Elastic Q2 results

Total revenue was $193.1 million, an increase of 50% year-over-year, or 45% on a constant currency basis
Elastic Cloud revenue was $61.5 million, an increase of 89% year-over-year, or 85% on a constant currency basis
Calculated billings was $165.0 million, an increase of 27% year-over-year, or 23% on a constant currency basis
Deferred revenue was $364.4 million, an increase of 31% year-over-year
GAAP operating loss was $31.0 million; GAAP operating margin was -16%
Non-GAAP operating profit was $7.2 million; non-GAAP operating margin was 4%
GAAP net loss per share was $0.38; non-GAAP earnings per share was $0.04
Operating cash flow was $14.1 million with free cash flow of $12.4 million
Cash and cash equivalents were $991.3 million as of July 31, 2021
“The first quarter was a strong start to the fiscal year driven by crisp execution, the continued robust growth of Elastic Cloud, and our investments against the rich market opportunity ahead of us,” said Shay Banon, Elastic founder, and chief executive officer. “Our release of Elastic Limitless XDR is a significant milestone in our efforts to bring actionable security to every organization, powered by our unified search platform.”

First Quarter Fiscal 2022 Key Metrics and Recent Business Highlights

Key Customer Metrics:

Total subscription customer count was over 16,000, compared to over 15,000 in Q4 FY21, and over 12,100 in Q1 FY21
Total customer count with Annual Contract Value (ACV) greater than $100,000 was over 780, compared to over 730 in Q4 FY21, and over 630 in Q1 FY21
Net Expansion Rate was consistent with Q4 FY21 and slightly below 130%
Product Releases and Other Business Highlights

In Q1 Elastic continued to accelerate its pace of innovation, with the launch of Elastic 7.14, featuring new capabilities across the company’s enterprise search, observability, and security solutions. Designed to offer new levels of integration, 7.14 provides customers with greater levels of visibility, control, and security across their organizations, all with a single platform.

A key component of Elastic 7.14 was the general availability of the industry’s first free and open, Limitless Extended Detection and Response (XDR). Part of Elastic Security, Elastic Limitless XDR modernizes security operations by unifying the capabilities of security information and event management (SIEM) for detecting threats and endpoint security for protecting and remediating issues on all endpoints, including in the cloud, all in a single platform.

Elastic 7.14 also featured the general availability of Elastic Agent — a single, unified agent that simplifies the management and monitoring of data from a growing volume of diverse sources, centrally managed in Fleet to give users broad visibility and control over their environments. With Elastic Agent, customers can simplify data onboarding, enable faster telemetry collection, reduce mean time to resolution and detection, and even respond to threats. All through unified and centralized agent management that is fully integrated across Elastic Observability and Security.

Expanded capabilities within 7.14 include:

Elastic Enterprise Search

Announced centralized management of Elastic Enterprise Search, delivering optimized search experiences and deeper search experience insights for customers through Kibana
Introduced precision tuning in App Search for customized web and application search results
Provided customers with synonym support in Workplace Search as well as data ingestion flexibility with out-of-the-box content sources
Elastic Observability

Announced the general availability of Elastic Agent for optimized data onboarding and simple and fast telemetry collection with secure centralized agent management
Allowed customers to seamlessly deploy endpoint security across their infrastructure with Fleet, without slowing down application development
Enhanced APM correlations to enable customers to further reduce mean-time-to-resolution (MTTR) with automated root cause analysis of application issues
Elastic Security

Introduced the industry’s first free and open Limitless Extended Detection and Response (XDR) in Elastic Security to modernize security operations
Extended visibility across any environment to bring native endpoint security to every host with a single agent to eliminate security blind spots and stop threats at cloud scale on a single platform
Automated prevention to stop fast-evolving ransomware and malware with an extra layer of ransomware protection for Windows systems and data, defending organizations from opportunistic adversaries like DarkSide and REvil
Elastic Cloud

Announced general availability of support for Microsoft Azure Private link providing secure connectivity between Elastic Cloud and Azure environments
Launched new Google cloud region: Asia Pacific Northeast 3 (Seoul) region
Other Business Highlights

Announced agreement to acquire Cmd, a leader in infrastructure detection and response for cloud workloads
Announced agreement to acquire build.security, a policy definition and enforcement platform
Issued $575 million of senior unsecured notes, due 2029
Named a Leader by Forrester Research in The Forrester Wave™: Cognitive Search, Q3, 2021
Announced virtual ElasticON Global conference will take place October 5th-7th, 2021
Delivered 16 regional virtual ElasticON events, sponsored and exhibited at Google Cloud Retail and CPG Summit, and Black Hat
Received the Microsoft U.S. Partner Award in Business Excellence in the Commercial Marketplace this quarter
Named the 2020 Google Cloud Technology Partner of the Year in the data management category
Financial Outlook

The Company is providing the following guidance:

For the second quarter of fiscal 2022 (ending October 31, 2021):

Total revenue is expected to be between $193 million and $195 million
Non-GAAP operating margin is expected to be between -4.0% and -3.0%
Non-GAAP net loss per share is expected to be between $0.19 and $0.15, assuming between 92.0 million and 93.0 million weighted average ordinary shares outstanding
For fiscal 2022 (ending April 30, 2022):

Total revenue is expected to be between $808 million and $814 million
Non-GAAP operating margin is expected to be between -4.0% and -3.0%
Non-GAAP net loss per share is expected to be between $0.67 and $0.57, assuming between 92.0 million and 94.0 million weighted average ordinary shares outstanding

Stock up 5% AH

Not growing as fast as other companies we have here, but the valuation makes it very attractive. With cybersecurity being more and more important it might do even better in the future.
Have a ~2% position.


This was another strong report from Elastic. Strong revenue growth and growth in free cash flow. Solid forward-looking guidance. VERY strong cloud revenue growth. Continued execution in that area is key to their story.

Elastic is a bit underappreciated because its top-line growth is somewhat lower than the most of the widely-held companies here (though not much lower than NET), and also because Elastic doesn’t have the focus of some of these companies (e.g., DDOG, CRWD). However, it is executing in all three of its major areas (search, observability, and security). In the last few days it has snapped up two security start-ups, as Shay Banon emphasizes providing synergies to companies by packaging observability and security solutions: “We have a saying at Elastic – while you observe, why not protect?” https://techcrunch.com/2021/08/25/elastic-acquisition-spree-…. As we have seen recently with CRWD and PANW, having a successful security product can lead to tremendous growth.

I like the Elastic story, and it has earned a solid place in my portfolio along with some of the other great, widely-held stocks like CRWD, NET, UPST (plus good old TTD).