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Elastic Reports Second Quarter Fiscal 2023 Financial Results

11/30/2022

Q2 Revenue of $264.4 million, up 28% year-over-year (34% in constant currency)

Q2 Elastic Cloud Revenue of $103.2 million, up 50% year-over-year (52% in constant currency)

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Elastic (NYSE: ESTC) (“Elastic”), the company behind Elasticsearch and the Elastic Stack, announced results for its second quarter of fiscal 2023 (ended October 31, 2022).

Second Quarter Fiscal 2023 Financial Highlights

  • Total revenue was $264.4 million, an increase of 28% year-over-year, or 34% on a constant currency basis
  • Elastic Cloud revenue was $103.2 million, an increase of 50% year-over-year, or 52% on a constant currency basis
  • GAAP operating loss was $49.0 million; GAAP operating margin was -18%
  • Non-GAAP operating income was $4.9 million; non-GAAP operating margin was 2%
  • GAAP net loss per share was $0.50; non-GAAP earnings per share was $0.00
  • Operating cash flow was $10.6 million with adjusted free cash flow of $10.3 million
  • Cash and cash equivalents were $856.2 million as of October 31, 2022

​​“In Q2, we exceeded both our revenue and profitability targets, demonstrating the operating leverage inherent in our business model,” said Ash Kulkarni, CEO, Elastic. “Revenue grew 34% year-over-year in constant currency. Even in this difficult business climate, we continue to see customers consolidate onto our platform with additional use cases. We remain confident in our long-term opportunity as we manage our cost structure with discipline and significantly increase our focus on profitable growth.”

The Company today also announced a selective reduction in its workforce and facilities-related cost optimization actions to align its investments more closely with its strategic priorities. “We are rebalancing investments across all functions and will strategically reinvest some savings in areas that best position us to drive profitable growth. With these changes, we expect to accelerate our non-GAAP operating income growth in the second half of fiscal 2023 and achieve a non-GAAP operating margin of 10% in fiscal 2024,” said Kulkarni.

Second Quarter Fiscal 2023 Key Metrics and Recent Business Highlights

Key Customer Metrics

  • Total subscription customer count was approximately 19,700 compared to over 19,300 in Q1 FY23, and over 17,000 in Q2 FY22
  • Total customer count with Annual Contract Value (ACV) greater than $100,000 was over 1,050, compared to over 1,010 in Q1 FY23, and over 830 in Q2 FY22
  • Net Expansion Rate was approximately 125%

Cloud Momentum

  • Elastic Cloud revenue represented 39% of total revenue this quarter versus 34% one year ago
  • Delivered a new streamlined sign-up experience for Elastic Cloud on the AWS Marketplace, enabling customers to set up Elastic in just a few clicks
  • Added Elastic support for Azure Virtual Machines with Ampere Altra Arm-based processors, letting customers maximize operational efficiency across all solutions
  • Announced an expanded partnership between Google Cloud and Elastic to help organizations search, observe, and protect their data and workloads more easily

Product Innovations and Updates

  • Announced a roadmap for a new serverless architecture that will form the foundation for the next-generation Elastic Search Platform
  • Announced new threat intelligence capabilities that will enable security teams to identify indicators of compromise and take action on threat intelligence from within Elastic Security
  • Released the first Elastic Global Threat Report, compiled using customer telemetry data, which details the evolving nature of cybersecurity threats
  • Launched the private beta of Universal Profiling™, an innovative performance optimization and cost-saving capability that overcomes the limitations of other profiling solutions by requiring no changes to the application code
  • Added new synthetics monitoring capabilities to provide customers with frictionless visibility at all levels of applications, services, and infrastructure
  • Announced the general availability of vector search and updates to improve search relevance with machine learning-based hybrid scoring

Other Business Highlights

  • Hosted more than 1,500 customers and prospects at ElasticON events in Singapore, New York, and Amsterdam featuring customer presentations by Affirm, Autozone, BMW, Booking.com, Comcast, and SWIFT
  • Sponsored AWS re:Invent, Google Next, KubeCon, and Microsoft Ignite industry conferences
  • Named winner of the 2022 CyberSecurity Breakthrough Award for Threat Intelligence Platform of the Year
  • Recognized as a Visionary in the 2022 Gartner Magic Quadrant, Security Information and Event Management and as one of the fastest-growing SIEMs in the IDC Worldwide Security Information and Event Management Market Share, 2021

