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Elastic Reports Third Quarter Fiscal 2024 Financial Results

Q3 Revenue of $328 million, up 19% year-over-year (18% in constant currency)

Q3 Elastic Cloud Revenue of $143 million, up 29% year-over-year (29% in constant currency)

Elastic (NYSE: ESTC) (“Elastic”), the company behind Elasticsearch®, announced financial results for its third quarter of fiscal 2024 ended January 31, 2024.

Third Quarter Fiscal 2024 Financial Highlights

  • Total revenue was $328 million, an increase of 19% year-over-year, or 18% on a constant currency basis
  • Elastic Cloud revenue was $143 million, an increase of 29% year-over-year as reported and on a constant currency basis
  • GAAP operating loss was $26 million; GAAP operating margin was -8%
  • Non-GAAP operating income was $43 million; non-GAAP operating margin was 13%
  • GAAP diluted earnings per share was $1.69(1); non-GAAP diluted earnings per share was $0.36
  • Operating cash flow was $52 million with adjusted free cash flow of $63 million
  • Cash, cash equivalents, and marketable securities were $1.015 billion as of January 31, 2024

“Elastic delivered another strong quarter and I'm pleased with our momentum and execution that drove our third quarter results,” said Ash Kulkarni, CEO, Elastic. “Customer interest in Generative AI, platform consolidation, and stability in cloud consumption patterns continued to drive momentum in our business in Q3. This reinforces our confidence in the business, and in our future growth as more companies choose our search analytics platform as a core part of their IT infrastructure stack for building GenAI applications.”

Third Quarter Fiscal 2024 Key Metrics and Recent Business Highlights

Key Customer Metrics

  • Total customer count with Annual Contract Value (ACV) greater than $100,000 was over 1,270 compared to over 1,220 in Q2 FY24, and over 1,110 in Q3 FY23
  • Total subscription customer count was approximately 20,800 compared to approximately 20,700 in Q2 FY24, and over 19,900 in Q3 FY23
  • Net Expansion Rate was approximately 109%

Product Innovations and Updates

  • Delivered scalar quantization for vector search, which provides significantly faster performance at a lower total cost
  • Introduced real time alerts with natural language interactions for the Elastic AI Assistant for security
  • Delivered cloud security posture management for Microsoft Azure, now integrated with the three largest cloud hyperscalers
  • Announced the general availability of the Elastic AI Assistant for observability, which provides site reliability engineers (SREs) with actionable operational insights that are specific to their IT environment
  • Delivered general availability of Service Level Objective (SLO) monitoring which allows SREs to manage business operations by tracking service performance, error budgets, reliability, and business goals
  • Delivered deeper integration between Elasticsearch and Hugging Face, to simplify the developer experience by allowing direct embedding of large language models and other machine learning models hosted on Hugging Face into custom GAI applications built with Elasticsearch

Other Business Highlights

  • Appointed Mark Dodds as Chief Revenue Officer to lead all customer facing functions
  • Participated in AWS re:Invent as a Diamond sponsor and hosted ElasticON London and Sydney events as part of our twelve city customer conference series

Financial Outlook

The Company is providing the following guidance:

For the fourth quarter of fiscal 2024 (ending April 30, 2024):

  • Total revenue is expected to be between $328 million and $330 million, representing 18% year-over-year growth at the midpoint (18% year-over-year constant currency growth at the midpoint)
  • Non-GAAP operating margin is expected to be between 7.4% and 7.8%
  • Non-GAAP diluted earnings per share is expected to be between $0.18 and $0.20, assuming between 105.5 million and 106.5 million diluted weighted average ordinary shares outstanding

For fiscal 2024 (ending April 30, 2024):

  • Total revenue is expected to be between $1.260 billion and $1.262 billion, representing 18% year-over-year growth at the midpoint (17% year-over-year constant currency growth at the midpoint)
  • Non-GAAP operating margin is expected to be approximately 11%
  • Non-GAAP diluted earnings per share is expected to be between $1.15 and $1.18, assuming between 103.0 million and 104.0 million diluted weighted average ordinary shares outstanding

The guidance assumes, among others, the following exchange rates: 1 Euro = 1.082 US Dollars; and 1 Great British Pound = 1.267 US Dollars.

