Q4 2024 Elastic NV Earnings Call

Followed by zero.

After today's presentation there'll be an opportunity to ask questions.

The comp sales increase was driven by strong growth in consumer traffic of more than 4% and was partially offset by a decline in average transaction amount, primarily driven by fewer items per basket.

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Please note this event is being recorded.

Speaker Change: I would now like to turn the conference over to Anthony <unk>, Vice President of Investor Relations. Please go ahead.

The comp sales increase was driven entirely by strong growth in our consumable category.

Speaker Change: Thank you good afternoon, and thank you for joining us on today's conference call to discuss elastic <unk> fourth quarter fiscal 2024 financial results on the call. We have ash Kulkarni, Chief Executive Officer, and <unk>, Johnny Chief Financial Officer, and Chief operating officer. Following their prepared remarks, we will take questions.

Customers relied on us for the value of the items they need most often for their families.

This growth was partially offset by declines in the home seasonal and apparel categories.

From a cadence perspective growth was strongest in March including a benefit of Easter moving from April into March this year and was relatively similar in the months of February and April.

Speaker Change: Our press release was issued today after the close of market and is posted on our website slides, which are supplemental to the call can also be found on the elastic investor relations website at IR Dot elastic that C O R.

We believe the softness in sales and the discretionary category during Q1 as a reflection of the continued pressure our core customers feel on their spending.

Speaker Change: Our discussion will include forward looking statements, which may include predictions estimates or expectations regarding the demand for our products and solutions and our future revenue and other information.

They continue to be very value oriented and their shopping behavior, which we see manifested in accelerated share growth in private brand sales as well as increased engagement with items at or below the $1 price point.

Speaker Change: These forward looking statements are based on factors currently known to US speak only as of the date of this call and are subject to risks and uncertainties that could cause actual results to differ materially we disclaim any obligation to update or revise these forward looking statements unless required by law.

Importantly, we continue to do well with our core customers, while growing with middle and higher income trading customers from adjacent cohorts.

Speaker Change: Please refer to the risks and uncertainties included in the press release that we issued earlier today included in the slides posted on the Investor Relations website and those more fully described in our filings with the Securities and Exchange Commission. We also discuss certain non-GAAP financial measures disclosures regarding non-GAAP measures, including reconciliations with the most comparable GAAP measures can be found in the press release and slides.

We continue to feel very good about our pricing position relative to competitors and other classes of trade and our value proposition.

<unk> significant opportunity for ongoing growth among a wide range of customers.

Speaker Change: A webcast replay of this call will be available on our company website under the Investor Relations link our first quarter fiscal 2025 quiet period begins at the close of business on Wednesday July 17th 2024, we will be participating in the bank of America Global Technology Conference and the Baird Global consumer Technology and services conference during the week of June 3rd.

Looking ahead, we expect value to continue to be the most important consideration for customers in multiple income ranges.

Know that our customers need us even more when they face economic challenges and we are well positioned to help them stretch their dollar.

Ash Kulkarni: And the Mizuho Technology conference and the Rosenblatt technology summit during the week of June 10th with that I'll turn it over to ash.

Before I turn the call over to Kelly I want to provide a brief update on our shrink reduction efforts, including the changes to our self checkout strategy that we announced in March.

Anthony: Thank you Anthony and thank you everyone for joining us on today's call.

Ash Kulkarni: Elastic delivered yet another strong quarter and a great finish to the fiscal year, we once again outperformed against our guidance on both revenue and profitability metrics.

Shrink continues to be the most significant headwind in our business and we are deploying an end to end approach to shrink reduction across the organization, including efforts in our supply chain merchandising and within our stores.

Q4 revenue grew by 20% and cloud revenue grew by 32% and we delivered an operating margin of 9%. We also continued to execute on our land expand and consolidate motion and we grew the number of customers spending over $100000 with us to over 1330.

To help combat combat issues around shrink.

Our supply chain teams are primarily focused on ensuring deliveries are on time and in full and our merchants on reducing the amount of inventory we carry.

Ash Kulkarni: A year ago, we kicked off FY 'twenty four by releasing our elastic search relevance engine, including our vector database and our spots and corridor model elsewhere.

Within our stores, we are focusing on delivering a more consistent front end presence broadening the reach of our high shrink planet grams, which include the removal of high shrink skus.

Ash Kulkarni: Throughout this past year, we continued to strengthen our position as the platform of choice for building real time generative AI, our journey I applications and I'm happy to share with all of you that we now have well over 1000 distinct paying customers using our vector database and return.

And the elimination of self checkout and the vast majority of stores.

As we discussed on last quarter's call, we converted approximately 9000 stores away from self checkout during the quarter.

Following the quick and successful conversion of these stores in Q1 and given the ongoing challenge from shrink we converted approximately 3000 additional stores away from self checkout in may.

Ash Kulkarni: Evil augmented generation, our rack capabilities for building Jenny I applications.

Ash Kulkarni: Particularly pleased with the strong Jenny I adoption, we're seeing among our largest customers with more than 145 of our customers with annual contract values of over 100000 already using our journey I capabilities.

Bringing us to approximately 12000 conversions completed in total.

While this represents a significant change in our stores. We believe this is the right course of action to drive increased customer engagement, while also better positioning us to begin reducing shrink in the back half of 'twenty four with a more material positive impact expected in 2025.

Ash Kulkarni: The number of journey II customers in this category has more than tripled in the last year and this represents the fastest pace of adoption, we have seen for any new major capability, we have introduced in the past.

Moving forward, we plan to have self checkout options available in a limited number of stores most of which are higher volume and low shrink locations.

Ash Kulkarni: We believe that in time every organization big and small will leverage the power of AI to transform their businesses. This is a significant market opportunity for us that will play out over the long term.

Overall, we are pleased with the results and progress across the business during the first quarter, which I will discuss in more detail. Later, we have a lot of opportunity ahead of us and this team is excited about the work we're doing.

Ash Kulkarni: Every customer interaction I had in Q4 involve customers actively seeking to explore and use Jenny I for business benefit.

Ash Kulkarni: Customers are using <unk> to improve all kinds of business processes and to transform customer and employee experiences.

We have a long history of serving customers in a variety of economic environments.

Two our distinctive combination of value and convenience.

Ash Kulkarni: This includes customers from newer digital native companies like global flow to more mature enterprises, including some of the largest companies in the fortune 100.

I also want to note.

That we recently published our annual Servings, others report, which provides several important updates on our ongoing ESG efforts angles.

Global fluids, using the elastic platform at tremendous scale for building innovative Jennie O applications. The ruble for platform is used by hundreds of thousands of engineers to create datasets trained models and deploy computer vision models in production.

We recognize the great responsibility, we have as an essential partner to the communities we call home and are excited about the many ways. We are able to serve our customers associates communities and shareholders.

Ash Kulkarni: <unk> uses the elastic vector database to store and search billions of vector embedding it extreme speed.

And with everyday low prices.

Store locations within five miles of approximately 75% of the U S population.

Ash Kulkarni: In Q4 within the enterprise segment, one of the world's largest financial services institutions expanded with a multi year eight figure deal with elastic.

We are uniquely positioned to serve customers and communities across the country.

Kelly I: We remain focused on getting back to the basics of dollar general as we look to enhance the way we serve customers further develop and support our associates and create a long term shareholder value with that I will turn the call over to Kelly. Thank you Todd and good morning, everyone now that Todd has taken you through that.

Ash Kulkarni: The company uses elastic for search and observe ability in a center of excellence with multiple use cases across the business.

Ash Kulkarni: The company is now using elastic vector search capabilities and a strategic new application to provide highly accurate AI based real time recommendations for wealth managers to support organizations most valuable clients.

Kelly I: You highlighted the quarter, let me take you through some of the important financial details unless we specifically note otherwise all comparisons are year over year, all references to EPS refer to diluted earnings per share and all year as noted refer to the corresponding fiscal year as Todd already discussed sales I will.

Not only will clients receive better service from wealth managers, but the managers will be able to double the number of clients that they can support.

Speaker Change: The company chose elastic or other vendors for this new generative AI use case, because if our innovative technology superior time to value and their ability to use existing in house expertise and technology to quickly deploy this cutting edge interactive application.

Kelly I: Start with gross profit for Q1 gross profit as a percentage of sales was 32% a decrease of 145 basis points.

Kelly I: This decrease was primarily attributable to increases in shrink and markdowns.

Speaker Change: Another example is a large international electronics company in Asia, which expanded their existing use of elastic and chose elastic for vector search and retrieval augmented generation a rag to power their internal employee support system.

Kelly I: Greater consumable sales mix and lower inventory markups. These were partially offset by a lower LIFO provision.

Todd Kelly: Shrink continues to be our med significant headwind and with 59 basis points worse than the first quarter compared to prior year as Todd noted we are taking multiple actions aimed at reducing shrink and I'll discuss our expectation for this headwind for the remainder of the year and just a bed.

Speaker Change: The new LLS based Q&A system for the semiconductor division is expected to improve both employee productivity and product quality.

Speaker Change: Another large global financial services company signed an expanded deal this quarter to use elastic Jenny I capabilities for bank policy search, helping all employees find out understand the organization's complicated interconnected regulatory policies and procedures.

Todd Kelly: With regards to markdowns were seeing promotional levels more similar to 2019 levels as we anticipated coming into the year as Todd noted customers are seeking value and we saw strong take rates on promotional items during the first quarter.

Speaker Change: This will increase efficiency and productivity across the business as well as help improve the overall regulatory posture.

Todd Kelly: Turning to SG&A. It was 24, 7% as a percentage of sales an increase of 97 basis points.

Speaker Change: As the search AI company elastic is uniquely positioned to help our customers capitalize on the transformative possibilities that generative AI brings.

Todd Kelly: The increase was primarily driven by retail labor depreciation and amortization incentive compensation and repair and maintenance.

Speaker Change: We bring together the precision of search and the intelligence of AI, so customers can build innovative applications.

Todd Kelly: Moving down the income statement operating profit for the first quarter decreased 26, 3% to 540.

Speaker Change: The strong and sustained adoption, we are seeing for our journey I capabilities and our continuing base of innovation that expands our competitive moat in this area reinforces our confidence in our ability to be a long term beneficiary of the massive wave of business transformation being brought about by Jennie O.

Speaker Change: In the areas of absurdity in security, we are helping customers harness the power of search AI to make their organizations more resilient by bringing more intelligence and automation to their observed and security solutions.

Speaker Change: In Q4, our AI strength, including our AI assistance for observed it in security continued to help us displace incumbent observed and security vendors and consolidate customers onto the elastic platform.

As customers look to consolidate onto a few platforms to reduce costs, while increasing their pace of innovation with the eye.

Speaker Change: Elastic has continued to be a beneficiary, thanks to our relentless focus on innovation and our obsession with customer centricity.

Speaker Change: For example, one of the largest global providers of insurance annuities and employee benefits signed a new deal for elastic cloud on Azure the company consolidated multiple tools onto elastic as part of its AI ops strategy, allowing teams to be faster more efficient and more accurate.

Strong and sustained adoption, we are seeing for our journey I capabilities and our continuing base of innovation that expands our competitive moat in this area reinforces our confidence in our ability to be a long term beneficiary of the massive wave of business transformation being brought about by Gen AI.

Speaker Change: Elastic was chosen over competitors because of our ability to ingest any kind of data aggregate and correlate all data on one platform as well as automated observed 80, using the elastic AI assistant.

In the areas of absurdity in security, we are helping customers harness the power of search AI to make their organizations more resilient by bringing more intelligence and automation to their absurdity and security solutions.

Speaker Change: Now turning to products in.

Speaker Change: In Q4, our team continued to deliver some highly anticipated capabilities to further expand our competitive moat in the areas of search journey I observed beauty and security.

In Q4, our AI strength, including our AI assistance for observed and security continued to help us displace incumbent observed and security vendors and consolidate customers onto the elastic platform.

Speaker Change: We launched a first of its kind such ILEC and announced the technical preview of our new elastic cloud service offering which is built on top of the search AI like architecture.

As customers look to consolidate onto a few platforms to reduce costs, while increasing their pace of innovation with AI.

Speaker Change: Neither lakes of the past offered low cost durable data storage, but there was a compromise when it came to speed and.

Elastic has continued to be a beneficiary, thanks to our relentless focus on innovation and our obsession with customer centricity.

Speaker Change: And the ability to search for relevant information across all of the data and the lake in real time.

For example, one of the largest global providers of insurance annuities and employee benefits signed a new deal for elastic cloud on Azure the company consolidated multiple tools onto elastic as part of its strategy, allowing teams to be faster more efficient and more accurate.

Speaker Change: This is historically inhibited the use of data lakes for real time applications.

Speaker Change: Elastic search area Lake is a significant innovation that addresses this need.

Speaker Change: It's an exabyte scale cloud native architecture with built in search and vector database capabilities. It is optimized for real time, low latency applications, including Rag absurdity and security.

