Elastic N.v. · NYSE:ESTC
Elastic — Q3 2024 Earnings Presentation
50 slides from Elastic's earnings presentation, Feb 29, 2024
Slide 1: Corporate Overview and Q3FY24 Financial Results
Corporate Overview and Q3FY24 Financial Results February 29, 2024
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 and the fiscal year ending April 30, 2024, o
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: Find answers that matter. From all data. In real time.
Find answers that matter. From all data. In real time. At scale. Elastic - The Search Analytics Company 8
Slide 9: Meet Elastic - The Search Analytics Company
Meet Elastic - The Search Analytics Company Out-of-the-Box Solutions Build Your Own Observability Security Search Elasticsearch™ Platform Ingest Secure & Scalable Visualization Workflow AI / ML Search Storage Automation 9
Slide 10: A Comprehensive Observability Solution
A Comprehensive Observability Solution Out-of-the-Box Solutions Build Your Own WHY CUSTOMERS CHOOSE ELASTIC OBSERVABILITY Any Data, Observability Any Source Logs, APM, Tracing, Metrics, Synthetics, Profiling, RUM Traditional Signals Elasticsearch™ Platform Logs + Ingests 400 terabytes of telemetry d
Slide 11: A Comprehensive Security Solution
A Comprehensive Security Solution Out-of-the-Box Solutions Build Your Own WHY CUSTOMERS CHOOSE ELASTIC SECURITY Any Data, Security Any Source SIEM, Endpoint, Cloud Bring Your Data Detect, Investigate, and Respond Elasticsearch™ Platform Cloud + Over 1,000 pieces of internal Network network equipment
Slide 12: 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, Search Any Source Generative AI Apps, Product Search, Workplace Search, Custom Search Apps Native Connectors Elasticsearch™ Platform + Customers worldwide searching across
Slide 13: 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 Observability Security Search Generative AI Apps, Logs, APM, Tracing, Metrics, + One of the world's leading digital travel Synthetics, Profiling,
Slide 14: 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 14
Slide 15: 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 15
Slide 16: 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 17: 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 18: 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 Observability Security Search learning tools to build Logs, APM, Tracing, Metrics, Synthetics, Profiling, RUM SIEM, Endpoint, Cloud Generative AI Apps, Product Search,
Slide 19: Tools to make the most of your data with AI
Tools to make the most of your data with AI ● Sensitive databases ● Multi-system / cloud information ● Private knowledge bases ● Case histories ● Runbooks 19
Slide 20: A safer, more cost effective approach to GenAI
Delivers the most relevant content Before GenAI composes a response, Elasticsearch delivers the most relevant content to best answer the query A safer, more Maintains security and confidentiality Recognizes and implements the cost effective appropriate access to the user and data, removes private in
Slide 21: The ingredients of search with generative AI
The ingredients of search with generative AI + + + Text, vector, and Vector database Choice of Tools & APIs to hybrid search capabilities embedding models build search apps 21
Slide 22: Only Elastic provides ALL the capabilities you need
Only Elastic provides ALL the capabilities you need Most Vector Databases Hybrid Search (text + vector) Store & Search Vector Some Vector Databases Choice & Flexibility Embeddings of embedding models Filtering & Faceting Elasticsearch Create Vector Embeddings Aggregations Autocomplete Search Optimiz
Slide 23: Enabling the creation of new contextual Generative AI applications
Enabling the creation of new contextual Generative AI applications Customer HR helpdesk Ecommerce Success What are key aspects of the Are customers in San Francisco What material list and tools do I company's 401k policy for an buying products with the deepest need to build an irrigation system empl
Slide 24: Partner and customer testimonials on Elastic's generative AI 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 AI Assistant Sentiment Analysis Integrated Case Management
Slide 26: 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, Dec. Quadrant™ for Insight Engines, Dec. Visionary in the Gart
Slide 27: Trusted by Organizations Around the World
Trusted by Organizations Around the World AUTOMOTIVE / TECHNOLOGY FINANCE TELCO CONSUMER HEALTHCARE PUBLIC SECTOR RETAIL TRANSPORTATION Airbus 27
Slide 28: 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 29: 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 29
