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Elastic Reports Third Quarter Fiscal 2023 Financial Results

Q3 Revenue of $275 million, up 23% year-over-year (27% in constant currency)

Q3 Elastic Cloud Revenue of $111 million, up 38% year-over-year (40% in constant currency)

Elastic (NYSE: ESTC) (“Elastic”), the company behind Elasticsearch and the Elastic Stack, announced results for its third quarter of fiscal 2023 (ended January 31, 2023).

Third Quarter Fiscal 2023 Financial Highlights

  • Total revenue was $275 million, an increase of 23% year-over-year, or 27% on a constant currency basis
  • Elastic Cloud revenue was $111 million, an increase of 38% year-over-year, or 40% on a constant currency basis
  • GAAP operating loss was $69 million; GAAP operating margin was -25%
  • Non-GAAP operating income was $22 million; non-GAAP operating margin was 8%
  • GAAP net loss per share was $0.76; non-GAAP diluted earnings per share was $0.17
  • Operating cash flow was $7 million with adjusted free cash flow of $19 million
  • Cash and cash equivalents were $878 million as of January 31, 2023

“We grew total revenue by 27% in constant currency while managing our business with discipline to deliver stronger than expected non-GAAP operating margin,” said Ash Kulkarni, CEO, Elastic. “Against a challenging macro backdrop, our platform capabilities address customer priorities as they look to drive efficiencies while increasing visibility, security and data insights across their business. Customers made strong contractual commitments to us during the quarter and we remain confident in the long-term market opportunity and the core fundamental strengths of our business.”

Third Quarter Fiscal 2023 Key Metrics and Recent Business Highlights

Key Customer Metrics

  • Total subscription customer count was approximately 19,900 compared to approximately 19,700 in Q2 FY23, and over 17,900 in Q3 FY22
  • Total customer count with Annual Contract Value (ACV) greater than $100,000 was over 1,110, compared to over 1,050 in Q2 FY23, and over 890 in Q3 FY22
  • Net Expansion Rate was approximately 120%

Cloud Momentum

  • Elastic Cloud revenue represented 40% of total revenue versus 36% in Q3 FY22
  • Doubled revenue from hyperscaler partner marketplaces with significant continuing momentum, including multiple transactions over $1M ACV
  • Partnered with cloud hyperscalers in go-to-market programs, including the Google Cloud North American Partner Advisory Council and an AWS-led co-sell campaign aimed to drive AWS-originated opportunities to Elastic

Product Innovations and Updates

  • Introduced new tools to implement and manage natural language processing across search indices to accelerate time to value and higher quality search results, including new dense vector optimizations with byte-sized integer per dimension
  • Delivered interactive investigation guides, introduced new deception-based ransomware protection, and improved protections against data exfiltration through entity analytics in Elastic Security
  • Added a new curated journey in Elastic Observability to accelerate root cause analysis and aid in the identification of performance or availability issues caused by application dependencies

Other Business Highlights

  • Recognized as a Leader in the 2022 Gartner® Magic Quadrant™ for Insight Engines
  • Recognized as a Leader in The Forrester Wave™: Security Analytics Platforms, Q4 2022, and named a Major Player in the IDC MarketScape: Worldwide SIEM 2022 Vendor Assessment
  • Named a Strong Performer in The Forrester Wave™: Artificial Intelligence For IT Operations (AIOps), Q4 2022
  • Hosted ElasticON Public Sector with more than 500 customers and prospects, and speakers from the US Army, Lawrence Livermore National Labs, and ECS
  • Appointed Mathew Donoghue as Chief Marketing Officer, focused on continuing to drive demand for the Company’s platform and solutions while delivering scalable growth

Financial Outlook

The Company is providing the following guidance for the fourth quarter of fiscal 2023 and is updating its prior full-year fiscal 2023 guidance as follows:

For the fourth quarter of fiscal 2023 (ending April 30, 2023):

  • Total revenue is expected to be between $276 million and $278 million, representing 16% year-over-year growth at the midpoint (18% year-over-year constant currency growth at the midpoint)
  • Non-GAAP operating margin is expected to be between 4.8% and 5.2%
  • Non-GAAP earnings per share is expected to be between $0.08 and $0.10, assuming between 100 million and 101 million diluted weighted average ordinary shares outstanding

