 GAAP operating loss ($22) Stock-based compensation expense and related employer taxes 58 Amortization of acquired intangibles 4
Slide 53: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted Free Cash Flow $ in millions Q2 FY24 Net cash provided by operating activities $(2.4) Less: Purchase of property and equipment (0.9) Add: Interest paid on long-term debt — Adjusted free cash flow $(3.3) Net cash used in operating activities (as a percentage