Elastic N.V. (ESTC -2.03%), known for its distributed search and analytics engine Elasticsearch, reported its first quarter 2025 earnings on Aug. 29. The company revealed strong performance, with revenue and profitability surpassing expectations. Revenue reached $347 million, compared to the expected $343 million to $345 million, marking an 18% year-over-year increase. Non-GAAP (generally accepted accounting principles) diluted earnings per share (EPS) came in at $0.35, exceeding the projected $0.24-$0.26 range.
While the quarter shows strength, future guidance for the second quarter suggests tempered growth with revenue between $353 million and $355 million, a 14% year-over-year increase.
| Metric | Q1 FY25 Result | Management’s Expectations | Q1 FY24 Result | Change (YoY) |
|---|---|---|---|---|
| Total Revenue (in millions) | $347 | $343-$345 | $294 | 18% |
| Elastic Cloud Revenue (in millions) | $157 | N/A | $121 | 30% |
| Non-GAAP Diluted EPS | $0.35 | $0.24-$0.26 | $0.25 | 40% |
| Non-GAAP Operating Margin | 11% | 9.2%-9.4% | 9% | 2 p.p. |
Source: Expectations based on management's guidance, as provided in 5-30-2024 earnings report.
Understanding Elastic N.V.’s Business
Elastic N.V. develops Elasticsearch, a distributed search and analytics engine. It primarily offers search-powered solutions, including Elastic Cloud, which helps organizations harness the power of search across varying use cases such as enterprise search, observability, and security.
Recently, the company has been heavily focused on expanding its cloud services and integrating advanced AI and machine learning capabilities into its solutions. Key factors for its success include continuous innovation, customer expansion, and maintaining technological leadership through features like Elasticsearch Relevance Engine (ESRE).
Elastic’s business hinges on several critical areas, including revenue growth, customer expansion, cloud service adoption, and product innovation. The company has demonstrated consistent revenue and customer growth, expanding its Elastic Cloud offerings, which are hosted on major platforms like Amazon's AWS, Google Cloud, and Microsoft Azure.
Quarterly Highlights
Elastic’s Q1 2025 revenue totaled $347 million, exceeding the guidance range of $343 million to $345 million, reflecting an 18% year-over-year increase. Elastic Cloud revenue was particularly strong, reaching $157 million, up 30% from the previous year, indicating increased adoption of its cloud services. Non-GAAP diluted EPS was $0.35, surpassing the expected $0.24-$0.26 range.
Operating margins for the quarter were also noteworthy. Non-GAAP operating margin reached 11%, above the forecast of 9.2%-9.4%. On a GAAP basis, the company reported an operating loss of $34 million and a net loss per share of $0.48. To provide a holistic view, it’s essential to consider both GAAP and non-GAAP metrics.
Cash flow was strong as well, with an operating cash flow of $53 million and adjusted free cash flow of $64 million. As of July 31, the company had $1.147 billion in cash and marketable securities, offering a robust liquidity position.
In terms of customer metrics, Elastic continued to expand its base. Customers with an Annual Contract Value (ACV) exceeding $100,000 grew to over 1,370, up from 1,190 a year ago. The total subscription customer count also saw growth, reaching approximately 21,200.
The firm made notable strides in product innovation. Key updates include the introduction of Automatic Import for SIEM (Security Information and Event Management) data onboarding and the enhancement of their AI platform with new integrations. Significant advancements like the new Elastic Cloud Serverless offering have further solidified its technological leadership.
Forward Outlook
Looking ahead, Elastic provided cautious guidance for the second fiscal quarter. The company expects total revenue to be between $353 million and $355 million, representing a 14% year-over-year growth. For all of fiscal 2025, Elastic projects revenue between $1.436 billion and $1.444 billion, a 14% increase. This tempered outlook suggests potential challenges in customer segmentation and broader economic conditions. Investors should keep an eye on how Elastic navigates these anticipated challenges and continues to leverage its technological advancements to maintain growth.
Management remains optimistic about long-term growth, driven by continued adoption of AI capabilities and new product offerings such as the Elastic Cloud Serverless. The company plans to reinvest in engineering, sales, and marketing to capitalize on these opportunities. Going forward, investors should monitor any further updates on revenue projections and key product developments, as these will be pivotal for Elastic’s future performance.
