Elastic(US:ESTC)2021-02-25 04:32Financial Data and Key Metrics Changes - Total revenue for Q3 was $157.1 million, growing 39% year-over-year [32] - Subscription revenue totaled $147.2 million, comprising 94% of total revenue [33] - Elastic Cloud revenue was $44.9 million, growing 79% year-over-year [33] - Calculated billings grew 41% year-over-year to $173.2 million [34] - Total deferred revenue was $334 million, up 59% year-over-year [34] - Remaining performance obligations totaled approximately $706 million, up 66% year-over-year [34] - Gross profit was $121 million, representing a gross margin of 77.0% [37] - Free cash flow was $18.3 million in Q3 [38] Business Line Data and Key Metrics Changes - Elastic Cloud showed strong growth, with a preference from customers for cloud offerings [33] - Professional services revenue was $9.9 million, growing 10% year-over-year [33] - The net expansion rate remained modestly above 130% [36] Market Data and Key Metrics Changes - The demand environment remained generally similar to the first half of the year, with some headwinds from COVID-19 [32] - The company noted a preference for cloud solutions among customers, particularly during the pandemic [50] Company Strategy and Development Direction - The company aims to build three powerful solutions—enterprise search, observability, and security—into a single technology stack [9] - A change to the licensing model was announced, moving to dual licensing under the Elastic License v2 and the Server Side Public License [10] - The company plans to accelerate investments in sales capacity, R&D, and G&A to drive long-term growth [43][79] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term market opportunity despite mixed demand in the near term [39] - The company expects revenue growth of 28% year-over-year for Q4 [40] - For full fiscal 2021, revenue is expected to be in the range of $589 million to $590 million, representing a growth rate of 38% year-over-year [41] Other Important Information - The company is hosting its first-ever Global Elastic Community Conference [30] - The company raised over $400,000 on Giving Tuesday as part of its Elastic Cares initiative [30] Q&A Session Summary Question: Overview of pricing changes and their impact - Management discussed the introduction of an enterprise subscription tier and the added value from new features [48] - The long-term impact of these changes is expected to provide a gradual tailwind [49] Question: Licensing change and community reaction - Management noted that the majority of users were satisfied with the licensing change and that it provided more options [56] Question: Customer spending trends and larger deal activity - Management expressed confidence in customer additions and deal activity heading into Q4 [60] Question: Schema on read feature and its implications - Management highlighted the flexibility and ease of use that schema on read provides, which is expected to enhance the product offering [66] Question: Investment plans and timing - Management plans to accelerate investments across all functions starting in Q4, aiming for long-term growth [78]