Q3 Revenue of $223.9 million, Up 43% year-over-year

Q3 Elastic Cloud Revenue of $80.4 million, Up 79% year-over-year

Elastic (NYSE: ESTC) (“Elastic”), the company behind Elasticsearch and the Elastic Stack, announced strong results for its third quarter of fiscal 2022 (ended January 31, 2022).

Third Quarter Fiscal 2022 Financial Highlights

  • Total revenue was $223.9 million, an increase of 43% year-over-year, as reported and on a constant currency basis
  • Elastic Cloud revenue was $80.4 million, an increase of 79% year-over-year, or 80% on a constant currency basis
  • GAAP operating loss was $45.8 million; GAAP operating margin was -20%
  • Non-GAAP operating profit was $0.2 million; non-GAAP operating margin was 0%
  • GAAP net loss per share was $0.61; non-GAAP loss per share was $0.12
  • Operating cash flow was $5.1 million with adjusted free cash flow of $15.8 million
  • Cash and cash equivalents were $864.4 million as of January 31, 2022

"We delivered another record quarter and exceeded our revenue expectations, fueled by increasing consumption trends in Elastic Cloud. Our cloud business grew 79% year-over-year and now accounts for 36% of total revenue,” said Ash Kulkarni, CEO, Elastic. “I look forward to us executing against the large and growing market opportunity ahead of us, particularly in cloud. I am confident that our demonstrated success, combined with the relevance of our solutions, enables us to capture this sizeable opportunity.”

Third Quarter Fiscal 2022 Key Metrics and Recent Business Highlights

Key Customer Metrics

  • Total subscription customer count was over 17,900, compared to over 17,000 in Q2 FY22, and over 13,800 in Q3 FY21
  • Total customer count with Annual Contract Value (ACV) greater than $100,000 was over 890, compared to over 830 in Q2 FY22, and over 670 in Q3 FY21
  • Net Expansion Rate was slightly above Q2 FY22 and just below 130%

Business Highlights

Cloud Momentum

  • Delivered a more simplified Elastic Cloud on AWS onboarding and trial experience and expanded cloud-native AWS integrations which include AWS FireLens, Amazon S3 Storage Lens, the Elastic Serverless Forwarder in the AWS Serverless Application Repository, Elastic and AWS Web Application Firewall, and the Elastic and AWS Network Firewall

Product Innovations

  • Announced Elastic 8.0 with major enhancements to Elasticsearch’s vector search capabilities, new native support for modern natural language processing models, increasingly simplified data onboarding, and a streamlined security experience
  • Announced Elastic 7.16 with new features enabling simplified data ingestion into the Elastic Search Platform, including dozens of prebuilt Elastic Agent data integrations, and observability tooling for continuous integration and continuous delivery (CI/CD) pipelines

Community Momentum

  • Hosted the second annual Elastic Community Conference with 2,000+ global attendees participating in more than 60 sessions

Financial Outlook

The Company is providing the following guidance:

For the fourth quarter of fiscal 2022 (ending April 30, 2022):

  • Total revenue is expected to be between $230 million and $232 million
  • Non-GAAP operating margin is expected to be between -5.5% and -4.5%
  • Non-GAAP net loss per share is expected to be between $0.24 and $0.20, assuming between 93.1 million and 94.1 million weighted average ordinary shares outstanding

For fiscal 2022 (ending April 30, 2022):

  • Total revenue is expected to be between $853 million and $855 million
  • Non-GAAP operating margin is expected to be between -0.4% and -0.2%
  • Non-GAAP net loss per share is expected to be between $0.42 and $0.38, assuming between 92.0 million and 93.0 million weighted average ordinary shares outstanding

See the section titled “Forward-Looking Statements” below for information on the factors that could cause our actual results to differ materially. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of the costs and expenses that may be incurred in the future. These items necessary to reconcile such non-GAAP measures could be material and have a significant impact on the Company’s results computed in accordance with GAAP.

Conference Call and Webcast

Elastic’s executive management team will host a conference call today at 2:00 p.m. PT/5:00 p.m. ET to discuss the Company’s financial results and business outlook. A live audio webcast of the conference call will be available through Elastic’s Investor Relations website at ir.elastic.co. Slides will accompany the webcast. The replay of the webcast and slides will be available for two months.