See the section titled “Forward-Looking Statements” below for information on the factors that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. We present historical and 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 “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of these non-GAAP measures. A reconciliation of forward-looking non-GAAP measures to the corresponding GAAP measures for operating margin and net earnings/(loss) per share is not available 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. A presentation containing financial and operating information will be available at the same website. The replay of the webcast will also be available on the investor relations website.

(1)

GAAP diluted earnings per share includes the impact of a discrete income tax benefit of approximately $207 million related to the release of a valuation allowance against certain deferred tax assets. There was no impact to operating results, non-GAAP diluted earnings per share, adjusted free cash flow or cash and cash equivalents.

About Elastic

Elastic (NYSE: ESTC), the leading search analytics company, securely harnesses search-powered AI to enable everyone to find the answers they need in real-time using all their data, at scale. Elastic’s solutions for security, observability and search are built on the Elasticsearch platform, the development platform used by thousands of companies, including more than 50% of the Fortune 500. 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.

Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risks 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, 2024, the expected performance or benefits of our offerings, expected market opportunities, and our expectations regarding our growth. 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 innovations around AI use cases); customer acceptance and purchase of our new and existing offerings; the expansion and adoption of our Elastic Cloud offerings; our ability to realize value from investments in the business; our ability to maintain and expand our user and customer base; the impact of the evolving macroeconomic and geopolitical environments on our business, operations, hiring and financial results, and on businesses and spending priorities of our customers and partners; the impact of our pricing model strategies on our business; the impact of foreign currency exchange rate fluctuations and the uncertain inflation and interest rate environment on our results; our international expansion strategy; our operating results and cash flows; the sufficiency of our capital resources; our ability to successfully execute our go-to-market strategy, our forecasts regarding our business; and general market, political, economic and business conditions.

Any additional or unforeseen effect from the evolving macroeconomic and geopolitical environments may exacerbate these risks. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those expressed or implied in our forward-looking statements 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, 2023 and 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.

Statement Regarding Use of Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe the non-GAAP measures listed below are useful in evaluating our operating performance. We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures and key metrics as analytical tools. Investors are encouraged to review the differences between GAAP financial measures and the corresponding non-GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Reconciliations of historical GAAP financial measures to their respective historical non-GAAP financial measures are included below. 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.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding stock-based compensation expense and related employer taxes and amortization of acquired intangible assets. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Non-GAAP Operating Income and Non-GAAP Operating Margin

We define non-GAAP operating income and non-GAAP operating margin as GAAP operating loss and GAAP operating margin, respectively, excluding stock-based compensation expense and related employer taxes, amortization of acquired intangible assets, acquisition-related expenses, and restructuring and other related charges. We believe non-GAAP operating income and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Non-GAAP Net Income and Non-GAAP Earnings Per Share

We define non-GAAP net income as GAAP income/(loss), excluding stock-based compensation expense and related employer taxes, amortization of acquired intangible assets, acquisition-related expenses, restructuring and other related charges, litigation settlement, the related income tax effect of the foregoing adjustments, and the income tax benefit from the release of any valuation allowance against deferred tax assets. We define non-GAAP earnings per share, basic, as non-GAAP net income divided by weighted average shares outstanding and non-GAAP earnings per share, diluted, as non-GAAP net income divided by weighted average diluted shares outstanding, which includes the potentially dilutive effect of the company’s employee equity incentive plan awards. We believe non-GAAP earnings per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this metric generally eliminates the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin

Adjusted free cash flow is a non-GAAP financial measure that we define as net cash provided by operating activities adjusted for cash paid for interest less cash used for investing activities for purchases of property and equipment. Adjusted free cash flow margin is calculated as adjusted free cash flow divided by total revenue. Adjusted free cash flow does not represent residual cash flow available for discretionary expenditures since, among other things, we have mandatory debt service requirements.