For fiscal 2023 (ending April 30, 2023):

  • Total revenue is expected to be between $1,065 million and $1,067 million, representing 24% year-over-year growth at the midpoint (28% year-over-year constant currency growth at the midpoint)
  • Non-GAAP operating margin is expected to be between 3.3% and 3.4%
  • Non-GAAP earnings per share is expected to be between $0.11 and $0.14, assuming between 99 million and 100 million diluted weighted average ordinary shares outstanding

The current guidance assumes, among others, the following exchange rates: 1 Euro = 1.059 US Dollars; and 1 Great British Pound = 1.208 US Dollars.

See the section titled “Forward-Looking Statements” below for information on the factors that could cause our actual results to differ materially. We present historical and forward-looking non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of these non-GAAP measures. A reconciliation of forward-looking non-GAAP measures to the corresponding GAAP measures for operating margin and net loss per share is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of the costs and expenses that may be incurred in the future. These items necessary to reconcile such non-GAAP measures could be material and have a significant impact on the Company’s results computed in accordance with GAAP.

Conference Call and Webcast

Elastic’s executive management team will host a conference call today at 2:00 p.m. PT/5:00 p.m. ET to discuss the Company’s financial results and business outlook. A live audio webcast of the conference call will be available through Elastic’s Investor Relations website at ir.elastic.co. Slides containing financial and operating information will accompany the webcast and will be available on the same website. The replay of the webcast and slides will be available for two months.

About Elastic

Elastic (NYSE: ESTC) is a leading platform for search-powered solutions. We help organizations, their employees, and their customers accelerate the results that matter. With solutions in Enterprise Search, Observability, and Security, we enhance customer and employee search experiences, keep mission-critical applications running smoothly, and protect against cyber threats. Delivered wherever data lives, in one cloud, across multiple clouds, or on-premise, Elastic enables its customers to achieve new levels of success at scale and on a single platform. Learn more at elastic.co.

Elastic and associated marks are trademarks or registered trademarks of Elastic N.V. and its subsidiaries. All other company and product names may be trademarks of their respective owners.

Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risks and uncertainties, which include, but are not limited to, statements regarding our expected financial results for the fiscal quarter and the fiscal year ending April 30, 2023, our expectations regarding demand for our products and solutions, our assessments of the strength of our solutions and products, the expected performance or benefits of our offerings, our expectations regarding the business and macroeconomic climate and long-term market opportunities, and assessments of customers' reasons for selecting our solutions and products. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements due to uncertainties, risks, and changes in circumstances, including but not limited to those related to: our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses (which include changes in sales and marketing, research and development and general and administrative expenses), and our ability to achieve and maintain future profitability; any disruption to our business resulting from our plan to reduce costs and rebalance investments; the effects of currency movements on our financial results; our ability to continue to deliver and improve our offerings and develop new offerings; customer acceptance and purchase of our new and existing offerings and the expansion and adoption of our Elastic Cloud offerings; our ability to realize value from investments and cost reduction efforts in the business; our ability to maintain and expand our user and customer base; the impact of the uncertain macroeconomic environment, ongoing conflict between Russia and Ukraine, and effects of the COVID-19 pandemic on our business, operations, hiring and financial results, and on businesses and spending priorities of our customers and partners; the impact of our licensing model on the use and adoption of our software; the impact of our pricing model strategies on our business; the impact of foreign currency exchange rate fluctuations and the uncertain inflation and interest rate environment on our results; our international expansion strategy; our operating results and cash flows; the sufficiency of our capital resources; our ability to successfully execute our go-to-market strategy and expand in new and existing markets, and our ability to forecast customer retention and expansion; and general market, political, economic and business conditions.

Any additional or unforeseen effect from the uncertain macroeconomic environment, ongoing conflict between Russia and Ukraine, or effects of the COVID-19 pandemic may exacerbate these risks. Additional risks and uncertainties that could cause actual outcomes and results to differ materially are included in our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2022 and other subsequent reports filed with the SEC. SEC filings are available on the Investor Relations section of Elastic’s website at ir.elastic.co and the SEC’s website at www.sec.gov. Elastic assumes no obligation to, and does not currently intend to, update any such forward-looking statements, except as required by law.

