Q4 2025 Elastic NV Earnings Call
Good afternoon, and welcome to the elastic N V fourth quarter fiscal 'twenty twenty-five earnings results conference call.
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Speaker Change: I would now like to turn the conference over to Anthony Law Scree, Vice President of Investor Relations. Please go ahead.
Speaker Change: Thank you good afternoon, and thank you for joining us on today's conference call to discuss the last six fourth quarter fiscal 'twenty twenty-five financial results on the call. We had ash Kulkarni, Chief Executive Officer, Nobama Lando, Chief Financial Officer. Following their prepared remarks, we will take questions. Our press release was issued today after the close of market and is posted on our.
Speaker Change: The website slides, which are supplemental to the call can also be found on the elastic investor Relations website at IR does elastic does C L.
Speaker Change: Our discussion will include forward looking statements, which may include predictions estimates or expectations regarding the demand of our products and solutions and our future revenue and other information. 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 a river.
Speaker Change: These forward looking statements unless required by law. Please.
Speaker Change: Please refer to the risks and uncertainties include 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 will 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.
Speaker Change: Unless specifically noted otherwise all results in comparisons are on a fiscal year over year basis.
Speaker Change: Webcast replay of this call will be available on our company website under the Investor Relations link our first quarter fiscal 'twenty 'twenty six quiet period begins at the close of business on July 17th we will be participating in the bank of America Technology Conference on June 5th and the Rosenblatt Virtual AI Conference on June 11th also elastic will host a financial analyst day in combination with our New York City.
Ash Kulkarni: Elastic on October 9th and we hope many of you will join US there in person with that I'll turn it over to ash.
Ash Kulkarni: Thank you Anthony and good afternoon, everyone and welcome to our Q4 earnings call.
Ash Kulkarni: Elastic achieved a strong quarter, culminating in a solid finish to this fiscal year building on our momentum we delivered strong growth fueled by our sales execution and the persistent demand for our solutions and our innovation velocity thrived.
Ash Kulkarni: Our guidance across all revenue and profitability metrics, demonstrating our platform strength and the extraordinary efforts of our team in.
Ash Kulkarni: In Q4 revenue grew 16% elastic cloud revenue grew 22% and we delivered a non-GAAP operating margin of 15%.
Ash Kulkarni: We ended FY 'twenty, five but more than 1510 customers spending over 100000.
Ash Kulkarni: Q4 was a great quarter, and a great close to a pivotal year and driving customer adoption of the elastic such a platform.
Ash Kulkarni: In Q4, we continued to benefit from a sales strategy of landing and expanding enterprise and high potential mid market customers. We ended the fiscal year with more than 200, and then customers over a million dollars and committed annual contract value representing more additions to the school hearts than ever before.
Ash Kulkarni: The sales segmentation changes to be implemented at the start of the fiscal year have started to pay off.
Ash Kulkarni: We saw progress in enterprise and commercial accounts and significant breakthroughs in our strategic segment, where we are helping our largest customers leveraging technology for consolidation and generative AI application development for.
Ash Kulkarni: For example, we closed an eight figure expansion deal this quarter with a global financial institution for elastic absurdity displacing a competitor.
Ash Kulkarni: With a real time alerting and monitoring features we addressed critical feature gaps for the customer giving them deeper insights into system performance. This deal also led to an expansion of elastic search for Jennie O applications as part of an internal efficiency initiative positioning elastic as a strategic partner in their journey a journey.
Ash Kulkarni: Jenny and consolidation remain powerful drivers accelerating our momentum and influencing customers and prospects to choose elastic for their search observable at insecurity needs.
Ash Kulkarni: Now more than ever before enterprises are scrutinizing their solution investments as they look to control costs and prioritize expenditures that drive productivity and auto I add scale.
Ash Kulkarni: Leveraging AI to automate business processes and drive innovation and efficiency is a big priority for customers. We provide mission critical technology able to flex the data complexities and accommodate diverse use cases for every industry.
Ash Kulkarni: We continue to strengthen our position as the platform of choice for customers building Jenny I applications as our pace of innovation drive superior performance scalability and ease of use enterprises remain committed to Jennie O investments as a key business strategy.
Ash Kulkarni: We continued our strong generic momentum in Q4 no.
Ash Kulkarni: Now over 2000, and elastic cloud customers are using elastic for Jennie O use cases with over 300 in 10 of these customers spending 100000 or more annually.
Ash Kulkarni: Our customers with over a million dollars in committed a C V more than 25% are utilizing elastic for Jennie O initiatives.
Ash Kulkarni: But of course, I say FY 'twenty five we saw customers progress from Jenny I application ideation to implementation as.
Ash Kulkarni: As Jennie O evolves, the importance of relevance and context increases.
Ash Kulkarni: Criteria very elastic search leads as the industry's most used vector database.
Ash Kulkarni: This drove continued strength in our overall search business in Q4, and all of FY 'twenty five.
Ash Kulkarni: We recently announced the general availability of our better binary quantization or BB Q technology.
Ash Kulkarni: Entering technology that compresses vectors for lightning fast retrieval.
Ash Kulkarni: Since its debut we have improved its performance and accuracy now achieving even more relevant skins, making it appealing for enterprise customers with large scale production workflows.
Ash Kulkarni: Elastic such as the first and only Victor database with this quantization technique on the market.
Ash Kulkarni: This feature has helped US upgrade in international Defense Agency from a free version of elastic search in a seven figure deal to leverage our vector database.
Ash Kulkarni: They required a solution capable of ingesting diverse data types for their intelligence applications.
Ash Kulkarni: We're able to handle immensely the volumes without sacrificing performance or accuracy.
Ash Kulkarni: <unk> is a solution for their needs.
Ash Kulkarni: In Q4, we continued to drive consolidation onto our search AD platform is a core value proposition is built on our industry, leading innovation and a very attractive cost to value ratio.
Ash Kulkarni: For instance, we secured a multiyear seven figure expansion deal with a leading international banking group and 50 plus global markets.
Ash Kulkarni: Last week was selected as one of the key platforms in their centralized observed at east strategy spanning across all business units.
Ash Kulkarni: This move supported a broader technology initiatives aimed at consolidating multiple monitoring an absurdity tools into a streamlined ecosystem as well.
Ash Kulkarni: Part of the expansion the customer upgraded to an enterprise license to cost effectively manage that environment with features such as the frozen tier AI assistant and synthetic source for logs D B indices.
Ash Kulkarni: They also recently deployed our AI assistant, which is already demonstrated value by identifying anomalies in retail banking data.
Ash Kulkarni: Globally, our business performed well overall, though we saw some pressure in the U S public sector, but agency space constraints.
