Group 1 - Elastic (ESTC) closed at $82.69, with a 2.3% gain over the past four weeks, and a mean price target of $112.17 suggests a 35.7% upside potential [1] - The average of 24 short-term price targets ranges from a low of $75.00 to a high of $148.00, with a standard deviation of $15.45, indicating variability among analysts [2] - Analysts show strong agreement in revising EPS estimates higher, which correlates with potential stock price movements [11] Group 2 - The Zacks Consensus Estimate for the current year has increased by 68.8% over the past month, with nine estimates going higher and two lower [12] - ESTC holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While consensus price targets may not be reliable for predicting gains, they can indicate the direction of price movement [14]

Financial Data and Key Metrics Changes - The company positions itself as a "Search AI company," focusing on providing high-performance solutions for storing, searching, and analyzing vast amounts of data [5][6] - The core technology is centered around Elasticsearch, which serves as the primary data storage and processing engine [8] Business Line Data and Key Metrics Changes - The company markets its offerings in three main areas: developer tools, observability products, and security solutions [9][12] - The observability product combines unstructured log messages with structured metrics and traces to identify operational issues [10] - The security product is described as a modern SIEM that goes beyond traditional capabilities, addressing the increasing complexity of security threats [11][49] Market Data and Key Metrics Changes - The company has seen a diverse range of use cases for Elasticsearch, from traditional search applications to more complex scenarios like transaction tracking and logistics [15][19] - The advent of AI has expanded the potential applications of Elasticsearch, with a focus on semantic and vector search capabilities [21][25] Company Strategy and Development Direction - The company aims to simplify the developer experience by providing out-of-the-box tools for building generative AI applications [36][37] - There is a strong emphasis on integrating AI capabilities into their products, including features like vector search and semantic search to enhance search relevance [25][26] - The acquisition of Keep Alerting is seen as a strategic move to enhance workflow automation capabilities in both security and observability [64][66] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that customers are at various stages of maturity in adopting generative AI applications, with some already in production while others are still experimenting [39][40] - The importance of providing accurate and contextually relevant information is highlighted as critical for the success of AI applications [72][75] Other Important Information - The company has established partnerships with major AI model providers to enhance its offerings and ensure compatibility with various AI frameworks [32][68] - The focus on security is underscored by the need for per-user and per-document security measures, which are critical for enterprise applications [80][81] Q&A Session Summary Question: What is Elastic's overall strategy regarding AI? - The company is focused on building core components for developers while also utilizing these components in their observability and security solutions [23][24] Question: Are customers still in the experimental stage with generative AI applications? - Customers are at different maturity levels, with some already deploying generative AI applications in production [39][40] Question: How does Elastic position itself in the security space? - The company provides a comprehensive security suite, including a modern SIEM with prebuilt detection rules and AI-powered features [46][49] Question: What is the integration with NVIDIA's enterprise AI factory about? - The partnership aims to leverage NVIDIA's capabilities for running AI workloads, enhancing the company's offerings in the AI space [90]

