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February 26, 2020
ELASTIC N.V. (ESTC)Q3 FY2020Earnings Conference Call
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This presentation and the accompanying oral presentation contain forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “would,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements in this presentation include, but are not limited to, statements related to anticipated future results of operations and financial position, potential market opportunities and total addressable market, planned product releases and services, potential growth opportunities and drivers, business strategy and plans and objectives of management for future operations, adoption of our product offerings, trends relating to open source distribution, and our search technology, customers and potential use cases. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to inherent risks, uncertainties and changes in circumstance that are difficult or impossible to predict. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements as a result of such uncertainties, risks, and changes in circumstances, including without limitation, risks and uncertainties related to: our future financial performance, including our expectations regarding our revenue; cost of revenue; gross profit or gross margin; operating expenses (including changes in sales and marketing, research and development and general and administrative expenses); our ability to achieve, and maintain, future profitability; our ability to continue to deliver and improve our offerings and successfully develop new offerings; customer acceptance and purchase of our existing offerings and new offerings; our ability to maintain and expand our user and customer base; the market for our products not continuing to develop; competition from other products; the impact of our acquisition of Endgame, Inc. on our operating margin; the impact of acquisitions on Elastic’s future product offerings; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our business strategy and our plan to build our business; our ability to effectively manage our growth; the pace of change and innovation in the markets in which we participate and the competitive nature of those markets; our international expansion strategy; our service performance and security, including the resources and costs required to prevent, detect and remediate potential security breaches; our operating results and cash flows; our strategy of acquiring complementary businesses and our ability to successfully integrate acquired businesses and technologies; our relationships with third parties, including partners; our ability to protect our intellectual property rights; our ability to develop our brands; our ability to attract and retain qualified employees and key personnel; the impact of expensing stock options and other equity awards; the sufficiency of our capital resources; and general market, political, economic and business conditions.
Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” and elsewhere in our most recent filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2019 and any subsequent reports on Form 10-K, Form 10-Q or Form 8-K filed with the SEC. SEC filings are available on the Investors Relations section of our website at ir.elastic.co and on the SEC’s website at www.sec.gov. The forward-looking statements in this presentation and the accompanying oral presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements provided to reflect any change in our expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law.
In addition to GAAP financial information, this presentation and the accompanying oral presentation include certain non-GAAP financial measures. The non-GAAP measures have limitations, and you should not consider them in isolation or as a substitute for our GAAP financial information. See the Appendix for a reconciliation of all non-GAAP financial measures to their nearest GAAP equivalent.
Forward Looking Statements and Non-GAAP Disclaimer
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Shay BanonFounder and CEO
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Q3 FY2020 Summary – Strong Results
• Revenue grew 60% year-over-year
• Over 10,500 total subscription customers
• Over 570 customers with ACV greater than $100K
• Net Expansion Rate continued to be greater than 130%
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Free & Open Distribution Model + Commercial Business Model
Commercial Business Model
Strong proprietary innovation & differentiation
Paid features
Unified pricing model
Self-managed and SaaS subscriptions
Free & Open Distribution Model
Rapid product adoption
Strong user community
Sole committer of code
Single code base
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SaaS Orchestration
Elastic Cloud on Kubernetes
Elastic Cloud Elastic Cloud Enterprise
Elastic Enterprise Search Elastic SecurityElastic Observability
Kibana
Elasticsearch
Beats Logstash
Elastic Technology
Powered by the Elastic Stack
Solutions
Deployed anywhere
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Search everything, anywhereEasily implement powerful, modern search experiences across your website, app, or digital workplace. Search it all, simply.
ELASTIC ENTERPRISE SEARCH
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ENTERPRISE SEARCH
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Unified visibility across your entire ecosystemBring your logs, metrics, and traces together into a single stack so you can monitor, detect, and react to events with speed.
ELASTIC OBSERVABILITY
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OBSERVABILITY
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Leading Global Investment Bank
Prevent, collect, detect, respond.Elastic Security integrates endpoint security and SIEM to give you prevention, collection, detection, and response capabilities for unified protection across your infrastructure.
ELASTIC SECURITY
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SECURITY
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Public Sector
Telecommunications Technology
Financial Services
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New GCP Regions (Montreal, Virginia, and Mumbai)New Azure Region (Tokyo)
Expanding the Official Elasticsearch Service
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Centrally manage your Elastic deploymentsProvision, manage, and monitor Elastic products and solutions, at any scale, on any infrastructure, while managing everything from a single console.
