Q1 2026 Elastic NV Earnings Call

There will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Please note this event is being recorded.

I would now like to turn the conference over to Eric Frankel Global Vice President of Finance. Please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss <unk> first quarter fiscal 2026 financial results.

My name is Eric Frankel Global Vice President of Finance.

On the call we have asphalt Carney Chief Executive Officer, and <unk> Chief Financial Officer. Following their prepared remarks, we will take questions.

Speaker #1: Good day and welcome to the Elastic Janesh first quarter, fiscal 2026 earnings results conference call. All participants will be in listen-only mode. To join the assistance, please signal a conference specialist by pressing the star key followed by zero.

Eric Prengel: Good day and welcome to the Elastic NV first quarter fiscal 2026 earnings results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Eric Prengel, Global Vice President of Finance. Please go ahead.

Our press release was issued today after market close 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 Dot C O.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on your telephone keypad.

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. 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 <unk>.

Speaker #1: To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Eric Prengel.

Speaker #1: Global Vice President of Finance, please go ahead.

Speaker #2: Good afternoon, and thank you for joining us on today's conference call to discuss Elastic's first quarter fiscal 2026 financial results. My name is Eric Prengel, Global Vice President of Finance.

Eric Prengel: Good afternoon and thank you for joining us on today's conference call to discuss Elastic's first quarter fiscal 2026 financial results. My name is Eric Prengel, Global Vice President of Finance. On the call, we have Ashutosh Kulkarni, Chief Executive Officer, and Navam Welihinda, Chief Financial Officer. Following their prepared remarks, we will take questions. Our press release was issued today after market close 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.elastic.co. Our discussion will include forward-looking statements, which may include predictions, estimates, our expectations regarding the demand for our products and solutions, and our future revenue, and other information.

Results could differ materially we.

We disclaim any obligation to update or revise these forward looking statements unless required by law.

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.

Speaker #2: On the call, we have Ashutosh Kulkarni, Chief Executive Officer, and Navam Welihinda, Chief Financial Officer. Following their prepared remarks, we will take questions. Our press release was issued today after market close and is posted on our website.

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 #2: Slides that are supplemental to the call can also be found on the Elastic Investor Relations website at ir.elastic.co. Our discussion will include forward-looking statements, which may include predictions, estimates, expectations regarding the demand for our products and solutions, as well as our future revenue and other information.

Unless specifically noted otherwise all results in comparisons are on a fiscal year over year basis.

The webcast replay of this call will be available on our company website under the Investor Relations link our.

Speaker #2: 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.

Eric Prengel: 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. 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 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. Unless specifically noted otherwise, all resultant comparisons are on a fiscal year-over-year basis.

Our second quarter fiscal 2026 quiet period begins at the close of business on Friday October 17th.

We will be participating in cities Global TMT conference on September 4th the Goldman Sachs Communica Opiate and Technology Conference on September 8th and the Piper Sandler growth Frontiers Conference on September 11th.

Speaker #2: We disclaim any obligation to update or revise these forward-looking statements unless required by law. Please refer to the risks and uncertainties included in the press release that we issued earlier today, including the slides posted on the Investor Relations website and those more fully described in our filings with the Securities and Exchange Commission.

Finally, elastic we will host a financial analyst day in combination with our New York City elastic kind of event on October 9th and we hope many of you will join us in person.

Speaker #2: 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.

With that I'll turn it over to ash.

Thank you Eric and thank you all for joining us today and.

And I was thinking of an excellent Q1, and a strong start to the fiscal year delivering 20% revenue growth for the first quarter, surpassing the high end of our guidance.

Speaker #2: Unless specifically noted otherwise, all resultant comparisons are on a fiscal year-over-year basis. The webcast replay of this call will be available on our company website under the Investor Relations link.

Sales related subscription revenue calculated as subscription revenue excluding monthly elastic cloud grew by 22% and was driven by strength in both our cloud and self managed offerings.

Eric Prengel: The webcast replay of this call will be available on our company website under the Investor Relations link. Our second quarter fiscal 2026 quiet period begins at the close of business on Friday, October 17. We will be participating in Citi's Global TMT Conference on September 4, the Goldman Sachs Communacopia and Technology Conference on September 8, and the Piper Sandler Growth Frontiers Conference on September 11. Finally, Elastic will host a Financial Analyst Day in combination with our New York City Elasticon event on October 9, and we hope many of you will join us in person. With that, I'll turn it over to Ash.

Speaker #2: Our second quarter, fiscal 2026 quiet period begins at the close of business on Friday, October 17th. We will be participating in Citi's Global TMT Conference on September 4th.

Both were supported by the ongoing demand for our highly differentiated search AD platform and our sales team's solid execution the inherent leverage in our business model and our disciplined execution continues to fuel our profitability, resulting in a non-GAAP operating margin of 16%.

Speaker #2: The Goldman Sachs Communicopia and Technology Conference on September 8, and the Piper Sandler Growth Frontiers Conference on September 11. Finally, Elastic will host a financial analyst day in combination with our New York City Elasticon event on October 9, and we hope many of you will join us in person.

We ended the quarter with more than 1550 customers spending over $100000 as enterprises continue to choose elastic for their such absurdity and security needs.

Speaker #2: With that, I'll turn it over to Ash.

Speaker #3: Thank you, Eric, and thank you all for joining us today. Elastic had an excellent Q1 and a strong start to the fiscal year, delivering 20% revenue growth for the first quarter surpassing the high end of our guidance.

Amidst todays rapidly changing global landscape and with AI now clearly shaping technology decisions. Our Q1 performance directly demonstrates the value that the elastic search AD platform delivers to customers.

Ashutosh Kulkarni: Thank you, Eric, and thank you all for joining us today. Elastic had an excellent Q1 and a strong start to the fiscal year, delivering 20% revenue growth for the first quarter, surpassing the high end of our guidance. Sales-led subscription revenue, calculated as subscription revenue excluding monthly Elastic Cloud, grew by 22% and was driven by strength in both our cloud and self-managed offerings. Our growth was supported by the ongoing demand for our highly differentiated Search AI Platform and our sales team's solid execution. The inherent leverage in our business model and our disciplined execution continue to fuel our profitability, resulting in a non-GAAP operating margin of 16%. We ended the quarter with more than 1,550 customers spending over $100,000 as enterprises continue to choose Elastic for their search, observability, and security needs.

Speaker #3: Sales-related subscription revenue, calculated as subscription revenue excluding monthly Elastic Cloud, grew by 22% and was driven by strength in both our cloud and self-managed offerings.

Market demand for our solutions has strengthened contributing to our overall success. This quarter a strong market position is further deepened by the operational strength of our sales team with the territory changes to be made now fully benefiting our execution.

Speaker #3: Our growth was supported by the ongoing demand for our highly differentiated search AI platform and our sales team's solid execution. The inherent leverage in our business model and our disciplined execution continue to fuel our profitability.

Our go to market momentum is building across the board.

In the U S public sector, we are seeing signs of stabilization in one U S public sector wins from the quarter and intelligence agency adopted elastic search and absurdity for their AI powered enterprise services consolidating onto elastic due to our reputation as a trusted mission partner and owing to the strength of our AI capabilities.

Speaker #3: Resulting in a non-GAAP operating margin of 16%. We entered the quarter with more than $1,550 customers, spending over $100,000 as enterprises continue to choose Elastic for their search, observability, and security needs.

Our strategic agreement with the U S General services administration, or GSA, which we signed in Q1 and ongoing progress on fed ramp certification for elastic cloud on helping build positive momentum both initiatives are boosting interest among U S civilian and defense agencies, who aim to modernize its scalable.

Speaker #3: Amidst today's rapidly changing global landscape, and with AI now clearly shaping technology decisions, our Q1 performance directly demonstrates the value that the Elastic Search AI platform delivers to customers.

Ashutosh Kulkarni: Amidst today's rapidly changing global landscape and with AI now clearly shaping technology decisions, our Q1 performance directly demonstrates the value that the Elastic Search AI Platform delivers to customers. Market demand for our solutions has strengthened, contributing to our overall success this quarter. Our strong market position is further deepened by the operational strength of our sales team, with the territory changes we made now fully benefiting our execution. Our go-to-market momentum is building across the board. In the U.S. public sector, we are seeing signs of stabilization. In one U.S. public sector win from the quarter, an intelligence agency adopted Elastic Search and Observability for their AI-powered enterprise services, consolidating onto Elastic due to our reputation as a trusted mission partner and owing to the strength of our AI capabilities. Our strategic agreement with the U.S.

Speaker #3: Market demand for our solutions has strengthened, contributing to our overall success this quarter. Our strong market position is further deepened by the operational strength of our sales team, with the territory changes we made now fully benefiting our execution.

Productive and efficient technology with our sales team fully primed for this environment, we are well positioned to execute and capitalize on the federal government's efforts to digitally transform and advance its infrastructure without innovative platform.

Speaker #3: Our go-to-market momentum is building across the board. In the U.S. public sector, we are seeing signs of stabilization. In one U.S. public sector win from the quarter, an intelligence agency adopted Elastic Search and Observability for their AI-powered enterprise services, consolidating onto Elastic due to our reputation as a trusted mission partner and owing to the strength of our AI capabilities.

A year ago, we revamped our sales segmentation model to build for the future focusing our team on expanding enterprise accounts and landing high potential mid market customers measures, which are proving very effective today.

Tactical alignment continues to drive progress in our strategic segment that'd be enable generative AI application development and consolidation for our largest customers. For example, a global professional services organization expanded their commitment by choosing to migrate to elastic cloud in Q1.

Speaker #3: Our strategic agreement with the US General Services Administration, or GSA, which we signed in Q1, and ongoing progress on FedRAMP high certification for Elastic Cloud, are helping build positive momentum.

Ashutosh Kulkarni: General Services Administration, or GSA, which we signed in Q1, and ongoing progress on FedRAMP High Certification for Elastic Cloud are helping build positive momentum. Both initiatives are boosting interest among U.S. civilian and defense agencies who aim to modernize with scalable, productive, and efficient technology. With our sales team fully primed for this environment, we are well positioned to execute and capitalize on the federal government's efforts to digitally transform and advance its infrastructure with our innovative platform. A year ago, we revamped our sales segmentation model to build for the future, focusing our team on expanding enterprise accounts and landing high-potential mid-market customers, measures which are proving very effective today. This tactical alignment continues to drive progress in our strategic segment, where we enable generative AI application development and consolidation for our largest customers.

Speaker #3: Both initiatives are boosting interest among U.S. civilian and defense agencies that aim to modernize with scalable, productive, and efficient technology. With our sales team fully primed for this environment, we are well-positioned to execute and capitalize on the federal government's efforts to digitally transform and advance its infrastructure with our innovative platform.

They rely on elastic search as their Victor database.

To power 40 different internal and client facing applications.

The transition to elastic cloud will enable them to achieve greater operational efficiencies and seamlessly access our more advanced search features.

Critically as they advanced the Jennie O initiatives for our clients elastic advanced search technology will be instrumental in unlocking insights from unstructured data at scale.

Speaker #3: A year ago, we revamped our sales segmentation model to build for the future, focusing our team on expanding enterprise accounts and landing high-potential mid-market customers. Measures which are proving very effective today.

In Q1, we saw significant activity around Jenny I, but many customers choosing elastic is the runtime platform for building generic applications using our vector database embedding and re ranking models and CP server and other platform capabilities for building conversational AI and agenda applications now.

Speaker #3: This tactical alignment continues to drive progress in our strategic segment, where we enable generative AI application development and consolidation for our largest customers. For example, our global professional services organization, expanded their commitment by choosing to migrate to Elastic Cloud in Q1.

Ashutosh Kulkarni: For example, a global professional services organization expanded their commitment by choosing to migrate to Elastic Cloud in Q1. They rely on Elastic Search as their vector database to power 40 different internal and client-facing applications. The transition to Elastic Cloud will enable them to achieve greater operational efficiencies and seamlessly access our more advanced search features. Critically, as they advance their GenAI initiatives for clients, Elastic's advanced search technology will be instrumental in unlocking insights from unstructured data at scale. In Q1, we saw significant activity around GenAI, with many customers choosing Elastic as a runtime platform for building GenAI applications, using our vector database, embedding and re-ranking models, MCP server, and other platform capabilities for building conversational AI and agentic applications. Now, over 2,200 Elastic Cloud customers are using Elastic for GenAI use cases, with over 330 of these customers spending $100,000 or more annually.

Now over 2200 elastic cloud customers are using elastic for Jenny I use cases with over 330 of these customers spending $100000 or more annually in Q1, we added more million dollars ACB elastic cloud customers using elastic for Jennie O use cases than the prior two quarters.

Speaker #3: They rely on Elasticsearch as their vector database to power 40 different internal and client-facing applications. The transition to Elastic Cloud will enable them to achieve greater operational efficiencies and seamlessly access our more advanced search features.

Combined they.

Speaker #3: Critically, as they advance to the GenAI initiatives for our clients, Elastic's advanced search technology will be instrumental in unlocking insights from unstructured data at scale.

We're also excited to witness the I need two businesses being built on elastic to introduce entirely new business models in Q1, and AI Native music company expanded their use of elastic search upgrading from a monthly cloud subscription to an annual agreement as they see growing adoption of their applications.

Speaker #3: In Q1, we saw significant activity around GenAI, with many customers choosing Elastic as their runtime platform for building GenAI applications. Using our vector database, embedding and re-ranking models, CP server, and other platform capabilities for building conversational AI and agentic applications.

Average elastic to manage vast amounts of song data supporting full text and semantic search for millions of users as they continue to grow and launch new products to.

The company chose our search air technology for its performance speed and ability to scale alongside their rapid growth, which in turn drives that elastic consumption.

Speaker #3: Now, over 2,200 Elastic Cloud customers are using Elastic for GenAI use cases, with over 330 of these customers spending $100,000 or more annually. In Q1, we added more million-dollar ACV Elastic Cloud customers, using Elastic for GenAI use cases, than the prior two quarters combined.

Our customers' requirements for speed scale and relevance drives our continued investment in product features to ensure that every query happens in real time with accuracy and reliability.

Ashutosh Kulkarni: In Q1, we added more million-dollar ACV Elastic Cloud customers using Elastic for GenAI use cases than the prior two quarters combined. We are also excited to witness AI-native businesses being built on Elastic to introduce entirely new business models. In Q1, an AI-native music company expanded their use of Elastic Search, upgrading from a monthly cloud subscription to an annual agreement as they see growing adoption of their applications. They leverage Elastic to manage vast amounts of song data, supporting full-text and semantic search for millions of users as they continue to grow and launch new products. The company chose our search AI technology for its performance, speed, and ability to scale alongside their rapid growth, which in turn drives their Elastic consumption.

This quarter, we launched new capabilities to improve performance and cost efficiency of our vector database now, making a better binary quantization rbq, an acorn one of <unk>.

Speaker #3: We are also excited to witness AI-native businesses being built on Elastic to introduce entirely new business models. In Q1, an AI-native music company expanded their use of Elasticsearch, upgrading from a monthly cloud subscription to an annual agreement as they see growing adoption of their applications.

<unk> filtering algorithm available to all users by default B.

<unk> and vector such with Acorn, one helped us land a seven figure expansion deal with a global wholesale provider of machinery parts for elastic search and observe ability there.

Speaker #3: They leverage Elastic to manage vast amounts of song data, supporting full text and semantic search for millions of users as they continue to grow and launch new products.

They rely on elastic to drive their E Commerce platform, which consists of four 1 million stock items in a database of nearly 50 million skus.

Speaker #3: The company chose our search AI technology for its performance, speed, and ability to scale alongside their rapid growth, which in turn drives their Elastic consumption.

The retailer is implementing a hybrid search system, which required a platform capable of interpreting natural language queries and performing exact and semantic matches to deliver more accurate and relevant search results. They chose elastic due to our extensive experience in retail such transformation and our customizable search functionality.

Speaker #3: Our customers' requirements for speed, scale, and relevance drives our continued investment in product features, to ensure that every query happens in real time, with accuracy and reliability.

Ashutosh Kulkarni: Our customers' requirements for speed, scale, and relevance drive our continued investment in product features to ensure that every query happens in real time with accuracy and reliability. This quarter, we launched new capabilities to improve performance and cost efficiency of our vector database, now making our better binary quantization, or BBQ, and ACORN1, a smart filtering algorithm, available to all users by default. BBQ and vector search with ACORN1 helped us land a seven-figure expansion deal with a global wholesale provider of machinery parts for Elastic Search and Observability. They rely on Elastic to drive their e-commerce platform, which consists of over 1 million stock items and a database of nearly 50 million SKUs. The retailer is implementing a hybrid search system, which required a platform capable of interpreting natural language queries and performing exact and semantic matches to deliver more accurate and relevant search results.

Speaker #3: This quarter, we launched new capabilities to improve the performance and cost efficiency of our vector database. We are now making our better binary quantization, or BBQ, an Acorn one, a smart filtering algorithm available to all users by default.

These all within one platform.

Yeah. It is reshaping the software stack and Llm's are becoming the new operating system for defining business logic in the past most software to light on data and data platforms optimized for structured data today llm's operate on all data and need a data platform optimized for all forms of data structure.

Speaker #3: BBQ and vector search with Acorn One helped us land a seven-figure expansion deal with a global wholesale provider of machinery parts for Elasticsearch and observability.

