Summary
Elastic's fiscal 2022 second quarter showed rapid top-line expansion. Total revenue was $206.0 million, up 42.2% year over year. Elastic Cloud revenue grew 84% year over year, and the cloud offering reached 34% of total revenue in the quarter. Calculated billings were $231.2 million, up 30% year over year. Deferred revenue was $390.3 million, up 26.2% year over year, and remaining performance obligations were $831.6 million, up 29.2% year over year. The customer base expanded to over 17,000 subscription customers, compared with over 12,900 a year earlier. The company also had over 830 customers with annual contract value above $100,000, compared with over 650 a year earlier. Net Expansion Rate was slightly below 130% and consistent with the first quarter of fiscal 2022.
Profitability remained mixed. GAAP gross profit was $152.1 million, up 42.9% year over year. Gross margin was 73.8%, up 0.4 percentage points from the prior-year quarter. GAAP operating loss widened to $37.2 million from $28.4 million, while operating margin was -18.0%, up 1.6 percentage points from -19.6%. GAAP net loss widened to $47.0 million from $29.2 million. For the six months ended October 31, 2021, diluted EPS was -$0.89. Non-GAAP operating profit was $1.4 million, with a non-GAAP operating margin of 1%. Non-GAAP loss per share was $0.09. Operating cash flow for the quarter was -$10.4 million, an improvement from -$17.3 million in the prior-year quarter. Free cash flow, a non-GAAP measure, was -$12.2 million.
Operational activity was heavy. Elastic launched version 7.15 of its platform, with cloud-first features across observability, security, and enterprise search. It made the App Search web crawler generally available and added malicious behavior protection to its Limitless XDR offering. The company completed the acquisitions of Optimyze, build.security, and Cmd. It expanded integrations with Google Cloud and joined the AWS ISV Workload Migration Program. Elastic also added AWS FireLens support and three new AWS regions. Forrester recognized the company in its New Wave Extended Detection and Response report. The board added Shelley Leibowitz.
Guidance points to continued growth with non-GAAP losses. For the third quarter of fiscal 2022 ending January 31, 2022, total revenue is expected between $207 million and $209 million. Non-GAAP operating margin is expected between -6.0% and -5.0%, and non-GAAP net loss per share is expected between $0.24 and $0.20, based on 92.5 million to 93.5 million weighted average ordinary shares. For fiscal 2022 ending April 30, 2022, total revenue is expected between $826 million and $832 million. Non-GAAP operating margin is expected between -3.0% and -2.0%, and non-GAAP net loss per share is expected between $0.61 and $0.51, based on 92.0 million to 93.0 million shares. The company states that a reconciliation of forward-looking non-GAAP guidance to GAAP is not available without unreasonable effort.
Risks remain tied to the pandemic, sales cycles, and margin mix. The MD&A notes that COVID-19 has caused delays in purchasing decisions, longer sales cycles, delayed professional services implementation, reduced renewals, and headwinds for calculated billings and Net Expansion Rate. Elastic expects Elastic Cloud to become more than 50% of total revenue in the next three years. That shift carries a modest adverse impact on gross margin because of third-party hosting costs. The company also expects to keep investing in research and development, sales, and marketing. Those investments may keep operating results under pressure in the near term.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $206.0M | $193.1M | +6.7% | $144.9M | +42.2% |
| Gross profit | $152.1M | $143.4M | +6.0% | $106.4M | +42.9% |
| Gross margin | 73.8% | 74.3% | -0.4 pp | 73.5% | +0.4 pp |
| Research & development | $63.8M | $59.4M | +7.4% | $46.7M | +36.6% |
| Sales & marketing | $95.0M | $88.0M | +7.9% | $64.5M | +47.3% |
| General & administrative | $30.6M | $27.1M | +12.9% | $23.7M | +28.9% |
| Total operating expenses | $189.3M | $174.5M | +8.5% | $134.9M | +40.3% |
| Operating income (loss) | -$37.2M | -$31.0M | -19.8% | -$28.4M | -30.8% |
| Operating margin | -18.1% | -16.1% | -2.0 pp | -19.6% | +1.6 pp |
| Net income (loss) | -$47.0M | -$34.5M | -36.3% | -$29.2M | -61.3% |
| Net margin | -22.8% | -17.9% | -5.0 pp | -20.1% | -2.7 pp |
| Customers | 17,000 | 16,000 | +6.3% | 12,900 | +31.8% |
Risks
In February 2021 Elastic changed Elasticsearch and Kibana from Apache 2.0 to dual Elastic License 2.0 and SSPL, and Amazon launched OpenSearch based on a forked Elastic Stack and rebranded its Elasticsearch Service to OpenSearch Service. The filing warns this may reduce adoption of Elasticsearch and Kibana and lead to fewer paying customers.
Elastic issued $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029, and interest expense increased by $6.4 million in the three months ended October 31, 2021 compared with the prior-year period. The indenture contains restrictive covenants and the notes can require repurchase on a change of control.
The ongoing COVID-19 pandemic has caused delays in purchasing decisions, longer sales cycles, delayed implementation of professional services, and reduced renewals, creating headwinds for calculated billings and Net Expansion Rate. Net Expansion Rate was slightly below 130% for the three months ended October 31, 2021.
Net loss widened to $47.0 million in FY2022 Q2 from $29.2 million in FY2021 Q2, and the six-month net loss widened to $81.5 million from $48.2 million. Accumulated deficit was $694.8 million as of October 31, 2021, and management expects operating expenses to increase substantially.
Elastic Cloud contributed 33% of total revenue in the six months ended October 31, 2021 compared with 26% in the six months ended October 31, 2020, and management expects its revenue mix to keep rising. The filing states this will modestly hurt gross margin because of associated third-party hosting costs.
The length of Elastic's sales cycle can vary substantially and can extend to more than a year for some customers, with larger enterprise deals requiring greater cost and negotiation. COVID-19 has made sales cycles longer and more unpredictable, and fixed expenses mean a revenue shortfall in a quarter can hurt results.
During the three months ended October 31, 2021 Elastic acquired Cmd and build.security for total consideration of $77.8 million and $39.3 million, respectively. The filing warns that integrating acquisitions may divert management attention, disrupt operations, and dilute shareholder value.
Elastic had 2,626 employees as of October 31, 2021 and continues to grow headcount rapidly, while competition for skilled sales and engineering personnel is significant. The filing states that loss of key personnel, particularly CEO and Chairman Shay Banon, could delay or prevent achievement of strategic objectives.
Customer count grew to over 17,000 as of October 31, 2021 from over 12,900 as of October 31, 2020, and employee headcount is also growing. The filing warns that this rapid growth strains management, operational, and financial resources and may impair forecasting and controls.
SaaS KPIs
All quarters →Net Expansion Rate
Non-GAAP Operating Margin
Total subscription customer count
Non-GAAP gross margin
Calculated Billings
Elastic Cloud Revenue
Free cash flow
Summary, forecast, risks and KPIs are extracted from Elastic N.V.'s SEC filings for Q2 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.