ESTC - Q320
Saul sees growing losses: https://discussion.fool.com/thoughts-on-elastic-34394368.aspx
Fool take (Symington): https://www.fool.com/premium/coverage/investing/2020/02/27/w…
Bert take: https://tickertarget.com/sq-and-estc-standouts-in-a-difficul…
CC transcript: https://www.fool.com/earnings/call-transcripts/2020/02/27/el…
Sarksnz summary: https://discussion.fool.com/estc-q3-2020-cc-notes-34424281.aspx
Bear with historical numbers: https://discussion.fool.com/looks-solid-to-me-too-here-are-the-d…
Stocknovice on reasons for flat price: https://discussion.fool.com/it-is-a-good-question-to-analyze-why…
Revenue 113.2M +60% (+61% CCURR) ^^
- Pro Svcs 9M +44%
- Sub Rev 89.7M +62% (+63% CCURR)
– SaaS Rev 25.1M +114% (+118% CURR) ^^
… 22% of total rev
Billings 122.9M +54% (+56% CURR)
Deferred Rev 209.8M (+52% CURR)
RPO 426M +40%
Gross Margin 70.49% -68bps
Adj Op Loss 20.2M
… margin -17.8%
Adj EPS -0.28 (vs -0.16)
Opex 122.0M +64.5%
CFFO -23.2M swung neg
… margin -21.4%
Custs 10.5k +45.8%, +8.25% seq
- Custs >100K 570 +50%
- Int’l is 44% of total.
- Accelerating growth from Q2 in total revs (+59% to +60%), SaaS (+106% to +114%), and billings (+41% to +54%)
- Cash flows strongly negative - FCF margin went from -1.3% to -21.4% seq.
- CRO is gone as of immediately, advising until 8/1 for replacement
- new CMO, ex-Informatica
- new BoD member, ex-Cisco
CEO on CRO change: "Looking ahead, I see an opportunity to bring in a seasoned go-to-market leader who has built and seen multibillion-dollar scale, as we address the large and exciting market opportunity ahead of us.
CFO on cash flow losses: "Free cash flow was negative $24.2M in Q3 compared to negative $9.9M in the same period a year ago, reflecting timing differences of certain inflows and outflows. As a reminder, we look at free cash flow and free cash flow margin primarily on an annual basis since there are both seasonal and timing effects in any quarter, making quarterly cash flow inherently lumpy."
- released Elastic Stack v7.6, including Elastic Security (SIEM + Endpoint)
- enhanced visibility into Windows security in Elastic Endpoint
- released Kibana Lens (BI data exploration tool) in beta https://www.elastic.co/what-is/kibana-lens
- released Elastic Cloud on Kubernetes 1.0 in GA https://www.elastic.co/elastic-cloud-kubernetes
- released App Search on Elastic Cloud in GA https://www.elastic.co/app-search/service
- released Elasticsearch Service on Azure in GA https://www.elastic.co/azure
- held 10 ElasticON confs this Q
- offering Elastic Endpoint free to US federal campaigns https://www.elastic.co/blog/elastic-partners-with-ddc-to-off…
My stance: This company is doing well, but boy howdy, the CRO sure was shown the door right quick. We aren’t being told why. Wonder if a new CRO will shake things up a bit on their go-to-market strategy? And will that be a good thing or a bad thing, as, to be fair to that now ex-CRO, it was a good quarter on the top line. Total rev and SaaS rev and billings growth have stabilized and are increasing again. Customers are growing and $NER remains >130%. But truth be told, Elastic is moving a lot of directions at once as the search-engine of choice keeps finding new verticals. I hope the new CRO finds a better balance.
I sold out in December, but with the promise to revisit. I made the right short term move, as I moved those funds into AYX, DDOG and CRWD which have all outperformed ESTC this YTD. It is at the top of my watch list, and the great performance this Q may bring me back in. Op margin remains flat, but the cash flow swing negative makes me pause a bit - however the CFO stated that it has short term swings.