Summary
Elastic started fiscal 2024 with total revenue of $293.8 million, up 17.5% from $250.1 million in the prior-year quarter. Gross profit was $216.3 million, up 22.1%, and gross margin reached 73.6%, up 2.8 percentage points from 70.8%. The company still posted a GAAP operating loss of $36.2 million, but that was narrower than the $60.6 million loss a year earlier. Operating margin improved to -12.3% from -24.2%. GAAP net loss was $48.5 million, narrower than $69.6 million. GAAP diluted loss per share was $0.50, narrower than the $0.74 loss in the prior-year quarter. Those headline GAAP numbers show steady progress on profitability even as the company remains unprofitable.
On a non-GAAP basis, Elastic reported operating income of $29 million, a 10% operating margin, and diluted earnings per share of $0.25. Operating cash flow was $37.8 million, a sharp swing from negative $9.7 million in the prior-year quarter. Adjusted free cash flow was $49 million. Capital expenditures were $0.6 million, up from $0.5 million. Deferred revenue was $506.9 million, up 24.4% from the prior-year quarter. Remaining performance obligations were $1.12 billion, up 22.5%. The cash flow swing is notable because it came alongside a GAAP net loss, helped by working capital movements and non-cash charges. The company also ended the quarter with a higher deferred revenue balance, which supports future revenue recognition.
Customer metrics showed expansion. Total subscription customer count was approximately 20,500, compared with approximately 20,200 at the end of Q4 FY23 and over 19,300 in Q1 FY23. The number of customers with annual contract value greater than $100,000 was over 1,190, compared with over 1,160 in Q4 FY23 and over 1,010 in Q1 FY23. Net Expansion Rate was approximately 113%. Elastic introduced several product updates, including the Elastic AI Assistant, hybrid search capabilities with Reciprocal Rank Fusion, and integration of Time Series Data Streams with Elastic Observability. The company also won partner awards from Microsoft, Google Cloud, and AWS. It released its second annual sustainability report, highlighting a 40% reduction in greenhouse gas emissions intensity. Elastic appointed Joanna Daly as chief human resources officer. The company had 2,995 employees as of July 31, 2023. Restructuring actions announced in November 2022 reduced the workforce by approximately 13%, and the company said the plan was substantially completed as of July 31, 2023.
Guidance points to continued growth but slower sequential expansion. For the second quarter of fiscal 2024 ending October 31, 2023, Elastic expects total revenue growth of 15% year-over-year at the midpoint, or 13% on a constant currency basis. Non-GAAP operating margin is expected to be 9.5% to 10.0%, and non-GAAP earnings per share is expected to be $0.23 to $0.25, assuming 101.5 million to 102.5 million diluted weighted average ordinary shares outstanding. For the full fiscal year 2024 ending April 30, 2024, the company expects 17% year-over-year revenue growth at the midpoint, or 16% on a constant currency basis. Full-year non-GAAP operating margin is expected to be 10.0% to 10.5%, and non-GAAP earnings per share is expected to be $1.01 to $1.11, assuming 102.0 million to 104.0 million diluted weighted average ordinary shares outstanding. The guidance assumes exchange rates of 1 Euro to 1.081 US Dollars and 1 Great British Pound to 1.258 US Dollars.
