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Elastic Reports Strong Fourth Quarter and Fiscal 2022 Financial Results

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Q4 Revenue of $239.4 million, Up 35% year-over-year (37% in constant currency)
Q4 Elastic Cloud Revenue of $87.7 million, Up 71% year-over-year (72% in constant currency)
FY22 Revenue of $862.4 million, Up 42% year-over-year (41% in constant currency)

MOUNTAIN VIEW, Calif., June 01, 2022--(BUSINESS WIRE)--Elastic (NYSE: ESTC) ("Elastic"), the company behind Elasticsearch and the Elastic Stack, announced strong results for its fourth quarter and full fiscal year (ended April 30, 2022).

Fourth Quarter Fiscal 2022 Financial Highlights

  • Total revenue was $239.4 million, an increase of 35% year-over-year, or 37% on a constant currency basis

  • Elastic Cloud revenue was $87.7 million, an increase of 71% year-over-year, or 72% on a constant currency basis

  • GAAP operating loss was $59.6 million; GAAP operating margin was -25%

  • Non-GAAP operating loss was $7.9 million; non-GAAP operating margin was -3%

  • GAAP net loss per share was $0.70; non-GAAP net loss per share was $0.16

  • Operating cash flow was -$3.1 million with adjusted free cash flow of -$5.3 million

  • Cash and cash equivalents were $860.9 million as of April 30, 2022

Full Fiscal 2022 Financial Highlights

  • Total revenue was $862.4 million, an increase of 42% year-over-year, or 41% on a constant currency basis

  • Elastic Cloud revenue was $298.6 million, an increase of 80% year-over-year, or 79% on a constant currency basis

  • GAAP operating loss was $173.7 million; GAAP operating margin was -20%

  • Non-GAAP operating profit was $0.9 million; non-GAAP operating margin was 0%

  • GAAP net loss per share was $2.20; non-GAAP net loss per share was $0.33

  • Operating cash flow was $5.7 million with adjusted free cash flow of $10.7 million

"We had a strong fourth quarter and closed out an excellent year, driven by robust growth in Elastic Cloud, which grew 80% year-over-year in fiscal year 2022, and increased to 37% of total revenue in Q4," said Ash Kulkarni, CEO, Elastic. "The strong momentum in Elastic Cloud puts us on the path to deliver over 50% of total revenue from Elastic Cloud exiting Q4 of fiscal year 2024, which is ahead of our prior outlook. The enormous market opportunity, the strategic relevance of our solutions to our customers and partners, and the momentum in Elastic Cloud make us confident that we can achieve $2 billion in total revenue in fiscal year 2025."

Fourth Quarter Fiscal 2022 Key Metrics and Recent Business Highlights

Key Customer Metrics

  • Total subscription customer count was over 18,600, compared to over 17,900 in Q3 FY22, and over 15,000 in Q4 FY21

  • Total customer count with Annual Contract Value (ACV) greater than $100,000 was over 960, compared to over 890 in Q3 FY22, and over 730 in Q4 FY21

  • Net Expansion Rate was just under 130%, and was flat compared to Q3 FY22

Cloud Partner Momentum

  • Announced expanded collaboration with AWS to accelerate momentum and build, market, and deliver seamless access for shared customers

  • Announced expanded strategic partnership with Microsoft to simplify cloud operations, launch co-selling activities, and make it easy to bring data from Azure services into Elastic, and added four new Azure regions in the Americas, Asia, and Africa

  • Joined the Data Cloud Alliance, led by Google Cloud, as a founding member to accelerate the path to value creation and solve the modern data challenges of today’s enterprises

Product Innovations and Updates

  • Announced Elastic 8.1 with new capabilities to help customers defend against cyberattacks and accelerate app development with expanded data integrations, faster indexing speeds, and more efficient storage utilization

  • Announced Elastic 8.2 with new capabilities that enable customers to build seamless search experiences, accelerate troubleshooting of cloud-native services, and streamline security analyst workflows

  • Enhanced machine learning and natural language processing capabilities across both releases to deliver more relevant results

  • Achieved Payment Card Industry Data Security Standard (PCI-DSS) compliance across all Elastic Cloud regions

Other Business Highlights

  • Named a Strong Performer by Forrester Research in The Forrester Wave™: Endpoint Detection and Response (EDR) Providers, Q2 2022

