“Our strong second-quarter results were fueled by the rapid adoption of Elastic Cloud, the increased strategic relevance of our solutions, and continued expansion across our customer base.”
2 | The Problem of Unstructured and Endless Data
“…digital transformation…creating massive volume of data.
IDC estimates that by 2025…generating 480 exabytes of data per day and as much as 90% of that data is unstructured and with endless data comes endless possibility.”
3 | High Recurring Revenue Model
- Total Rev: +42%
- Sub Rev: ~93% of total | +45% ◀️
- Self-Managed Rev ~66% of total | +34%
- SaaS Rev ~27% of total | +80% ◀️
4 | Story of the Cloud
➡️ Expects consumption-based Elastic Cloud (current ~34% up from 26% OYA) to ↗️ to >50% of revenues in 3Y.
“Cloud was once again the highlight, with strong new customer adds & robust consumption trends…expect cloud will remain a tailwind for the LT.”
5 | Revenue better measure going forward
“Monthly cloud business has no deferred revenue or RPO.”
“I think revenue is the best measure for us to reflect the performance of our business.”
“…consumption model, revenue reflects customers current consumption patterns…
5 | Revenue better measure going forward (cont’d)
it's not a time-based runoff of historical deals. So, revenue in fact in a consumption business is a very current measure of customer activity.”
6 | The Data Flywheel 🔄
“The consumption model faces no limits on how much data a customer can bring into our platform.”
“We shine when there's data in Elastic itself.”
“So the more data comes into Elastic, the more consumption is driven in our cloud...”
7 | Inherent Operating Leverage with Scale resulting in improving profit margins as revenues grow
8 | Not Top Dog Yet: Elastic recognized as Challenger in the Forrester New Wave™: Extended Detection and Response (XDR) Providers, Q4 2021 (even before officially launching their Limitless XDR offering)
9 | Cash Flows - Positive in FY22
“…quarterly cash flow can be lumpy & affected by timing issues & seasonal variation, so we look at cash flow primarily for the full fiscal year…continue to expect our FCF margin to remain slightly positive on an unlevered basis in FY22.”
➡️ Final Takeaway Elastic $ESTC:
Still growing rapidly, extending beyond observability, to enterprise search & security. Faster growing Cloud to drive growth & shift to more recurring monthly revenue than lumpier annual revenues. Profit margins improving with operating leverage.
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- Atlas +84% 🚀now ~58% of revenues ↗️
(vs 56% in 2Q22, 47% in 3Q21)
- Cust >31K +37% ↗️ +2K QoQ 📶
- Atlas Cust >29.5K +40% ↗️
- Cust >$100k ARR 1,201 +34% ↗️
- Net AR Expansion >120% ✅
- >$0.5bn Rev Run-Rate 📈
1 | Strong 3Q22
“…just to reiterate, our strong performance is really due to again our consistent go to market execution as well as the confluence of the fact that the secular trends are really reinforcing our technical advantages and our growing credibility with customers….”
- 4Q22 Rev Guide Flat QoQ $1.05b ➡️
- 4Q33 NDRR to be modestly below 130% mark ➡️
1 | Q4 - Lowest Seasonality
“…for deferred revenue there's two things to remember, which is the seasonality trend of our renewals is that Q1 is the largest quarter for renewals order for renewals and Q4 is the lowest.”
“The third quarter was outstanding, with record revenue. Demand for NVIDIA AI is surging, driven by hyperscale and cloud scale-out, and broadening adoption by more than 25,000 companies.”