Revenue Performance - Revenue increased to $1.483 billion for the year ended April 30, 2025, up 17% from $1.267 billion in 2024 and 39% from $1.069 billion in 2023[301] - Subscription revenue accounted for 93% of total revenue for the years ended April 30, 2025 and 2024[297] - Total revenue for the year ended April 30, 2025, was $1,483.3 million, up from $1,267.3 million in 2024, representing a 17% increase[334] Customer Growth - As of April 30, 2025, the number of customers increased to approximately 21,500, compared to 21,000 as of April 30, 2024[298] - The number of customers with annual contract value over $100,000 increased to over 1,510 as of April 30, 2025, up from over 1,330 in 2024[299] Elastic Cloud Contribution - Elastic Cloud contributed 46% of total revenue for the year ended April 30, 2025, compared to 43% in 2024[314] - Subscription revenue for the year ended April 30, 2025, increased by $207.9 million, or 18%, compared to the prior year, driven by a 26% growth in Elastic Cloud, which accounted for 46% of total revenue[334] Financial Performance - Net cash provided by operating activities was $266.2 million for the year ended April 30, 2025, up from $148.8 million in 2024[302] - The company incurred a net loss of $108.1 million for the year ended April 30, 2025, following a net income of $61.7 million in 2024[302] - Operating loss for the year ended April 30, 2025, was $(54.9) million, an improvement from $(129.9) million in 2024[329] Expenses - Research and development expenses for the year ended April 30, 2025, were $365.8 million, an increase of 7% from $342.0 million in 2024[329] - Sales and marketing expenses for the year ended April 30, 2025, rose to $617.2 million, up 10% from $559.6 million in 2024[329] - General and administrative expenses for the year ended April 30, 2025, increased to $175.2 million, compared to $160.6 million in 2024[329] Tax and Other Income - The provision for income taxes was $76.5 million for the year ended April 30, 2025, compared to a benefit of $184.5 million in the prior year[344] - Other income, net increased by $15.4 million, or 46%, for the year ended April 30, 2025, attributed to a $10.3 million increase in interest and investment income[343] Cash and Securities - As of April 30, 2025, the company had cash, cash equivalents, and marketable securities totaling $1.397 billion[348] - The company had purchase commitments of $812.3 million related to cloud hosting services as of April 30, 2025[359] Foreign Currency and Risk Management - Foreign currency transaction losses recognized were $2.5 million, $3.4 million, and $0.4 million for the years ended April 30, 2025, 2024, and 2023, respectively[380] - A 10% increase or decrease in exchange rates as of April 30, 2025, would have impacted cash, cash equivalents, restricted cash, and marketable securities balances by approximately $9.2 million[381] - The company has not had a formal hedging program for foreign currency but may adopt one if exposure increases significantly[379] Accounting and Valuation - The company applies significant judgment in determining the fair value of acquired intangible assets, which involves estimates of future cash flows and discount rates[372] - Revenue recognition involves significant judgment in evaluating customer contracts and performance obligations, with transaction prices allocated based on standalone selling prices[368] - The company recognizes deferred tax assets for net operating loss and credit carryforwards, with a valuation allowance provided unless realization is more likely than not[374]

Core Viewpoint - Elastic (ESTC) shares have shown no gain over the past four weeks, closing at $86.29, but analysts suggest a potential upside of 30.1% based on a mean price target of $112.22 [1] Price Targets and Analyst Estimates - The mean estimate consists of 23 short-term price targets with a standard deviation of $15.79, indicating variability among analysts; the lowest estimate is $75 (13.1% decline), while the highest is $148 (71.5% increase) [2] - Analysts' price targets can often mislead investors, as empirical research shows they rarely indicate actual stock price movements [7] - A low standard deviation in price targets suggests a high degree of agreement among analysts regarding the stock's price direction, serving as a starting point for further research [9] Earnings Estimates and Potential Upside - Analysts have shown increasing optimism about ESTC's earnings prospects, with a strong consensus in revising EPS estimates higher, which correlates with potential stock price increases [11] - The Zacks Consensus Estimate for the current year has risen by 59.4% over the past month, with eight estimates increasing and two decreasing [12] - ESTC holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, indicating a strong potential upside [13]