Constant Currency

We compare the percent change in certain results from one period to another period using constant currency information to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. In presenting this information, current and comparative prior period results are converted into United States dollars at the exchange rates in effect on the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.

Contact Information

Anthony Luscri

Elastic Investor Relations

ir@elastic.co

Madge Miller

Elastic Corporate Communications

PR-Team@elastic.co

Elastic N.V.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended January 31,

Nine Months Ended January 31,

 

2024

2023

2024

2023

Revenue

 

 

 

 

Subscription

$

307,632

 

$

255,613

 

$

865,622

 

$

728,638

 

Services

 

20,325

 

 

18,953

 

 

66,700

 

 

60,410

 

Total revenue

 

327,957

 

 

274,566

 

 

932,322

 

 

789,048

 

Cost of revenue

 

 

 

 

Subscription

 

63,976

 

 

56,146

 

 

181,238

 

 

164,798

 

Services

 

20,666

 

 

19,062

 

 

60,970

 

 

58,146

 

Total cost of revenue

 

84,642

 

 

75,208

 

 

242,208

 

 

222,944

 

Gross profit

 

243,315

 

 

199,358

 

 

690,114

 

 

566,104

 

Operating expenses

 

 

 

 

Research and development

 

87,202

 

 

77,472

 

 

248,000

 

 

231,689

 

Sales and marketing

 

141,621

 

 

126,717

 

 

408,020

 

 

379,902

 

General and administrative

 

40,896

 

 

34,711

 

 

117,530

 

 

103,724

 

Restructuring and other related charges

 

 

 

29,805

 

 

754

 

 

29,805

 

Total operating expenses

 

269,719

 

 

268,705

 

 

774,304

 

 

745,120

 

Operating loss

 

(26,404

)

 

(69,347

)

 

(84,190

)

 

(179,016

)

Other income (expense), net

 

 

 

 

Interest expense

 

(6,368

)

 

(6,265

)

 

(19,023

)

 

(18,875

)

Other income, net

 

8,568

 

 

5,460

 

 

24,107

 

 

20,774

 

Loss before income taxes

 

(24,204

)

 

(70,152

)

 

(79,106

)

 

(177,117

)

(Benefit from) provision for income taxes

 

(200,328

)

 

2,422

 

 

(181,926

)

 

12,313

 

Net income (loss)

$

176,124

 

$

(72,574

)

$

102,820

 

$

(189,430

)

Net earnings (loss) per share attributable to ordinary shareholders

 

 

 

 

Basic

$

1.76

 

$

(0.76

)

$

1.04

 

$

(1.99

)

Diluted

$

1.69

 

$

(0.76

)

$

1.00

 

$

(1.99

)

Weighted-average shares used to compute net earnings (loss) per share attributable to ordinary shareholders

 

 

 

 

Basic

 

100,282,179

 

 

96,052,025

 

 

99,099,210

 

 

95,327,131

 

Diluted

 

104,503,290

 

 

96,052,025

 

 

103,149,384

 

 

95,327,131

 

 

Elastic N.V.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 

 

As of

January 31, 2024

As of

April 30, 2023

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

526,893

 

$

644,167

 

Restricted cash

 

2,774

 

 

2,473

 

Marketable securities

 

488,133

 

 

271,041

 

Accounts receivable, net of allowance for credit losses of $3,865 and $3,409 as of January 31, 2024 and April 30, 2023, respectively

 

229,946

 

 

260,919

 

Deferred contract acquisition costs

 

68,937

 

 

55,813

 

Prepaid expenses and other current assets

 

45,440

 

 

39,867

 

Total current assets

 

1,362,123

 

 

1,274,280

 

Property and equipment, net

 

5,512

 

 

5,092

 

Goodwill

 

319,546

 

 

303,642

 

Operating lease right-of-use assets

 

23,088

 

 

19,997

 

Intangible assets, net

 

23,822

 

 

29,104

 

Deferred contract acquisition costs, non-current

 

100,389

 

 

95,879

 

Deferred tax assets

 

218,693

 

 

