Elastic NV (ESTC) Q1 2024 Earnings: Strong Start with Revenue and Non-GAAP Operating Margin ...
Elastic NV (NYSE:ESTC) recently held its first-quarter fiscal 2024 earnings results conference call, where the company's performance exceeded expectations in terms of both revenue and non-GAAP operating margin. The company's revenue grew by 17% year over year, with Elastic Cloud growing by 24% over the same period. The company ended the quarter with more than 1,190 customers with annual contract values over $100K, as customers continue to adopt Elastic as their data analytics platform of choice for addressing multiple real-time search use cases. The company also managed to deliver a non-GAAP operating margin of 9.9%.
Generative AI and Consolidation Trends
In Q1, Elastic NV observed two distinct trends within its business. The first trend is around generative AI, which is driving a resurgence of excitement around enterprise search. Businesses are recognizing the opportunity to create new customer and employee experiences and drive efficiencies in various business processes through the use of AI-powered search. This is opening up new opportunities for Elastic to build generative AI applications that work within their environment. The second distinct trend in the business is the continued push by customers to consolidate onto the Elastic platform for multiple use cases. In Q1, customers continued to make large, multiyear commitments as they sought ways to lower their total spend without sacrificing innovation by bringing more workloads from other incumbent solutions onto Elastic.
Product Innovation and Partnerships
In Q1, Elastic NV continued its focus on innovation and delivered several key capabilities to its platform and solutions. One of the most significant announcements in Q1 was the release of the Elastic AI assistant powered by ESRE. This AI assistant, which helps guide analyst investigations and remediation, is in beta for security and in technical preview for observability. On the go-to-market front, Elastic NV continues to focus on its partnerships with the major cloud hyperscalers. The company recently earned top accolades from each of the three hyperscalers, Microsoft, AWS, and Google Cloud.
Financial Results and Outlook
Elastic NV's total revenue in the first quarter was $294 million, up 17% year over year on an as-reported and constant-currency basis. Subscription revenue in the first quarter totaled $270 million, up 17% year over year, or 16% year over year in constant currency, and comprised 92% of total revenue. Within subscriptions, revenue from Elastic Cloud was $121 million, growing 24% year over year on an as-reported and constant-currency basis. Elastic Cloud represented 41% of total revenue in the quarter, up from 39% a year ago. For the second quarter of fiscal '24, the company expects total revenue in the range of $303 million to $305 million, representing 15% year-over-year growth at the midpoint, or 13% on a constant-currency basis.
This article first appeared on GuruFocus.
