Summary
Elastic closed fiscal 2022 Q4 with revenue of $239.4 million, up 34.8% from the prior-year quarter. Full-year revenue reached $862.4 million, up 41.7%. The top line stayed strong even as GAAP profitability moved the other way. Q4 gross profit was $172.0 million, up 30.5%, but gross margin slipped to 71.9%, down 2.4 percentage points. Full-year gross profit was $630.2 million, up 40.8%, with gross margin at 73.1%, down 0.5 percentage points. Hosted services carry third-party hosting costs, and the 10-K says Elastic Cloud's rising share of revenue will have a modest adverse impact on gross margin.
GAAP operating loss widened to $59.6 million in Q4 and to $173.7 million for the full year. Net loss widened to $65.6 million in Q4 and $203.8 million for the full year. Full-year diluted EPS was -$2.20, down from the prior year. Operating margin was -24.9% in Q4, down 4.0 percentage points, while full-year operating margin was -20.1%, up 1.1 percentage points. That full-year improvement came as revenue grew faster than the operating loss. Q4 operating cash flow was -$3.05 million, down 94.9%. Full-year operating cash flow was $5.67 million, down 74.8%. Adjusted free cash flow, a non-GAAP measure, was -$5.3 million in Q4 and $10.7 million for the year. Capital expenditures were $1.50 million in Q4, up 26.9%, and $2.48 million for the year, down 36.5%.
Deferred revenue was $465.3 million at quarter end, up 17.0% year-over-year, and remaining performance obligations were $932.3 million, up 17.1%. Customer metrics kept growing. Total subscription customer count was over 18,600, compared with over 17,900 in Q3 FY22 and over 15,000 in Q4 FY21. Customers with annual contract value greater than $100,000 were over 960, compared with over 890 in Q3 FY22 and over 730 in Q4 FY21. Net Expansion Rate was just under 130%, flat versus Q3 FY22. Elastic also expanded partnerships with AWS, Microsoft, and Google Cloud, and shipped Elastic 8.1 and 8.2 with new search, observability, and security features. It achieved PCI-DSS compliance across all Elastic Cloud regions and was named a Strong Performer in The Forrester Wave for Endpoint Detection and Response Providers, Q2 2022.
Guidance for the first quarter of fiscal 2023 points to 27% year-over-year revenue growth at the midpoint, or 32% on a constant currency basis. Non-GAAP operating margin is expected between -3.8% and -2.8%, and non-GAAP net loss per share between $0.20 and $0.16, on 94.0 million to 95.0 million weighted average ordinary shares outstanding. For the full fiscal year 2023, the company guides to 26% year-over-year revenue growth at the midpoint, or 29% on a constant currency basis, with non-GAAP operating margin between 0.0% and 0.5% and non-GAAP net loss per share between $0.36 and $0.28. Management says Elastic Cloud should exceed 50% of total revenue exiting Q4 of fiscal 2024, ahead of the prior outlook.
Risks remain material. The 10-K cites continued net losses, planned investments in fiscal 2023, foreign currency movements, the COVID-19 pandemic, and the Russia-Ukraine conflict. It also lists purchase commitments of $415.7 million for cloud hosting, $29.8 million in future minimum lease payments, and $36.2 million for other contracts. Gross margin could face more pressure as Elastic Cloud grows, and professional services margin may fluctuate, decline, or be negative. Liquidity is supported by existing cash, but the company expects to keep investing and may need additional capital if growth or spending plans change.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $239.4M | $223.9M | +6.9% | $177.6M | +34.8% |
| Gross profit | $172.0M | $162.7M | +5.7% | $131.8M | +30.5% |
| Gross margin | 71.9% | 72.6% | -0.8 pp | 74.2% | -2.3 pp |
| Research & development | $78.9M | $71.7M | +9.9% | $55.4M | +42.3% |
| Sales & marketing | $118.6M | $105.1M | +12.9% | $82.2M | +44.3% |
| General & administrative | $34.1M | $31.7M | +7.7% | $31.3M | +9.2% |
| Total operating expenses | $231.6M | $208.5M | +11.1% | $168.9M | +37.1% |
| Operating income (loss) | -$59.6M | -$45.8M | -30.0% | -$37.1M | -60.8% |
| Operating margin | -24.9% | -20.5% | -4.4 pp | -20.9% | -4.0 pp |
| Net income (loss) | -$65.6M | -$56.7M | -15.7% | -$43.3M | -51.5% |
| Net margin | -27.4% | -25.3% | -2.1 pp | -24.4% | -3.0 pp |
| Diluted EPS | -$0.71 | — | — | — | — |
| Customers | 18,600 | 17,900 | +3.9% | 15,000 | +24.0% |
Risks
Russia's invasion of Ukraine and the resulting international political crisis could have significant negative economic consequences on customers and partners and reduce their spending on Elastic offerings. The filing also warns of heightened cybersecurity attack risk from nation-state and affiliated actors due to the conflict.