Ash Kulkarni: Our team executed effectively and our compelling value to cost proposition was key to driving traction with these customers with features like large ZB and frozen tier storage motivating them to move more workloads to elastic.
Ash Kulkarni: We are utilizing this focus on efficiency as a catalyst as the U S administration seeks to transform processes and drive efficiency area is very elastic truly excess.
Ash Kulkarni: Looking to FY 'twenty six we are projecting continued growth and strong margins as we continue to drive leverage across the business, Nevada will dig more into what assumptions here momentarily.
Ash Kulkarni: While we acknowledge that there is potential uncertainty amidst evolving macro conditions, our pipeline remains healthy.
Ash Kulkarni: Our business model also incentivize customers to move more data to elastic by offering competitive pricing and features to optimize infrastructure usage, thus, enabling them to do more and realize the full potential of unlimited data on one unified platform.
Ash Kulkarni: Finally, as we continue to innovate and develop highly differentiated solutions with features that effortlessly migrate customers to elastic we are generating significant forward sales opportunities from competitive displacements insecurity and absurdity.
Ash Kulkarni: Meeting customers, where they are the friendships elastic in the marketplace with the flexibility of our solutions, we unlock new opportunities across every industry and vertical offering architecture able to accommodate both cloud and self managed environments.
Ash Kulkarni: Last quarter, our cloud business eclipsed 50% of our subscription revenue and growth remained strong in Q4.
Ash Kulkarni: Cloud, we are seeing significant adoption of AI and it continues to be a favorite choice for customers looking to eliminate operational burden.
Ash Kulkarni: We've also been seeing strong traction in our self managed business, we announced an integration with the new Nvidia AI factory for elastic search to be a recommended vector database for enterprises to build and deploy applications on their own infrastructure.
Ash Kulkarni: We will also cause it to build a plug in to accelerate vector indexing and search using nvidia could be S. On top of Nvidia Gpus and Cpus. This will allow the Nvidia and elastic to bring all enterprise data to AI at blazing speeds for customers looking to build AI native applications, we will continue to deliver.
Ash Kulkarni: Innovative capabilities to both cloud and self managed architectures for our customers in FY 'twenty six.
Ash Kulkarni: Security is a prime area, where we see customers from every vertical industry in G O putting our AI features into use so that their security deems realize the benefits of advanced threat detection investigation and response that discovery is now generally available to customers, notably the improved the technologies.
Ash Kulkarni: You can see since launching in technical preview.
Ash Kulkarni: You have better line of attack discovery to our customers' use cases, reducing hallucinations and improving the overall customer experience.
Ash Kulkarni: Customer interest for our AI assistant grows but active users growing steadily over the course of FY 'twenty five.
Ash Kulkarni: We predicted the journey I advancements would fundamentally change the security landscape and our solutions are at the forefront of this transformation.
Ash Kulkarni: Q4, Siemens a global technology company with over 1300, cyber security experts protecting more than 120 factories worldwide has enhanced its comprehensive defense in depth strategy by incorporating elastic siem platform into their global Cyber Defense Center services.
Ash Kulkarni: Siemens chose elastic for its integration flexibility and AI related capabilities for a multi year collaboration.
Ash Kulkarni: During a slide 25, we consistently delivered new capabilities and improved product features further differentiating elastic and such absurdity in security during.
Ash Kulkarni: During the fourth quarter, we continued to make progress with elastic cloud service now in general availability on AWS and Google Cloud.
Ash Kulkarni: As a fully managed offering several it allows customers to quickly launch and scale, giving them flexibility to manage workloads without managing the underlying infrastructure.
Ash Kulkarni: And one expansion deals from the quarter, a leading cloud based content and productivity platform selected elastic to deliver mission critical search capabilities and consolidate their security tools to.
Ash Kulkarni: To achieve operational efficiency accelerate their go to market and reduce costs with a scalable solution the customer opted for elastic cloud server list further enabling their modernization initiatives.
Ash Kulkarni: <unk> emerged as the preferred choice against key competitors.
Ash Kulkarni: With silver lists and our Jennie O features specifically AI assistant and attack discovery differentiating us from the other vendors.
Ash Kulkarni: We believe that our service offering will benefit elastic cloud revenue over the long term and early customer adoption is tracking to our expectations.
Ash Kulkarni: In the area of security, we released a new Sim migration to automatic migration.
Ash Kulkarni: Similar to automatic import, which streamlines user migration to AI, driven security analytics, and Expedites SEC ops workflows with automatic migration customers can transfer detection routes from legacy providers onto elastic lowering the barrier to entry and helping us win new enterprise customers.
Ash Kulkarni: Informed by our belief that bringing workflow automation features will strengthen all of our solution areas. We acquired keep an open source leader in AI ops, a platform that unifies alert behind a single pane of glass and provides workflow automation capabilities for incident remediation.
Ash Kulkarni: We are delighted to join forces with the keep team to drive innovation across our search ad platform.
Ash Kulkarni: This quarter, we celebrated some significant wins and initiatives with our partners for years, we have invested in partnerships prioritizing hyperscale is through technical integrations.
Ash Kulkarni: And they continue to drive new business at elastic.
Ash Kulkarni: Earlier this week, we announced a new five year strategic collaboration agreement with AWS, which deepens our partnership through solution integrations joint go to market and marketing initiatives ultimately simplifying elastic adoption on the AWS marketplace.
Ash Kulkarni: Working together, we believe our collaboration will accelerate AI innovation as the integrations will make it easier for customers to build the Jennie O applications with elastic on AWS.
Ash Kulkarni: Our partnership with Google grows stronger too.
Ash Kulkarni: Google Cloud next we announced that elastic search is the first third party native grounding engine on Google clouds vertex AI platform and Google's Gemini models now our giant customers can seamlessly build Jenny I experiences grounded in their enterprise data powered by elastic search AI capabilities as Bruce.
Ash Kulkarni: With our continued partnership with Google, We want to Google Cloud partner of the year Awards and the AI category at Google Cloud next.
Ash Kulkarni: I'm delighted to see our partnerships driving as they are key to helping us market and deliver our products globally.
Ash Kulkarni: On the go to market front, we recently that our annual sales kick off meeting I spend an incredibly productive week with the team.
Ash Kulkarni: We believe our value proposition has never been clearer to customers and prospects with their FY 'twenty five sales segmentation changes validated by our recent financial performance, we're not bringing any major changes to our sales strategy. This year.
Ash Kulkarni: We enter FY 'twenty, six, but our team fully energized and ready to keep driving our momentum forward.
Ash Kulkarni: We're motivated and ready to win.
