Elastic N.V.

Good day and welcome to Elastic's second quarter fiscal 2022 financial 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 touchtone phone. 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 Anthony Luskri, Vice President of Investor Relations. Please go ahead.

Thank you. Good afternoon, and thank you for joining us on today's conference call to discuss Elastic's second quarter fiscal 2022 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 is posted on our website. Slides which accompany this webcast can be viewed in conjunction with live remarks and can also be downloaded to 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, 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 the date of this call, and are subject to risk 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 third quarter fiscal 2022 quiet period begins at the close of business Friday, January 14th, 2022. On December 8th, we will be participating in the Barclays Global TMT Conference. That'll 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 second quarter results. We once again delivered strong performance driven by broad adoption of our offerings and the continued growth of Elastic Cloud. In Q2, total revenue grew 42% year-over-year. Revenue from Elastic Cloud grew 84% year-over-year. And we once again saw robust customer acquisition and expansion metrics. We ended the quarter with more than 17,000 subscription customers, including over 830 with annual contract value of more than $100,000. The strong performance was fueled by continued adoption of our differentiated solutions, reflecting our increased strategic relevance across our customer base. Organizations across the world continue to accelerate their digital transformation plans, creating massive volume of data. IDC estimates that by 2025, we will be generating 480 exabytes of data per day, and as much as 90% of that data is unstructured. And with endless data comes endless possibilities. At Elastic, we use the power of search to help people and organizations turn these possibilities into results. With our leading platform for search-powered solutions, we help everyone, organizations, their employees, and their customers accelerate the results that matter. Our solutions for enterprise search, observability, and security help people find what they need faster, keep mission-critical applications running smoothly, and protect against cyber threats. As I get back to spending time in person with customers, something I'm hearing again and again is that for many organizations, their business strategy heavily relies on their cloud strategy. As organizations embrace the cloud to drive business agility and flexibility, IT systems also become more distributed and heterogeneous. This is because as new workloads are deployed on the cloud, many times across clouds, existing workloads might still run on . And with data having gravity to it, deploying search-powered solutions next to it while working seamlessly across it is critical. Our investments in Elastic Cloud are geared to address exactly these needs, and it is resonating with our customers. And we continue to invest in Elastic Cloud, which we expect will exceed 50% of our revenue in the next three years. We are expanding our strategic partnerships with the cloud hyperscalers, and we are seeing significant traction in the cloud marketplaces. This is happening thanks to our investments with each cloud provider, in product, marketing, and the field. In Q2, we announced new integrations with Google Dataflow that allows customers to leverage the powerful search and analysis capabilities of Elastic from within the Google Cloud Console. We also added support for Amazon ARM-based EC2 instances, and we expanded it to three new AWS regions and now have 48 regions across Azure, AWS, and Google Cloud. We also release major enhancements that improve data resiliency and reduce network latency across all cloud providers, enabling customers to deliver results fast while reducing data transfer costs. Elastic Cloud is the best, easiest, and only way to access all of our innovations across all of our solutions. For example, a longtime free and open user, one of the world's leading online job sites, migrated their free on-prem clusters to our enterprise tier on Elastic Cloud. The customer is using Elastic to power the global job search functionality on the website and to monitor logs for suspicious or illegal activity. They moved to Elastic Cloud to access these innovations while lowering their overall costs. Managing risk is another reason global organizations are turning to Elastic. And with increasing sophistication and scale of cybersecurity threats across an ever-growing attack surface area, Elastic Security helps our customers quickly find the data they need to prevent, detect, and respond to complex cyber threats at scale, minimizing risk and protecting your organization's reputation. Because cyber risk is business risk. One of the core and unique pillars in Elastic Security is openness. from open data to open architecture to open content to open collaboration. Openness is something we believe is deeply missing in the cybersecurity space, and we are actively working to change that. Security starts with data. That's why we invest in integrations to extend our customers' ability to protect their data and use it to prevent, detect, and respond to cyber threats. we announce integrations with products from CarboBlack, CrowdStrike, CloudFlare, HashiCorp, and Palo Alto Networks. When customers get started with Elastic, we often see a natural evolution as they expand their adoption of Elastic across SIEM, endpoint protection, cloud security, and XDR. In fact, Forrester recognized a strong, customizable, free and open SIEM, naming Elastic a contender in the industry's first analysis of XDR vendors. And this analysis was done even before we launched our SDR offering. We believe this was driven partially by the power of our open search platform, including capabilities such as searchable snapshots and machine learning, which we believe are game changers for security use cases. Typically, our security customers start to use our same use cases. For example, in Q2, we closed new business with a global leader in commercial electronic document management and operations. They chose our SIEM to replace their legacy product because they were looking for an open and innovative data-driven SIEM that is an easy-to-deploy, cost-effective option to manage their growing data volumes while meeting data retention requirements. Other times, customers start with security and add observability. while