Elastic(ESTC) - 2025 Q3 - Quarterly Results

Q3 FY2025 Financial Results Overview Elastic reported strong Q3 FY2025 results, exceeding guidance with total revenue of $382 million and a non-GAAP operating margin of 17% Financial Highlights Elastic reported strong Q3 FY2025 results, exceeding guidance across all key metrics, with total revenue growing 17% year-over-year to $382 million, driven by a 26% increase in Elastic Cloud revenue, achieving a non-GAAP operating margin of 17% and non-GAAP diluted EPS of $0.63, while generating $99 million in adjusted free cash flow - The company exceeded guidance on all revenue and profitability metrics for the third quarter, driven by strong sales execution and market demand for its Search AI products, particularly in Generative AI applications[3] Q3 FY2025 Key Financial Results | Metric | Value | Year-over-Year Change | | :--- | :--- | :--- | | Total Revenue | $382 million | +17% | | Elastic Cloud Revenue | $180 million | +26% | | GAAP Operating Margin | -1% | N/A | | Non-GAAP Operating Margin | 17% | N/A | | GAAP Net Loss per Share | $0.16 | N/A | | Non-GAAP Diluted EPS | $0.63 | N/A | | Operating Cash Flow | $88 million | N/A | | Adjusted Free Cash Flow | $99 million | N/A | Key Metrics and Business Highlights The company demonstrated solid customer growth, with customers having an ACV greater than $100,000 increasing to over 1,460, and the Net Expansion Rate remained healthy at approximately 112%, alongside key business developments including the general availability of Elastic Cloud Serverless on AWS, the appointment of a new CFO, and receiving the AWS Global Generative AI Infrastructure and Data Partner of the Year award Q3 FY2025 Customer Metrics | Metric | Q3 FY2025 | Q2 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | :--- | | Customers with ACV > $100k | > 1,460 | > 1,420 | > 1,270 | | Total Subscription Customers | ~21,350 | ~21,300 | ~20,800 | | Net Expansion Rate | ~112% | N/A | N/A | - Key product innovations in Q3 included: - General availability of Elastic Cloud Serverless on AWS and technical preview on Azure - Delivery of Elasticsearch logsdb index mode to optimize storage and extend log retention - Launch of the Elastic Rerank Model to improve search accuracy and relevance[6] - Other significant business highlights include the appointment of Navam Welihinda as the new CFO and being awarded the AWS Global Generative AI Infrastructure and Data Partner of the Year for 2024[10] Financial Outlook Elastic provides financial guidance for Q4 FY2025 and updates full-year FY2025 projections, anticipating continued revenue growth and strong profitability Q4 FY2025 Guidance For the fourth quarter of fiscal 2025, Elastic projects total revenue between $379 million and $381 million, representing 13% year-over-year growth at the midpoint, with an expected non-GAAP operating margin of approximately 13.5% and non-GAAP diluted earnings per share between $0.36 and $0.37 Q4 FY2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $379M - $381M | | YoY Growth (Midpoint) | 13% (15% in constant currency) | | Non-GAAP Operating Margin | ~13.5% | | Non-GAAP Diluted EPS | $0.36 - $0.37 | Full Year FY2025 Guidance For the full fiscal year 2025, the company updated its guidance, expecting total revenue to be between $1.474 billion and $1.476 billion, a 16% year-over-year growth at the midpoint, with the full-year non-GAAP operating margin projected to be approximately 14.7% and non-GAAP diluted EPS forecasted between $1.91 and $1.96 Full Year FY2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $1.474B - $1.476B | | YoY Growth (Midpoint) | 16% (17% in constant currency) | | Non-GAAP Operating Margin | ~14.7% | | Non-GAAP Diluted EPS | $1.91 - $1.96 | Financial Statements Detailed financial statements for Q3 FY2025 show revenue growth, improved operating performance, strong liquidity, and increased cash flow from operations Consolidated Statements of Operations For Q3 FY2025, total revenue increased to $382.1 million from $328.0 million in the prior year, with the GAAP operating loss significantly narrowing to $4.6 million from $26.4 million year-over-year, while GAAP net loss was $17.1 million, a substantial change from a net income of $176.1 million in Q3 FY2024, primarily due to a large one-time tax benefit in the prior-year period Q3 FY2025 Statement of Operations