Statement Regarding Use of Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe the non-GAAP measures listed below are useful in evaluating our operating performance. We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures and key metrics as analytical tools. Investors are encouraged to review the differences between GAAP financial measures and the corresponding non-GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Reconciliations of historical GAAP financial measures to their respective historical non-GAAP financial measures are included below. In relation to constant currency non-GAAP financial measures, the only reconciling item between GAAP financial measures and non-GAAP financial measures is the effect of foreign currency rate fluctuations. Further details on how we calculate such effects can be found in the definition of “Constant Currency” below.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, and amortization of acquired intangible assets. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Non-GAAP Operating Income (Loss) and Non-GAAP Operating Margin

We define non-GAAP operating income (loss) and non-GAAP operating margin as GAAP operating loss and GAAP operating margin, respectively, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, and restructuring and other related charges. We believe non-GAAP operating income (loss) and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Non-GAAP Net Earnings (Loss) Per Share

We define non-GAAP net earnings (loss) per share as GAAP net loss per share, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, restructuring and other related charges, litigation settlement, and the tax effects related to the foregoing. We believe non-GAAP net earnings (loss) per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this metric generally eliminates the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin

Adjusted free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities adjusted for cash paid for interest less cash used for investing activities for purchases of property and equipment, and capitalized internal-use software costs. Adjusted free cash flow margin is calculated as adjusted free cash flow divided by total revenue. Adjusted free cash flow does not represent residual cash flow available for discretionary expenditures since, among other things, we have mandatory debt service requirements.

Constant Currency

We compare the percent change in certain results from one period to another period using constant currency information to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. In presenting this information, current and comparative prior period results are converted into United States dollars at the exchange rates in effect on the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.

Contact Information 

Nikolay Beliov

Elastic Investor Relations

ir@elastic.co

Madge Miller

Elastic Corporate Communications

PR-Team@elastic.co

 

Elastic N.V.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

2023

 

2022

 

2023

 

2022

Revenue

 

 

 

 

 

 

 

 

Subscription

 

$

255,613

 

 

$

209,614

 

 

$

728,638

 

 

$

577,056

 

Services

 

 

18,953

 

 

 

14,330

 

 

 

60,410

 

 

 

45,963

 

Total revenue

 

 

274,566

 

 

 

223,944

 

 

 

789,048

 

 

 

623,019

 

Cost of revenue

 

 

 

 

 

 

 

 

Subscription

 

 

56,146

 

 

 

47,577

 

 

 

164,798

 

 

 

127,339

 

Services

 

 

19,062

 

 

 

13,707

 

 

 

58,146

 

 

 

37,491

 

Total cost of revenue

 

 

75,208

 

 

 

61,284

 

 

 

222,944

 

 

 

164,830

 

Gross profit

 

 

199,358

 

 

 

162,660

 

 

 

566,104

 

 

 

458,189

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

 

77,472

 

 

 

71,749

 

 

 

231,689

 

 

 

194,894

 

Sales and marketing

 

 

126,717

 

 

 

105,069

 

 

 

379,902

 

 

 

288,055

 

General and administrative

 

 

34,711

 

 

 

31,691

 

 

 

103,724

 

 

 

89,298

 

Restructuring and other related charges

 

 

29,805

 

 

 

 

 

 

29,805

 

 

 

 

Total operating expenses

 

 

268,705

 

 

 

208,509

 

 

 

745,120

 

 

 

572,247

 

Operating loss

 

 

(69,347

)

 

 

(45,849

)

 

 

(179,016

)

 

 

(114,058

)

Other income (expense), net

 

 

 

 

 

 

 

 

Interest expense

 

 

(6,265

)

 

 

(6,175

)

 

 

(18,875

)

 

 

(14,327

)

Other income (expense), net

 

 

5,460

 

 

 

(861

)

 

 

20,774

 

 

 

(509

)

Loss before income taxes

 

 

(70,152

)