they continue to expand their security use cases. For example, we closed business during the quarter with a major U.S. public research university. They had first adopted our endpoint security solution and then expanded to observability. In Q2, the customer expanded with us yet again, choosing our SIM to replace a legacy product for their security operations center. They currently deploy Elastic on devices across the university system, and leverage searchable snapshots and frozen data tier to better manage their high volume logging data and storage needs. Which leads me to another trend we are seeing, the continued convergence and adoption of a unified platform within and across observability and security. On one hand, customers are bringing together logs, metrics, and application traces with unified observability. At the same time, we're seeing a similar convergence in security with SIM, endpoint, and cloud security coming together with XDR. And because customers rely on the same data across security, operations, and development, they are choosing Elastic as their unified platform, growing from one to another and laying the foundations for new DevSecOps workflows. We are investing heavily in this major evolution in the market. For example, we joined forces with Optimize to further enhance the ability for customers to gain insight into the entire IT ecosystem and eliminate blind spots in complex distributed environments. This will allow customers to have always-on continuous profiling capabilities without needing to explicitly instrument applications. Along with CMD and Build.Security, which I spoke about last time, The addition of Optimize furthers our vision to enable customers to both observe and protect their cloud-native workloads. One of the world's largest internet domain registration and web hosting companies is a great example of this. They wanted a single pane of glass across DevOps, network operations, and security. They previously chose Elastic Cloud for observability to achieve faster mean time to respond and have implemented logging, metrics, and APM. With our unified resource-based pricing and features like searchable snapshots, the customer is able to bring in more data and instrument more applications than with other vendors. But the story doesn't stop there. In Q2, the customer expanded to security, displacing another vendor with our SIEM. Because, as we say, while you observe, why not protect? And within Elastic Observability, our APM capabilities continue to grow. In Q2, we GA'd trace correlations to help organizations overcome complex dependencies to keep modern cloud applications running. While logging is still the most common use case for new customers to adopt Elastic Observability, APM customer use cases are growing in both land and expand. A leading telehealth platform provider expanded business with us so they can gain insight into their overall operating environment. Demand for their platform skyrocketed over the last 18 months. Already an Elastic Observability customer for logging, in Q2, they added APM to better understand and improve the user experience of patients and providers. User experience can be a competitive differentiator for enterprises. Our customers use our observability solution to monitor user experience, and they use Elastic Enterprise Search to empower their customers and employees to find what they need when they need it. In Q2, we announced the general availability of our native web caller, offering a fast and efficient way for users to ingest content directly from publicly accessible websites. Customers turn to our enterprise search solution for our out-of-the-box capabilities like WebCaller and Workplace Search, as well as the flexibility to develop search apps with Elasticsearch. A wonderful example of this is the business we disclosed with one of the largest diversified financial services institutions in the United States. The customer uses Workplace Search to centralize search across their multiple data sources to promote efficiency across the organization. In Q2, the customer added a new use case, developing a custom application to reliably search, audit, and report on ATM data using Elasticsearch as a central repository. Retail customers are taking a cloud-first approach as they look to retool their traditional brick-and-mortar businesses to meet the continuing demand for online shopping and curbside pickup. one of the world's largest home improvement speciality retailers expanded business with us in Q2. Their online business has nearly doubled over the last three years, and the existing search functionality on their website was not able to keep up with their scalability and availability requirements. With Elastic Cloud on Google Cloud, The customer is able to leverage the speed and scale of Elasticsearch without having to invest in additional people and infrastructure to manage the deployment. And with our machine learning capabilities, they are able to provide more relevant search results and product suggestions for their customers. Elastic is at the epicenter of all of these digital transformation trends. The possibilities for us are endless. That's why we are making significant investments in our business, in all functions, and particularly in the field. We are expanding coverage in all geographies and also expanding our global cloud inside sales, which supports our scalable programmatic approach to revenue generation, which focuses on Elastic Cloud. And we continue to invest in our partnerships. Azure and Google Cloud were marquee sponsors at our Elasticon Global User Conference. Scott Guthrie, Microsoft's Executive Vice President of Cloud and AI, joined me on the virtual stage at Elastic on Global. And customers, including Adobe, General Motors, IBM, SAP, and Twitter, showed how Elastic is helping them solve their data challenges. As we scale towards becoming a multi-billion dollar company in the future, we welcomed Shelly Labovitch to the Elastic Board of Directors. Shelly was the CIO at Morgan Stanley and the World Bank, and she brings 30 years of real-world security domain expertise and extensive corporate board and advisory experience. And for the second year in a row, we were honored to be named as the best technology company for women, a best overall company for women, and best company where CEOs support gender diversity by workplace review site Ferry Godboss. It's humbling to see that wherever and however our community, customers, and partners are putting Elastic to work, we are helping them search, solve, and succeed at scale and on a single platform. Now, over to you, Ganesh.