Ash Kulkarni: To close I'm deeply proud of what our team has achieved this fiscal year and our exceptional performance this quarter.
Ash Kulkarni: The continuous innovation in our search AD platform, the accelerating adoption of generative AI and the growing trend of customer consolidation all reinforces my confidence in the elastic <unk> future and our ability to create a generational company. Thank you to our employees for their hard work and dedication as well as to our customers partners and investors.
Ash Kulkarni: For their continued support and trust.
Speaker Change: I'll turn it over to none of them to review our financial results in more detail.
Speaker Change: Thank you ash echoing ashes comments I would like to thank our team for their hard work in fiscal year 2025, delivering strong Q4 results across all areas of the business I am delighted to join elastic at this pivotal time, the company's leadership in Jan AI and our business momentum both reflected in our Q4 print where key raw.
Ash Kulkarni: And it's why I came on board, we finished the year strong and outperformed against the high end of both our revenue and profitability guidance.
Ash Kulkarni: So let's get to the numbers.
Ash Kulkarni: Our total revenue in the fourth quarter was 388 million growing 16% on an as reported and constant currency basis.
Ash Kulkarni: Subscription revenue in the fourth quarter totaled 362 million growing 16% as reported and 17% in constant currency.
Ash Kulkarni: The elastic cloud, which sits within subscription revenue grew 23% on an as reported basis and constant currency basis.
Ash Kulkarni: As we mentioned last quarter Q4 has three fewer days than the other quarters, creating a sequential headwind.
Ash Kulkarni: We also faced a less straightforward year over year comparison, as we lapped a leap year still revenue remained strong across the business bolstered by strong customer commitments and ongoing tailwind from Gen. AI, we had a solid quarter in our self managed business and we achieved significant wins across both our cloud and sell.
Ash Kulkarni: Managed environments. This go to market progress is a direct outcome of the sales strategy, we put in place at the start of the fiscal year.
Ash Kulkarni: You can measure revenue from our sales led motion by excluding monthly cloud revenue from subscription revenue.
Ash Kulkarni: Subscription revenue, excluding monthly cloud was 315 million growing 19% in Q4 as reported and in constant currency.
Ash Kulkarni: For fiscal year 2025 subscription revenue excluding monthly cloud was 1.1 95 billion growing 20% as reported and 21% in constant currency.
Ash Kulkarni: This momentum is a positive sign of our go to market success, and we expect to disclose our progress on this metric quarterly as we believe it best captures the results of our sales team, whose focus is on securing commitments from our enterprise and high potential mid market customers.
Ash Kulkarni: Additionally, our current remaining performance obligations or C. R. P. O in Q4, which is the portion of our appeal that we expect to recognize as revenue within the next 12 months was approximately 1 billion and grew 18% year over year and 17% in constant currency to support. This further we saw a strong growth, particularly among our largest.
Ash Kulkarni: <unk>.
Ash Kulkarni: Customers with more than 1 million in annual contract value grew approximately 27%, where we added approximately 45 net new customers this year and our customers with more than 100 K in annual contract value grew approximately 14% this year, where we added approximately 180 net new customers.
Ash Kulkarni: We saw strong field execution across all geographies were a P. J grew the fastest followed by EMEA and the Americas.
Ash Kulkarni: We saw some pressure in the U S public sector, which caused sales cycle longer <unk>, specifically in the federal civilian side of our business as agencies faced personnel and budget constraints.
Ash Kulkarni: Even though we saw an impact in the quarter given the strategic importance of our solutions to the agencies, we serve and our compelling value for cost proposition. We believe our solutions are well aligned with the efficiency focus in Washington.
Ash Kulkarni: Turning to Q4 margins and profitability I will discuss all measures on a non-GAAP basis.
Ash Kulkarni: We delivered a strong gross margin in Q4, representing 77% of revenue and a solid operating margin of 15%.
Ash Kulkarni: For the fiscal year, we delivered approximately 400 basis points of operating margin improvement to end the year at 15%. This was a result of our concentrated discipline to deliver profitable growth.
Ash Kulkarni: Our business has achieved a scale that allows us to maintain a strong and consistent free cash flow generation as we continue our operational discipline. We grew our adjusted free cash flow margin by approximately 600 basis points in fiscal year 'twenty five to end the year with 19% adjusted free cash flow margin.
Ash Kulkarni: We are actively focused on this metric and believe we have the potential to maintain and expand on this strong free cash flow margin percentage over the long term.
Ash Kulkarni: Looking ahead to fiscal year 2026, I would like to lay out several assumptions that relate to how we model the business before going into guidance.
Ash Kulkarni: First historically, our sales led bookings ramp throughout the year with the second half bookings greater than the first half. This is a typical pattern within that enterprise sales force and we expect this pattern to continue.
Ash Kulkarni: Second as our cloud business has been getting bigger we've seen modest seasonal revenue patterns emerge and for the last couple of years. Once we normalize for the number of days in the quarter, we've seen slower sequential cloud growth in our fiscal Q1 period with more ramp typically occurring in fiscal Q2 and Q3 in.
Ash Kulkarni: Conjunction with the back half of the calendar year.
Ash Kulkarni: Now onto guidance.
Ash Kulkarni: We are in a very dynamic macro environment and as such we are approaching our guidance with prudence.
Ash Kulkarni: Though we did not see macro impacts beyond the U S public sector in Q4, we extrapolated constraints that we saw in the U S public sector to potentially extend to our broader business.
Ash Kulkarni: This is the largest factor affecting our revenue guidance range.
Ash Kulkarni: The lower end of our guidance range also assumes we see headwinds to consumption from Q2 to Q4, though we did not see them in Q4 of FY 'twenty five.
Ash Kulkarni: We believe we have adequately derisked, our revenue guidance with the conservatism largely reflecting the external uncertainty of the full fiscal year.
Ash Kulkarni: We expect to continue delivering year over year margin improvements in fiscal year 2026, though the rate of improvement may moderate if we prioritize investment to support higher topline growth.
Ash Kulkarni: If revenue trends are more modest we expect to outperform our non-GAAP operating margin guidance and should growth exceed our expectations, we will adjust our investments accordingly to capture any upside while maintaining a balance between growth and profitability.
Ash Kulkarni: So we do not formally guide to adjusted free cash flow, we expect to sustain the fiscal year 2025 level of adjusted free cash flow margins in fiscal 2026.
Ash Kulkarni: With these assumptions in mind.
Ash Kulkarni: For the first quarter of fiscal year 2026.
Ash Kulkarni: We expect total revenue in the range of 396 million to $398 million, representing 14% year over year growth at the midpoint or 13% year over year constant currency growth at the midpoint.
