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Elastic N.V.

ESTC
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Business Summary

Elastic N.V. operates in the highly competitive, quickly evolving, and fragmented market for search, observability, and security technologies, which is subject to rapid changes in technology, shifting customer needs, and frequent introductions of new offerings. The industry requires constant change and innovation, and the company believes that every organization must incorporate search AI capabilities across IT and line-of-business functions to find answers from all data in real time and at scale. The company's platform combines the precision of search with the intelligence of AI to help customers solve real-time business problems, unlock potential value, and achieve better outcomes.

The company's principal competitors include Algolia, Apache Solr, Coveo, Pinecone, Qdrant, Weaviate, MongoDB Atlas, Google Gemini Enterprise Agent Platform, Microsoft Azure AI Search, AppDynamics, Splunk, Datadog, Dynatrace, New Relic, Azure Sentinel, CrowdStrike, Google SecOps, Palo Alto Networks, and certain cloud hosting providers and MSPs including AWS. The company believes it compares favorably to competitors on factors such as product capabilities, extensibility, ease of deployment, flexible deployment models, and mindshare with developers and IT executives, though many competitors have substantially greater financial, technical, and other resources, greater brand recognition, larger sales forces and marketing budgets, and broader distribution networks.

The company's business model is based primarily on a combination of paid service offerings (Elastic Cloud Hosted and Elastic Cloud Serverless) and free and paid proprietary self-managed software (Elastic Self-Managed). Paid offerings are sold via subscription through resource-based pricing, and all customers and users have access to varying levels of features across all solutions. Subscriptions accounted for 94% of total revenue for the year ended April 30, 2026 and 93% of total revenue for the years ended April 30, 2025 and 2024. The company also generates revenue from consulting and training services. The company maintains a single code base across both self-managed software and Elastic-hosted services, and develops the majority of its software in public repositories under an open source AGPL license as well as under a proprietary license.

The company offers three Elasticsearch-powered solutions built on its platform: Search & AI, Elastic Observability, and Elastic Security. Search & AI includes context engineering and AI, combining a scalable distributed data store, vector database, hybrid search, embedding and reranking AI models, and an agent builder. Elastic Observability is an agentic observability platform that brings logs, metrics, and traces into a unified datastore for investigation, correlation, and issue resolution across applications, networks, and infrastructure. Elastic Security is an agentic security operations platform that provides unified protection to prevent, detect, and respond to threats, combining SIEM, XDR, endpoint security, cloud security, and native SOAR capabilities in a single platform. The platform is available as either a cloud service or self-managed software, and is made available as a service across major cloud providers (AWS, GCP, and Azure) in more than 55 public cloud regions globally.

The company's platform is powered by Elasticsearch, a distributed, real-time vector database and analytics engine and data store for all types of data. Key features include storage of any type of data, a vector database that is the most downloaded open source vector database, an Agent Builder for creating AI agents, machine learning and AI capabilities including anomaly detection and forecasting, powerful query languages, developer centricity with consistent APIs, high speed and scale, and security features including encrypted communications, role-based access control, and field-level security. The user interface, Kibana, provides exploration and visualization of stored data, incorporation of advanced analytics and machine learning, management of the Elasticsearch platform, and is the home for the three solutions. The company also offers Elastic Cloud Serverless, a fully-managed, stateless architecture that auto-scales with customer usage.

During the year ended April 30, 2026, the company acquired 100% of the share capital of Conic AI Technology Limited and its subsidiaries for a total purchase consideration of $43.4 million , including $6.9 million held back for indemnity obligations. The company also acquired 100% of the share capital of Paladin Data Inc., including its wholly-owned subsidiary Keep Alerting Ltd., for a total purchase consideration of $10.9 million , including $1.4 million held back for indemnity obligations. In October 2025, the board of directors authorized a share repurchase program of up to $500.0 million of the company's outstanding ordinary shares. During the year ended April 30, 2026, the company repurchased 4.4 million of its outstanding ordinary shares for an aggregate purchase price of $340.0 million , excluding transaction costs, at a weighted-average price of $76.91 per share. As of April 30, 2026, $160.0 million remained available for future repurchases under the program.

Total revenue was $1.739 billion for the year ended April 30, 2026, compared to $1.483 billion for the year ended April 30, 2025, representing year-over-year growth of 17% . Net income was $367.8 million for the year ended April 30, 2026, compared to a net loss of $108.1 million for the prior year. Subscription revenue was $1.634 billion for the year ended April 30, 2026, an increase of 18% from $1.385 billion in the prior year. Elastic Cloud contributed 48% of total revenue for the year ended April 30, 2026, compared to 46% in the prior year. Gross margin was 76% for the year ended April 30, 2026, compared to 74% in the prior year. Net cash provided by operating activities was $326.9 million for the year ended April 30, 2026, compared to $266.2 million in the prior year.

