Elastic N.V. Reports Strong Fourth Quarter

Elastic N.V. Reports Strong Fourth Quarter and Fiscal 2019 Financial Results


Q4 Revenue of $80.6 million; Up 63% year-over-year (68% in constant currency)

FY19 Revenue of $271.7 million; Up 70% year-over-year (72% in constant currency)

Announced proposed acquisition of Endgame, an endpoint security company


long ESTC


Their guidance, if I read it correctly, for the next FY is about 49% y/y.
That is about as high a guidance for the forward 12 months you will find with our group of companies out there.

So I am pretty happy with that. Need to dig into the whole endpoint company, but my guess is it plays more into IoT/Edge, which complements their log security business.



What Im wondering about is why is their operating margin -22% and projected to continue widening while our other companies have an operating margin of 70-90%?
I am still new at investing and learning a lot from this board and TMF, am I understanding operating margin incorrectly in comparison to our other companies AYX, MDB, ext?

I see the market didn’t love the report, 5% loss for the lowest price since January or February from what it looks.


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What Im wondering about is why is their operating margin -22% and projected to continue widening while our other companies have an operating margin of 70-90%?

You are conflating operating and gross margins. Lots of our companies have gross margins in the 70+ percent range, however none of them have operating margins in that range.



Elastic’s strength is IoT and logs. Elastic is making acquisitions and iterations of its software to better compete in enterprise search and SIEM as well. That is their long-term plan and they are working it quarter to quarter just as Mongo has been doing. Mongo has done it mostly internally however and not by little add on acquisitions.

I read one article criticizing Mongo for this and praising Elastic for their strategy as it enables them to move faster. However, they both face different use cases, and they are both probably doing exactly what they need to be doing. Both companies are founder run, and they seem to very much know what they are doing.

I chose to keep all my Mongo instead of diversify some of it into Elastic. Not so much deworsification in that but I still favor Mongo if I had to choose between the two (which I guess I had to). Not just because I already owned a ton of Mongo and have all those capital gains sitting but Mano Mano.

This said, if they both came out at the same time, I probably would have bought 50/50 between the two.

Will be fun to read the earnings calls.

I know there are lots of rumbling of “bubble”. But notice, not all stocks are bubbles. The also rans just keep getting cheaper and smashed. IF it is a bubble, something that some here are saying as Prince would be saying, 1999, then it is limited to ONLY those companies that continue to break category dominators with long term hyper growth. Ie, quality.

But hey, each to their own interpretation.



Sorry I realized that as soon as I posted that I mixed up gross margin and opp margin. I didn’t see in the report what Elastic’s gross margin is, does anyone know?
I added a few shares after the report but am still down a few percent total.