Elastic (ESTC) AI Stock Analysis

• Market Cap: $8.83B
• Dividend Yield: N/A
• Average Volume (3M): 2.16M
• Price to Earnings (P/E): 192.8
• Beta (1Y): 1.43
• Revenue Growth: 17.04%
• EPS Growth: -273.13%
• Country: US
• Employees: 3,403
• Sector: Technology
• Sector Strength: 86
• Industry: Software - Application
• EPS (TTM): 0.47
• Shares Outstanding: 105,534,890
• 10 Day Avg. Volume: 1,590,980
• 30 Day Avg. Volume: 2,157,995
• PEG Ratio: -1.86
• Price to Book (P/B): 13.55
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 163.89
• Enterprise Value/Market Cap: 0.50
• Enterprise Value/Revenue: 0.78
• Enterprise Value/Gross Profit: 3.99
• Enterprise Value/Ebitda: -26.07
• 1Y Price Target: $110.95
• Price Target Upside: 31.77% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 25

• Rating: 68 Neutral
• Price Target: $91.00 ▲(8.08%Upside)

Elastic shows strong financial performance and positive earnings call outcomes, with significant revenue growth and AI adoption. However, technical indicators suggest a bearish trend, and the valuation remains challenging due to negative net earnings. The conservative guidance for FY 2026 due to macroeconomic uncertainties adds a layer of caution.

Positive Factors

Customer Growth

Elastic has demonstrated early momentum with gen AI, with over 2,000 customers utilizing the Elastic Cloud for gen AI use cases, significantly increasing from previous quarters.

Financial Performance

Elastic reported 4Q:FY25 revenue of $388.4 million that beat the projection and EPS of $0.47 trumped the estimate.

Strategic Partnerships

Elastic announced the signing of a five-year strategic collaboration agreement with Amazon’s AWS to help accelerate organizations’ transition into AI-native enterprises.

Negative Factors

Cost Challenges

The increase in cost of subscription revenue was primarily due to an increase in cloud infrastructure costs.

Public Sector Challenges

Elastic faced headwinds in the US public sector, particularly within Federal civilian agencies dealing with personnel and budget constraints, which is significant as it is one of the company's top five verticals.

Revenue Guidance

The FY26 revenue guidance of 12% year-over-year growth fell short of expectations, as the market anticipated 14% growth, influenced by ongoing macroeconomic headwinds and challenges in the US public sector.

Elastic Business Overview & Revenue Model

Company Description

Elastic N.V. (ESTC) is a data analytics company that specializes in search-powered solutions. Founded in 2012, Elastic is best known for its Elastic Stack, a collection of open-source products that includes Elasticsearch, Kibana, Beats, and Logstash. These tools are designed to help organizations search, analyze, and visualize data in real-time, with applications in areas such as application search, site search, enterprise search, logging, and security analytics. Elastic operates in the technology and software sectors, catering to a wide range of industries including technology, healthcare, financial services, and government.

How the Company Makes Money

Elastic makes money primarily through a subscription-based revenue model. The company offers a range of subscription tiers for its Elastic Stack products, providing features like advanced security, alerting, machine learning, and dedicated support. These subscriptions are available in self-managed, cloud, and hybrid deployment options. Additionally, Elastic generates revenue through its Elastic Cloud service, a managed offering hosted on major cloud providers such as AWS, Google Cloud, and Microsoft Azure. Elastic also offers professional services, including training and consulting, which contribute to its revenue. Significant partnerships with major cloud providers help extend its market reach and customer base, enhancing its revenue-generating capabilities.

Elastic Financial Statement Overview

Summary

Elastic has shown strong revenue growth and robust gross profit margins, indicating effective cost management. However, the company struggles with net profitability due to high operational expenses, typical in the software industry. The balance sheet is solid with a low debt-to-equity ratio, and cash flow has improved significantly, demonstrating strong liquidity and operational efficiency.