About Elastic

Elastic is a search company built on a free and open heritage. Anyone can use Elastic products and solutions to get started quickly and frictionlessly. Elastic offers three solutions for enterprise search, observability, and security, built on one technology stack that can be deployed anywhere. From finding documents to monitoring infrastructure to hunting for threats, Elastic makes data usable in real time and at scale. Founded in 2012, Elastic is a distributed company with Elasticians around the globe. Learn more at elastic.co.

Elastic and associated marks are trademarks or registered trademarks of Elastic N.V. and its subsidiaries. All other company and product names may be trademarks of their respective owners.

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to Elastic’s financial results as determined in accordance with U.S. GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of this press release titled “About Non-GAAP Financial Measures.”

Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risk and uncertainties, which include, but are not limited to, statements regarding our expected financial results for the fiscal quarter and the fiscal year ending April 30, 2022, our expectations regarding demand for our products and solutions and our future revenue, our assessments of the strength of our solutions and products, the expected performance or benefits of our offerings, our expectations regarding market and growth opportunities and our ability to address those opportunities, our expectations regarding the growth and adoption of our Elastic Cloud offering, and the expected benefits of our investments. These forward-looking statements are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Our expectations and beliefs in light of currently available information regarding these matters may not materialize. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements due to uncertainties, risks, and changes in circumstances, including but not limited to those related to: our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses (which include changes in sales and marketing, research and development and general and administrative expenses), and our ability to achieve and maintain future profitability; our ability to continue to deliver and improve our offerings and develop new offerings, including security-related product and Elastic Cloud offerings; customer acceptance and purchase of our existing offerings and new offerings, including the expansion and adoption of our Elastic Cloud offerings; our inability to realize value from investments in the business, including R&D investments and strategic transactions; our ability to maintain and expand our user and customer base; the impact of the COVID-19 pandemic, including any variants, on the macroeconomic environment, on our business, operations, hiring and financial results, and on businesses of our customers and partners, including their spending priorities, the effect of lockdowns, restrictions and new regulations; the impact of our licensing model on the use and adoption of our software; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our international expansion strategy; our operating results and cash flows; our beliefs and objectives for future operations; the sufficiency of our capital resources; our ability to successfully execute our go-to-market strategy, including by expanding our relationships with our partners, and expand in our existing markets and into new markets, and our ability to forecast customer retention and expansion; and general market, political, economic and business conditions.

Any additional or unforeseen effect from the COVID-19 pandemic may exacerbate these risks. Additional risks and uncertainties that could cause actual outcomes and results to differ materially are included in our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2021 and any subsequent reports filed with the SEC. SEC filings are available on the Investor Relations section of Elastic’s website at ir.elastic.co and the SEC’s website at www.sec.gov. Elastic assumes no obligation to, and does not currently intend to, update any such forward-looking statements, except as required by law.

Contact Information

Janice Oh Elastic Investor Relations ir@elastic.co

Lisa Boughner Elastic Corporate Communications lisa.boughner@elastic.co

Elastic N.V.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except share and per share amounts)

(Unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue

 

 

 

 

 

 

 

License - self-managed

$

20,119

 

 

$

15,280

 

 

$

54,457

 

 

$

45,673

 

Subscription - self-managed and SaaS

 

189,495

 

 

 

131,969

 

 

 

522,599

 

 

 

357,127

 

Total subscription revenue

 

209,614

 

 

 

147,249

 

 

 

577,056

 

 

 

402,800

 

Professional services

 

14,330

 

 

 

9,866

 

 

 

45,963

 

 

 

28,079

 

Total revenue

 

223,944

 

 

 

157,115

 

 

 

623,019

 

 

 

430,879

 

Cost of revenue

 

 

 

 

 

 

 

Cost of license - self-managed

 

501

 

 

 

346

 

 

 

1,242

 

 

 

1,039

 

Cost of subscription - self-managed and SaaS

 

47,076

 

 

 

31,426

 

 

 

126,097

 

 

 

86,464

 

Total cost of revenue - subscription

 

47,577

 

 

 

31,772

 

 

 

127,339

 

 

 

87,503

 

Cost of professional services

 

13,707

 

 

 

10,196

 

 

 

37,491

 

 

 

27,744

 

Total cost of revenue

 

61,284

 

 

 

41,968

 

 

 

164,830

 

 

 

115,247

 

Gross profit

 

162,660

 

 

 

115,147

 

 

 

458,189

 

 

 

315,632

 

Operating expenses

 

 

 

 

 

 

 

Research and development

 

71,749

 

 

 

51,400

 

 

 

194,894

 

 

 

143,766

 

Sales and marketing

 

105,069

 

 

 

71,087

 

