Elastic N.V. Q2 FY2025 earnings call

Elastic delivered strong Q2 with 18% revenue growth, cloud revenue up 25%, and non-GAAP operating margin 18%, exceeding guidance. Generative AI momentum continued with over 1,550 customers on Elastic Cloud using Gen AI, new customer commitments with Gen AI almost doubling from Q1. Product innovations included better binary quantization for vector database, general availability of AutoOps, 100% OpenTelemetry Native in observability, and expanded LLM observability. Kicked off Elasticon events and launched Elastic AI ecosystem. Janesh Moorjani to leave, Eric Pringle becomes Interim CFO effective Dec 14.

Total revenue in the second quarter was $365 million, up 18% year over year. Subscription revenue totaled $341 million, up 18% year over year. Elastic Cloud represented 46% of total revenue. Professional services revenue was $25 million, growing 7% year over year. Ended Q2 with over 1,420 customers with annual contract values more than $100,000, over 4,480 customers above $10,000 in ACV, and approximately 21,300 total subscription customers. Net expansion rate was approximately 112%.

Third quarter fiscal 2025 total revenue expected to be in range $367M - $369M (12%-13% y/y growth), non-GAAP operating margin ~15%, diluted EPS $0.46 - $0.48. Full fiscal 2025 total revenue expected to be in range $1.451B - $1.457B (15% y/y growth), non-GAAP operating margin ~13.5%, diluted EPS $1.68 - $1.72. Raised full-year revenue and profitability guidance.

Forward-looking statements subject to risks and uncertainties including market conditions, competitive landscape, and execution risks that could cause actual results to differ materially.

Q: Matt Hedberg on larger enterprise consumption patterns A: Janesh Moorjani said consumption was strong across enterprise and commercial, with some larger customers accelerating consumption, but guidance built prudently due to past fluctuations.

Q: Pinjalim Bora on cloud consumption and RPO A: Janesh Moorjani noted strong cloud consumption, but RPO guidance built considering historical fluctuations and prudence.

Q: Tyler Radke on Gen AI deals and consumption A: Ashutosh Kulkarni said Gen AI deals are for specific projects, with momentum in Gen AI use cases, and consumption strength broad-based but guided prudently.

Q: Koji Ikeda on sales org and Gen AI deals A: Ashutosh Kulkarni and Eric Pringle discussed sales org progress, with focus on pipeline and win rates, and Gen AI deals being specific projects with momentum.

Q: Brent Thill on RPO and search mix A: Janesh Moorjani explained RPO considerations and search mix, with search accelerating due to Gen AI trends.

Q: Raimo Lenschow on search and SIEM competition A: Ashutosh Kulkarni discussed search adoption and SIEM competition, with focus on modern SIEM and vector database strengths.

Q: Ittai Kidron on Gen AI adoption and competition A: Ashutosh Kulkarni talked about Gen AI adoption phases and competition, highlighting vector database and SIEM displacement opportunities.

Q: Howard Ma on Q1 shortfall and Gen AI metrics A: Eric Pringle said Q1 shortfall impacts full-year guidance, and Gen AI metrics tracked via customer commitments and use cases.

Q: Austin Dietz on greenfield opportunities and RPO A: Ashutosh Kulkarni and Janesh Moorjani discussed greenfield progress and RPO potential with strong execution.

Q: Kash Rangan on Gen AI metrics and sales capacity A: Ashutosh Kulkarni explained Gen AI metrics via sales team info, and Janesh Moorjani noted investments in sales capacity as needed.