Elastic(US:ESTC)2025-11-24 21:45Revenue and Growth - Subscription revenue accounted for 94% and 93% of total revenue for the six months ended October 31, 2025 and 2024, respectively [124]. - The number of customers with annual contract value over $100,000 increased to over 1,600 as of October 31, 2025, up from over 1,420 in 2024 [126]. - Elastic Cloud contributed 48% and 46% of total revenue for the six months ended October 31, 2025 and 2024, respectively [140]. - The Net Expansion Rate was approximately 112% as of October 31, 2025, indicating growth in customer spending [138]. - Total revenue for the three months ended October 31, 2025, was $423.5 million, representing a 16% increase from $365.4 million in the same period of 2024 [159]. - Subscription revenue increased by $56.9 million, or 17%, driven by a 22% growth in Elastic Cloud revenue and a 12% increase in Other subscriptions [159]. - Subscription revenue increased by $121.7 million, or 18%, for the six months ended October 31, 2025, driven by a 23% growth in Elastic Cloud revenue [173]. - Total revenue for the six months ended October 31, 2025, was $838.8 million, an increase of $126.0 million, or 18%, compared to the same period of the prior year [173]. Expenses and Profitability - Gross profit for the three months ended October 31, 2025, was $321.5 million, with a gross margin of 76%, compared to 74% in the same period of 2024 [155][157]. - Research and development expenses for the three months ended October 31, 2025, were $108.2 million, up from $88.2 million in 2024, reflecting ongoing investment in new technology [148][155]. - Sales and marketing expenses increased to $173.6 million for the three months ended October 31, 2025, compared to $144.3 million in 2024, as the company expanded its sales force [149][155]. - General and administrative expenses rose to $48.0 million for the three months ended October 31, 2025, from $44.1 million in 2024, supporting business growth [150][155]. - The net loss for the three months ended October 31, 2025, was $51.3 million, compared to a net loss of $25.5 million in the same period of 2024 [155]. - Research and development expenses rose by $39.8 million, or 22%, for the six months ended October 31, 2025, primarily due to a $28.1 million increase in personnel and related costs [178]. - Sales and marketing expenses increased by $46.0 million, or 15%, for the six months ended October 31, 2025, mainly due to a $34.4 million rise in personnel and related costs [179]. - Gross profit for the six months ended October 31, 2025, was $640.0 million, reflecting a 21% increase compared to the prior year [176]. - Subscription gross margin improved to 81% for the six months ended October 31, 2025, up from 79% in the same period of the prior year [176]. - Total cost of revenue for the six months ended October 31, 2025, was $198.8 million, an increase of $13.8 million, or 7%, compared to the prior year [176]. Tax and Other Income - The effective tax rate was influenced by various factors, including non-deductible stock-based compensation and one-time tax benefits, leading to a provision for income taxes of $52.6 million for the three months ended October 31, 2025 [153][155]. - Provision for income taxes increased by $28.9 million, or 122%, for the three months ended October 31, 2025, compared to the same period of the prior year [171]. - Other income, net increased by $6.7 million, or 74%, for the three months ended October 31, 2025, primarily due to a $4.0 million increase in interest and other investment income [169]. - Other income, net rose by $11.3 million, or 56%, to $31.6 million for the six months ended October 31, 2025, driven by an $8.0 million increase in interest and other investment income and a $3.3 million increase in net foreign currency exchange gains [184]. - Provision for income taxes increased by $33.4 million, or 76%, to $77.2 million for the six months ended October 31, 2025, compared to $43.7 million in the prior year [185]. Cash Flow and Financial Position - As of October 31, 2025, the company had cash, cash equivalents, and marketable securities totaling $1.396 billion [188]. - The company reported an accumulated deficit of $1.176 billion as of October 31, 2025, reflecting significant operating losses [189]. - Net cash provided by operating activities was $131.4 million for the six months ended October 31, 2025, compared to $91.1 million in the prior year [196]. - Net cash provided by investing activities was $38.4 million for the six months ended October 31, 2025, primarily from sales and maturities of marketable securities [199]. - Net cash used in financing activities was $96.7 million for the six months ended October 31, 2025, mainly due to repurchases of ordinary shares totaling $109.2 million [201]. - The company authorized a Share Repurchase Program for up to $500.0 million of its outstanding ordinary shares in October 2025 [194]. - Foreign currency transaction losses were $1.1 million for the six months ended October 31, 2025, compared to $2.0 million in the prior year [208]. - As of October 31, 2025, the company's cash, cash equivalents, restricted cash, and marketable securities were primarily denominated in U.S. dollars, Euros, and British Pound Sterling [209]. - A 10% increase or decrease in exchange rates would have impacted the company's cash and marketable securities balances by approximately $8.2 million [209]. Strategic Initiatives - The company plans to continue investing in developing new features for its platform to drive growth [133]. - The company aims to convert free users of its software into paid subscribers, which is critical for financial performance [135]. - The company continues to monitor macroeconomic conditions that may impact sales cycles and customer spending behavior [129]. - The company expects research and development expenses to continue increasing in absolute dollars as it invests further in existing products and new technology [148]. - The company anticipates that revenue from Elastic Cloud will continue to grow as a percentage of total revenue, which may have a modest unfavorable impact on gross margin due to third-party hosting costs [147].