Income Statement

Elastic has demonstrated strong revenue growth with a compound annual growth rate (CAGR) over the past five years. The gross profit margin remains robust, indicating effective cost management. However, the company has struggled to achieve net profitability, as reflected by negative net profit margins and EBIT margins, primarily due to high operational and R&D expenses typical in the software industry.

Balance Sheet

Elastic's balance sheet shows a solid equity position with a healthy equity ratio, contributing to financial stability. The company has significantly reduced its debt, leading to a low debt-to-equity ratio. However, the return on equity remains negative due to continuous net losses, suggesting room for operational improvements to enhance profitability.

Cash Flow

Elastic's cash flow from operations has improved markedly, demonstrating effective cash management and operational efficiency. The free cash flow has shown positive growth, indicating strong liquidity and the ability to fund expansion without additional debt. The operating cash flow to net income ratio suggests high quality of earnings, as cash flows exceed reported net income.

Breakdown	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	1.48B	1.27B	1.07B	862.37M	608.49M
Gross Profit	1.10B	937.24M	772.36M	630.18M	447.44M
EBITDA	-54.70M	-78.63M	-171.49M	-157.34M	-63.49M
Net Income	-108.11M	61.72M	-236.16M	-203.85M	-129.43M
Balance Sheet
Total Assets	2.59B	2.24B	1.74B	1.64B	973.17M
Cash, Cash Equivalents and Short-Term Investments	1.40B	1.08B	915.21M	860.95M	400.81M
Total Debt	25.29M	593.70M	594.23M	594.22M	28.18M
Total Liabilities	1.67B	1.50B	1.34B	1.23B	522.34M
Stockholders Equity	927.23M	738.18M	398.90M	415.43M	450.83M
Cash Flow
Free Cash Flow	261.82M	145.31M	32.98M	-1.75M	18.32M
Operating Cash Flow	266.17M	148.76M	35.66M	5.67M	22.55M
Investing Cash Flow	-118.67M	-287.96M	-272.95M	-127.27M	-1.52M
Financing Cash Flow	40.95M	40.05M	17.47M	602.13M	77.26M

Elastic Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 84.20
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESTC, the sentiment is Neutral. The current price of 84.2 is above the 20-day moving average (MA) of 83.40, below the 50-day MA of 85.73, and below the 200-day MA of 92.36, indicating a neutral trend. The MACD of -0.87 indicates Negative momentum. The RSI at 49.61 is Neutral, neither overbought nor oversold. The STOCH value of 81.08 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ESTC.

Elastic Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CWAN	78 Outperform	$6.17B	13.07	58.14%	―	23.21%	―
FRSH	73 Outperform	$4.35B	―	-6.85%	―	20.46%	39.37%
ESTC	68 Neutral	$8.83B	192.75	-12.98%	―	17.04%	-273.13%
CFLT	64 Neutral	$8.71B	―	-34.18%	―	24.11%	21.87%
INTA	61 Neutral	$3.87B	―	-4.16%	―	17.70%	61.98%
GTLB	61 Neutral	$7.46B	452.76	2.53%	―	29.31%	―
Sector *	49 Neutral	C$2.91B	2.04	-80.91%	2.67%	12.55%	-24.32%

Elastic Corporate Events

Elastic Appoints Navam Welihinda as New CFO

Elastic announced the appointment of Navam Welihinda as its new Chief Financial Officer, effective February 28, 2025, succeeding Eric Prengel. Welihinda, with a background at Grammarly and HashiCorp, is expected to lead Elastic’s finance function and contribute to its growth. In its third quarter of fiscal 2025, Elastic reported a 17% year-over-year increase in total revenue to $382 million and a 26% increase in Elastic Cloud revenue to $180 million, reflecting strong sales execution and market demand. The company also highlighted significant product innovations and received recognition as the AWS Global Generative AI Infrastructure and Data Partner of the Year 2024.