 

 

288,055

 

 

 

191,712

 

General and administrative

 

31,691

 

 

 

27,121

 

 

 

89,298

 

 

 

72,555

 

Total operating expenses

 

208,509

 

 

 

149,608

 

 

 

572,247

 

 

 

408,033

 

Operating loss

 

(45,849

)

 

 

(34,461

)

 

 

(114,058

)

 

 

(92,401

)

Other income (expense), net

 

 

 

 

 

 

 

Interest expense

 

(6,175

)

 

 

(65

)

 

 

(14,327

)

 

 

(78

)

Other income (expense), net

 

(861

)

 

 

(2,312

)

 

 

(509

)

 

 

8,502

 

Loss before income taxes

 

(52,885

)

 

 

(36,838

)

 

 

(128,894

)

 

 

(83,977

)

Provision for income taxes

 

3,841

 

 

 

1,136

 

 

 

9,344

 

 

 

2,156

 

Net loss

$

(56,726

)

 

$

(37,974

)

 

$

(138,238

)

 

$

(86,133

)

Net loss per share attributable to ordinary shareholders, basic and diluted

$

(0.61

)

 

$

(0.43

)

 

$

(1.50

)

 

$

(1.00

)

Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted

 

93,015,185

 

 

 

88,341,038

 

 

 

92,140,919

 

 

 

86,296,028

 

   

Elastic N.V.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share amounts)

(Unaudited)

 

 

As of January 31, 2022

 

As of April 30, 2021

Assets

 

Current assets:

 

 

 

Cash and cash equivalents

$

864,363

 

 

$

400,814

 

Restricted cash

 

3,928

 

 

 

2,894

 

Accounts receivable, net of allowance for credit losses of $2,729 and $2,344 as of January 31, 2022 and April 30, 2021, respectively

 

146,218

 

 

 

160,415

 

Deferred contract acquisition costs

 

38,938

 

 

 

36,089

 

Prepaid expenses and other current assets

 

39,405

 

 

 

37,002

 

Total current assets

 

1,092,852

 

 

 

637,214

 

Property and equipment, net

 

6,739

 

 

 

8,881

 

Goodwill

 

304,155

 

 

 

198,851

 

Operating lease right-of-use assets

 

21,454

 

 

 

25,464

 

Intangible assets, net

 

49,948

 

 

 

36,286

 

Deferred contract acquisition costs, non-current

 

62,980

 

 

 

50,263

 

Deferred tax assets

 

3,765

 

 

 

3,697

 

Other assets

 

17,403

 

 

 

12,516

 

Total assets

$

1,559,296

 

 

$

973,172

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

21,792

 

 

$

7,248

 

Accrued expenses and other liabilities

 

42,110

 

 

 

28,909

 

Accrued compensation and benefits

 

56,181

 

 

 

52,525

 

Operating lease liabilities

 

8,983

 

 

 

8,528

 

Deferred revenue

 

362,287

 

 

 

352,805

 

Total current liabilities

 

491,353

 

 

 

450,015

 

Deferred revenue, non-current

 

33,395

 

 

 

44,895

 

Long-term debt, net

 

566,271

 

 

 

 

Operating lease liabilities, non-current

 

14,879

 

 

 

19,649

 

Other liabilities, non-current

 

21,089

 

 

 

7,782

 

Total liabilities

 

1,126,987

 

 

 

522,341

 

Commitments and contingencies

 

 

 

Shareholders’ equity:

 

 

 

Convertible preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of January 31, 2022 and April 30, 2021

 

 

 

 

 

Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 93,420,927 and 90,533,985 shares issued and outstanding as of January 31, 2022 and April 30, 2021, respectively

 

982

 

 

 

948

 

Treasury stock

 

(369

)

 

 

(369

)

Additional paid-in capital

 

1,197,570

 

 

 

1,071,675

 

Accumulated other comprehensive loss

 

(14,318

)

 

 

(8,105

)

Accumulated deficit

 

(751,556

)

 

 

(613,318

)

Total shareholders’ equity

 

432,309

 

 

 

450,831

 

Total liabilities and shareholders’ equity

$

1,559,296

 

 

$

973,172

 

   

Elastic N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net loss

$

(56,726

)

 

$

(37,974

)

 

$

(138,238

)

 

$

(86,133

)

Adjustments to reconcile net loss to cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

5,233

 

 

 

4,290

 

 

 

14,558

 

 

 

12,856

 

Amortization of deferred contract acquisition costs

 

14,803

 

