Elastic NV at Rosenblatt Securities Technology Summit (Virtual) Transcript

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

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Maybe if we just want to set a little context for the audience that may not have followed Elastic recently. If you just give us a bit of an overview of the business and the markets problems that you guys solve or address for customers, that would be really helpful.

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : And it's literally millions of downloads of the search product, right so --

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Hundreds of thousands of enterprises get to try it out, use it on a limited basis, I guess compared to your full stack subscription level?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Let's talk a little bit about a Elastic's overall -- let's call it, your AI strategy. How are you guys approaching -- leveraging this technology withing your products and sort of beyond that sort of how customers are going to use them and/or how you may be using some of this stuff internally?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : You started talking [or now] I think your vector search technology and ESRE engine last year. Maybe talk to us a little (technical difficulty) -- Thanks. Sorry, Matt, I'm having difficulties on my end. You're going to sort of walk us through a little bit around what is ESRE, which you introduced last year and how are you guys differentiated with your vector database?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : And what sort of stage are our customers at with building these customized -- leveraging ESRE engine? Are they just still piloting? Or is this -- are we getting further down the road here?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Yeah, I was certainly seeing the capabilities of the open-source models really approaching those of the proprietary models. So I guess you -- Elastic is based upon an open source project. How are you guys looking at the large language model world from a -- and I think you recently open sourced some additional technology, didn't you?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : [I mean, how do you feel about this]? it seems that with your core search, then you've opened up the market for observability for yourselves as additional solution for your customers. And then you moved into the security theme space as well. Is -- building LLM-driven applications or Gen-AI applications, is that potentially another leg to the stool for your business overall?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Got it. There's a question just come in from the audience. Question is, how do you compete against Honeycomb and some of the other dedicated vector search companies.

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Okay. I think the question was also was around, I guess, is it Pinecone? I'm not familiar with that.

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Is it the same [sort of] differentiation that you just laid out there? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 13, 2024 / 7:00PM, ESTC.N - Elastic NV at Rosenblatt Securities Technology Summit (Virtual)

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : I was going to ask about that. I mean compliance and governance becoming much, much more important I think with especially as companies look to make these applications customer facing and also regulatory changes, the European, the recently enacted the AI Act. Does that impact you guys at all or [it could be]?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : If you think about -- if you step back and you look at some of your customers maybe they're starting to build Gen-AI applications, where does Elastic sort of fit in that Gen-AI -- that application stack, if you will? And who would you say is competing against you there at that level? Kind of could the customer would have some choice over what they want to use?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : The fact that you're -- if you take out one of your existing large customers and they've indexed portions or a significant part of their internal data, are using you already for your search capabilities, is that gives them a leg up in building these models, these new Gen-AI models?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Interesting. If we shift over to observability, your observability solution that's been in the market for a few years now has grown to be a pretty significant part of your business. What's sort of do you see there in terms of where your technology is going, where your capabilities are going, and how is observability going to leverage AI?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : So the human is still in the loop though, right?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : And observability, I mean, is some pure-play players out there, the Datadogs of the world and Dynatraces. How has Elastic sort of position itself when you're going after observability kind of opportunities?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : On the search side of things, where do you sort of see the biggest opportunities for Elastic over the next couple of years? And where should we be looking for innovations in that space?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Interesting. One of the things I was mentioned before we came on to you was I was at the Databricks conferences on this week and was mentioned a couple of times there compound models using multiple steps, I guess, in this inferencing process. That seems to me that that would play in well for you guys as well to be part of that build?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : And we're running up against time here, we have a couple of more minutes. But would a customer of yours be building their enterprise application, their generative-AI application for, let's say, customer service department or what have you? I'm just trying to clarify, there's a [number] of different providers out there if you think about the Databricks, a platform, or if you think about DataIQ or some of the other players out there where that model building type applications do. How does Elastic fit into that world? Are you with the core with which the customer is going to build their application? Or are you plugged into some of these other platforms?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : So you're definitely in the flow, in part of the process.

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : And it really does give your existing customers another a fourth sort of reason, if you will, to use you -- to consume your platform, right?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Interesting. Before I let you go here, a crystal ball for me a little bit, Matt, five years out, what are we going to see in the enterprises different than what we're seeing now with your platform?

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : Fantastic. All right. Well, thank you. Thanks very much for the deep dive, but you guys are -- it seems like you're really well positioned still. And the importance of the value that Elastic brings to its customers is actually going up in this very complex world we're currently in.

Question: Blair Abernethy - Rosenblatt Securities Inc. - Analyst : So thank you.