Summary
Elastic closed fiscal 2023 with fourth-quarter total revenue of $279.94 million, up 17.0% from the prior-year quarter, or 19% in constant currency. Full-year revenue reached $1.07 billion, up 24.0%. Fourth-quarter gross profit was $206.26 million, up 19.9%, and full-year gross profit was $772.36 million, up 22.6%. Gross margin for the quarter was 73.7%, up 1.8 percentage points from 71.9%. For the full year, gross margin was 72.3%, down 0.8 percentage points from 73.1%. The quarter's top line was supported by subscription demand and a customer base that grew to approximately 20,200 subscription customers, compared with over 18,600 in the fourth quarter of fiscal 2022. Customers with annual contract value greater than $100,000 rose to over 1,160 from over 960 a year earlier. The Net Expansion Rate was approximately 117%. Elastic Cloud revenue was $112 million for the quarter, up 28% year over year, and $424 million for the full year, up 42%.
The bottom line improved on a quarter-over-quarter basis. Fourth-quarter GAAP operating loss was $40.16 million, narrower than the $59.62 million loss in the prior-year quarter. GAAP operating margin was -14.3%, up 10.6 percentage points from -24.9%. GAAP net loss was $46.73 million, narrower than the $65.61 million loss a year earlier. On a non-GAAP basis, operating income was $24 million and operating margin was 9%. Non-GAAP diluted earnings per share was $0.22. For the full year, the picture was different. Full-year GAAP operating loss widened to $219.17 million from $173.68 million. Full-year GAAP net loss widened to $236.16 million from $203.85 million. Full-year diluted GAAP loss per share was $2.47, compared with $2.20, a wider loss. Full-year non-GAAP operating income was $46 million, with a 4% non-GAAP operating margin, and non-GAAP diluted earnings per share was $0.25.
Cash generation was a bright spot. Fourth-quarter operating cash flow was $27.56 million, up from negative $3.05 million in the prior-year quarter. Full-year operating cash flow was $35.66 million, up from $5.67 million. Adjusted free cash flow, a non-GAAP measure, was $26 million for the quarter and $57 million for the full year. Capital expenditures were $1.66 million in the quarter, up 11.1% from $1.50 million, and $2.68 million for the full year, up 8.0% from $2.48 million. Deferred revenue was $562.95 million, up 21.0% from $465.29 million. Remaining performance obligations were $1.10 billion, up 18.3% from $932.30 million. Those figures suggest a durable backlog, though the company continues to invest heavily in cloud hosting and product development.
Guidance for the first quarter of fiscal 2024, ending July 31, 2023, calls for year-over-year revenue growth of 14% at the midpoint, on both a reported and constant currency basis. Non-GAAP operating margin is expected to be 5.6% to 6.0%, and non-GAAP earnings per share is expected to be $0.10 to $0.12. For the full fiscal year 2024, ending April 30, 2024, management expects year-over-year revenue growth of 16% at the midpoint, also on both a reported and constant currency basis, with a non-GAAP operating margin of 9.7% to 10.3% and non-GAAP earnings per share of $0.94 to $1.06. The outlook assumes exchange rates of 1 Euro to 1.076 US Dollars and 1 British Pound to 1.237 US Dollars.