Ash Kulkarni: We expect non-GAAP operating margin for the first quarter of fiscal 'twenty six to be approximately 11, 5%.
Ash Kulkarni: We expect non-GAAP diluted earnings per share in the range of 41 to 43.
Ash Kulkarni: Using between $107 5 million and $108 5 million diluted weighted average ordinary shares outstanding.
Ash Kulkarni: For fiscal year 'twenty six we expect total revenue in the range of 1.655 billion to $1 six 7 billion.
Ash Kulkarni: Representing 12% year over year growth at the midpoint or 11% year over year constant currency growth at the midpoint.
Ash Kulkarni: We expect non-GAAP operating margin for the full fiscal 'twenty to be approximately 16%.
Ash Kulkarni: We expect non-GAAP diluted earnings per share in the range of $2.24 to $2.32 using between $109 million and 111 million diluted weighted average ordinary shares outstanding.
Ash Kulkarni: In summary, while we have taken a measured approach to guidance there are multiple paths to meeting and exceeding the top end of our guidance, we are committed to maintaining and expanding upon our success and are aiming to build a generational company and sustain profitable growth at scale.
Ash Kulkarni: We will continue to provide updates as we move through the year and look forward to hosting an analyst day on October 9th in New York City, where we will showcase the power of elastic search AI platform and the business opportunity ahead.
Ash Kulkarni: And with that.
Ash Kulkarni: Let's go ahead and take questions operator.
Speaker Change: We will now begin the question and answer session.
Ash Kulkarni: To ask a question you May press Star then one on your telephone keypad.
Ash Kulkarni: If you were using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Pendulum Bora: Our first question today is from pendulum Bora with J P. Morgan. Please go ahead.
Pendulum Bora: Oh, great. Thanks for taking the questions.
Speaker Change: No problem.
Speaker Change: Just on the guidance.
Speaker Change: Trying to trying to kind of.
Speaker Change: What are you seeing.
Speaker Change: But it seems very conservative so I wanted to ask you one.
Speaker Change: Would you say, it's incrementally more conservative than how elastic has guided in the past and to students.
Speaker Change: Since.
Speaker Change: The feed I would ask you when I look across the metrics see IPO grew 17% I think you said in constant currency billings grew 16% I think that's USD I don't know come from guaranteed effort revenues into 'twenty. So from your perspective, what do you think is kind of the better leading indicator of the biz.
Speaker Change: At this point.
Speaker Change: Hey, pendulum. Thanks, Chad Thanks for the question so.
Speaker Change: Look we came off a very good Q4, despite pressure from the U S public sector. Our sales led motion is going well and given the pipeline and demand signals. We're seeing we feel good about the Q1 guide right.
Speaker Change: There's no doubt we're in a very dynamic macro environment, but I am new to the business and I need to be prudent about the first guide so what I've done is our balanced the positive demand signals that we're seeing now the positive demand signals and the positive pipeline that we're seeing now with broadly macro.
Speaker Change: Uncertainty and I think I've been clear on the assumptions that I've made on what's what's influencing those those guidance numbers that I provided meaning beyond what we're seeing we're extrapolating the U S public sector.
Speaker Change: Pressure to the entire business and I'm, assuming more consumption headwinds in Q2 through Q4, even though we haven't seen macro consumption headwinds in Q4, So you know I'm I'm.
Speaker Change: Not entirely sure I.
Speaker Change: I can calibrate myself to elastic into prior quarters, but I think what I'm attempting to do is to give you clarity on what I'm, putting into the guidance and all things considered we've taken a very measured approach and like I said, there are multiple paths on exceeding and meeting and exceeding that that top end, especially if if am.
Speaker Change: Macro doesn't play out.
Speaker Change: The way we modeled so what have what I wanted to do and what I've done in my prepared remarks is tell you exactly what's what's in that guidance number that I provided.
Speaker Change: On the CRP Oh look at you know I I think I spoke to you is what I spoke to a number of analysts and investors and and I heard loud and clear that there was incremental metrics that they would like to hear on the health of the business and I think Theres. A couple that are very useful for you to consider first being the subscription revenue less monthly cloud number that I provided in the other one is.
Speaker Change: Is that C. R. P O as you mentioned I think both of these are supplemental measures you have to look at them in conjunction with the revenue number and I'm trying to be more open on disclosing these items for you to consider and so the best measure of how our business doing is doing continues to be revenue the bed.
Speaker Change: Measure of how our sales team is doing is subscription subscription revenue last monthly cloud and C. R. P. O is a useful metric as well and it's and it's showing the positive momentum we're seeing specifically on the special on the subscription revenue less monthly cloud number and how much we have in terms of coverage for that number from a forward basis.
Speaker Change: So overall, you know where we're going to give you continued visibility into how the revenue numbers going through guidance, but both of these metrics are going to be useful for you to consider as well.
Speaker Change: And just to net it out pendulum you know just the strength that we saw in the business in Q4, the visibility that we have into the pipeline in Q1, just makes us feel really good about the business overall.
Speaker Change: And what you're seeing reflected in the guide is really the conservatism around the fact that we are guiding for the next 12 months and given the dynamic nature of the external environment. We just wanted to take that into account.
Speaker Change: Yep understood one quick follow up there.
Speaker Change: There has been a slew of a partnership.
Speaker Change: Kind of news news releases from elastic I think most oh, well most recently as our strategic partnership with AWS had also seen you know kind of the default vector Serge on I think the Microsoft Atlantic Tunnel, and then obviously the Nvidia AI, maybe don't talk about some of these partnerships.
Speaker Change: Do we think about the opportunity unlock given by default and relationships and specifically on kind of the go to market portion of it with AWS.
Speaker Change: Yeah, I think the best way to describe it would be that we are seeing.
Speaker Change: A real change in the market, where you know we are being accepted as one of the most appropriate and favored Victor databases out there right. So you know when you think about it from the perspective of the Hyperscale as you know we are working very well with them to become.
Speaker Change: Sort of the top of the third party services that they provide in terms of vector database. They all have their own vector database functionality, but when you look beyond their own you know if you want to be number one and all of these relationships that we are forming it's all sort of indicating that we are getting that pole position.
Speaker Change: Now the relationship with Nvidia like that's you know fundamentally that's beyond just the cloud right because what they're trying to do is also to make sure that they can take these are AI factory. These blueprints to their enterprise customers, where these customers wanted to deploy AI solutions agents within their own data center within their own environment.
Speaker Change: Because often that data is one that they don't want to put in an extended and amendments and we want to be everywhere, we want to be in all of these places and from a go to market perspective, you know as as you've heard from us in the past the marketplace all three marketplaces or the three Hyperscale are amazing places for us to conduct.
