Summary
Elastic delivered $157.1 million of revenue in the third quarter of fiscal 2021, up 38.8% from the prior-year quarter. Subscription revenue accounted for 94% of the total. Elastic Cloud, the company's SaaS offering, grew 79% year over year, or 76% in constant currency. Calculated billings were $173.2 million, up 41% year over year, or 37% in constant currency. Deferred revenue was $334.0 million, up 59.2%, and remaining performance obligations were $705.7 million, up 65.7%. Through the first nine months of fiscal 2021, revenue was $430.9 million, up 41.7%. Management attributes the subscription growth to volume-driven increases from new business and to existing customers buying additional subscriptions.
The margin picture improved on both a GAAP and a non-GAAP basis. Gross profit was $115.1 million, up 44.3%, and gross margin reached 73.3%, up 2.8 percentage points. The operating loss narrowed to $34.5 million, and operating margin improved to -21.9%. Net loss was $38.0 million, and diluted loss per share was $0.43. Employer payroll taxes, amortization of acquired intangibles, and stock-based compensation are the main bridge between the GAAP loss and the non-GAAP numbers. On a non-GAAP basis, operating loss was $0.0 million, operating margin was 0%, and net loss per share was $0.04.
Cash generation swung positive. Operating cash flow was $19.4 million for the quarter, up from an outflow in the prior-year period, and capital expenditures were $1.1 million. Free cash flow, which the company defines as operating cash flow less purchases of property and equipment, was $18.3 million, against negative $24.2 million a year earlier. For the first nine months of fiscal 2021, operating cash flow was $24.1 million, up from an outflow a year earlier. Cash and cash equivalents stood at $393.1 million as of January 31, 2021.
Customer metrics kept expanding. Elastic counted over 13,800 subscription customers, up from over 10,500 a year earlier, and more than 670 customers with annual contract value above $100,000, up from over 570. The Net Expansion Rate stayed above 130%. The company shipped version 7.11 of the Elastic Stack with searchable snapshots, a cold data tier, and a new alerting framework, and it ended the quarter with 2,084 employees. Elastic also moved the source code for Elasticsearch and Kibana from Apache 2.0 to dual licensing under the Elastic License v2 and the Server Side Public License.
Guidance for the fourth quarter of fiscal 2021 points to a non-GAAP operating margin between -8.5% and -7.5% and a non-GAAP net loss per share of $0.18 to $0.15 on 90.5 million to 91.5 million weighted average shares. For the full fiscal year, management guides to a non-GAAP operating margin of -3.3% to -3.0% and a non-GAAP net loss per share of $0.19 to $0.16 on 87 million to 88 million weighted average shares. Management said it will step up the pace of investment in the business in the fourth quarter of fiscal 2021 and in fiscal 2022, after pulling back early in the pandemic. COVID-19 headwinds are built into that outlook. The 10-Q lists delays in purchasing decisions, longer sales cycles, delayed professional services work, reduced renewals, and a harder time building pipeline without in-person events, all of which pressure calculated billings and the Net Expansion Rate. A rising mix of Elastic Cloud revenue carries higher hosting costs and is expected to pressure gross margin, and professional services margin may fluctuate or turn negative as that business expands. Elastic carried an accumulated deficit of $570.0 million as of January 31, 2021 and notes it may need to raise additional capital.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $157.1M | $144.9M | +8.4% | $113.2M | +38.8% |
| Gross profit | $115.1M | $106.4M | +8.2% | $79.8M | +44.3% |
| Gross margin | 73.3% | 73.5% | -0.2 pp | 70.5% | +2.8 pp |
| Research & development | $51.4M | $46.7M | +10.1% | $46.1M | +11.5% |
| Sales & marketing | $71.1M | $64.5M | +10.3% | $54.8M | +29.7% |
| General & administrative | $27.1M | $23.7M | +14.4% | $21.1M | +28.6% |
| Total operating expenses | $149.6M | $134.9M | +10.9% | $122.0M | +22.6% |
| Operating income (loss) | -$34.5M | -$28.4M | -21.3% | -$42.3M | +18.5% |
| Operating margin | -21.9% | -19.6% | -2.3 pp | -37.4% | +15.4 pp |
| Net income (loss) | -$38.0M | -$29.2M | -30.2% | -$44.3M | +14.2% |
| Net margin | -24.2% | -20.1% | -4.1 pp | -39.1% | +14.9 pp |
| Customers | 13,800 | 12,900 | +7.0% | 10,500 | +31.4% |
Risks
In February 2021, with Elastic Stack 7.11, the company moved Elasticsearch and Kibana source code from Apache 2.0 to dual licensing under ELv2 and SSPL. Neither license has been approved by the Open Source Initiative or interpreted by a court, and competitors including Amazon have announced forks, which may harm adoption and paying customers.
Amazon Web Services and other cloud providers offer SaaS products based on open source components of the Elastic Stack and compete for potential customers. The permissive rights under open source and source available licenses create limited technological barriers to entry and may reduce demand or pressure pricing.
The ongoing pandemic has caused delays in purchasing decisions, longer sales cycles, delayed professional services, reduced renewals, and changes in pipeline generation. MD&A states these factors have resulted in headwinds for calculated billings and the Net Expansion Rate.
The company has incurred losses in all years since incorporation, including a net loss of $86.1 million in the nine months ended January 31, 2021, and had an accumulated deficit of $570.0 million as of January 31, 2021. It may not achieve profitability or positive cash flows on a consistent basis.
The sales cycle can extend to more than a year for some customers, particularly large enterprise and channel partner deals, and may lengthen due to COVID-19. The loss or delay of one or more large transactions in a quarter could affect cash flows and results for that quarter and future quarters.
Customer count grew from over 2,800 as of April 30, 2017 to over 13,800 as of January 31, 2021, straining management, operational, and financial resources. Failure to improve systems, processes, and controls could impair forecasting and growth execution.
The company depends on senior management, particularly CEO and Chairman Shay Banon, and on skilled engineering and sales personnel. Competition for talent and COVID-19 related hiring and onboarding challenges could delay strategic objectives if key employees leave.
As a provider of security solutions, the company may be specifically targeted by bad actors, and supply chain cyber attacks and remote work during COVID-19 heighten risk. A breach or unauthorized access could damage reputation, lead to litigation or regulatory investigations, and incur significant liabilities.
Elastic Cloud contributed 27% of total revenue for the nine months ended January 31, 2021 compared to 21% for the prior-year period. An increasing cloud mix is expected to adversely impact gross margin because of associated hosting costs.
A portion of revenue is generated through channel partners, especially to U.S. federal government customers and in certain international markets. If partners fail to perform or relationships deteriorate, the company's ability to market, sell, and distribute its solutions would be more limited.
SaaS KPIs
All quarters →Net Expansion Rate
Non-GAAP Operating Margin
Non-GAAP gross 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 Q3 FY2021 (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 1, 2026.