Summary of Elastic (ESTC) 2025 Conference Call Company Overview - **Company**: Elastic (ESTC) - **Industry**: Search AI platform - **Core Solutions**: Search, observability, and security - **Customer Base**: Tens of thousands of customers, including over 50% of the Fortune 500 [4][3] Financial Performance Highlights - **Q4 Revenue Growth**: 16% year-over-year growth [5] - **New Metric**: Subscription revenue less monthly cloud grew by 19% year-over-year [6] - **Operating Margin Improvement**: Increased by 400 basis points, reaching 19% free cash flow margins [7] - **Full Year Guidance**: Provided a conservative outlook due to potential macroeconomic uncertainties [9][10] Key Challenges and Assumptions - **Public Sector Softness**: Noted spending moratoriums and personnel changes affecting deal cycles, particularly in civilian agencies [14][16] - **SMB Performance**: SMB business expected to remain flat, reflecting the overall market conditions [18][20] - **Macro Impact**: Assumed potential negative macroeconomic effects on revenue, particularly in Q2 through Q4 [21][22] New Metrics and Guidance - **CRPO Growth**: 17% growth in CRPO, which is a new metric aimed at providing visibility into subscription revenue [35][36] - **Sales Strategy**: Sales team incentivized to sell both self-managed and cloud solutions, with a focus on strategic enterprise customers [45][46] Generative AI Insights - **Adoption Stage**: Generative AI applications are in early stages of adoption, with examples of production use cases from customers like DocuSign and Cisco [51][54] - **Market Potential**: Significant growth potential in the generative AI space, with current applications representing only a small fraction of enterprise portfolios [55] Investment and Profitability Strategy - **Balancing Growth and Profitability**: Elastic is investing in sales and R&D to capitalize on growth opportunities while maintaining a target operating margin of around 16% [59][60] - **Dynamic Cost Management**: Ability to adjust spending based on macroeconomic conditions to maintain profitability [61][62] Sales Productivity and Future Outlook - **Sales Team Performance**: Strong performance in customer accounts, particularly in the $100k and $1 million segments [70] - **Hiring Strategy**: Continued hiring to enhance sales capacity, particularly in security sales [71] Additional Insights - **CFO's Perspective**: The CFO noted the strength of the R&D team and the advantages of having a single code base for multiple solutions [75] This summary encapsulates the key points discussed during the Elastic conference call, highlighting the company's performance, challenges, strategic direction, and market opportunities.

Group 1: Earnings Performance - Elastic reported quarterly earnings of $0.47 per share, exceeding the Zacks Consensus Estimate of $0.37 per share, and up from $0.21 per share a year ago, representing an earnings surprise of 27.03% [1] - The company posted revenues of $388.43 million for the quarter ended April 2025, surpassing the Zacks Consensus Estimate by 2.20%, compared to year-ago revenues of $335 million [2] - Over the last four quarters, Elastic has consistently surpassed consensus EPS estimates and revenue estimates [2] Group 2: Stock Performance and Outlook - Elastic shares have declined approximately 6.8% since the beginning of the year, while the S&P 500 has gained 0.1% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $0.43 on revenues of $393.05 million, and for the current fiscal year, it is $2.11 on revenues of $1.67 billion [7] Group 3: Industry Context - The Internet - Software industry, to which Elastic belongs, is currently ranked in the top 24% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Elastic's stock performance [5]

