Elastic N.V.

Good day and welcome to the Elastic fourth quarter and physical 2021 conference call. All participants will be in a 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. Please note that this event is being recorded. I would now like to turn the conference over to Anthony Luskri, Vice President, Investor Relations. Please go ahead.

Thank you. Good afternoon, and thank you for joining us on today's conference call to discuss Elastic's fourth quarter and fiscal 2021 financial results. On the call, we have Shai Bannon, founder and chief executive officer, and Janesh Morjani, chief financial officer. Following their prepared remarks, we will take questions. Our press release was issued today after the close of market, and it's posted on our website. Slides which accompany this webcast can be viewed in conjunction with live remarks. You can also be downloaded at the conclusion of the webcast on the Elastic Investor Relations website, ir.elastic.co. Our discussion will include forward-looking statements which may include predictions, estimates, our expectations regarding the demand of our products and solutions, and our future revenue and other information. These forward-looking statements are based on factors currently known to us, speak only as 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 accompanying this webcast, 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 these non-GAAP measures, including reconciliations with the most comparable GAAP measures, can be found in the press release and slides. The webcast replay of this call will be available for the next 60 days on our company website under the Investor Relations link. Our first quarter fiscal 2022 quiet period begins at the close of business Friday, July 16th, 2021. During the week of June 8th, we will be participating in the Bank of America Global Technology Conference, the Stiefel Cross-Sector Insight Conference, and the Baird Global Consumer Technology and Services Conference. With that, I will turn it over to Shai.

