Summary
Elastic posted total revenue of $327.96 million for its fiscal 2024 third quarter, ended January 31, 2024, up 19.4% from $274.57 million in the prior-year quarter. Elastic Cloud revenue was $143 million, up 29% year over year both as reported and in constant currency, and cloud reached 44% of total revenue versus 40% a year earlier. Nine-month revenue came to $932.32 million, up 18.2% from $789.05 million. CEO Ash Kulkarni credited customer interest in generative AI, platform consolidation, and steadier cloud consumption patterns for the momentum.
Profitability improved sharply. Gross profit was $243.32 million in the quarter, up 22.0%, and gross margin rose to 74.2% from 72.6%. GAAP operating loss narrowed to $26.40 million from $69.35 million, moving operating margin to -8.1% from -25.3%. The bottom line swung to net income of $176.12 million from a loss of $72.57 million, and diluted EPS was $1.69 versus -$0.76. Most of that swing traces to a one-time income tax benefit from releasing a valuation allowance against certain deferred tax assets, not to operating results. Non-GAAP operating income was $43 million, a 13% margin, and non-GAAP diluted EPS was $0.36. Non-GAAP gross margin was 77.0% versus 75.5%. Over nine months, net income was $102.82 million against a loss of $189.43 million, with diluted EPS of $1.00 versus -$1.99. The prior-year quarter also carried restructuring and other related charges that did not repeat.
Cash generation stepped up. Operating cash flow was $52.39 million in the quarter, up 630.7% from $7.17 million a year earlier, while adjusted free cash flow, a non-GAAP measure, was $63 million. Through nine months, operating cash flow was $87.81 million versus $8.11 million. Capital expenditures were $1.08 million. Deferred revenue, current portion, stood at $561.66 million on January 31, 2024, up 25.1%, and total remaining performance obligations were $1.18 billion, up 17.9% from $997.20 million.
Customer metrics point to steady land-and-expand. Customers with annual contract value above $100,000 numbered over 1,270, compared with over 1,110 a year earlier and over 1,220 in the prior quarter. Total subscription customers were roughly 20,800, and the Net Expansion Rate was approximately 109%. Product work in the quarter included scalar quantization for vector search, general availability of the Elastic AI Assistant for observability, service level objective monitoring, cloud security posture management for Microsoft Azure, and a deeper Hugging Face integration. Elastic also named Mark Dodds chief revenue officer.
Guidance for the fourth quarter of fiscal 2024 sets revenue at $328 million to $330 million, about 18% year-over-year growth at the midpoint and 18% in constant currency, with a non-GAAP operating margin of 7.4% to 7.8% and non-GAAP diluted EPS of $0.18 to $0.20 on 105.5 million to 106.5 million diluted shares. For the full fiscal year, revenue is guided to $1.260 billion to $1.262 billion, 18% growth at the midpoint and 17% in constant currency, with a non-GAAP operating margin of roughly 11% and non-GAAP diluted EPS of $1.15 to $1.18 on 103.0 million to 104.0 million shares. The outlook assumes exchange rates of 1 Euro to 1.082 US dollars and 1 Great British Pound to 1.267 US dollars. Management lists macroeconomic pressure, longer and less predictable sales cycles, more scrutiny on deals, slower customer consumption, and foreign exchange swings as risks. Elastic Cloud's rising mix also carries a modest drag on gross margin because of third-party hosting costs.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $328.0M | $310.6M | +5.6% | $274.6M | +19.4% |
| Gross profit | $243.3M | $230.5M | +5.5% | $199.4M | +22.0% |
| Gross margin | 74.2% | 74.2% | -0.0 pp | 72.6% | +1.6 pp |
| Research & development | $87.2M | $80.1M | +8.9% | $77.5M | +12.6% |
| Sales & marketing | $141.6M | $133.2M | +6.3% | $126.7M | +11.8% |
| General & administrative | $40.9M | $38.7M | +5.7% | $34.7M | +17.8% |
| Total operating expenses | $269.7M | $252.1M | +7.0% | $268.7M | +0.4% |
| Operating income (loss) | -$26.4M | -$21.5M | -22.6% | -$69.3M | +61.9% |
| Operating margin | -8.1% | -6.9% | -1.1 pp | -25.3% | +17.2 pp |
| Net income (loss) | $176.1M | -$24.8M | +810.3% | -$72.6M | +342.7% |
| Net margin | 53.7% | -8.0% | +61.7 pp | -26.4% | +80.1 pp |
| Diluted EPS | $1.69 | — | — | — | — |
| Customers | 20,800 | 20,700 | +0.5% | 19,900 | +4.5% |
Risks
MD&A says macroeconomic events including inflation, slower growth, and rising interest rates continue to negatively impact worldwide economic activity, and Elastic has experienced and may continue to experience longer and more unpredictable sales cycles, increased deal scrutiny, and slowing consumption. The risk factors note these impacts have negatively affected results of operations since the first quarter of fiscal 2023.