  • Appointed Carolyn Herzog as chief legal officer

  • Appointed Janesh Moorjani as chief operating officer in addition to his role as chief financial officer

Financial Outlook

The Company is providing the following guidance:

For the first quarter of fiscal 2023 (ending July 31, 2022):

  • Total revenue is expected to be between $244 million and $246 million, representing 27% year-over-year growth at the midpoint (32% year-over-year constant currency growth at the midpoint)

  • Non-GAAP operating margin is expected to be between -3.8% and -2.8%

  • Non-GAAP net loss per share is expected to be between $0.20 and $0.16, assuming between 94.0 million and 95.0 million weighted average ordinary shares outstanding

For fiscal 2023 (ending April 30, 2023):

  • Total revenue is expected to be between $1,080 million and $1,086 million, representing 26% year-over-year growth at the midpoint (29% year-over-year constant currency growth at the midpoint)

  • Non-GAAP operating margin is expected to be between 0.0% and 0.5%

  • Non-GAAP net loss per share is expected to be between $0.36 and $0.28, assuming between 95.0 million and 97.0 million weighted average ordinary shares outstanding

See the section titled "Forward-Looking Statements" below for information on the factors that could cause our actual results to differ materially. We present forward-looking non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled "About Non-GAAP Financial Measures" for an explanation of these non-GAAP measures. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures for operating margin and net loss per share is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of the costs and expenses that may be incurred in the future. These items necessary to reconcile such non-GAAP measures could be material and have a significant impact on the Company’s results computed in accordance with GAAP.

Conference Call and Webcast

Elastic’s executive management team will host a conference call today at 2:00 p.m. PT/5:00 p.m. ET to discuss the Company’s financial results and business outlook. A live audio webcast of the conference call will be available through Elastic’s Investor Relations website at ir.elastic.co. Slides will accompany the webcast. The replay of the webcast and slides will be available for two months.

About Elastic

Elastic (NYSE: ESTC) is a leading platform for search-powered solutions. We help organizations, their employees, and their customers accelerate the results that matter. With solutions in Enterprise Search, Observability, and Security, we enhance customer and employee search experiences, keep mission-critical applications running smoothly, and protect against cyber threats. Delivered wherever data lives, in one cloud, across multiple clouds, or on-premise, Elastic enables its customers to achieve new levels of success at scale and on a single platform. Learn more at elastic.co.

Elastic and associated marks are trademarks or registered trademarks of Elastic N.V. and its subsidiaries. All other company and product names may be trademarks of their respective owners.

Use of Non-GAAP Financial Measures

In relation to constant currency non-GAAP financial measures, the only reconciling item between GAAP financial measures and non-GAAP financial measures is the effect of foreign currency rate fluctuations. Further details on how we calculate such effects can be found in the definition of "Constant Currency" below. Reconciliations of other GAAP financial measures to their respective non-GAAP financial measures are included at the end of this press release following the accompanying financial data. For a description of non-GAAP financial measures, including the reasons management uses each measure, please see the section of this press release titled "About Non-GAAP Financial Measures."

Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risk and uncertainties, which include, but are not limited to, statements regarding our expected financial results for the fiscal quarter ending July 31, 2022 and the fiscal year ending April 30, 2023, our expectations regarding demand for our products and solutions and our future revenue, our assessments of the strength of our solutions and products, the expected performance or benefits of our offerings, our expectations regarding market and growth opportunities and our ability to address those opportunities, our expectations regarding the growth and adoption of our Elastic Cloud offering, and the expected benefits of our investments. These forward-looking statements are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Our expectations and beliefs in light of currently available information regarding these matters may not materialize. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements due to uncertainties, risks, and changes in circumstances, including but not limited to those related to: our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses (which include changes in sales and marketing, research and development and general and administrative expenses), and our ability to achieve and maintain future profitability; the effects of currency movements on our financial results, our ability to continue to deliver and improve our offerings and develop new offerings, including security-related product and Elastic Cloud offerings; customer acceptance and purchase of our existing offerings and new offerings, including the expansion and adoption of our Elastic Cloud offerings; our inability to realize value from investments in the business, including R&D investments and strategic transactions; our ability to maintain and expand our user and customer base; the impact of the COVID-19 pandemic, including any variants, on the macroeconomic environment, on our business, operations, hiring and financial results, and on businesses of our customers and partners, including their spending priorities, the effect of lockdowns, restrictions and new regulations; the impact of our licensing model on the use and adoption of our software; our pricing model strategies and their anticipated impacts on our business and results of operations; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our international expansion strategy; our operating results and cash flows; our beliefs and objectives for future operations; the sufficiency of our capital resources; our ability to successfully execute our go-to-market strategy, including by expanding our relationships with our partners, and expand in our existing markets and into new markets, and our ability to forecast customer retention and expansion; and general market, political, economic and business conditions (including impacts arising from the ongoing military conflict between Russia and Ukraine).