ELASTIC CLOUD ENTERPRISE
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OBSERVABILITYElastic Cloud Enterprise
(ECE)
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Official Operator, and more
Simplify setup, upgrades, snapshots, scaling, high availability, security, and more when running Elastic products and solutions on Kubernetes.
ELASTIC CLOUD ON KUBERNETES
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OBSERVABILITYElastic Cloud on Kubernetes
(ECK)
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Alison GleesonNon-executive Director (Independent Board member)
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Sally JenkinsChief Marketing Officer
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Search. Observe. Protect.
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Janesh Moorjani CFO
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Revenue Highlights
Q3 FY20 Y/Y Y/Y CC
Total Revenue $113.2 60% 61%
Total Subscription Revenue $104.2 61% 63%
SaaS Revenue $25.1 114% 118%
Subscription % of Total Revenue 92%
Professional Services Revenue $9.0 44% 45%
$ millions
CC = Constant Currency22
Strong Billings and Customer Metrics
1. Calculated Billings represents total revenue plus the sequential increase in deferred revenue as presented on the statement of cash flows, less the increase in unbilled accounts receivable. See appendix for reconciliation to GAAP.
CC=Constant Currency
Q3 FY20 Q3 FY 20 Y/Y
Q3 FY 20 Y/Y CC
Calculated Billings1 $122.9 54% 56%
Q3 FY20 CUSTOMER METRICS
Total Subscription Customers > 10,500
Subscription Customers with ACV > $100,000 > 570
Net Expansion Rate > 130%
$ millions
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Q3 FY20 % OF REVENUE
Total Revenue $113.2 100%
Gross Profit/Margin $84.7 75%
Research & Development Expense $39.6 35%
Sales & Marketing Expense $48.1 43%
General & Administrative Expense $17.1 15%
Operating Income/Margin -$20.2 -18%
Net loss per share $0.28
Non-GAAP Income Statement Highlights
See appendix for reconciliation to GAAP.
$ millions, except per share amounts
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Select Financial Measures
Q3 FY20
Free Cash Flow -$24.2
Cash & Cash Equivalents $294.1
Total Deferred Revenue $209.8
Remaining Performance Obligations $426.0
Employees 1,892
$ millions, except employees
See appendix for reconciliation to GAAP.25
Q4 and Full Year FY 2020 Guidance
Q4 FY20 FY20
Total Revenue $119M - $120M $423M - $424M
Non-GAAP Operating Margin -20.5% to -19.5% Approx. -20.5%
Non-GAAP Net loss per share $0.32 to $0.30 $1.13 to $1.12
Weighted average shares outstanding (basic & diluted) 82M - 83M Approx. 79M
A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of these costs and expenses that may be incurred in the future.
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Q&A
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Appendix
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• 7.6 Released
• Faster Elasticsearch queries, more turnkey machine learning
• Meta engines for managing multiple search experiences
• Deeper observability with AWS and GCP integrations
• Machine learning for automatic, log categorization and analysis
• Elastic SIEM GA, new detection engine and rules
• Deeper Windows visibility with Elastic Endpoint Security
Solutions & Elastic Stack SaaS: Elastic Cloud Orchestration: ECK & ECE
• Announced general availability of Elastic App Search on Elastic Cloud
• New Elastic Cloud GCP regions in Montreal and Mumbai
• New Elastic Cloud Azure regions in Tokyo
• Elastic Cloud on Kubernetes (ECK) 1.0 general availability
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Product Releases
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Remaining Performance Obligations (RPO) Historical Trend
$ millionsQ1
FY19Q2
FY19Q3
FY19Q4
FY19Q1
FY20Q2
FY20Q3
FY20Remaining Performance Obligations (RPO)
$228.5 $268.5 $304.2 $352.5 $362.8 $410.0 $426.0
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GAAP to Non-GAAP Reconciliations Gross Profit and Gross Margin
Sums may not add to totals due to rounding
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GAAP to Non-GAAP Reconciliations Operating Expenses
Sums may not add to totals due to rounding
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GAAP to Non-GAAP Reconciliations Operating Loss, Operating Margin and Net Loss per share
Sums may not add to totals due to rounding
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Calculated Billings (excludes acquired Deferred Revenue)
Free Cash Flow
GAAP to Non-GAAP Reconciliations
Sums may not add to totals due to rounding
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https://ir.elastic.co/
ELASTIC N.V. (ESTC)Q3 FY2020Earnings Conference Call