Risks remain substantial. The company cited macroeconomic pressure, inflation, slower economic growth, bank failures, and uncertainty around the U.S. debt ceiling as factors that could affect demand. Foreign exchange fluctuations, longer sales cycles, and increased customer scrutiny of deals are also headwinds. Elastic's restructuring plan, announced in November 2022, reduces the workforce by approximately 13% and is expected to be substantially complete by the end of the first quarter of fiscal 2024. The company still expects net losses for the foreseeable future, and its growing Elastic Cloud mix may pressure gross margin because of third-party hosting costs. It employed 2,886 people as of April 30, 2023. Product momentum includes the Elasticsearch Relevance Engine, new security and observability capabilities, and expanded work with AWS, but execution against a tougher spending environment will shape the next few quarters.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $279.9M | $274.6M | +2.0% | $239.4M | +17.0% |
| Gross profit | $206.3M | $199.4M | +3.5% | $172.0M | +19.9% |
| Gross margin | 73.7% | 72.6% | +1.1 pp | 71.9% | +1.8 pp |
| Research & development | $81.8M | $77.5M | +5.5% | $78.9M | +3.7% |
| Sales & marketing | $123.6M | $126.7M | -2.4% | $118.6M | +4.2% |
| General & administrative | $39.5M | $34.7M | +13.9% | $34.1M | +15.8% |
| Total operating expenses | $246.4M | $268.7M | -8.3% | $231.6M | +6.4% |
| Operating income (loss) | -$40.2M | -$69.3M | +42.1% | -$59.6M | +32.6% |
| Operating margin | -14.3% | -25.3% | +10.9 pp | -24.9% | +10.6 pp |
| Net income (loss) | -$46.7M | -$72.6M | +35.6% | -$65.6M | +28.8% |
| Net margin | -16.7% | -26.4% | +9.7 pp | -27.4% | +10.7 pp |
| Diluted EPS | -$0.49 | — | — | -$0.71 | +$0.22 |
| Customers | 20,200 | 19,900 | +1.5% | 18,600 | +8.6% |
Risks
Current macroeconomic conditions, including inflation, rising interest rates, banking instability, and Russia's invasion of Ukraine, have negatively impacted IT spending and caused longer and more unpredictable sales cycles, increased scrutiny of deals, slowing consumption, and overall customer expenditure reductions. MD&A states these impacts have negatively affected results of operations since the first quarter of fiscal 2023.
Sales cycles have lengthened and become more unpredictable, with some customers scrutinizing spending more carefully and reducing consumption spending. The company expects this to continue if adverse economic conditions persist, which could cause loss or delay of large transactions and affect cash flows and results of operations.
The company has limited history with consumption-based arrangements for Elastic Cloud, making revenue less predictable. MD&A notes slowing consumption as customers optimize usage and newer customers increasing consumption at a slower pace than tenured customers.
The 2021 decision to no longer offer Elasticsearch and Kibana under Apache 2.0 may harm adoption. Competitors such as Amazon have forked these products into OpenSearch, creating competition and potential pricing pressure.
As a security solutions provider, the company faces heightened risk of being specifically targeted by threat actors, with AI increasing the velocity of threats. The Russia-Ukraine conflict heightens retaliatory attack risk due to the company's support for Ukraine and cessation of sales to Russia and Belarus.
The November 2022 plan to reduce workforce by approximately 13% and optimize facilities incurred $31.3 million in restructuring and other related charges for the year ended April 30, 2023. Risks include failure to realize anticipated savings, disruption to operations, and unplanned attrition beyond planned reductions.
Elastic Cloud contributed 40% of total revenue for the year ended April 30, 2023, up from 35% in the prior year, and MD&A expects its increasing share to adversely impact gross margin due to associated third-party hosting costs. Total gross margin declined to 72% for the year ended April 30, 2023 from 73% in the prior year.
Competition for skilled personnel is intense, and the shift to hybrid and remote work has expanded the pool of competitors for employees. The November 2022 workforce reduction could lead to attrition beyond planned reductions and reduced morale.
The company has $575.0 million aggregate principal amount of 4.125% Senior Notes due 2029 outstanding as of April 30, 2023. Interest expense increased 21% to $25.2 million for the year ended April 30, 2023, and restrictive covenants limit financial flexibility.
The company faces evolving privacy, data protection, and information security regulations globally, including the GDPR with fines up to 20 million Euros or four percent of global turnover. Compliance burdens may increase costs and impact data transfer capabilities.
As a Dutch company, the company is subject to tax risks including potential PFIC status for U.S. persons, Dutch dividend withholding tax, and a proposed DWT Exit Tax that could impose a deemed distribution tax if it ceases to be a Dutch tax resident.
SaaS KPIs
All quarters →Summary, forecast, risks and KPIs are extracted from Elastic N.V.'s SEC filings for Q4 FY2023 (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.