And unstructured text.

Speaker #3: They rely on Elastic to drive their e-commerce platform, which consists of over 1 million stock items and a database of nearly 50 million SKUs.

<unk> spoken and programming languages audio video graphs vectors and more.

I think as the worlds, leading vector database crucially, our continued leadership stems from the foresight that what matters. Most is relevance in data retrieval irrespective of the language type and Messiness of the data that you get relevant Tonight, you provide accurate context llm's to do their job and this accuracy.

Speaker #3: The retailer is implementing a hybrid search system which required a platform capable of interpreting natural language queries and performing exact and semantic matches to deliver more accurate and relevant search results.

Speaker #3: They chose Elastic due to our extensive experience in retail search transformation and our customizable search AI functionalities, all within one platform. AI is reshaping the software stack, and LLMs are becoming the new operating system for defining business logic.

Ashutosh Kulkarni: They chose Elastic due to our extensive experience in retail search transformation and our customizable search AI functionalities, all within one platform. AI is reshaping the software stack, and LLMs are becoming the new operating system for defining business logic. In the past, most software relied on data and data platforms optimized for structured data. Today, LLMs operate on all data and need a data platform optimized for all forms of data, structured and unstructured, text in spoken and programming languages, audio, video, graphs, vectors, and more. Elastic is the world's leading vector database. Crucially, our continued leadership stems from the foresight that what matters most is relevance in data retrieval, irrespective of the language, type, and messiness of the data.

The matters, even more as agenda K I gets used for automating increasingly more complex business desks.

Elastic search relevance is a true competitive advantage for defining a defensible moat around our business.

Speaker #3: In the past, most software relied on data and data platforms optimized for structured data. Today, LLMs operate on all data and need a data platform optimized for all forms of data—structured and unstructured.

As enterprises build more agents and develop software to new ways, the importance of getting context and search relevance right will only grow.

This is why we have invested for years in developing our own embedding models really anchor models data chunking strategies and more all with the goal of being the absolute best at search relevance.

Speaker #3: Text, spoken and programming languages, audio, video, graphs, vectors, and more. Elastic is the world's leading vector database. Crucially, our continued leadership stems from the foresight that what matters most is relevance in data retrieval, irrespective of the language, type, and messiness of the data.

It is this innovation that gives us the confidence to be the leading data retrieval and context engineering platform for the AI era.

This also forms are asymmetric advantage in the other markets, we play in including observed at the insecurity.

Speaker #3: When you get relevance right, you provide accurate context to LLMs to do their job, and this accuracy matters even more as agentic AI gets used for automating increasingly more complex business tasks.

Ashutosh Kulkarni: When you get relevance right, you provide accurate context to LLMs to do their job, and this accuracy matters even more as agentic AI gets used for automating increasingly more complex business tasks. With Elastic Search, relevance is our true competitive advantage, fortifying a defensible moat around our business. As enterprises build more agents and develop software in new ways, the importance of getting context and search relevance right will only grow. This is why we have invested for years in developing our own embedding models, re-ranking models, data chunking strategies, and more, all with the goal of being the absolute best at search relevance. It is this innovation that gives us the confidence to be the leading data retrieval and context engineering platform for the AI era. This also forms our asymmetric advantage in the other markets we play in, including observability and security.

And anchoring or absurdity and security solutions and elastic search refused the immense power of search AI into boat and automate the observed at the end security processes for users without AI capabilities like attack discovery auto import and our AI assistance to observe that the insecurity.

Speaker #3: With Elasticsearch, relevance is our true competitive advantage, fortifying a defensible moat around our business. As enterprises build more agents and develop software in new ways, the importance of getting context and search relevance right will only grow.

It is precisely these advanced capabilities that contributed to our security business achieving strong results this quarter as AI reshaped the Sim landscape.

Speaker #3: This is why we have invested for years in developing our own embedding models, re-ranker models, data chunking strategies, and more, all with the goal of being the absolute best at search relevance.

Alaska Security unified Sim and xdr into a single AI powered platform extending protection across customers data infrastructure and eliminating the need for multiple standalone tools in Q1, a third of our new and expansion wins insecurity involved competitive displacements and one.

Speaker #3: It is this innovation that gives us the confidence to be the leading data retrieval and context engineering platform for the AI era. This also forms our asymmetric advantage in the other markets we play in, including observability and security.

Such deals from the quarter, what are the largest integrated academic health systems in the U S selected elastic security to replace its existing Sim solution. The.

Speaker #3: In anchoring our observability and security solutions on Elasticsearch, we fuse the immense power of Search AI into both and automate the observability and security processes of our users with our AI capabilities, like attack discovery, auto-import, and our AI assistants for observability and security.

Ashutosh Kulkarni: In anchoring our observability and security solutions on Elasticsearch, we fuse the immense power of search AI into both and automate the observability and security processes of our users with our AI capabilities, like Elastic Attack Discovery, Elastic Automatic Import, and our Elastic AI Assistant for observability and security. It is precisely these advanced capabilities that contributed to our security business achieving strong results this quarter. As AI reshapes the SIEM landscape, Elastic Security unifies SIEM and XDR into a single AI-powered platform, extending protection across customers' data infrastructure and eliminating the need for multiple standalone tools. In Q1, a third of our new and expansion wins in security involved competitive displacements. In one such deal from the quarter, one of the largest integrated academic health systems in the U.S. selected Elastic Security to replace its existing SIEM solution.

The seven figure expansion deal marks the customer, making a strategic shift from an incumbent solution towards a more scalable AI driven security approach driven by their need for a flexible platform to unify data Alaska.

Speaker #3: It is precisely these advanced capabilities that contributed to our security business achieving strong results this quarter. As AI reshapes the SIEM landscape, Elastic Security unifies SIEM and XDR into a single AI-powered platform, extending protection across customers' data infrastructure and eliminating the need for multiple standalone tools.

Elastic stood out due to our ability to support a broad set of data sources and our market, leading AI features including attack discovery, demonstrating our leadership and defining the future of Sip.

Our consistent vision of solving security as a data problem, while driving innovation in the eye positions elastic at the forefront of the market and doing so we are being rightly recognized by independent research and we are delighted that elastic has been named a leader in the Forrester wave security analytics platform in Q1.

Speaker #3: In Q1, a third of our new and expansion wins in security involved competitive displacements. In one such deal from the quarter, one of the largest integrated academic health systems in the U.S. selected Elastic Security to replace its existing SIEM solution.

Provost and security is further demonstrated by elastic securities, 100% score and Navy competitive business security test for endpoint security, maybe we are the sole participant amongst 17 vendors to achieve a perfect score in both the real World protection and malware protection tests.

Speaker #3: This seven-figure expansion deal marks the customer making a strategic shift from an incumbent solution towards a more scalable, AI-driven security approach, driven by their need for a flexible platform to unify data.

Ashutosh Kulkarni: This seven-figure expansion deal marks the customer making a strategic shift from an incumbent solution towards a more scalable, AI-driven security approach, driven by their need for a flexible platform to unify data. Elastic stood out due to our ability to support a broad set of data sources and our market-leading AI features, including Elastic Attack Discovery, demonstrating our leadership in defining the future of SIEM. Our consistent vision of solving security as a data problem while driving innovation in AI positions Elastic at the forefront of the market. In doing so, we are being rightly recognized by independent research, and we are delighted that Elastic has been named a leader in the Forrester Wave Security Analytics Platform in Q1.

Bedding elastic anti malware prevention with a ransomware defense and leading Sim features we achieved world class XT are.

Speaker #3: Elastic stood out due to our ability to support a broad set of data sources and our market-leading AI features, including attack discovery, demonstrating our leadership in defining the future of SIEM.

And our innovation has not stopped earlier this month, we introduced the elastic AI suck engine or ease.

Speaker #3: Our consistent vision of solving security as a data problem while driving innovation in AI positions Elastic at the forefront of the market. In doing so, we are being rightly recognized by independent research, and we are delighted that Elastic has been named a leader in the Forrester Wave security analytics platform in Q1.

Many soft teams today rely on Sim and endpoint detection and response or Edr solutions that generate valuable alerts, but lack mature built in AI capabilities to conduct investigations ease integrates with existing Sim and edr platforms to connect our advanced AI tools.

Speaker #3: Our prowess in security is further demonstrated by Elastic Security's 100% score in AV comparatives business security test for endpoint security, where we were the sole participant among 17 vendors to achieve a perfect score in both the real-world protection and malware protection tests.

Ashutosh Kulkarni: Our prowess in security is further demonstrated by Elastic Security's 100% score in AV Comparatives Business Security Test for Endpoint Security, where we were the sole participant among 17 vendors to achieve a perfect score in both the real-world protection and malware protection tests. By pairing Elastic's anti-malware prevention with our ransomware defense and leading SIEM features, we achieve world-class XDR. Our innovation has not stopped. Earlier this month, we introduced the Elastic AI SOC engine, or EES. Many SOC teams today rely on SIEM and Endpoint Detection and Response, or EDR, solutions that generate valuable alerts but lack mature built-in AI capabilities to conduct investigations. EES integrates with existing SIEM and EDR platforms to connect our advanced AI tools into their environment, allowing for AI-powered alert correlation with attack discovery and access to our AI assistant.

Their environment, allowing for AI powered alert correlation with attack discovery and access to our AI assistant.

Architected as an agent lis integration on top of our customers' existing stack ease as an onramp to elastic security.

This commitment to AI driven innovation extends beyond security.

Speaker #3: In pairing Elastic's anti-malware prevention with our ransomware defense and leading SIEM features, we achieve world-class XDR. Our innovation has not stopped. Earlier this month, we introduced the Elastic AI SOC engine, or EASE.

Our AI capabilities and powerful analytics also earned us recognition as a leader.

<unk> in the 2020 five Gartner magic quadrant for absurdity platforms for the second year in a row.

Plastics leadership reflects how we are transforming absurdity from a reactive tool into our solution for real time investigations through the power of our search AD platform there.

Speaker #3: Many SOC teams today rely on SIEM and endpoint detection and response (EDR) solutions that generate valuable alerts but lack mature built-in AI capabilities to conduct investigations.

We are shipping new tools like ease and our recently announced logs essentials, our new low priced tier of elastic absurdity within elastic cloud service for customers wanting a fully managed offering.

Speaker #3: EASE integrates with existing SIEM and EDR platforms to connect our advanced AI tools into their environment, allowing for AI-powered alert correlation with attack discovery and access to our AI assistant.

<unk> is now generally available on all three cloud hyperscale it including on Microsoft Azure service is gaining traction with contribution surpassing our Q1 targets as more customers adopt this deployment there.

Speaker #3: Architected as an agentless integration on top of a customer's existing stack, EASE is an on-ramp to Elastic Security. This commitment to AI-driven innovation extends beyond security.

Ashutosh Kulkarni: Architected as an agentless integration on top of a customer's existing stack, EES is an on-ramp to Elastic Security. This commitment to AI-driven innovation extends beyond security. Our AI capabilities and powerful analytics also earned us recognition as a leader in the 2025 Gartner Magic Quadrant for Observability Platforms for the second year in a row. Elastic's leadership reflects how we are transforming observability from a reactive tool into a solution for real-time investigations through the power of our Search AI Platform. We are shipping new tools like EES and our recently announced Logs Essentials, a new low-price tier of Elastic Observability within Elastic Cloud Serverless for customers wanting a fully managed offering. Serverless is now generally available on all three cloud hyperscalers, including on Microsoft Azure. Serverless is gaining traction, with contributions surpassing our Q1 targets as more customers adopt this deployment.

The elastic search AD platform meet customers, where they are with deployment options for cloud hosted and services and self managed environments.

Speaker #3: Our AI capabilities and powerful analytics also earned us recognition as a leader in the 2025 Gartner Magic Quadrant for Observability Platforms for the second year in a row.

This quarter, I visited India, Australia, Singapore, and Japan to meet with customers across numerous industries.

Speaker #3: Elastic's leadership reflects how we are transforming observability from a reactive tool into a solution for real-time investigations through the power of our search AI platform.

Despite vastly different businesses every conversation I had revealed a common desire to do more with their data enterprises are all looking to leverage that information more effectively.

Speaker #3: We are shipping new tools like EASE and our recently announced Logs Essentials, a new low-priced tier of Elastic Observability, within Elastic Cloud Serverless for customers wanting a fully managed offering.

This consistent feedback reinforces the universal need for powerful data solutions like ours, especially one that is optimized to address the need for search relevance and context in an ela, let them centric world.

Speaker #3: Serverless is now generally available on all three cloud hyperscalers, including Microsoft Azure. Serverless is gaining traction, with contributions surpassing our Q1 targets as more customers adopt this deployment.

In closing Q1 was an outstanding quarter fueled by focused execution and strong demand our platform is more differentiated than ever providing us a competitive advantage and Jenny I and platform consolidation across all industries.

Speaker #3: The Elastic Search AI platform meets customers where they are, with deployment options for cloud, hosted and serverless, and self-managed environments. This quarter, I visited India, Australia, Singapore, and Japan to meet with customers across numerous industries.

Ashutosh Kulkarni: The Elastic Search AI Platform meets customers where they are, with deployment options for cloud, hosted, and serverless, and self-managed environments. This quarter, I visited India, Australia, Singapore, and Japan to meet with customers across numerous industries. Despite vastly different businesses, every conversation I had revealed the common desire to do more with their data. Enterprises are all looking to leverage their information more effectively. This consistent feedback reinforces the universal need for powerful data solutions like ours, especially one that is optimized to address the need for search relevance and context in an LLM-centric world. In closing, Q1 was an outstanding quarter, fueled by focused execution and strong demand. Our platform is more differentiated than ever, providing us a competitive advantage in GenAI and platform consolidation across all industries.

We have the ability to win in every market, where we are playing and I'm excited to see our progress unfold.

This quarter's performance highlights the talent and dedication of our team none of them and I are truly grateful for the continuous hard work elastic shouldn't put in daily.

Speaker #3: Despite vastly different businesses, every conversation I had revealed the common desire to do more with their data. Enterprises are all looking to leverage their information more effectively.

Thank you as well to our customers partners and investors for their ongoing support and trust.

I'll now turn it over to Nava him to review our financial results in more detail.

Speaker #3: This consistent feedback reinforces the universal need for powerful data solutions like ours, especially one that is optimized to address the need for search relevance and context in an LLM-centric world.

Thank you Ash Q1 was an excellent quarter with solid execution across the business, we exceeded the revenue and profitability metrics, we set out to achieve and our go to market team is executing well on all fronts.

Speaker #3: In closing, Q1 was an outstanding quarter, fueled by focused execution and strong demand. Our platform is more differentiated than ever, providing us a competitive advantage in GenAI and platform consolidation across all industries.

Our Q1 results provided a promising start to the year.

This performance positioned elastic to enter Q2, and the remainder of fiscal 2026 from a position of strength.

Our total revenue in the first quarter was $415 million, we grew 20% as reported and 18% on a constant currency basis.

Speaker #3: We have the ability to win in every market where we are playing, and I am excited to see our progress unfold. This quarter's performance highlights the talent and dedication of our team.

Ashutosh Kulkarni: We have the ability to win in every market where we are playing, and I'm excited to see our progress unfold. This quarter's performance highlights the talent and dedication of our team. Navam and I are truly grateful for the continuous hard work Elastic has put in daily. Thank you as well to our customers, partners, and investors for their ongoing support and trust. I'll now turn it over to Navam to review our financial results in more detail.

Our sales lead subscription revenue calculated as subscription revenue excluding monthly elastic cloud was 339 million growing 22% as reported and 20% on a constant currency basis.

Speaker #3: Navam and I are truly grateful for the continuous hard work Elasticians put in daily. Thank you as well to our customers, partners, and investors for their ongoing support and trust.

Q1, 26 marked the fourth consecutive quarter of strong performance since we made the sales segmentation changes last year.

Speaker #3: I'll now turn it over to Navam to review our financial results in more detail. Thank you, Ash. Q1 was an excellent quarter, with solid execution across the business.

Navam Welihinda: Thank you, Ash. Q1 was an excellent quarter with solid execution across the business. We exceeded the revenue and profitability metrics we set out to achieve, and our go-to-market team is executing well on all fronts. Our Q1 results provided a promising start to the year. This performance positioned Elastic to enter Q2 and the remainder of fiscal 2026 from a position of strength. Our total revenue in the first quarter was $415 million. We grew 20% as reported and 18% on a constant currency basis. Our sales-led subscription revenue, calculated as subscription revenue excluding monthly Elastic Cloud, was $339 million, growing 22% as reported and 20% on a constant currency basis. Q1 2026 marked the fourth consecutive quarter of strong performance since we made the sales segmentation changes last year.

Our sales like subscription revenue grew 22% in Q2 'twenty, 518% in Q3 25, 19% in Q4, 25, and now 22% this quarter.

Speaker #3: We exceeded the revenue and profitability metrics we set out to achieve, and our go-to-market team is executing well on all fronts. Our Q1 results provided a promising start to the year.

These consistent results demonstrate the durability of our team's execution.

Speaker #3: This performance positioned Elastic to enter Q2 and the remainder of fiscal 2026 from a position of strength. Our total revenue in the first quarter was $415 million.

The revenue performance, we saw this quarter was broad based across both our cloud and self managed environments. We.

