Elastic NV (ESTC) Q4 2025 Earnings Call Highlights: Strong Revenue Growth and Strategic ...

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Total Revenue: $388 million, 16% growth year-over-year.
Subscription Revenue: $362 million, 16% growth as reported, 17% in constant currency.
Elastic Cloud Revenue: 23% growth as reported and in constant currency.
Non-GAAP Operating Margin: 15% for Q4 and fiscal year 2025.
Adjusted Free Cash Flow Margin: 19% for fiscal year 2025.
CRPO (Current Remaining Performance Obligations): Approximately $1 billion, 18% growth year-over-year.
Customers with >$1 Million ACV: Grew approximately 27%, with 45 net new customers added.
Customers with >$100,000 ACV: Grew approximately 14%, with 180 net new customers added.
Q1 Fiscal 2026 Revenue Guidance: $396 million to $398 million, 14% year-over-year growth at midpoint.
Fiscal Year 2026 Revenue Guidance: $1.655 billion to $1.67 billion, 12% year-over-year growth at midpoint.
Fiscal Year 2026 Non-GAAP Operating Margin Guidance: Approximately 16%.
Q1 Fiscal 2026 Non-GAAP EPS Guidance: $0.41 to $0.43.
Fiscal Year 2026 Non-GAAP EPS Guidance: $2.24 to $2.32.
Warning! GuruFocus has detected 2 Warning Sign with ESTC.
Release Date: May 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Elastic NV (NYSE:ESTC) achieved a strong quarter with a 16% revenue growth and a 23% increase in Elastic Cloud revenue.
The company exceeded guidance across all revenue and profitability metrics, demonstrating platform strength.
Elastic NV (NYSE:ESTC) ended FY25 with more than 1,510 customers spending over $100,000, and over 210 customers with more than $1 million in committed annual contract value.
The company secured significant deals, including an eight-figure expansion with a global financial institution and a multiyear seven-figure deal with an international banking group.
Elastic NV (NYSE:ESTC) continues to see strong adoption of its GenAI applications, with over 2,000 Elastic Cloud customers using it for GenAI use cases.
Elastic NV (NYSE:ESTC) faced pressure in the US public sector, impacting sales cycles, particularly in federal civilian agencies.
The company is approaching FY26 guidance with prudence due to potential macroeconomic uncertainties.
There is a noted sequential headwind due to fewer days in Q4, affecting revenue comparisons.
Despite strong performance, the company acknowledges potential uncertainty amidst evolving macro conditions.
Elastic NV (NYSE:ESTC) is seeing slower sequential cloud growth in fiscal Q1, attributed to seasonal patterns and consumption headwinds.
Q: Navam, the guidance seems conservative. Is it more conservative than past guidance, and what metrics are the best indicators of the business's health? A: Navam Welihinda, CFO: We had a strong Q4 despite US public sector pressure. The guidance reflects a balance between positive demand signals and macro uncertainty. We extrapolated US public sector pressure to the entire business and assumed more consumption headwinds in Q2 through Q4. The best measure of our business remains revenue, with subscription revenue less monthly cloud and CRPO as useful supplemental metrics.
Q: Ash, can you discuss the recent partnerships with AWS, NVIDIA, and others? How do these partnerships impact Elastic's market position and go-to-market strategy? A: Ashutosh Kulkarni, CEO: We are being recognized as a leading vector database, working with hyperscalers to be a top third-party service. The NVIDIA partnership extends beyond cloud, allowing enterprises to deploy AI solutions internally. These partnerships enhance our marketplace presence, enabling customers to use EDP commitments to purchase Elastic Cloud, and are crucial for our growth.
Q: Ash, what's your view on the adoption of retrieval-augmented generation (RAG) architectures, and how is Elastic positioned in this space? A: Ashutosh Kulkarni, CEO: RAG is essential for providing real-time context to language models, especially as enterprise data is dynamic and large. Elastic's vector database is crucial for retrieval in RAG architectures, and we are seeing strong adoption across various use cases, indicating RAG's durability and Elastic's strong positioning.
Q: Can you elaborate on the cloud performance this quarter and any factors affecting sequential growth? A: Navam Welihinda, CFO: Cloud performance was strong, but Q4 has three fewer days than other quarters, impacting consumption. When normalized for days, cloud growth is in the mid-20s. We are seeing emerging seasonal patterns, with Q1 typically showing lower sequential growth due to consumption patterns.
Q: Ash, how are the go-to-market changes from last year impacting fiscal year '26, and what are the next steps? A: Ashutosh Kulkarni, CEO: The territory changes have settled and are paying off, with significant growth in our $1 million customer cohort. We are not planning major changes for FY26 but will continue hiring sales capacity and adding security sales specialists to capture more of the security platform consolidation opportunity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.