Thank you, Anthony. Hello and welcome, everyone. I'm happy to be here with all of you today to share our fourth quarter and full fiscal year results. We once again delivered strong performance, driven by broad adoption of our offerings and the continued growth of Elastic Cloud. In Q4, revenue grew 44% year over year, and we once again saw robust customer acquisitions and expansion metrics. We ended the quarter with more than 15,000 subscription customers, including over 730 with annual contract value of more than $100,000. Looking at the full fiscal year, revenue grew 42%. This strong performance was fueled by continued adoption and differentiation of our solutions and features, expansions to new use cases, growth across all geographies, and increased strategic relevance at all levels of the business. Companies throughout the world are becoming more digital and distributed, especially as they move to the cloud. And they are generating an ever-increasing amount of data. The ability to search, observe, and protect this data is critical to every company's success. We believe search is the most natural way for people to interact with data and find what they're looking for. Elastic enables customers to quickly search across any data, anywhere, anytime. From adding a search box to a website, to monitoring applications, infrastructure, and cloud services, and preventing, detecting, and responding to threats across their organization. Customers turn to Elastic for our deep expertise in creating world-class search experiences across our enterprise search, observability, and security solutions that are built into the Elastic Search Platform, our single unified technology stack. Now, I would like to share some of the innovations we have made in our unified search platform. First, I'm happy to share that the frozen data tier, powered by searchable snapshots, is now generally available. Data is growing exponentially, and our customers must be able to do more than just store it. They need data to be easily accessible and always on, and fully searchable at a moment's notice, regardless of temperature. With searchable snapshots in the new frozen tier, Customers can now search petabytes of data in just minutes, anytime they want. They will not be forced to delete data to reduce costs with the power to easily balance the speed of results with the cost of storage. In fact, one of the world's largest telecommunications companies will leverage searchable snapshots and the frozen data tier to better manage their high-volume logging data and storage requirements. The customer started with our free basic gear and needed a reliable and cost-effective way to keep up with growing data volumes and during major launch events. In addition, new business requirements demanded they store their logging data for 60 days instead of seven. They upgraded to an enterprise subscription to take advantage of the tremendous value provided by searchable snapshots. Now, the customer can more effectively manage the growing data volumes in Elastic while meeting their data retention requirements. Our differentiated implementation of schema on read, what we call runtime fields, is also now generally available. Runtime fields provide an easy and flexible way to onboard data and make it searchable. Users can immediately interact with and enrich their data without defined fields. In one click, they can switch to the blazing speed of schema on right, benefiting from the power of choice and speed in a single integrated search platform. Moving on to Enterprise Search, which powers search across websites, applications, and workplaces. We continue to build powerful, modern search experiences for our customers that are easy to implement, use, connect, and scale. As customers continue to grow their digital footprints and generate more and more data, we're enabling them to search everything, anywhere, so they can find the signal through the noise. One example of this is a deal we closed in Q4 with a major enterprise that enables customers to manage electronic agreements. They were looking to evolve the search functionality within their platform to give customers a faster and more user-friendly way to search across contracts and agreements. Leveraging the power of Elastic's search capabilities, the customer is able to meet the growing demands of their customers and scale their top-line growth. In another example, a long-time customer, one of the largest global banking and financial services companies in the world, expanded their business with us considerably in Q4 as they looked to deliver Elastic's technology more broadly within their company. The customer started with a large observability deployment to power their internal logging and observability center of excellence. Then, as other groups within the organization saw the value of Elastic, the company expanded with enterprise search. One staff, one pricing model, and the ability to move between solutions. This resonates with our customers. It's gratifying to see how they are growing with us as they realize the power of Elastic's search platform. We're also seeing recognition from industry analysts. In Q4, Elastic was recognized as a challenger in the 2021 Gartner Magic Quadrant for Inside Engines. This is our first time participating in this magic quadrant, and it's exciting to see this recognition of the innovations in our enterprise search solution. And we're continuing to innovate in this space with new connectors for workplace search, including a new Dropbox integration and enhanced custom source API. Now, development team can more easily ingest and manage content from any content source, including legacy and custom applications. Now, on to our observability solution. Enterprises continue to expand their digital footprints and move to the cloud at an ever-increasing pace. The need to observe their applications and cloud infrastructure to keep these complex digital ecosystems available and performing is becoming more and more critical. Elastic observability helps customers by unifying the various types of observability data like logs, metrics, and APM traces into a single search platform. It allows customers to easily monitor and respond to any event happening anywhere in any environment. In Q4, We closed business with a major national home improvement retailer who was looking to gain better visibility and performance insights into the more than 40 mobile and in-store applications. These applications are used to manage their retail operations across over 2,000 locations. The company chose Elastic over their current provider because we delivered significantly faster speeds and better integrations of logs and APM data. This enabled them to better monitor and respond to events happening in their order management and supply chain management applications, point of sale systems, and other digital environments. We're seeing recognition from industry analysts in the APM space as well. Elastic was recognized for the first time in Gartner's evaluation of APM vendors and was named a visionary in the 2021 Gartner's Magic Quadrant for application performance monitoring. And we continue to simplify the ability to onboard any data into elastic observability. We announced native support for open telemetry, providing even more flexibility for customers to onboard data. In addition to using our unified agent to collect and send data to the elastic staff, organizations can now directly send data collected by open telemetry agents to the same elastic deployments. I'm also excited to share that we announced an extended integration with Microsoft that featured enhanced support for Azure monitoring use cases, which was just demoed during the Microsoft build conference last week. Customers can now easily onboard logs and metrics for their Azure services directly in Azure to our observability solution in just a few clicks. Moving to our security solution, Companies are continuing to generate more and more data everywhere, and this data plays a critical role in their ability to protect themselves from attacks. Elastic Security helps protect companies by making all of this data searchable and actionable, from the endpoint to the data center to the cloud. It unifies security capabilities such as SIEM, endpoint security, and threat hunting in a single search platform, equipping analysts to seamlessly prevent, detect, and respond to threats This quarter, we closed a deal with a major real estate developer in Japan with more than 20,000 employees. They were looking to protect their large remote workforce using a scalable and easy-to-maintain solution that offered a simple pricing structure. Using Elastic Security on Elastic Cloud, the customer established a security operations center in just a few months and quickly launched our SIEM to drive their security operations. We also expanded business this quarter with a major public research university in the US. Their security team's scope expanded to include both the campus and the university hospital. The customer had been using our SYNC capabilities under a gold subscription and upgraded to a platinum subscription to take advantage of our machine learning and alerting capabilities. Now, even though the customer's scope has expanded and they are ingesting far more data than they were before, they are still able to stay on top of threats across their entire environment. It's great to see real-world examples of how our solutions are able to flexibly grow with customers, giving them the added functionality they need when they need it. We accelerated hunting and investigation with the general availability of analyst-driven correlation powered by EQL. This critical correlation capability provides a new type of search experience for practitioners to quickly identify threats. Additionally, we launch support for central management and deployment of OS Query, a large and rapidly growing open source project. This integration allows customers to reach out to hosts and endpoints and search them, effectively folding them into our search platform. It is useful to threat hunters, security analysts, and IT operations everywhere. Now, if a report comes along for a malicious Chrome extension, finding who has it installed across the organization is just a simple search query away. We continue to invest in our cloud offering, expanding strategic partnership with cloud providers and supporting customers with a simple, worry-free, and easy-to-use cloud experience. In Q4, we closed a deal with one of the largest US retailers of automated parts and accessories. We are supporting them in their decision to move all of their Elastic usage to Elastic Cloud. Like many of our customers, the company has grown with us over time, starting with logging an APM and expanding to security and enterprise search as different groups across the business saw the value in leveraging our platform. As adoption of Elastic within the company has grown, we have recognized the value of our Elastic Cloud worry-free managed service. We have also expanded our strategic partnership and first-party integration with Microsoft. Customers can now deploy on Elastic Cloud as if it was a native Azure service. They can also ship monitoring data to it as if it was a native Azure service. The Elastic team enjoys working closely with Microsoft. and we look forward to continuing our deep partnership to bring our joint customers the search experience they deserve. I'm thrilled with the momentum we are building with all of our partners to enable our customers to bring together and understand all their data, no matter where it resides. Our continued investments across the business drive rapid innovation, help us bring the best search experience to all of our users and customers, and enable us to build strong product differentiation in the market. I'm incredibly humbled as I think about all the people who make it possible, from employees to our community, customers, and partners. Also, I'm very proud to share that in fiscal 21, our Elastic Cares program raised $1.3 million for charitable organizations around the world. and Elastic employees volunteered more than 4,000 hours as part of our volunteer time off program. Moving into fiscal 22, I'm confident in our ability to execute and I'm looking forward to supporting our growing customer base as they leverage the power of search to gain actionable insights from their data. And looking further forward, I believe that we're on our way to becoming a $1 billion plus revenue company in fiscal 23. with style. And with that, I'll hand it over to Janesh.