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1. Company Snapshot

1.a. Company Description

Elastic N.V., a search company, delivers technology solutions designed to run in public or private clouds in multi-cloud environments.It primarily offers Elastic Stack, a set of software products that ingest and store data from various sources and formats, as well as perform search, analysis, and visualization.The company's Elastic Stack product portfolio comprises Elasticsearch, a distributed, real-time search and analytics engine, and data store for various types of data, including textual, numerical, geospatial, structured, and unstructured; Kibana, a user interface, management, and configuration interface for the Elastic Stack; Beats, a single-purpose data shippers for sending data from edge machines to Elasticsearch or Logstash; Elastic Agent that offers integrated host protection and central management services; and Logstash, a data processing pipeline for ingesting data into Elasticsearch or other storage systems.


It also provides software solutions on the Elastic Stack that address cases, including app search, workplace search, logging, metrics, application performance management, and synthetic monitoring.The company's platform solutions provide new capabilities that helps users to combine the benefits of the Elastic Stack.The company was incorporated in 2012 and is headquartered in Mountain View, California.

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1.b. Last Insights on ESTC

Elastic N.V.'s recent performance was negatively impacted by analyst downgrades, with Canaccord Genuity Group and Citigroup lowering their price targets. Despite beating Q3 earnings estimates with $0.73 per share, the company's stock faced downward pressure. A "Moderate Buy" consensus rating from 29 analysts, with 17 buy recommendations, still exists. However, investor sentiment was dampened by reduced stakes from Baird Financial Group Inc. and Assenagon Asset Management S.A. Hillsdale Investment Management Inc. increased its stake, but this had a limited impact.

1.c. Company Highlights

2. Elastic's Q3 Earnings Beat Expectations with Strong Revenue Growth

Elastic delivered an outstanding Q3, with total revenue growth of 18% to $450 million and a non-GAAP operating margin of 18.6%. Sales-led subscription revenue grew 21% to $376 million, driven by strong demand from large companies and AI-native businesses. The company's EPS came out at $0.07336, significantly lower than estimates of $0.64. Adjusted free cash flow was approximately $54 million, representing a 12% margin.

Publication Date: Mar -02

📋 Highlights
  • Total Revenue Growth:: 18% to $450 million, exceeding guidance with 18.6% non-GAAP operating margin.
  • Sales-Led Subscription Revenue:: 21% growth to $376 million, driven by AI adoption and large customer commitments.
  • CRPO Milestone:: Crossed $1 billion for the first time, up 19% to $1.06 billion, with RPO growing 22% (best in two years).
  • AI-Driven Expansion:: 3,000+ AI customers, including 2,700 using Elastic Cloud as a vector database, and 30% growth in $1M+ annual commitments.
  • Shareholder Returns:: Returned $186 million via buybacks (60% of $500M program), with $54 million adjusted free cash flow (12% margin).

Key Drivers of Growth

The number of customers with an annual contract value (ACV) of $100,000 or greater exceeded 1,660, growing 14%. Current remaining performance obligations (CRPO) crossed the $1 billion mark for the first time, growing 19% to $1.06 billion. Elastic's AI capabilities are driving growth, with over 3,000 AI customers, including more than 2,700 on Elastic Cloud using it as a vector database. As Navam Welihinda, CFO, highlighted, the company's strong execution, consumption trends, and customer commitments support future growth.

Valuation Metrics

Elastic's current valuation metrics indicate a P/S Ratio of 3.27 and an EV/EBITDA of 62.87. With analysts estimating next year's revenue growth at 13.5%, the company's current valuation appears to be pricing in a significant growth premium. The Free Cash Flow Yield is 4.68%, which may be attractive to income investors.

AI and Growth Prospects

Elastic sees AI as a key driver of growth, with a focus on penetration of AI within its customer base. The company's context engineering platform provides a critical part of the infrastructure for AI applications, with capabilities including vector search, hybrid search, and agent builder. The recent CISA win for SIEM as a service is expected to drive growth for multiple quarters, and the company feels confident about exceeding its midterm growth guide of 20%.

Operational Highlights

Cloud revenue grew 27% year-over-year, with strong commitments and performance on sales-led subscription revenue. The number of agents and AI services in production has increased, with a broadening of use cases beyond search-related workflows to security and observability workflows. Elastic charges customers based on consumption, with pricing based on compute, storage, and tokens for LLM-related activities.

Guidance and Outlook

For Q4, Elastic expects total revenue of $445-447 million and sales-led subscription revenue of $371-373 million. For the full year, total revenue is expected to be $1.734-1.736 billion, with sales-led subscription revenue of $1.434-1.436 billion and non-GAAP operating margin of approximately 16.3%. The company's guidance suggests a continued strong growth trajectory, driven by AI and cloud revenue growth.