Elastic was chosen over competitors because of our ability to ingest any kind of data aggregate and correlate all data on one platform as well as automated observed 80, using the elastic AI assistant.

Speaker Change: Our search AI Lake and the technical preview of our service offerings are currently available on AWS or.

Now turning to products in.

Speaker Change: Over the next couple of quarters, we plan to expand this offering to all three major cloud hyperscale and across the major geographical regions at which point, we will make this offering generally available.

In Q4, our team continued to deliver some highly anticipated capabilities to further expand our competitive moat in the areas of search journey I observed beauty and security.

We launched a first of its kind such ILEC and announced the technical preview of our new elastic cloud service offering which is built on top of the search AI like architecture.

Speaker Change: We see this as an exciting new chapter for elastic cloud as it greatly simplifies the overall user experience and we expect this to be a growth driver for cloud in the coming years.

Neither lakes of the past offered low cost durable data storage, but there was a compromise when it came to speed.

Speaker Change: In the area of search engine AI, we delivered several new capabilities to further differentiate our offering.

And the ability to search for relevant information across all of the data and the lake in real time.

Speaker Change: <unk> with significant enhancements to the elastic search open influence API.

This is historically inhibited the use of data lakes for real time applications.

Speaker Change: These additions include integration with coheres vector embedding and re ranking Apis as well as the embedding API for open AI on Microsoft Azure.

The plastics such as Lake is a significant innovation that addresses this need.

It's an exabyte scale cloud native architecture with built in search and vector database capabilities. It is optimized for real time, low latency applications, including Rag absurdity and security.

Speaker Change: We also delivered improvements to our core vector database, including concurrent multi segment graph search and native code optimizations that contributed to significant improvements director search query speed.

Speaker Change: We released vector search optimized instance types on both Google cloud platform and Microsoft Azure.

Our search AI Lake and the technical preview of our service offerings are currently available on AWS or.

Speaker Change: Leading our effort to support optimized hardware profiles on all three hyperscale.

Over the next couple of quarters, we plan to expand this offering to all three major cloud Hyperscale is and across the major geographical regions at which point, we will make this offering generally available.

Speaker Change: We also released native support for custom learn to rank models, allowing customers to deploy trained models that improve search relevance based on user behavioral data directly and elastic search.

We see this as an exciting new chapter for elastic cloud as it greatly simplifies the overall user experience and we expect this to be a growth driver for cloud in the coming years.

Speaker Change: In addition, Microsoft announced that elastic search was added as an officially supported vector store and retrieval augmented search technology for Azure opening I service on your data.

In the area of search engine AI, we delivered several new capabilities to further differentiate our offering.

Speaker Change: Similarly, Red hat also announced their support for elastic search and officially supported vector store and open shift.

<unk> with significant enhancements to the elastic search open influence API.

These additions include integration with coheres vector embedding and re ranking Apis as well as the embedding API for open AI on Microsoft Azure.

Speaker Change: In the area of absurdity elastic has become a platform of choice for customers, who are standardizing on open telemetric.

Speaker Change: Earlier in FY 'twenty four we donated the elastic common schema or ECS to the cloud Native Computing Foundation.

We also delivered improvements to our core vector database, including concurrent multi segment graph search and native code optimizations that contributed to significant improvements director search query speed.

Speaker Change: <unk> opened to elementary project as its standard schema for logs.

Speaker Change: And now we've open sourced our profiling agent under the Apache to license and contributed it to C. N C F pending their approval.

We released vector search optimized instance types on both Google cloud platform and Microsoft Azure.

Leading our effort to support optimized hardware profiles on all three hyperscale.

Speaker Change: We also delivered support for AWS bedrock, and Anthropic class III model in our observed at the AI assistant improving the overall air assistant experience and increasing choice for our customers.

We also released native support for custom learn to rank models, allowing customers to deploy trained models that improve search relevance based on user behavioral data directly and elastic search.

Speaker Change: In security we.

Speaker Change: <unk>, our newest generation attack discovery.

Speaker Change: In addition, Microsoft announced that elastic search was added as an officially supported vector store and retrieval augmented search technology for Azure opening I service on your data.

Speaker Change: Powered by search AI at the RSA Security Conference attacked.

Attack discovery correlate enriches sifts through and prioritizes actionable intelligence from our Florida alerts using the unique capabilities of our platform significantly reducing their foot sock analysts have to put into the alert triage and investigation process.

Speaker Change: Similarly, Red hat also announced their support for elastic search as an officially supported vector store and open shift.

Speaker Change: In the area of absurdity elastic has become a platform of choice for customers, who are standardizing on open telemetric.

Speaker Change: It presents the user but then attack view that focuses on the few relevant attacks that matter as opposed to the underlying alerts, which can have way more noise than signal.

Speaker Change: Earlier in FY 'twenty four we donated the elastic common schema or ECS to the cloud Native Computing Foundation.

Speaker Change: On average shocked teams received thousands of alerts daily and spend many hours manually triaging. These alerts, leaving a significant portion of potentially critical threats the slipped through the cracks by.

Speaker Change: <unk> opened to elementary project as its standard schema for logs.

Speaker Change: And now we've open sourced our profiling agent under the Apache to license and contributed it to C. N C F pending their approval.

By leveraging elastic AI assistance attack discovery and other AI powered ways to remediate prevent issues.

Kelly I: <unk>, we also delivered support for AWS bedrock, and Anthropic class III model in our Observatory AI assistant improving the overall air assistant experience and increasing choice for our customers.

Speaker Change: Security practitioners to do their jobs more efficiently.

Speaker Change: While helping our customers remain resilient with less cost and less effort.

Kelly I: In security, we unveiled our newest generation attack discovery.

Speaker Change: Our customers have told us that they see this patent pending innovation is a true game changer for the sock.

Kelly I: Powered by search AI at the RSA Security Conference attacked.

Kelly I: Attack discovery correlates enriches sifts through and prioritizes actionable intelligence from our Florida alerts using the unique capabilities of our platform significantly reducing their foot sock analysts have to put into the alert triage and investigation process.

Speaker Change: The Sim space is evolving again.

Speaker Change: This time to an AI driven security analytics platform and we are leading the charge in this evolution.

Speaker Change: Lastly in security elastic security Labs also delivered our LLM safety assessment, along with detection rules to help customers protect themselves from prompt injection attacks and other threats to the secured adoption of larger language models and other generic technologies.

Speaker Change: It presents the user but then attack view that focuses on the few relevant attacks that matter as opposed to the underlying alerts, which can have way more noise than signal.

Speaker Change: In closing I couldnt be more proud of our team and the consistent way we have executed on our strategy, while managing the business with discipline throughout FY 'twenty four.

Speaker Change: On average shocked teams received thousands of alerts daily and spend many hours manually triaging. These alerts, leaving a significant portion of potentially critical threats to slip through the cracks by.

Speaker Change: We continued to strengthen our position as the platform of choice for building real time Gen. AI applications, and we see increased momentum as customers displace incumbent solutions and consolidate onto elastic for more and more use cases.

Speaker Change: By leveraging elastic AI assistance attack discovery and other AI powered ways to remediate prevent issues, we enable security practitioners to do their jobs more efficiently.

Speaker Change: Our customers partners and the developer communities are what drives our focus and fuels our innovation.

Speaker Change: While helping our customers remain resilient with less cost and less effort.

Speaker Change: Our customers have told us that they see this patent pending innovation is a true game changer for the shock.

As the search AI company elastic is exceptionally well positioned to take advantage of the transformative technology shift degenerative as sharing it.

Speaker Change: The Sim space is evolving again.

Speaker Change: This time to an AI driven security analytics platform and we are leading the charge in this evolution.

Speaker Change: With that I'll turn it over to Jim to go through our financial results in more detail.

Speaker Change: Lastly in security elastic security Labs also delivered our LLM safety assessment, along with detection rules to help customers protect themselves from prompt injection attacks and other threats to the secure adoption of larger language models another generic technologies.

Jim: Thanks, Ash Q4 was a great finish to the year, continuing our momentum of strong execution.

Jim: I am pleased that we once again exceeded the high end of our guidance across all measures.

Speaker Change: As in prior quarters, we continue to see a number of customers consolidate onto the elastic platform to realize strong business value and innovation and we had yet another quarter of healthy cloud consumption.

Speaker Change: In closing I couldn't be more proud of our team and the consistent way we have executed on our strategy, while managing the business with discipline throughout FY 'twenty four.

Speaker Change: Total revenue in the fourth quarter was $335 million up 20% year over year as reported and in constant currency.

Speaker Change: Subscription revenue in the fourth quarter totaled $311 million up 21% year over year as reported and in constant currency.

Speaker Change: We continued to strengthen our position as the platform of choice for building real time Gen. AI applications, and we see increased momentum as customers displace incumbent solutions and consolidate onto elastic for more and more use cases.

Speaker Change: Within subscriptions revenue from elastic cloud was $148 million growing 32% year over year as reported and in constant currency elastic cloud represented 44% of total revenue in the quarter.

Speaker Change: Our customers partners and the developer communities are what drives our focus and fuels our innovation.

Speaker Change: We continue to see consumption patterns similar to the prior quarter, while we are not seeing the level of focus by our customers on optimization that we experienced some quarters ago cost consciousness and operational efficiency remain important themes for them, which continues to be a reason why customers are picking elastic as their preferred platform to consolidate workloads.

Speaker Change: As the search AI company elastic is exceptionally well positioned to take advantage of the transformative technology shift degenerative areas of sharing it.

Speaker Change: With that I'll turn it over to Jim <unk> to go through our financial results in more detail.

Speaker Change: Elastic cloud revenue based on month to month arrangement came in at 14% of total revenue.

Ash: Thanks, Ash Q4 was a great finish to the year continuing our momentum of strong execution I am pleased that the once again exceeded the high end of our guidance across all measures.

Speaker Change: As we've shared before elastic cloud revenue based on month to month arrangements is driven mainly by yourself service motion in the SMB segment, which remains challenged.

Speaker Change: As in prior quarters, we continue to see a number of customers consolidate onto the elastic platform, you'll realize strong business value and innovation and we had yet another quarter of healthy cloud consumption.

Speaker Change: Professional services revenue in the fourth quarter was $24 million growing 1% year over year as reported and in constant currency.

Kelly I: Total revenue in the fourth quarter was $335 million up 20% year over year as reported and in constant currency.

Speaker Change: Although professional services may fluctuate across quarters based on the timing of services delivery, we do not expect it to very significantly and makes it a good thing.

Kelly I: Subscription revenue in the fourth quarter totaled $311 million up 21% year over year as reported and in constant currency.

Speaker Change: To add more context around deal flow during the quarter, we saw a healthy balance across our solutions and continuing to maintain a similar solution mix and annual contract values versus the prior quarter.

Kelly I: Within subscriptions revenue from elastic cloud was $148 million growing 32% year over year as reported and in constant currency elastic cloud represented 44% of total revenue in the quarter.

Speaker Change: The quarter's strength was also balanced across geographies, where EMEA grew the fastest followed by the Americas any P. J.

Speaker Change: Customers continued to make strong multi year commitments to us reflecting their preference for elastic as they consider a platform consolidation and reflecting our increasing relevance to that business.

Kelly I: We continue to see consumption patterns similar to the prior quarter, while we're not seeing the level of focus by our customers on optimization that we experienced some quarters ago cost consciousness and operational efficiency remain important themes for them, which continues to be a reason why customers are picking elastic as their preferred platform to consolidate workloads.

We also saw higher volume of early renewals than we typically see in Q4, reflecting continued customer confidence and commitment to our platform.

Speaker Change: As a reminder, early renewals do not impact the timing of revenue recognition. So there was no revenue benefit from this in the quarter.

Todd Kelly: Elastic cloud revenue based on month to month arrangement came in at 14% of total revenue.

Todd Kelly: As we've shared before elastic cloud revenue based on month to month arrangements is driven mainly by yourself service motion in the SMB segment, which remains challenged.

Speaker Change: Our strategy of focusing on customers with a higher propensity for growth is working as evidenced in our customer metrics.

Speaker Change: We ended the fourth quarter with over 1330 customers with annual contract values more than $100000.

Todd Kelly: Professional services revenue in the fourth quarter was $24 million growing 1% year over year as reported and in constant currency.

Speaker Change: We are pleased with this quarter's customer additions in the greater than $100000 category. As these larger customers provide a strong foundation for our land and expand motion as we build a multibillion dollar company over time.

Although professional services may fluctuate across quarters based on the timing of services delivery, we do not expect it to very significantly in mix over time.

To add more contexts around deal flow during the quarter, we saw a healthy balance across our solutions and continuing to maintain a similar solution mix and annual contract values versus the prior quarter.

Speaker Change: The strength of this motion is also reflected in the number of customers over $1 million in annual contract value, which was over 165 customers at the end of fiscal 'twenty four compared to over 140, such customers at the end of the prior year.

Todd Kelly: The quarter's strength was also balanced across geographies, where EMEA grew the fastest followed by the Americas any P. J.