Speaker Change: Business customers are able to use their ETP commitments to purchase elastic cloud through those marketplaces, and we work very actively with these hyperscale or partners for incentive programs and so on to work together to get customers to move to the cloud where the customer is trying to move to the cloud and adopt.
Speaker Change: Stick cloud as their solution, whether it's Virginia are observable at your security. So these are very important partnerships for us and you're seeing the momentum continue to grow.
Speaker Change: Thank you very much.
Sanjay Singh: The next question is from Sanjay Singh with Morgan Stanley. Please go ahead.
Sanjay Singh: Thank you for taking the question.
Speaker Change: And overall question to ask on the state of where people have mentioned generation. There's a debate in industry wide. There Raj is going to have pretty durable.
Speaker Change: Uh huh.
Speaker Change: Arms, a and access.
Speaker Change: What's your latest thinking on customers adopting rag architectures and elastic sort of.
Speaker Change: With an overall.
Speaker Change: Yeah, what we are seeing some gpus that are right is being acknowledged as the the solution that always makes sense.
Speaker Change: Perspective, you know your your data and your environment, a new use case unless your data is absolutely static. The reality is that enterprise data is constantly changing enterprise data is significant in size and so it's impractical to assume that you're ever going to be able to take language model of any kind of larger midsize and train it entirely on.
Speaker Change: Our data, which means that effectively you need some way to provide in real time context or grounding to the large language model from your data and that's right. That's right rag, whether you're building conversation elapsed. So whether you are building agents and automating entire workflows retrieval is.
Speaker Change: <unk> critical and that's where we're seeing this adoption of vector database and all of these use cases, and so I think it's here to stay we feel very confident we feel that it's going to be something that benefits us both in the cloud and in a self managed business.
Speaker Change: And you know we are we are starting to see the adoption really go into right direction for us I'm I'm really excited about this.
Speaker Change: I appreciate the response Ash and then on the on the soft performance. This quarter. The sequential dollar adds were definitely smaller than they were last year. If you wanted just chalk that up to that sort of leap year impact or what did you see any sort of.
Speaker Change: Consumption hesitation.
Speaker Change: In the quarter I imagine the public sector weakness wouldn't necessarily factor into that at 10 o'clock. So I just wanted to get make sure I understand the sequential growth in cloud correctly got it. Thanks for the question Sanjay its a good question. So look the fourth quarter total revenue. We did we did a really good job, it's a solid bookings quarter and we had a really good self managed bookings quarter.
Speaker Change: In Q4 as well.
Speaker Change: So on the on the performance on the bookings. It was it was very strong we're biased towards cloud obviously on the on the revenue growth side, but if you dig into the cloud revenue number a little bit more you you exactly hit the nail on the head there is a leap year impact year over year, but specifically to the quarter. This is the one quarter with three fewer days than the other quarters.
Speaker Change: So Q4 has three fewer days than Q1, two and three and that that is a that is a consumption headwind as you think about the daily consumption rate. So when you think about the sequential adds you really have to normalize for the number of days and when you normalize for the number of days you know that the cloud growth rate is in the mid Twenty's end and quite.
Speaker Change: <unk>. So we're we're we're happy about the cloud performance in Q4, and just Didnt note I mentioned in my prepared remarks as well.
Speaker Change: The cloud numbers getting better bigger so there are some seasonal patterns that are emerging now. These are patterns. We're seeing now it may change, but the current pattern is that Q1 tends to be a lower sequential growth.
Speaker Change: Quarter, because people are consuming what they bought in the back half of the year Q2, and three are higher in terms of sequential growth in Q4 as variable compared to Q3 and that's essentially what.
Speaker Change: What we saw in the business with with cloud.
Speaker Change: Thanks, Hello, Thanks, Tom I appreciate the responses.
Speaker Change: The next question is from Matt Hedberg with RBC capital markets. Please go ahead.
Aaron: Hey, guys. This is Aaron on for.
Speaker Change: Thanks for taking my question and congrats on a solid finish to the year.
Aaron: Just thinking about this past fiscal year, you've made some pretty big changes on the go to market side as we think about fiscal year 'twenty.
Aaron: Is the majority of the heavy lifting of these large transformation changes done.
Aaron: Can you just talk a bit about the next steps here and speak one this strategy that continue to resonate with enterprise customers.
Aaron: Yeah. Thank you for the question. So in terms of the territory changes that we made at the beginning of last fiscal year.
Aaron: Look not only have those fully settled but they are really starting to pay off in a meaningful way you know one of the data points that both my mom and I shared was the fact that we grew our million dollar co hard more than we ever have in the past 45 net new adds in that particular category we are seeing.
Speaker Change: Real meaningful expansion in our strategic accounts, that's where the largest tier of our customer base.
Speaker Change: High propensity of mid market customer base, and our enterprise customer base. So all of that focus that we drove through that that territory change last year.
Speaker Change: Is really helping its paying off so at this point as we go into FY 'twenty six we're not planning to make any changes like I called out in my prepared remarks.
Speaker Change: There are a couple of small things that I did want to call out. One is that you know we have been continuing to hire sales capacity and that's going to continue because we see the growth opportunity ahead of us. So you know.
Speaker Change: We will keep doing that and every time you bring on new sales reps are there are some minor changes that you always make to make sure that there is sufficient coverage and appropriate coverage across all all accounts, but that's very common that's something that's you know typical across every enterprise company and the second thing that I'll call out is that.
Speaker Change: This year. This is something that's new we are incrementally adding securities.
Speaker Change: Security sales specialists and it's a small team but this is a team that is going to act as overlays to help our broader field organization captured an even bigger share of the security platform consolidation opportunity that we see ahead of us and I'm personally very excited about that you know traditionally we've had a.
Speaker Change: Security technical specialists team last.
Speaker Change: Last year, we added a technical journey I specialist team and now this is a security specialist sales team and with all of this what we're really trying to do is double down on that motion of our sales led go to market being all about our enterprise and mid market high potential customer.
Speaker Change: And driving our SMB purely through the self service motion of monthly cloud. So very excited about that and we're going to continue on this.
Speaker Change: Great. Thank you that's very helpful. And then just one follow up could you.
Speaker Change: Oh, Jenny I and your positioning in fiscal 'twenty stacks in housing with like.
Speaker Change: Factory throughout the year, and then just more broadly touching on the Opex.
Speaker Change: Okay.
Speaker Change: Oh I'm sorry.
Speaker Change: Yeah. So we are seeing customers sort of progress along the continuum of first to you know they were they were going from a.