 

 

(52,885

)

 

 

(177,117

)

 

 

(128,894

)

Provision for income taxes

 

 

2,422

 

 

 

3,841

 

 

 

12,313

 

 

 

9,344

 

Net loss

 

$

(72,574

)

 

$

(56,726

)

 

$

(189,430

)

 

$

(138,238

)

Net loss per share attributable to ordinary shareholders, basic and diluted

 

$

(0.76

)

 

$

(0.61

)

 

$

(1.99

)

 

$

(1.50

)

Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted

 

 

96,052,025

 

 

 

93,015,185

 

 

 

95,327,131

 

 

 

92,140,919

 

 

Elastic N.V.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 

As of

January 31, 2023

 

As of

April 30, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

877,683

 

 

$

860,949

 

Restricted cash

 

2,362

 

 

 

2,688

 

Accounts receivable, net of allowance for credit losses of $2,195 and $2,700 as of January 31, 2023 and April 30, 2022, respectively

 

200,790

 

 

 

215,228

 

Deferred contract acquisition costs

 

50,436

 

 

 

43,628

 

Prepaid expenses and other current assets

 

33,457

 

 

 

41,215

 

Total current assets

 

1,164,728

 

 

 

1,163,708

 

Property and equipment, net

 

3,951

 

 

 

7,207

 

Goodwill

 

303,853

 

 

 

303,906

 

Operating lease right-of-use assets

 

22,523

 

 

 

25,437

 

Intangible assets, net

 

33,175

 

 

 

45,800

 

Deferred contract acquisition costs, non-current

 

84,601

 

 

 

74,419

 

Deferred tax assets

 

5,668

 

 

 

5,811

 

Other assets

 

9,470

 

 

 

16,643

 

Total assets

$

1,627,969

 

 

$

1,642,931

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

29,246

 

 

$

28,403

 

Accrued expenses and other liabilities

 

58,091

 

 

 

53,930

 

Accrued compensation and benefits

 

67,884

 

 

 

68,002

 

Operating lease liabilities

 

12,839

 

 

 

11,219

 

Deferred revenue

 

449,049

 

 

 

431,776

 

Total current liabilities

 

617,109

 

 

 

593,330

 

Deferred revenue, non-current

 

34,960

 

 

 

33,518

 

Long-term debt, net

 

567,283

 

 

 

566,520

 

Operating lease liabilities, non-current

 

16,725

 

 

 

16,482

 

Other liabilities, non-current

 

6,903

 

 

 

17,648

 

Total liabilities

 

1,242,980

 

 

 

1,227,498

 

Shareholders’ equity:

 

 

 

Convertible preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of January 31, 2023 and April 30, 2022

 

 

 

 

 

Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 96,435,276 shares issued and outstanding as of January 31, 2023 and 94,174,914 shares issued and outstanding as of April 30, 2022

 

1,014

��

 

 

990

 

Treasury stock

 

(369

)

 

 

(369

)

Additional paid-in capital

 

1,410,944

 

 

 

1,250,108

 

Accumulated other comprehensive loss

 

(20,004

)

 

 

(18,130

)

Accumulated deficit

 

(1,006,596

)

 

 

(817,166

)

Total shareholders’ equity

 

384,989

 

 

 

415,433

 

Total liabilities and shareholders’ equity

$

1,627,969

 

 

$

1,642,931

 

 

Elastic N.V.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

2023

 

2022

 

2023

 

2022

Cash flows from operating activities

 

 

 

 

 

 

 

Net loss

$

(72,574

)

 

$

(56,726

)

 

$

(189,430

)

 

$

(138,238

)

Adjustments to reconcile net loss to cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

5,045

 

 

 

5,233

 

 

 

15,475

 

 

 

14,558

 

Amortization of deferred contract acquisition costs

 

15,821

 

 

 

14,803

 

 

 

51,495

 

 

 

43,373

 

Amortization of debt issuance costs

 

257

 

 

 

247

 

 

 

763

 

 

 

554

 

Non-cash operating lease cost

 

2,705

 

 

 

2,417

 

 

 

8,354

 

 

 

6,259

 

Asset impairment charges

 