We saw strong customer commitments with key wins across all of our solution areas.

Speaker #3: We grew 20% as reported and 18% on a constant currency basis. Our sales-led subscription revenue, calculated as subscription revenue excluding monthly Elastic Cloud, was $339 million, growing 22% as reported and 20% on a constant currency basis.

Both generative AI and platform consolidation continue to be powerful tailwind benefiting search observer ability and security.

As Ashley mentioned, we saw competitive success in security with one third of new and expansion deals in security coming from replacing an incumbent solution.

Speaker #3: Q1 26 marked the fourth consecutive quarter of strong performance since we made the sales segmentation changes last year. Our sales-led subscription revenue grew 22% in Q2 25, 18% in Q3 25, 19% in Q4 25, and now 22% this quarter.

Our traction is further supported by new product releases, including our elastic AI suck engine or ease which uses AI to enhance threat detection.

Navam Welihinda: Our sales-led subscription revenue grew 22% in Q2 2025, 18% in Q3 2025, 19% in Q4 2025, and now 22% this quarter. These consistent results demonstrate the durability of our team's execution. The revenue performance we saw this quarter was broad-based across both our cloud and self-managed environments. We saw strong customer commitments with key wins across all our solution areas. Both generative AI and platform consolidation continue to be powerful tailwinds benefiting search, observability, and security. As Ash mentioned, we saw competitive success in security, with one-third of new and expansion deals in security coming from replacing an incumbent solution. Our traction is further supported by new product releases, including our Elastic AI SOC engine, or EES, which uses AI to enhance threat detection. As you heard from Ash, our team continued to operate effectively in all areas, and we saw strength across all our geos. In the U.S.

As you heard from Ash, our team continued to operate effectively in all areas and we saw strength across all our geos in the U S public sector, we're seeing stabilization and the team is fully primed to execute.

Speaker #3: These consistent results demonstrate the durability of our team’s execution. The revenue performance we saw this quarter was broad-based, across both our cloud and self-managed environments.

Even with ongoing shifts in select civilian agencies. The last six costa value proposition remains a compelling incentive for a public sector customers to consider our products as they look to consolidate mission critical tools and increase efficiency.

Speaker #3: We saw strong customer commitments, with key wins across all our solution areas. Both generative AI and platform consolidation continue to be powerful tailwinds benefiting search, observability, and security.

Our current remaining performance obligations or C. R. P O, which is the portion of our appeal that we expect to recognize as revenue within the next 12 months remain solid in.

Speaker #3: As Ash mentioned, we saw competitive success in security, with one-third of new and expansion deals in security coming from replacing an incumbent solution. Our traction is further supported by new product releases, including our Elastic AI SOC engine, or EASE, which uses AI to enhance threat detection.

In the end of Q1 C. R. P. O was approximately 956 million and grew 18% year over year and 17% in constant currency.

R. P. O is a useful supplemental measure of commitments when evaluated in conjunction with sales led subscription revenue.

Speaker #3: As you heard from Ash, our team continued to operate effectively in all areas, and we saw strength across all our geos. In the U.S. public sector, we are seeing stabilization, and the team is fully primed to execute.

During the quarter of 100, K annual contract value customer count grew approximately 13% year over year.

Navam Welihinda: public sector, we're seeing stabilization, and the team is fully primed to execute. Even with ongoing shifts in select civilian agencies, Elastic's cost-to-value proposition remains a compelling incentive for public sector customers to consider our products as they look to consolidate mission-critical tools and increase efficiency. Our current remaining performance obligations, or CRPO, which is the portion of RPO that we expect to recognize as revenue within the next 12 months, remain solid. In the end of Q1, CRPO was approximately $956 million and grew 18% year over year and 17% in constant currency. CRPO is a useful supplemental measure of commitments when evaluated in conjunction with sales-led subscription revenue. During the quarter, our $100,000 annual contract value customer count grew approximately 13% year over year, representing approximately 180 net new customers over the past four quarters.

Representing approximately 180 net new customers over the past four quarters quarter.

Speaker #3: Even with ongoing shifts in select civilian agencies, the last six cost-to-value propositions remain a compelling incentive for our public sector customers to consider our products as they look to consolidate mission-critical tools and increase efficiency.

Quarter over quarter, we added approximately 40 net new customers and continued to see strong expansion from our existing customer base.

Our total customer count reached approximately 21000 and 550 at the end of July.

Speaker #3: Our current remaining performance obligations, or CRPO, which is the portion of RPO that we expect to recognize as revenue within the next 12 months, remain solid.

Approximately 80% of our annual recurring revenue comes from 100 Canyon contract value customers.

Moving forward, we will only disclose our total customer count annually as this metric does not fully represent our quarterly total revenue performance.

Speaker #3: In the end of Q1, CRPO was approximately $956 million and grew 18% year-over-year, and 17% in constant currency. CRPO is a useful supplemental measure of commitments when evaluated in conjunction with sales-led subscription revenue.

On the consumption front, we are happy to see that consumption remains strong in may we increased prices on our cloud and self managed environments and demand for our solutions remained high as we continue to deliver more value to our customers through new product features and functionality.

Speaker #3: During the quarter, the customer count for contracts valued at $100K annually grew approximately 13% year over year, representing about 180 net new customers over the past four quarters.

Now turning to Q1 margins and profitability I will discuss all measures on a non-GAAP basis.

Speaker #3: Quarter over quarter, we added approximately 40 net new customers and continued to see strong expansion from our existing customer base. Our total customer count reached approximately 21,550 at the end of July.

Navam Welihinda: Quarter over quarter, we added approximately 40 net new customers and continued to see strong expansion from our existing customer base. Our total customer count reached approximately 21,550 at the end of July. Approximately 80% of our annual recurring revenue comes from $100,000 annual contract value customers. Moving forward, we will only disclose our... See that consumption remains strong. In May, we increased prices on our cloud and self-managed environments, and demand for our solutions remained high as we continue to deliver more value to our customers through new product features and functionality. Now turning to Q1 margins and profitability, I will discuss all measures on a non-GAAP basis. We delivered strong profitability across the board with a gross margin of 79% and an operating margin of 16%. In Q1, we recognized a one-time credit of approximately $4 million related to our cloud infrastructure costs.

We delivered strong profitability across the board with a gross margin of 79% and an operating margin of 16%.

In Q1, we recognized a one time credit of approximately $4 million related to our cloud infrastructure costs. The credit caused a one time gross margin benefit of 1%.

Speaker #3: Approximately 80% of our annual recurring revenue comes from $100K annual contract value customers. Moving forward, we will only disclose our key metrics to ensure that consumption remains strong.

Additional margin expansion is representative of the inherent leverage in our model.

Our disciplined approach to costs combined with increasing revenue underpins our strong profitability further supported by our cash generation.

In Q1, we achieved an adjusted free cash flow margin of 28%.

Speaker #3: In May, we increased prices on our cloud and self-managed environments, and demand for our solutions remained high as we continued to deliver more value to our customers through new product features and functionality.

Historically, we experienced quarter over quarter seasonality related to the magnitude of the prior quarter's bookings and the collection of those bookings.

Keeping these fluctuations in mind, we expect Q2 to follow normal seasonal patterns, representing a sequential decline in Mcf.

Speaker #3: Now, turning to Q1 margins and profitability, I will discuss all measures on a non-GAAP AP basis. We delivered strong profitability across the board, with a gross margin of 79% and an operating margin of 16%.

We manage and view adjusted free cash flow on a full year basis, and believe we have the potential to maintain and expand our free cash flow margin overtime.

Now for our outlook for the second quarter and the remainder of fiscal 2026.

Speaker #3: In Q1, we recognized a one-time credit of approximately $4 million related to our cloud infrastructure costs. The credit caused a one-time gross margin benefit of 1%.

We are pleased with our strong execution in the quarter and the momentum we've built heading into the balance of fiscal 2026.

Navam Welihinda: The credit caused a one-time gross margin benefit of 1%. Additional margin expansion is representative of the inherent leverage in our model. Our disciplined approach to costs, combined with increasing revenue, underpins our strong profitability, further supported by our cash generation. In Q1, we achieved an adjusted free cash flow margin of 28%. Historically, we experienced quarter-over-quarter seasonality related to the magnitude of the prior quarter's bookings and the collection of those bookings. Keeping these fluctuations in mind, we expect Q2 to follow normal seasonal patterns, representing a sequential decline in FCF. We manage and view adjusted free cash flow on a full-year basis and believe we have the potential to maintain and expand our free cash flow margin over time. Now for our outlook for the second quarter and the remainder of fiscal 2026.

While we continue to operate in a complex macro environment conditions did not deteriorate to the degree we had factored into our guidance in may as such we are raising our fiscal 2026 revenue guidance.

Speaker #3: Additional margin expansion is representative of the inherent leverage in our model. Our disciplined approach to costs, combined with increasing revenue, underpins our strong profitability.

Speaker #3: Further supported by our cash generation, in Q1, we achieved an adjusted free cash flow margin of 28%. Historically, we have experienced quarter-over-quarter seasonality related to the magnitude of the prior quarter's bookings.

Note that our Q2 2026 assumptions factor in benefit from our price increase which I discussed earlier.

We do not formally guide to adjusted free cash flow still for fiscal 2026, we expect to sustain the level of adjusted free cash flow margins that we achieved in fiscal 2025.

Speaker #3: And the collection of those bookings. Keeping these fluctuations in mind, we expect Q2 to follow normal seasonal patterns, representing a sequential decline in free cash flow (FCF).

With these assumptions in mind.

For the second quarter of fiscal 2026.

Speaker #3: We manage and view adjusted free cash flow on a full-year basis and believe we have the potential to maintain and expand our free cash flow margin over time.

We expect total revenue in the range of $415 million to $417 million, representing 14% growth at the midpoint or 14% constant currency growth at the midpoint.

Speaker #3: Now for our outlook for the second quarter (Q2) and the remainder of fiscal 2026. We are pleased with our strong execution in the quarter and the momentum we've built heading into the balance of fiscal 2026.

We expect non-GAAP operating margin to be approximately 16%.

Navam Welihinda: We are pleased with our strong execution in the quarter and the momentum we've built heading into the balance of fiscal 2026. While we continue to operate in a complex macro environment, conditions did not deteriorate to the degree we had factored into our guidance in May. As such, we are raising our fiscal 2026 revenue guidance. Note that our Q2 2026 assumptions factor in benefit from our price increase, which I discussed earlier. We do not formally guide to adjusted free cash flow. Still, for fiscal 2026, we expect to sustain the level of adjusted free cash flow margins that we achieved in fiscal 2025. With these assumptions in mind, for the second quarter of fiscal 2026, we expect total revenue in the range of $415 million to $417 million, representing 14% growth at the midpoint or 14% constant currency growth at the midpoint.

We expect non-GAAP diluted earnings per share in the range of 56 to 58 cents using between $108 5 million and $109 5 million diluted weighted average ordinary shares outstanding.

Speaker #3: While we continue to operate in a complex macro environment, conditions did not deteriorate to the degree we had factored into our guidance in May.

Speaker #3: As such, we are raising our fiscal 2026 revenue guidance. Note that our Q2 2026 assumptions factor in the benefit from our price increase, which I discussed earlier.

For fiscal 2026.

We are raising our total revenue, which improves our expected non-GAAP diluted EPS.

We expect total revenue in the range of 1.679 billion to 1.689 billion, representing approximately 14% growth at the midpoint or 13% constant currency growth at the midpoint.

Speaker #3: We do not formally guide to adjusted free cash flow; still, for fiscal 2026, we expect to sustain the level of adjusted free cash flow margins that we achieved in fiscal 2025.

We expect non-GAAP operating margin for the full fiscal 2026 to be approximately 16%.

Speaker #3: With these assumptions in mind, for the second quarter of fiscal 2026, we expect total revenue in the range of $450 million to $470 million, representing 14% growth at the midpoint, or 14% constant currency growth at the midpoint.

We expect non-GAAP diluted earnings per share in the range of $2 29 to $2.35.

Using between $109 million and 111 million diluted weighted average ordinary shares outstanding.

Speaker #3: We expect non-GAAP operating margin to be approximately 16%. We expect non-GAAP diluted earnings per share in the range of $56.00 to $58.00, using between 108.5 million and 109.5 million diluted weighted average ordinary shares outstanding.

Navam Welihinda: We expect non-GAAP operating margin to be approximately 16%. We expect non-GAAP diluted earnings per share in the range of $0.56 to $0.58, using between 108.5 million and 109.5 million diluted weighted average ordinary shares outstanding. For fiscal 2026, we are raising our total revenue, which improves our expected non-GAAP diluted EPS. We expect total revenue in the range of $1.679 billion to $1.689 billion, representing approximately 14% growth at the midpoint or 13% constant currency growth at the midpoint. We expect non-GAAP operating margin for the full fiscal 2026 to be approximately 16%. We expect non-GAAP diluted earnings per share in the range of $2.29 to $2.35, using between 109 million and 111 million diluted weighted average ordinary shares outstanding. We will continue to provide updates as we move throughout the year. This quarter's performance is a testament to the dedication of our team.

We will continue to provide updates as we move throughout the year.

This quarter's performance is that a testament to the dedication of our team ash and I are thankful for the hard work of our employees to deliver these strong results.

As a reminder, we are hosting our financial analyst day on October 9th in New York City.

Speaker #3: For fiscal 2026, we are raising our total revenue, which improves our expected non-GAAP diluted EPS. We expect total revenue in the range of $1.679 billion to $1.689 billion.

Where we will showcase the power of the elastic search AI platform and the business opportunity.

With that I'll open it up for Q&A.

Thank you.

Speaker #3: Representing approximately 14% growth at the midpoint, or 13% constant currency growth at the midpoint. We expect non-GAAP operating margin for the full fiscal 2026 to be approximately 16%.

Ask a question you May press Star then one on your telephone.

Pat.

I think that's why when you pick up your handset before pressing any key.

Anytime you have a question has been addressed.

You would like to have a dry up question.

Speaker #3: We expect non-GAAP diluted earnings per share in the range of $2.29 to $2.35, using between 109,000,000 and 111,000,000 diluted weighted average ordinary shares outstanding.

Two.

That's my question comes from Matt Hedberg with RBC capital markets. Please go ahead.

Great. Thanks for taking my questions guys. Congrats on the results are really really good to see.

Speaker #3: We will continue to provide updates as we move throughout the year. This quarter's performance is a testament to the dedication of our team. Ashutosh Kulkarni and I are thankful for the hard work of our employees to deliver these strong results.

You know early in the fiscal year I guess, maybe the first one for you as you know it was really good to hear about AI relevancy with elastic cloud and even the Pakistan server list, thus far I guess I'm wondering you know.

Navam Welihinda: Ash and I are thankful for the hard work of our employees to deliver these strong results. As a reminder, we are hosting our Financial Analyst Day on October 9th in New York City, where we will showcase the power of the Elastic Search AI Platform and the business opportunity ahead. With that, I'll open it up for Q&A.

Is there a way to think about what you know.

Speaker #3: As a reminder, we are hosting our Financial Analyst Day on October 9th in New York City, where we will showcase the power of the Elastic Search AI platform and the business opportunity ahead.

Customers the uplift in customer spend is when they start to think about.

Growing usage of elastic to support AI.

It really does feel like you guys are becoming a bit of a center of gravity for that but any way to kind of think about what this is doing to customer spend or usage and maybe it becomes even more evident with server list.

Speaker #3: With that, I'll open it up for Q&A.

Speaker #1: Thank you. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing any keys.

Speaker 6: Thank you. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please press star two. The first question comes from Matt Hedberg with RBC Capital Markets. Please go ahead.

Yeah, Matt Thanks for the question and you know like you said.

Our Jennie O and momentum is something that we feel really really good about the customer adoption has been strong 2200 customers and elastic cloud now using us for generic use cases, what we're seeing is as customers start to use us.

Speaker #1: If at any time your question has been addressed and you would like to withdraw your question, please press star two. The first question comes from Matt Hedberg with RBC Capital Markets.

For all of these AI applications. These workloads tend to be more compute intensive and that obviously means that the growth sort of helps and let you know when we've described it as a tailwind that's really what it is now the extent to which that growth.

Speaker #1: Please go ahead.

Speaker #3: Great. Thanks for taking

Matt Hedberg: Great. Thanks for taking my questions, guys. Congrats on the results. Really, really good to see, you know, early in the fiscal year. I guess maybe the first one for you, Ash. You know, it was really good to hear about AI relevancy with Elastic Cloud and even the progress on serverless thus far. I guess I'm wondering, you know, is there a way to think about, you know, what, you know, customers, the uplift in customer spend is when they start to think about, you know, growing usage of Elastic to support AI? It really does feel like you guys are becoming a bit of a center of gravity for that. Any way to kind of think about what this is doing to customer spend or usage, and maybe it becomes even more evident with serverless?

Speaker #2: My questions, guys. Congrats on the results, really good to see you know early in the fiscal year. I guess maybe the first one for you, Ash, you know it was really good to hear about AI relevancy with Elastic Cloud, and even the progress on serverless thus far.

<unk> itself the workload cost depends upon the kind of data it depends upon the kind of use case.

Speaker #2: I guess I'm wondering, you know, is there a way to think about, you know, what you know customers, the uplift of customer spend is when they start to think about, you know, growing usage of Elastic to support AI?