Speaker Change: Just lexical or tech space search to semantic search we've seen them go from there to conversational building conversational apps using rag and now we're seeing them building agenda workflows using you know module context protocol at M. C. P. R agent to agent interactions.
Speaker Change: This is an attempt to what they're trying to automate the entire workflows using AI in all of these what is critical is retrieval being able to connect that large language model to the just the right internal data in real time, and that's where accuracy matters speech.
Speaker Change: Feed and scale matter.
Speaker Change: And being able to do it in an efficient way really matters and that's what we've been putting our focus on so in terms of efficiency, a we've talked about things like better binary quantization. All we've been doing a lot of work around you know, making things more and more accurate than the algorithms that we have we've provided capabilities like our AI playground.
Speaker Change: Tumor skin, you know as they develop desktop things reduce hallucinations work on getting the most accurate results and speed and scale like that's something that we've always been known for so our mission is to be the vector database of choice in every Jenny I application that gets built.
Speaker Change: And we're just getting started you know if you think about the total addressable opportunity in most enterprise organizations are still in the early part of the journey on things that they're trying to automate using AI. So I think the the path ahead is is really exciting, but we have a long.
Speaker Change: Way to go and that's that's something that you know we're really leaning into.
Speaker Change: Thanks, guys.
Speaker Change: The next question is from Raimo <unk> with Barclays. Please go ahead.
Speaker Change: Perfect. Thank you Christy on that subject please.
Raimo: How do I have to think about the revenue the change in revenue contribution from the different parts.
Speaker Change: Like you know, there's a lot of activity in the field and we see that as well around.
Speaker Change: Victor database and all the stuff that you're doing there how how do you think that will impact where revenue is coming from going forward and then.
Speaker Change: <unk>.
Speaker Change: Second question I had was like on the monthly side, thanks for breaking that out on the extra disclosure there like how should we think about that line going forward when we model. It because it does look like you're deemphasizing it and we just all need to make sure that we have that fully covered intermodal. Thank you.
Speaker Change: Yeah, absolutely yeah, I'll I'll talk about it and that also are asking all of them to maybe being so.
Speaker Change: Maybe I can.
Speaker Change: Touch upon the the monthly cloud stuff first and on the monthly cloud.
Speaker Change: Like I've said that is a self service driven motion. We believe what we've seen is that that's largely U.
Speaker Change: SMB customers that show up there.
Speaker Change: Our goal is to really drive ourselves led motion towards the enterprise and high propensity mid market customer base, and that's where we feel that we are seeing great success that number gives you a real sense of how our sales driven go to market motion is actually working.
Speaker Change: And that's the focus within the company because look for us to become a multibillion dollar company, it's the enterprise and the high potential mid market customers that adoption is going to be what matters. Most that's the reason why we give a data points around 100, K plus customers and so on.
Speaker Change: So that's one part the second part is on the AI piece.
Speaker Change: As you know the way our model works is customers first build us into their applications, where they adopt our platform and we've given you know the the metrics around it just on elastic cloud over 2000 customers I'm using us and we also give metrics on the percentage of our 100 gig cohort that are used.
Speaker Change: That has been using us Virginia.
Speaker Change: That is all about adoption, but then we also have customers that have been making commitments and those commitments have now been translating they've been contributing to revenue. So we've started to see that but like I also said in just the prior question. We're still in the very early days you take any organization you know they're still in a phase.
Speaker Change: Where they have maybe dozens of these AI applications and projects that they're working on you think about the total number of our.
Speaker Change: Enterprise workflows, they're in the thousands so you've got a long ways to go and as that grows as the revenue contribution from AI continues to evolve.
Speaker Change: I would expect that search will become a bigger and bigger part of our business. Because this is expanding the search them, having said that we are seeing a benefit all parts of our business, our AI assistance or things like attack discovery are helping us become much more competitive in our Sim and security analytics product, it's helping us.
Speaker Change: <unk> better adoption of AI ops, and our observed at the product so from that sense I would expect all parts of the business to grow.
Speaker Change: Overtime I would expect that such as it's growing the fastest within our within the business will eventually continue to see more benefit from AI.
Speaker Change: Hi, Raimo, it's never I'll add to that the monthly cloud point that that Ash man made in in 2026, we expect the monthly cloud revenue to be roughly flat. This.
Speaker Change: This quarter it was about 12% of the total.
Speaker Change: Thank you.
Speaker Change: The next question is from Tyler Radke with Citi. Please go ahead.
Speaker Change: Hey, good afternoon. Thanks for taking my question wanted to ask you about the AI commitments I think you talked about the 100 K additions.
Speaker Change: Additions there, but wanted to double click on the million dollar commitments and just clarify the disclosure that you gave around the 25% using.
Speaker Change: Using AI is that 25% of your million dollar customers have million dollar commitments or just help us understand a little bit more what you saw on the larger customers for AI commitment and then would just be curious on some of the emerging use cases are you seeing stuff.
Speaker Change: The stuff on the on the <unk> front, what are some of the <unk>.
Speaker Change: Emerging use cases that might be different from prior quarters.
Speaker Change: All right no. Thanks.
Speaker Change: Thanks, Tyler so the metric on the 25% metric that we were talking about that was if you take the total number of million dollar customers that we have a 25% of them are using us for some kind of AI workloads right. So it's the adoption within that high growth propel.
Speaker Change: So the cohort of customers.
Speaker Change: And you know in the past, we've given a similar metric or under 100 K cohort.
Speaker Change: This is also giving you a sense of what it's like in the million dollar cohort.
Speaker Change: Hopefully hopefully that makes sense.
Speaker Change: Yeah, and then the second part around the emerging use cases.
Speaker Change: And in terms of emerging use cases like look what we're seeing is people are now starting because of things like module context protocol.
Speaker Change: Because if you know people sort of getting beyond the ideation to early implementation, we are seeing more and more sophisticated use cases across pretty much every industry and whether this is it's not just around customer support now we're seeing use cases, you know that.
Speaker Change: Involve sales that involve our sales automation that involve marketing automation, we're seeing use cases and in legal ediscovery.
Speaker Change: We're seeing conversational apps that are being built for interactions with partners. So there's a there's a lot of different use cases that we're seeing across the board, but the pattern seems to be that customers have gone.
Speaker Change: It's gotten much more comfortable and are now extending beyond just the the semantic search kind of use cases that we started with maybe about a year and a half ago and are now actually building. These kinds of automated agents to automate parts of their workflow.
Speaker Change: And it's pretty broad it even in public sector. We are seeing it and then obviously you know about our AI assistance and those are continuing to see traction.
Speaker Change: Great.
