Tyler Radke: Okay great. Janesh, can you just frame for us how we should be thinking about the moving pieces in Q4. Q3 saw stronger other subscription growth. How should we think about the relative growth between other subscription and Elastic Cloud. And then secondly, I apologize if I missed it, should we think about Q4 exit growth is the right top line growth for FY ’25 to the starting point, realize you’re not pinning guidance, but just any color on that would be helpful. Thank you.
Janesh Moorjani: Yes, Tyler, I’ll cover all of those. So first off, I think about the other subscription of the self-managed business, and the strength that we saw there in the quarter. Maybe just to start with, I’ll just remind folks that whether a customer chooses cloud or self-manage really depends on their own posture and deployment format. We’ve seen good momentum on both. And while we prefer cloud, and we think it’s better for the customer and better for us, it is ultimately the customer’s choice. So the mix of business is generally partly a function of deal flow in the quarter. And importantly, we did not see any kind of shift from customers trying to move from cloud to self-managed. I think it’s just more a function of the deals that we saw across the geos and segments and timing of renewals and so forth.
We had also shared on the prior call already that we actually expected to see an increase in self-managed revenue this quarter. So it was not a surprise to us. In fact, in Q3 in the year ago period, we saw a similar pattern where that self-managed business was a little bit strong. And so if I look at it even in terms of year-over-year growth, I think self-managed grew 13% year-over-year, compared to 11% in the prior couple of quarters. So it really wasn’t a big deviation. And so as I think about then how that’s factored into our guidance for Q4. One way to think about it is the guidance for Q4 sequentially is only $1 million higher than what we reported here for Q3. So there’s just not a lot of moving parts in there, so I don’t expect much movement.
We obviously don’t guide to the individual pieces around cloud and self-managed, but that’s roughly how I think about it. And just keep in mind that in Q4, we’ve got two fewer days because we have 90 days versus 92 days that we typically have in Q1 to Q3. And so that presents a little bit of a headwind of, call it, roughly $6 million to $7 million of revenue in Q4. And that’s also what we’ve already factored into the guide. And that’s just something to keep in mind as you think about sequential growth rates. And then finally, in terms of thinking about growth for fiscal ’25. Look, I think it’s just too early at this stage, right. We’ve seen really strong performance from the business in ’24 so far. We’ve been very pleased with our execution.
We’re still in the middle of the planning process for ’25. So it’s too early to have a concrete view on the revenue outlook. For now, we’re just focused on delivering a strong Q4, and we will talk more about ’25 on the next call.
Tyler Radke: Thank you. And to follow-up for Ash, the customer example displacing the vector database, which I am — for the customer in reference that drawn a blank on the name, but the coding repository company. Can you just talk about maybe the decision on why — that — I mean, vectors are pretty early in terms of the nascent industry. How common are these displacements? And what were the main factors that drove them to evaluate an alternative and choose Elastic?
Ash Kulkarni: Yes. Thanks, Tyler. So as customers are getting more educated about everything that goes into building Generative AI applications, we are seeing that our core differentiators, things that we’ve talked about in the past are really beginning to not only shine but become very obvious to customers. And as I talk to customers, you think about the customer examples I gave last quarter, whether it was DocuSign, or in the past, Cisco and so on, this time, Stack Overflow, Consensus. What’s standing out to these customers is, I’d say, roughly four things. First is our vector database implementation that’s built on top of the SIEM. It’s just an incredibly good implementation. Like customers really see us perform well, especially in terms of scalability.
And I’ve talked about the kinds of new innovations that we’ve driven in that area around scaler quantization that’s making the system perform even better scale even better, be less intensive in terms of memory requirements. So just the vector performance is one thing, the first thing. The second thing, which is very powerful, is all the capabilities — the enterprise capabilities that we’ve delivered into the product, things like the ability to do document level permissions, the security capabilities that we have the ability to use other facets of search like personalization and geolocation and so on, which really become important when you’re building these enterprise applications. The third thing, which is now becoming very popular is hybrid search.