Does these AI competitions tend to take up more CPU tend to take up more memory and as you know our consumption model is biased towards that so it's hard to give a precise number but what we can say is that there is definitely a a improvement in sort of the overall consumption that we see as customers use us for AI.

Speaker #2: It really does feel like you guys are becoming a bit of a center of gravity for that. But is there any way to think about customer spend or usage, and maybe it becomes even more evident with serverless?

Speaker #3: Yeah, Matt, thanks for the question. And you know, like you said, our GenAI momentum is something that we feel really, really good about. The customer adoption has been strong.

Ashutosh Kulkarni: Yeah, Matt, thanks for the question. Like you said, our GenAI momentum is something that we feel really, really good about. The customer adoption has been strong. 2,200 customers in Elastic Cloud now using us for GenAI use cases. What we are seeing is, as customers start to use us for all of these AI applications, these workloads tend to be more compute intensive, and that obviously means that the growth sort of helps. When we've described it as a tailwind, that's really what it is. Now, the extent to which that growth manifests itself, the workload cost depends upon the kind of data, depends upon the kind of use case, because these AI computations tend to take up more CPU, tend to take up more memory. As you know, our consumption model is biased towards that.

Now, let me repeat that.

Fundamentally we are still early in the AI journey. So we are seeing some contribution from AI, but we are very early and I see a longer path here, where by being the core foundation for AI for our customers as they're making multiyear decisions. Here. This is gonna be a tailwind for us for many years to come.

Speaker #3: 2,200

Speaker #3: customers in Elastic Cloud now, using us for GenAI use cases. What we are seeing is, as customers start what this is doing to to use us, for all of these AI applications, you know these workloads tend to be more compute intensive, and that obviously means that the growth sort of helps and that you know when we've described it as a tailwind, that's really what it is.

Really good to hear and then maybe just a quick one for Nevada.

You mentioned the price of the May price increase.

Speaker #3: Now, the extent to which that growth, you know, manifests itself, the workload cost depends upon the kind of data and the kind of use case, because these AI computations, you know, tend to take up more CPU, tend to take up more memory. And as you know, our consumption model is biased towards that.

Not reflected in the guide is there any way you could help us think about how that's benefiting the year.

Just any sort of quantification there would be helpful. Thanks, guys.

Oh sure thing Thanks, Matt So you know.

First of all just starting with Q1, you look at the performance it was a broad based over performance.

Speaker #3: So it's hard to give a precise number, but what we can say is that there is definitely an improvement in sort of the overall consumption that we see as customers use us for AI.

Ashutosh Kulkarni: It's hard to give a precise number, but what we can say is that there is definitely an improvement in the overall consumption that we see as customers use us for AI. Let me repeat that, fundamentally, we are still early in the AI journey. We are seeing some contribution from AI, but we are very early, and I see a long path here where, by being the core foundation for AI for our customers as they're making multi-year decisions here, this is going to be a tailwind for us for many years to come.

Ross consumption and across commitments from both our cloud customers and our self managed customers. When you think about a normal course of business from time to time, we do price increases and we've done one last year for self managed we did one this year for self managed and cloud.

Speaker #3: Now, let me repeat that you know fundamentally we are still early in the AI journey. So we are seeing some contribution from AI, but we are very early, and I see a long, you know, path here where by being the core foundation for AI for our customers, as they are making multi-year decisions here, this is going to be a tailwind for us for many years to come.

The increase in Q1 was mostly related to consumption performance and the goodness of our business, but we did have a benefit from the price increase and the way you should think about it is a price increase lifts the floor year over year, so you'll get a benefit year over year as you think about the growth from year over year, but the majority.

Speaker #2: Really good to hear. And then maybe just a quick one for Navam. You mentioned the price, the May price increase, which is now reflected in the guide.

Matt Hedberg: Really good to hear. Maybe just a quick one for Navam. You mentioned the May price increase, which is now reflected in the guide. Is there any way that you could help us think about how that's benefiting the year? Just any sort of quantification that would be helpful. Thanks, guys.

Comes from performance, rather than price increase and then quarter over quarter you'd see a more muted effect of prices as you've now got a got a floor that you will you will grow from so that's how I think about the price increase overall Q1 was like I said broad based from a performance perspective, and and macro was in a much better spot than where.

Speaker #2: Is there any way that you could help us think about, you know, how that's benefiting the year? Just any sort of quantification that would be helpful.

Speaker #2: Thanks, guys.

Speaker #3: Sure thing. Thanks, Matt. So, you know, first of all, just starting with Q1, you look at the performance; it was a broad-based overperformance across consumption and across commitments, from both our cloud customers and our self-managed customers.

Navam Welihinda: Sure thing. Thanks, Matt. First of all, just starting with Q1, you look at the performance. It was a broad-based overperformance across consumption and across commitments from both our cloud customers and our self-managed customers. When you think about our normal course of business, from time to time, we do price increases, and we've done one last year for self-managed. We did one this year for self-managed and cloud. The increase in Q1 was mostly related to consumption performance and the goodness of our business. We did have a benefit from the price increase, and the way you should think about it is a price increase lifts the floor year over year. You get a benefit year over year as you think about the growth from year over year, but the majority comes from performance rather than price increase.

Uh huh.

We originally assumed so feeling good about the year.

Thanks, a lot guys.

Speaker #3: When we think about our normal course of business, from time to time, we do price increases. We've done one last year. For self-managed, we did one this year for both self-managed and cloud.

The next question comes from Koji Ikeda with Banc of America Securities. Please go ahead.

Hey, this is George for growing off of Koji <unk> really appreciate it.

Speaker #3: The increase in Q1 was mostly related to consumption performance and the strength of our business. However, we did benefit from the price increase. The way you should think about it is that a price increase lifts the floor year over year.

I had one.

I wanted to ask on the growth mix.

Just you know understanding.

Obviously, there's a lot of momentum with Gen AI and search, but if you could maybe stack rank or give us a framework to think about how growth.

Speaker #3: So, you get a benefit year over year as you think about the growth from year over year, but the majority comes from performance rather than price increase.

Across the business is kind of playing out and observer ability and security as well.

Speaker #3: And then, quarter over quarter, you'd see a more muted effect on prices, as you've now got a floor that you will grow from. So that's how I think about the price increase.

Navam Welihinda: Quarter over quarter, you'd see a more muted effect of prices as you've now got a floor that you will grow from. That's how I think about the price increase. Overall, Q1 was, like I said, broad-based from a performance perspective, and macro was in a much better spot than where we had originally assumed. Feeling good about the year.

Yeah, George Thanks for the question. So you know this was a really strong quarter with a very broad.

Speaker #3: Overall, Q1 was, like I said, broad-based from a performance perspective. And macro was in a much better spot than where we had originally assumed.

Performance trends that we saw across all solution areas search.

And by January continues to be a very strong tailwind for us.

Speaker #3: So, feeling good about the year.

But this quarter, we also saw security.

Speaker #2: Thanks, Alex.

Matt Hedberg: Thanks a lot, guys.

And the platform consolidation motion that we've been describing work very very nicely for us I think one of the stats that I talked about was the fact that.

Speaker #1: The next question comes from Koji Akira with Bank of America Securities. Please go ahead.

Speaker 6: The next question comes from Koji Aikita with Bank of America Securities. Please go ahead.

Speaker #4: Hey, this is George McGrean. I'm with Koji. I really appreciate it. I had one I wanted to ask on the growth mix. Just, you know, understanding that there's obviously a lot of momentum with GenAI in search, but if you could maybe stack rank or give us a framework to think about how growth across the business is kind of playing out in observability and security as well.

Matt Hedberg: Hey, this is George Iwanyc, and I'm for Koji. Really appreciate it. I had one. I wanted to ask on the growth mix, just, you know, understanding, you know, obviously there's a lot of momentum with generative AI and search, but if you could maybe stack rank or give us a framework to think about how growth across the business is kind of playing out in observability and security as well.

You know a third of the business in security this quarter came from competitive displacements and you know these deals take some time to build but we are starting to see that momentum and this is primarily because customers are looking to consolidate onto platforms that tend to see security and observed that theater.

Data problem, and we've always done that incredibly well and that's the amount of data the complexity of data is growing and so it's becoming more and more important to use AI techniques to try and drive automation, even in security and absurdity, we're seeing our ability to compete and take share really improve and that's something that we see is.

Speaker #3: Yeah, George, thanks for the question. So, you know this was a really strong quarter with very broad performance strength that we saw across all solution areas.

Ashutosh Kulkarni: Yeah, George, thanks for the question. This was a really strong quarter with a very broad performance strength that we saw across all solution areas. Search, driven by GenAI, continues to be a very strong tailwind for us. This quarter, we also saw security and the platform consolidation motion that we've been describing worked very, very nicely for us. I think one of the stats that I talked about was the fact that a third of the business in security this quarter came from competitive displacements. These deals take some time to build, but we are starting to see that momentum. This is primarily because customers are looking to consolidate onto platforms that tend to see security and observability as a data problem. We've always done that incredibly well.

As a very exciting thing for the future.

Speaker #3: Search, driven by GenAI, continues to be a very strong tailwind for us. But this quarter, we also saw security and the platform consolidation motion that we've been describing work very, very nicely for us.

I appreciate it and if I could.

Asking another question here.

You know in a bomb since you.

You joined how would you describe them.

Maybe the <unk>.

Speaker #3: I think one of the stats that I talked about was the fact that, you know, a third of the business in security this quarter came from competitive displacements.

Victor ability of the model today.

Versus when you joined has it changed much and if so why.

Yeah, No I'm I'm about two quarters in since I joined I think the big learning for me is on the sales lead subscription side and I think I mentioned I mentioned this during my prepared remarks.

Speaker #3: And you know these deals take some time to build, but we are starting to see that momentum. This is primarily because customers are looking to consolidate onto platforms that tend to see security and observability as a data problem.

The execution, there and the durability of execution was very strong right. We had 22% growth a year ago, followed by 18 19, and 22% again. This year. This is a testament to the consistency of growth we're seeing from our sales led motion across both cloud and self managed.

Speaker #3: And we've always done that incredibly well. As the amount of data and the complexity of data is growing, and as it's becoming more and more important to use AI techniques to try and drive automation—even in security and observability—we are seeing our ability to compete and take share really improve. That's something that we see as a very exciting thing for the future.

Ashutosh Kulkarni: As the amount of data, the complexity of data is growing, as it's becoming more and more important to use AI techniques to try and drive automation, even in security and observability, we are seeing our ability to compete and take share really improve. That's something that we see as a very exciting thing for the future.

So I'd say that the underlying execution from the team remains very good and very very.

And predictable on the sales lead side, where a consumption business and that's that's the one place where there is a little bit of unpredictability on what could happen on a quarter over quarter basis. Overall, you know we had a good quarter in Q1 and given what we expected. So I feel like we have more data now than we did a quarter ago.

Speaker #4: Appreciate it. And if I could, you know, ask another question here. Navam, since you joined, how would you describe maybe the predictability of the model today versus when you joined?

Matt Hedberg: Appreciate it. If I could ask another question here, Navam, since you joined, how would you describe maybe the predictability of the model today versus when you joined? Has it changed much? If so, why?

Speaker #4: Has it changed much? And if so, why?

Thank you.

Speaker #3: Yeah, now I'm about two quarters in since I joined. I think the big learning for me is on the sales-led subscription side, and I think I mentioned this during my prepared remarks.

Navam Welihinda: Yeah, now I'm about two quarters in since I joined. I think the big learning for me is on the sales-led subscription side. I think I mentioned this during my prepared remarks. The execution there and the durability of execution was very strong. We had 22% growth a year ago, followed by 18%, 19%, and 22% again this year. This is a testament to the consistency of growth we're seeing from our sales-led motion across both cloud and self-managed. I'd say that the underlying execution from the team remains very good and very predictable on the sales-led side. We're a consumption business, and that's the one place where there is a little bit of unpredictability on what could happen on a quarter-over-quarter basis. Overall, we had a good quarter in Q1 and given what we expected. I feel like we have more data now than we did a quarter ago.

The next question comes from Rob Owens with Piper Sandler. Please go ahead.

Great. Thanks for taking my question.

Speaker #3: The execution there and the durability of execution was very strong, right? We had 22% growth a year ago, followed by 18%, 19%, and 22% again this year.

I really wanted to drill down and the success that youre seeing on the security front I think you said a third of it was coming from <unk>.

Competitive displacements and obviously, we're seeing a lot of success I think across the board from vendors that are competing for this next generation Sim opportunities. So I guess relative to the unlock that happened. This quarter was there anything in particular that drove that momentum was it more just how the pipeline set up and as we as we.

Speaker #3: This is a testament to the consistency of growth we're seeing from our sales-led motion across both cloud and self-managed. So, I'd say that the underlying execution from the team remains very good and very, very predictable on the sales-led side.

We look forward, maybe what are some of the different key ingredients to further unlock customers that have been with some of those legacy vendors for some time.

Speaker #3: We're a consumption business, and that's the one place where there is a little bit of unpredictability on what could happen on a quarter-over-quarter basis.

Speaker #3: Overall, you know we had a good quarter in Q1. Given what we expected, I feel like we have more data now than we did a quarter ago.

Yeah, that's a great question and what's you know what's driving that that unlock is really a greater and greater appreciation for the fact that security really is a data problem. The AR in the modern landscape today, but the tax getting more and more sophisticated it is becoming incredibly important to make sure that you are.

Speaker #4: Awesome, thank you.

Matt Hedberg: Awesome. Thank you.

Speaker #1: The next question comes from Rob Owens with Piper Sandler. Please go ahead.

Speaker 6: The next question comes from Rob Owens with Piper Sandler. Please go ahead.

Bringing in all of the data all of the security related signals analyzing all of them correlating across all of them and then using AI automation to really try and make it easier for the stock analysts do identify what the what the issues might be and the way. We think about it is you Miss 100% of the threats and attacks in the day.

Speaker #4: Great, thanks for taking my question. I really want to drill down into the success that you're seeing on the security front. I think you said a third of it was coming from competitive displacements, and obviously we're seeing a lot of success, I think, across the board from vendors that are competing for this next-generation SIEM opportunity.

Matt Hedberg: Great. Thanks for taking my question. I really want to drill down on the success that you're seeing on the security front. I think you said a third of it was coming from competitive displacements. Obviously, we're seeing a lot of success, I think, across the board from vendors that are competing for this next-generation SIEM opportunity. I guess relative to the unlock that happened this quarter, was there anything in particular that drove that momentum? Was it more just how the pipeline's set up? As we look forward, maybe what are some of the different key ingredients to further unlock customers that have been with some of those legacy vendors for some time? Thanks.

Speaker #4: So I guess relative to the unlock that happened this quarter, was there anything in particular that drove that momentum? Was it more just how the pipeline set up? And as we look forward, maybe what are some of the different key ingredients to further unlock customers that have been with some of those legacy vendors for some time?

Later that you don't see them.

And for that reason, we've always had this this mentality of thinking of security from a data perspective, our backend is designed for that our AI capabilities are designed for that and as customers are appreciating. This we are seeing them make multiyear decisions to consolidate onto our platform and that's driving the momentum and we're really leaning in so one.

Speaker #4: Thanks.

Speaker #3: Yeah, that's a great question. And what's you know what's driving that that unlock is really a greater and greater appreciation for the fact that security really is a data problem.

Ashutosh Kulkarni: Yeah, that's a great question. What's driving that unlock is really a greater and greater appreciation for the fact that security really is a data problem. You know, in the modern landscape today, with attacks getting more and more sophisticated, it is becoming incredibly important to make sure that you're bringing in all of the data, all of the security-related signals, analyzing all of them, correlating across all of them, and then using AI automation to really try and make it easier for the SOC analyst to identify what the issues might be. The way we think about it is you miss 100% of the threats and attacks in the data that you don't see. For that reason, we've always had this mentality of thinking of security from a data-first perspective. Our back end is designed for that. Our AI capabilities are designed for that.

The announcements that we made the elastic security the AI sock engine or ease as we call. It what it lets you do is even if you're using a ah incumbent different Sim solution. It allows you to take all of the alerts that might be generated in that solution and then use our AI capabilities to I'd.

Speaker #3: You know that in the modern landscape today, with attacks getting more and more sophisticated, it is becoming incredibly important to make sure that you're bringing in all of the data, all of the security-related signals, analyzing all of them, correlating across all of them, and then using AI automation to really try and make it easier for the SOC analyst to identify what the issues might be.

<unk> attacks within that alert data, which is incredibly powerful because what that means is you don't have to change. Your current infrastructure you can use elastic on top of it to get significantly more incremental value and that becomes a stepping stone and sort of an on ramp for customers, but then eventually display.

Speaker #3: And the way we think about it is, you miss 100% of the threats and attacks in the data that you don't see. For that reason, we've always had this mentality of thinking of security from a data-first perspective. Our backend is designed for that; our AI capabilities are designed for that.

<unk> completely take out their existing incumbent and move completely to our solution. So it's things like that that we've been working on that give me a lot of confidence on how this is going to progress in the coming years.

Speaker #3: And as customers are appreciating this, we are seeing them make multi-year decisions to consolidate onto our platform, and that's driving the momentum. And we are really leaning in.