7,412

 

Other assets

 

5,749

 

 

8,076

 

Total assets

$

2,058,922

 

$

1,743,482

 

Liabilities and Shareholders’ Equity

 

 

Current liabilities:

 

 

Accounts payable

$

10,935

 

$

35,151

 

Accrued expenses and other liabilities

 

64,835

 

 

63,532

 

Accrued compensation and benefits

 

78,049

 

 

76,483

 

Operating lease liabilities

 

12,788

 

 

12,749

 

Deferred revenue

 

561,665

 

 

528,704

 

Total current liabilities

 

728,272

 

 

716,619

 

Deferred revenue, non-current

 

23,521

 

 

34,248

 

Long-term debt, net

 

568,341

 

 

567,543

 

Operating lease liabilities, non-current

 

15,297

 

 

13,942

 

Other liabilities, non-current

 

15,654

 

 

12,233

 

Total liabilities

 

1,351,085

 

 

1,344,585

 

Shareholders’ equity:

 

 

Preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of January 31, 2024 and April 30, 2023

 

 

 

 

Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 100,792,010 shares issued and outstanding as of January 31, 2024 and 97,366,947 shares issued and outstanding as of April 30, 2023

 

1,060

 

 

1,024

 

Treasury stock

 

(369

)

 

(369

)

Additional paid-in capital

 

1,676,493

 

 

1,471,584

 

Accumulated other comprehensive loss

 

(18,840

)

 

(20,015

)

Accumulated deficit

 

(950,507

)

 

(1,053,327

)

Total shareholders’ equity

 

707,837

 

 

398,897

 

Total liabilities and shareholders’ equity

$

2,058,922

 

$

1,743,482

 

 

Elastic N.V.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Three Months Ended January 31,

Nine Months Ended January 31,

 

2024

2023

2024

2023

Cash flows from operating activities

 

 

 

 

Net income (loss)

$

176,124

 

$

(72,574

)

$

102,820

 

$

(189,430

)

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

 

 

 

 

Depreciation and amortization

 

4,072

 

 

5,045

 

 

13,853

 

 

15,475

 

Amortization of discounts or premiums on marketable securities

 

(2,750

)

 

 

 

(6,396

)

 

 

Amortization of deferred contract acquisition costs

 

20,440

 

 

15,821

 

 

56,392

 

 

51,495

 

Amortization of debt issuance costs

 

269

 

 

257

 

 

798

 

 

763

 

Non-cash operating lease cost

 

2,878

 

 

2,705

 

 

8,148

 

 

8,354

 

Asset impairment charges

 

 

 

6,242

 

 

 

 

6,242

 

Stock-based compensation expense

 

62,762

 

 

54,456

 

 

176,344

 

 

148,626

 

Deferred income taxes

 

(210,705

)

 

148

 

 

(210,278

)

 

68

 

Foreign currency transaction loss

 

1,845

 

 

2,213

 

 

2,267

 

 

2,261

 

Other

 

(16

)

 

 

 

(34

)

 

67

 

Changes in operating assets and liabilities, net of impact of business acquisitions:

 

 

 

 

Accounts receivable, net

 

4,072

 

 

(11,143

)

 

31,044

 

 

14,050

 

Deferred contract acquisition costs

 

(30,668

)

 

(24,615

)

 

(74,089

)

 

(68,184

)

Prepaid expenses and other current assets

 

(7,655

)

 

(238

)

 

(5,512

)

 

7,671

 

Other assets

 

(917

)

 

2,297

 

 

639

 

 

7,106

 

Accounts payable

 

(25,330

)

 

(11,809

)

 

(25,212

)

 

511

 

Accrued expenses and other liabilities

 

2,821

 

 

(4,627

)

 

1,428

 

 

(6,272

)

Accrued compensation and benefits

 

12,282

 

 

5,786

 

 

1,509

 

 

(161

)

Operating lease liabilities

 

(2,902

)

 

(2,831

)

 

(9,096

)

 

(8,404

)

Deferred revenue

 

45,767

 

 

40,037

 

 

