Summary
Elastic started fiscal 2022 with strong top-line growth. Total revenue for the first quarter ended July 31, 2021 was $193.1 million, up 49.8% from $128.9 million in the prior-year quarter. Gross profit rose 52.5% to $143.4 million, and gross margin expanded to 74.3% from 73.0%. The bottom line moved the other way. GAAP operating loss widened to $31.0 million from $29.5 million, and GAAP net loss widened to $34.5 million from $19.0 million. Diluted GAAP loss per share was $0.38 for the quarter. Operating margin improved to -16.1% from -22.9%, but the company still spent heavily to drive growth.
Deferred revenue was $364.4 million at July 31, 2021, up 31.3% year over year. Remaining performance obligations climbed 34.6% to $776.0 million. Those forward-looking metrics suggest a healthy pipeline. Cash generation was weaker. Operating cash flow was $14.1 million, down 36.1% from $22.0 million a year earlier. Capital expenditures were $0.7 million, up 74.1%. Free cash flow, a non-GAAP measure, was $12.4 million. Calculated billings, also non-GAAP, totaled $165.0 million, up 27% year over year, or 23% on a constant currency basis. That billings growth trailed revenue growth, which management attributed to COVID-19 related headwinds such as longer sales cycles and delayed purchasing decisions.
Customer metrics continued to improve. Elastic ended the quarter with over 16,000 subscription customers, up from over 12,100 a year ago and over 15,000 in the prior quarter. The number of customers with annual contract value above $100,000 was over 780, compared with over 630 a year earlier and over 730 in the prior quarter. Net Expansion Rate was slightly below 130% and consistent with the prior quarter. Non-GAAP operating profit was $7.2 million, a swing from a non-GAAP operating loss of $4.3 million a year earlier. Non-GAAP earnings per share was $0.04. On the product front, Elastic released version 7.14 of the Elastic Stack, which included the general availability of Limitless Extended Detection and Response and a unified Elastic Agent. The company also announced agreements to acquire Cmd and build.security. In July 2021, it issued $575 million of senior unsecured notes due 2029 with a 4.125% coupon. Elastic employed 2,285 people as of July 31, 2021. The quarter also brought expanded cloud partnerships, including support for Microsoft Azure Private Link and a new Google Cloud region in Seoul. Elastic received the Microsoft U.S. Partner Award in Business Excellence in the Commercial Marketplace and was named the 2020 Google Cloud Technology Partner of the Year in data management. It also held 16 regional virtual ElasticON events and announced that its virtual ElasticON Global conference would take place October 5-7.
Guidance points to continued growth but wider losses on a non-GAAP basis. For the second quarter of fiscal 2022 ending October 31, 2021, management expects total revenue of $193 million to $195 million. Non-GAAP operating margin is guided to -4.0% to -3.0%, and non-GAAP net loss per share is expected to be $0.19 to $0.15, assuming 92.0 million to 93.0 million weighted average ordinary shares. For the full fiscal year 2022 ending April 30, 2022, revenue is guided to $808 million to $814 million, with non-GAAP operating margin of -4.0% to -3.0% and non-GAAP net loss per share of $0.67 to $0.57, assuming 92.0 million to 94.0 million weighted average ordinary shares. Risks include the ongoing COVID-19 pandemic, which could further delay customer purchases and renewals. Management also warned that a growing mix of Elastic Cloud revenue could pressure gross margin because of higher hosting costs. The company's licensing model change, which moved Elasticsearch and Kibana to the Elastic License 2.0 and Server Side Public License, remains a risk factor. Foreign currency exchange rate fluctuations could also affect results. Elastic plans to keep increasing investments throughout fiscal 2022, which may keep GAAP profitability out of reach in the near term. The company may need additional equity or debt financing to execute its strategic initiatives.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $193.1M | $177.6M | +8.7% | $128.9M | +49.8% |
| Gross profit | $143.4M | $131.8M | +8.8% | $94.0M | +52.5% |
| Gross margin | 74.3% | 74.2% | +0.1 pp | 73.0% | +1.3 pp |
| Research & development | $59.4M | $55.4M | +7.1% | $45.7M | +30.0% |
| Sales & marketing | $88.0M | $82.2M | +7.1% | $56.2M | +56.8% |
| General & administrative | $27.1M | $31.3M | -13.5% | $21.7M | +24.5% |
| Total operating expenses | $174.5M | $168.9M | +3.3% | $123.6M | +41.2% |
| Operating income (loss) | -$31.0M | -$37.1M | +16.3% | -$29.5M | -5.1% |
| Operating margin | -16.1% | -20.9% | +4.8 pp | -22.9% | +6.8 pp |
| Net income (loss) | -$34.5M | -$43.3M | +20.4% | -$19.0M | -81.5% |
| Net margin | -17.9% | -24.4% | +6.5 pp | -14.7% | -3.1 pp |
| Customers | 16,000 | 15,000 | +6.7% | 12,100 | +32.2% |
Risks
License change for Elasticsearch and Kibana from Apache 2.0 to ELv2 and SSPL may harm adoption, and Amazon launched OpenSearch based on older Elastic Stack releases and competes with us. Limited technological barriers to entry due to permissive source available licenses.
COVID-19 has caused longer sales cycles, delayed professional services, reduced renewals, and changes in sales pipeline, creating headwinds for calculated billings and our Net Expansion Rate, which was slightly below 130% for the three months ended July 31, 2021.
Issued $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029. Interest expense increased $1.8 million in the three months ended July 31, 2021, and indenture covenants restrict liens, guarantees, mergers, and asset sales.
As a provider of security solutions, may be specifically targeted by bad actors, and supply chain attacks and ransomware incidents are increasing. A breach could result in loss of confidential data, litigation, regulatory investigations, and customer loss.
Net loss widened to $34.5 million in the three months ended July 31, 2021 from $19.0 million in the prior-year quarter, with accumulated deficit of $647.8 million as of July 31, 2021. Operating cash flow decreased 36.1% to $14.1 million in the current quarter.
Sales cycle can extend more than a year for large customers and has been further impacted by COVID-19 as customers scrutinize spending. Loss or delay of one or more large transactions could affect cash flows and quarterly results.
Significant competition for sales, engineering, and technical support personnel and high employee attrition. Loss of key personnel, including CEO and Chairman Shay Banon, could delay strategic objectives.
Elastic Cloud contributed 32% of total revenue in the three months ended July 31, 2021 compared with 25% in the prior-year quarter. Increasing cloud mix is expected to adversely impact gross margin due to associated hosting costs.
Pending acquisitions of build.security and Cmd and past acquisitions may divert management attention, disrupt ongoing business, and fail to achieve intended goals. Integration may require significant time and resources.
Subject to privacy, data protection, export control, trade sanctions, anti-bribery, anti-corruption, and anti-money laundering laws. Sales to government entities add compliance and contracting challenges.
Customer count grew to over 16,000 as of July 31, 2021 from over 12,100 a year earlier, and employee headcount was 2,285. Rapid growth strains management, operational, and financial resources and may impair ability to forecast accurately.
Subscription revenue was 92% of total revenue in the three months ended July 31, 2021, with significant portion recognized over the subscription term. Downturns in new or renewed subscriptions are not immediately reflected in full in results of operations.
SaaS KPIs
All quarters →Net Expansion Rate
Non-GAAP Operating Margin
Customers with ACV > $100,000
Calculated Billings
Free cash flow
Free Cash Flow Margin
Total Subscription Customers
Summary, forecast, risks and KPIs are extracted from Elastic N.V.'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.