Any additional or unforeseen effect from the COVID-19 pandemic or ongoing conflict between Russia and Ukraine may exacerbate these risks. Additional risks and uncertainties that could cause actual outcomes and results to differ materially are included in our filings with the Securities and Exchange Commission (the "SEC"), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2021 and any subsequent reports filed with the SEC. SEC filings are available on the Investor Relations section of Elastic’s website at ir.elastic.co and the SEC’s website at www.sec.gov. Elastic assumes no obligation to, and does not currently intend to, update any such forward-looking statements, except as required by law.

Contact Information
Nikolay Beliov
Elastic Investor Relations
ir@elastic.co

Lisa Boughner
Elastic Corporate Communications
lisa.boughner@elastic.co

Elastic N.V.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except share and per share amounts)

(Unaudited)

Three Months Ended April 30,

Year Ended April 30,

2022

2021

2022

2021

Revenue

License - self-managed

$

22,507

$

22,321

$

76,964

$

67,994

Subscription - self-managed and SaaS

199,207

142,218

721,806

499,345

Total subscription revenue

221,714

164,539

798,770

567,339

Professional services

17,641

13,071

63,604

41,150

Total revenue

239,355

177,610

862,374

608,489

Cost of revenue

Cost of license - self-managed

306

347

1,548

1,386

Cost of subscription - self-managed and SaaS

50,559

34,663

176,656

121,127

Total cost of revenue - subscription

50,865

35,010

178,204

122,513

Cost of professional services

16,499

10,797

53,990

38,541

Total cost of revenue

67,364

45,807

232,194

161,054

Gross profit

171,991

131,803

630,180

447,435

Operating expenses

Research and development

78,867

55,437

273,761

199,203

Sales and marketing

118,603

82,165

406,658

273,877

General and administrative

34,143

31,278

123,441

103,833

Total operating expenses

231,613

168,880

803,860

576,913

Operating loss

(59,622

)

(37,077

)

(173,680

)

(129,478

)

Other income (expense), net

Interest expense

(6,389

)

(107

)

(20,716

)

(185

)

Other income (expense), net

(2,884

)

(553

)

(3,393

)

7,949

Loss before income taxes

(68,895

)

(37,737

)

(197,789

)

(121,714

)

Provision for (benefit from) income taxes

(3,285

)

5,564

6,059

7,720

Net loss

$

(65,610

)

$

(43,301

)

$

(203,848

)

$

(129,434

)

Net loss per share attributable to ordinary shareholders, basic and diluted

$

(0.70

)

$

(0.48

)

$

(2.20

)

$

(1.48

)

Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted

93,806,902

90,028,822

92,547,145

87,207,094

Elastic N.V.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share amounts)

(Unaudited)

As of
April 30, 2022

As of
April 30, 2021

Assets

Current assets:

Cash and cash equivalents

$

860,949

$

400,814

Restricted cash

2,688

2,894

Accounts receivable, net of allowance for credit losses of $2,700 and $2,344 as of April 30, 2022 and April 30, 2021, respectively

215,228

160,415

Deferred contract acquisition costs

43,628

36,089

Prepaid expenses and other current assets

41,215

37,002

Total current assets

1,163,708

637,214

Property and equipment, net

7,207

8,881

Goodwill

303,906

198,851

Operating lease right-of-use assets

25,437

25,464

Intangible assets, net

45,800

36,286

Deferred contract acquisition costs, non-current

74,419

50,263

Deferred tax assets

5,811

3,697

Other assets

16,643

12,516

Total assets

$

1,642,931

$

973,172

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

28,403

$

7,248

Accrued expenses and other liabilities

53,930

28,909

Accrued compensation and benefits

68,002

52,525

Operating lease liabilities

11,219

8,528

Deferred revenue

431,776

352,805

Total current liabilities

593,330

450,015

Deferred revenue, non-current

33,518

44,895

Long-term debt, net

566,520

Operating lease liabilities, non-current

16,482

19,649

Other liabilities, non-current

17,648

7,782

Total liabilities

1,227,498

522,341

Commitments and contingencies

Shareholders’ equity:

Convertible preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of April 30, 2022 and April 30, 2021

Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 94,174,914 and 90,533,985 shares issued and outstanding as of April 30, 2022 and April 30, 2021, respectively

990

948

Treasury stock

(369

)

(369

)

Additional paid-in capital

1,250,108

1,071,675

Accumulated other comprehensive loss

(18,130

)

(8,105

)

Accumulated deficit

(817,166

)

(613,318

)

Total shareholders’ equity

415,433

450,831

Total liabilities and shareholders’ equity

$

1,642,931

$

973,172

Elastic N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

Three Months Ended April 30,

Year Ended April 30,

2022

2021

2022

2021

Cash flows from operating activities

Net loss

$

(65,610

)

$

(43,301

)

$

(203,848

)

$

(129,434

)

Adjustments to reconcile net loss to cash provided by (used in) operating activities:

Depreciation and amortization

5,170

4,381

19,728

17,237

Amortization of deferred contract acquisition costs

17,365

12,536

60,738

40,991

Amortization of debt issuance costs

249

803

Non-cash operating lease cost

2,377

2,671

8,636

7,927

Stock-based compensation expense, net of amounts capitalized

43,641

28,375

140,612

93,680

Deferred income taxes

(2,211

)

321

(2,430

)

33

Foreign currency transaction (gain) loss

277

(44

)

1,984

(9,507

)

Other

(153

)

98

(142

)

Changes in operating assets and liabilities:

Accounts receivable, net

(71,988

)

(39,283

)

(62,187

)

(24,037

)

Deferred contract acquisition costs

(35,521

)

(26,525

)

(96,755

)

(81,137

)

Prepaid expenses and other current assets

(777

)

(9,009

)

(3,427

)

(4,192

)

Other assets

1,628

(9,344

)

825

(4,107

)

Accounts payable

6,584

1,546

21,036

(4,775

)

Accrued expenses and other liabilities

9,653

6,422

27,192

8,118

Accrued compensation and benefits

13,089

9,726

17,775

3,867

Operating lease liabilities

(2,450

)

(2,512

)

(8,888

)

(7,914

)

Deferred revenue

75,474

62,628

83,780

115,937

Net cash provided by (used in) operating activities

(3,050

)

(1,565

)

5,672

22,545

Cash flows from investing activities

Purchases of property and equipment

(1,498

)

(1,180

)

(2,485

)

(3,912

)

Capitalization of internal-use software costs

(705

)

(317

)

(4,932

)

(317

)

Business acquisitions, net of cash acquired

(119,854

)

Other

1,391

2,711

Net cash used in investing activities

(2,203

)

(106

)

(127,271

)

(1,518

)

Cash flows from financing activities

Proceeds from the issuance of senior notes

575,000

Proceeds from issuance of ordinary shares upon exercise of stock options

8,870

9,704

36,410

77,258

Payments of debt issuance costs

(9,283

)

Net cash provided by financing activities

8,870

9,704

602,127

77,258

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(8,271

)

186

(20,599

)

6,034

Net increase (decrease) in cash, cash equivalents, and restricted cash

(4,654

)

8,219

459,929

104,319

Cash, cash equivalents, and restricted cash, beginning of period

868,291

395,489

403,708

299,389

Cash, cash equivalents, and restricted cash, end of period

$

863,637

$

403,708

$

863,637

$

403,708

Elastic N.V.

REVENUE BY TYPE

(amounts in thousands, except percentages)

(Unaudited)

Three Months Ended April 30,

Year Ended April 30,

2022

2021

2022

2021

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

Elastic Cloud

$

87,652

37

%

$

51,335

29

%

$

298,615

35

%

$

166,319

27

%

Other subscription

134,062

56

%

113,204

64

%

500,155

58

%

401,020

66

%

Total subscription revenue

221,714

93

%

164,539

93

%

798,770

93

%

567,339

93

%

Professional services

17,641

7

%

13,071

7