6,242

 

 

 

 

 

 

6,242

 

 

 

 

Stock-based compensation expense, net of amounts capitalized

 

54,456

 

 

 

37,393

 

 

 

148,626

 

 

 

96,971

 

Deferred income taxes

 

148

 

 

 

30

 

 

 

68

 

 

 

(219

)

Foreign currency transaction loss

 

2,213

 

 

 

1,703

 

 

 

2,261

 

 

 

1,707

 

Other

 

 

 

 

 

 

 

67

 

 

 

98

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

(11,143

)

 

 

9,282

 

 

 

14,050

 

 

 

9,801

 

Deferred contract acquisition costs

 

(24,615

)

 

 

(21,957

)

 

 

(68,184

)

 

 

(61,234

)

Prepaid expenses and other current assets

 

(238

)

 

 

(4,868

)

 

 

7,671

 

 

 

(2,650

)

Other assets

 

2,297

 

 

 

2,534

 

 

 

7,106

 

 

 

(803

)

Accounts payable

 

(11,809

)

 

 

3,967

 

 

 

511

 

 

 

14,452

 

Accrued expenses and other liabilities

 

(4,627

)

 

 

820

 

 

 

(6,272

)

 

 

17,539

 

Accrued compensation and benefits

 

5,786

 

 

 

863

 

 

 

(161

)

 

 

4,686

 

Operating lease liabilities

 

(2,831

)

 

 

(2,455

)

 

 

(8,404

)

 

 

(6,438

)

Deferred revenue

 

40,037

 

 

 

11,768

 

 

 

17,869

 

 

 

8,306

 

Net cash provided by operating activities

 

7,170

 

 

 

5,054

 

 

 

8,107

 

 

 

8,722

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of property and equipment

 

(197

)

 

 

(236

)

 

 

(1,019

)

 

 

(987

)

Capitalization of internal-use software

 

 

 

 

(1,514

)

 

 

 

 

 

(4,227

)

Business acquisitions, net of cash acquired

 

 

 

 

(11,750

)

 

 

 

 

 

(119,854

)

Net cash used in investing activities

 

(197

)

 

 

(13,500

)

 

 

(1,019

)

 

 

(125,068

)

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds from the issuance of debt

 

 

 

 

 

 

 

 

 

 

575,000

 

Proceeds from issuance of ordinary shares upon exercise of stock options

 

4,510

 

 

 

6,709

 

 

 

12,234

 

 

 

27,540

 

Payments of debt issuance costs

 

 

 

 

(49

)

 

 

 

 

 

(9,283

)

Net cash provided by financing activities

 

4,510

 

 

 

6,660

 

 

 

12,234

 

 

 

593,257

 

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

9,940

 

 

 

(8,921

)

 

 

(2,914

)

 

 

(12,328

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

21,423

 

 

 

(10,707

)

 

 

16,408

 

 

 

464,583

 

Cash, cash equivalents, and restricted cash, beginning of period

 

858,622

 

 

 

878,998

 

 

 

863,637

 

 

 

403,708

 

Cash, cash equivalents, and restricted cash, end of period

$

880,045

 

 

$

868,291

 

 

$

880,045

 

 

$

868,291

 

 

Elastic N.V.

Revenue by Type

(in thousands, except percentages)

(unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

2023

 

2022

 

2023

 

2022

 

 

Amount

 

% of

Total

Revenue

 

Amount

 

% of

Total

Revenue

 

Amount

 

% of

Total

Revenue

 

Amount

 

% of

Total

Revenue

Elastic Cloud

 

$

110,743

 

40

%

 

$

80,402

 

36

%

 

$

311,709

 

40

%

 

$

210,963

 

34

%

Other subscription

 

 

144,870

 

53

%

 

 

129,212

 

58

%

 

 

416,929

 

52

%

 

 

366,093

 

59

%

Total subscription

 

 

255,613

 

93

%

 

 

209,614

 

94

%

 

 

728,638

 

92

%

 

 

577,056

 

93

%

Services

 

 

18,953

 

7

%

 

 

14,330

 

6

%

 

 

60,410

 

8

%

 

 

45,963

 