Elastic says sales cycles can extend beyond a year for large customers and may lengthen under worsening economic conditions, with customers scrutinizing spending and reducing consumption. A lost or delayed large transaction can affect cash flows and results of operations for that quarter and future quarters.
Elastic changed Elasticsearch and Kibana from Apache 2.0 to dual Elastic License 2.0 and SSPL, creating uncertainty that may deter developers and upgrades. Amazon offers OpenSearch based on a forked Elastic Stack, and the risk factors say fork competition and license enforceability concerns could reduce demand and pricing for Elastic offerings.
Elastic Cloud was 44% of total revenue for the quarter ended January 31, 2024, and most Elastic Cloud subscriptions are consumption-based. Elastic says it lacks adequate history to predict adoption, renewal, or slowing consumption, and revenue may be more variable than historical results.
As a security solutions provider, Elastic says it has been and may continue to be specifically targeted by threat actors seeking to circumvent its security capabilities as an entry point into customer environments. It also cites evolving AI-enabled threats, supply chain attacks, and third-party vendor incidents.
The market for search, observability, and security is subject to rapid technological change and innovation such as the use of AI, and competitors may develop AI-based offerings that achieve greater market acceptance. Elastic also cites delays in releasing new products and enhancements that may cause customers to defer purchases or choose competitors.
A significant portion of revenue comes from renewals, and customers have no contractual obligation to renew; if existing customers do not renew or expand, Net Expansion Rate may decline. Elastic reported a Net Expansion Rate of approximately 109% as of January 31, 2024.
Elastic depends on senior management including CEO Ashutosh Kulkarni and CTO Shay Banon, and competition for skilled sales, engineering, and support personnel is high, with hybrid and remote work expanding the pool of competitors. It had 3,161 employees as of January 31, 2024.
As of January 31, 2024, Elastic had $575.0 million aggregate principal amount of Senior Notes outstanding. The indenture contains restrictive covenants, and failure to generate sufficient cash could force asset sales, refinancing on worse terms, or default.
MD&A says increasing Elastic Cloud contribution is expected to continue to have a modest adverse impact on gross margin because of third-party hosting costs, even though total gross margin rose to 74.2% for the quarter ended January 31, 2024 from 72.6% in the prior-year quarter.
Privacy and data protection obligations are evolving, including GDPR fines up to 20 million Euros or 4% of global turnover, the Irish DPC's $1.3 billion SCC ruling, and challenges to the EU-U.S. Data Privacy Framework. These could increase compliance costs or restrict cross-border data transfers.
Elastic recorded a $250.7 million release of a U.S. federal and certain states' deferred tax asset valuation allowance during the quarter, which drove a $200.3 million income tax benefit. Future tax rates may be volatile, and the DWT Exit Tax proposal could create Dutch withholding tax exposure 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
Non-GAAP gross margin
Customers with Annual Contract Value > $100,000
Summary, forecast, risks and KPIs are extracted from Elastic N.V.'s SEC filings for Q3 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 1, 2026.