Speaker Change: As a reminder, we generally provide this data point of customers over $1 million ACB annually.

Todd Kelly: Customers continue to make strong multi year commitments to us reflecting their preference for elastic as they consider platform consolidation and reflecting our increasing relevance to that business.

Speaker Change: Looking at customer additions more broadly we ended the quarter with over 4370 customers above $10000 in HCV and approximately 21000 total subscription customers.

Todd Kelly: We also saw a higher volume of early renewals and we typically see in Q4, reflecting continued customer confidence and commitment to our platform.

Speaker Change: Our net expansion rate was approximately 110%, which was in line with our expectation for the quarter.

Todd Kelly: As a reminder, early renewals do not impact the timing of revenue recognition. So there was no revenue benefit from this in the quarter.

Speaker Change: As you know this is a trailing 12 month measure and the effects of the consumption optimization headwinds that impacted some of the prior quarters have now largely abated.

Todd Kelly: Our strategy of focusing on customers with a higher propensity for growth is working as evidenced in our customer metrics.

Speaker Change: Now turning to profitability and cash flow for which I will discuss non-GAAP measures.

Todd Kelly: We ended the fourth quarter with over 1330 customers with annual contract values more than $100000.

Speaker Change: Gross margin in the quarter was 76, 6% in line with our expectations.

Speaker Change: Our operating margin in the quarter was eight 6%, which was better than expected driven by our revenue outperformance.

Todd Kelly: We are pleased with this quarter's customer additions in the greater than $100000 category. As these larger customers provide a strong foundation for our land and expand motion as we build a multibillion dollar company over time.

Speaker Change: Diluted earnings per share in the fourth quarter was 21 cents.

Speaker Change: Free cash flow margin on an adjusted basis was 18% or approximately $60 million in the fourth quarter.

Todd Kelly: The strength of this motion is also reflected in the number of customers over $1 million in annual contract value, which was over 165 customers at the end of fiscal 'twenty four compared to over 140, such customers at the end of the prior year.

Speaker Change: We ended the year with adjusted free cash flow of $169 million, which was a substantial improvement against the prior year consistent with our overall operating profitability improvement.

Todd Kelly: As a reminder, we generally provide this data point of customers over $1 million ACB annually.

Speaker Change: Finally, though we don't formally guide to cash flow, we are expecting adjusted free cash flow margin for fiscal 'twenty five to be slightly above the non-GAAP operating margin for fiscal 'twenty five.

Todd Kelly: Looking at customer additions more broadly we ended the quarter with over 4370 customers above $10000 in HCV and approximately 21000 total subscription customers.

Speaker Change: This is similar to what we experienced in fiscal 'twenty four.

Speaker Change: Cash flow on a quarterly basis will fluctuate given the timing issues on seasonality. So we continue to look at this primarily on a full year basis.

Todd Kelly: Our net expansion rate was approximately 110%, which was in line with our expectation for the quarter.

Todd Kelly: As you know this is a trailing 12 month measure and the effects of the consumption optimization headwinds that impacted some of the prior quarters have now largely abated.

Speaker Change: Turning to guidance.

Speaker Change: As we look into fiscal 'twenty five we remain focused on execution and believe that we are well positioned for long term growth and profitability.

Todd Kelly: Now turning to profitability and cash flow for which I'll discuss non-GAAP measures.

Speaker Change: Our guidance philosophy remains unchanged from fiscal 'twenty four we remain prudent in the near term and assume that current business conditions will remain stable.

Todd Kelly: Gross margin in the quarter was 76, 6% in line with our expectations.

Todd Kelly: Our operating margin in the quarter was eight 6%, which was better than expected driven by our revenue outperformance.

Speaker Change: Our sales strategy remains focused on the enterprise and commercial segments, where we continue to believe that offering customers the choice on whether to deploy on premise or in the cloud is a competitive differentiator for us.

Todd Kelly: Diluted earnings per share in the fourth quarter was 21 cents.

Todd Kelly: Free cash flow margin on an adjusted basis was 18% or approximately $60 million in the fourth quarter.

Speaker Change: Accordingly, we expect continued momentum across both self managed and annual cloud subscriptions, depending on customer preference.

Todd Kelly: We ended the year with adjusted free cash flow of $169 million, which was a substantial improvement against the prior year consistent with our overall operating profitability improvement.

Speaker Change: As Asher mentioned, we are seeing strong customer interest around generative AI use cases and continue to believe this will be a significant growth driver for us in the long term.

Todd Kelly: Finally, though we don't formally guide to cash flow, we are expecting adjusted free cash flow margin for fiscal 'twenty five to be slightly above the non-GAAP operating margin for fiscal 'twenty five.

Speaker Change: This market opportunity is significant for us, but customers are still in the early stages of the adoption cycle.

While we anticipate continued growth in fiscal 2005, we are not modeling significant revenue contribution from Jenny I This year.

Todd Kelly: This is similar to what we experienced in fiscal 'twenty four.

As we've shared before fiscal 2005 will be a year of focused investment for us as we reinvest them upon natural operating leverage back in the business in particular towards the journey II opportunity.

Todd Kelly: Cash flow on a quarterly basis will fluctuate given the timing issues on seasonality. So we continue to look at this primarily on a full year basis.

Todd Kelly: Turning to guidance.

Todd Kelly: As we look into fiscal 'twenty five we remain focused on execution and believe that we are well positioned for long term growth and profitability.

Speaker Change: These investments will be focused on engineering sales and marketing activities.

Speaker Change: With that background for the first quarter of fiscal 2005, we expect total revenue in the range of $343 million to $345 million.

Todd Kelly: Our guidance philosophy remains unchanged from fiscal 'twenty four we remain prudent in the near term and assume that current business conditions will remain stable.

This represents 17% year over year growth at the midpoint, both on an as reported basis and in constant currency.

Todd Kelly: Our sales strategy remains focused on the enterprise and commercial segments, where we continue to believe that offering customers the choice on whether to deploy on premise or in the cloud is a competitive differentiator for us.

Speaker Change: We expect non-GAAP operating margin for the first quarter of fiscal 2005 in the range of nine 2% to nine 4% and non-GAAP diluted earnings per share in the range of 24 to 26 cents using between 105.5 and $106 5 million diluted weighted average ordinary shares outstanding.

Todd Kelly: Accordingly, we expect continued momentum across both self managed and annual cloud subscriptions, depending on customer preference.

Speaker Change: As Asher mentioned, we are seeing strong customer interest around generative AI use cases and continue to believe this will be a significant growth driver for us in the long term.

Speaker Change: For full fiscal 2005, we expect total revenue in the range of 146 $8 billion to $1 48 zero billion dollars.

Speaker Change: This market opportunity is significant for us, but customers are still in the early stages of the adoption cycle.

This represents 16% year over year growth at the midpoint, both on an as reported basis and in constant currency.

Speaker Change: While we anticipate continued growth in fiscal 'twenty five we are not modeling significant revenue contribution from Jenny I This year.

Speaker Change: We expect non-GAAP operating margin for full fiscal 'twenty five in the range of 11, 7% to 12, 3% and non-GAAP diluted earnings per share in the range of $1.35 to $1.47 using between 107 and 109 million diluted weighted average ordinary shares outstanding.

Speaker Change: As we've shared before fiscal 2005 will be a year of focused investment for us as we reinvest some of our natural operating leverage back in the business in particular towards the journey II opportunity.

Speaker Change: These investments will be focused on engineering sales and marketing activities.

Speaker Change: In summary, we are confident that we are still in the early stages of our growth journey.

Speaker Change: With that background for the first quarter of fiscal 2005, we expect total revenue in the range of $343 million to $345 million.

Speaker Change: We are pleased with our strong performance in fiscal 'twenty, four and are confident in our outlook for the first quarter and fiscal year and with that let's go ahead and take questions operator.

Speaker Change: This represents 17% year over year growth at the midpoint, both on an as reported basis and in constant currency.

Speaker Change: We will now begin the question and answer session.

Speaker Change: We expect non-GAAP operating margin for the first quarter of fiscal 'twenty five in the range of nine 2% to nine 4% and non-GAAP diluted earnings per share in the range of 24 cents to <unk> 26 cents using between 105.5 and $106 5 million diluted weighted average ordinary shares outstanding.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: Our first question today is from Matthew Hedberg with RBC capital markets. Please go ahead.

Speaker Change: For full fiscal 'twenty five we expect total revenue in the range of $1.468 billion to $1 48 zero billion dollars.

Matthew Hedberg: Great guys. Thanks for taking my questions. Congrats on the results. So obviously this is a tough selling environment, but really good to see.

Lastly, cloud acceleration.

Speaker Change: This represents 16% year over year growth at the midpoint, both on an as reported basis and in constant currency.

Speaker Change: Friday's review there has been.

Matthew Hedberg: Got it.

Speaker Change: Data points on consumption companies recently.

Speaker Change: We expect non-GAAP operating margin for full fiscal 'twenty five in the range of 11, 7% to 12, 3% and non-GAAP diluted earnings per share in the range of $1.35 to $1.47 using between 107 and 109 million diluted weighted average ordinary shares outstanding.

Matthew Hedberg: Right.

Speaker Change: Our database vendor had some some divergent results here you guys are delivering strong elastic cloud results.

Speaker Change: No. It doesn't it also doesn't seem like Jenny I as much of a tailwind for you guys. So I'm kind of curious if you could provide a little bit more color on sort of the consumption trends that youre seeing that seem a bit more favorable than others and maybe why is that impacting your model maybe differently than others.

Speaker Change: In summary, we are confident that we are still in the early stages of our growth journey.

Speaker Change: Yeah, Hey, Matt Thanks for asking the question. This is actually I'll get started and then ask maybe just to add to it but you know just in terms of the overall consumption environment and you know.

Speaker Change: We are pleased with our strong performance in fiscal 'twenty, four and are confident in our outlook for the first quarter and fiscal year and with that let's go ahead and take questions operator.

Speaker Change: What we saw in Q4.

Speaker Change: We will now begin the question and answer session.

Speaker Change: It's largely that consumption was steady customers, we're continuing to consume increase their consumption towards the commitments that they've made and as we explained in the past our model tends to be that'd be sell commitments for customers related to specific projects and those commitments the consumption ramps towards it and we saw that happening.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: Our first question today is from Matthew Hedberg with RBC capital markets. Please go ahead.

Speaker Change: Quite nicely.

Speaker Change: The fact that we have been able to win competitive opportunities, where we're displacing incumbents because of the innovations that we've been driving especially in the areas of absurdity in security.

Matthew George Hedberg: Great guys. Thanks for taking my questions. Congrats on the results. So obviously this is a tough selling environment, but really good to see.

Speaker Change: Lascar cloud acceleration.

Speaker Change: Friday's review, there's been a lot of converge or diversion data points on consumption companies recently.

Speaker Change: And the fact that when it comes to search you know we have a very strong position and search I'd argue is more important now than ever before because of Jennie O and everything that's happening there. So the consumption trends that we saw were very steady based on everything that we had seen through Q4 not that different.

Speaker Change: Even tonight.

Speaker Change: Our database vendor had some some divergent results here you guys are delivering strong elastic cloud results. It doesn't it also doesn't seem like Jenny I as much of a tailwind for you guys. So I'm kind of curious if you could provide a little bit more color on sort of the consumption trends that youre seeing that seem a bit more favorable than others and maybe why is that impacting your model maybe a different way.

From what we saw in Q3, I don't know what others have reported yeah I haven't had a chance to look at it but you know we were quite pleased with how Q4 played out.

Speaker Change: Others.

Speaker Change: Yeah, Hey, Matt Thanks for asking the question. This is actually I'll get started and then ask maybe just to add to it but you know just in terms of the overall consumption environment than what we saw in Q4.

Ash Kulkarni: I think that sums it up nicely ash.

Speaker Change: Maybe just a follow up then generally it sounds like you're not really baking in much revenue contribution from <unk> yet.

Speaker Change: It's largely that.

Speaker Change: Consumption was steady customers, we're continuing to consume increase their consumption towards the commitments that they've made and as we explained in the past our model tends to be that'd be sell commitments for customers related to specific projects and those commitments the consumption ramps towards it and we saw that happening quite nicely.

Speaker Change: Elastic cloud continues to accelerate I guess, when we think about the full year growth for fiscal 'twenty five.

Speaker Change: Or are you kind of thinking about the progression of elastic cloud into this year and you know maybe when might we actually see Jenny I tell what's given that you. It sounds like you already have 1000 paying customers using vectren rag.

Matt: Yeah, Matt So the way I think about it.

Speaker Change: The the fact that we have been able to win competitive opportunities, where we're displacing incumbents because of the innovations that we've been driving especially in the areas of absurdity in security.

Matt: Is.

Speaker Change: This follows if I think about fiscal 'twenty for the year played out really nicely for us and we're very confident in our outlook for this year to.

To start with as I think about the overall guidance framework and philosophy, we've not changed that from from prior quarters. We continue to guide based on what we know and maintain that prudent stance.