Ashutosh Kulkarni: As customers are appreciating this, we are seeing them make multi-year decisions to consolidate onto our platform, and that's driving the momentum. We're really leaning in. One of the announcements that we made, the Elastic Security, the Elastic AI SOC engine, or EES, as we call it, what it lets you do is even if you're using an incumbent, different SIEM solution, it allows you to take all of the alerts that might be generated in that solution and then use our AI capabilities to identify attacks within that alert data, which is incredibly powerful because what that means is you don't have to change your current infrastructure. You can use Elastic on top of it to get significantly more incremental value. That becomes a stepping stone, sort of an on-ramp for customers to then eventually displace, completely take out their existing incumbent, and move completely to our solution.

Oh hold to the one question. Thank you very much.

Speaker #3: So one of the announcements that we made the Elastic Security, the AI SOC engine, or EASE, as we call it, what it lets you do is, even if you're using a incumbent different SIEM solution, it allows you to take all of the alerts that might be generated in that solution and then use our AI capabilities to identify attacks within that alert data, which is incredibly powerful, because what that means is you don't have to change your current infrastructure.

Our next question comes from Raimo <unk> with Barclays. Please go ahead.

Perfect Congrats from.

Me as well.

It's nice to see the cloud.

V acceleration, but the bigger upside of my model was actually on self service.

Two factors.

Factors, there that drove that reacceleration of growth in <unk> and <unk>.

What drove that was that like you mentioned several times torrid pace of Arctic purpose, but its still there was a very decent step up on their growth rate there. Thank you.

Speaker #3: You can use Elastic on top of it to get significantly more incremental value, and that becomes a stepping stone, sort of an on-ramp for customers to then eventually displace completely, take out their existing incumbent, and move completely to our solution.

Yeah. Thank you Raimo I'll I'll take that just a just a reiteration that this is the second quarter, now where where we had very strong self managed growth and the combination of self managed growth and cloud growth is what we're going for two to reinforce our our subscription sales led subscription revenue right. That's the core piece that the <unk>.

Speaker #3: So it's things like that that we've been working on that give me a lot of confidence on how this is going to progress in the coming years.

Ashutosh Kulkarni: It's things like that that we've been working on that give me a lot of confidence on how this is going to progress in the coming years.

Company is focused on to drive growth. So the growth in self manage this quarter was truly as I mentioned broad based when you think about where it came from geographically where it came from from from the solutions it pretty much most of the all the geographies and solutions contributed.

Speaker #2: I'll hold to the one question. Thank you very much.

Matt Hedberg: I'll hold to the one question. Thank you very much.

Speaker #1: The next question comes from Raymo Venture with Barclays. Please go ahead.

Speaker 6: The next question comes from Raimo Lenschow with Barclays. Please go ahead.

Speaker #2: Perfect. Correct from me as well. You know it's nice to see the cloud re-acceleration, but the bigger upside of my model was actually on self-service.

Matt Hedberg: Perfect. Congrats from me as well. It's nice to see the cloud reacceleration, but the bigger upside of my model was actually on self-service. Can you speak to the factors there that drove that reacceleration of growth and what drove that? You mentioned several times broad-based, so I take broad-based, but still, there was a very decent step up on that growth right there. Thank you.

Two the self managed are.

Solid cloud and that that's sort of the main main benefits of it.

Speaker #2: Can you speak to the factors there that drove that re-acceleration of growth and you know what drove that? Was that like you know you mentioned several times broad-based I take broad-based, but like still there was a very decent step up on their growth rate there.

Okay.

Oh I'm sorry.

If you were also referring to self service self service cloud or monthly cloud business I think that as you know it's generally been.

Speaker #2: Thank you.

Speaker #3: Yeah, thank you, Raymo. I'll take that. Just a reiteration that this is the second quarter now where we had very strong self-managed growth, and the combination of self-managed growth and cloud growth is what we are going for to reinforce our subscription sales-led subscription revenue, right?

Navam Welihinda: Yeah, thank you, Raimo. I'll take that. Just a reiteration that this is the second quarter now where we had very strong self-managed growth, and the combination of self-managed growth and cloud growth is what we are going for to reinforce our sales-led subscription revenue. That's the core piece that the company is focused on to drive growth. The growth in self-managed this quarter was truly, as I mentioned, broad-based. When you think about where it came from geographically, where it came from the solutions, it pretty much most of all the geographies and solutions contributed to the self-managed cloud. That's sort of the main benefits of it.

Trending around the same way, but to two novel point, our focus really is on the the sales lead subscription revenue, which we're very excited about.

Okay, and then one follow up just like.

Like all the other vendors like a lot of you ever been a struggling around AI with kind of how to price it properly et cetera, but you guys have been on consumption for a long time like how does that help you at the moment and in customer conversations and driving that message from you guys forward. Thank you congrats again.

Speaker #3: That's the core piece that the company is focused on to drive growth. So, the growth in self-managed this quarter was truly, as I mentioned, broad-based.

Speaker #3: When you think about where it came from geographically, and where it came from in terms of solutions, it’s pretty much that all the geographies and solutions contributed to the self-managed cloud.

Thank you. So the reason why consumption as a metric works incredibly well and they are as fundamentally because it makes it very easy for customers to sort of connect the dots between their usage of our platform and the value that they're getting out of it so as opposed to a per user price or.

Speaker #3: And that's sort of the main benefits of it.

Speaker #2: Okay, and sorry. Yeah, I don't know if you were also referring to self-service cloud or our monthly cloud business. I think that, as you know, it's generally been trending around the same way.

Matt Hedberg: Okay, go ahead.

Ashutosh Kulkarni: Sorry. I don't know if you were also referring to self-service cloud or our monthly cloud business. I think that, as you know, it's generally been trending around the same way. To Navam's point, our focus really is on the sales-led subscription revenue, which we are very excited about.

Something that's a flat fee. This really is completely dependent on how much of the AI functionality they use and from our experience that's been something that customers really like as their usage grows as they get more value from the usage of the platform in a day.

Speaker #2: But to Navam's point, our focus really is on the sales-led subscription revenue, which we are very excited about.

They need to pay more and they're more than happy to pay more and so we feel that we've got exactly the right mix when it comes to the pricing model.

Speaker #3: Yeah, okay. And then, Ash, one follow-up. It's like all the other vendors, or like a lot of the other vendors, struggling around AI with kind of how to price it properly, etc.

Matt Hedberg: Okay. Ash, one follow-up is like all the other vendors, like a lot of the other vendors struggling around AI with kind of how to price it properly, et cetera. You guys have been on consumption for a long time. How does that help you at the moment in customer conversations and driving that AI message from you guys forward? Thank you. Congrats again.

And you can see some of that and in terms of just the adoption and the growth that we're seeing.

Speaker #3: But you guys have been on consumption for a long time. Like, how does that help you at the moment in customer conversations and driving that AI message from you guys forward?

Okay perfect. Thank you.

The next question comes from Mike <unk> with Needham <unk> co. Please go ahead.

Speaker #3: Thank you, congrats again.

Speaker #2: Thank you. The reason why consumption as a metric works incredibly well in AI is fundamentally because it makes it very easy for customers to sort of connect the dots between their usage of our platform and the value that they're getting out of it.

Ashutosh Kulkarni: Thank you. The reason why consumption as a metric works incredibly well in AI is fundamentally because it makes it very easy for customers to sort of connect the dots between their usage of our platform and the value that they're getting out of it. As opposed to a per-user price or something that's a flat fee, this really is completely dependent on how much of the AI functionality they use. From our experience, that's been something that customers really like. As their usage grows, as they get more value from the usage of the platform, you know, they need to pay more, and they're more than happy to pay more. We feel that we've got exactly the right mix when it comes to the pricing model. You can see some of that in terms of just the adoption and the growth that we are seeing.

Great. Thanks for taking the questions guys and congrats on the strong quarter here.

First question I wanted to ask was for Ash and coming back again, I think people I mean, the one third of the new and expansion wins in security, where competitive displacements, but if I could try to drive it that slightly differently.

Speaker #2: So, as opposed to a per-user price or something that's a flat fee, this really is completely dependent on how much of the AI functionality they use.

And I think all of US are aware of the industry M&A that's out there.

We're also talking about the sustained execution on the go to market front.

Speaker #2: And from our experience, that's been something that customers really like. As their usage grows and they get more value from the usage of the platform, they need to pay more, and they're more than happy to pay more.

So I wanted to ask what is the thought around how durable.

These competitive displacements or when thinking about what's taking place on the security front I think about the amount of time that these deals might be sitting in your pipeline.

Speaker #2: And so we feel that we've got exactly the right mix when it comes to the pricing model, and you can see some of that in terms of just the adoption and the growth that we are seeing.

Might mature.

What is the durability for these continuing to convert on a go forward basis from where we sit today.

Yeah. That's a great question and you know generally what I'd say is that in.

Speaker #3: Okay, perfect. Thank you.

Matt Hedberg: Okay, perfect. Thank you.

In the last few years, we've been seeing a constant steady drumbeat and it's been it's been growing of customers that are really looking for a change from their incumbent solutions. You know most of the incumbent solutions that have been around really thought about same as sort of just the the dashboards and the alerts.

Speaker #1: The next question comes from Mike Sicos with Needham & Co. Please go ahead.

Speaker 6: The next question comes from Mike Siekos with Needham & Co. Please go ahead.

Speaker #4: Great, thanks for taking the questions, guys, and congrats on the strong quarter here. First question I wanted to ask was for Ash, and coming back again, I think people are hanging on the one-third of the new and expansion wins in security were competitive displacements.

Matt Hedberg: Great. Thanks for taking the questions, guys, and congrats on the strong quarter here. The first question I wanted to ask was for Ash. Coming back again, I think people are hanging on the one-third of the new and expansion wins in security were competitive displacements. If I could try to drive it that slightly differently, I think all of us are aware of the industry M&A that's out there. You're also talking about the sustained execution on the go-to-market front. I wanted to ask, what is the thought around how durable these competitive displacements are when thinking about what's taking place on the security front? I think about the amount of time that these deals might be sitting in your pipeline. They might mature. What is the durability for these continuing to convert on a go-forward basis from where we sit today?

Speaker #4: But if I could try to drive it that slightly differently, I think all of us are aware of the industry M&A that's out there.

They didn't think about the effort that is involved in automating the job of the sock analyst and things that need to be done to really make it easier to spot the attacks as opposed to just the alerts and for that reason, we are seeing sort of a secular shift in the migration onto you know what I would describe as the next generation.

Speaker #4: You're also talking about the sustained execution on the go-to-market front. So, I wanted to ask, what is the thought around how durable these competitive displacements are when thinking about what's taking place on the security front?

<unk> of Sim platforms in some technologies that tend to have a bias towards treating security as a data problem. So we are seeing more and more of these conversations happening. That's the reason why we introduced capabilities like attack discovery, we introduced capabilities like automatic import which make it easier for people to migrate.

Speaker #4: I think about them, the amount of time that these deals might be sitting in your pipeline. They might mature. What is the durability for these continuing to convert on a go-forward basis from where we sit today?

Speaker #3: Yeah, that's a great question. And you know, generally what I'd say is that in the last few years, we've been seeing a constant steady drumbeat, and it's been growing, of customers that are really looking for a change from their incumbent solutions.

Ashutosh Kulkarni: Yeah, that's a great question. Generally, what I'd say is that in the last few years, we've been seeing a constant steady drumbeat, and it's been growing of customers that are really looking for a change from their incumbent solutions. Most of the incumbent solutions that have been around really thought about SIEM as sort of just the dashboards and the alerts. They didn't think about the effort that is involved in automating the job of the SOC analyst and things that need to be done to really make it easier to spot the attacks as opposed to just the alerts. For that reason, we are seeing sort of a secular shift and a migration onto what I would describe as the next generation of SIEM platforms and SIEM technologies that tend to have a bias towards treating security as a data problem.

Their workflows over onto elastic and most recently, we introduced our elastic security AI shock engine. So you can get started by using our AI functionality on top of your existing Sim and making that sort of an easy on ramp to eventually replace your European provider.

Speaker #3: You know, most of the incumbent solutions that have been around really thought about SIEM as sort of just the dashboards and the alerts. They didn't think about the effort that is involved in automating the job of the SOC analyst in things that need to be done to really make it easier to spot the attacks, as opposed to just the alerts.

We feel very good about this being a tailwind for us for many years to come.

And you know I I see this as a really good ongoing motion and our sales team is leaning into it.

Speaker #3: And for that reason, we are seeing sort of a secular shift and a migration onto what I would describe as the next generation of SIEM platforms and SIEM technologies that tend to have a bias towards treating security as a data problem.

Terrific and for the follow up here just wanted to circle back to the net expansion rate for a second.

Great to hear in Q1, how you guys outperformed.

Across both consumption and commitments right.

I guess could you help us think about what's embedded in the guide today for how net expansion is expected to play out over the rest of the year or are we still assuming relatively stable net expansion or are we starting to get an inkling that this might actually begin picking up.

Speaker #3: So we are seeing more and more of these conversations happening. That's the reason why we introduced capabilities like attack discovery. We introduced capabilities like automatic import, which make it easier for people to migrate their workflows over onto Elastic.

Ashutosh Kulkarni: We are seeing more and more of these conversations happening. That's the reason why we introduced capabilities like Elastic Attack Discovery. We introduced capabilities like Elastic Automatic Import, which make it easier for people to migrate their workflows over onto Elastic. Most recently, we introduced our Elastic AI SOC engine. You can get started by using our AI functionality on top of your existing SIEM and making that sort of an easy on-ramp to eventually replace your SIEM provider. We feel very good about this being a tailwind for us for many years to come. I see this as a really good ongoing motion, and our sales team is leaning into it.

Yeah. Thanks for the question, Mike. So look we had a we had a good start to the year a great Q1 with a going in macro was in a better position than what we thought.

Speaker #3: And most recently, we introduced our Elastic Security AI SOC engine. So you can get started by using our AI functionality on top of your existing SIEM, making that sort of an easy on-ramp to eventually replace your SIEM provider.

In the beginning of the year, when we issued our first guidance.

Consumption was strong and the commitments were strong from our from our customers. So overall as you think about where those commitments come from.

Speaker #3: We feel very good about this being a tailwind for us for many years to come. And, you know, I see this as a really good ongoing motion, and our sales team is leaning into it.

A lot of it comes from existing customers as they expand usage from us and that's driven by our net expansion rate, we don't guide to future net expansion, but as we think about the full year.

Speaker #4: Terrific. And for the follow-up here, just wanted to cycle back to the net expansion rate for a second. Great to hear in Q1 how you guys outperformed across both consumption and commitments, right?

Matt Hedberg: Terrific. For the follow-up here, just wanted to cycle back to the net expansion rate for a second. Great to hear in Q1 how you guys outperformed across both consumption and commitments, right? I guess, can you help us think about what's embedded in the guide today for how net expansion is expected to play out over the rest of the year? Are we still assuming relatively stable net expansion, or are we starting to get an inkling that this might actually begin ticking up?

You know what we baked in is more visibility into the year and a better macro situation and also the quarter over quarter impacts of prices.

Speaker #4: I guess, can you help us think about what's embedded in the guide today for how net expansion is expected to play out over the rest of the year?

Price as well as the year over year impacts of price had been baked into the guide we felt good about performance, which is what led to the race.

Speaker #4: Are we still assuming relatively stable net expansion, or are we starting to get an inkling that this might actually begin ticking up?

For the full year, and we would expect net expansion to performed well over the next several quarters as well.

Speaker #3: Yeah, thanks for the question, Mike. So look, we had a good start to the year, a great Q1, with the macro environment in a better position than what we thought at the beginning of the year when we issued our first guidance.

Navam Welihinda: Yeah, thanks for the question, Mike. Look, we had a good start to the year, a great Q1. Going in, macro was in a better position than what we thought in the beginning of the year when we issued our first guidance. Consumption was strong, and the commitments were strong from our customers. Overall, as you think about where those commitments come from, a lot of it comes from existing customers as they expand usage from us, and that's driven by our net expansion rate. We don't guide to future net expansion, but as we think about the full year, what we've baked in is more visibility into the year and a better macro situation, and also the quarter-over-quarter impacts of price, as well as the year-over-year impacts of price have been baked into the guide.

Great. Thank you guys.

The next question comes from Sandy thing with them.

Morgan Stanley. Please go ahead.

Thank you for taking the questions and congrats on the strong start to the fiscal year.

Speaker #3: Consumption was strong, and the commitments were strong from our customers. So overall, as you think about where those commitments come from, a lot of it comes from existing customers as they expand usage from us.

I wanted to get some help in terms of understanding the impact on some of your most exciting opportunities and I want us to compare and contrast, the sort of AI search opportunity, which you guys have been very clear right. We've come from POC in eval initial applications into production and then you have to sort of get it.

Speaker #3: And that's driven by our net expansion rate. We don't guide to future net expansion, but as we think about the full year, you know what we've baked in is more visibility into the year and a better macro situation.

<unk>.

Increase the penetration rate in terms of a customer as a whole the application of real estate to do that long multiyear journey you guys have been very clear about that when it comes to the Sim opportunity.

Speaker #3: And also the quarter-over-quarter impacts of price, as well as the year-over-year impacts of price, have been baked into the guide.

<unk> is the right way to think about it is it because it's a more established category because theres a lot of brownfield replacement opportunities.

Speaker #3: We felt good about performance, which is what led to the raise. For the full year, we expect net expansion to perform well over the next several quarters as well.

