Elastic NV at Mizuho Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : All right. Wonderful. Thank you for that, Janesh. And then nearly every enterprise software vendor says that Gen AI will be an incremental growth driver for them. But I have to say, you seem to be showing it earlier than most, and maybe that's most evidenced by the fact that Elastic has amassed REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 12, 2024 / 5:55PM, ESTC.N - Elastic NV at Mizuho Technology Conference over a thousand paid customers for your vector database and RAG capabilities. But what would you primarily attribute the early success to? And then also in your view, how, if we sort of take a step back a little bit, how much more relevant is search in a Gen AI world?

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : All right, that's great. Very helpful, Janesh. Thank you. You also reported a very good Q4 a couple of weeks ago, which really has, I would say, bucked the trend versus what we've seen from many other consumption models more recently. Maybe just spend a minute or two to talk about the results or kind of what your key highlights were from that.

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : Okay, wonderful. And then on the product front, so a lot of innovation recently at Elastic. Let's begin with your most recent announcements, if you will. So search, AI lake, and Elastic cloud serverless. What personally excites you about these?

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : Probably not enough.

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : Yeah, that's super interesting. And also there's, I know, some list pricing that's available on the site, just kind of under -- (multiple speakers)

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : And I also want to touch on Elastic's new query language, ESQL, which I believe you're already at 1,000 customers and counting that are using it. What does ESQL bring to the table that Elastic didn't have previously?

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : Excellent. Thank you. And then a two-part question on generative AI. So you have ESRI, you have sparse encoder model, you have your observability, and security AI assistance as well. How are -- and I know it's early days, but how are the uptake of these progressing relative to what you may have expected? And then second part of the question is, where do you think incremental budget is coming from at this stage to pay for Gen AI? Is it coming from other areas in IT or is it largely incremental spend?

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : Okay, very helpful. And then let's talk about the competitive environment, if we can, because at least if I take the SIEMs-based, Janesh, I mean, there's just been an enormous amount of change recently. You've got Cisco, of course, buying Splunk. You have Exabeam and LogRhythm merging. You have Palo Alto buying the Qradar assets from IBM for their XSIAM business. What does all of this mean, do you think, for Elastic and just for the competitive landscape and dynamics overall?

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : And do you guys have any competitive displacement programs that are targeted towards one or more of these vendors?

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : Okay, terrific. And I'm glad you mentioned Mark, because obviously, that was an important hire for Elastic. Any other focus areas under Mark's leadership that you would call out?

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : Yeah, and I have to say, that's kind of a real terrific angle. It actually helped elucidate why -- part of the reason why, anyway, that Elastic is being so successful in that area. So you could easily imagine how that's going to, again, spark really in-depth conversations. How do we add value in the strategic area? Who am I going to use and how? (multiple speakers) right there for that.

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : All right. Wonderful. One more question before I pause, see if there are any questions in the audience. Let's just turn back to the financial for a moment. So for the year, I know you've guided, of course, 16% top-line growth. Your operating -- your margin guidance at the midpoint is 12%. Can you give us a sense, Janesh, of how you're thinking about balancing incremental R&D investments, as well as sales and marketing overall, including sales capacity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 12, 2024 / 5:55PM, ESTC.N - Elastic NV at Mizuho Technology Conference

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : Okay, very helpful. Any questions? Yes? Oh, sorry, there's a mic coming over. Unidentified Participant Thank you. Just quick two questions. The first one is vector search versus vector database. Are the customers tied to the database? Or can they plug in a different vector database to use your vector? What is the connect-disconnect?

Question: Gregg Moskowitz - Mizuho Securities Co. Ltd - Analyst : All right. Well, unfortunately, we could talk probably a lot longer, but we are out of time, so we have to wrap it up there. But Janesh, thank you for a terrific conversation.