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Elastic Reports Strong Third Quarter Fiscal 2022 Financial Results

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Q3 Revenue of $223.9 million, Up 43% year-over-year

Q3 Elastic Cloud Revenue of $80.4 million, Up 79% year-over-year

MOUNTAIN VIEW, Calif., March 03, 2022--(BUSINESS WIRE)--Elastic (NYSE: ESTC) ("Elastic"), the company behind Elasticsearch and the Elastic Stack, announced strong results for its third quarter of fiscal 2022 (ended January 31, 2022).

Third Quarter Fiscal 2022 Financial Highlights

  • Total revenue was $223.9 million, an increase of 43% year-over-year, as reported and on a constant currency basis

  • Elastic Cloud revenue was $80.4 million, an increase of 79% year-over-year, or 80% on a constant currency basis

  • GAAP operating loss was $45.8 million; GAAP operating margin was -20%

  • Non-GAAP operating profit was $0.2 million; non-GAAP operating margin was 0%

  • GAAP net loss per share was $0.61; non-GAAP loss per share was $0.12

  • Operating cash flow was $5.1 million with adjusted free cash flow of $15.8 million

  • Cash and cash equivalents were $864.4 million as of January 31, 2022

"We delivered another record quarter and exceeded our revenue expectations, fueled by increasing consumption trends in Elastic Cloud. Our cloud business grew 79% year-over-year and now accounts for 36% of total revenue," said Ash Kulkarni, CEO, Elastic. "I look forward to us executing against the large and growing market opportunity ahead of us, particularly in cloud. I am confident that our demonstrated success, combined with the relevance of our solutions, enables us to capture this sizeable opportunity."

Third Quarter Fiscal 2022 Key Metrics and Recent Business Highlights

Key Customer Metrics

  • Total subscription customer count was over 17,900, compared to over 17,000 in Q2 FY22, and over 13,800 in Q3 FY21

  • Total customer count with Annual Contract Value (ACV) greater than $100,000 was over 890, compared to over 830 in Q2 FY22, and over 670 in Q3 FY21

  • Net Expansion Rate was slightly above Q2 FY22 and just below 130%

Business Highlights

Cloud Momentum

  • Delivered a more simplified Elastic Cloud on AWS onboarding and trial experience and expanded cloud-native AWS integrations which include AWS FireLens, Amazon S3 Storage Lens, the Elastic Serverless Forwarder in the AWS Serverless Application Repository, Elastic and AWS Web Application Firewall, and the Elastic and AWS Network Firewall

Product Innovations

  • Announced Elastic 8.0 with major enhancements to Elasticsearch’s vector search capabilities, new native support for modern natural language processing models, increasingly simplified data onboarding, and a streamlined security experience

  • Announced Elastic 7.16 with new features enabling simplified data ingestion into the Elastic Search Platform, including dozens of prebuilt Elastic Agent data integrations, and observability tooling for continuous integration and continuous delivery (CI/CD) pipelines

Community Momentum

  • Hosted the second annual Elastic Community Conference with 2,000+ global attendees participating in more than 60 sessions

Financial Outlook

The Company is providing the following guidance:

For the fourth quarter of fiscal 2022 (ending April 30, 2022):

  • Total revenue is expected to be between $230 million and $232 million

  • Non-GAAP operating margin is expected to be between -5.5% and -4.5%

  • Non-GAAP net loss per share is expected to be between $0.24 and $0.20, assuming between 93.1 million and 94.1 million weighted average ordinary shares outstanding

For fiscal 2022 (ending April 30, 2022):

  • Total revenue is expected to be between $853 million and $855 million

  • Non-GAAP operating margin is expected to be between -0.4% and -0.2%

  • Non-GAAP net loss per share is expected to be between $0.42 and $0.38, assuming between 92.0 million and 93.0 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. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures 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 is a search company built on a free and open heritage. Anyone can use Elastic products and solutions to get started quickly and frictionlessly. Elastic offers three solutions for enterprise search, observability, and security, built on one technology stack that can be deployed anywhere. From finding documents to monitoring infrastructure to hunting for threats, Elastic makes data usable in real time and at scale. Founded in 2012, Elastic is a distributed company with Elasticians around the globe. 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

Reconciliations of non-GAAP financial measures to Elastic’s financial results as determined in accordance with U.S. GAAP are included at the end of this press release following the accompanying financial data. For a description of these 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 and the fiscal year ending April 30, 2022, 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; 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; 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.

Any additional or unforeseen effect from the COVID-19 pandemic 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

Janice Oh
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 January 31,

Nine Months Ended January 31,

2022

2021

2022

2021

Revenue

License - self-managed

$

20,119

$

15,280

$

54,457

$

45,673

Subscription - self-managed and SaaS

189,495

131,969

522,599

357,127

Total subscription revenue

209,614

147,249

577,056

402,800

Professional services

14,330

9,866

45,963

28,079

Total revenue

223,944

157,115

623,019

430,879

Cost of revenue

Cost of license - self-managed

501

346

1,242

1,039

Cost of subscription - self-managed and SaaS

47,076

31,426

126,097

86,464

Total cost of revenue - subscription

47,577

31,772

127,339

87,503

Cost of professional services

13,707

10,196

37,491

27,744

Total cost of revenue

61,284

41,968

164,830

115,247

Gross profit

162,660

115,147

458,189

315,632

Operating expenses

Research and development

71,749

51,400

194,894

143,766

Sales and marketing

105,069

71,087

288,055

191,712

General and administrative

31,691

27,121

89,298

72,555

Total operating expenses

208,509

149,608

572,247

408,033

Operating loss

(45,849

)