Navam Welihinda: We felt good about performance, which is what led to the raise for the full year, and we'd expect net expansion to perform well over the next several quarters as well.

That would be more immediate impact on growth and self managed and cloud growth.

Speaker #4: Great, thank you guys.

Matt Hedberg: Great. Thank you, guys.

To get your comments on doing the compare and contrast between those two specific opportunities.

Speaker #1: The next question comes from Sandeep Singh with Morgan Stanley. Please go ahead.

Speaker 6: The next question comes from Sandeep Singh with Morgan Stanley. Please go ahead.

Yeah. Thanks for the question so the way to think about.

Speaker #4: Thank you for taking the questions, and congrats on the strong start to the fiscal year. Ash, I wanted to get some help in terms of understanding the impact on some of your most exciting opportunities. I want to sort of compare and contrast the sort of AI search opportunity, which you guys have been very clear about, right?

Matt Hedberg: Thank you for taking the questions, and congrats on the strong start to the fiscal year. Ash, I wanted to get some help in terms of understanding the impact on some of your most exciting opportunities. I want to sort of compare and contrast the sort of AI search opportunity, which you guys have been very clear, right? Like we've come from POC and evals, initial applications into production, and then you have to sort of get, you know, increase the penetration rate in terms of a customer's overall application real estate to do that long multi-year journey. You guys have been very clear about that. When it comes to the SIEM opportunity, though, is the right way to think about it because it's a more established category, because there's a lot of brownfield replacement opportunities? Can that be a more immediate impact on growth and self-managed and cloud growth?

Displacements that happen, whether its in security or observed that whenever somebody consolidates onto our platform.

The first thing to keep in mind is that they have to migrate those workflows over so typically that takes a little bit of time.

The fastest migrations that we've seen happen within a quarter the longest that we've seen take multiple quarters, just because there's actual engineering working world and moving all of those data streams over but like you said these are better understood techniques and these are better understood.

Speaker #4: Like we've come from POC and evals, initial applications into production, and then you have to sort of increase the penetration rate in terms of a customer's overall application real estate to do that long multi-year journey.

Speaker #4: You guys have been very clear about that. When it comes to the SIEM opportunity, though, it's the right way to think about it because it's a more established category and there are a lot of brownfield replacement opportunities.

You know templates for that.

So we have invested a fair bit both from the product side I talked about automatic import but also from our services team that has the experience and expertise doing these kinds of migrations I think the most important thing to think about though is you know we are seeing ourselves as a beneficiary of this.

Speaker #4: Can there be a more immediate impact on growth from self-managed and cloud offerings? I would love to get your comments on comparing and contrasting those two specific opportunities.

Matt Hedberg: I just would love to get your comments on doing the compare and contrast between those two specific opportunities.

Live of migrations and sort of moving to the next generation of Sim that's happening within.

Speaker #3: Yeah, thanks for the question, Sandeep. So the way to think about displacements that happen, whether it's in security or observability, whenever somebody consolidates onto our platform, the first thing to keep in mind is that they have to migrate those workflows over.

Ashutosh Kulkarni: Yeah, thanks for the question, Sandeep. The way to think about, you know, displacements that happen, whether it's in security or observability, whenever somebody consolidates onto our platform, the first thing to keep in mind is that they have to migrate those workflows over. Typically, that takes a little bit of time. The fastest migrations that we've seen happen within a quarter. The longest that we've seen take multiple quarters just because there's actual engineering work involved in moving all of those data streams over. Like you said, these are better understood techniques, and these are better understood, you know, templates for that. We have invested a fair bit, both from the product side, I talked about Elastic Automatic Import, but also from our services team that has experience and expertise doing these kinds of migrations.

The broad market.

And our goal is to take as much of that share as possible and so I don't see this as just.

Speaker #3: So typically, that takes a little bit of time. You know, the fastest migrations that we've seen happen within a quarter are the longest that we've seen take multiple quarters, just because there’s actual engineering work involved in moving all of those data streams over.

A one time thing, but this is I believe something that we should benefit from for not just several quarters, but you know several years to come.

Got it.

Great great great color.

Speaker #3: But like you said, these are better understood techniques, and these are better understood, you know, templates for that. So, we have invested a fair bit, both from the product side.

I had a question on just the federal business and that was a source of.

This last quarter it sounds like things are stabilizing.

Said comes into its fiscal year and what are some of the assumptions that you're baking in for.

Speaker #3: I talked about automatic import, but also from our services team that has experience and expertise doing these kinds of migrations. I think the most important thing to think about, though, is, you know, we are seeing ourselves as beneficiaries of this wave of migrations and sort of moving to the next generation of SIEM that's happening within the broad market.

For fiscal Q2, and the governments fiscal year end coming up next year.

Ashutosh Kulkarni: I think the most important thing to think about, though, is, you know, we are seeing ourselves as a beneficiary of this wave of migrations and sort of moving to the next generation of SIEM that's happening within, you know, the broad market. Our goal is to take as much of that share as possible. I don't see this as just a one-time thing, but this is, I believe, something that, you know, we should benefit from for not just several quarters, but, you know, several years to come.

Yeah, maybe let me just touch upon that and then I'll ask him to do it you know.

The first thing I'd say is we are definitely seeing sort of stabilization.

In the U S public sector, yes, six months ago, what we saw was with the new administration settling in with Doge and everything like there was a lot of.

Speaker #3: And our goal is to take as much of that share as possible. I don't see this as just a one-time thing.

Yeah. So movement the environment was very dynamic that has settled.

Speaker #3: But this is, I believe, something that we should benefit from for not just several quarters, but, you know, several years to come.

A much more stable environment, and our sales team knows how to execute very well within that environment, especially given that you know the value that we offer for our platform is incredibly high and its very well received by our customers in the public sector. So we're really excited about that.

Speaker #4: That's a great, great, great color. I had a question on just the federal business, and you know that was a source of weakness last quarter.

Matt Hedberg: That's a great, great color. I had a question on just the federal business, and you know, that was a source of weakness last quarter. It sounds like things are stabilizing. As the Fed comes into its fiscal year-end, what are some of the assumptions that you're baking in for fiscal Q2 and the government's fiscal year-end coming up next quarter?

Speaker #4: It sounds like things are stabilizing. As the Fed comes into its fiscal year end, what are some of the assumptions that you're baking in for fiscal Q2 and the government's fiscal year end coming up next quarter?

I will say that you know Q2 is typically like me even in past years have not seen like a big federal flush or anything of that sort. So from a public sector standpoint, Q2 hasn't necessarily been sort of a outlying quarter for us. So just keep that in mind, but let me I don't know if not all of them you have anything else to add to that I think.

Speaker #3: Maybe let me just touch upon that and then I'll ask Navam to add to it. You know, the first thing I'd say is we're definitely seeing sort of stabilization in the U.S. public sector.

Ashutosh Kulkarni: Maybe let me just touch upon that, and then I'll ask Navam to add to it. The first thing I'd say is we're definitely seeing sort of stabilization in the U.S. public sector. Six months ago, what we saw was with the new administration settling in with DOJ and everything, there was a lot of movement. The environment was very dynamic. That has settled. It's a much more stable environment, and our sales team knows how to execute very well within that environment, especially given that the value that we offer for our platform is incredibly high, and it's very well received by our customers in the public sector. We are really excited about that. I will say that Q2 has typically, like we, even in past years, have not seen a big federal flush or anything of that sort.

Scott most of my points.

When we gave our initial guide in May there was a lot of uncertainty around what would happen with the U S. A.

Speaker #3: You know, six months ago, what we saw was with the new administration settling in with DOJ and everything, like there was a lot of sort of movement.

Public sector, specifically the civilian agencies would it expand to do more of the public sector and the rest of the.

Rest of sort of the geos it clearly did not occur.

Speaker #3: The environment was very dynamic; that has settled. It's a much more stable environment. Our sales team knows how to execute very well within that environment, especially given that the value we offer for our platform is incredibly high and is very well received by our customers in the public sector.

And the U S public sector, while there is some ongoing impacts have mostly stabilized as ash said our teams executing well there.

And our products are a good fit for what they're trying to achieve so we've factored that into our second quarter guide and as Ashley mentioned, there's no real flush that we're factoring in there and that's not something we would expect.

Speaker #3: So we are really excited about that. I will say that, you know, Q2 has typically, like we, even in past years, have not seen a big federal flush or anything of that sort.

I appreciate the thoughts.

The next question comes from Kash Rangan with Goldman Sachs. Please go ahead.

Speaker #3: So from a public sector standpoint, Q2 hasn't necessarily been an outlying quarter for us. So just keep that in mind. But let me, I don't know if Navam, you have anything else to add to that.

Ashutosh Kulkarni: From a public sector standpoint, Q2 hasn't necessarily been an outlying quarter for us. Just keep that in mind. I don't know if Navam, you have anything else to add to that.

Alright. Thank you very much I'll add my congrats on the quarter. It looks like everything is coming back together for you guys just to where you'd like it.

Pardon me.

Speaker #4: No, I think Ash got most of my points. But you know when we gave our initial guide in May, there was a lot of uncertainty around what would happen with the U.S. public sector, specifically the civilian agencies.

Navam Welihinda: No, I think Ash got most of my points, but you know, when we gave our initial guide in May, there was a lot of uncertainty around what would happen with the U.S. public sector, specifically the civilian agencies. Would it expand to more of the public sector and the rest of the rest of sort of the geos? It clearly did not occur. The U.S. public sector, you know, while there's some ongoing impacts, have mostly stabilized, and as Ash said, our team's executing well there, and our products are a good fit for what they're trying to achieve. We've factored that into our second quarter guide. As Ash mentioned, there's no real flush that we're factoring in there, and that's not something we'd expect.

It's like a reduction from a few years ago.

I've asked you this debt.

This is the call Theres, an AI search aspect to it there's the security aspect to it doesn't absorb the aspect to it.

Speaker #4: Would it expand to more of the public sector and the rest of the rest of sort of the geos? It clearly did not occur.

What is it that makes elastic tick at the end of the day what is the message to your customer base. What is the unifying thread that makes this machine a predictable growth.

Speaker #4: And the U.S. public sector, you know, while there are some ongoing impacts, has mostly stabilized. As Ash said, our teams are executing well there.

That is a really.

We're ready for the next four to five years.

That's a great question Kash and that's the kind of redox question that there are always I appreciate it.

Speaker #4: And our products are a good fit for what they're trying to achieve. So we've factored that into our Q2 guide. And as Ash mentioned, there's no real flush that we're factoring in there, and that's not something we'd expect.

Fundamentally we think of ourselves as a search AI company.

Like I've described in the past our secret sauce is our ability to take in any and all kinds of data, especially messy unstructured data and really gets you. The most correct the most relevant.

Speaker #2: I appreciate the thoughts.

Matt Hedberg: I appreciate the thoughts.

Speaker #1: The next question comes from Cash Rangan with Goldman Sachs. Please go ahead.

Speaker 6: The next question comes from Kash Rangan with Goldman Sachs. Please go ahead.

Speaker #4: Hi, thank you very much. I'll add my congrats on the quarter. Looks like everything is coming back together for you guys just the way you would like it.

Matt Hedberg: Hi, thank you very much. I'll add my congrats on the quarter. Looks like everything is coming back together for you guys just the way you would like it. Pardon me, Ash, if this feels like a reluctance from a few years ago, but I would ask you this, that listen to the call. There is an AI search aspect to it. There's a security aspect to it. There's an observability aspect to it. What is it that makes Elastic tick at the end of the day? What is the message to your customer base? What is the unifying thread that makes this machine a predictable growth machine that is ready for the next four to five years?

Information out of it and as we've described in the context of AI as you think about companies enterprises government agencies, what have you building agenda applications in the.

Speaker #4: And pardon me, Ash, if this feels like a redux from a few years ago, but I would ask you this: listen to the call.

Speaker #4: There is an AI search aspect to it. There's a security aspect to it. There's an observability aspect to it. What is it that makes Elastic tick at the end of the day?

Criticality of getting the context right is so high, especially as you're building more and more sophisticated agents and that search relevance is absolutely critical and we're seeing that across the board and it's not just about having a vector database its about so much more than that so the way we think about our role in this ecosystem.

Speaker #4: What is the message to your customer base? What is the unifying thread that makes this machine a predictable growth machine that is ready for the next four to five years?

Is to be the data retrieval and context engineering platform, making it possible to get exactly the accurate context in real time to these larger language models, that's helping us in our search business, but if you then think about security and you think about observed that you really recognize that these are.

Speaker #3: That's a great question, Cash, and that's the kind of redux question that I always appreciate. You know, fundamentally, we think of ourselves as a search AI company.

Ashutosh Kulkarni: That's a great question, Kash, and that's the kind of redux question that I always appreciate. Fundamentally, we think of ourselves as a search AI company. Like I've described in the past, our secret sauce is our ability to take in any and all kinds of data, especially messy, unstructured data, and really get you the most correct, the most relevant information out of it. As we've described in the context of AI, as you think about companies, enterprises, government agencies, what have you, building agentic applications, the criticality of getting the context right is so high, especially as you are building more and more sophisticated agents. That search relevance is absolutely critical. We are seeing that across the board. It's not just about having a vector database. It's about so much more than that.

Speaker #3: And like I've described in the past, our secret sauce is our ability to take in any and all kinds of data, especially messy, unstructured data, and really get you the most correct, the most relevant information out of it.

Fundamentally at the at the end of the day data problems, you're dealing with complex logs, you're dealing with complex traces application logs that are incredibly messy and if you have to analyze them at scale in real time using AI, we have the best platform for that so for us that core search AI piece is the secret sauce.

Speaker #3: And as we've described in the context of AI, you know as you think about companies, enterprises, government agencies, what have you, building agentic applications, the criticality of getting the context right is so high, especially as you're building more and more sophisticated agents.

That's what's going to continue to drive our progress on our growth and that's why I'm very confident in the long term growth and strength of our business.

Speaker #3: And that search relevance is absolutely critical. We are seeing that across the board. And it's not just about having a vector database; it's about so much more than that.

Thank you to ash from cash thank you.

Thank you Josh.

Speaker #3: So, the way we think about our role in this ecosystem is to be that data retriever and context engineering platform, making it possible to get exactly the accurate context in real time to these large language models.

Ashutosh Kulkarni: The way we think about our role in this ecosystem is to be that data retriever and context engineering platform, making it possible to get exactly the accurate context in real time to these large language models. That's helping us in our search business. If you then think about security and you think about observability, you really recognize that these are fundamentally, at the end of the day, data problems. You're dealing with complex logs. You're dealing with complex traces. Application logs are incredibly messy. If you have to analyze them at scale in real time using AI, we have the best platform for that. For us, that core search AI piece is the secret sauce. That's what's going to continue to drive our progress and our growth. That's why I'm very confident in the long-term growth and strength of our business.

Our next question comes from Howard <unk> with Guggenheim Securities. Please go ahead.

Okay.

Great, Thanks, and excellent quarter guys.

I guess building on <unk> question on use cases, when you analyze your quarterly performance by U K did growth in search continued to accelerate but because I believe that's been the trend and part two is as Ginny you can't become more mature. There you also require more data to be monitored so is that leading to more observer ability cross sell.

Speaker #3: That's helping us in our search business. But if you then think about security, and you think about observability, you really recognize that these are fundamentally, at the end of the day, data problems.

Speaker #3: You're dealing with complex logs. You're dealing with complex traces. Application logs are incredibly messy. And if you have to analyze them at scale in real time using AI, we have the best platform for that.

Or not necessarily.

Yeah. So that's a great question. So what I'd say is that our search business continues to be incredibly strong because of the general idea elements and that's what's so exciting about what's happening here and like I said this quarter. We also saw a lot of platform consolidation and in security I gave some of the examples because you know it.

Speaker #3: So for us, that core search AI piece is the secret sauce. That's what's going to continue to drive our progress and our growth. And that's why I'm very confident in the long-term growth and strength of our business.

The end of the day, our strengths in AI is helping us compete better and take more share and observed at the insecurity and that's the nice part about it so you're fundamentally AI expands the Tam for our search business and then the other areas. It allows us to compete better now to your point about what's happening overall.

Speaker #2: Thank you to Ash from Cash. Thank you.

Matt Hedberg: Thank you to Ashutosh from Kash. Thank you.

Speaker #3: Thank you, Cash.

Ashutosh Kulkarni: Thank you, Kash.

Speaker #1: The next question comes from Howard Ma with Google Enhanced Securities. Please go ahead.

Speaker 6: The next question comes from Howard Ma with Goldman Sachs. Please go ahead.

Speaker #4: Great, thanks. And excellent quarter, guys. I guess building on Cash's question on use cases, when you analyze your quarterly performance by use case, did growth in search continue to accelerate?

Matt Hedberg: Great, thanks. An excellent quarter, guys. I guess building on Kash's question on use cases, when you analyze your quarterly performance by use case, did growth in search continue to accelerate? I believe that's been the trend. Part two is, as GenAI use cases become more mature, they also require more data to be monitored. Is that leading to more observability cross-sell or not necessarily?

And the market.

We absolutely see that more and more applications, especially these AI centric applications are being built but we are still in the early days you take any enterprise you're talking about a handful or at most dozens of applications and you compare that to the total application landscape that exists in a new organ.