Financial Outlook

The Company expects the following results for the third quarter of fiscal 2023 and is updating its prior full-year fiscal 2023 guidance as follows:

For the third quarter of fiscal 2023 (ending January 31, 2023):

  • Total revenue is expected to be between $272 million and $274 million, representing 22% year-over-year growth at the midpoint (26% year-over-year constant currency growth at the midpoint)
  • Non-GAAP operating margin is expected to be between 4.3% and 4.7%
  • Non-GAAP earnings per share is expected to be between $0.04 and $0.07, assuming between 98.5 million and 99.5 million diluted weighted average ordinary shares outstanding

For fiscal 2023 (ending April 30, 2023):

  • Total revenue is expected to be between $1,067 million and $1,073 million, representing 24% year-over-year growth at the midpoint (28% year-over-year constant currency growth at the midpoint)
  • Non-GAAP operating margin is expected to be between 2.2% and 2.6%
  • Non-GAAP earnings per share is expected to be between -$0.03 and $0.03, assuming between 95.0 million and 97.0 million basic weighted average ordinary shares outstanding and 98.5 million and 100.5 million diluted weighted average ordinary shares outstanding

The current guidance assumes, among others, the following exchange rates: 1 Euro = 1.035 US Dollars; and 1 Great British Pound = 1.208 US Dollars.

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 “Statement Regarding Use of 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 containing financial and operating information will accompany the webcast and will be available on the same website. 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.

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 January 31, 2023 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 the business climate and growth opportunities and our ability to manage costs and address those opportunities, and the expected benefits of our investments, our plan to reduce costs and rebalance investments, and our expectations regarding our ability to achieve cost savings, accelerate our non-GAAP operating income growth and increase our non-GAAP operating margin upon implementation of the plan. 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; any disruption to our business resulting from our plan to reduce costs and rebalance investments; the effects of currency movements on our financial results; our ability to continue to deliver and improve our offerings and develop new offerings; customer acceptance and purchase of our new and existing offerings and the expansion and adoption of our Elastic Cloud offerings; our inability to realize value from investments in the business; our ability to maintain and expand our user and customer base; the impact of the COVID-19 pandemic and variants on the macroeconomic environment, on our business, operations, hiring and financial results, and on businesses and spending priorities of our customers and partners; the impact of our licensing model on the use and adoption of our software; 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 and expand in new and existing 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, uncertain macroeconomic environment 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, 2022 and other 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, employer payroll taxes on employee stock transactions, 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 (Loss) and Non-GAAP Operating Margin

We define non-GAAP operating income (loss) and non-GAAP operating margin as GAAP operating loss and GAAP operating margin, respectively, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, and acquisition-related expenses. We believe non-GAAP operating income (loss) 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 Earnings (Loss) Per Share

We define non-GAAP net earnings (loss) per share as GAAP net loss per share, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses and the tax effects related to the foregoing. We believe non-GAAP net earnings (loss) 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 (used in) operating activities adjusted for cash paid for interest less cash used for investing activities for purchases of property and equipment, and capitalized internal-use software costs. 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

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

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

 

 

 

 

 

 

 

Subscription

 

$

241,211

 

 

$

190,257

 

 

$

473,025

 

 

$

367,442

 

Services

 

 

23,190

 

 

 

15,723

 

 

 

41,457

 

 

 

31,633

 

Total revenue

 

 

264,401

 

 

 

205,980

 

 

 

514,482

 

 

 

399,075

 

Cost of revenue

 

 

 

 

 

 

 

 

Subscription

 

 

55,101

 

 

 

42,242

 

 

 

108,652

 

 

 

79,762

 

Services

 

 

19,656

 

 

 

11,642

 

 

 

39,084

 

 

 

23,784

 

Total cost of revenue

 

 

74,757

 

 

 

53,884

 

 

 

147,736

 

 

 

103,546

 

Gross profit

 

 

189,644

 

 

 

152,096

 

 

 

