Elastic Segment Growth

Talked a little about Elastic ESTC business segments in the other Elastic thread and thought this might be worthy of its own discussion.

In Elastics first public filing they break down business segments into two major categories.

Subscription Software made up 92% of revenue and grew 68% yoy. From $34.78M to $58.43M. The other category is Professional Services and is 8% of revenues and grew 128% yoy. From $2.26M to $5.14M.

In the year prior quarter the mix was Subscription Software 94% and professional services 6%.

Total Revenue Growth came in at 72%.

Revenue is further broken down inside of the Subscription Software banner into Self-Managed License, Self-Managed Subscription, and SaaS. The “Self-Managed” is the Elastic Stack and related software that is downloaded and run on premises. The newer SaaS product consists of the Elastic Cloud products that have very similar offerings but are hosted by Elastic. SaaS has higher costs and lower margins due to personnel and hosting costs. That’s how AYX which is not really a SaaS product is able to maintain those almost 90% margins. But it’s not a huge margin problem for ESTC and will be where majority of future software growth will be.

Here is the breakdown with those segments broken out. The first number is revenue % and the second number is yoy growth.

License- 16%, 58%
Subscription- 60%, 68%
SaaS- 16%, 79%
Pro Services- 8%, 128%

In the call management provided some color to the Pro Services segment. It will vary greatly quarter to quarter because it is and will remain a small part of the total. So a few million difference could make a huge difference in its apparent growth rate. They do not expect it to grow like that consistently. It is a necessary part of training new customers on the stack and for driving Subscription sales.

Consolidation can be expected as numbers get bigger but with a strong amount of differed revenue and Billings growth and SaaS strength this looks to be a big grower for some time.