They [ESTC] are performing near the top of our companies. Consistent 60% growth. Double check. Awesome guidance. Yup. Great gross margins. Indeed. Cash flow approaching positive. Yes, -$1.4M. Adding 900-1000 customers per quarter. Near the best we got. Good, granted not the best, growth of >$100K customers. It’s about 60% for that metric. SaaS from a small base >100% growth. While sustaining high growth in core on prem (close to 50%)
https://discussion.fool.com/geez-guys-from-some-of-the-comments-…
I resonate with Darth’s thoughts here. ESTC is still my #3 position after AYX and CRWD, and I’ve even added to ESTC this month.
I also saved this post Torquepeak made a month ago. Makes a lot of sense. https://discussion.fool.com/i-believe-the-key-to-understanding-e…
Now, of course I don’t want ESTC to be the discount provider of all the services our companies provide, and as always there could be a chance that’s all they are. I’m just not sure yet. We’ve already seen the developer-focused model work great with Twilio.
Of course I pay attention when Saul shares thoughts, but I can’t seem to shake the idea that ESTC is doing something valuable. I sometimes wonder if we’re just missing the point. Maybe Wall Street too. ESTC may simply be hard to grasp because we’re not developers – their target audience. The same might have been said for Twilio a few years ago.
I’d love to hear more from anyone with direct experience with ESTC. In fact, please weigh in on Saul’s points if you have facts to share:
1. Maybe it takes a lot more S&M expense to sell a customer a platform that is harder to use? Bear: is it really hard to use Elastic? Which products? Why?
2. Maybe open source sounds good, but is simply harder to make money at? Bear: Seemed to work pretty well for RedHat, but again I’d love to hear from someone who has more experience with it.
3. It’s also my impression (and what do I know?) that open source isn’t a business strategy for the Elastic CEO, it’s an ideology! That means he cares more about getting warm fuzzy approbations from fellow open source-ers than he cares about making a profit for his shareholders. Just my impression. Bear: Does open source help with the developer-led strategy? Did Twilio have open source roots or components?
- How about competition? Well Alteryx, Okta, and Coupa don’t seem to have effective competition. They dominate their categories. Elastic on the other hand is trying to do a little bit of everything, and thus seems to be operating in a jungle, with loads of people who do what they do in each field. Bear: Do they really dominate in search like I’ve heard they do? Is their pricing here optimal or are they failing to capitalize on their dominance?
Thanks in advance,
Bear