Financial Data and Key Metrics Changes - Total revenue in Q4 was $388 million, growing 16% year-over-year on an as-reported and constant currency basis [30] - Subscription revenue in Q4 totaled $362 million, also growing 16% as reported and 17% in constant currency [30] - Elastic Cloud revenue grew 23% on an as-reported and constant currency basis [30] - Non-GAAP operating margin for Q4 was 15%, with a gross margin of 77% [35][36] - Adjusted free cash flow margin improved by approximately 600 basis points to end the year at 19% [36] Business Line Data and Key Metrics Changes - The number of customers with over $1 million in annual contract value grew approximately 27%, adding about 45 net new customers [34] - Customers with over $100,000 in annual contract value grew approximately 14%, adding about 180 net new customers [34] - Subscription revenue excluding Monthly Cloud was $315 million, growing 19% in Q4 [32] Market Data and Key Metrics Changes - Strong growth was observed in the APJ region, followed by EMEA and The Americas, while some pressure was noted in the U.S. Public sector [34] - Over 2,000 Elastic Cloud customers are using Elastic for Gen AI use cases, with over 30% of these customers spending $100,000 or more annually [12] Company Strategy and Development Direction - The company is focusing on leveraging AI to automate business processes and drive innovation, positioning itself as a strategic partner for enterprises [11][18] - Elastic aims to strengthen its position as the preferred vector database, enhancing its offerings with new technologies like better binary quantization [13][19] - The company is committed to maintaining a balance between growth and profitability while continuing to innovate and expand its product offerings [40][43] Management's Comments on Operating Environment and Future Outlook - Management acknowledged potential uncertainty in the macro environment but expressed confidence in the healthy pipeline and demand signals [39] - The company expects continued growth and strong margins in FY 2026, projecting total revenue in the range of $1.655 billion to $1.670 billion [42] Other Important Information - Elastic Cloud now accounts for over 50% of subscription revenue, with strong growth in cloud adoption [18] - The company announced a strategic collaboration agreement with AWS to enhance solution integrations and accelerate AI innovation [25] Q&A Session Summary Question: Guidance and Metrics - Inquiry about the conservativeness of guidance and leading indicators of business performance [45] - Response highlighted the balance of positive demand signals with macro uncertainty, emphasizing the importance of CRPO and subscription revenue metrics [46][49] Question: Partnerships and Market Opportunities - Question regarding the impact of recent partnerships, particularly with AWS and NVIDIA, on market opportunities [53] - Management noted the growing acceptance of Elastic as a leading vector database and the importance of partnerships for driving cloud adoption [54] Question: Retrieval Augmented Generation (RAG) - Inquiry about the durability of RAG architectures and Elastic's positioning [59] - Management affirmed the critical role of retrieval in enterprise data management and the growing adoption of their vector database for RAG use cases [60][61] Question: Cloud Performance and Consumption Hesitation - Question about the sequential growth in cloud performance and the impact of the leap year [62] - Management clarified that the leap year and fewer days in Q4 affected consumption rates, but normalized growth rates remained strong [64][66] Question: Go-to-Market Strategy and Changes - Inquiry about the effectiveness of go-to-market changes made in the previous fiscal year [69] - Management confirmed that the changes have settled and are yielding positive results, with plans to continue hiring sales capacity [70][72] Question: AI Commitments and Emerging Use Cases - Question about the $1 million AI commitments and emerging use cases [93] - Management clarified that 25% of $1 million customers are using Elastic for AI workloads, with a variety of sophisticated use cases emerging across industries [94][96]

Financial Data and Key Metrics Changes - In Q4, total revenue reached $388 million, growing 16% year-over-year on both reported and constant currency basis [29] - Subscription revenue for Q4 totaled $362 million, also growing 16% as reported and 17% in constant currency [29] - Elastic Cloud revenue grew 23% on both reported and constant currency basis [29] - Non-GAAP operating margin for Q4 was 15%, with a gross margin of 77% [34][35] - For FY 2025, subscription revenue excluding Monthly Cloud was $1,195 million, growing 20% as reported and 21% in constant currency [31] Business Line Data and Key Metrics Changes - The number of customers with over $1 million in annual contract value grew approximately 27%, adding about 45 net new customers [32] - Customers spending over $100,000 annually increased by approximately 14%, with around 180 net new customers added [32] - The self-managed business performed solidly, contributing to overall revenue growth [30] Market Data and Key Metrics Changes - APJ region showed the fastest growth, followed by EMEA and The Americas, while there was some pressure in the U.S. public sector [32] - The U.S. public sector faced constraints, leading to elongated sales cycles, particularly in federal civilian agencies [33][34] Company Strategy and Development Direction - The company is focusing on driving customer adoption of the Elasticsearch AI platform, leveraging Gen AI and consolidation as key growth drivers [9][10] - Elastic aims to strengthen its position as the preferred platform for enterprises building Gen AI applications, emphasizing innovation and performance [10][19] - The company is committed to maintaining a balance between growth and profitability while continuing to invest in its sales capacity and security sales specialists [74] Management's Comments on Operating Environment and Future Outlook - Management acknowledged potential uncertainties in the macro environment but expressed confidence in a healthy pipeline and ongoing demand for their solutions [16][39] - The company expects continued growth and strong margins in FY 2026, projecting total revenue between $1.655 billion and $1.670 billion, representing 12% year-over-year growth at the midpoint [40][41] Other Important Information - The company announced a new five-year strategic collaboration agreement with AWS to enhance solution integrations and simplify Elastic adoption [24] - Elastic's AI capabilities are being integrated into various sectors, including security, observability, and customer support, with a focus on automating workflows [20][88] Q&A Session Summary Question: Guidance and Metrics - The guidance was described as conservative due to macro uncertainties, with a focus on balancing positive demand signals against potential consumption headwinds [45][46] - Key metrics for assessing business health include subscription revenue less Monthly Cloud and CRPO, which showed positive momentum [49] Question: Partnerships and Market Position - The company is positioning itself as a leading vector database through partnerships with hyperscalers like AWS and NVIDIA, enhancing its go-to-market strategy [53][55] Question: AI Commitments and Use Cases - 25% of customers with over $1 million in annual contract value are utilizing Elastic for AI workloads, indicating strong adoption within this cohort [95] - Emerging use cases for AI include sales automation, marketing automation, and legal e-discovery, reflecting a broadening of applications beyond initial use cases [97]