7

%

Total revenue

 

$

274,566

 

100

%

 

$

223,944

 

100

%

 

$

789,048

 

100

%

 

$

623,019

 

100

%

 

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

Supplementary Information

(in thousands, except percentages)

(unaudited)

 

 

Three Months Ended

January 31, 2023

 

% Change

Year Over

Year

 

% Change

Year Over Year

Excluding

Currency Changes

 

% Change

Quarter

Over Quarter

 

% Change

Quarter Over

Quarter Excluding

Currency Changes

Revenue

 

 

 

 

 

 

 

 

 

Elastic Cloud

$

110,743

 

38

%

 

40

%

 

7

%

 

7

%

Other subscription

$

144,870

 

12

%

 

17

%

 

5

%

 

5

%

Total subscription

$

255,613

 

22

%

 

26

%

 

6

%

 

6

%

Total revenue

$

274,566

 

23

%

 

27

%

 

4

%

 

4

%

Total deferred revenue

$

484,009

 

22

%

 

25

%

 

12

%

 

9

%

Total remaining performance obligations

$

997,225

 

16

%

 

18

%

 

11

%

 

7

%

 

 

Nine Months Ended

January 31, 2023

 

% Change

Year Over

Year

 

% Change

Year Over Year

Excluding

Currency Changes

 

Revenue

 

 

 

 

 

 

Elastic Cloud

$

311,709

 

48

%

 

51

%

 

Other subscription

$

416,929

 

14

%

 

20

%

 

Total subscription

$

728,638

 

26

%

 

31

%

 

Total revenue

$

789,048

 

27

%

 

31

%

 

 

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

Adjusted Free Cash Flow

(in thousands, except percentages) 

(unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

2023

 

2022

 

2023

 

2022

Net cash provided by operating activities

 

$

7,170

 

 

$

5,054

 

 

$

8,107

 

 

$

8,722

 

Less: Purchases of property and equipment

 

 

(197

)

 

 

(236

)

 

 

(1,019

)

 

 

(987

)

Less: Capitalization of internal-use software

 

 

 

 

 

(1,514

)

 

 

 

 

 

(4,227

)

Add: Interest paid on long-term debt

 

 

11,859

 

 

 

12,452

 

 

 

23,719

 

 

 

12,452

 

Adjusted free cash flow (1)

 

$

18,832

 

 

$

15,756

 

 

$

30,807

 

 

$

15,960

 

Net cash used in investing activities

 

$

(197

)

 

$

(13,500

)

 

$

(1,019

)

 

$

(125,068

)

Net cash provided by financing activities

 

$

4,510

 

 

$

6,660

 

 

$

12,234

 

 

$

593,257

 

Net cash provided by operating activities (as a percentage of total revenue)

 

 

3

%

 

 

2

%

 

 

1

%

 

 

1

%

Less: Purchases of property and equipment (as a percentage of total revenue)

 

 

%

 

 

%

 

 

%

 

 

%

Less: Capitalization of internal-use software (as a percentage of total revenue)

 

 

%

 

 

(1

) %

 

 

%

 

 

%

Add: Interest paid on long-term debt (as a percentage of total revenue)

 

 

4

%

 

 

6

%

 

 

3

%

 

 

2

%

Adjusted free cash flow margin

 

 

7

%

 

 

7

%

 

 

4

%

 

 

3

%

(1) Adjusted free cash flow includes $18.0 million of cash paid for restructuring and other charges during the three and nine months ended January 31, 2023.

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

(in thousands, except percentages, share and per share data)

(unaudited) 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

2023

 

2022

 

2023

 

2022

Gross Profit Reconciliation:

 

 

 

 

 

 

 

GAAP gross profit

$

199,358

 

 

$

162,660

 

 

$

566,104

 

 

$

458,189

 

Stock-based compensation expense

 

4,692

 

 

 

3,790

 

 

 

13,419

 

 

 

10,855

 

Employer payroll taxes on employee stock transactions

 

255

 

 

 

260

 

 

 

705

 

 

 

1,065

 

Amortization of acquired intangibles

 

2,977

 

 

 

3,046

 

 

 

