Elastic CEO: Observability and security converge as they continue to grow rapidly

Elastic Enterprise Research Technology Company reported this afternoon Q2 revenue and earnings for the year, both of which exceeded analysts’ expectations and raised its outlook above consensus.

Despite the optimistic report, Elastic shares were down 8% at the end of the session.

“The area we are very proud of is our growth of Elastic Cloud,” said CEO and Founder Shay Banon. ZDNet in an interview via Zoom. This product saw sales increase 84% year-over-year to $ 69 million, the same magnitude as the 89% growth in the previous quarter.

“We have made significant investments in our cloud offering,” he added. “We believe this is the best way to engage with our products and solutions.”

The Elastic Cloud service is a SaaS offering for the open source Apache Elasticsearch program, as opposed to the on-premises version of the product. Elastic Cloud integrates with the three largest cloud provider networks, Amazon AWS, Microsoft Azure, and Google Cloud.

Revenue in the three months ended October increased 42% year-over-year to $ 206 million, a net loss of 9 cents per share, excluding certain costs.

Analysts had modeled $ 194.6 million and a net loss of 16 cents per share.

Also: Q1 elastic revenue exceeds expectations, offers surprise profit and increases visibility over the year

For the current quarter, the company reports sales of $ 207 million to $ 209 million and a net loss of 20 to 24 cents. That compares to the consensus for $ 202 million and a loss of 22 cents a share.

For the full year, the company raised its forecast to a revenue outlook of $ 826 million to $ 832 million, up from its previous forecast of $ 808 million to $ 814 million; and a net loss of 51 cents to 61 cents, improved from the previous forecast of minus 57 cents to minus 67 cents.

That compares to the consensus of $ 813.6 million and a loss of 60 cents per share.

Banon said the company sees an increase in Elastic Cloud business thanks to the changes he made in january to its licensing policy. The company has moved from using the open source Apache 2.0 license to using a dual licensing system, comprising its own enterprise license and the server-side public license developed by database maker MongDB.

The result was that Amazon’s AWS could no longer offer its own hosted version of the open source Elasticsearch under the name Elasticsearch because Amazon did not contribute source code changes to the Elasticsearch distribution.

“We are very happy to have changed the license, to remove the confusion and get the clarity we deserve,” said Banon. ZDNet. “In order to get Elasticsearch now, you have to work with us as a business, and I’m seeing that increased clarity reflected in the market, and I think that’s a big tailwind for Elastic Cloud over the next two years. years. “

In other business details, Banon told ZDNet that the company’s October acquisition of “continuous profiling” startup Optimyze was part of building a comprehensive observability suite that is a natural convergence of technologies. .

“Our technology allows you to search Slack and Office365, Google Docs and Microsoft Teams,” Banon said. “You want a unified field of research, and we’re seeing the same thing happening in the observability market. ”

“There’s application performance monitoring, there’s logging, there’s metrics, there’s eBPF, there’s continuous profiling – it’s all just data streams,” Banon said. “People are looking for a unified way to find and apply AI and ML logarithms on top of it to just keep their apps running. ”

The same convergence is happening in security technologies, he said, such as SIEM, endpoint protection, cloud security, and posture management, which are also flows.

“We’re really investing in our core unified platform that can support these things,” he said. “It helps us stay one step ahead.”

These observability and security technologies “are always developing faster than they are converging,” observed Banon, as the attack surfaces get faster and faster.

“These markets are huge,” he said.

But in the years to come, there will be consolidation.

“In two or three years, observability and security will merge,” he said.

“We strive to be the best in observability, the best in security and to have the best features in everyone, but they become features: they are no longer product categories. “

Ultimate consolidation is a natural development of roles in the business, he said.

“It’s not just the technology anymore, it’s the amalgamation of the organization,” he said. “Fifteen years ago, it wasn’t much different between developers and operations.

“It took a few years to have DevOps and build trust between these two teams, and the same has to happen between developers, operations and threat hunters, to a point where they merge. ”

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