Speaker Change: And the fact that when it comes to search you know we have a very strong position and search I'd argue is more important now than ever before because of Jennie O and everything that's happening there. So the consumption trends that we saw were very steady based on everything that we had seen through Q4 not that different.

Speaker Change: As you've seen we initiated guide for the full year at 16% at the midpoint compared to the 19%. We just reported for the full fiscal year 'twenty four.

Speaker Change: I think about the breakdown of that we expect that you'll see momentum in both self managed as well as cloud depending on customer preference fundamentally.

From what we saw in Q3, I don't know what others have reported I haven't had a chance to look at it but you know we were quite pleased with how Q4 played out.

Speaker Change: When we think about the.

Ash: I think that sums it up nicely ash.

Speaker Change: The progression and in each of those that is driven by customer choice and we think that's actually a competitive differentiator for us in terms of our ability to offer that choice.

Speaker Change: Maybe just a follow up then generally it sounds like you're not really baking in much revenue contribution from <unk> yet.

Speaker Change: Also in terms of the guide we are not assuming meaningful revenue upside from Jenny I, either in self managed or in the cloud.

Speaker Change: Laughter clock continues to accelerate I guess, when we think about the full year growth for fiscal 'twenty five.

Speaker Change: How are you kind of thinking about the progression of elastic cloud into this year and you know maybe when might we actually see Jenny I tell it is given that you. It sounds like you already have 1000 paying customers using vectren rag.

Speaker Change: If I think about it from a segment perspective, our sales strategy continues focus to be focused on the enterprise and commercial segments, where we're continuing to see a strong growth of our cloud annual subscriptions and the SMB segment, which we serve as you know through our self serve monthly cloud offering.

Matt: Yeah, Matt So the way I think about it.

Matt: Is it.

Speaker Change: This follows if I think about fiscal 'twenty for the year played out really nicely for us and we're very confident in our outlook for this year are to start with as I think about the overall guidance framework and philosophy, we've not changed that from from prior quarters. We continue to guide based on what we know and maintain that prudent stance.

Speaker Change: We're expecting that that will remain challenged from a macroeconomic perspective. So I think those are some of the the general puts and takes and in terms of Jenny I, We as I've said, we continue to see.

Speaker Change: Expect to see progression there, but we're not modeling any significant inflection at this point I think that's a longer term play for us.

Speaker Change: You've seen we initiated guide for the full year at 16% at the midpoint compared to the 19%. We just reported for the full fiscal year 'twenty four if.

Speaker Change: Thanks, guys.

Speaker Change: The next question is from Brent Thill with Jefferies. Please go ahead.

Speaker Change: If I think about the breakdown of that we expect that you'll see momentum in both self managed as well as cloud depending on customer preference you know fundamentally.

Brent Thill: Ask just a follow up on Matt's question on on the demand environment I mean, it seems like something is going on in the industry you've seen in.

Speaker Change: In the best of front office and back office, and what you saw with Mongo.

Speaker Change: When we think about the the progression and in each of those that's driven by customer choice and we think that's actually a competitive differentiator for us in terms of our ability to offer that choice also and in terms of the guide we are not assuming meaningful revenue upside from Jenny I, either in self managed or in the cloud.

Speaker Change: Seems to be an air pocket in demand and I think everyone scratching their head trying to figure out what's happening in one of the explanations maybe that AI is causing some type of investigation or pause.

Speaker Change: Clearly it seems like you're benefiting.

Speaker Change: To some degree from that but I guess, just if you had to sum up the conversations with your clients and what youre hearing around the demand environment and are we seeing a sudden change in budgets as there is there's a pretty clear.

Speaker Change: If I think about it from a segment perspective, our sales strategy continues focus ought to be focused on the enterprise and commercial segments, where we're continuing to see a strong growth of our cloud annual subscriptions and the SMB segment, which we serve as you know through our self serve monthly cloud offering.

Speaker Change: Signal, that's coming through the software and the screen.

Speaker Change: As Matt said, you're not seeing that.

Brent Thill: Yeah, Brent Thanks for the question and you know the way I'd characterize it as the demand environment really felt stable throughout Q4 and customers are really focused on generative AI and how they can leverage their business and you can see it in the kinds of use cases that they are trying to apply a generative AI at woods I talked about some of the use cases.

Speaker Change: We're expecting that that will remain challenged from a macroeconomic perspective. So I think those are some of the the general puts and takes and in terms of Jenny I would be as I've said, we continue to see expect to.

Speaker Change: See progression there, but we're not modeling any significant inflection at this point I think that's a longer term play for us.

Speaker Change: Thanks, guys.

Brent Thill: I mean are the large fortune 100 bank, that's Ah trial, that's using generative AI for improving the experience for their.

Speaker Change: The next question is from Brent Thill with Jefferies. Please go ahead.

Brent John Thill: Ask just a follow up on Matt's question on on the demand environment I mean, it seems like something is going on in the industry you've seen in the best of front office and back office.

Brent Thill: High net worth individual clients.

All of these are designed to improve their efficiency improve the kinds of customer experiences that they deliver so there's real value there and they're trying to make sure that they can fund those they're funding those initiatives and it is it is definitely taking a lot of mindshare.

Speaker Change: What you saw with Mongo, there seems to be an air pocket in demand and I think everyone scratching our head trying to figure out what's happening in one of the explanations maybe that AI is causing some type of investigation or pods and.

Brent Thill: In terms of.

Brent Thill: The the level of optimizations and stuff that we had seen in the past.

Clearly it seems like you're benefiting.

Brent Thill: Those have like we've said leveled off but cost consciousness and operational efficiency remains important themes for our customers and for US we actually have been leaning into it and we've talked about this in the last many quarters, we lean into it because we believe that we are able to offer the innovations that we deliver based on.

Speaker Change: To some degree from that but I guess, just if you had to sum up the conversations with your clients and what you're hearing around the demand environment and are we seeing a sudden change in budgets as there is there's a pretty clear.

Speaker Change: Signal, that's coming through the software and the screen.

Speaker Change: As Matt said Youre not seeing that.

Speaker Change: Yeah, Brent Thanks for the question and you know the way I'd characterize it as the demand environment really felt stable throughout Q4 and customers are really focused on generative AI and how they can leverage in their business and you can see it in the kinds of use cases that they are trying to apply it to be at woods I talked about some of the use cases.

Brent Thill: Our generative AI capabilities, both in search for Jennie O, but also how we apply that towards absurdity in security and I've talked about that in my prepared remarks, and how we are really changing the game in security all of those are helping us compete better they're helping us deliver greater value to customers at a better price, it's helping us displace income.

Speaker Change: You know the large fortune 100 bank, that's Ah trial, that's using generative AI for improving the experience for their high net worth individual clients.

Brent Thill: Vince.

Speaker Change: And we are benefiting from some of these things that are happening, but definitely apart from the SMB area, but as Dinesh said.

Speaker Change: That has remained flat and has been flat for a few quarters now and we are we are seeing the benefit of our ability.

Speaker Change: All of these are designed to improve their efficiency improve the kinds of customer experiences that they deliver so there's real value there and they're trying to make sure that they can fund those they're funding those initiatives and it is it is definitely taking a lot of mindshare.

Speaker Change: To drive differentiation at a better cost amongst our customer base.

Speaker Change: Thanks, Ashley Gene. That's just quick follow up just when you think about the 16% growth you gave for the year are you embedding a little more headwind from macro and uncertainty in SMB blow down or are you any change in assumptions or conservatism in terms of how you're you're sending that guide point.

Speaker Change: In terms of.

Speaker Change: The the level of optimizations and stuff that we had seen in the past you know those.

Speaker Change: Those have like we've said leveled off but cost consciousness and operational efficiency remains important themes for our customers and for US we actually have been leaning into it and we've talked about this in the last many quarters, we lean into it because we believe that we are able to offer the innovations that we deliver based on.

Speaker Change: Yeah, Brent the way I'd characterize it is that we've learned over the last couple of years that when customer spending priorities are shifting it's really important for us to stay very close to them. That's exactly what we're doing right now with our sales and customer success teams and it's also really important that we maintain prudent in our outlook and that prudence is reflected in our guidance.

Regenerative AI capabilities, both in search for Jennie O, but also how we apply that towards observed beauty and security and I've talked about that in my prepared remarks, and how we are really changing the game in security all of those are helping us compete better they're helping us deliver greater value to customers at a better price, it's helping us displace.

Speaker Change: So we're going to continue to monitor things carefully as we move forward, but at this point, we feel good about our outlook and we'll obviously update you as we go.

Speaker Change: Thank you.

Speaker Change: <unk>.

Speaker Change: And we are benefiting from some of these things that are happening, but you know definitely apart from the SMB area, but as Jennifer said.

Speaker Change: The next question is from pendulum Bora with J P. Morgan. Please go ahead.

Speaker Change: Oh, great. Thanks for taking the questions and congrats on the quarter guys.

Speaker Change: That that has remained flat and has been flat for a few quarters now and we are we are seeing the benefit of our ability.

Pendulum Bora: Actually I wanted to ask you on obviously you're seeing great.

Pendulum Bora: Uptake of the January capabilities could.

Speaker Change: To drive differentiation at a better cost amongst our customer base.

Speaker Change: Can you talk about the ROI that people are seeing around kind of the vector search when when we have done our own research seems like when you move a lexical search to Victor searched cost shoots up by a lot somewhere around 20 to 30 X. So I'm wondering anecdotally what are you hearing around our Hawaii in general and if people are eating more on sparse and coding versus.

Speaker Change: Thanks, Ashley and that's just a quick follow up just when you think about the 16% growth you gave for the year are you embedding a little more headwind from macro and uncertainty in SMB blow down or are you.

Speaker Change: Change in assumptions or conservatism in terms of how you're you're sending that guide point.

Pendulum Bora: Vince.

Pendulum Bora: Yes, so pendulum. Thanks for the question, we are seeing usage of both our.

Brent: Yeah, Brent the way I'd characterize it is that you know we've learned over the last couple of years that when customer spending priorities are shifting it's really important for us to stay very close to them. That's exactly what we're doing right now without sales and customer success teams and it's also really important that we maintain prudent in our outlook and that prudence is reflected in our guidance.

Speaker Change: Spartan coated models like our Elsa model, but also the use of dense vectors.

Speaker Change: And what we are seeing is that the projects that are getting funded at least initially.

Speaker Change: Are you know many of them are related to improving efficiency.

Speaker Change: In the processes that involve supporting supporting either customers supporting both internal and external customers. The the fortune 100 bank that I talked about what they are trying to drive is a faster way to deliver precise information on what's happening that <unk>.

Brent: So we're going to continue to monitor things carefully as we move forward, but at this point, we feel good about our outlook and we'll obviously update you as we go.

Speaker Change: Thank you.

Speaker Change: The next question is from pendulum Bora with J P. Morgan. Please go ahead.

Speaker Change: Oh, great. Thanks for taking the questions and congrats on the quarter guys.

Speaker Change: The portfolios of their high net worth individual clients as quickly as possible, it's enabling them to reduce the number of.

Pinjalim Bora: Actually I wanted to ask you on obviously, you're seeing a great up.

Speaker Change: Take off the January capabilities.

Speaker Change: At the time that it takes for there.

Speaker Change: Can you talk about the ROI that people are seeing around kind of the vector search when when we have done our own research seems like when you move electrical search to vector searched the cost.

Speaker Change: All employees to provide that kind of information to clients.

Speaker Change: In effect.

Speaker Change: Our wealth manager supporting more number of clients, but also the overall experience becomes better. So when you look at those kinds of dynamics. The overall costs does tend to be more favorable although you're spending more on the technology and those are the kinds of projects that we're seeing.

Speaker Change: By a lot somewhere around 20 to 30 X. So I'm wondering anecdotally what are you hearing around our why in general and if people are leaning more on sparse and coding versus dense.

Pendulum: Yes, so pendulum. Thanks for the question, we are seeing usage of both sports.

And we've had customers with Cisco or CBC bank stack overflow customers that I mentioned are in certain in past calls that I've presented at our elastic on conference events and talked about the specific metrics and benefits that they have seen.

Pendulum: Sports and coated models like our Elsa model, but also the use of dense vectors.

Speaker Change: And what we're seeing is that the projects that are getting funded at least initially.

Speaker Change: Are you know many of them are related to improving efficiency.

Speaker Change: A lot of them had clear ROI. So that's what we are seeing as a trend obviously.

Speaker Change: In the processes that involve supporting supporting either customers supporting both internal and external customers. The fortune 100 bank that I talked about what they are trying to drive is a faster way to deliver precise information on what's happening that effect.

Speaker Change: More and more customers as they go through that journey of ramping up their their use cases.

Speaker Change: Expect that they will see greater and greater benefits and that will show up in revenue over time for us, but it's really exciting and I'm very excited about the the adoption that we have seen especially amongst our over 100 K customer cohort because that's the customer cohort that you.

Speaker Change: The portfolios of their high net worth individual clients as quickly as possible, it's enabling them to reduce the number of the time that it takes for their internal employees to provide that kind of information to clients.