Business Outlook

The company intends to continue to invest in its platform, solutions, and services to extend into new use cases, industries, geographies, and customers. Key growth vectors include extending product leadership through continued investment in technology, particularly in AI capabilities such as vector search, inference and retrieval APIs, embedding and relevance models, agentic workflows, and domain-specific applications. The company views its AI capabilities as a major competitive differentiator and intends to continue to invest in additional features and functionality related to AI. The company also offers Elastic Cloud Serverless, a fully-managed, stateless architecture that auto-scales with customer usage, and manages the underlying deployment while customers benefit from automatic upgrades.

The company pursues growth by increasing product adoption through improving ease of use and growing its user community, expanding its customer base by acquiring new customers through varied deployment options including Elastic Self-Managed, Elastic Cloud Hosted, and Elastic Cloud Serverless, and expanding within its existing customer base through new use cases and larger deployments. The company also focuses on expanding penetration in enterprise and commercial customer accounts using a sales-led motion, selling Elastic Self-Managed, Elastic Cloud Hosted, and Elastic Cloud Serverless deployments. Additionally, the company pursues expansion of strategic and regional partnerships, including with cloud providers, systems integrators, channel partners, referral partners, OEM and MSP partners, and technology partners, and selectively pursues strategic acquisitions to drive product and market expansion.

The company expects its revenue from Elastic Cloud to continue to increase as a percentage of total revenue, which it expects will continue to have a modest unfavorable impact on gross margin as a result of associated third-party cloud hosting costs. The company expects its cost of subscription to increase in absolute dollars as subscription revenue increases, and expects its cost of services to increase in absolute dollars as it invests in its business and as services revenue increases. The company expects its research and development expense to increase in absolute dollars for the foreseeable future as it continues to develop new technology and invest further in existing products. The company expects its sales and marketing expense to increase in absolute dollars as it expands its sales force and increases investments in marketing resources. The company expects its general and administrative expense to increase in absolute dollars as it increases the size of its general and administrative functions to support growth.

The company expects to continue to make significant investments to maintain and improve website performance and to enable rapid releases of new features and applications for its products. The company had 4,019 employees as of April 30, 2026 , and its workforce is distributed globally. The company intends to continue to invest in research and development capabilities to extend its products, with research and development expense totaling $451.9 million for the year ended April 30, 2026. The company plans to continue to devote significant resources to research and development, with its engineering organization focusing on enhancing existing products and developing new features that are easy to use and can be run in any environment.

The company's capital allocation strategy includes continued investment in research and development, with research and development expense of $451.9 million for the year ended April 30, 2026. The company made purchases of property and equipment of $5.1 million during the year ended April 30, 2026. In October 2025, the board of directors authorized a share repurchase program of up to $500.0 million of the company's outstanding ordinary shares. During the year ended April 30, 2026, the company repurchased 4.4 million shares for an aggregate purchase price of $340.0 million . As of April 30, 2026, $160.0 million remained available for future repurchases. The company has never declared or paid any cash dividends on its ordinary shares and does not anticipate declaring or paying cash dividends in the foreseeable future.

The company faces headwinds from macroeconomic conditions, including declining rates of economic growth, inflationary pressures, changing interest rates, changes in U.S. federal spending, evolving international trade policies and environments, and geopolitical turmoil. These conditions have resulted in longer and more unpredictable sales cycles, increased scrutiny of prospective sales, slowing consumption and overall customer expenditures, and impacts of changing foreign exchange rates. The company has experienced and may continue to experience slowing consumption as customers look to optimize their usage in response to the uncertain macroeconomic environment. The company also faces risks related to the rapid evolution of AI technologies, including generative and agentic AI, which may require additional investment in development, integration, and maintenance of product offerings, as well as the development of appropriate technical protections and safeguards.

The company faces structural headwinds from seasonality in its sales cycle, which generally reflects a trend toward the highest sales in the fourth fiscal quarter and lowest sales in the first fiscal quarter, and this seasonality might become more pronounced as the company continues to target larger enterprise customers. The company also faces risks from its consumption-based arrangements for Elastic Cloud offerings, which make it difficult to accurately predict the long-term rate of customer adoption or renewal, or the impact those arrangements will have on near-term or long-term revenue and operating results. Additionally, the company faces risks from the evolving regulatory landscape for AI, including the EU AI Act and emerging state-level AI legislation in the United States, which could require significant changes to the company's use of AI and increase compliance costs.

Risk Factors

The company has a history of losses and may not be able to achieve profitability on a consistent basis, with an accumulated deficit of $732.0 million as of April 30, 2026. The company faces significant competition in the AI landscape, and its business, reputation, or financial results may be adversely affected by any failure to be successful in AI initiatives, by significant competition, and by uncertain market understanding and valuation of AI technologies. The company is subject to cybersecurity risks and incidents that may disrupt or damage its business, and as a provider of security solutions to entities frequently targeted by nation-state actors, the company has been and may continue to be specifically targeted by threat actors. The company has a substantial amount of indebtedness, with $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029 outstanding as of April 30, 2026, which could adversely affect its financial condition and limit its ability to obtain additional financing. The company's consumption-based arrangements for Elastic Cloud offerings make it difficult to accurately predict the long-term rate of customer adoption or renewal, and the company has experienced and may continue to experience slowing consumption as customers look to optimize their usage in response to adverse economic conditions.