23,189

 

 

17,869

 

Net cash provided by operating activities

 

52,389

 

 

7,170

 

 

87,814

 

 

8,107

 

Cash flows from investing activities

 

 

 

 

Purchases of property and equipment

 

(1,077

)

 

(197

)

 

(2,605

)

 

(1,019

)

Purchases of marketable securities

 

(179,972

)

 

 

 

(358,273

)

 

 

Maturities of marketable securities

 

74,931

 

 

 

 

150,223

 

 

 

Business acquisitions, net of cash acquired

 

(18,951

)

 

 

 

(18,951

)

 

 

Net cash used in investing activities

 

(125,069

)

 

(197

)

 

(229,606

)

 

(1,019

)

Cash flows from financing activities

 

 

 

 

Proceeds from issuance of ordinary shares under employee stock purchase plan

 

 

 

 

 

9,111

 

 

 

Proceeds from issuance of ordinary shares upon exercise of stock options

 

8,847

 

 

4,510

 

 

19,490

 

 

12,234

 

Net cash provided by financing activities

 

8,847

 

 

4,510

 

 

28,601

 

 

12,234

 

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

 

1,008

 

 

9,940

 

 

(3,782

)

 

(2,914

)

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

 

(62,825

)

 

21,423

 

 

(116,973

)

 

16,408

 

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

 

592,492

 

 

858,622

 

 

646,640

 

 

863,637

 

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

$

529,667

 

$

880,045

 

$

529,667

 

$

880,045

 

 

Elastic N.V.

Revenue by Type

(in thousands, except percentages)

(unaudited)

 

 

Three Months Ended January 31,

Nine Months Ended January 31,

 

2024

2023

2024

2023

 

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

Amount

% of

Total

Revenue

Elastic Cloud

$

143,379

44

%

$

110,743

40

%

$

399,540

43

%

$

311,709

40

%

Other subscription

 

164,253

50

%

 

144,870

53

%

 

466,082

50

%

 

416,929

52

%

Total subscription

 

307,632

94

%

 

255,613

93

%

 

865,622

93

%

 

728,638

92

%

Services

 

20,325

6

%

 

18,953

7

%

 

66,700

7

%

 

60,410

8

%

Total revenue

$

327,957

100

%

$

274,566

100

%

$

932,322

100

%

$

789,048

100

%

 

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

Supplementary Information

(in thousands, except percentages)

(unaudited)

 

 

Three Months

Ended


January 31, 2024

% Change

Year Over

Year

% Change

Year Over Year

Excluding

Currency Changes

% Change

Quarter

Over

Quarter

% Change

Quarter Over

Quarter Excluding

Currency Changes

Revenue

 

 

 

 

 

Elastic Cloud

$

143,379

29

%

29

%

6

%

6

%

Other subscription

$

164,253

13

%

12

%

8

%

7

%

Total subscription

$

307,632

20

%

19

%

7

%

7

%

Total revenue

$

327,957

19

%

18

%

6

%

6

%

Total deferred revenue

$

585,186

21

%

21

%

9

%

9

%

Total remaining performance obligations

$

1,176,486

18

%

18

%

5

%

5

%

 

Nine Months

Ended


January 31, 2024

% Change

Year Over

Year

% Change

Year Over Year

Excluding

Currency Changes

Revenue

Elastic Cloud

$

399,540

28

%

28

%

Other subscription

$

466,082

12

%

11

%

Total subscription

$

865,622

19

%

18

%

Total revenue

$

932,322

18

%

17

%

 

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

Adjusted Free Cash Flow

(in thousands, except percentages)

(unaudited)

 

 

Three Months Ended January 31,

Nine Months Ended January 31,

 

2024

2023

2024

2023

Net cash provided by operating activities

$

52,389

 

$

7,170

 

$

87,814

 

$

8,107

 

Less: Purchases of property and equipment

 

(1,077

)

 

(197

)

 

(2,605

)

 

(1,019

)

Add: Interest paid on long-term debt

 

11,859

 

 

11,859

 

 

23,719

 