Speaker #4: Because I believe that's been the trend. And part two is, as GenAI use cases become more mature, do they also require more data to be monitored?

Speaker #4: So is that leading to more observability cross-sell, or not necessarily?

Speaker #3: Yeah, so that's a great question. What I'd say is that our search business continues to be incredibly strong because of the GenAI tailwinds.

Ashutosh Kulkarni: Yeah, that's a great question. What I'd say is that our search business continues to be incredibly strong because of the GenAI tailwinds. That's what's so exciting about what's happening here. Like I said, this quarter, we also saw a lot of platform consolidation. In security, I gave some of the examples because, you know, at the end of the day, our strength in AI is helping us compete better and take more share in observability and security. That's the nice part about it. Fundamentally, AI expands the TAM for our search business. In the other areas, it allows us to compete better. Now, to your point about what's happening overall in the market, we absolutely see that more and more applications, especially these AI-centric applications, are being built. We are still in the early days.

<unk>, it's in the hundreds of thousands so we are still in the early days AI has a lot of legs ahead of it I think this is a.

Speaker #3: And that's what's so exciting about what's happening here. Like I said, this quarter, we also saw a lot of platform consolidation in security. I gave some of the examples because, you know, at the end of the day, our strength in AI is helping us compete better and take more share in observability and security.

Multiyear journey, where theres a lot of excitement for the future.

The fact that we're getting baked in into the platform into the infrastructure that our customers are using us as this the score context engine. Just makes me feel very good about the long term prospects for our business.

Speaker #3: And that's the nice part about it. So fundamentally, AI expands the TAM for our search business. In the other areas, it allows us to compete better—not to your point about what's happening overall in the market.

Great. Thank you ash.

Follow up you've made some significant go to market improvements over the last year and it's a question for Nevada.

Tom you were not at all I think this time last year, obviously, but when you look at your data on key metrics like sales capacity and productivity and coverage ratio is that the number of large deals in the pipeline. So things like that I'm curious how you would characterize your optimism for the rest of the year versus the stellar quarter you just posted.

Speaker #3: We absolutely see that more and more applications, especially these AI-centric applications, are being built. But we are still in the early days. You know, you take any enterprise, you're talking about a handful or at most dozens of applications.

Ashutosh Kulkarni: You know, you take any enterprise, you're talking about a handful or at most dozens of applications. You compare that to the total application landscape that exists in any organization, it's in the hundreds of thousands. We are still in the early days. AI has a lot of legs ahead of it. I think this is a multi-year journey where there's a lot of excitement for the future. The fact that we are getting baked in into the platform, into the infrastructure where our customers are using us as this core context engine just makes me feel very good about the long-term prospects for our business.

Speaker #3: And you compare that to the total application landscape that exists in any organization; it's in the hundreds of thousands. So, we are still in the early days.

Thank you.

Yeah. Thanks, Thanks for the question Howard So.

Speaker #3: AI has a lot of legs ahead of it. I think this is a multi-year journey where there's a lot of excitement for the future.

I said I feel good about the year and the reason I feel good about the year is about the durability of our team's execution.

And that is reinforced by the underlying data we're seeing in terms of how the sales team has been about being able to perform from a subscription revenue less sorry, our sales lead subscription revenue perspective, and the reason they're able to do that is they have had strong strong performance from up from.

Speaker #3: And the fact that we are getting baked into the platform, into the infrastructure, where our customers are using us as this core context engine, just makes me feel very good about the long-term prospects for our business.

Speaker #2: Great, thank you, Ash. As a follow-up, you've made some significant go-to-market improvements. Over the last year, it's a question for Navam. So, Navam, you were not at Elastic this time last year, obviously, but when you look at your data on key metrics like sales capacity and productivity and coverage ratio; the number of large deals in the pipeline—things like that—I'm curious how you would characterize your optimism for the rest of the year versus the stellar quarter you just posted.

Matt Hedberg: Great, thank you, Ash. As a follow-up, you've made some significant go-to-market improvements over the last year. It's a question for Navam. Navam, you were not at Elastic this time last year, obviously. When you look at your data on key metrics like sales capacity and productivity and coverage ratios, the number of large deals in the pipeline, things like that, I'm curious how you would characterize your optimism for the rest of the year versus the seller quarter you just posted. Thank you.

A productivity perspective, and our capacity additions are working so that's sort of the underlying drivers as to why our our sales led growth has been durable and you know we've we've had a great started the year and I feel optimistic about the rest of the year.

Great. Thanks again.

The next question comes from.

Tyler Radke with.

Eddie Please go ahead.

Speaker #2: Thank you.

Yeah. Thank you thanks for taking the question.

Speaker #3: Yeah, thanks for the question, Howard. So, you know, like I said, I feel good about the year. And the reason I feel good about the year is about the durability of our team's execution.

Navam Welihinda: Yeah, thanks for the question, Howard. Like I said, I feel good about the year. The reason I feel good about the year is about the durability of our team's execution. That is reinforced by the underlying data we're seeing in terms of how the sales team has been able to perform from a sales-led subscription revenue perspective. The reason they're able to do that is they've had strong performance from a productivity perspective, and our capacity additions are working. That's sort of the underlying drivers as to why our sales-led growth has been durable. We've had a great start of the year, and I feel optimistic about the rest of the year.

You sound pretty good turn our PEO bookings this quarter and you also talked about some pretty impressive million dollar customer.

Customer ads on AI can you just talk about the use cases.

Speaker #3: And that is reinforced by the underlying data we're seeing in terms of how the sales team has been able to perform. From a subscription revenue, less, sorry, a sales-led subscription revenue perspective, and the reason they're able to do that is they've had strong performance from a productivity perspective.

Youre seeing and sort of what what drove that step up.

Versus the last couple of quarters.

Yeah fundamentally what we're seeing is.

That our customers are making meaningful commitments to us Tyler I think that that sales led motion is now I've mentioned has been continuing to do well on the AI side.

Speaker #3: And our capacity additions are working. So that's sort of the underlying drivers as to why our sales-led growth has been durable. And you know we've had a great start to the year, and I feel optimistic about the rest of the year.

It's an area that we've been focused on to make sure that.

Our largest customers our highest propensity to grow customers.

Really adopting our AI technology.

Speaker #2: Great, thanks again.

And as we've been driving that Youre seeing some of this momentum so from my perspective like my goal is to make sure that every single one of our customers.

Matt Hedberg: Great, thanks again.

Speaker #1: The next question comes from Tyler Radke with Firi. Please go ahead.

Speaker 6: The next question comes from Tyler Radke with Citi. Please go ahead.

Existing customers and new customers, we lead with our AI functionality.

Speaker #4: Yeah, thank you. Thanks for taking the question.

Matt Hedberg: Thank you. Thanks for taking the question. You saw pretty good turn RPO bookings this quarter, and you also talked about some pretty impressive million-dollar customer ads on AI. Can you just talk about the use cases you're seeing and sort of what drove that step up versus the last couple of quarters?

We are getting better and better at it than my my belief is that as more of our customers adopt.

Speaker #5: You saw a pretty good current RPO bookings this quarter, and you also talked about some pretty impressive million-dollar customer ads on AI. Can you just talk about the use cases you're seeing and sort of what drove that step up versus the last couple of quarters?

As they build more complex applications. These complex applications don't have just one call to a record database, but they have like multiple different interactions. There are multiple moments, where they have to do retrieval and context engineering and each of those drives consumption as you know so for our consumption based model.

Speaker #3: Yeah, fundamentally what we're seeing is that our customers are making meaningful commitments to us, Tyler. I think that sales-led motion, as Navam mentioned, has been continuing to do well.

Ashutosh Kulkarni: Yeah, fundamentally, what we are seeing is that our customers are making meaningful commitments to us. Tyler, I think that sales-led motion, as Navam mentioned, has been continuing to do well. On the AI side, you know, it's an area that we've been focused on to make sure that our largest customers, our highest propensity to grow customers, are really adopting our AI technology. As we've been driving that, you are seeing some of this momentum. From my perspective, my goal is to make sure that every single one of our customers, you know, existing customers and new customers, be lead with our AI functionality. We are getting better and better at it.

We are embedded into every one of their AI applications the better the traction that we see and that's what we're focused on that's what we're starting to see.

Speaker #3: On the AI side, you know it's an area that we've been focused on to make sure that our largest customers and highest propensity to grow customers are really adopting our AI technology.

Great and a follow up on the on the pricing side I think.

Based on the list price that we saw out there it looks like the monthly cloud price went up by about 5% was that.

Speaker #3: And as we've been driving that, you're seeing some of this momentum. So from my perspective, my goal is to make sure that every single one of our customers—existing customers and new customers—we lead with our AI functionality.

Similar across the the rest of the business I think there was price increases on the annual as well as the self managed side of the equation.

Speaker #3: We are getting better and better at it. And my belief is that as more of our customers adopt as they build more complex applications, you know these complex applications don't have just one call to a vector database, but they have like multiple different interactions that are multiple moments where they have to do retrieval and context engineering.

Yes, so we did a price increase at the beginning of the year Tyler as you know our business model is such that we don't sell discrete products. So for US the way you know as we as we add more and more functionality from time to time, we will increase our prices.

Ashutosh Kulkarni: My belief is that as more of our customers adopt, you know, as they build more complex applications, you know, these complex applications don't have just one call to a vector database, but they have like multiple different interactions. There are multiple moments where they have to do retrieval and context engineering, and each of those drives consumption, as you know. For our consumption-based model, the more we are embedded into every one of their AI applications, the better the traction that we see. That's what we are focused on. That's what we are starting to see.

To just to remind you we did something similar for our self managed products last year, we had talked about it at the beginning of last year and we also did a price increase at the beginning of this year like you mentioned so for US. This is just the normal course of business.

Speaker #3: And each of those drives consumption, as you know. So, for our consumption-based model, the more we are embedded into every one of their AI applications, the better the traction that we see.

Speaker #3: And that's what we're focused on. That's what we're starting to see.

These from time to time, but.

But it was it was across both cloud and self managed.

Speaker #2: Great. And a follow-up on the pricing side, I think you know based on the list price that we saw out there, it looked like the monthly cloud price went up by about 5%.

Matt Hedberg: Great. A follow-up on the pricing side, I think, you know, based on the list price that we saw out there, it looked like the monthly cloud price went up by about 5%. Was that similar across the rest of the business? I think there were price increases on the annual as well as the self-managed side of the equation.

Thank you.

The next question comes from Brian <unk> with Jpmorgan. Please go ahead.

Speaker #2: Was that similar across the rest of the business? I think there were price increases on the annual as well as the self-managed side of the equation.

The next question comes from Brian Essex with Jpmorgan. Please go ahead.

Speaker #3: Yeah, so we did a price increase at the beginning of the year. Tyler, as you know, our business model is such that we don't sell discrete products.

Ashutosh Kulkarni: Yeah, so we did a price increase at the beginning of the year. Tyler, as you know, our business model is such that we don't sell discrete products. For us, the way, you know, as we add more and more functionality, from time to time, we will increase our prices. You know, just to remind you, we did something similar for our self-managed products.

Yeah, Hi, Thank you for taking the question and congratulations from me on the strong results.

Maybe one for you as well.

Speaker #3: So for us, the way you know, as we add more and more functionality, from time to time we will increase our prices. You know, just to remind you, we did something similar for our self-managed products last year.

We're hearing, particularly on the security side the focus on AI.

AI and leveraging enhanced visibility and real time detection on streaming data, which I think you addressed but would love to but we're also hearing is a focus on more and more efficient data ingestion, leveraging AI and AR and storage of more efficient storage of data.

Ashutosh Kulkarni: Last year, we had talked about it at the beginning of last year. We also did a price increase at the beginning of this year, like you mentioned. For us, this is just the normal course of business to do these from time to time. It was across both cloud and self-managed.

Speaker #3: We had talked about it at the beginning of last year, and we also did a price increase at the beginning of this year, like you mentioned.

Speaker #3: So for us, this is just the normal course of business. To do these from time to time, but it was across both cloud and self-managed.

Wondering if are you seeing that at all at all competitively and how you might position the position to address that need.

Yeah, I mean, we have been driving that for many years right. So one of our greatest strengths is our ability to ingest massive amounts of data at scale, and then store that data incredibly efficiently.

Speaker #2: Thank you.

Eric Prengel: Thank you.

Speaker #1: The next question comes from Brian Essex with JP Morgan. Please go ahead. The next question comes from Brian Essex with JP Morgan. Please go ahead.

Eric Prengel: The next question comes from Brian Essex with JPMorgan. Please go ahead.

So several years ago, we introduced capabilities that allow us to take advantage of object storage really really cheap storage.

And through.

Lifecycle management sort of manage how much data you retain on disk versus how much your store to an object storage and really bring down the costs.

Ashutosh Kulkarni: Hi. Thank you for taking the question. Congratulations from me on the strong results. Maybe one for you, Ash. We're hearing, particularly in the security side, the focus on AI and leveraging enhanced visibility, real-time detection on streaming data, which I think you addressed. What we're also hearing is a focus on more efficient data ingestion, leveraging AI and more efficient storage of data. I'm wondering, are you seeing that at all competitively? How you might be positioned to address that need?

Of both data storage and data analysis, that's been one of the biggest drivers for customers to move on to our platform because they see that kind of efficiency gain and that efficiency improvement even a two quarters ago, we introduced a capability called logs D. B.

It allows you to do even more aggressive.

Data compression and management of log data to store to bring down the cost of what it takes to store log data and these kinds of capabilities at a constant stream of innovations from us. So its been a reason why we keep winning.

Ashutosh Kulkarni: Yeah. I mean, we have been driving that for many years, right? One of our greatest strengths is our ability to ingest massive amounts of data at scale and then store that data incredibly efficiently. Several years ago, we introduced capabilities that allow us to take advantage of object storage, really, really cheap storage, and through lifecycle management, manage how much data you retain on disk versus how much you store in object storage and really bring down the costs of both data storage and data analysis. That's been one of the biggest drivers for customers to move on to our platform because they see that kind of efficiency gain and that efficiency improvement.

And we're not going to stop on this area like we you know my my firm belief is that given the rate at which data grows continuing to drive these kinds of innovations is going to be a reason why we'll continue to win.

That's very helpful. Thank you very much.

The next question comes from take a bearish with William Blair. Please go ahead.

Yes. Thanks for taking the question just wanted to follow up on the go to market front, you talked about execution, improving and the change is starting to bear more fruit and just in terms of the go forward, where do you see the largest opportunities remaining and what inning do you feel like we're in with that overall transition.

Ashutosh Kulkarni: Even two quarters ago, we introduced a capability called Elasticsearch LogsDB index mode that allows you to do even more aggressive data compression and management of log data to bring down the cost of what it takes to store log data. These kinds of capabilities are a constant stream of innovations from us. It's been a reason why we keep winning. We're not going to stop in this area. My firm belief is that given the rate at which data grows, continuing to drive these kinds of innovations is going to be a reason why we'll continue to win.

Yeah, I mean, maybe I'll address this and then number might want to add to it you know from our perspective. There is so much opportunity in the enterprise and mid market segment, where our sales teams are focused and are the changes.

In territory alignment that we made segmentation that we made a little over a year ago. What they were what they were all about was to have our teams more focused on the enterprise and strategic segment and then to go after Greenfield territories more effectively and we are really starting to see the benefits of that those are the kinds of chain.

Ashutosh Kulkarni: That's very helpful. Thank you very much.

There are really really important because you get from $1 million in revenue to two and three and so on.

Eric Prengel: The next question comes from Jacob Esch with William Blair. Please go ahead.

Ashutosh Kulkarni: Yeah. Thanks for taking the questions. Just wanted to follow up on the go-to-market front. You talked about execution improving and the changes starting to bear more fruit. In terms of the go-forward, where do you see the largest opportunities remaining? What inning do you feel like we're in with that overall transition?

And now we are starting to see the benefits. So we've got a long ways to go like I you know I grew up in India. So not much of a baseball player, but what I'd say is that we have the ability to build a true generational company here keep driving strong growth for many years to come.

Our current sales model, our current sales segmentation gives us the ability to continue to do that.

Ashutosh Kulkarni: Yeah. I mean, maybe I'll address this, and then Navam might want to add to it. From our perspective, there is so much opportunity in the enterprise and mid-market segment where our sales teams are focused. The changes in territory alignment that we made, segmentation that we made a little over a year ago, what they were all about was to have our teams more focused on the enterprise and strategic segment, and then to go after greenfield territories more effectively. We are really starting to see the benefits of that. Those are the kinds of changes that are really, really important as you get from $1 million in revenue to $2 million and $3 million and so on. We are starting to see the benefits. We've got a long ways to go. I grew up in India, so not much of a baseball player.

Yeah, and I would add to that I mean, we we are playing an exceptionally large can mark.

It's an observer ability security in search and we're just starting to see <unk> that are taking taking are taking root in those markets right. So two ashes point.

To put an inning on it but it is it is early days in the.

In the journey.

Okay. That's helpful. And then I know, it's still early but can you talk about the early feedback you've gotten for the new server less solutions and just how that migration process has been progressing this year.

Yeah. So.

We obviously have internal milestones that we set for ourselves and we have been running ahead of those milestones. So that makes me feel really good.

The early feedback in terms of the product itself has been really good now where we are is I'll remind everybody still pretty early in the overall.