8,902

 

 

 

7,556

 

Non-GAAP gross profit

$

207,282

 

 

$

169,756

 

 

$

589,130

 

 

$

477,665

 

Gross Margin Reconciliation(1):

 

 

 

 

 

 

 

GAAP gross margin

 

72.6

%

 

 

72.6

%

 

 

71.7

%

 

 

73.5

%

Stock-based compensation expense

 

1.7

%

 

 

1.7

%

 

 

1.7

%

 

 

1.7

%

Employer payroll taxes on employee stock transactions

 

0.1

%

 

 

0.1

%

 

 

0.1

%

 

 

0.2

%

Amortization of acquired intangibles

 

1.1

%

 

 

1.4

%

 

 

1.1

%

 

 

1.2

%

Non-GAAP gross margin

 

75.5

%

 

 

75.8

%

 

 

74.7

%

 

 

76.7

%

Operating Income Reconciliation:

 

 

 

 

 

 

 

GAAP operating loss

$

(69,347

)

 

$

(45,849

)

 

$

(179,016

)

 

$

(114,058

)

Stock-based compensation expense

 

54,456

 

 

 

37,393

 

 

 

148,626

 

 

 

97,553

 

Employer payroll taxes on employee stock transactions

 

1,699

 

 

 

1,643

 

 

 

4,881

 

 

 

8,634

 

Amortization of acquired intangibles

 

4,209

 

 

 

4,277

 

 

 

12,597

 

 

 

11,644

 

Acquisition-related expenses

 

899

 

 

 

2,731

 

 

 

5,100

 

 

 

4,999

 

Restructuring and other related charges

 

29,805

 

 

 

 

 

 

29,805

 

 

 

 

Non-GAAP operating income

$

21,721

 

 

$

195

 

 

$

21,993

 

 

$

8,772

 

Operating Margin Reconciliation(1):

 

 

 

 

 

 

 

GAAP operating margin

 

(25.3

) %

 

 

(20.5

) %

 

 

(22.7

) %

 

 

(18.3

) %

Stock-based compensation expense

 

19.8

%

 

 

16.7

%

 

 

18.8

%

 

 

15.7

%

Employer payroll taxes on employee stock transactions

 

0.6

%

 

 

0.7

%

 

 

0.6

%

 

 

1.4

%

Amortization of acquired intangibles

 

1.5

%

 

 

1.9

%

 

 

1.6

%

 

 

1.9

%

Acquisition-related expenses

 

0.3

%

 

 

1.2

%

 

 

0.6

%

 

 

0.8

%

Restructuring and other related charges

 

10.9

%

 

 

%

 

 

3.8

%

 

 

%

Non-GAAP operating margin

 

7.9

%

 

 

0.1

%

 

 

2.8

%

 

 

1.4

%

Net Income (Loss) Reconciliation:

 

 

 

 

 

 

 

GAAP net loss

$

(72,574

)

 

$

(56,726

)

 

$

(189,430

)

 

$

(138,238

)

Stock-based compensation expense

 

54,456

 

 

 

37,393

 

 

 

148,626

 

 

 

97,553

 

Employer payroll taxes on employee stock transactions

 

1,699

 

 

 

1,643

 

 

 

4,881

 

 

 

8,634

 

Amortization of acquired intangibles

 

4,209

 

 

 

4,277

 

 

 

12,597

 

 

 

11,644

 

Acquisition-related expenses

 

899

 

 

 

2,731

 

 

 

5,100

 

 

 

4,999

 

Restructuring and other related charges

 

29,805

 

 

 

 

 

 

29,805

 

 

 

 

Litigation settlement

 

 

 

 

 

 

 

(10,150

)

 

 

 

Income tax(2)

 

(1,599

)

 

 

(148

)

 

 

1,929

 

 

 

(679

)

Non-GAAP net income (loss)

$

16,895

 

 

$

(10,830

)

 

$

3,358

 

 

$

(16,087

)

Non-GAAP net earnings (loss) per share attributable to ordinary

shareholders, basic(1)

$

0.18

 

 

$

(0.12

)

 

$

0.04

 

 

$

(0.17

)

Non-GAAP net earnings (loss) per share attributable to ordinary

shareholders, diluted(1)

$

0.17

 

 

$

(0.12

)

 

$

0.03

 

 

$

(0.17

)

Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic

 

96,052,025

 

 

 

93,015,185

 

 

 

95,327,131

 

 

 

92,140,919

 

Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, diluted

 

98,902,515

 

 

 

93,015,185

 

 

 

98,834,408

 

 

 

92,140,919

(1) Totals may not sum, due to rounding. Gross margin, operating margin, and earnings (loss) per share are calculated based upon the respective underlying, non-rounded data.