Speaker Change: On the public sector comments I appreciate all the breakdown moving pieces on the guide to those super helpful. But on the the public sector comments. The Choppiness you saw in the quarter I assume that was all kind of himself manage but where where did you see that show up most would we see that more in billings and in ARPA.
Speaker Change: I imagine there is some.
Speaker Change: In period Rev Rec.
Speaker Change: You saw it just as a result of lower bookings, but any way to sort of dimensionalize it and.
Speaker Change: Quantify the.
Speaker Change: The shortfall that you saw in public sector would be helpful.
Speaker Change: Yeah. Thanks for that so look we saw the pressure in in public sector.
Speaker Change: But it's important to remember that we're a well diversified business with many verticals and public sector is an important one it's one of our top five verticals, but you know the reason we had a strong Q4 was a P. J EMEA and North America performed well and you know because of our diversified business.
Speaker Change: This we were able to still have a strong fourth quarter. Despite the.
Speaker Change: The pressure we saw in the public sector. So I guess, it's very hard to quantify the counterfactual of what would have happened had public sector stayed the same but the point is we're well diversified and we have the ability to make up for one with other sides of the business.
Speaker Change: The other thing I'd also say is Nevada to the point that Nova made we saw some pressure in them you know.
Speaker Change: The federal civilian agencies, but you know our department of defense and other parts of U S. Public sector remains strong also we are seeing continued strength in the public sector business that we do outside of the U S.
Speaker Change: And you know as with everything going on geopolitically that is something that we believe as we continue to drive our business in you know a global markets that that will continue to be a source of strength for us.
Speaker Change: Thank you very much.
Speaker Change: The next question is from Howard MA with Guggenheim Securities. Please go ahead.
Speaker Change: Great. Thank you.
Speaker Change: Given the AI search momentum that Alaska, seeing especially exiting Q3, we were hoping that Q4 cloud growth would've been stable or perhaps even accelerate a little bit and I understand that the leap day adjustments I'm talking on a days adjusted basis, but a downtick a little bit and I was hoping ash or Nevada.
Speaker Change: I feel like both of you can you can you help us understand the components a little bit more than.
Speaker Change: The premises and AI searches pumping on all cylinders and I believe it is.
Speaker Change: The contribution each month higher than the last and if that's the case can you talk a little bit more about the offset I mean, we hit on the the monthly cloud segment a bit right that remains weak, but can you talk you did observe ability and then use cases, perhaps underperformed your expectations little.
Speaker Change: Are there optimization in larger customers or I guess, lesser overconsumption versus recent quarters anything that anything more on that on the mix in the quarter that would be tremendously helpful.
Howard: Howard I think the probably the most important point that I'll make is that.
Howard: It is.
Speaker Change: In our opinion not the right way to think about it to associate AI just with cloud because we are seeing demand for AI workloads on both cloud and our self managed business and if you saw our self managed business did well you know we are seeing customers adopt AI and.
Speaker Change: Adopt a record database not just in the cloud environment, but we are seeing use cases like in yeah. I gave in my prepared remarks. The example of one of our customers a a public sector customer an international public sector customer that chose us for some of that.
Speaker Change: <unk> that we've done in better binary quantization. So that's an example of a customer that is doing something with AI in their own environment in their own data center and so it's important to understand that.
Speaker Change: Is helping us both in cloud and in self managed number one second.
Speaker Change: Says yeah, you look in terms of consumption, we saw very steady consumption, we didn't see any any challenges like like no mom talked about even in his prepared remarks, so but let me let me turn it to Nevada, if he has anything to add to that.
Speaker Change: I'd reinforce ashes point that our expectation is both cloud and self manage continue to be drivers of growth and the metric. We look at is how is your sales team doing against those two metrics and the new disclosure around subscription revenue less monthly cloud 1.1 hundred 95 million growing 20% year over year.
Speaker Change: Around 21% constant currency is meant to reflect that expectation that both those lines growth.
Speaker Change: Great. Thank you and as a quick follow up.
Speaker Change: Let's hit on this but on the U S. Public sector can you help us perhaps quantify the headwind in Q4, and how much you're baking in and how much of the public sector had been that as you are baking into FY 'twenty six guidance. Thank you.
Speaker Change: Yeah, I mean, I'll reiterate that that there's a there's a diversity in our verticals that allows us to not be reliant on a single vertical or a single customer because we have a diversity of customers as well public cloud was the one macro impact we saw in Q4, but the rest of the teams rallied well and the like.
Speaker Change: D E P J M and USPS, sorry, our Americas businesses did well in Q4.
Speaker Change: So there was strength in in one side of the business, we've been prudent in extrapolating a U S public sector pressure into the rest of the year or Q1 through Q4, and like I said beyond the USPS segment into the broader business, which is what informs that the revenue range. We gave you in our guidance. So that's how.
Speaker Change: We've factored in I wouldn't disaggregate it further beyond that it's a holistic view of the impact of macro.
Speaker Change: Should it play out in the ways that we've laid out and how the.
Speaker Change: How the range it would turn out but like I said, you know, we're going to execute on it quarter by quarter. We feel good about the Q1 guide and we've got multiple paths to get to and exceed.
Speaker Change: The guidance.
Speaker Change: Yeah got it. Thank you that's helpful and I appreciate that you're looking at the business on a combined basis. So thanks again.
Kash Rangan: The next question is from Kash Rangan with Goldman Sachs. Please go ahead.
Kash Rangan: Yes, thank you very much.
Speaker Change: Graduations, Nevada I think this is your first call as our CFO for elastic so.
Speaker Change: Welcome to the call and ask sort of a question for you as you wrap up this fiscal year last fiscal year was when we got started with that.
Speaker Change: Experimentation now it seems to be in production mode that is the segmentation of how you go to market, a large enterprise and who's going to pay you that sort of thing. So one year into the new segmentation what are the big takeaways for other things that kind of surprised you and what are the tweaks youre going to be making is that I think we agree that elastic as well.
Speaker Change: Should it be a multibillion dollar generation a company really really cool stuff right from the early days.
Speaker Change: But in order to achieve that vision at some point.
Speaker Change: New revenue or the net new business and net new ACD, all that stuff faster to kind of be up and to the right. We need to start to see some level of acceleration granted that guidance is rightly it should be it's conservative, but not get that vision of a multibillion dollar generation company, we need to start to see some level of acceleration. So as you hoped.
Speaker Change: The learnings from the segmentation as to what your aspirations for elastic.
Speaker Change: Or how do you change go about not not dramatically altering things disrupting necessarily but how are you.
Speaker Change: How do you refine the go to market approach going forward to achieve your potential. Thank you so much.