Speaker Change: You know effectively.

Speaker Change: Some of our largest customers and as they adopt our generic capabilities, that's going to be very very meaningful for us in the long run.

Speaker Change: In effect for a wealth manager supporting more number of clients, but also the overall experience becomes better. So when you look at those kinds of dynamics. The overall cost does tend to be more favorable although you're spending more on the technology and those are the kinds of projects that we're seeing and we've had customers you know we're there to assist.

Yep understood one one follow up for Dennis just as more of a hypothetical question on the guidance, but if I look back in your numbers fiscal 'twenty three RPM you exited the year at 17% growth in constant currency and you did 18% in revenue growth in constant currency in fiscal 'twenty four it seems like our peers accelerating.

Speaker Change: Cool or C. B C bank stack overflow of customers that I mentioned are in certain in past calls that I've presented at our elastic on conference events and talked about the specific metrics and benefits that they have seen.

Speaker Change: Exiting fiscal 'twenty for now, but the revenue growth seems to imply a deceleration. So maybe talk about that dispersion and is there any reason.

Speaker Change: Because of which.

Speaker Change: And a lot of them had clear ROI. So that's what we're seeing is a trend obviously you know.

Speaker Change: You might be longer duration, that's driving <unk>, maybe but is there any reason that revenue growth will not directionally follow our view of this year.

Speaker Change: More and more customers as they go through that journey of ramping up their their use cases, you know, we expect that they'll see greater and greater benefits and that will show up in revenue over time for us, but it's really exciting and I'm very excited about the the adoption that we have seen especially amongst our Oh 100.

Speaker Change: Yeah pendulum happy to talk about that so there's a couple of things to consider as you think about the RVO performance you know one.

Speaker Change: One is maybe just as a oh starting matter the elastic cloud from month to month arrangements that we talked about that is more heavily weighted towards S. N V where there continues to be a greater degree of macro pressure that part of the business does not have any our appeal in it and so that's one one piece to naturally consider in the model I think the other piece that it would also.

Speaker Change: Our customer cohort because that's the customer cohort that are you.

You know effectively.

Speaker Change: Some of our largest customers and as they adopt our journey I capabilities, that's going to be very very meaningful for us in the long run.

Speaker Change: Just a highlight I touched on this a little bit during the prepared remarks that we did see a slightly higher volume of early renewals here in Q4 than we generally see in any other Q4 and that just it reflects continuing customer confidence and commitment to our platform and that was a little bit more than $15 million above what we typically see in most of.

Speaker Change: Yep understood one one follow up for Jenny Tenacious, there's more of a hypothetical question on the guidance, but if I look back in your numbers fiscal 'twenty three RPM you exited the year at 17% growth in constant currency and you did 18% in revenue growth in constant currency in fiscal 'twenty four it seems like our peers accelerating.

Speaker Change: Those contracts, but do you in Q1.

Speaker Change: Exiting fiscal 'twenty for now, but the revenue growth seems to imply a deceleration. So maybe talk about that dispersion and is there any reason.

In some instances I think those were related to the single digit price increase for our self managed products that went into effect in me some customers wanted to lock those lower prices and then they renewed early and that's obviously something that we had anticipated when we announced the price increase.

Speaker Change: Because of which.

Speaker Change: You might be longer duration, that's driving our P. O maybe but is there any reason that revenue growth will not directionally follow our view of this year.

Speaker Change: And just as a reminder, I mentioned this on the call on the script as well that.

Speaker Change: Early renewals they do not impact the timing of revenue recognition. So there was no revenue benefit from that in the quarter and it doesn't change anything for revenue for fiscal 'twenty five either.

Speaker Change: Yeah pendulum happy to talk about that so there's a couple of things to consider as you think about the RVO performance. You know one is maybe just as a oh starting matter the elastic cloud from month to month arrangements that we talked about that is more heavily weighted towards S. N V where there continues to be a greater degree of match.

Speaker Change: The other thing I would point out in Q4 is that we saw a very strong multi year commitments are many of these are new and renewing customers and they all elected to sign multiyear contracts with us and these multi year commitments are obviously super valuable to us because they create long term commitments, but those don't necessarily translate into revenue in fiscal 'twenty five.

Speaker Change: Crow pressure that part of the business does not have any RP O in it and so that's one one piece to naturally you consider in the model.

Speaker Change: The other piece that I would also just highlight I touched on this a little bit during the prepared remarks that we did see a slightly higher volume of early renewals are here in Q4 than we generally see in any other Q4 and that just it reflects continuing customer confidence and commitment to our platform and that was a little bit more than $15 million above what we.

Speaker Change: So those are some of the things that I would call out as Youre thinking about our view on the connection of our <unk> to revenue.

Speaker Change: Got it very helpful. Thank you.

Speaker Change: The next question is from Tyler Radke with Citi. Please go ahead.

Speaker Change: Yes. Thanks, Thanks for taking the question Jonas just following up on the price increase side of the equation can you just talk about what you're embedding in for the full year and then I know you recently released the technical preview of server list. If you could just talk about.

Speaker Change: Typically see in most of those contracts, but do you in Q1 are in some instances I think those would relate it to be single digit price increase for our self managed products that went into effect in me some customers wanted to lock those lower prices and then they renewed early and that's obviously something that we had anticipated when we announced the price increase.

Speaker Change: To the extent that server lists and different pricing models and cloud or are being considered in the guide as well. Thank you.

Speaker Change: And just as a reminder, I mentioned this on the call on the script as well that are.

Speaker Change: Early renewals they do not impact the timing of revenue recognition. So there was no revenue benefit from that in the quarter and it doesn't change anything for revenue for fiscal 'twenty five either.

Speaker Change: Thanks, Tyler so maybe I'll start off with the first piece, which was the self managed price increase that we did in <unk>.

Speaker Change: Those that may not be familiar with it we did raise prices for our self managed products actually starting this month.

Speaker Change: The other thing I would point out in Q4 is that we saw a very strong multi year commitments are many of these are new and renewing customers and they all elected to sign multi year contracts with us and are these multi year commitments are obviously super valuable to us because they create long term commitments, but those don't necessarily translate into revenue in fiscal 'twenty five.

Speaker Change: It was a single digit percentage increase and based primarily on all the technology enhancements that we've delivered and the platform that's not a meaningful driver of revenue in the near term for a few reasons first off it's a obviously limited to self managed only and it is a single digit percentage increase so it's not that substantial and.

Speaker Change: So those are some of the things that I would call out as Youre thinking about our view on the connection of our <unk> to revenue.

Speaker Change: So it'll start to come into renewal contracts only at the time of renewal and given that we signed a number of multi year contracts not all of those would be do you hear in fiscal 'twenty five and then of course, you'll have the revenue recognition waterfall on top of that so it's not a significant impact to revenue.

Speaker Change: Got it very helpful. Thank you.

Speaker Change: The next question is from Tyler Radke with Citi. Please go ahead.

Speaker Change: Yes. Thanks, Thanks for taking the question Dennis just following up on the pricing side of the equation can you just talk about what you're embedding in for the full year and then I know you recently released the technical preview of server list. If you could just talk about to the extent that.

Speaker Change: But we do continue to deliver tremendous value to our customers who are willing to pay for the value that we bring to them and the price increase was a reflection of that and eventually will play out in revenue over the longer term.

Speaker Change: In terms of silver lists several this is going to go G. Eight only later this calendar year and as a reminder, server list does not replace the hosted offering that we have today, it's an additional offering so we expect that the adoption of that will be gradual and over time will again play into the model. So we've not baked in any meaningful upside from silver list either at this.

Speaker Change: Server list and different pricing models in cloud or are being considered in the guide as well. Thank you.

Speaker Change: Thanks, Tyler so maybe I'll start off with the first piece, which was the self managed price increase that we did in <unk>.

Speaker Change: Those that may not be familiar with it we did raise prices for our self managed products actually starting this month.

Tyler Radke: Point in time and in the revenue guide, Yeah, and Tyler just to add to that are you know in terms of so unless we believe that it gives more choice to customers right. So the current elastic cloud offering what will end up calling elastic cloud hosted will continue to have the pricing model that it has today. It allows customers to have more control over there.

It was a single digit percentage increase and based primarily on all the technology enhancements that we've delivered and the platform that's not a meaningful driver of revenue in the near term for a few reasons first off it's a obviously limited to self managed only and it is a single digit percentage increase so it's not that substantial and.

Tyler Radke: Stick search.

Tyler Radke: The store itself and the technology itself a bit server list, it's a more even more fully managed offering.

Speaker Change: Also it'll start to come into renewal contracts only at the time of renewal and given that we sign a number of multi year contracts not all of those will be due here in fiscal 'twenty five and then of course you'd have the revenue recognition waterfall on top of that so it's not a significant impact to revenue.

And it sits on top of the search AI Lake that I talked about and the pricing model. There would also be consumption based but it'll be based on metrics that we've seen from customers that they are interested in seeing from us in terms of pricing based on the amount of data ingested and monitor data stored in credit.

Speaker Change: But we do continue to deliver tremendous value to our customers who are willing to pay for the value that we bring to them and the price increase was a reflection of that and eventually will play out in revenue over the longer term.

Tyler Radke: And so it's more choice for customers.

Speaker Change: In terms of silver lists several this is going to go G. Eight only later this calendar year.

Tyler Radke: Unlock more types of workloads.

Tyler Radke: It's going to give them more flexibility to optimize those workloads in ways that really allows them to do more and more with elastic.

Tyler Maverick Radke: And as a reminder, silver list does not replace the hosted offering that we have today, it's an additional offering so we expect that the adoption of that will be gradual and over time will again play into the model. So we've not baked in any meaningful upside from silver list either at this point in time and in the revenue guide, Yeah, and Tyler just to add to that are you know in terms of solar.

Speaker Change: I'm very excited about what that's going to mean for the long term for elastic cloud, but as Jeff said given that it will be generally available only after the next couple of quarters are you know, we're not modeling any benefit from that in FY 'twenty five.

We believe that it gives more.

Okay very helpful and just a follow up if I may on the bookings side and I. Appreciate the explanation that there could have been some.

Speaker Change: More choice to customers right. So the current elastic cloud offering what will end up calling elastic cloud hosted will continue to have the pricing model that it has today.

Speaker Change: Early renewals ahead of that price increase that drove the bookings strength, but I'm just curious in the context of tying back bookings too.

Speaker Change: <unk> customers to have more control over their elastic search.

Speaker Change: The the store itself and the technology itself a bit server list, it's a more even more fully managed offering.

Speaker Change: The trajectory of net expansion rate like how are you seeing the the upsells and contracts expand from an IRR perspective.

Speaker Change: And it sits on top of the search AI Lake that I talked about and the pricing model. There would also be consumption based but it'll be based on metrics that we've seen from customers that they are interested in seeing from us in terms of pricing based on the amount of data ingested and the amount of data stored in credit.

Speaker Change: Even if it was even if the timing was a little bit earlier do you feel like we're at a point now where given your comment on optimizations easing.

Speaker Change: We can start to see the NR or improve from here. Thanks.

Speaker Change: Yeah, Tyler it's a it's a great question. So as we think about the net expansion rate. It played out as we expected in a couple of things about the net expansion rate number one as you know it's a trailing 12 month measure so the effects of the consumption optimization headwinds have now started to do where often have largely abated and.

Speaker Change: And so it it's more choice for customers, it's going to unlock more types of workloads.

Speaker Change: Gonna give them more flexibility to optimize those workloads in ways that really allows them to do more and more with elastic and so I'm very excited about what that's going to mean for the long term for elastic cloud, but as Jennifer said given that it will be generally available only after the next couple of quarters are you know, we're not modeling any benefit.

Speaker Change: In terms of thinking about the bookings piece or orders just keep in mind that for our cloud business. The net expansion rate is actually based on actual consumption. It's not based on the commitments so that doesn't affect the net expansion rate.

Speaker Change: That in FY 'twenty five.

Speaker Change: Okay very helpful and just a follow up if I may on the bookings side and I. Appreciate the explanation that there could have been some.

Speaker Change: And if I think about you know the self managed business.

Speaker Change: On that side. The net expansion rate will include the commitments that customers have made to us, but overall the strength that we see in our land and expand motion is playing out quite nicely. We obviously had.

Speaker Change: Early renewals ahead of that price increase that drove the bookings strength, but I'm just curious in the context of tying back bookings too.

Speaker Change: The trajectory of net expansion rate like how are you seeing the the upsells and and contracts expand from an IRR perspective.

Finish out to Q4 and to the full year and so as I think about what that means for the net expansion rate going forward, but we don't provide a specific view on it but I will say that we feel very good about our expansion motion is working nicely.

Speaker Change: Even if it was even if the timing was a little bit earlier do you feel like we're at a point now where I'm, giving you a comment on the optimizations easing.

Speaker Change: And self managed and in cloud and you've seen that in the numbers that we just printed so we're excited about that for the rest of the year.