366,746

 

 

 

295,529

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

 

75,568

 

 

 

63,763

 

 

 

154,217

 

 

 

123,145

 

Sales and marketing

 

 

128,179

 

 

 

94,953

 

 

 

253,185

 

 

 

182,986

 

General and administrative

 

 

34,925

 

 

 

30,555

 

 

 

69,013

 

 

 

57,607

 

Total operating expenses

 

 

238,672

 

 

 

189,271

 

 

 

476,415

 

 

 

363,738

 

Operating loss

 

 

(49,028

)

 

 

(37,175

)

 

 

(109,669

)

 

 

(68,209

)

Other income (expense), net

 

 

 

 

 

 

 

 

Interest expense

 

 

(6,209

)

 

 

(6,332

)

 

 

(12,610

)

 

 

(8,152

)

Other income (expense), net

 

 

14,975

 

 

 

(666

)

 

 

15,314

 

 

 

352

 

Loss before income taxes

 

 

(40,262

)

 

 

(44,173

)

 

 

(106,965

)

 

 

(76,009

)

Provision for income taxes

 

 

7,043

 

 

 

2,850

 

 

 

9,891

 

 

 

5,503

 

Net loss

 

$

(47,305

)

 

$

(47,023

)

 

$

(116,856

)

 

$

(81,512

)

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

 

$

(0.50

)

 

$

(0.51

)

 

$

(1.23

)

 

$

(0.89

)

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

 

 

95,307,146

 

 

 

92,206,199

 

 

 

94,964,423

 

 

 

91,703,786

 

Elastic N.V.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 

 

 

As of
October 31, 2022

 

As of
April 30, 2022

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

856,237

 

 

$

860,949

 

Restricted cash

 

 

2,385

 

 

 

2,688

 

Accounts receivable, net of allowance for credit losses of $1,801 and $2,700 as of October 31, 2022 and April 30, 2022, respectively

 

 

185,906

 

 

 

215,228

 

Deferred contract acquisition costs

 

 

45,418

 

 

 

43,628

 

Prepaid expenses and other current assets

 

 

33,030

 

 

 

41,215

 

Total current assets

 

 

1,122,976

 

 

 

1,163,708

 

Property and equipment, net

 

 

5,696

 

 

 

7,207

 

Goodwill

 

 

303,742

 

 

 

303,906

 

Operating lease right-of-use assets

 

 

29,840

 

 

 

25,437

 

Intangible assets, net

 

 

37,384

 

 

 

45,800

 

Deferred contract acquisition costs, non-current

 

 

77,544

 

 

 

74,419

 

Deferred tax assets

 

 

5,395

 

 

 

5,811

 

Other assets

 

 

11,655

 

 

 

16,643

 

Total assets

 

$

1,594,232

 

 

$

1,642,931

 

Liabilities and Shareholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

41,055

 

 

$

28,403

 

Accrued expenses and other liabilities

 

 

62,350

 

 

 

53,930

 

Accrued compensation and benefits

 

 

60,501

 

 

 

68,002

 

Operating lease liabilities

 

 

12,348

 

 

 

11,219

 

Deferred revenue

 

 

410,718

 

 

 

431,776

 

Total current liabilities

 

 

586,972

 

 

 

593,330

 

Deferred revenue, non-current

 

 

22,867

 

 

 

33,518

 

Long-term debt, net

 

 

567,026

 

 

 

566,520

 

Operating lease liabilities, non-current

 

 

19,127

 

 

 

16,482

 

Other liabilities, non-current

 

 

6,675

 

 

 

17,648

 

Total liabilities

 

 

1,202,667

 

 

 

1,227,498

 

Commitments and contingencies

 

 

 

 

Shareholders’ equity:

 

 

 

 

Convertible preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of October 31, 2022 and April 30, 2022

 

 

 

 

 

 

Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 95,575,775 shares issued and outstanding as of October 31, 2022 and 94,174,914 shares issued and outstanding as of April 30, 2022

 

 

1,005

 

 

 

990

 

Treasury stock

 

 

(369

)

 

 

(369

)

Additional paid-in capital

 

 

1,351,987

 

 

 

1,250,108

 