Ashutosh Kulkarni: What I'd say is that we have the ability to build a true generational company here, keep driving strong growth for many years to come. Our current sales model, our current sales segmentation gives us the ability to continue to do that.

Movement here when it comes to service we are now <unk> in all three Hyperscale is.

Yeah, I mean, maybe I'll I'll address this and then uh, number might want to add to it, you know, from our perspective, there is so much opportunity in the Enterprise and mid-market segment where our sales teams are focused. You know, the changes, um, in territory alignment that we made segmentation that we made a little over a year ago, what they were, what they were all about was to have our teams more focused on the Enterprise and strategic segment. And then to go after Greenfield territory is more effectively, uh, and we are really starting to see the benefits of that. You know, those are the kinds of changes that are really, really important as you get from a million dollars in Revenue to 2 and 3 and so on. Um, and now, we are starting to see the benefits. So, we've got a long ways to go, like I I, you know, I grew up in India, so uh, not much of a, a baseball player. But what I'd say is that we have the ability to build a true generational company. Here, keep driving strong growth for many years to come. Um, and

But the total data center footprint that we have for server list, it's still relatively small compared to our cloud elastic cloud hosted footprint and our goal through this fiscal year is to do the build out of our service and make it available in all the day.

Eric Prengel: Yeah. I would add to that. I mean, we are playing in exceptionally large TAM markets in observability, security, and search. We're just starting to see AI tailwinds that are taking root in those markets, right? To Ash's point, hard to put an inning on it, but it is early days in the journey.

Our current sales model and our current sales segmentation give us the ability to continue to do that.

The centers and the majority of the data centers, where we do cloud business today. So as we do that you will you know we continue we expect to continue to see more and more adoption of service because customers prefer.

Ashutosh Kulkarni: OK. That's helpful. I know it's still early, but can you talk about the early feedback you've gotten for the new serverless solutions and just how that migration process has been progressing this year?

Yeah, and I would add to that. I mean, we, we are playing in exceptionally, large Tam, uh, markets, in, observability, security, and search. And we're just starting to see AI Tailwind that are taking taking, uh, taking root in those markets, right? So, the to Ash's point, you know, hard to put in an in on it, but it is, it is early days in, uh, in the, in the journey.

<unk> to have their data in local data centers, if you will.

Ashutosh Kulkarni: Yeah. We obviously have internal milestones that we set for ourselves, and we have been running ahead of those milestones. That makes me feel really good. The early feedback in terms of the product itself has been really good. Now, where we are is, I'll remind everybody, still pretty early in the overall movement here when it comes to serverless. We are now GA in all three hyperscalers, but the total data center footprint that we have for serverless is still relatively small compared to our Elastic Cloud-hosted footprint. Our goal through this fiscal year is to do the build-out of our serverless, make it available in all the data centers, in the majority of the data centers where we do cloud business today.

Okay, that's helpful. And then I know it's still early, but can you talk about the early feedback you've gotten for the new serverless solutions, and just how that migration process has been progressing this year?

And in the coming years, I'm very confident that silver is going to be the primary way in which our customers use elastic cloud.

The next question comes from Brent Thill with Jefferies. Please go ahead.

Thanks, Noah just on the guide you to 20% growth in Q1 and guiding.

Below mid teen growth for mid teen growth for the year, I guess that that drop off in the growth.

I guess what are you what are you factoring in as you.

Are there other factors that you're on.

Clear about that you're not putting in or more conservatism just trying to bridge the great start to tail off and the growth throughout the year.

Ashutosh Kulkarni: As we do that, we expect to continue to see more and more adoption of serverless because customers prefer to have their data in local data centers, if you will. In the coming years, I'm very confident that serverless is going to be the primary way in which our customers use Elastic Cloud.

Yeah, so, uh, you know, we obviously have internal Milestones that we set for ourselves and we have been running ahead of those Milestones. So, that makes me feel really good, uh, the early feedback in terms of the product itself. Um, has been really good. Um, now where we are is, I'll remind everybody still pretty early, uh, in the overall, uh, movement here when it comes to serverless, we are now G in all 3, hyperscalers. Uh, but the the total, uh, data center footprint that we have for serverless, uh, is still relatively small compared to our Cloud elastic Cloud hosted footprint. Um, and our goal through this fiscal year is to do the build out um of our uh serverless make it available in all the the data centers and the majority of the data centers, where we do Cloud business,

Yeah, Brenda here, Here's I would here's how I would consume the guy who was a great start to the year, we had coming into the year, we laid out the assumptions around the dynamics of macro that we baked into the guide, which led to the low end and the high end of the guide that we gave the last quarter.

Clearly we are in a much more stable macro environment, while it's still uncertain, while there still are.

A complex environment out there it is it feels much more stable than we anticipated compared to Q1 and you you add to that that there was a broad based good execution.

This today. So as we do that, you will you know we continue we expect to continue to see more and more adoption of serverless because customers you know, prefer to have their data in, you know, local data centers, if you will. Um, and in the coming years, I'm very confident that serverless is going to be the primary way in which our customers use elastic cloud.

Eric Prengel: The next question comes from Brent Thill with Jefferies. Please go ahead.

Ashutosh Kulkarni: Thanks. Navam, just on the guide, 20% growth in Q1 and guiding the below mid-teens growth or mid-teens growth for the year. I guess that drop-off in the growth, I guess, what are you factoring in? Are there other factors that you're unclear about that you're not putting in? Or is it more conservatism just trying to bridge the great start to the tail-off on the growth throughout the year?

The next question comes from Brandel with Jeffrey. Please go ahead.

Led Q1 number that came to us this last quarter. So overall, we beat the Q1 number by a good amount and we raised the full year and Thats that raise is meant to signify.

The better position, we're in and the more confidence that we have in India.

Okay, great. Thanks for the color on that and ash.

Maybe.

Mistaken that's been.

You seem to be pretty excited about the security business you mentioned it many times.

Eric Prengel: Yeah, Brent. Here's how I would consume the guide. It was a great start to the year. Coming into the year, we laid out the assumptions around the dynamics of macro that we baked into the guide, which led to the low end and the high end of the guide that we gave the last quarter. Clearly, we are in a much more stable macro environment. While there's still a complex environment out there, it feels much more stable than we anticipated compared to Q1. You add to that that there was a broad-based, good execution-led Q1 number that came to us this last quarter. Overall, we beat the Q1 number by a good amount, and we raised the full year. That raise is meant to signify the better position we're in and the more confidence that we have in the year.

Thanks uh navam just on the guide. Um you know, 20% growth in q1 and and guiding uh you know the below mid team growth or mid team growth for the year. I guess that that drop off in the growth I guess, what are you what are you factoring in? Is it are there other factors that that you're on a on clear about that you're not putting in or just more concerns? I'm just trying to bridge the, the great start to to the tail off in the growth throughout the year.

I guess what was there something in the quarter that then triggered in terms of breadth of transactions. You know some big deals was there is there something that that maybe or maybe I'm misreading. This.

And reading into that the number of times you mentioned securities.

But just curious if you could pull that thread.

I wouldn't I wouldn't call out a you know obviously in any given quarter. There are you know the deal flow there might be a more deals in one solution area versus another you know that kind of happens from quarter to quarter, but what I'd say is that my enthusiasm and security.

Yeah, Brandon here. Here's I would here's how I would consume. The guide was a great start to the year. We had uh, coming into the year. We'd we'd laid out the assumptions around the Dynamics of macro that we baked into the guide which led to the low end and the high end of the guide that we gave the last quarter. Um, clearly we are in a much more stable macro environment while it's still uncertain while there's still uh you know, a complex environment out there it is. It it feels much more stable.

It has been high for a while now we've been seeing a lot of traction with customers moving onto our platform consolidating onto our platform. We've been doing competitive displacements for some time you know one of the things to be aware of is <unk>.

Then we anticipated compared to q1. And you you add to that that there was a, you know, broad-based, good execution. Uh LED q1 number that came to us uh, this last quarter. So overall, we we beat the q1 number by a good amount and we raised the full year and that's that raise is meant to signify, you know, the better position we're in and the more confidence that we have in the in the year

Ashutosh Kulkarni: OK. Great. Thanks for the call on that. Ash, maybe I'm mistaking this, but you seem to be pretty excited about the security business. You mentioned it many times. I guess, was there something in the quarter that triggered in terms of breadth of transactions, some big deals? Was there something that maybe, or maybe I'm misreading this and reading into the number of times you mentioned security too much. Just curious if you could pull that thread.

<unk> displacements like these deals take time.

Thanks for the call on Q1 2026, Ash.

It's not a one to two quarter motion. It typically takes several quarters, but that's also why we have been investing in capabilities like automatic import.

We recently announced our AI soccer engine that can be used on top of other Sim products. So we're doing a lot to make it easier for customers to make that migration journey as easy as possible.

So I expect that the momentum that we're seeing on the security side is one that will continue to build overtime and I feel really really good about it and if there was just a higher count this quarter. It was just because you know I'm I'm truly truly excited about the business across the board.

Maybe maybe on uh mistake in this. You seem to be pretty excited about the security business. You mentioned it many times. Um, I guess was, was there something in the quarter that that triggered in terms of breadth of transactions? You know, some big deals was there, was there something that that maybe or, or maybe on this reading this. And and, and reading into the, the number of times you mentioned security too, too much, but just curious, if you could pull that thread,

Ashutosh Kulkarni: I wouldn't call out. Obviously, in any given quarter, there are the deal flow. There might be more deals in one solution area versus another. That kind of happens from quarter to quarter. What I'd say is that my enthusiasm in security has been high for a while now. We've been seeing a lot of traction with customers moving onto our platform, consolidating onto our platform. We've been doing competitive displacements for some time. One of the things to be aware of is competitive displacements, like these deals, take time. It's not a one to two quarter motion. It typically takes several quarters. That's also why we've been investing in capabilities like Elastic Automatic Import. We recently announced our Elastic AI SOC engine that can be used on top of other SIEM products.

Okay good to hear thanks.

Our last question comes from Patrick Colville, That's Scotia Bank. Please go ahead.

Thank you so much for taking my question and squeezing me in I guess I just want to circle back to the price increase because and I'll field work heading into the quarter. We were picking up was it was about a 5% price increase of course cloud and self managed and so.

I guess is that quantum roughly right.

Ashutosh Kulkarni: We are doing a lot to make it easier for customers to make that migration journey as easy as possible. I expect that the momentum that we are seeing on the security side is one that will continue to build over time. I feel really, really good about it. If there was just a higher count this quarter, it was just because I'm truly, truly excited about the business across the board.

Does it apply to all customers and.

If we exclude the price increase is that like.

Yeah, I wouldn't I wouldn't call out. Uh, you know, obviously in any given quarter there are, uh, you know, the deal flow. There might be, uh, more deals in 1, solution area versus another. You know, that kind of happens from quarter to quarter, what I'd say is that my enthusiasm and security um, has been high for a while now. You know, we've been seeing a lot of traction with customers. Moving on to our platform, consolidating onto our platform. We've been doing competitive displacements for some time. You know, 1 of the things to be aware of is competitive. Displacements, like these deals, take time. Um, you know, it's not a 1 to 2 quarter motion, it typically takes several quarters. Uh, but that's also why we've been investing in capabilities like automatic import? You know, we, we recently announced our AI stock engine, uh, that can be used on top of other SIM products, so we are doing a lot to make it easier for customers to make that migration Journey as easy as possible. Um, so I

To walk out an underlying number is that logic.

Correct or should we not be thinking about.

The business that way.

I was thinking of them.

Yeah, I I'd start off by my sort of thinking about the business slightly differently, which is you know from time to time that business.

Ashutosh Kulkarni: OK. Good to hear. Thanks.

Expect that the momentum that we are seeing on the security side, uh, is 1 that will continue to build over time and I feel really really good about it. Uh, and if there was just a higher count this quarter, it was just because, you know, I'm I'm truly, truly excited, uh, about the the business across the board.

Okay, good to hear. Thanks.

Increases prices. This is something we did last year and that's it's somewhat ordinary course of business as we as we add more features to our product and to ashes point earlier, we don't have distinct skus, we just add more functionality of the product and that leads to a more valuable product to our customers and we reflect that buy from time to.

Eric Prengel: Our last question comes from Patrick Colville with Scotiabank. Please go ahead.

Our last question comes from Patrick Koval with Kosha Bank. Please go ahead.

Navam Welihinda: Thank you so much for taking my question and squeezing me in. I guess I just want to circle back to the price increase because in our field work heading into the quarter, what we were picking out was it was about a 5% price increase across cloud and self-managed. Is that quantum roughly right? Does it apply to all customers? If we exclude the price increase, is that like to work out an underlying number, is that logic correct? Should we not be thinking about the business that way? Thank you, Ash. Thank you, Navam.

I'm evaluating prices and increasing as necessary, there's discounting that factors in as well. So you can't really say hey, it was a X percent increase across the board on every customer, but roughly that quantum would be would be.

Thank you so much for taking my question and squeezing me in. I guess I just want to circle back to the price increase, because in our field work heading into the quarter, what we were picking up was it was about a 5% price increase across cloud and self-managed. And so I guess is that quantum roughly right?

On the rough order of magnitude accurate as you portrayed it now how it relates to the performance as you as you think about it is price increases that offer a durable baseline that you grow from so as you go from one year to the next you almost lift you're lifting that baseline that you'll you'll grow from there so you'll see a year over year benefit.

Does it apply to all customers? And you know if we exclude the price increase, is that like, um, to work out an underlying number?

Is that logic?

Eric Prengel: Yeah. I'd start off by sort of thinking about the business slightly differently, which is from time to time, the business increases prices. This is something we did last year, and it's a somewhat ordinary course of business as we add more features to our product. To Ash's point earlier, we don't have distinct SKUs. We just add more functionality to the product, and that leads to a more valuable product to our customers. We reflect that by from time to time evaluating prices and increasing as necessary. There's discounting that factors in as well, so you can't really say, hey, it was an X% increase across the board on every customer. Roughly, that quantum would be on the rough order of magnitude accurate as you portrayed it.

Correct. Or should we not be thinking about, um, the business that way? Yeah, thank you, Ash, for thinking that time.

But quarter over quarter, you're just going to see a normal.

One more benefit and not something that's related to prices. So that's how you should think about price increases. The Q1 performance like I said was broad based so while we did have benefits to price increase and price increase is something we do.

Yeah, I'd start off by sort of thinking about the business slightly differently, which is, you know, from time to time, the business.

From time to time, a lot of the performance in fact, the majority of the performance came from good solid execution and good consumption from our customers.

Crystal clear thinking thank.

Thank you Josh.

Congrats on a strong start to fiscal first quarter.

Thanks, Patrick.

That concludes our question and answer session I would like to turn the conference back over to Ash Kulkarni for any closing remarks. Please go ahead.

Eric Prengel: Now, how it relates to the performance as you think about it is price increases offer a durable baseline that you grow from. As you go from one year to the next, you're lifting that baseline that you'll grow from there. You'll see a year-over-year benefit, but quarter-over-quarter, you're just going to see a normal benefit and not something that's related to prices. That's how you should think about price increases. The Q1 performance, like I said, was broad-based. While we did have benefits to price increase, and price increase is something we do from time to time, a lot of the performance, in fact, the majority of the performance came from good, solid execution and good consumption from our customers.

Thank you and thank you all for joining us today I'm extremely proud of our excellent results and more excited than ever about the opportunity ahead as we built a generational company. Thank you.

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Uh, increases prices. This is something we did last year and and it's, it's somewhat ordinary course of business as we, as we add more features to to our product. And to Ash's Point earlier, we don't have distinct skus. We just add more functionality to the product and that leads to a more valuable product to our customers. And we reflect that by from time to time evaluating prices and increasing as necessary. There's discounting that factors in as well as well. So you can't really say, hey, it was a x percent increase across the board on every customer, but roughly, that Quantum would be would be, you know, on on the rough order of magnitude accurate as you portrayed it, now how it relates to the performance. As you, as you think about it is price increases offer a durable Baseline that you grow from. So as you go from 1 year to the next you're almost lift you you're lifting that Baseline that you you grow from there. So you'll see a year-over-year benefit but quarter over quarter. You're just going to see a a normal, uh, a normal benefit and

Not something that's related to prices. So that's how you should think about price increases. The Q1 performance, like I said, was broad-based. While we did have benefits from pricing and price increases—something we do, you know, from time to time—a lot of the performance, in fact, the majority of the performance came from good solid execution and strong consumption from our customers.

Navam Welihinda: Crystal clear. Thank you, Navam. Thank you, Ash. Congrats on a strong start to fiscal first quarter.

Crystal clear. Thank you, no problem. And thank you, Ash. And, uh,

Eric Prengel: Thanks, Patrick.

Uh, congrats on a strong start to fiscal Q1.

Eric Prengel: This concludes our question and answer session. I would like to turn the conference back over to Ashutosh Kulkarni for any closing remarks. Please go ahead.

Thanks Patrick.

Ashutosh Kulkarni: Thank you. Thank you all for joining us today. I'm extremely proud of our excellent results and more excited than ever about the opportunity ahead as we build a generational company. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Ash Kearney for any closing remarks. Please go ahead.

Thank you, and thank you all for joining us today. I'm extremely proud of our excellent results and more excited than ever about the opportunity ahead as we build a generation of company. Thank you.

Eric Prengel: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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