3. NewsRoom

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Siren Fusion 2026: The Convergence of People, Technology and Ideas

Mar -04

Source: businesswire.com

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Elastic N.V. (ESTC) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript

Mar -03

Source: seekingalpha.com

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Elastic (NYSE:ESTC) Shares Gap Down After Analyst Downgrade

Feb -28

Source: defenseworld.net

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Elastic N.V. (ESTC) Q3 2026 Earnings Call Transcript

Feb -27

Source: seekingalpha.com

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Compared to Estimates, Elastic (ESTC) Q3 Earnings: A Look at Key Metrics

Feb -27

Source: zacks.com

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Elastic (ESTC) Q3 Earnings and Revenues Surpass Estimates

Feb -27

Source: zacks.com

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Elastic Reports Third Quarter Fiscal 2026 Financial Results

Feb -26

Source: businesswire.com

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Countdown to Elastic (ESTC) Q3 Earnings: Wall Street Forecasts for Key Metrics

Feb -24

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (20.45%)

6. Segments

Other Subscription

Expected Growth: 26.27%

Elastic N.V.'s Other Subscription segment growth of 26.27% is driven by increasing adoption of its Elastic Stack, expansion into new markets, and growing demand for cloud-based solutions. Additionally, the company's strategic partnerships, innovative product offerings, and strong sales execution are contributing to its rapid growth.

Elastic Cloud

Expected Growth: 13.93%

Elastic Cloud's 13.93% growth is driven by increasing adoption of cloud-based search and analytics solutions, expansion into new markets, and growing demand for real-time data insights. Additionally, Elastic's strategic partnerships, innovative product offerings, and strong sales execution contribute to its rapid growth.

Services

Expected Growth: 14.43%

Elastic N.V.'s 14.43% growth is driven by increasing adoption of cloud-based search and analytics solutions, expansion into new markets, and growing demand for real-time data insights. Additionally, the company's innovative products, such as Elastic Stack and Elastic Cloud, are gaining traction among enterprises, contributing to its rapid growth.

7. Detailed Products

Elasticsearch

A search and analytics engine that allows users to store, search, and analyze large volumes of data in real-time.

Kibana

A data visualization tool that provides real-time insights into data stored in Elasticsearch.

Logstash

A data processing pipeline that collects, transforms, and loads data into Elasticsearch.

Beats

A family of lightweight, open-source data shippers that collect data from various sources and send it to Elasticsearch.

Elastic Stack

A suite of products that includes Elasticsearch, Kibana, Logstash, and Beats, providing a comprehensive solution for data collection, storage, and analysis.

Elastic Cloud

A cloud-based service that provides a managed Elasticsearch experience, including deployment, management, and scaling.

Elastic Security

A security solution that provides threat detection, incident response, and security analytics.

Elastic Observability

A solution that provides real-time observability into application performance, infrastructure, and user experience.

8. Elastic N.V.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Elastic N.V. operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the evolving nature of the technology industry.

Bargaining Power Of Customers

Elastic N.V. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products and services are often critical to its customers' operations, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

Elastic N.V. has a diverse supplier base, which reduces the bargaining power of individual suppliers. The company's scale and global presence also give it negotiating power when dealing with suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the technology industry, including the need for significant investments in research and development, marketing, and sales.

Intensity Of Rivalry

The technology industry is highly competitive, with many established players and new entrants vying for market share. Elastic N.V. faces intense competition from companies such as Amazon Web Services, Microsoft Azure, and Google Cloud Platform.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.83%
Debt Cost 3.95%
Equity Weight 40.17%
Equity Cost 8.54%
WACC 5.79%
Leverage 148.97%

11. Quality Control: Elastic N.V. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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PTC

A-Score: 5.1/10

Value: 2.1

Growth: 8.3

Quality: 8.9

Yield: 0.0

Momentum: 4.0

Volatility: 7.3

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Aspen Technology

A-Score: 4.6/10

Value: 3.3

Growth: 5.1

Quality: 5.9

Yield: 0.0

Momentum: 7.0

Volatility: 6.0

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Progress Software

A-Score: 4.2/10

Value: 4.4

Growth: 6.4

Quality: 5.9

Yield: 1.0

Momentum: 0.5

Volatility: 6.7

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Manhattan Associates

A-Score: 4.1/10

Value: 0.8

Growth: 7.9

Quality: 8.7

Yield: 0.0

Momentum: 1.0

Volatility: 6.0

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Elastic

A-Score: 3.8/10

Value: 3.2

Growth: 8.0

Quality: 4.9

Yield: 0.0

Momentum: 3.0

Volatility: 4.0

1-Year Total Return ->

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Agilysys

A-Score: 3.8/10

Value: 0.0

Growth: 7.9

Quality: 7.5

Yield: 0.0

Momentum: 4.0

Volatility: 3.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

53.73$

Current Price

53.73$

Potential

-0.00%

Expected Cash-Flows