Elastic N.V. Q3 FY2026 earnings

Elastic posted FY2026 Q3 total revenue of $449.9 million, up 17.7% from the prior-year quarter. Gross profit was $343.4 million, up 20.5%, and gross margin was 76.3%, up 1.8 percentage points. The company swung to GAAP operating income of $0.6 million, and operating margin was 0.1%, up 1.3 percentage points. GAAP net income was $7.8 million, a swing from a loss a year earlier, and diluted EPS was $0.07. Through the first nine months of FY2026, revenue was $1,288.7 million, up 17.7%, while the year-to-date net loss was $68.1 million and the year-to-date operating loss was $17.1 million, both narrowed from the prior-year period. Non-GAAP operating income was $83 million at an 18.6% margin, and non-GAAP diluted EPS was $0.73. Sales-led subscription revenue was $376 million, up 21% year over year, or 19% in constant currency.

Cash generation softened. Operating cash flow was $42.7 million, down 51.5% from the prior-year quarter, and year-to-date operating cash flow was $174.2 million, down 2.8%. Capital expenditures were $0.9 million, up 22.2%. Adjusted free cash flow was $54 million. Current deferred revenue of $763.9 million was up 15.6%, and remaining performance obligations of $1,651.0 million were up 21.9%. Cash, cash equivalents, and marketable securities totaled $1.248 billion as of January 31, 2026. During the quarter Elastic repurchased about 2.4 million ordinary shares at an average price of $76.92 for roughly $186 million, leaving $200 million available under the $500 million share repurchase program.

Customer metrics kept expanding. Customers with annual contract value above $100,000 numbered over 1,660, compared with over 1,600 in Q2 FY26 and over 1,460 in Q3 FY25. Net Expansion Rate was about 112%. Product news centered on context for AI workloads: general availability of Agent Builder, a technical preview of Elastic Workflows, an NVIDIA cuVS integration for GPU-accelerated vector indexing, and two Jina Reranker models plus an embedding model on Elastic Inference Service. Elastic also delivered EIS to Cloud Connect, upgraded Elastic Cloud Serverless performance on AWS, and integrated Elastic Observability with Amazon Bedrock AgentCore. It partnered with the Cybersecurity and Infrastructure Security Agency on a SIEM-as-a-Service offering on Elastic Cloud and earned the AWS Agentic AI Specialization. Headcount stood at 3,921.

Guidance for the fourth quarter of fiscal 2026 calls for total revenue of $445 million to $447 million, 15% growth at the midpoint, or 13% constant currency growth at the midpoint. Sales-led subscription revenue is guided to $371 million to $373 million, up 18% at the midpoint. Non-GAAP operating margin is expected near 14.5%, and non-GAAP diluted EPS is guided to $0.55 to $0.57. For the full fiscal year 2026, revenue is guided to $1.734 billion to $1.736 billion, up 17% at the midpoint, with a non-GAAP operating margin near 16.3% and non-GAAP diluted EPS of $2.50 to $2.54. The outlook assumes exchange rates of 1 Euro to 1.175 US Dollars and 1 Great British Pound to 1.345 US Dollars.

Risks remain familiar. Management points to a possible resurgence in inflation, uncertainty in international trade policies, foreign exchange swings, longer sales cycles, and more scrutiny of customer spending. A rising mix of Elastic Cloud carries third-party hosting costs that pressure gross margin, and services gross margin can fluctuate or decline. The company has an accumulated deficit of $1.168 billion and may generate negative cash flows from operations again. It also flagged that a release of part or all of the valuation allowance against deferred tax assets in the Netherlands, the United Kingdom, and certain U.S. states is reasonably possible within the next 12 months, which would create a material non-cash income tax benefit. Repurchases under the buyback can be modified, suspended, or terminated at any time.