Speaker Change: Yeah. Thanks, Kash I think the first thing I'll start with this by saying that as never mentioned the right way to look at the business as the way we look at it which is subscription revenue less monthly cloud because subscription the the monthly cloud business that is largely SMB. It correlates very much with SMB when smbs.
Speaker Change: <unk> to really pick up in that segment, you know, we will benefit from it but we're not counting on it what we are really pushing for is our sales that go to market motion, which is all targeted towards the enterprise and hypertension mid market base, and that's where we spend a lot of time and energy as you know at the beginning of <unk>.
Speaker Change: Year to do the territory changes the segment changes.
Speaker Change: And start to create more focus so we are seeing the benefits of that focus being off we are seeing larger deals we are seeing more.
Speaker Change: Interactions with the senior level buyers, we are seeing better platform consolidation opportunities that we are not only participating in but closing in winning and so all of that to me feels like we've got the right motion now now we just need to continue scaling so part of what we've been.
Speaker Change: Working on is adding that sales capacity that we need to continue to move the business in the right direction. Because what you stated is exactly our aspiration to keep building the the growth momentum.
Speaker Change: Then in terms of what we're doing in addition to all of that one of the things that I touched upon earlier is the security specialization look we have an amazing set of capabilities in all of these areas not just in search and Jennie O, but also an observer and security, but in security as we.
Speaker Change: We go higher as we do larger and larger deals you know what we want to do is really double down on their opportunity to capture share from some of the incumbents, but as you know have a have seen some disruption in the market and severe really putting putting more gasoline on that far to see how we can go even faster.
Speaker Change: I'll reiterate like watched that metric about our subscription revenue less monthly cloud I think I've talked about that too to many of you in the past and that's one that we will keep you know sharing more details on as we go.
Speaker Change: Excellent that's one quick one for you.
Speaker Change: As you bring your new mindset into the elastic business model what are the opportunities you see to uncover leverage.
Speaker Change: In your own unique let's thank you so much.
Speaker Change: Yeah, Thanks, Ashley I mean cash sorry.
Speaker Change: Look I think that elastic Asgard ash.
Speaker Change: Cash not exactly.
Speaker Change: I think that elastic is an amazing company and that's one of the main reasons I joined.
Speaker Change: And it's got so much going for it in terms of the the momentum. It has behind you in AI. So I'm I'm really excited to be part of that journey over the next several.
Speaker Change: Several many years actually.
Speaker Change: So in terms of what I can provide to the business is help with more visibility into how the business is going with with the with all of you as the first one and to be a be a partner to ash to invest in the business appropriately to actually gain the gain the share that we deserve in that journey II space and that's why we've been investing appropriately.
Speaker Change: Lee in R&D and in our G. P M motion.
Speaker Change: We have over the past couple of quarters, and we think that that's the right thing to do given the opportunity ahead.
Speaker Change: So that's what I'm gonna be helping ash ash with over the next several quarters.
Speaker Change: By the way I said cash costs cash so we we'd love ash.
Speaker Change: [laughter].
Speaker Change: The next question is from George <unk> with Oppenheimer. Please go ahead.
Speaker Change: Thank you for taking my question.
Speaker Change: Cash.
Speaker Change: You know maybe digging into.
Speaker Change: Well, what do you just kind of alluded to with the security specialist team when Youre looking at your million dollar customers. How many of them are using the entire portfolio and can you kind of compare that to your 100, K customers and how broadly they are exposed to the overall portfolio.
Speaker Change: We haven't broken that out and you know that's one of the things that are never mentioned was the financial Investor day that we're gonna have in October and we'll provide a lot of those details there what I will say, though is that our largest customers typically tend to use us for more than just a single use case.
Speaker Change: Right.
Speaker Change: We have a platform approach where when they purchase elastic we don't we don't have separate skus for observatory or security or search or AI, they're purchasing the platform and when they purchased the platform then they get to use whatever they want to use the in cloud.
Speaker Change: <unk> spend differently for some of these uses but theres a lot of value in being able to put all your data in one environment, and then leverage that data for absurdity or for cyber security or for other purposes, and so that's a very very common pattern.
Speaker Change: But that also means that you know if you if you look at the million dollar count of the 100 K count it's still a fraction of our overall customer base. So the land and expand motion is working very well for us and we just want to keep doubling down on it because that's that's what we see as the opportunity for continued growth.
Speaker Change: Thank you John and Nevada.
Speaker Change: And maybe just.
Speaker Change: Looking at linearity and from April into May I E. I know you talked about generally solid regional trends, but are there any differences with respect to verticals or customer size.
Speaker Change: No not really I mean, our our our verticals are very diversified and I don't think that month over month theres much. There's always puts and takes but in terms of linearity of what happens I don't think there's much difference.
Speaker Change: Between those two months in particular.
Speaker Change: At this point.
Speaker Change: In time, the macro remains what we have seen in Q4 around U S public sector and no real incremental changes on the consumption side or incremental pressure beyond what we've seen in U S public sector.
Speaker Change: Thank you.
Speaker Change: The next question is Brent Thill with Jefferies. Please go ahead.
Brent Thill: Ask just on the sales productivity. When you mentioned there is no changes can you just bring us up to speed on where productivity. Today are you are you happy are they fully at peak capacity.
Speaker Change: And I guess with the you know the age of AI, a sales team that's running closer to peak capacity not making big changes I think most of them thought you'd see a little more healthy backlog and growth.
Speaker Change: But maybe just help reconcile what's happening with productivity here to your pipeline. Thank you.
Speaker Change: Yeah. So in terms of the sales capacity you know the sales teams that we have the productivity that we saw in FY 'twenty five we were very happy with it.
Speaker Change: The changes like I said that we made at the beginning of the year caused us some issues in Q1, but then we started to see the benefits accrue in Q4 was just wonderful to see how you know the output that we got from the team.
Speaker Change: So in terms of productivity and by the way the use of AI views internally, even for our own purposes in terms of how our S. D ours, our sales development reps and even our account executives them use the information that we have about our customers and our prospects with AI to be able to.
Speaker Change: <unk> do better targeting to have better conversations to sort of follow and satisfy our customers better and so you know productivity I believe is something that you know we have always paid attention to it and we will continue to pay attention to them. That's a big focus, but I feel really good about where we are I'll, let no am I I don't know.
Speaker Change: If you have anything to add to that.
Speaker Change: You got it mostly yeah.
Speaker Change: Yeah.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Ash Kulkarni for any closing remarks.
Ash Kulkarni: Well. Thank you all for joining us today as I said I'm extremely proud of what we accomplished in FY 'twenty five and more excited than ever about the opportunity ahead as we build a truly generational company. Thank you all and have a good day.
Ash Kulkarni: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: [music].