Highlights (in thousands) | Account | Three Months Ended Jan 31, 2025 | Three Months Ended Jan 31, 2024 | | :--- | :--- | :--- | | Total Revenue | $382,083 | $327,957 | | Gross Profit | $284,931 | $243,315 | | Operating Loss | $(4,638) | $(26,404) | | Net (Loss) Income | $(17,056) | $176,124 | Consolidated Balance Sheets As of January 31, 2025, Elastic's balance sheet shows a strong liquidity position with cash, cash equivalents, and marketable securities totaling $1.284 billion, total assets increased to $2.33 billion from $2.24 billion at the end of fiscal 2024, total liabilities decreased slightly to $1.47 billion, while total shareholders' equity grew to $859.1 million Balance Sheet Highlights (in thousands) | Account | As of Jan 31, 2025 | As of Apr 30, 2024 | | :--- | :--- | :--- | | Cash, Cash Equivalents & Marketable Securities | $1,284,039 | $1,084,399 | | Total Assets | $2,330,147 | $2,242,566 | | Deferred Revenue (Current) | $660,873 | $663,846 | | Total Liabilities | $1,471,041 | $1,504,381 | | Total Shareholders' Equity | $859,106 | $738,185 | Consolidated Statements of Cash Flows In Q3 FY2025, the company generated $88.1 million in cash from operating activities, a significant increase from $52.4 million in the same period last year, and for the nine months ended January 31, 2025, net cash provided by operating activities more than doubled to $179.2 million compared to $87.8 million in the prior year, reflecting improved operational efficiency and profitability Cash Flow Highlights (in thousands) | Account | Three Months Ended Jan 31, 2025 | Three Months Ended Jan 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $88,058 | $52,389 | | Net cash used in investing activities | $(158,778) | $(125,069) | | Net cash provided by financing activities | $1,486 | $8,847 | Supplementary Financial Data and Non-GAAP Reconciliations This section provides detailed breakdowns of revenue by type, key performance indicators, and reconciliations between GAAP and non-GAAP financial measures Revenue by Type In Q3 FY2025, Elastic Cloud revenue grew to $180.0 million, now representing 47% of total revenue, up from 44% in the prior year, highlighting the continued successful shift towards the company's cloud offerings, while other subscription revenue grew more modestly to $178.2 million, making up the other 47% of total revenue Q3 FY2025 Revenue Breakdown (in thousands) | Revenue Type | Amount | % of Total Revenue | | :--- | :--- | :--- | | Elastic Cloud | $179,996 | 47% | | Other subscription | $178,202 | 47% | | Total subscription | $358,198 | 94% | | Services | $23,885 | 6% | | Total revenue | $382,083 | 100% | Key Performance Indicators (KPIs) Growth Elastic's key growth indicators remained strong in Q3 FY2025, with Elastic Cloud revenue leading with 26% year-over-year growth, total revenue growing 17% YoY, and forward-looking indicators also positive, with total deferred revenue increasing by 21% YoY and total remaining performance obligations (RPOs) growing by 15% YoY Q3 FY2025 Growth Metrics (YoY) | Metric | Value (in thousands) | % Change YoY | % Change YoY (Constant Currency) | | :--- | :--- | :--- | :--- | | Elastic Cloud Revenue | $179,996 | 26% | 26% | | Total Revenue | $382,083 | 17% | 17% | | Total Deferred Revenue | $706,926 | 21% | 22% | | Total RPOs | $1,354,345 | 15% | 16% | Reconciliation of GAAP to Non-GAAP Measures The reconciliation from GAAP to non-GAAP metrics highlights the impact of non-cash expenses like stock-based compensation, showing that for Q3 FY2025, the GAAP operating loss of $4.6 million was adjusted to a non-GAAP operating income of $64.0 million, and adjusted free cash flow for the quarter was $99.2 million, representing a strong margin of 26%, up from 19% in the prior year Q3 GAAP vs. Non-GAAP Reconciliation (in thousands) | Metric | Q3 FY2025 GAAP | Q3 FY2025 Non-GAAP | | :--- | :--- | :--- | | Gross Profit | $284,931 | $293,162 | | Gross Margin | 74.6% | 76.7% | | Operating (Loss) Income | $(4,638) | $64,022 | | Operating Margin | (1.2)% | 16.8% | | Net (Loss) Income | $(17,056) | $67,183 | Adjusted Free Cash Flow (in thousands) | Metric | Three Months Ended Jan 31, 2025 | Three Months Ended Jan 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $88,058 | $52,389 | | Adjusted free cash flow | $99,151 | $63,171 | | Adjusted free cash flow margin | 26% | 19% |