 

 

10,282

 

 

 

43,373

 

 

 

28,455

 

Amortization of debt issuance costs

 

247

 

 

 

 

 

 

554

 

 

 

 

Non-cash operating lease cost

 

2,417

 

 

 

1,822

 

 

 

6,259

 

 

 

5,256

 

Stock-based compensation expense, net of amounts capitalized

 

37,393

 

 

 

25,227

 

 

 

96,971

 

 

 

65,305

 

Deferred income taxes

 

30

 

 

 

(2

)

 

 

(219

)

 

 

(288

)

Foreign currency transaction (gain) loss

 

1,703

 

 

 

1,461

 

 

 

1,707

 

 

 

(9,463

)

Other

 

 

 

 

22

 

 

 

98

 

 

 

11

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

9,282

 

 

 

15,183

 

 

 

9,801

 

 

 

15,246

 

Deferred contract acquisition costs

 

(21,957

)

 

 

(16,740

)

 

 

(61,234

)

 

 

(54,612

)

Prepaid expenses and other current assets

 

(4,868

)

 

 

3,717

 

 

 

(2,650

)

 

 

4,817

 

Other assets

 

2,534

 

 

 

1,197

 

 

 

(803

)

 

 

5,237

 

Accounts payable

 

3,967

 

 

 

(3,683

)

 

 

14,452

 

 

 

(6,321

)

Accrued expenses and other liabilities

 

820

 

 

 

2,757

 

 

 

17,539

 

 

 

1,696

 

Accrued compensation and benefits

 

863

 

 

 

(5,168

)

 

 

4,686

 

 

 

(5,859

)

Operating lease liabilities

 

(2,455

)

 

 

(1,867

)

 

 

(6,438

)

 

 

(5,402

)

Deferred revenue

 

11,768

 

 

 

18,877

 

 

 

8,306

 

 

 

53,309

 

Net cash provided by operating activities

 

5,054

 

 

 

19,401

 

 

 

8,722

 

 

 

24,110

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of property and equipment

 

(236

)

 

 

(1,076

)

 

 

(987

)

 

 

(2,732

)

Capitalization of internal-use software costs

 

(1,514

)

 

 

 

 

 

(4,227

)

 

 

 

Business acquisitions, net of cash acquired

 

(11,750

)

 

 

 

 

 

(119,854

)

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

1,320

 

Net cash used in investing activities

 

(13,500

)

 

 

(1,076

)

 

 

(125,068

)

 

 

(1,412

)

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds from the issuance of senior notes

 

 

 

 

 

 

 

575,000

 

 

 

 

Proceeds from issuance of ordinary shares upon exercise of stock options

 

6,709

 

 

 

22,324

 

 

 

27,540

 

 

 

67,554

 

Payments of debt issuance costs

 

(49

)

 

 

 

 

 

(9,283

)

 

 

 

Net cash provided by financing activities

 

6,660

 

 

 

22,324

 

 

 

593,257

 

 

 

67,554

 

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

(8,921

)

 

 

3,529

 

 

 

(12,328

)

 

 

5,848

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

(10,707

)

 

 

44,178

 

 

 

464,583

 

 

 

96,100

 

Cash, cash equivalents, and restricted cash, beginning of period

 

878,998

 

 

 

351,311

 

 

 

403,708

 

 

 

299,389

 

Cash, cash equivalents, and restricted cash, end of period

$

868,291

 

 

$

395,489

 

 

$

868,291

 

 

$

395,489

 

   

Elastic N.V.

REVENUE BY TYPE

(amounts in thousands, except percentages)

(Unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

2022

 

2021

 

2022

 

2021

 

Amount

 

% of

Total

Revenue

 

Amount

 

% of

Total

Revenue

 

Amount

 

% of

Total

Revenue

 

Amount

 

% of

Total

Revenue

Elastic Cloud

$ 80,402

 

36 %

 

$ 44,929

 

29 %

 

$ 210,963

 

34 %

 

$ 114,984

 

27 %

Other subscription

129,212

 

58 %

 

102,320

 

65 %

 

366,093

 

59 %

 

287,816

 

66 %

Total subscription revenue

209,614

 

94 %

 

147,249

 

94 %

 

577,056

 

93 %

 

402,800

 

93 %

Professional services

14,330

 

6 %

 

9,866

 

6 %

 

45,963

 

7 %

 

28,079

 

7 %

Total revenue

$ 223,944

 

100 %

 

$ 157,115

 

100 %

 

$ 623,019

 

100 %

 

$ 430,879

 

100 %

   

Elastic N.V.

