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| Statement |
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| Our performance in the quarter reflects both our success in the market and continued investment discipline |
| We are excited and confident about Q4 and the strength of the business heading into FY '25 |
| We are pleased with our Q3 performance and strong execution, as our focused sales motion in the enterprise and commercial segments is paying dividends |
| Elastic delivered another strong quarter |
| But we also see a pretty significant opportunity to drive growth in security and observability with the consolidation motion that we've been seeing as well as with the strength of the GenAI capabilities that we build into the stack |
| The trends we saw over the first-half of the fiscal year continued to drive momentum in our business in Q3 |
| First, customer interest in generative AI remains strong, and as customers become more educated about what it takes to build generative AI applications, they're increasingly able to appreciate the advantages of our platform relative to pure play vector database vendors |
| If I think about the medium term, all 3 solution areas are growing nicely for us |
| All of those are big factors why customers are now very comfortable and confident about moving over to our platform, and that's really exciting |
| These trends reinforce our confidence in the business and in our future growth as more companies choose our search analytics platform as a core part of their IT infrastructure stack for log analytics, SIEM, and Gen AI applications |
| We've talked to you in the past about Frozen Tier, which is tremendously beneficial for customers, our AI capabilities around our observability and security AI assistance |
| I'm pleased with our strong momentum and execution that drove our third quarter results |
| In Q3, revenue grew 19% year-over-year, with Elastic Cloud growing 29% year-over-year, driven by continued customer traction in the cloud, and consolidation onto the Elasticsearch Platform |
| We have so many strengths when it comes to log analytics and SIEM and search and being always land with those -- and then once we are in there, that gives us the opportunity to expand even further beyond that |
| Turning to the broad trends we saw this quarter, as I met with customers around the globe, I saw a strong desire to leverage AI to improve business processes and elevate customer experiences |
| We see this as a tremendous opportunity |
| And in terms of thinking about the future, we won't unpack the segment-based view on cloud here, but fundamentally, if I think about our cloud business overall, we continue to be really excited about the opportunity set there and expect that it will continue to grow faster than the rest of the business |
| I mean, fundamentally, we've been very pleased with the annual cloud selling motion, which is a sales-led motion, and the both the commitments that we've secured as Ash has been talking about and also the consumption that we've driven against that -- against those commitments |
| So I'm very excited about the early momentum |
| So we're very excited about the traction that we are seeing here in terms of customer adoption |
| And as we've shared before, we look at revenue as really the primary indicator of the success of our business, and we are very pleased with the outcome there |
| Brent Thill Janesh, I know RPO bounces around, but it did decel anything underneath the surface that we should be aware of? Janesh Moorjani Hey Brent, so overall, I'd say we are actually very pleased with the annual contract selling motion, including how sales successfully delivered a very strong Q3 |
| We had raised it even earlier in the year, and we're very pleased that we can outperform even against our prior commitments, and we expect to finish the year strong |
| If I think about the change from the third quarter to the fourth quarter, we are obviously pleased with the outperformance that we delivered in Q3 |
| And as it typically takes some time for these workloads once they come on to ramp up, as you can imagine, since we've been doing it for a few quarters, that has been a very strong contributor to the growth of the business, and the fact that consumption is stable also helps |
| Their users have benefited from increased accuracy and relevance of search results and new GenAI features such as a summarization of the top 10 studies based on integration with OpenAI's GPT-4 model |
| And that's one of the reasons why I feel so excited about our continued ability to take share and make it possible for customers to switch from incumbent solutions onto Elastic, consolidate onto our platform and grow |
| And really execute well in the longer term |
| I mean he's been -- even in the short time that he's been here, he's just been a wonderful partner, and it's impressive to see how he's really -- he's dived into the job |
| And that's the reason why we are so excited about everything that we're doing around Generative AI |
| Statement |
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| And then on the SMB side, which is predominantly in the self-serve motion, that piece remained soft, and that's been soft for a little bit of time now |
| And then also, as I mentioned a little bit earlier on this call, since we have 2 fewer days in the quarter, we've got a natural headwind of approximately $6 million to $7 million on revenue |
| And if I think about the SMB portion, as I mentioned a short while ago, that remains soft |
| And so that presents a little bit of a headwind of, call it, roughly $6 million to $7 million of revenue in Q4 |
| Based on my imbalance, some investors nitpicking, but look, that's only the same as 2Q levels and guidance indicates a leg down in 4Q |
| This quarter, we closed several multi-million dollar deals where we displaced incumbent solutions for observability and security |
| In terms of the consolidation that we are seeing on our platform, incumbent solutions being displaced by customers and customers consolidating onto our platform for observability and security |
| As in prior quarters, we saw a number of customers consolidate onto the Elastic Platform to lower their total spend without sacrificing innovation |
| So that just meant that for those users switching to the Elastic platform was a bit of a hurdle because they were used to doing things in a certain way |
| So it was not a surprise to us |
| So those two factors come together, and that's why Q4 is lower |
| Beyond generative AI, we noted that customers are continuing to displace incumbents and consolidate onto the Elastic Platform for observability and security, which is the second trend I talked about earlier |
| I expect that edge to only continue growing in the future |
| The third quarter largely played out as expected |
| So it really wasn't a big deviation |
| Q2 was a much higher sequential uptick versus Q1, which is typically the opposite, and then Q3 seems like was a little bit of a down take versus Q2, which is again, typically opposite? Was there anything one-time in Q2 which did not repeat in Q3, or did you see kind of slightly lower consumption rate versus last quarter or maybe seems like the -- if I got that correctly 14% monthly seems like the variability was a little bit of a drag |
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