We can start to see the NR or improve from here. Thanks.

Speaker Change: Yeah, Tyler it's a it's a great question. So as we think about the net expansion rate. It played out as we expected in a couple of things about the net expansion rate number one as you know it's a trailing 12 month measure so the effects of the consumption optimization headwinds have now started to do where often have largely abated and.

Speaker Change: The next question is from Rob Owens with Piper Sandler. Please go ahead.

Ethan: Great. Thanks for taking my question. This is Ethan on for Rob I wanted to ask about the 100 plus customers that are adopting right. Now can you speak to how big their azure commitments are relative to their overall spend on elastic and if youre seeing any material uplift in spend for this specific portion of your larger customer base.

Speaker Change: In terms of thinking about the bookings piece or orders just keep in mind that for our cloud business. The net expansion rate is actually based on actual consumption. It's not based on the commitments so that doesn't affect the net expansion rate.

Thank you.

Speaker Change: Hey, maybe I'll start and and ash can add to that so we were actually very pleased with the adoption that we've seen of our overall Jennie O functionality.

Speaker Change: And if I think about you know the self managed business.

Speaker Change: On that side are the net expansion rate will include the the commitments that are that customers have made to us, but overall the strength that we see in our land and expand motion is playing out quite nicely. We obviously had a great finish to Q4 and the full year and so as I think about what that means for the net expansion rate.

Speaker Change: And that cohort of customers that are more than 100 K a as you know that reflects our higher value customers and that's the primary that pool is the primary driver of our business.

Speaker Change: And with more than 10% of those customers already using us for Jennie O. That's one of the it's being just phenomenally rapid expansion and that are in that category if.

Going forward, we don't provide a specific view on it but I will say that we feel very good about our expansion motion is working nicely.

Speaker Change: If I think about the the level of adoption there in terms of what that means and by way of a dollar contribution it's still small as we've said most of our customers are still in the very early stages of adopting Jenny I and relative to the overall opportunity that we see longer term I think the revenue contribution in the near term is is small and we will.

Speaker Change: And self managed and in cloud and you've seen that in the numbers that we just printed so we're excited about that for the rest of the year.

Speaker Change: The next question is from Rob Owens with Piper Sandler. Please go ahead.

Speaker Change: We'll continue to take some time to ramp and that's the way we've built our model as we said a few minutes ago, we've not built in any meaningful upside into the guidance from that.

Ethan: Great. Thanks for taking my question. This is Ethan on for Rob.

Ethan: I wanted to ask about the 100 K plus customers that are adopting it is very right. Now can you speak to how big their azure commitments are relative to their overall spend on elastic and if youre seeing any material uplift in central.

Speaker Change: But in terms of the use cases for which those customers are adopting us. It's a variety of different use cases, most of them tend to be more focused on their internal enterprise rather than things that they are exposed to external customers. At this point, just yet, but I think that's just the nature of where the industry. Overall is in terms of the adoption of of journey II and so we've seen.

Ethan: Pacific portion of your larger customer base.

Speaker Change: Thank you.

Speaker Change: Hey, maybe I'll start and and ash can add to that so we were actually very pleased with the adoption that we've seen of our overall journey I functionality.

Speaker Change: In a really strong traction across geographies and across different types of use cases in that in that population.

Speaker Change: In that cohort of customers that are more than 100 K a as you know that reflects our higher value customers and that's the primary that pool is the primary driver of our business.

Speaker Change: And with more than 10% of those customers already using us for Jenny I. That's one of the it's been just phenomenally a rapid expansion in that are in that category. If I think about the the level of adoption. There in terms of what that means and by way of a dollar contribution it's still small as we've said most of our customers are still in.

Speaker Change: Thank you.

Speaker Change: The next question is from Austin <unk> with UBS. Please go ahead.

Speaker Change: Hey, Thanks, guys.

Speaker Change: The impact of the growth in cloud this past <unk>.

Speaker Change: Looking at the annual business the annual club business, it's been growing in the mid Forty's and <unk> and <unk> and it looked like it picked up a little bit further to 50% in <unk>. So I guess, what's been the biggest driver of that stability, you're seeing in the annual cloud business and then how are you feeling about the durability of that growth in annual cloud as we move into <unk>.

Speaker Change: The very early stages of adopting Jenny I and relative to the overall opportunity that we see longer term I think the revenue contribution in the near term is as small and well we'll continue to take some time to ramp and that's the way we've built our model as we said a few minutes ago, we've not built in any meaningful upside into the guidance from.

Speaker Change: 25.

Speaker Change: Hey, happy to take that so you know fundamentally as I think about our land.

Speaker Change: That but in terms of the use cases for which those customers are adopting us. It's a variety of different use cases, most of them tend to be more focused on their internal enterprise rather than things that they are exposed to external customers. At this point, just yet, but I think that's just the nature of where the industry. Overall is in terms of the adoption of of journey II.

Speaker Change: Land and expand motion, it's been working quite nicely, we've talked over the last several quarters about the investments that we've been making to drive that and the strength of the commitments and the strength of the consolidation that we're seeing onto the elastic platform and that's all been playing out quite nicely. We obviously had a strong finish here in Q4 as well.

Speaker Change: And so we've seen a really strong traction across geographies and across different types of use cases in that in that population.

And so fundamentally those those drivers continue to to play out and we are seeing strength both.

Speaker Change: Both in the enterprise and commercial segments from that selling motion and that's offset a little bit as I mentioned on the monthly cloud side by some of the broader macro weakness in the SMB segment.

Speaker Change: Thank you.

Speaker Change: The next question is from Austin Dietz with UBS. Please go ahead.

Speaker Change: But as we move forward into fiscal 'twenty five we're continuing to focus ourselves our sales efforts in enterprise and and commercial and continuing to drive those expansion plays, particularly with with in areas like Jenny I in areas like platform consolidation and I think that's actually working quite nicely for us. So so we've.

Austin Dietz: Oh, Hey, thanks, guys.

Speaker Change: The impact of the growth in cloud this past <unk>.

Speaker Change: You know looking at the annual business. The annual club business had been growing in the mid Forty's and <unk> and <unk> and it looked like it picked up a little bit further to 50% in <unk>. So I guess, what's been the biggest driver of that stability, you're seeing in the annual cloud business and then how are you feeling about the durability of that growth in annual cloud as we move into <unk>.

Speaker Change: We've been pleased with the performance of cloud so far and we're looking forward to Q1 and the rest of the year.

Speaker Change: 25.

Speaker Change: Great. Thanks, guys.

Speaker Change: Hey, happy to take that so you know fundamentally as I think about our land.

Speaker Change: The next question is from Mike Seacoast with Needham. Please go ahead.

Speaker Change: Land and expand motion, it's been working quite nicely, we've talked over the last several quarters about the investments that we've been making to drive that and the strength of the commitments and the strength of the consolidation that we're seeing onto the elastic platform.

Hey, guys. This is drew on for Mike It goes over at Needham. Thanks for taking a question.

You guys have been clear that consumption will vary quarter to quarter, but is there anything you can call out as far as expected seasonality your shape chicken assumption in fiscal 'twenty five and on that note are you expecting <unk> to be a seasonally strong as this.

Speaker Change: And that's all been playing out quite nicely. We obviously had a strong finish here in Q4 as well.

Speaker Change: And so fundamentally those those drivers continue to to play out and we were seeing strength both.

Speaker Change: Passenger.

Both in the enterprise and commercial segments from that selling motion and that's offset a little bit as I mentioned on the monthly cloud side by some of the broader macro weakness in the SMB segment.

Speaker Change: Hey, Mike maybe I'll take that and you know as I sort of look back at our fiscal 'twenty four I'm actually very happy with the consistent execution that we had across all the four quarters of fiscal 'twenty. Four are very proud of how the whole team delivered as I think about fiscal 2005, we've obviously just initiated guy.

Speaker Change: But as we move forward into fiscal 'twenty five we're continuing to focus ourselves our sales efforts and enterprise and and commercial and continuing to drive those expansion players, particularly with with in areas like Jenny I in areas like platform consolidation and I think that's actually working quite nicely for us. So so we.

Speaker Change: For the full year at 16% year over year growth and for Q1 at 17% year over year growth I expect that revenue will continue to ramp nicely over the course of the year and so as we think about the specific numbers for Q2 and beyond I think it's too early to tell so you prevent provide you with a better view on Q2, specifically as we get to the end of Q.

Speaker Change: We've been pleased with the performance of cloud so far and we're looking forward to Q1 and the rest of the year.

Speaker Change: Great. Thanks, guys.

Speaker Change: One, but we expect that revenue will ramp nicely over the course of steel.

Speaker Change: The next question is from Mike Seacoast with Needham. Please go ahead.

Okay that makes sense. Thank you.

Drew: Hey, guys. This is drew on for Mike. So it goes over at Needham. Thanks for taking a question.

Speaker Change: And then you.

Speaker Change: You've mentioned a couple of times continued softness in the SMB segment, but was there any change quarter to quarter and what are you doing the calendar of the softness.

Speaker Change: You guys have been clear that consumption will vary quarter to quarter, but is there anything you can call out as far as expected seasonality your shape chicken consumption in fiscal 'twenty five and on that note are you expecting <unk> to be a seasonally strong as this.

Speaker Change: Yeah. So in terms of what we experienced over the course of the quarter. It was remarkably stable, we haven't seen any fundamental big shifts in terms of the state of the the SMB segment broadly and if I think about the operating actions that we're taking in that monthly cloud self serve business.

Drew: Pasture.

Hey, Mike maybe I'll take that and you know as I sort of look back at our fiscal 'twenty for I'm actually very happy with the consistent execution that we had across all the four quarters of fiscal 'twenty. Four are very proud of how the whole team delivered as I think about fiscal 'twenty five we've obviously just initiated guy.

Speaker Change: That continues to be an important part of the business to us from a growth standpoint, we're continuing to make appropriate investments you know for example, the product investments that we've made in service will ultimately make adoption easier and will make scaling more seamless for users in that segment and that very naturally supports a product led growth self service motion.

Drew: For the full year at 16% year over year growth and for Q1 at 17% year over year growth I expect that revenue will continue to ramp nicely over the course of the year and so as we think about the specific numbers for Q2 and beyond I think it's too early to tell so we will provide you with a better view on Q2, specifically as we get to the end of Q.

Speaker Change: Ah, we're working towards making our service offerings available on all three Hyperscale is later this year.

Speaker Change: In addition to some of the product enhancements. We are also focused on driving appropriate demand Gen investments to continue to drive users to the product and and that motion is working quite nicely for us as well. So I think it's more of a broader macro impact in SMB that we're continuing to work our way through but in terms of both product as well as applying there.

Drew: But we expect that revenue will ramp nicely over the course of the year.

Speaker Change: Okay that makes sense. Thank you.

Speaker Change: And then you've mentioned a couple of times kind of continued softness in the SMB segment, but was there any change quarter to quarter and what are you doing the calendar of the softness.

Speaker Change: What kinds of demand Gen motions to it we're continuing to make the investments through an efficient cost model. So that we can continue to serve that segment.

Speaker Change: Yeah. So in terms of what we experienced over the course of the quarter. It was remarkably stable, we haven't seen any fundamental big shifts in terms of the the state of the the SMB segment broadly and if I think about the operating actions that we're taking in that monthly cloud self serve business.

Speaker Change: Profitable way.

Speaker Change: Awesome. Thanks, so much.

Speaker Change: The next question is from Raimo <unk> with Barclays. Please go ahead.

Raimo <unk>: Thank you.

Speaker Change: Congrats from me.

Speaker Change: And compared to everyone else that youre kind of amazing numbers and guidance.

Speaker Change: That continues to be an important part of the business to us from a growth standpoint, we're continuing to make appropriate investments you know for example, the product investments that we made in several of US will ultimately make adoption easier and will make scaling more seamless for users in that segment and that very naturally supports a product led growth self service motion.

The if you think about customer understanding of like you know where you guys are going to play going forward and if you think about like.

Speaker Change: All the other guys that are trying to say like Oh I can do this et cetera, like what are you seeing the customer conversations in terms of understanding like youre offering versus the competitors offering and.

Speaker Change: Ah, we're working towards making our service offerings available on all three Hyperscale is later this year in.

Speaker Change: Where do you see like where are you on that adoption curve. They are coming out of that then.

Speaker Change: In addition to some of the product enhancements. We also are focused on driving appropriate demand Gen investments to continue to drive users to the product.

Ryan: Yeah, Hey, Ryan Thanks for the question so first.

Speaker Change: First of all what I'd say is every single conversation that I've had in the last quarter.

Speaker Change: And and that motion is working quite nicely for us as well. So I think it's more of a broader macro impact in SMB that we're continuing to work our way through but in terms of both product as well as applying the right kinds of demand Gen motions do it we're continuing to make the investments through an efficient cost model. So that we can continue to serve that.

Ryan: Even when customers have been using primarily elastic for observed lithium security every one of those conversations is involved generative AI and this is something that's coming up from the customer side, because every single customer that I've spoken to it seems to be thinking about.

