Enterprise data search company Elastic N.V. delighted Wall Street investors today as it delivered financial results that surpassed even the most optimistic forecasts.
Its guidance for the current quarter was just as impressive, and the value of its stock soared in extended trading.
The company reported fiscal 2026 first-quarter earnings before certain costs such as stock compensation of 60 cents per share, trouncing the Street’s forecast of just 42 cents per share, while revenue increased 18%, to $415 million, well ahead of the analyst’s $397.2 million target. Elastic Cloud revenue, which is a key growth driver for the company, shot up 24%, to $196 million.
The impressive results helped the company to slash its overall losses by half compared to one year earlier. It delivered a net loss of just $24.6 million, down from a loss of $49.2 million last year, boosting optimism that it will soon start generating a profit in the next few quarters.
Elastic is the creator of the open-source Elasticsearch tool, which is used by companies to store, search and analyze large volumes of structured and unstructured data in real-time. Elastic sells an enterprise-grade version of the open-source offering, adding extra functionality and managed services on top. It’s an ideal platform for businesses with applications that require sophisticated search capabilities.
Besides its main offering, the company also has a growing business selling tools relating to application observability and threat detection, which make it easier for companies to visualize and monitor their business-critical apps. Given that it’s all about data, Elastic has been looking to take advantage of the booming artificial intelligence industry, positioning Elasticsearch as a platform for feeding real-time data to large language models.
Elastic Chief Executive Ash Kulkarni (pictured) said the company’s growth stems from its highly differentiated technology and solid execution by its sales teams. “With AI now clearly reshaping technology decisions, our strong performance directly demonstrates the value that Elastic’s Search AI platform delivers,” he added.
Looking to the second quarter, Elastic said it’s anticipating revenue of between $415 million and $417 million, far ahead of Wall Street’s $397.3 million estimate. As for earnings, it’s looking at a range of 56 to 58 cents per share, again well ahead of the Street’s target of a 42-cent profit. The company’s full-year guidance also tops most analysts’ forecasts.
Elastic said its subscription revenue grew 20% during the quarter, to $389 million, and now accounts for 94% of its total sales. It also reported having 1,550 customers that deliver at least $100,000 in annual revenue, up from just 1,370 in the year-ago quarter. It also posted a net expansion rate of 112%, which indicates strong customer retention and upselling.
Holger Mueller of Constellation Research Inc. said investors were encouraged not only by Elastic’s faster-than-expected revenue growth, but also its cost management, which has helped it to slash its overall losses by half. “Elastic has done well to build out and now retain its position as the leader in unstructured data search for AI models, and that is a good achievement because it was certainly not the default option when the AI era kicked off,” the analyst said.
With its business ticking over nicely, Elastic has been looking to strengthen its hand in AI. During the quarter, it launched a new tool called the Elastic AI SOC Engine, which provides enhanced threat detection, triage and investigation capabilities within its application monitoring tools. It also debuted an improved vector search function with faster query performance and superior ranking qualities.
Elsewhere, the company announced the expanded availability of Elastic Cloud Serverless, a fully managed version of the Elasticsearch platform, in six Amazon Web Services regions, three Google Cloud regions and one Microsoft Azure region.
“The expanded availability of Elastic Cloud Serverless should help to drive more growth,” Mueller said. “The multicloud strategy is working well, underscoring the need for search experiences to operate consistently across every cloud platform.”
Elastic’s stock jumped more than 19% in extended trading after its results were posted, although it’s still down 11% in the year to date.
Photo: News
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