 

(2) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as other significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

 

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

(in thousands)

(unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

2023

 

2022

 

2023

 

2022

Cost of revenue reconciliation:

 

 

 

 

 

 

 

 

GAAP subscription

 

$

56,146

 

 

$

47,076

 

 

$

164,798

 

 

$

126,097

 

Stock-based compensation expense

 

 

(2,163

)

 

 

(2,064

)

 

 

(6,352

)

 

 

(6,262

)

Employer payroll taxes on employee stock transactions

 

 

(128

)

 

 

(147

)

 

 

(381

)

 

 

(474

)

Amortization of acquired intangibles

 

 

(2,977

)

 

 

(2,545

)

 

 

(8,902

)

 

 

(6,314

)

Non-GAAP subscription

 

$

50,878

 

 

$

42,320

 

 

$

149,163

 

 

$

113,047

 

GAAP services

 

$

19,062

 

 

$

13,707

 

 

$

58,146

 

 

$

37,491

 

Stock-based compensation expense

 

 

(2,529

)

 

 

(1,726

)

 

 

(7,067

)

 

 

(4,593

)

Employer payroll taxes on employee stock transactions

 

 

(127

)

 

 

(113

)

 

 

(324

)

 

 

(591

)

Non-GAAP services

 

$

16,406

 

 

$

11,868

 

 

$

50,755

 

 

$

32,307

 

Operating expenses reconciliation:

 

 

 

 

 

 

 

 

GAAP research and development expense

 

$

77,472

 

 

$

71,749

 

 

$

231,689

 

 

$

194,894

 

Stock-based compensation expense

 

 

(20,905

)

 

 

(16,029

)

 

 

(58,378

)

 

 

(41,784

)

Employer payroll taxes on employee stock transactions

 

 

(557

)

 

 

(663

)

 

 

(1,842

)

 

 

(2,916

)

Acquisition-related expenses

 

 

(870

)

 

 

(2,713

)

 

 

(5,034

)

 

 

(3,695

)

Non-GAAP research and development expense

 

$

55,140

 

 

$

52,344

 

 

$

166,435

 

 

$

146,499

 

GAAP sales and marketing expense

 

$

126,717

 

 

$

105,069

 

 

$

379,902

 

 

$

288,055

 

Stock-based compensation expense

 

 

(19,096

)

 

 

(12,545

)

 

 

(50,756

)

 

 

(30,798

)

Employer payroll taxes on employee stock transactions

 

 

(787

)

 

 

(512

)

 

 

(1,828

)

 

 

(3,874

)

Amortization of acquired intangibles

 

 

(1,232

)

 

 

(1,231

)

 

 

(3,695

)

 

 

(4,088

)

Non-GAAP sales and marketing expenses

 

$

105,602

 

 

$

90,781

 

 

$

323,623

 

 

$

249,295

 

GAAP general and administrative expense

 

$

34,711

 

 

$

31,691

 

 

$

103,724

 

 

$

89,298

 

Stock-based compensation expense

 

 

(9,763

)

 

 

(5,029

)

 

 

(26,073

)

 

 

(14,116

)

Employer payroll taxes on employee stock transactions

 

 

(100

)

 

 

(208

)

 

 

(506

)

 

 

(779

)

Acquisition-related expenses

 

 

(29

)

 

 

(18

)

 

 

(66

)

 

 

(1,304

)

Non-GAAP general and administrative expense

 

$

24,819

 

 

$

26,436

 

 

$

77,079

 

 

$

73,099

 

 

 

 

 

 

 

 

 

 

 

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