Accumulated other comprehensive loss

 

 

(27,036

)

 

 

(18,130

)

Accumulated deficit

 

 

(934,022

)

 

 

(817,166

)

Total shareholders’ equity

 

 

391,565

 

 

 

415,433

 

Total liabilities and shareholders’ equity

 

$

1,594,232

 

 

$

1,642,931

 

Elastic N.V.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 
 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2022

 

2021

 

2022

 

2021

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(47,305

)

 

$

(47,023

)

 

$

(116,856

)

 

$

(81,512

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

5,216

 

 

 

4,921

 

 

 

10,430

 

 

 

9,325

 

Amortization of deferred contract acquisition costs

 

 

18,230

 

 

 

14,692

 

 

 

35,674

 

 

 

28,570

 

Amortization of debt issuance costs

 

 

254

 

 

 

230

 

 

 

506

 

 

 

307

 

Non-cash operating lease cost

 

 

2,644

 

 

 

1,988

 

 

 

5,649

 

 

 

3,842

 

Stock-based compensation expense, net of amounts capitalized

 

 

47,287

 

 

 

29,400

 

 

 

94,170

 

 

 

59,578

 

Deferred income taxes

 

 

(747

)

 

 

(106

)

 

 

(80

)

 

 

(249

)

Foreign currency transaction loss (gain)

 

 

(1,731

)

 

 

1,131

 

 

 

48

 

 

 

4

 

Other

 

 

45

 

 

 

 

 

 

67

 

 

 

98

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(20,798

)

 

 

(47,805

)

 

 

25,193

 

 

 

519

 

Deferred contract acquisition costs

 

 

(23,893

)

 

 

(24,496

)

 

 

(43,569

)

 

 

(39,277

)

Prepaid expenses and other current assets

 

 

3,180

 

 

 

6,815

 

 

 

7,909

 

 

 

2,218

 

Other assets

 

 

2,695

 

 

 

2,760

 

 

 

4,809

 

 

 

(3,337

)

Accounts payable

 

 

2,447

 

 

 

(175

)

 

 

12,320

 

 

 

10,485

 

Accrued expenses and other liabilities

 

 

15,096

 

 

 

16,889

 

 

 

(1,645

)

 

 

16,719

 

Accrued compensation and benefits

 

 

5,574

 

 

 

5,277

 

 

 

(5,947

)

 

 

3,823

 

Operating lease liabilities

 

 

(2,369

)

 

 

(2,038

)

 

 

(5,573

)

 

 

(3,983

)

Deferred revenue

 

 

4,817

 

 

 

27,157

 

 

 

(22,168

)

 

 

(3,462

)

Net cash provided by (used in) operating activities

 

 

10,642

 

 

 

(10,383

)

 

 

937

 

 

 

3,668

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(343

)

 

 

(91

)

 

 

(822

)

 

 

(751

)

Capitalization of internal-use software

 

 

 

 

 

(1,739

)

 

 

 

 

 

(2,713

)

Business acquisitions, net of cash acquired

 

 

 

 

 

(108,104

)

 

 

 

 

 

(108,104

)

Net cash used in investing activities

 

 

(343

)

 

 

(109,934

)

 

 

(822

)

 

 

(111,568

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from the issuance of debt

 

 

 

 

 

 

 

 

 

 

 

575,000

 

Proceeds from issuance of ordinary shares upon exercise of stock options

 

 

4,327

 

 

 

9,852

 

 

 

7,724

 

 

 

20,831

 

Payments of debt issuance costs

 

 

 

 

 

(2,046

)

 

 

 

 

 

(9,234

)

Net cash provided by financing activities

 

 

4,327

 

 

 

7,806

 

 

 

7,724

 

 

 

586,597

 

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

 

 

(7,152

)

 

 

(2,172

)

 

 

(12,854

)

 

 

(3,407

)

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

 

 

7,474

 

 

 

(114,683

)

 

 

(5,015

)

 

 

475,290

 

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

 

 

851,148

 

 

 

993,681

 

 

 

863,637

 

 

 

403,708

 

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

 

$

858,622

 

 

$

878,998

 

 

$

858,622

 

 

$

878,998

 

Elastic N.V.