How could they can use generative AI AI in general to make their offerings to make their systems and their processes are.

Speaker Change: Segment and are.

Speaker Change: Profitable way.

Speaker Change: Awesome. Thanks, so much.

Ryan: Just better more automated more efficient et cetera.

Speaker Change: The next question is from Raimo <unk> with Barclays. Please go ahead.

Ryan: In terms of the awareness of our capability what I'd say is you know.

Raimo Lenschow: Thank you.

Speaker Change: Congrats from me.

Speaker Change: And compared to everyone else. These are kind of amazing numbers and guide them.

Ryan: We've done a good job of getting our customers to understand all the vector database functionality that's inherent in our platform and we are very proud of the fact that because we built this into our platform not as an add on or an adjunct.

Speaker Change: The if you think about customer understanding all of like you know where you guys are going to play going forward and if you think about like.

Speaker Change: All the other guys that are trying to say like Oh, I can do days et cetera, like what are you seeing the customer conversations in terms of understanding like youre offering versus the competitors offering and.

Ryan: Customers immediately get the benefit of it as long as they have the right tier of usage and so they have the skills. Their data is already sitting on elastic and now without having to learn new things, they're able to quickly get started using us for these kinds of generative AI use cases, both for dense vector usage or.

Speaker Change: Where do you see like where are you on that adoption curve. They are coming out of that then.

Yeah, Hey, Ryan Thanks for the question. So you know first of all what I'd say is every single conversation that I've had in the last quarter.

Ryan: Sparse and coated vectors and just the breadth of functionality the integrations that we keep delivering with third parties the ability to use all of these larger language models that are out there and all of these have been tremendous strengths and advantages and you know the last year has been a journey for our customers to better.

You know even when customers have been using primarily elastic for absorb lithium security every one of those conversations is involved generative AI and this is something that's coming up from the customer side, because every single customer that I've spoken to it seems to be thinking about.

Speaker Change: How could they can use generative AI AI in general to make their offerings to make their systems and their processes are just better more automated more efficient et cetera.

Ryan: Understand this evolving landscape what I'd say is we're still in the early phases of the overall journey for Ginnie I, but the customer awareness both in terms of differentiation and why they need not just a vector database, but a much more comprehensive platform that includes hybrid search that includes.

Speaker Change: In terms of the awareness of our capability. What I'd say is you know I think we've done a good job of getting our customers to understand all the vector database functionality that's inherent in our platform.

Ryan: The ability to do re ranking and so on the integrations that ive talked about all of those are becoming clearer and clearer, so I'm, having and I'm, having fewer conversations where I'm, having to do that explanation and more discussions where customers are asking for us to work with them together.

And we're very proud of the fact that because we built this into our platform not as an add on or an adjunct our customers immediately get the benefit of it as long as they have the right tier of usage and so they have the skills. Their data is already sitting on elastic and now without having to learn new things they're able to.

Ryan: To help them not only build these applications, but really define the art of the possible. So the momentum is working very nicely and I'm quite excited about it.

Speaker Change: Quickly get started using us for these kinds of generative AI use cases, both for dense vector usage or sparse and coated vectors are and just the breadth of functionality. The integrations that we keep delivering with third parties. The ability to use all of these are larger language models that are out there and all of these.

Speaker Change: Thank you and then if you haven't tried.

Speaker Change: One for you.

In theory, you like if you think about it that if a customer was using search.

Speaker Change: You should be very easy upsell that you just go in and say look I can give you a hybrid search.

Victor.

Speaker Change: <unk> has been tremendous strengths and advantages and you know the last year has been a journey for customers to better understand this evolving landscape. What I'd say is you're still in the early phases of the overall journey for Ginnie I, but the customer awareness.

Speaker Change: Using yesterday et cetera, like can you remind us like like like search as a percentage of the different workloads I know you've never gave like corporate numbers, but is that like a meaningful part of what you did like how does that fit into your overall scheme. Thank you.

Raimo <unk>: Yeah, Raimo I think the solutions mix for us in Q4 across Absorbability security and search was very consistent with what we've generally seen over the course of the last year in terms of HCV.

Speaker Change: In terms of differentiation and why they need not just a vector database, but a much more comprehensive platform that includes hybrid search that includes the ability to do re ranking and so on the integrations that I talked about all of those are becoming clearer and clearer so I'm, having and you know I'm having fewer.

Speaker Change: All of the solutions are growing nicely for us.

Raimo: If in terms of numbers observer ability continues to be a little bit more than 40% of the mix in terms of HCV security continued to be roughly 25% or a bit higher and then search makes up the rest of it.

Speaker Change: Our conversations where I'm, having to do that explanation and more discussions where customers are asking for us to work with them together to help them not only build these applications, but really define the art of the possible. So the momentum is working very nicely and I'm quite excited about it.

Raimo: And over time, we think that search will benefit from Jennie O. But we also obviously you see the opportunity to drive growth in security and observe ability with the consolidation motions that we've been seeing so we felt very good about our overall solutions. Thanks.

Speaker Change: The only thing I'll add to that is.

Speaker Change: Thank you and then.

Speaker Change: One for you.

Speaker Change: Search has we are seeing that its becoming more interesting to customers than ever before because of generative AI and the willingness for customers to invest in it is something that I'm.

Speaker Change: The in theory like if you think about it that if a customer was using search. It's the you should be very easy upsell that you just go in and say look I can give you a hybrid search.

Speaker Change: That's a day.

Speaker Change: I'm seeing a a very interesting change in conversation on and people are also looking to look at how elastic and searching I can change the absurdity in their security solutions for the better. So that's the reason why everything seems to be benefiting from the work that we've done in this really fundamental area of search.

Using yesterday et cetera, like can you remind us like like like search as a percentage of the different workloads I know you've never gave like corporate numbers, but is that like a meaningful part of what you did like how does that fit into your overall scheme. Thank you.

Raimo Lenschow: Yeah, Raimo I think those solutions mix for us in Q4 across Absorbability security and search was very consistent with what we've generally seen over the course of the last year in terms of a C D.

Okay, perfect that makes sense. Thank.

Speaker Change: Thank you.

Speaker Change: The next question is from <unk> Kidron with Oppenheimer. Please go ahead.

Raimo: All of the solutions are growing nicely for us.

Speaker Change: Thanks, and nice results guys Ash I was wondering if you can give us a little bit more color on the.

Speaker Change #100: In terms of numbers observer ability continues to be a little bit more than 40% of the mix in terms of H C. V security continued to be a roughly 25% or a bit higher and then search makes up the rest of it and overtime. We think that search will benefit from Jennie O. But we also obviously you see the opportunity to drive growth in security.

Kidron: The ramp profile.

Speaker Change: Ginny I customer somebody first of all congrats on reaching 1000 paying customers.

Speaker Change: If I remember correctly, you've already had at least a few hundreds of them that have been with you for more than two quarters.

Speaker Change #100: And observe ability with the consolidation motions that we've been seeing so we felt very good about our overall solutions makes the only thing I'll add to that is.

Speaker Change: Is there any pattern of behavior and adoption of grill.

Speaker Change: Is there.

Speaker Change: Any color you can give us on how should we expect the usage to grow what are you seeing with customers on the pace. They wish to incorporate it and then on the flip side the pace of our reach those applications are used in driving more.

Speaker Change #100: Search has a way of seeing that its becoming more interesting to customers than ever before because of generative AI and the willingness for customers to invest.

Speaker Change: Demand.

Speaker Change: Yeah. It's a great question and you know if you think about it in terms of the customer journey. The first step is almost always the adoption rate what are they choosing as the as the technology platform of choice and that's where the thousand plus customer.

And the security solutions for the better. So that's the reason why everything seems to be benefiting from the work that we've done in this really fundamental area of search.

Speaker Change: So really that's how we should think about it so it's the most appropriate leading indicator of the traction as well as the 145 plus customers are in the 100 K plus category because those are the customers that tend to really they're our largest customer. So that's where we see the greatest revenue potential in the future now once.

Okay perfect that makes sense. Thank you.

The next question is from its high Kidron with Oppenheimer. Please go ahead.

Thanks, and nice results guys. ASUR was I was wondering if you can give us a little bit more color on the.

Speaker Change: Customers choose us.

The ramp profile of with the Ginnie I customer somebody first of all congrats on reaching 1000 paying customers, but if I remember correctly, you've already had at least a few hundreds of them that have been with you for more than two quarters.

Speaker Change: They start to go into the implementation phases, and we've had many customers that have you know.

Speaker Change: Put everything in production there.

Speaker Change: Applications have ramped up and many of those customers have come and talked at our elastic on conferences and I mentioned a few names earlier.

Is there any pattern of behavior and adoption of grill kidney is there.

Speaker Change: Whether it's Cisco or stack overflow and so on and so forth, but other customers that I mentioned during this earnings call.

Any color you can give us on how should we expect the usage to grow what are you seeing with customers on the pace. They wish to incorporate it and then on the flip side the pace by which those applications are used in driving more demand.

Speaker Change: The bank.

Speaker Change: <unk> electronics company et cetera.

Speaker Change: We're putting their technology into into production and what time, it's going to ramp one of the things that you.

Demand.

Speaker Change: You have to consider when it comes to regenerative AI is because in the context of an enterprise enterprises tend to have much lower willingness to accept hallucinations than consumers word when youre using something like a chat GPT. So the natural amount of time that it takes customers to <unk>.

Yeah. That's a great question and you know if you think about it in terms of the customer journey. The first step is almost always the adoption rate what are they choosing as the as the technology platform of choice and that's the thousand plus customer.

Really that's how we should think about it so it's the most appropriate leading indicator of the traction as well as the 145 plus customers are in the 100 K plus category because those are the customers that tend to really they're our largest customer. So that's where we see the greatest revenue potential in the future now once customers choose.

Do testing and so on and feel comfortable with deploying these tends to be longer. So that's one of the reasons why you're seeing the slightly longer curve, but once once that kicks in because there is clear ROI associated with it and the customers that have spoken at conferences have talked about the ROI that they have seen.

Yes.

They start to go into the implementation phases, and we've had many customers that have you know.

Speaker Change: In our opinion this is a matter of when.

Speaker Change: And it's just a matter of timing, which is why we've not modeled it into our FY 'twenty five guide, but we feel very strongly that this is going to be it's going to increase our total addressable market and a significant and meaningful way in the long run.

<unk> put everything in production there are there's a.

Applications have ramped up and many of those customers have come and talk that our elastic on conferences and I've mentioned, a few names earlier, whether it's cisco or stack overflow and so on and so forth, but other customers that I mentioned during this earnings call Oh, you know the the bank the electronics company et cetera, you know they are putting there.

Speaker Change: Awesome and then the second question.

Speaker Change #100: On the <unk> opportunity.

Speaker Change #101: This has been clearly a big area of success for you for years, where supply is being the main competitor.

Our technology into into production and what time, it's going to them one of the things that you.

Speaker Change #102: But in the last three months a lot of things are happening in this market.

Speaker Change #103: Logarithm, and <unk> coming together IBM selling business to Palo Alto and of course, Cisco closing on Splunk.

You have to consider when it comes to generative AI is because in the context of an enterprise enterprises tend to have much lower willingness to accept hallucinations than consumers would when you're using something like a chat GPT. So the natural amount of time that it takes customers to do.

Speaker Change #104: Yes My question is.

Speaker Change #105: How do you see the landscape seems specifically developed for you and.

When you see all those things happening in the market.

Speaker Change #106: How are you reorienting either product.

Do testing and so on and feel comfortable with deploying these tends to be longer. So that's you know one of the reasons why you're seeing the slightly longer curve, but once once that kicks in because there is clear ROI associated with it and the customers that have spoken at conferences have talked about the ROI that they have seen it.

Speaker Change #107: Go to market pricing.

Speaker Change #108: Anything internally to try and capitalize on what could be a very big displacement opportunity over the next 12 to 24 months.

Speaker Change #109: That's a great question and you know what we are seeing especially in the security market, especially in Sim, which is our as you know I've talked about this in the past that's our core focus when it comes to security.

In our opinion this is a matter of when.

And it's just a matter of timing, which is why we've not modeled it into our FY 'twenty five guide, but we feel very strongly that this is gonna be you know, it's it's going to increase our total addressable market and a significant and meaningful way in the long run.

Speaker Change #109: Market is moving to where we have always been you know we've looked at this as a problem all about data and as data volumes had been growing its becoming very clear to customers that you need a data platform in the back end, that's able to ingest any and all kinds of security data even from other security technologies.

Awesome and then the second question.

On the Siem opportunity.

This has been clearly a big area of success for you for years, where supply is being the main competitor.

Speaker Change #109: If somebody if a customer is using somebody else's endpoint security our cloud security products, we need to be able to bring that data in and coordinate across all of it very very quickly at speed.

But in the last three months a lot of things are happening in this market.

Speaker Change #101: Logarithm and exiting coming together IBM selling business to Palo Alto and of course, Cisco clothing on Splunk.

