Elastic NV Q2 2026 Earnings Call Transcript

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

Question: Matt Hedberg - RBC Capital Markets - Analyst : Great. Thanks for taking my question, guys. Ash, I want to start with you. I assume you're seeing strong consumption trends from your AI native customer base, but I'm curious if you could talk about the performance of your non-AI native customers. Are they seeing an increase or an acceleration in consumption due to sort of an increased AI focus within that customer base?

Question: Matt Hedberg - RBC Capital Markets - Analyst : That's really good to hear. And then maybe for Navam, just a follow-up. All of your reported growth metrics were strong, including both CRPO and RPO, all kind of growing in the mid-teens or better. I'm curious though, billings isn't a key metric for you guys, but it did lag some of those focus metrics. Wondering if you could talk a little bit about why that was the case? Thanks.

Question: Matt Hedberg - RBC Capital Markets - Analyst : Great to hear. Thanks guys.

Question: Koji Ikeda - Bank of America Securities - Analyst : Yeah, hey guys, thanks so much for taking the question, And so -- definitely appreciate the newly introduced guidance for sales subscription or sales-led subscription revenue. And so I wanted to ask kind of the compositions of that. I know underlying assumptions around monthly cloud, should we assume that's roughly flat with where it was in the fiscal second quarter? And that really leaves cloud and self-managed as the other inputs. And I do think cloud is probably the more watched metric of the two, and so I'll focus there. And so what should we assume as implied in the guide there? Is cloud growth higher, the same or lower in the -- compared to the fiscal second quarter to get to that sales-led sub guide?

Question: Koji Ikeda - Bank of America Securities - Analyst : Got it. Thank you. And maybe a follow-up, just focusing on that sales-led subscription revenue result of 18%, 17% in constant currency. Last quarter was 22%. And I know there was some cloud kind of tailwinds there, pricing tailwinds in there. So maybe excluding the pricing tailwinds, can you help us bridge the gap between the growth between the second quarter and the first quarter on sales-led sub growth? And was there any GenAI revenue growth contributions in the second quarter this year that you can call out?

Question: Sanjit Singh - Morgan Stanley - Analyst : Thank you for taking the question. I actually had a two-parter for you. If we can wind back to the go-to-market changes at the beginning of last fiscal year or beginning of the fiscal year, just sort of mark-to-market where we are from a productivity standpoint? It sounds like productivity is going well. And if that's the case, is there a case given the momentum you're seeing with commitments to drive more capacity on the sales side? So maybe we tackle that first and then I had a follow-up.

Question: Sanjit Singh - Morgan Stanley - Analyst : And then my follow-up, Ash, is sort of on RAG. As we have the industry conversation that we talked to some leading engineering departments at innovative companies, there does seem to be a friction with RAG. There still seems to be the hallucination problem. Chunking data seems to be a complicated task, if you will. And so when it comes to like monetizing your guys' AI search capabilities, do you guys -- is there a world where you have opportunities for growth outside of RAG, maybe some of the agent builder stuff that you discussed on your script? Just to give your point of view on how durable is the RAG opportunity? And then are there other ways to monetize the company's AI search capabilities outside of RAG?

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Yeah. You talked about the slippage in the quarter, like the one question I got from a lot of people was like historically, you guys kind of beat in the quarter by a little bit more. And obviously, I appreciate we have a new CFO, so there could be a new guidance philosophy. But like -- but there also could be just a slippage situation. How does -- how do you think about the quarter? I appreciate the bookings, but like on kind of cloud beach on total revenue, the beat level was kind of lower than what we've seen before. Were there any kind of puts and takes there?

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Okay. Perfect. And then Ash, one for you. On the big win in SIEM, is that -- do I have to think about that as like -- or maybe broader like is this kind of like there is obviously a play that used to be strong in that space that is takeaways from that or like what are you seeing here in terms of the momentum? Thank you.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Yeah, okay, perfect, congrats. Thank you.

Question: Rob Owens - Piper Sandler - Analyst : Great. Good evening and thanks for taking my question here. Ash, I wanted to build on one of your initial comments in your script about how AI is positively impacting all areas of the business, and I appreciate all of the color that you've given. And the question is really around as as a percentage, both of overall customers and of large deals and it's great to see that growing, I think it was 23% of your $100,000 deals. But why isn't that number greater? If everyone has some level of proof of concept right now going on in GenAI, where is the unlock for Elastic relative to those types of opportunities?