In February 2021 Elastic changed Elasticsearch and Kibana from Apache 2.0 to dual licensing under Elastic License 2.0 and SSPL, and neither license has been approved by the Open Source Initiative or interpreted by any court. The filing states this may harm adoption and has already led Amazon to fork the Elastic Stack as OpenSearch.
Elastic faces larger competitors and cloud providers, including Amazon Web Services, which offers products based on a forked version of the Elastic Stack. The filing warns these offerings may reduce demand and pricing for Elastic products, and some competitors have significantly greater financial, technical and marketing resources.
Future growth significantly depends on Elastic Cloud, which contributed 35% of total revenue for the year ended April 30, 2022, up from 27% for the year ended April 30, 2021 and 22% for the year ended April 30, 2020. Elastic has non-cancelable multi-year cloud hosting capacity commitments of $415.7 million as of April 30, 2022, and MD&A expects Elastic Cloud's rising mix to adversely impact gross margin due to third-party hosting costs.
Elastic has incurred losses in all years since incorporation and had an accumulated deficit of $817.2 million as of April 30, 2022. For FY2022 year to date net loss was $203.85 million, or -$2.20 diluted EPS, compared with net loss of $129.43 million, or -$1.48 diluted EPS, in the prior-year year to date, and the loss widened.
In July 2021 Elastic issued $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029, which increased interest expense by $20.6 million for FY2022. The indenture contains restrictive covenants, and failure to comply could result in acceleration of substantially all indebtedness.
As a security solutions provider, Elastic has been and may continue to be specifically targeted by bad actors, and the Russia-Ukraine conflict increases cybersecurity attack risk from nation-state actors. A breach could cause loss of confidential data, remediation costs, reputational damage and significant liabilities.
Consumption-based Elastic Cloud arrangements reduce visibility into timing of revenue recognition and make revenue less predictable because customers may consume at a different pace than expected. The filing states Elastic lacks adequate history with these arrangements to accurately predict long-term adoption or renewal rates.
Elastic must hire, train and retain effective sales personnel and may need to retrain them for consumption-based selling, or revenue growth will be harmed. MD&A reports sales and marketing expense increased 48% for FY2022, and the filing notes a large percentage of the sales force has relatively little experience with Elastic.
Rapid growth strains management and operations, and Elastic may not hire, train and retain enough qualified employees to support its growth plans. MD&A reports 2,978 employees as of April 30, 2022, and the filing notes significant competition for sales and technical personnel.
Future growth depends on selling additional subscriptions to existing customers and expanding their usage. If customers do not renew or expand, revenue growth may decline, and MD&A reports the Net Expansion Rate was slightly below 130% for the year ended April 30, 2022.
During FY2022 Elastic acquired Cmd, build.security and Optimyze for combined consideration of $135.0 million, and it may pursue more acquisitions. Integration may divert management attention, disrupt the business or adversely affect results, and acquisitions could dilute shareholders or increase debt.
Unfavorable global economic conditions, including inflation, interest rates, the Russian invasion of Ukraine and COVID-19, could reduce customer information technology spending and negatively affect results. The filing also notes customers may delay purchases and competitors may lower prices.
Elastic is subject to rapidly evolving privacy and data protection laws, including GDPR, CCPA and CPRA, and cross-border transfer requirements such as SCCs. Non-compliance could lead to fines up to 20 million Euros or 4% of global annual turnover under GDPR and require changes to products or business practices.
SaaS KPIs
All quarters →Net Expansion Rate
Non-GAAP Operating Margin
Adjusted Free Cash Flow
Total subscription customer count
Calculated Billings
Customers with Annual Contract Value > $100,000
Summary, forecast, risks and KPIs are extracted from Elastic N.V.'s SEC filings for Q4 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.