Speaker Change #109: That's something that we're exceptionally good at the second thing is using AI to automate all of the processes around it you know the work that we've done with our AI assistance to attack discovery work that we've done the market is moving in this direction in this area of security analytics and we've been beneficiaries of it we've been able to displace incumbents.

Speaker Change #102: Yes My question is.

Speaker Change #103: How do you see the landscape.

Speaker Change #103: Specifically develop for you and.

Speaker Change #103: When you see all those things happening in the market.

Speaker Change #104: How are you reorienting either product go to market pricing.

Speaker Change #109: In a very nice way and we are seeing the results of that kind of consolidation plays the land expand consolidation play are playing out with the kinds of dynamics that you talked about so I'm very excited about what this means and we're leaning in on the go to market and product set on this.

Speaker Change #105: Anything internally to.

Speaker Change #105: To try and capitalize on what could be a very big displacement opportunity over the next 12 to 24 months.

That's a great question and you know what we are seeing especially in the security market, especially in Sim, which is our as you know I've talked about this in the past that's our core focus when it comes to security.

Speaker Change #110: Can you elaborate kind of go to market side, because what you've described there's a lot of product enhancements and benefits, but what have you changed on the go to market side to try and capitalize on this.

Speaker Change #106: Market is moving to where we have always been you know we've looked at this as a as a problem all about data and as data volumes had been growing its becoming very clear to customers that you need a data platform in the backend that's able to ingest any and all kinds of security data even from other security technologies like <unk>.

Speaker Change #111: Yeah look we got out of our sales kick off just a couple of weeks ago and this is one of the areas that are our sales teams are most excited about so we have clear campaigns that are going after this opportunity as you can imagine.

Speaker Change: If somebody if a customer is using somebody else's endpoint security our cloud security products, we need to be able to bring that data in and correlate across all of it very very quickly at speed.

Speaker Change #111: And you know literally the way we talk to our sales team as you know the two questions that we need to be asking is one what vector database are you using to every customer. That's the question that we should be asking in the second you know are you using any of these incumbent security or log analytics technologies that haven't been delivering value.

Speaker Change: That's something that would be an exceptionally good at the second thing is using AI to automate all of the processes around it you know the work that we've done with our AI assistance to attack discovery work that we've done the market is moving in this direction in this area of security analytics and we've been beneficiaries of it we've been able to displace incumbents.

Speaker Change #111: Haven't been innovating.

Speaker Change #111: And we are seeing success with that motion. So it is absolutely a big go to market focus for us and the discipline.

Speaker Change #111: And just the up leveling of everything that Mark Dodson, our CFO, who is doing it.

Speaker Change: In a very nice way and we are seeing the results of that kind of consolidation plays the land expand consolidation play are playing out with the kinds of dynamics that you talked about so I'm very excited about what this means and we're leaning in on the go to market and product set on this.

Speaker Change #112: Just something I'm very excited about very good good luck. Thanks.

Speaker Change #113: The next question is from shred it Qatari with Baird. Please go ahead.

Speaker Change #114: Hey, Thanks for taking my question congrats on the great execution.

Speaker Change #107: Can you elaborate kind of go to market side, because what you've described there's a lot of product enhancements and benefits, but what have you changed on the go to market side to try and capitalize on this.

Speaker Change #115: You mentioned about of course.

Speaker Change #116: A recent deal that you guys signed with the global insurance provider to implement elastic cloud on Azure.

Speaker Change #108: Yeah look we got out of our sales kick off just a couple of weeks ago and this is one of the areas that are our sales teams are most excited about so we have clear campaigns that are going after this opportunity as you can imagine.

Speaker Change #117: Highlight of consolidation and ingesting data, which gives you an advantage, but given the context of all conversations involving gen.

Speaker Change #118: And then Alaska being the first non Microsoft on the Azure opening I saw it.

Speaker Change #109: And you know literally the way we talk to our sales team as you know the two questions that we need to be asking is one what vector database are you using to every customer. That's the question that we should be asking in the second you know what are you using any of these incumbent security or log analytics technologies that haven't been delivering value.

And it sounds highlight strong.

Partnership and relationship can you elaborate on on the strategic importance of this open AI.

Speaker Change #118: Service in particular.

Speaker Change #118: How it is and it can move the needle.

Speaker Change #119: And then I'm sure some of them yes.

Speaker Change: Haven't been innovating.

Yeah sure. So the hyperscale is or they see a lot of value in partnering with us.

Speaker Change: And we are seeing success with that motion. So it is absolutely a big go to market focus for us and the discipline.

Speaker Change #119: Because in the context of generative AI in all the spaces that we play in that.

Speaker Change #110: And just the up leveling of everything that Mark Dodson. Our CFO is doing is just something I'm I'm very excited about.

Speaker Change #119: Data tends to already be on elastic said just given our.

Speaker Change #119: Prevalence out there in the market you.

Speaker Change #111: Good luck thanks.

Speaker Change #119: You know, we provide a lot of choice to customers and the fact is that just a vector database isn't enough you need all of the other search capabilities that we've built over the last 12 years.

Speaker Change #112: The next question is from shredded Qatari with Baird. Please go ahead.

Speaker Change #113: Hey, Thanks for taking my question congrats on the great execution.

Speaker Change #119: And that's one of the reasons why the Hyperscale is have worked very closely with us to integrate our technology is very nicely so customers get a great experience.

Speaker Change #114: You mentioned about a of course the recent deal that you guys signed with the global insurance provider to implement elastic cloud on Azure.

Speaker Change #119: The integration that I talked about in my prepared remarks that makes elastic search another vector database functionality available through the.

Speaker Change #115: The highlight of course consolidation and ingesting data, which gives you an advantage, but given the context of all of all conversations involving Gen AI and I'd like to highlight and then Alaska being the first to know.

The Azure interface for building AI applications, which makes it easier for customers and it's going to be a faster way for us to get out there in the market and we're seeing that also play out in deals like the one that you're referring to so great things and across all three hyperscale.

Speaker Change #116: Microsoft on the Azure opening I saw was.

Speaker Change #117: And it sounds highlight strong kind of lose your partnership and relationship can you elaborate on on the strategic importance of this open AI.

Speaker Change #120: Got it and then just a quick follow up for Dennis.

Speaker Change #117: Service in particular, and how it is and it can move the needle.

Speaker Change #121: And then the continuation of the last question on go to market. It seems like of course, you guys are executing on our display thing comparator then of course, leveraging Jenny I and also expanding partnerships, but the gen <unk> and in particular I mean, you've highlighted earlier there still in kind of early design phase, it's still very kind of looks like.

Speaker Change #117: And then I'm sure some of them.

Speaker Change #118: Yeah sure. So the Hyperscale is or you know they see a lot of value in partnering with us.

Speaker Change #118: In the context of generative AI in all the spaces that we play in.

Speaker Change: Data tends to already be on elastic said just given.

Speaker Change: Prevalence out there in the market.

Speaker Change #120: Graham.

Speaker Change #120: And then in the new AI workload adoption is also evolving so how do these initial kind of programs.

Speaker Change: You know, we provide a lot of choice to customers and the fact is that just a vector database isn't enough you need all of the other search capabilities that we've built over the last 12 years.

Speaker Change #120: Data are kind of informing your there are internal.

Speaker Change #120: Internal models in terms of like anything that you can share from a financial standpoint.

Speaker Change: And that's one of the reasons why the hyper scaler have worked very closely with us to integrate our technologies very nicely so customers get a great experience.

Speaker Change #122: Does it look like it's still very design fees or things are kind of starting to do more or inflect up.

Speaker Change: The integration that I talked about in my prepared remarks that makes elastic search another vector database functionality available through the.

Speaker Change #123: Sure I think just in the interest of time to keep it brief I'll just recap out that you know we built our guidance prudently considering things that we know we have not modeled in any meaningful upside in our model from a journey I. We expect that we will continue to see some growth because there was some small contribution in fiscal 'twenty four should we expect.

Speaker Change #119: The Azure interface for building AI applications, which makes it easier for customers and it's gonna be a faster way for us to get out there in the market and we're seeing that also play out in deals like the one that you're referring to so great things and across all three hyperscale.

Speaker Change #123: You'll see some contribution in 'twenty five as well, but it's not a significant amount that we're modeling and we're also not modeling in any meaningful upside from server list, which obviously happens a much later this fiscal year in terms of its general availability.

Speaker Change #120: Got it and then just a quick follow up for Dennis.

Speaker Change #121: And then the continuation of last question on go to market. It seems like of course, you guys are executing on on displacing a competitor then of course, leveraging Jenny I and also expanding partnerships, but the gen. I in particular, I mean, you highlighted earlier that still in kind of early design phase, it's still very kind of looks like pilot.

Speaker Change #123: And so that's been the approach we've taken.

Speaker Change #124: Got it thanks a lot.

The next question is from Jake <unk> with William Blair. Please go ahead.

Jake <unk>: Hi, Thanks for taking the question just in terms of the thousands of paying customers you know then.

Kelly I: Graham.

Speaker Change #126: Those largely existing customers that youre seeing upgrade to premium solutions are the new capability also starting to expand the top of funnel and drive some incremental new logo activity to you.

Speaker Change #122: And then in the new AI workload adoption is also involved in so how do these initial kind of programs.

Speaker Change #123: Data are kind of informing your internal models in terms of like anything that you can share from a financial standpoint.

Speaker Change #127: Hey, Jake.

Speaker Change #128: Maybe address that Youre seeing both that's the that's the simple answer existing customers. Obviously are the easiest ones to convert but then we're also seeing new customers, especially ones coming in through the.

Speaker Change #124: Does it look like it's still very design phase or things are kind of starting to do more or inflect up.

Speaker Change #125: Sure I think just in the interest of time to keep it brief I'll just recap out that you know we built our guidance prudently considering things that we know we have not modeled in any meaningful upside in our model from a journey I. We expect that we will continue to see some growth because there was some small contribution in fiscal 'twenty four should we expect.

Jake <unk>: The monthly cloud motion and then translating to being paid customer so across the board.

Speaker Change #129: Okay, Great and then just a quick follow up on the price increases often do you push those out to the to the self managed basis and on an annual basis or is this the first price increase that you've done for a few years.

Speaker Change #126: You'll see some contribution in 'twenty five as well, but it's not a significant amount of modeling and we're also not modeling in any meaningful upside from server list, which obviously happens much later this fiscal year in terms of its general availability.

Jake <unk>: It's the first one in a few years' Jake we don't do it on an annual basis, we generally price.

Jake <unk>: Price changes to value that we deliver and so when we have significant shifts from the standpoint of value added to the to the subscription tiers. That's when we'll go in and adjust our prices because that's when customers see the value in what they've been getting and it's a much easier conversation at that point. So this is not a standard annual practice for us.

Todd Kelly: And so that's been the approach we've taken.

Speaker Change #127: Got it thanks a lot.

Speaker Change #128: The next question is from Jake ROE Bearish with William Blair. Please go ahead.

Speaker Change #129: Hey, Thanks for taking the question just in terms of the thousands of paying customers you know them as well.

Speaker Change #130: Are those largely existing customers that you are seeing upgrade that premium solutions are the new capability also starting to expand the top of funnel and drive some incremental new logo activity to you.

Speaker Change #130: This concludes our question and answer session I would like to turn the conference back over to Ash Kulkarni for any closing remarks.

Jake <unk>: Alright.

Ash Kulkarni: Thank you all very much for joining our call today, we had a great fiscal 2024.

Speaker Change #131: Hey, Jake.

Jake: Maybe address that you're seeing both that's the that's the simple answer existing customers. Obviously are the easiest wants to convert but then we're also seeing new customers, especially ones coming in through.

Ash Kulkarni: I'm really proud of how the team executed continuing to bring exciting innovations and providing value to our customers.

Ash Kulkarni: Excited.

Ash Kulkarni: Thank you and have a great rest of the evening.

Speaker Change #131: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Todd Kelly: The monthly cloud motion and then translating to a being paid customers so across the board.

Speaker Change #133: Okay, Great and then just a quick follow up on the price increases how often do you push those out to the to the self managed base. It on an annual basis or is this the first price increase that you've done for a few years.

Jake: It's the first one in a few years' Jake we don't do it on an annual basis, we generally price changes to value that we deliver and so when we have significant shifts from the standpoint of value added to the to the subscription tiers. That's when we'll go in and adjust our prices because that's when customers see the value in what they are.

Todd Kelly: Been getting and it's a much easier conversation at that point. So this is not a standard annual practice for us.

Speaker Change #134: This concludes our question and answer session I would like to turn the conference back over to Ash Kulkarni for any closing remarks.

Todd Kelly: Alright.

Thank you all very much for joining our call today, we had a great fiscal 2024, and I'm really proud of how the team executed continuing to bring exciting innovations and providing value to our customers.

Todd Kelly: We're excited.

Todd Kelly: Thank you and have a great rest of the evening.

Speaker Change #135: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Todd Kelly: [music].