 

23,719

 

Adjusted free cash flow (1)

$

63,171

 

$

18,832

 

$

108,928

 

$

30,807

 

Net cash used in investing activities

$

(125,069

)

$

(197

)

$

(229,606

)

$

(1,019

)

Net cash provided by financing activities

$

8,847

 

$

4,510

 

$

28,601

 

$

12,234

 

Net cash provided by operating activities (as a percentage of total revenue)

 

16

%

 

3

%

 

9

%

 

1

%

Less: Purchases of property and equipment (as a percentage of total revenue)

 

%

 

%

 

%

 

%

Add: Interest paid on long-term debt (as a percentage of total revenue)

 

3

%

 

4

%

 

3

%

 

3

%

Adjusted free cash flow margin

 

19

%

 

7

%

 

12

%

 

4

%

(1) Adjusted free cash flow includes cash paid for restructuring and other charges of $0.8 million and $1.5 million during the three and nine months ended January 31, 2024, respectively, and $18.0 million during the three and nine months ended January 31, 2023.

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

(in thousands, except percentages, share and per share data)

(unaudited)

 

 

Three Months Ended January 31,

Nine Months Ended January 31,

 

2024

2023

2024

2023

Gross Profit Reconciliation:

 

 

 

 

GAAP gross profit

$

243,315

 

$

199,358

 

$

690,114

 

$

566,104

 

Stock-based compensation expense and related employer taxes

 

5,902

 

 

4,947

 

 

16,483

 

 

14,124

 

Amortization of acquired intangibles

 

3,186

 

 

2,977

 

 

9,139

 

 

8,902

 

Non-GAAP gross profit

$

252,403

 

$

207,282

 

$

715,736

 

$

589,130

 

Gross Margin Reconciliation(1):

 

 

 

 

GAAP gross margin

 

74.2

%

 

72.6

%

 

74.0

%

 

71.7

%

Stock-based compensation expense and related employer taxes

 

1.8

%

 

1.8

%

 

1.8

%

 

1.8

%

Amortization of acquired intangibles

 

1.0

%

 

1.1

%

 

1.0

%

 

1.1

%

Non-GAAP gross margin

 

77.0

%

 

75.5

%

 

76.8

%

 

74.7

%

Operating Income Reconciliation:

 

 

 

 

GAAP operating loss

$

(26,404

)

$

(69,347

)

$

(84,190

)

$

(179,016

)

Stock-based compensation expense and related employer taxes

 

65,847

 

 

56,155

 

 

183,564

 

 

153,507

 

Amortization of acquired intangibles

 

3,186

 

 

4,209

 

 

11,282

 

 

12,597

 

Acquisition-related expenses

 

682

 

 

899

 

 

2,240

 

 

5,100

 

Restructuring and other related charges

 

 

 

29,805

 

 

754

 

 

29,805

 

Non-GAAP operating income

$

43,311

 

$

21,721

 

$

113,650

 

$

21,993

 

Operating Margin Reconciliation(1):

 

 

 

 

GAAP operating margin

 

(8.1

)%

 

(25.3

)%

 

(9.0

)%

 

(22.7

)%

Stock-based compensation expense and related employer taxes

 

20.1

%

 

20.4

%

 

19.7

%

 

19.4

%

Amortization of acquired intangibles

 

1.0

%

 

1.5

%

 

1.2

%

 

1.6

%

Acquisition-related expenses

 

0.2

%

 

0.3

%

 

0.2

%

 

0.6

%

Restructuring and other related charges

 

%

 

10.9

%

 

0.1

%

 

3.8

%

Non-GAAP operating margin

 

13.2

%

 

7.9

%

 

12.2

%

 

2.8

%

Net Income (Loss) Reconciliation:

 

 

 

 

GAAP net income (loss)

$

176,124

 

$

(72,574

)

$

102,820

 

$

(189,430

)

Stock-based compensation expense and related employer taxes

 

65,847

 

 

56,155

 

 

183,564

 

 

153,507

 

Amortization of acquired intangibles

 

3,186

 

