Group 1: Inclusion in "IVES AI30" List - CrowdStrike is positioned favorably in the AI revolution, with increasing module expansions and strong trading flows from Charlotte AI driving growth [2] - Roblox offers attractive incentives for developers, and its AI-driven discovery features are enhancing platform adoption, expected to lead to stronger monetization in upcoming quarters [2] - GE Vernova will benefit from the growing demand for electrification as large cloud providers continue to build data centers, providing necessary tools for grid management [2] - Nebius is experiencing strong demand in AI infrastructure, planning to increase data center capacity in the coming years [2] Group 2: Removal from "IVES AI30" List - CyberArk was removed due to Palo Alto Networks' plan to acquire it for $25 billion, as Palo Alto is already on the list [3] - C3.ai was removed following a recent sales organization restructuring and the resignation of CEO Thomas Siebel, which significantly impacts its finances, though analysts remain optimistic about its future [3] - Adobe faces concerns over its growth potential, with worries that its product portfolio may be disrupted by AI, leading to slower growth and free cash flow generation [3] - Elastic's public business growth has slowed, despite incremental funding from the U.S. federal government for software and AI improvements, with analysts favoring other tech companies for the "IVES AI30" list [3]

Core Viewpoint - Elastic (NYSE: ESTC) is positioned between "Hold" and "Buy" with an expected revenue growth of 14% for FY'25 and an estimated fair value around $95, indicating potential upside from its current price of approximately $76.4 [1] Group 1: Company Analysis - The company is expected to achieve a revenue growth of 14% for FY'25, reflecting strong operational performance [1] - Elastic's margins are increasing, which is a positive indicator for profitability and financial health [1] - The estimated base-case fair value of the stock is around $95, suggesting a potential appreciation from its current trading price [1] Group 2: Investment Strategy - The investment approach combines fundamental analysis with options strategies, allowing for a diversified investment methodology [1] - Various strategies are employed, including income-oriented investments, growth at a reasonable price, deep value based on discounted cash flow, and dividend aristocrats [1] - The investment style includes 20-25 options strategies for purposes such as hedging, bullish substitutes, neutral trades, trading volatility, and earnings-related trades [1]

Group 1 - The stock of Elastic N.V. (NYSE: ESTC) has declined approximately 25% since January, while the market has increased nearly 5% [1] - The analysis focuses on growth opportunities in technology sectors, emphasizing the importance of current and future trends in fundamental analysis [1] Group 2 - The author has a long position in the shares of ESTC, AMD, and DDOG, indicating a personal investment interest in these companies [2]

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: Elastic N.V. Performance - Elastic reported adjusted earnings of 47 cents per share, exceeding market estimates of 37 cents per share [1] - The company's sales reached $388.43 million, surpassing expectations of $380.36 million [1] - For the first quarter, Elastic anticipates adjusted EPS of 41 to 43 cents on sales between $396.00 million and $398.00 million [2] Group 2: Market Reactions - Elastic shares fell 9.7% to $83.23 in pre-market trading following the earnings report [2] - The Gap, Inc. saw a decline of 13.7% to $24.10 after reporting first-quarter results and warning of potential tariff costs of $250 million to $300 million [5] - The Cooper Companies, Inc. shares dropped 10% to $72.00 after second-quarter results [5] - Regeneron Pharmaceuticals, Inc. shares fell 8.8% to $552.00 despite meeting primary endpoints in one study [5] - Newsmax, Inc. declined 8.2% to $20.49 after filing for resale of up to 121 million shares [5] - IonQ, Inc. shares decreased by 7.4% to $40.01 [5] - American Eagle Outfitters, Inc. fell 7.2% to $10.38 after reporting disappointing first-quarter results [5] - Venu Holding Corporation dipped 6.1% to $12.10 after a previous gain [5] - NetApp, Inc. shares declined 5.2% to $94.00 following soft first-quarter guidance [5]

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]