Slide 30: 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 31: 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 31
Slide 32: 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 32
Slide 33: 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 33
Slide 34: 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 34
Slide 35: Q3 FY24 Results
Q3 FY24 Results 35
Slide 36: Q3 FY24 Results At a Glance
Q3 FY24 Results At a Glance 19% 29% 13% >1,270 Total Revenue Elastic Cloud Non-GAAP Customers Growth Revenue Growth Operating with ACV > year-over-year year-over-year Margin* $100K 44% of Total Revenue ACV = Annual contract value 36 *See appendix for reconciliation to GAAP operating margin
Slide 37: Revenue Highlights
Revenue Highlights $ millions Q3 FY24 Y/Y Y/Y CC Total Revenue $328 19% 18% Total Subscription Revenue $308 20% 19% Elastic Cloud Revenue $143 29% 29% Subscription % of Total Revenue 94% Professional Services Revenue $20 7% 6% CC = Constant Currency 37
Slide 38: Strong track record of driving growth
Strong track record of driving growth 23% 17% 17% 17% 19% 38% 28% 24% 31% 29% 27% 19% 17% 16% 18% 40% 30% 24% 30% 29% As Reported Y/Y Growth % 40% 40% 41% 43% 44% Constant Currency Y/Y Growth % As Reported Y/Y Growth % Constant Currency Y/Y Growth % Cloud Revenue as a % of Total Revenue 38
Slide 39: >$100K ACV Customer Trend
>$100K ACV Customer Trend Change from Prior Quarter 60 70 50 40 60 50 30 30 50 39
Slide 40: >$10K ACV Customer Trend
>$10K ACV Customer Trend Change from Prior Quarter 70 130 90 80 100 100 70 60 60 40
Slide 41: Healthy Net Expansion Rate
Healthy Net Expansion Rate Trailing twelve month measure ~109% Includes only consumption, not commitments, Q3 FY24 for customers on Cloud consumption contracts 41
Slide 42: Non-GAAP Income Statement Highlights
Non-GAAP Income Statement Highlights $ millions, except per share amounts Q3 FY24 % OF REVENUE Total Revenue $328 100% Gross Profit/Margin $252 77% Research & Development Expense $61 19% Sales & Marketing Expense $120 37% General & Administrative Expense $27 8% Operating Income/Margin $43 13% Earnin
Slide 43: Select Financial Measures
Select Financial Measures $ millions, except employees Q3 FY24 Adjusted Free Cash Flow* $63 Cash, Cash Equivalents, and Marketable Securities $1,015 Total Deferred Revenue $585 Remaining Performance Obligations $1,176 Employees 3,161 *See appendix for reconciliation to GAAP 43
Slide 44: Q4 and Full Year FY2024 Guidance
Q4 and Full Year FY2024 Guidance Q4 FY24 FY24 Total Revenue $328M - $330M $1.260B - $1.262B Year-over-year growth % 18% 18% Constant currency year-over-year growth % 18% 17% Non-GAAP Operating Margin 7.4% - 7.8% ~11% Non-GAAP Diluted Earnings Per Share $0.18 - $0.20 $1.15 - $1.18 Diluted Weighted Av
Slide 45: Appendix
Appendix 45
Slide 46: GAAP to Non-GAAP Reconciliations: Gross Profit and Gross Margin
GAAP to Non-GAAP Reconciliations Gross Profit and Gross Margin $ in millions except percentages Q3 FY24 GAAP gross profit $243 Stock-based compensation expense and related employer taxes 6 Amortization of acquired intangibles 3 Non-GAAP gross profit $252 GAAP subscription gross margin % 79 % Stock-b
Slide 47: GAAP to Non-GAAP Reconciliations: Operating Expenses
GAAP to Non-GAAP Reconciliations Operating Expenses $ in millions except percentages Q3 FY24 GAAP sales & marketing expenses $142 Stock-based compensation expense and related employer taxes (21) Amortization of acquired intangibles — Non-GAAP sales & marketing expenses $120 Y/Y 14 % GAAP research &
Slide 48: GAAP to Non-GAAP Reconciliations: Operating Income and Margin
GAAP to Non-GAAP Reconciliations Operating Income/(Loss) and Operating Margin $ in millions except percentages Q3 FY24 GAAP operating loss $(26) Stock-based compensation expense and related employer taxes 66 Amortization of acquired intangibles 3 Acquisition-related expenses 1 Non-GAAP operating inc
Slide 49: GAAP to Non-GAAP Reconciliations: Earnings per share
GAAP to Non-GAAP Reconciliations Earnings/(loss) per share $ in millions except per share amounts Q3 FY24 GAAP earnings per share - Basic $1.76 Stock-based compensation expense and related employer taxes 0.66 Amortization of acquired intangibles 0.03 Acquisition-related expenses 0.01 Tax adjustment
Slide 50: GAAP to Non-GAAP Reconciliations: Adjusted Free Cash Flow
GAAP to Non-GAAP Reconciliations Adjusted Free Cash Flow $ in millions Q3 FY24 Net cash provided by operating activities $52.4 Less: Purchases of property and equipment (1.1) Add: Interest paid on long-term debt 11.9 Adjusted free cash flow $63.2 Net cash provided by operating activities (as a perce