Elastic N.V. Q1 FY2026 earnings

Elastic closed FY2026 Q1 ended July 31, 2025 with total revenue of $415.3 million, up 19.5% year over year, or 18% on a constant currency basis. The quarter showed better profitability. Gross profit rose 24.6% to $318.5 million, and gross margin expanded to 76.7%, up 3.1 percentage points. Operating loss narrowed 72.1% to $9.4 million, and operating margin was -2.3%, up 7.5 percentage points. Net loss narrowed 50.0% to $24.6 million. Diluted EPS was -$0.23, an improvement of $0.25 per share. The GAAP bottom line still reflects heavy stock-based compensation and other costs, but the trend is toward smaller losses.

Cash generation stood out. Operating cash flow was $104.8 million, up 98.7% year over year. Capital expenditures were $0.7 million, down 12.2%. Adjusted free cash flow, a non-GAAP measure, was $116 million. Non-GAAP operating income was $65 million, with a non-GAAP operating margin of about 16%. Non-GAAP diluted EPS was $0.60. Non-GAAP gross profit was $327.0 million and non-GAAP gross margin was 78.7%. The GAAP to non-GAAP gap remains wide, mostly from stock-based compensation expense and related employer taxes. On the balance sheet, current deferred revenue was $710.1 million, up 18.5%, and remaining performance obligations were $1.46 billion, up 16.0%.

Customer metrics stayed solid. Elastic had over 1,550 customers with annual contract value greater than $100,000, compared with over 1,510 at the end of Q4 FY25 and over 1,370 in Q1 FY25. Net Expansion Rate was approximately 112%. The company ended the quarter with 3,711 employees. Product news included expansion of Elastic Cloud Serverless across Microsoft Azure, Google Cloud, and AWS regions; the launch of Elastic AI SOC Engine; and a new Logs Essentials tier. Elastic also highlighted vector search improvements, Cross Cluster Search general availability, and partnerships with Dell, Nvidia, and the U.S. General Services Administration. Management tied the quarter's growth to demand for the Elastic Search AI platform and AI-driven technology decisions.

Guidance points to steady growth. For the second quarter of fiscal 2026 ending October 31, 2025, total revenue is expected between $415 million and $417 million, representing 14% year-over-year growth at the midpoint, or 14% on a constant currency basis. Non-GAAP operating margin is expected at approximately 16%, and non-GAAP diluted EPS is expected between $0.56 and $0.58, assuming 108.5 million to 109.5 million diluted weighted average ordinary shares. For full fiscal 2026 ending April 30, 2026, revenue is expected between $1.679 billion and $1.689 billion, representing 14% year-over-year growth at the midpoint, or 13% on a constant currency basis. Full-year non-GAAP operating margin is also expected at approximately 16%, with non-GAAP diluted EPS between $2.29 and $2.35, assuming 109.0 million to 111.0 million shares. The guidance assumes exchange rates of 1 Euro to 1.16 U.S. dollars and 1 British Pound to 1.35 U.S. dollars.

Risks remain familiar. Macroeconomic uncertainty, inflation, international trade policy, tariffs, and geopolitical unrest could pressure customer spending. Elastic said it has experienced and may continue to experience longer and more unpredictable sales cycles, increased scrutiny of prospective sales, and slowing consumption. Foreign exchange fluctuations can affect reported results. The company expects Elastic Cloud to keep growing as a share of revenue, which carries a modest unfavorable impact on gross margin because of third-party hosting costs. It also plans to keep investing in research and development and sales and marketing, which may hurt near-term operating results. Management's ability to convert free users into paid subscribers and expand within existing accounts remains central to the outlook.