Management Priorities

Management's tone is focused on the company's position as the Search AI Company, enabling customers to transform data into answers, actions, and outcomes with Search AI. The company emphasizes that its platform combines the precision of search with the intelligence of AI to help customers solve real-time business problems. Management highlights that the company's business has experienced significant growth around the world, with total revenue of $1.739 billion for the year ended April 30, 2026, representing year-over-year growth of 17% . Management emphasizes the company's commitment to an open software development model, developing the majority of its software in public repositories under an open source AGPL license as well as under a proprietary license. Key strategic priorities include extending product leadership through continued investment in technology, particularly AI capabilities; increasing product adoption by improving ease of use and growing the user community; expanding the customer base by acquiring new customers; expanding within the existing customer base through new use cases and larger deployments; expanding penetration in enterprise and commercial customer accounts; expanding strategic and regional partnerships; and selectively pursuing strategic acquisitions.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Acquisitions; Item 8, Note 5 — Acquisitions
  2. [2] Item 8, Note 5 — Acquisitions
  3. [3] Item 8, Note 5 — Acquisitions
  4. [4] Item 8, Note 5 — Acquisitions
  5. [5] Item 5, Issuer Purchases of Equity Securities; Item 8, Note 10 — Ordinary Shares
  6. [6] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 10 — Ordinary Shares
  7. [7] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 10 — Ordinary Shares
  8. [8] Item 8, Note 10 — Ordinary Shares
  9. [9] Item 5, Issuer Purchases of Equity Securities; Item 8, Note 10 — Ordinary Shares
  10. [10] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Operations
  11. [11] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Operations
  12. [12] Item 1, Business — Overview; Item 7, MD&A — Overview
  13. [13] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Operations
  14. [14] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Operations
  15. [15] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  16. [16] Item 7, MD&A — Results of Operations
  17. [17] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  18. [18] Item 1, Business — Risk Factors; Item 7, MD&A — Overview; Item 8, Note 3 — Revenue
  19. [19] Item 1, Business — Risk Factors; Item 7, MD&A — Overview; Item 8, Note 3 — Revenue
  20. [20] Item 7, MD&A — Results of Operations
  21. [21] Item 7, MD&A — Results of Operations
  22. [22] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Cash Flows
  23. [23] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Cash Flows
  24. [24] Item 1, Business — Human Capital Management; Item 7, MD&A — Overview
  25. [25] Item 1, Business — Research and Development; Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  26. [26] Item 1, Business — Research and Development; Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  27. [27] Item 7, MD&A — Cash Flows; Item 8, Consolidated Statements of Cash Flows
  28. [28] Item 5, Issuer Purchases of Equity Securities; Item 8, Note 10 — Ordinary Shares
  29. [29] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 10 — Ordinary Shares
  30. [30] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 10 — Ordinary Shares
  31. [31] Item 5, Issuer Purchases of Equity Securities; Item 8, Note 10 — Ordinary Shares
  32. [32] Item 1A, Risk Factors; Item 7, MD&A — Overview; Item 8, Consolidated Balance Sheets
  33. [33] Item 1A, Risk Factors; Item 7, MD&A — Contractual Obligations; Item 8, Note 7 — Senior Notes
  34. [34] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Operations
  35. [35] Item 1, Business — Overview; Item 7, MD&A — Overview
  36. [36] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Operations
  37. [37] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Operations
  38. [38] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Operations
  39. [39] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Operations
  40. [40] Item 8, Consolidated Statements of Operations; Item 8, Note 12 — Net Earnings (Loss) Per Share
  41. [41] Item 8, Consolidated Statements of Operations; Item 8, Note 12 — Net Earnings (Loss) Per Share
  42. [42] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  43. [43] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  44. [44] Item 7, MD&A — Results of Operations
  45. [45] Item 7, MD&A — Results of Operations
  46. [46] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Cash Flows
  47. [47] Item 1, Business — Overview; Item 7, MD&A — Overview; Item 8, Consolidated Statements of Cash Flows
  48. [48] Item 7, MD&A — Liquidity and Capital Resources
  49. [49] Item 1A, Risk Factors; Item 7, MD&A — Contractual Obligations; Item 8, Note 7 — Senior Notes
  50. [50] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations; Item 8, Note 13 — Income Taxes
  51. [51] Item 7, MD&A — Results of Operations; Item 8, Note 13 — Income Taxes
  52. [52] Item 7, MD&A — Results of Operations; Item 8, Note 13 — Income Taxes
  53. [53] Item 7, MD&A — Results of Operations; Item 8, Note 13 — Income Taxes
  54. [54] Item 7, MD&A — Results of Operations
  55. [55] Item 7, MD&A — Results of Operations
  56. [56] Item 8, Note 3 — Revenue
  57. [57] Item 8, Note 3 — Revenue

Analysis on 10/27/2026