Risks remain familiar. Management pointed to inflation, slower economic growth, political unrest, and concerns about bank stability as factors that continue to weigh on worldwide economic activity. Those conditions have led to longer and more unpredictable sales cycles, increased scrutiny of deals, and slowing consumption. Foreign exchange rate fluctuations add another layer of uncertainty. Elastic also said that as Elastic Cloud grows as a percentage of revenue, it expects a modest adverse impact on gross margin because of third-party hosting costs. The company has a history of operating losses and may generate negative cash flows from operations on an annual basis for the foreseeable future. The restructuring plan is substantially complete, but the company will keep adjusting spending to adapt to the macroeconomic landscape.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $293.8M | $279.9M | +4.9% | $250.1M | +17.5% |
| Gross profit | $216.3M | $206.3M | +4.9% | $177.1M | +22.1% |
| Gross margin | 73.6% | 73.7% | -0.1 pp | 70.8% | +2.8 pp |
| Research & development | $80.7M | $81.8M | -1.3% | $78.6M | +2.6% |
| Sales & marketing | $133.2M | $123.6M | +7.7% | $125.0M | +6.5% |
| General & administrative | $37.9M | $39.5M | -4.0% | $34.1M | +11.3% |
| Total operating expenses | $252.5M | $246.4M | +2.5% | $237.7M | +6.2% |
| Operating income (loss) | -$36.2M | -$40.2M | +9.7% | -$60.6M | +40.2% |
| Operating margin | -12.3% | -14.3% | +2.0 pp | -24.3% | +11.9 pp |
| Net income (loss) | -$48.5M | -$46.7M | -3.8% | -$69.6M | +30.3% |
| Net margin | -16.5% | -16.7% | +0.2 pp | -27.8% | +11.3 pp |
| Customers | 20,500 | 20,200 | +1.5% | 19,300 | +6.2% |
Risks
Risk factors and MD&A state that inflation, slower economic growth, bank stability concerns, and geopolitical events have caused longer and more unpredictable sales cycles, increased scrutiny of deals, slowing consumption, and reduced customer expenditures. The filing says these macroeconomic impacts have negatively affected results of operations since the first quarter of fiscal 2023.
Elastic Cloud contributed 41% of total revenue for the three months ended July 31, 2023, and the vast majority of Elastic Cloud subscriptions are consumption-based. The company says limited history with these arrangements makes it hard to predict long-term adoption or renewal, and customers have slowed consumption and optimized usage, making revenue less predictable or more variable.
The decision to stop offering Elasticsearch and Kibana under an open source license may harm adoption, and Amazon's OpenSearch, a forked version of the Elastic Stack, plus other third-party hosted offerings, may reduce demand and put pricing pressure on subscriptions. The filing warns this could reduce brand and product awareness and lead to a decline in paying customers.
As a security solutions provider, Elastic says it has been and may continue to be specifically targeted by threat actors, and Russia's invasion of Ukraine heightens risk from nation-state and retaliatory attacks. The filing also notes AI use by threat actors may increase the velocity of such threats and that third-party vendors have been subject to phishing and other security incidents.
MD&A says Elastic Cloud contributed 41% of total revenue for the three months ended July 31, 2023 and expects its contribution to subscription revenue to continue increasing, which is expected to continue to have a modest adverse impact on gross margin because of third-party hosting costs.
Risk factors say the search, observability, and security markets are subject to rapid technological change and innovation such as the use of AI, and competitors with greater resources may develop similar offerings or invest more heavily in research and development, potentially attracting customers and reducing Elastic's market share.
The November 2022 plan reduced the workforce by approximately 13% and optimized facilities costs; MD&A says implementation was substantially completed and the quarter included $0.7 million of restructuring charges, but risk factors warn the anticipated savings may not be realized and the plan could disrupt the business.
Elastic depends on senior management including CEO Ashutosh Kulkarni and CTO/co-founder Shay Banon, and faces significant competition for skilled sales and engineering personnel with high employee attrition. Hybrid and remote work have expanded the pool of competing employers, and replacements may be protracted to find.
As of July 31, 2023, Elastic had $575.0 million aggregate principal amount of Senior Notes outstanding. The indenture includes restrictive covenants, and failure to comply could result in an event of default and acceleration of substantially all indebtedness.
Privacy and data protection compliance risks include GDPR fines of up to 20 million Euros or 4% of annual global turnover. The filing notes Ireland's DPC fined another company approximately $1.3 billion over SCCs, and the implications may affect Elastic's ability to use SCCs or increase regulatory fine risk.
Dutch tax proposals include an Alternative Withholding Tax effective January 1, 2024 on dividends to related entities in low-tax jurisdictions, and a DWT Exit Tax that could impose 15% tax on a deemed distribution if Elastic ceases to be a Dutch tax resident, with retroactive effect from December 8, 2021 if enacted.
SaaS KPIs
All quarters →Net Expansion Rate
Non-GAAP Operating Margin
Adjusted Free Cash Flow
Adjusted Free Cash Flow Margin
Total subscription customer count
Total remaining performance obligations
Elastic Cloud Revenue
Customers with Annual Contract Value > $100,000
Summary, forecast, risks and KPIs are extracted from Elastic N.V.'s SEC filings for Q1 FY2024 (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.