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Elastic(ESTC) - 2024 Q1 - Quarterly Report
ESTCElastic(ESTC)2023-09-01 20:02
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Revenue and Growth - Elastic Cloud contributed 41% and 39% of total revenue for the three months ended July 31, 2023 and 2022, respectively[118] - Total revenue increased by 43.7million(1743.7 million (17%) to 293.8 million for the three months ended July 31, 2023, driven by a 17% growth in subscription revenue and a 29% increase in services revenue[143][144] - Subscription revenue grew by 38.4million(1738.4 million (17%) to 270.2 million, with Elastic Cloud revenue increasing 24% and accounting for 41% of total revenue[143] - Services revenue increased by 5.2million(295.2 million (29%) to 23.5 million, attributed to higher adoption of the company's services offerings[144] - Elastic Cloud revenue as a percentage of total revenue increased to 41% in Q3 2023 from 39% in Q3 2022, reflecting continued growth in cloud adoption[143] Customer Base and Contracts - The company had approximately 20,500 customers as of July 31, 2023, compared to over 19,300 customers as of July 31, 2022[109] - The number of customers with annual contract value (ACV) greater than 100,000wasover1,190asofJuly31,2023,comparedtoover1,010asofJuly31,2022[110]−Thecompany′sNetExpansionRatewasapproximately113100,000 was over 1,190 as of July 31, 2023, compared to over 1,010 as of July 31, 2022[110] - The company's Net Expansion Rate was approximately 113% as of July 31, 2023[123] Subscription and Cloud Services - Subscriptions accounted for 92% and 93% of total revenue for the three months ended July 31, 2023 and 2022, respectively[108] - Elastic Cloud subscriptions are primarily consumption-based, with the majority contracted in U.S. dollars[108] Financial Performance and Margins - Gross profit rose by 39.2 million (22%) to 216.3million,withtotalgrossmarginimprovingfrom71216.3 million, with total gross margin improving from 71% to 74%[145] - Operating loss improved from 60.6 million to 36.2million,withoperatingmarginimprovingfrom−2436.2 million, with operating margin improving from -24% to -12%[139][141] - Net loss decreased from 69.6 million to 48.5million,withnetmarginimprovingfrom−2848.5 million, with net margin improving from -28% to -17%[139][141] Expenses and Costs - Cost of subscription revenue increased by 3.7 million (7%) to 57.3million,primarilyduetohighercloudinfrastructurecosts[145]−Researchanddevelopmentexpensesincreasedby57.3 million, primarily due to higher cloud infrastructure costs[145] - Research and development expenses increased by 2.0 million (3%) to 80.7million,drivenbyhigherpersonnelandcloudinfrastructurecosts[148]−Salesandmarketingexpensesgrewby80.7 million, driven by higher personnel and cloud infrastructure costs[148] - Sales and marketing expenses grew by 8.2 million (7%) to 133.2million,mainlyduetoincreasedpersonnelcostsandtravelexpenses[149]−Generalandadministrativeexpensesincreasedby133.2 million, mainly due to increased personnel costs and travel expenses[149] - General and administrative expenses increased by 3.9 million, or 11%, primarily due to a 3.8millionincreaseinpersonnelandrelatedcosts,including3.8 million increase in personnel and related costs, including 2.7 million in stock-based compensation and 1.0millioninsalariesandrelatedtaxes[150]−Restructuringandotherrelatedchargesof1.0 million in salaries and related taxes[150] - Restructuring and other related charges of 0.7 million were recorded for employee-related severance and termination benefits, compared to no charges in the same period last year[151] Investments and Income - Other income, net increased by 7.0millionto7.0 million to 7.3 million, primarily due to a 7.2millionincreaseininvestmentincomefrommarketablesecuritiesandmoneymarketfunds[153]−AsofJuly31,2023,thecompanyhad7.2 million increase in investment income from marketable securities and money market funds[153] - As of July 31, 2023, the company had 957.1 million in cash, cash equivalents, and marketable securities, with a strong and diversified credit quality portfolio[157] - Net cash provided by operating activities was 37.8million,drivenby37.8 million, driven by 81.8 million in non-cash charges and a 4.6millionnetcashinflowfromchangesinoperatingassetsandliabilities[161]−Netcashusedininvestingactivitieswas4.6 million net cash inflow from changes in operating assets and liabilities[161] - Net cash used in investing activities was 55.1 million, primarily due to the purchase of 83.6millioninmarketablesecurities,offsetby83.6 million in marketable securities, offset by 29.1 million from maturities of marketable securities[163] - The company had 959.8millionincash,cashequivalents,restrictedcash,andmarketablesecuritiesasofJuly31,2023,withminimalexposuretointerestraterisk[169]TaxesandProvisions−Provisionforincometaxesincreasedby959.8 million in cash, cash equivalents, restricted cash, and marketable securities as of July 31, 2023, with minimal exposure to interest rate risk[169] Taxes and Provisions - Provision for income taxes increased by 10.4 million, or 365%, driven by growth in taxable income in certain jurisdictions and a one-time charge of 7.4millionforacquisition−relatedintegration[154]−ThecompanymaintainsafullvaluationallowanceagainstU.S.federalandstatedeferredtaxassets,butanticipatespotentialrecognitionoftheseassetswithinthenext12monthsifsustainedprofitabilityisachieved[155]StrategicInitiatives−ThecompanyplanstocontinueinvestinginnewfeaturesandsolutionsfortheElasticStacktodrivegrowth[120]−Elastic′sstrategyincludesconvertingfreeusersofitssoftwareintopaidsubscriberstogrowitscustomerbase[121]EmployeeandRestructuring−Thecompanyhad2,995employeesasofJuly31,2023[112]−Elasticincurred7.4 million for acquisition-related integration[154] - The company maintains a full valuation allowance against U.S. federal and state deferred tax assets, but anticipates potential recognition of these assets within the next 12 months if sustained profitability is achieved[155] Strategic Initiatives - The company plans to continue investing in new features and solutions for the Elastic Stack to drive growth[120] - Elastic's strategy includes converting free users of its software into paid subscribers to grow its customer base[121] Employee and Restructuring - The company had 2,995 employees as of July 31, 2023[112] - Elastic incurred 0.7 million in restructuring and other related charges during the three months ended July 31, 2023[114] Interest and Other Financials - Interest expense decreased slightly by $0.1 million, or 1%, compared to the same period last year[152]