October 3, 2022

Robotic Notes

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Elastic delivers strong revenue growth and beats expectations, but its stock is down

3 min read



Elastic NV, a provider of enterprise-grade search software, saw its shares fall in extended trading today despite posting fiscal first-quarter financial results that beat expectations.

The company reported a loss before certain expenses as stock compensation of 15 cents per share, beating the consensus estimate of Wall Street analysts for a loss of 17 cents per share. Meanwhile, Elastic’s revenue rose 30% year over year to $250.1 million, beating the consensus estimate of $246.2 million. On a constant currency basis, Elastic’s revenue grew 34%.

In total, Elastic reported a net loss of $69.6 million, more than double the $34.4 million loss reported in the prior period. Shares of Elastic fell more than 5% in extended trading after the report. Earlier in the day, the stock had gained just over 2% on the day, up for the entire stock market, especially technology companies.

The company sells a commercial version of the popular open source Elasticsearch platform. Elasticsearch is used by enterprises to store, search and analyze huge volumes of structured and unstructured data. This allows them to do this very quickly, in near real time.

The platform serves as the core engine for millions of applications that have complex features and search requirements. In addition to Elasticsearch, Elastic also sells application monitoring tools that help companies track network performance, as well as threat detection software.

The company wanted to highlight the growth of its cloud business. Elastic Cloud revenue increased 59% year-over-year to $97.7 million. Elastic CEO Ash Kulkarni (pictured) said Elastic Cloud now accounted for 39% of the firm’s total revenue, up from 32% a year earlier.

“Despite increased currency headwinds, we are performing well against our plan to achieve $2 billion in total revenue in fiscal 2025,” Kulkarni said. “We remain confident in our outlook given our belief in the criticality of our solutions to our customers and our momentum in Elastic Cloud, and we are raising our guidance for constant currency revenue growth for the year.”

Elastic said it ended the quarter with more than 19,300 subscription customers, up from 18,600 in the previous quarter and 16,000 a year ago. Of those customers, 1,010 generate annual revenue of at least $100,000 a year, compared to 960 at the end of the previous quarter and 780 a year earlier.

For the second fiscal quarter of 2023, Elastic said it expects a loss of between nine and 11 cents per share, on revenue in the range of $260 million to $262 million. Wall Street was looking for a loss of nine cents a share on sales of $260.67 million. For the full year, Elastic said it expects a loss of between 25 cents and 31 cents per share on sales of $1.08 billion to $1.086 billion, compared with the consensus of a loss of 31 cents on revenue of $1.08 billion.

In other news, Elastic said it has hired Ken Exner as its new chief product officer. Exner is a 16-year veteran of Amazon Web Services Inc., where his most recent role was vice president and general manager of AWS developer tools.

Photo: SiliconANGLE

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