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Elastic N.V. (ESTC)
NYSE:ESTC
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Elastic
(NYSE:ESTC)
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Rating:63Neutral
Price Target:
$55.00
▲(5.63% Upside)
Action:ReiteratedDate:02/28/26
The score is driven primarily by improving financial quality (strong margins, positive free cash flow, and low leverage) and a constructive earnings-call outlook with raised guidance and strong backlog. These positives are tempered by weak technicals (downtrend with negative momentum) and limited valuation support due to negative earnings and no dividend.
Positive Factors
High gross margins & cash generation
Sustained high subscription gross margins (~82%) combined with materially positive adjusted free cash flow indicate durable unit economics and strong cash conversion. This supports reinvestment in product, R&D, and strategic initiatives while funding buybacks and reducing financing risk over the medium term.
De-risked balance sheet with minimal leverage
Very low net leverage and a sizable equity base materially improve financial flexibility and lower bankruptcy/refinancing risk. This enables continued investment in cloud and AI offerings, opportunistic M&A or buybacks, and cushions the business versus cyclical or execution setbacks over the coming quarters.
Strong subscription growth, backlog and AI adoption
Robust sales-led subscription growth, a >$1B contract backlog and rapid AI adoption point to expanding recurring revenue and higher customer stickiness. Large-deal momentum and vector DB traction should drive multi-quarter consumption growth and upsell across observability, security and search use cases.
Negative Factors
Ongoing net losses and negative ROE
Despite margin improvement and positive cash flow, continued GAAP net losses and negative returns on equity limit sustained profitability metrics and enterprise returns. This constrains the company's ability to deliver consistent reported earnings and reduces optionality for dividends or broader capital returns until GAAP profitability is sustained.
Hybrid cloud vs self-managed monetization complexity
Persistent customer demand for self-managed deployments—especially for sensitive AI workloads—complicates Elastic's cloud conversion path. That structural trade-off can slow higher-margin cloud consumption growth, require differentiated GTM motions, and increase implementation/ support costs over multiple quarters.
Seasonal timing, Q4 headwind and margin compression risk
Management's Q4 guidance signals durable seasonality and timing risks: expected margin compression and a measurable shorter-quarter revenue headwind. Such structural quarter-to-quarter variability can complicate cadence for profitability targets and cash flow forecasting, limiting near-term margin visibility.
Elastic (ESTC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.49B
Dividend YieldN/A
Average Volume (3M)2.02M
Price to Earnings (P/E)―
Beta (1Y)1.61
Revenue Growth16.98%
EPS Growth-265.85%
CountryUS
Employees3,403
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.73
Shares Outstanding105,372,800
10 Day Avg. Volume2,467,597
30 Day Avg. Volume2,016,321
Financial Highlights & Ratios
PEG Ratio0.31
Price to Book (P/B)9.64
Price to Sales (P/S)6.02
P/FCF Ratio34.13
Enterprise Value/Market Cap0.87
Enterprise Value/Revenue2.84
Enterprise Value/Gross Profit3.74
Enterprise Value/Ebitda62.87
Forecast
1Y Price Target
$83.11Price Target Upside59.61% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering23
EPS Forecast (FY)2.45
Revenue Forecast (FY)$1.72B
Elastic Business Overview & Revenue Model
Company DescriptionElastic 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.
How the Company Makes MoneyElastic generates revenue primarily through a subscription-based model, offering various tiers of paid services that provide enhanced features and support. Key revenue streams include subscriptions for Elastic Cloud, which is the company's managed service offering, as well as on-premises software licenses and professional services such as training and consulting. The company also benefits from a growing user base that adopts its open-source products, leading to increased demand for premium features and support. Significant partnerships with cloud service providers and integration with other enterprise software systems further enhance its revenue potential, enabling Elastic to reach a broader market and drive sales growth.
Elastic Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyElastic Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 28, 2026
Earnings Call Sentiment Positive
The call conveyed strong execution: Elastic beat guidance, accelerated sales‑led subscription growth (21% YoY), crossed a $1B CRPO milestone, expanded AI customer penetration (2,700+ vector DB Cloud users, >3,000 total AI customers), delivered product milestones (Agent Builder GA, Jina rerankers, Cloud Connect) and maintained healthy margins (Q3 non‑GAAP operating margin 18.6%). Management raised full‑year revenue and sales‑led subscription guidance while prudently guiding Q4 due to a shorter quarter and seasonal cost timing. Near‑term concerns include a guided sequential pullback in sales‑led subscription for Q4, expected margin compression into Q4 (~14.5%), and CRPO growth that is robust but still in mid‑teens vs. the 20%+ inflection some expect. Overall, positive commercial momentum, AI adoption and product differentiation outweigh the limited near‑term seasonality and guidance conservatism.Q3-2026 Updates
Positive Updates
Revenue Beat and Raised Full-Year Revenue Guide
Q3 total revenue of $450M, up ~18% year-over-year (16% constant currency); company beat the high end of guidance and raised full-year total revenue guide to $1.734B–$1.736B (~17% growth at midpoint, 15% cc).