 

4,209

 

 

11,282

 

 

12,597

 

Acquisition-related expenses

 

682

 

 

899

 

 

2,240

 

 

5,100

 

Restructuring and other related charges

 

 

 

29,805

 

 

754

 

 

29,805

 

Litigation settlement

 

 

 

 

 

 

 

(10,150

)

Income tax effects related to the above adjustments(2)

 

(780

)

 

(1,599

)

 

7,988

 

 

1,929

 

Discrete income tax benefit from the release of a valuation allowance against deferred tax assets

 

(207,456

)

 

 

 

(207,456

)

 

 

Non-GAAP net income

$

37,603

 

$

16,895

 

$

101,192

 

$

3,358

 

Non-GAAP earnings per share attributable to ordinary

shareholders, basic(1)

$

0.37

 

$

0.18

 

$

1.02

 

$

0.04

 

Non-GAAP earnings per share attributable to ordinary

shareholders, diluted(1)

$

0.36

 

$

0.17

 

$

0.98

 

$

0.03

 

Weighted-average shares used to compute earnings per share attributable to ordinary shareholders, basic

 

100,282,179

 

 

96,052,025

 

 

99,099,210

 

 

95,327,131

 

Weighted-average shares used to compute earnings per share attributable to ordinary shareholders, diluted

 

104,503,290

 

 

98,902,515

 

 

103,149,384

 

 

98,834,408

 

(1) Totals may not sum, due to rounding. Gross margin, operating margin, and earnings per share are calculated based upon the respective underlying, non-rounded data.

(2) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as other significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

(in thousands)

(unaudited)

 

 

Three Months Ended January 31,

Nine Months Ended January 31,

 

2024

2023

2024

2023

Cost of revenue reconciliation:

 

 

 

 

GAAP subscription

$

63,976

 

$

56,146

 

$

181,238

 

$

164,798

 

Stock-based compensation expense and related employer taxes

 

(2,400

)

 

(2,291

)

 

(6,989

)

 

(6,733

)

Amortization of acquired intangibles

 

(3,186

)

 

(2,977

)

 

(9,139

)

 

(8,902

)

Non-GAAP subscription

$

58,390

 

$

50,878

 

$

165,110

 

$

149,163

 

GAAP services

$

20,666

 

$

19,062

 

$

60,970

 

$

58,146

 

Stock-based compensation expense and related employer taxes

 

(3,502

)

 

(2,656

)

 

(9,494

)

 

(7,391

)

Non-GAAP services

$

17,164

 

$

16,406

 

$

51,476

 

$

50,755

 

Operating expenses reconciliation:

 

 

 

 

GAAP research and development expense

$

87,202

 

$

77,472

 

$

248,000

 

$

231,689

 

Stock-based compensation expense and related employer taxes

 

(25,989

)

 

(21,462

)

 

(71,956

)

 

(60,220

)

Acquisition-related expenses

 

 

 

(870

)

 

(1,175

)

 

(5,034

)

Non-GAAP research and development expense

$

61,213

 

$

55,140

 

$

174,869

 

$

166,435

 

GAAP sales and marketing expense

$

141,621

 

$

126,717

 

$

408,020

 

$

379,902

 

Stock-based compensation expense and related employer taxes

 

(21,142

)

 

(19,883

)

 

(59,541

)

 

(52,584

)

Amortization of acquired intangibles

 

 

 

(1,232

)

 

(2,143

)

 

(3,695

)

Non-GAAP sales and marketing expenses

$

120,479

 

$

105,602

 

$

346,336

 

$

323,623

 

GAAP general and administrative expense

$

40,896

 

$

34,711

 

$

117,530

 

$

103,724

 

Stock-based compensation expense and related employer taxes

 

(12,814

)

 

(9,863

)

 

(35,584

)

 

(26,579

)

Acquisition-related expenses

 

(682

)

 

(29

)

 

(1,065

)

 

(66

)

Non-GAAP general and administrative expense

$

27,400

 

$

24,819

 

$

80,881

 

$

77,079

 

 

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