Revenue by Type

(in thousands, except percentages)

(unaudited)

 
 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2022

 

2021

 

2022

 

2021

 

 

Amount

 

% of

Total

Revenue

 

Amount

 

% of

Total

Revenue

 

Amount

 

% of

Total

Revenue

 

Amount

 

% of

Total

Revenue

Elastic Cloud

 

$

103,237

 

39

%

 

$

69,031

 

34

%

 

$

200,966

 

39

%

 

$

130,561

 

33

%

Other subscription

 

 

137,974

 

52

%

 

 

121,226

 

58

%

 

 

272,059

 

53

%

 

 

236,881

 

59

%

Total subscription

 

 

241,211

 

91

%

 

 

190,257

 

92

%

 

 

473,025

 

92

%

 

 

367,442

 

92

%

Services

 

 

23,190

 

9

%

 

 

15,723

 

8

%

 

 

41,457

 

8

%

 

 

31,633

 

8

%

Total revenue

 

$

264,401

 

100

%

 

$

205,980

 

100

%

 

$

514,482

 

100

%

 

$

399,075

 

100

%

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

Supplementary Information

(in thousands, except percentages)

(unaudited)

 

 

 

Three Months
Ended

October 31, 2022

 

% 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

 

$

103,237

 

50

%

 

52

%

 

6

%

 

6

%

Other subscription

 

$

137,974

 

14

%

 

20

%

 

3

%

 

5

%

Total subscription

 

$

241,211

 

27

%

 

32

%

 

4

%

 

5

%

Total revenue

 

$

264,401

 

28

%

 

34

%

 

6

%

 

7

%

Total deferred revenue

 

$

433,585

 

11

%

 

18

%

 

%

 

1

%

Total remaining performance obligations

 

$

901,200

 

8

%

 

16

%

 

(1

)%

 

%

 

 

Six Months
Ended

October 31, 2022

 

% Change
Year Over
Year

 

% Change
Year Over Year
Excluding
Currency Changes

Revenue

 

 

 

 

 

 

Elastic Cloud

 

$

200,966

 

54

%

 

57

%

Other subscription

 

$

272,059

 

15

%

 

21

%

Total subscription

 

$

473,025

 

29

%

 

34

%

Total revenue

 

$

514,482

 

29

%

 

34

%

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

Adjusted Free Cash Flow

(in thousands, except percentages)

(unaudited)

 

 

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2022

 

2021

 

2022

 

2021

Net cash provided by (used in) operating activities

 

$

10,642

 

 

$

(10,383

)

 

$

937

 

 

$

3,668

 

Less: Purchases of property and equipment

 

 

(343

)

 

 

(91

)

 

 

(822

)

 

 

(751

)

Less: Capitalization of internal-use software

 

 

 

 

 

(1,739

)

 

 

 

 

 

(2,713

)

Add: Interest paid on long-term debt

 

 

 

 

 

 

 

 

11,859

 

 

 

 

Adjusted free cash flow

 

$

10,299

 

 

$

(12,213

)

 

$

11,974

 

 

$

204

 

Net cash used in investing activities

 

$

(343

)

 

$

(109,934

)

 

$

(822

)

 

$

(111,568

)

Net cash provided by financing activities

 

$

4,327

 

 

$

7,806

 

 

$

7,724

 

 

$

586,597

 

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

 

 

4

%

 

 

(5

) %

 

 

%

 

 

1

%

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

 

 

%

 

 

%

 

 

%

 

 

%

Less: Capitalization of internal-use software (as a percentage of total revenue)

 

 

%

 

 

(1

) %

 

 

%

 

 

(1

) %

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

 

 

%

 

 

%

 

 

2

%

 

 

%

Adjusted free cash flow margin

 

 

4

%

 

 

(6

) %

 

 

2

%

 

 

%

Elastic N.V.