Acceleration in Sales-Led Subscription Revenue
Sales-led subscription revenue of $376M in Q3, up 21% YoY (19% cc); full-year sales-led subscription revenue guide raised to $1.434B–$1.436B (20% growth at midpoint, 18% cc).
CRPO Milestone and Strong Contract Backlog
CRPO crossed $1.0B for first time (~$1.06B), growing 19% as reported (15% cc); RPO grew 22% (18% cc), signaling strong multi‑year commitments and near-term revenue visibility.
Material Large-Deal Momentum
Count of customers with ACV > $100k exceeded 1,660 (up 14% YoY) with ~60 net additions QoQ; commitments > $1M grew >30% YoY and multiple 7‑figure new logo and expansion deals closed across security, observability and search.
Robust Profitability and Gross Margins
Q3 non‑GAAP operating margin of 18.6%, subscription gross margin of 82% and total gross margin of 78%; adjusted free cash flow of ~$54M in Q3 (~12% margin). Full‑year non‑GAAP operating margin guide updated to ~16.3%.
Strong AI Adoption Metrics
More than 2,700 Elastic Cloud customers using Elastic as a vector database and total AI customers >3,000; >470 customers with ACV ≥ $100k using Elastic for AI (including >410 using as vector DB); AI use cases have penetrated over 25% of the $100k ACV cohort.
Product and Technical Milestones
GA launch of Agent Builder; Elastic inference service expanded with Jina AI multilingual rerankers; Elastic Workflows (technical preview); Cloud Connect for self‑managed customers; Elasticsearch GPU plug‑in technical preview (12x faster indexing).
Performance and Cost Efficiency Leadership
Engineering improvements reduced RAM requirements for vector search by ~100x in last 18 months and claim up to 8x faster vector search vs OpenSearch; innovations (BBQ, Disk BBQ, Acorn) drove performance and cost advantages referenced in multiple customer wins.
Share Repurchase and Capital Return
Returned ~$186M to shareholders in Q3 (≈2.4M shares); cumulatively repurchased 3.8M shares and completed ~60% of the $500M repurchase program.
Notable Public Sector and Strategic Wins
CISA SIEM as a service win with additional federal agencies onboarding; strategic partnerships (Dell, NVIDIA) and joint initiatives to position Elastic in AI infrastructure stacks.
Negative Updates
Q4 Sequential Revenue Headwind and Quarters with Fewer Days
Q4 guidance factors in a 3‑day shorter quarter, producing an estimated revenue headwind of ~$14M–$15M (~3%), and contributed to conservative Q4 guidance despite Q3 outperformance.
Q4 Sales‑Led Subscription Guidance Down Sequentially
Guided sales‑led subscription revenue for Q4 ($371M–$373M) is lower QoQ, an atypical sequential decline historically; management attributes this to prudence/risk adjustment and fewer days in the quarter.
Near‑Term Margin Compression Expected in Q4
Q4 non‑GAAP operating margin guidance ~14.5%, below Q3's 18.6%, reflecting seasonal employee benefit timing and anticipated higher Q4 expenses despite strong Q3 leverage.
CRPO Growth Still Mid‑Teen; Not Yet at 20% Inflection
CRPO growth accelerated but remains ~19% reported (15% cc), short of the ~20%+ inflection some investors expect; management reiterated path to higher penetration but acknowledged runway to accelerate further.
Complex Monetization Between Cloud and Self‑Managed
Significant demand for self‑managed deployments (driven by sensitive AI workloads) highlights hybrid complexity — positive strategically but may limit some cloud monetization cadence and compels nuanced go‑to‑market execution.
Seasonal and Timing Risks
Adjusted free cash flow and cash flows are expected to fluctuate quarter-to-quarter due to timing of bookings and collections; company maintained full‑year cash flow margins target but cautioned on quarterly variability.