(34,461

)

(114,058

)

(92,401

)

Other income (expense), net

Interest expense

(6,175

)

(65

)

(14,327

)

(78

)

Other income (expense), net

(861

)

(2,312

)

(509

)

8,502

Loss before income taxes

(52,885

)

(36,838

)

(128,894

)

(83,977

)

Provision for income taxes

3,841

1,136

9,344

2,156

Net loss

$

(56,726

)

$

(37,974

)

$

(138,238

)

$

(86,133

)

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

$

(0.61

)

$

(0.43

)

$

(1.50

)

$

(1.00

)

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

93,015,185

88,341,038

92,140,919

86,296,028

Elastic N.V.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)

As of
January 31, 2022

As of
April 30, 2021

Assets

Current assets:

Cash and cash equivalents

$

864,363

$

400,814

Restricted cash

3,928

2,894

Accounts receivable, net of allowance for credit losses of $2,729 and $2,344 as of January 31, 2022 and April 30, 2021, respectively

146,218

160,415

Deferred contract acquisition costs

38,938

36,089

Prepaid expenses and other current assets

39,405

37,002

Total current assets

1,092,852

637,214

Property and equipment, net

6,739

8,881

Goodwill

304,155

198,851

Operating lease right-of-use assets

21,454

25,464

Intangible assets, net

49,948

36,286

Deferred contract acquisition costs, non-current

62,980

50,263

Deferred tax assets

3,765

3,697

Other assets

17,403

12,516

Total assets

$

1,559,296

$

973,172

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

21,792

$

7,248

Accrued expenses and other liabilities

42,110

28,909

Accrued compensation and benefits

56,181

52,525

Operating lease liabilities

8,983

8,528

Deferred revenue

362,287

352,805

Total current liabilities

491,353

450,015

Deferred revenue, non-current

33,395

44,895

Long-term debt, net

566,271

Operating lease liabilities, non-current

14,879

19,649

Other liabilities, non-current

21,089

7,782

Total liabilities

1,126,987

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 January 31, 2022 and April 30, 2021

Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 93,420,927 and 90,533,985 shares issued and outstanding as of January 31, 2022 and April 30, 2021, respectively

982

948

Treasury stock

(369

)

(369

)

Additional paid-in capital

1,197,570

1,071,675

Accumulated other comprehensive loss

(14,318

)

(8,105

)

Accumulated deficit

(751,556

)

(613,318

)

Total shareholders’ equity

432,309

450,831

Total liabilities and shareholders’ equity

$

1,559,296

$

973,172

Elastic N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

Three Months Ended January 31,

Nine Months Ended January 31,

2022

2021

2022

2021

Cash flows from operating activities

Net loss

$

(56,726

)

$

(37,974

)

$

(138,238

)

$

(86,133

)

Adjustments to reconcile net loss to cash provided by operating activities:

Depreciation and amortization

5,233

4,290

14,558

12,856

Amortization of deferred contract acquisition costs

14,803

10,282

43,373

28,455

Amortization of debt issuance costs

247

554

Non-cash operating lease cost

2,417

1,822

6,259

5,256

Stock-based compensation expense, net of amounts capitalized

37,393

25,227

96,971

65,305

Deferred income taxes

30

(2

)

(219

)

(288

)

Foreign currency transaction (gain) loss

1,703

1,461

1,707

(9,463

)

Other

22

98

11

Changes in operating assets and liabilities:

Accounts receivable, net

9,282

15,183

9,801

15,246

Deferred contract acquisition costs

(21,957

)

(16,740

)

(61,234

)

(54,612

)

Prepaid expenses and other current assets

(4,868

)

3,717

(2,650

)

4,817

Other assets

2,534

1,197

(803

)

5,237

Accounts payable

3,967

(3,683

)

14,452

(6,321

)

Accrued expenses and other liabilities

820

2,757

17,539

1,696

Accrued compensation and benefits

863

(5,168

)

4,686

(5,859

)

Operating lease liabilities

(2,455

)

(1,867

)

(6,438

)

(5,402

)

Deferred revenue

11,768

18,877

8,306

53,309

Net cash provided by operating activities

5,054

19,401

8,722

24,110

Cash flows from investing activities

Purchases of property and equipment

(236

)

(1,076

)

(987

)

(2,732

)

Capitalization of internal-use software costs

(1,514

)

(4,227

)

Business acquisitions, net of cash acquired

(11,750

)

(119,854

)

Other

1,320

Net cash used in investing activities

(13,500

)

(1,076

)

(125,068

)

(1,412

)

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

6,709

22,324

27,540

67,554

Payments of debt issuance costs

(49

)

(9,283

)

Net cash provided by financing activities

6,660

22,324

593,257

67,554

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

(8,921

)

3,529

(12,328

)

5,848

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

(10,707

)

44,178

464,583

96,100

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

878,998

351,311

403,708

299,389

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

$

868,291

$

395,489

$

868,291

$

395,489

Elastic N.V.

REVENUE BY TYPE

(amounts in thousands, except percentages)

(Unaudited)

Three Months Ended January 31,

Nine Months Ended January 31,

2022

2021

2022

2021

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

Elastic Cloud

$ 80,402

36 %

$ 44,929

29 %

$ 210,963

34 %

$ 114,984

27 %

Other subscription

129,212

58 %

102,320

65 %

366,093

59 %

287,816

66 %

Total subscription revenue

209,614

94 %

147,249

94 %

577,056

93 %

402,800

...

Professional services

14,330

6 %

9,866

6 %

45,963

7 %

28,079

7 %

Total revenue

$ 223,944

100 %

$ 157,115

100 %

$ 623,019