Question: Brian Essex - JPMorgan Chase & Co - Analyst : Hi, good afternoon. Thank you for taking the question. I guess maybe Ash for you, I'd like to dig into the security side of the business a little bit. Would love to understand what you're seeing competitively? Whether the deal wins that you're seeing are against -- or at the expense of more observability-focused vendors? And are you starting to see maybe what I'll call some of the next-gen security platform vendors more frequently in the marketplace? And then I have a quick follow-up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2025 / 10:00PM, ESTC.N - Q2 2026 Elastic NV Earnings Call

Question: Brian Essex - JPMorgan Chase & Co - Analyst : Got it. Maybe just a follow-up on that point. We've seen a couple of recent acquisitions by some of the larger platform vendors. We saw the acquisition of Chronosphere last night and then a little while earlier from CrowdStrike. Any initial thoughts on those and whether or not you see those in the marketplace? Or are they maybe responding to the capabilities that you have in that space in that regard?

Question: Brian Essex - JPMorgan Chase & Co - Analyst : Got it. That's helpful color. Thank you so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2025 / 10:00PM, ESTC.N - Q2 2026 Elastic NV Earnings Call

Question: Tyler Radke - Citi Infrastructure Investments LLC - Analyst : Yeah, thank you for taking the question. You talked about, in prior quarters, how you introduced some product optimizations into the platforms like the logs DB product, which cut storage costs for customers that took advantage of that. I was just wondering if you could tie in that dynamic into sort of the cloud revenue trajectory? Because obviously, last quarter, you saw some of the pricing dynamics impacted and I imagine the optimization side impacted that as well. But I guess the question is, are most customers kind of through that optimization in terms of adopting the logs DB product and now you're starting to see those come on in terms of greater use cases and greater commitments and perhaps that can sort of drive an acceleration in the cloud growth sequentially just as they've been able to kind of optimize and bring on new use cases?

Question: Tyler Radke - Citi Infrastructure Investments LLC - Analyst : Got it. The $20 million security deals, those were all cloud? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2025 / 10:00PM, ESTC.N - Q2 2026 Elastic NV Earnings Call

Question: Tyler Radke - Citi Infrastructure Investments LLC - Analyst : Okay. Okay. Great. And just a quick follow-up for you, Navam. You talked about ACV growth being stronger in the first half. I assume net new ACV stronger as well. Is that ACV growth kind of tracking above what we see in terms of reported subscription or sales subscription growth, too?

Question: Tyler Radke - Citi Infrastructure Investments LLC - Analyst : Okay. Very helpful. Thank you.

Question: Shrenik Kothari - Robert Baird - Analyst : Yeah, thanks for taking my question. So you called out or you had called out production GenAI workloads across DocuSign, NHFC proof points at the Analyst Day. Just curious like how are you seeing these large-scale embedded use cases evolving? And just how enterprise customers are deploying workloads involving vector search inference? Are these usage patterns proving to be more stickier, more than your traditional sort of logs metrics, which I would think are often more compressible? And how to think from an NRR point of view? Then I have a follow-up.

Question: Shrenik Kothari - Robert Baird - Analyst : Very helpful, Ash. And Navam, a quick follow-up. How you're thinking about NRR dynamics broadly since you guys called out the sales side subscription? How is that trending from an NRR perspective, you can share an update? And I know it's early days, but just curious if the renewals closed in the quarter, what could have been the NRR versus now?

Question: Shrenik Kothari - Robert Baird - Analyst : Great, thanks.

Question: Ittai Kidron - Oppenheimer & Co Inc - Analyst : Thanks. Ash, the large deal volume is impressive. Is there a way for you to break down the $30 million -- 30 $1 million deals into how many of them were renewals versus actually new customers? And also in that 30, how do I think about potential deals that were pushed out from 1Q into 2Q or perhaps pulled in from 3Q into 2Q? How do I think about that?

Question: Ittai Kidron - Oppenheimer & Co Inc - Analyst : Very good. And maybe as a follow-up, Navam, on your sales-led guidance. I know you look at sales-led as a group, whether it be self-managed or cloud as both of them as important drivers for you. I think the challenge that investors have is that when you don't give more specific breakdowns on your expectations from cloud to self-manage, it's hard to gauge where you internally your outperformed versus underperform. And investors, no matter what, they're going to be very focused on cloud. So is there any color that you can give us, first of all, on 2Q that you just reported? Did you outperform on cloud or self-managed or underperform in any of them relative to your internal targets? That's question number one. And question number two, can you give us any -- some sort of a little bit more granular perspective on how to think about the breakdown of your sales-led guide for the third quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 20, 2025 / 10:00PM, ESTC.N - Q2 2026 Elastic NV Earnings Call

Question: Jake Roberge - William Blair Capital Partners - Analyst : Yeah, thanks for taking the question. You referenced the CISA deal during the quarter, but can you talk about how the rest of the federal business came together? And then you mentioned there was some impact to term license in the quarter from the shutdown. Would you expect that to catch back up pretty quickly during the third quarter? And any way to kind of size that impact that it was to Q2?

Question: Jake Roberge - William Blair Capital Partners - Analyst : Very helpful. Thanks for taking the question.