Company Guidance
Elastic guided Q4 FY‑2026 total revenue of $445–447M (≈15% growth at the midpoint, 13% CC) and sales‑led subscription revenue of $371–373M (≈18% growth at the midpoint, 15% CC), with non‑GAAP operating margin ~14.5% and non‑GAAP diluted EPS $0.55–0.57 using 105.5–106.5M diluted shares; they raised full‑year FY‑2026 targets to total revenue $1.734–1.736B (~17% growth midpoint, 15% CC) and sales‑led subscription $1.434–1.436B (~20% growth midpoint, 18% CC), with full‑year non‑GAAP operating margin ~16.3% and non‑GAAP diluted EPS $2.50–2.54 using 107–108M shares. Management noted Q4 has three fewer days (a ~3% / $14–15M sequential revenue headwind), reaffirmed they expect FY‑2026 adjusted free cash flow margins to be in line with FY‑2025 (Q3 adj. FCF ≈ $54M, ~12% margin), and pointed to healthy forward visibility (CRPO ≈ $1.06B, +19% Y/Y; RPO +22% Y/Y) that underpins the guidance.Elastic Financial Statement Overview
Summary
Improving fundamentals supported by strong gross margins, positive operating/free cash flow, and a notably de-risked balance sheet with minimal debt. The key constraint is that the company remains net-loss making with negative ROE, and free cash flow declined versus the prior period.Income Statement
Elastic continues to scale, with revenue up strongly over the multi-year period and still growing in 2026 TTM (Trailing-Twelve-Months). Profitability has improved meaningfully versus earlier years, helped by consistently high gross margins (~72%–76%). However, the company remains net-loss making in 2026 TTM (Trailing-Twelve-Months), and operating profitability is still not firmly established, which keeps the score in the middle of the range.58
Neutral
Balance Sheet
The balance sheet looks solid and less leveraged than prior years. Total debt is very low in 2026 TTM (Trailing-Twelve-Months) versus equity (debt-to-equity ~0.03), a major improvement from the higher leverage seen in 2022–2024. Equity remains sizable relative to assets, supporting financial flexibility. The main weakness is that returns on equity are currently negative due to ongoing net losses.78
Positive
Cash Flow
Cash generation is a clear strength: operating cash flow and free cash flow are strongly positive in 2026 TTM (Trailing-Twelve-Months), and free cash flow is close to net income in magnitude (despite net losses), indicating good cash conversion. That said, free cash flow declined versus the prior period (negative growth in 2026 TTM (Trailing-Twelve-Months)), which introduces some near-term variability.74
Positive
| Breakdown | TTM | Apr 2025 | Apr 2024 | Apr 2023 | Apr 2022 | Apr 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.68B | 1.48B | 1.27B | 1.07B | 862.37M | 608.49M |
| Gross Profit | 1.27B | 1.10B | 937.24M | 772.36M | 630.18M | 447.44M |
| EBITDA | 75.88M | 6.05M | -78.63M | -171.49M | -157.34M | -104.29M |
| Net Income | -84.52M | -108.11M | 61.72M | -236.16M | -203.85M | -129.43M |
Balance Sheet | ||||||
| Total Assets | 2.44B | 2.59B | 2.24B | 1.74B | 1.64B | 973.17M |
| Cash, Cash Equivalents and Short-Term Investments | 1.25B | 1.40B | 1.08B | 915.21M | 860.95M | 400.81M |
| Total Debt | 21.08M | 595.01M | 593.70M | 594.23M | 594.22M | 28.18M |
| Total Liabilities | 1.65B | 1.67B | 1.50B | 1.34B | 1.23B | 522.34M |
| Stockholders Equity | 790.99M | 927.23M | 738.18M | 398.90M | 415.43M | 450.83M |
Cash Flow | ||||||
| Free Cash Flow | 256.85M | 261.82M | 145.31M | 32.98M | -1.75M | 18.32M |
| Operating Cash Flow | 261.16M | 266.17M | 148.76M | 35.66M | 5.67M | 22.55M |
| Investing Cash Flow | 151.08M | -118.67M | -287.96M | -272.95M | -127.27M | -1.52M |
| Financing Cash Flow | -264.62M | 40.95M | 40.05M | 17.47M | 602.13M | 77.26M |
Elastic Technical Analysis
Negative
52.07
Price Trends
68.77
Negative
75.60
Negative
80.33
Negative
Market Momentum
-3.62
Positive
35.05
Neutral
44.21
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESTC, the sentiment is Negative. The current price of 52.07 is below the 20-day moving average (MA) of 59.98, below the 50-day MA of 68.77, and below the 200-day MA of 80.33, indicating a bearish trend. The MACD of -3.62 indicates Positive momentum. The RSI at 35.05 is Neutral, neither overbought nor oversold. The STOCH value of 44.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ESTC.
Elastic Risk Analysis
Elastic disclosed 76 risk factors in its most recent earnings report. Elastic reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Elastic Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $6.99B | 11.91 | 16.53% | ― | 9.46% | 34.09% | |
71 Outperform | $7.39B | 20.50 | 57.32% | 0.16% | 17.00% | 120.21% | |
64 Neutral | $3.74B | 44.09 | 34.48% | ― | 22.02% | -55.25% | |
63 Neutral | $5.49B | -65.50 | -12.84% | ― | 16.98% | -265.85% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $4.14B | -25.76 | -15.88% | ― | 24.26% | 55.58% | |
54 Neutral | $7.89B | -19.07 | -12.53% | ― | -8.23% | 48.57% |
* Technology Sector Average
ESTC
Elastic
52.07
-55.08
-51.40%
CVLT
CommVault Systems
85.08
-79.13
-48.19%
NICE
NICE
116.25
-24.37
-17.33%
PEGA
Pegasystems
43.73
5.31
13.82%
KC
Kingsoft Cloud Holdings
13.48
-1.48
-9.89%
U
Unity Software
18.23
-5.47
-23.08%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.