Reconciliation of GAAP to Non-GAAP Data

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

(unaudited)

 

 

 

Three Months Ended October 31,

 

Six Months Ended October 31,

 

 

2022

 

2021

 

2022

 

2021

Gross Profit Reconciliation:

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

189,644

 

 

$

152,096

 

 

$

366,746

 

 

$

295,529

 

Stock-based compensation expense

 

 

4,342

 

 

 

3,356

 

 

 

8,727

 

 

 

7,065

 

Employer payroll taxes on employee stock transactions

 

 

83

 

 

 

179

 

 

 

450

 

 

 

805

 

Amortization of acquired intangibles

 

 

2,961

 

 

 

2,498

 

 

 

5,925

 

 

 

4,510

 

Non-GAAP gross profit

 

$

197,030

 

 

$

158,129

 

 

$

381,848

 

 

$

307,909

 

Gross Margin Reconciliation(1):

 

 

 

 

 

 

 

 

GAAP gross margin

 

 

71.7

%

 

 

73.8

%

 

 

71.3

%

 

 

74.1

%

Stock-based compensation expense

 

 

1.6

%

 

 

1.6

%

 

 

1.7

%

 

 

1.8

%

Employer payroll taxes on employee stock transactions

 

 

0.0

%

 

 

0.1

%

 

 

0.1

%

 

 

0.2

%

Amortization of acquired intangibles

 

 

1.1

%

 

 

1.2

%

 

 

1.2

%

 

 

1.1

%

Non-GAAP gross margin

 

 

74.5

%

 

 

76.8

%

 

 

74.2

%

 

 

77.2

%

Operating Loss Reconciliation:

 

 

 

 

 

 

 

 

GAAP operating loss

 

$

(49,028

)

 

$

(37,175

)

 

$

(109,669

)

 

$

(68,209

)

Stock-based compensation expense

 

 

47,287

 

 

 

29,982

 

 

 

94,170

 

 

 

60,160

 

Employer payroll taxes on employee stock transactions

 

 

800

 

 

 

2,592

 

 

 

3,182

 

 

 

6,991

 

Amortization of acquired intangibles

 

 

4,193

 

 

 

3,926

 

 

 

8,388

 

 

 

7,367

 

Acquisition-related expenses

 

 

1,684

 

 

 

2,042

 

 

 

4,201

 

 

 

2,268

 

Non-GAAP operating income

 

$

4,936

 

 

$

1,367

 

 

$

272

 

 

$

8,577

 

Operating Margin Reconciliation(1):

 

 

 

 

 

 

 

 

GAAP operating margin

 

 

(18.5

) %

 

 

(18.0

) %

 

 

(21.3

) %

 

 

(17.1

) %

Stock-based compensation expense

 

 

17.9

%

 

 

14.6

%

 

 

18.3

%

 

 

15.1

%

Employer payroll taxes on employee stock transactions

 

 

0.3

%

 

 

1.3

%

 

 

0.6

%

 

 

1.8

%

Amortization of acquired intangibles

 

 

1.6

%

 

 

1.9

%

 

 

1.6

%

 

 

1.8

%

Acquisition-related expenses

 

 

0.6

%

 

 

1.0

%

 

 

0.8

%

 

 

0.6

%

Non-GAAP operating margin

 

 

1.9

%

 

 

0.7

%

 

 

0.1

%

 

 

2.1

%

Net Loss Reconciliation:

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(47,305

)

 

$

(47,023

)

 

$

(116,856

)

 

$

(81,512

)

Stock-based compensation expense

 

 

47,287

 

 

 

29,982

 

 

 

94,170

 

 

 

60,160

 

Employer payroll taxes on employee stock transactions

 

 

800

 

 

 

2,592

 

 

 

3,182

 

 

 

6,991

 

Amortization of acquired intangibles

 

 

4,193

 

 

 

3,926

 

 

 

8,388

 

 

 

7,367

 

Acquisition-related expenses

 

 

1,684

 

 

 

2,042

 

 

 

4,201

 

 

 

2,268

 

Litigation settlement

 

 

(10,150

)

 

 

 

 

 

(10,150

)

 

 

 

Income tax(2)

 

 

3,676

 

 

 

(262

)

 

 

3,528

 

 

 

(531

)

Non-GAAP net income (loss)

 

$

185

 

 

$

(8,743

)

 

$

(13,537

)

 

$

(5,257

)

Non-GAAP net earnings (loss) per share attributable to ordinary

shareholders, basic(1)

 

$

 

 