Corporate Overview and Q4FY25 Financial Results May 29, 2025 Forward Looking Statements; Use of Non-GAAP Measures This presentation and the accompanying oral presentation contain 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 ending July 31, 2025 and fiscal year ending April 30, 2026, our strategic areas of focus, expectations and plans regarding our future growth, ...

Financial Performance - Q4 revenue was $388 million, up 16% year-over-year, with Elastic Cloud revenue at $182 million, up 23% year-over-year[1][6] - FY25 total revenue reached $1.483 billion, an increase of 17% year-over-year, with Elastic Cloud revenue at $688 million, up 26% year-over-year[1][6] - Total revenue for the three months ended April 30, 2025, was $388,432, representing a 16% year-over-year increase[35] - Total subscription revenue for the year ended April 30, 2025, was $1,384,520, an 18% increase year-over-year[35] - Subscription revenue increased to $361,741 thousand for the three months ended April 30, 2025, up 16.3% from $310,984 thousand in the prior year[33] - Elastic Cloud revenue reached $181,507 for the three months ended April 30, 2025, with a 23% year-over-year growth[35] Profitability Metrics - GAAP operating loss for Q4 was $12 million, with a GAAP operating margin of -3%, while non-GAAP operating income was $60 million, with a non-GAAP operating margin of 15%[6] - Non-GAAP net income for the year ended April 30, 2025, was $217,837, up from $123,568 in 2024, reflecting a 76% increase[39] - Non-GAAP earnings per share (diluted) for the three months ended April 30, 2025, was $0.47, compared to $0.21 in the same period last year[39] - Non-GAAP operating margin for FY26 is expected to be approximately 16%[14] - Gross profit for the three months ended April 30, 2025, was $290,647 thousand, compared to $247,128 thousand for the same period in 2024, reflecting a 17.6% increase[27] - Adjusted free cash flow for the three months ended April 30, 2025, was $84,862, compared to $60,103 for the same period in 2024, marking a 41% increase[37] Customer Growth - Total customer count with Annual Contract Value (ACV) greater than $100,000 increased to over 1,510, compared to over 1,460 in Q3 FY25[7] Future Guidance - The company expects Q1 FY26 revenue to be between $396 million and $398 million, representing 14% year-over-year growth at the midpoint[11] - Non-GAAP diluted earnings per share for Q1 FY26 is expected to be between $0.41 and $0.43, assuming between 107.5 million and 108.5 million diluted weighted average ordinary shares outstanding[12] Strategic Initiatives - The company announced the acquisition of Keep Alerting Ltd, enhancing its AIOps capabilities[10] - A five-year global Strategic Collaboration Agreement was signed with Amazon Web Services (AWS) to deepen partnership through solution integrations[10] - The company plans to expand Elastic Cloud Serverless, now available in 1 region on Google Cloud and 4 regions on AWS[10] Balance Sheet Highlights - Cash and cash equivalents increased to $727,543 thousand as of April 30, 2025, from $540,397 thousand as of April 30, 2024[29] - Total assets grew to $2,592,853 thousand as of April 30, 2025, compared to $2,242,566 thousand as of April 30, 2024[29] - Deferred revenue increased to $802,117 thousand as of April 30, 2025, up from $663,846 thousand as of April 30, 2024, indicating strong future revenue potential[29] - Total remaining performance obligations reached $1,545,412, reflecting a 14% increase year-over-year[35]