$

(0.09

)

 

$

(0.14

)

 

$

(0.06

)

Non-GAAP net earnings (loss) per share attributable to ordinary

shareholders, diluted(1)

 

$

 

 

$

(0.09

)

 

$

(0.14

)

 

$

(0.06

)

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

 

 

95,307,146

 

 

 

92,206,199

 

 

 

94,964,423

 

 

 

91,703,786

 

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

 

 

98,764,660

 

 

 

92,206,199

 

 

 

94,964,423

 

 

 

91,703,786

 

(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 October 31,

 

Six Months Ended October 31,

 

 

2022

 

2021

 

2022

 

2021

Cost of revenue reconciliation:

 

 

 

 

 

 

 

 

GAAP subscription

 

$

55,101

 

 

$

41,847

 

 

$

108,652

 

 

$

79,021

 

Stock-based compensation expense

 

 

(2,029

)

 

 

(2,064

)

 

 

(4,189

)

 

 

(4,198

)

Employer payroll taxes on employee stock transactions

 

 

(30

)

 

 

(65

)

 

 

(253

)

 

 

(327

)

Amortization of acquired intangibles

 

 

(2,961

)

 

 

(2,103

)

 

 

(5,925

)

 

 

(3,769

)

Non-GAAP subscription

 

$

50,081

 

 

$

37,615

 

 

$

98,285

 

 

$

70,727

 

GAAP services

 

$

19,656

 

 

$

11,642

 

 

$

39,084

 

 

$

23,784

 

Stock-based compensation expense

 

 

(2,313

)

 

 

(1,292

)

 

 

(4,538

)

 

 

(2,867

)

Employer payroll taxes on employee stock transactions

 

 

(53

)

 

 

(114

)

 

 

(197

)

 

 

(478

)

Non-GAAP services

 

$

17,290

 

 

$

10,236

 

 

$

34,349

 

 

$

20,439

 

Operating expenses reconciliation:

 

 

 

 

 

 

 

 

GAAP research and development expense

 

$

75,568

 

 

$

63,763

 

 

$

154,217

 

 

$

123,145

 

Stock-based compensation expense

 

 

(18,763

)

 

 

(13,658

)

 

 

(37,473

)

 

 

(25,755

)

Employer payroll taxes on employee stock transactions

 

 

(323

)

 

 

(655

)

 

 

(1,285

)

 

 

(2,253

)

Acquisition-related expenses

 

 

(1,684

)

 

 

(982

)

 

 

(4,164

)

 

 

(982

)

Non-GAAP research and development expense

 

$

54,798

 

 

$

48,468

 

 

$

111,295

 

 

$

94,155

 

GAAP sales and marketing expense

 

$

128,179

 

 

$

94,953

 

 

$

253,185

 

 

$

182,986

 

Stock-based compensation expense

 

 

(16,013

)

 

 

(8,403

)

 

 

(31,660

)

 

 

(18,253

)

Employer payroll taxes on employee stock transactions

 

 

(266

)

 

 

(1,671

)

 

 

(1,041

)

 

 

(3,362

)

Amortization of acquired intangibles

 

 

(1,232

)

 

 

(1,428

)

 

 

(2,463

)

 

 

(2,857

)

Non-GAAP sales and marketing expenses

 

$

110,668

 

 

$

83,451

 

 

$

218,021

 

 

$

158,514

 

GAAP general and administrative expense

 

$

34,925

 

 

$

30,555

 

 

$

69,013

 

 

$

57,607

 

Stock-based compensation expense

 

 

(8,169

)

 

 

(4,565

)

 

 

(16,310

)

 

 

(9,087

)

Employer payroll taxes on employee stock transactions

 

 

(128

)

 

 

(87

)

 

 

(406

)

 

 

(571

)

Acquisition-related expenses

 

 

 

 

 

(1,060

)

 

 

(37

)

 

 

(1,286

)

Non-GAAP general and administrative expense

 

$

26,628

 

 

$

24,843

 

 

$

52,260

 

 

$

46,663

 

 

 

 

 

 

 

 

 

 

Nikolay Beliov
Elastic Investor Relations
ir@elastic.co

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

Source: Elastic N.V.

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