RECONCILIATION OF GAAP TO NON-GAAP DATA

CALCULATED BILLINGS

(amounts in thousands)

(Unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Total revenue

$

223,944

 

 

$

157,115

 

 

$

623,019

 

 

$

430,879

 

Add: Increase in deferred revenue

 

11,768

 

 

 

18,877

 

 

 

8,306

 

 

 

53,309

 

Less: Increase in unbilled accounts receivable

 

(2,711

)

 

 

(2,790

)

 

 

(2,102

)

 

 

(3,214

)

Calculated billings

$

233,001

 

 

$

173,202

 

 

$

629,223

 

 

$

480,974

 

   

Elastic N.V.

RECONCILIATION OF GAAP TO NON-GAAP DATA

ADJUSTED FREE CASH FLOW

(amounts in thousands, except percentages)

(Unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net cash provided by operating activities

$

5,054

 

 

$

19,401

 

 

$

8,722

 

 

$

24,110

 

Less: Purchases of property and equipment

 

(236

)

 

 

(1,076

)

 

 

(987

)

 

 

(2,732

)

Less: Capitalization of internal-use software

 

(1,514

)

 

 

 

 

 

(4,227

)

 

 

 

Add: Interest paid on long-term debt

 

12,452

 

 

 

 

 

 

12,452

 

 

$

 

Adjusted free cash flow

$

15,756

 

 

$

18,325

 

 

$

15,960

 

 

$

21,378

 

Net cash used in investing activities

$

(13,500

)

 

$

(1,076

)

 

$

(125,068

)

 

$

(1,412

)

Net cash provided by financing activities

$

6,660

 

 

$

22,234

 

 

$

593,257

 

 

$

67,554

 

Net cash provided by operating activities (as a percentage of total revenue)

 

2

%

 

 

13

%

 

 

1

%

 

 

6

%

Less: Purchases of property and equipment (as a percentage of total revenue)

 

%

 

 

(1

)%

 

 

%

 

 

(1

)%

Less: Capitalization of internal-use software (as a percentage of total revenue)

 

(1

)%

 

 

%

 

 

%

 

 

%

Add: Interest paid on long-term debt (as a percentage of total revenue)

 

6

%

 

 

%

 

 

2

%

 

 

%

Adjusted free cash flow margin

 

7

%

 

 

12

%

 

 

3

%

 

 

5

%

   

Elastic N.V.

RECONCILIATION OF GAAP TO NON-GAAP DATA

(amounts in thousands, except percentages, share and per share amounts)

(Unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Gross Profit Reconciliation:

 

 

 

 

 

 

 

GAAP gross profit

$

162,660

 

 

$

115,147

 

 

$

458,189

 

 

$

315,632

 

Stock-based compensation expense

 

3,790

 

 

 

3,198

 

 

 

10,855

 

 

 

8,352

 

Employer payroll taxes on employee stock transactions

 

260

 

 

 

589

 

 

 

1,065

 

 

 

911

 

Amortization of acquired intangibles

 

3,046

 

 

 

2,110

 

 

 

7,556

 

 

 

6,328

 

Non-GAAP gross profit

$

169,756

 

 

$

121,044

 

 

$

477,665

 

 

$

331,223

 

Gross Margin Reconciliation(1):

 

 

 

 

 

 

 

GAAP gross margin

 

72.6

%

 

 

73.3

%

 

 

73.5

%

 

 

73.3

%

Stock-based compensation expense

 

1.7

%

 

 

2.0

%

 

 

1.7

%

 

 

1.9

%

Employer payroll taxes on employee stock transactions

 

0.1

%

 

 

0.4

%

 

 

0.2

%

 

 

0.2

%

Amortization of acquired intangibles

 

1.4

%

 

 

1.3

%

 

 

1.2

%

 

 

1.5

%

Non-GAAP gross margin

 

75.8

%

 

 

77.0

%

 

 

76.7

%

 

 

76.9

%

Operating Loss Reconciliation:

 

 

 

 

 

 

 

GAAP operating loss

$

(45,849

)

 

$

(34,461

)

 

$

(114,058

)

 

$

(92,401

)

Stock-based compensation expense

 

37,393

 

 

 

25,227

 

 

 

97,553

 

 

 

65,305

 

Employer payroll taxes on employee stock transactions

 

1,643

 

 

 

5,685

 

 

 

8,634

 

 

 

10,436

 

Amortization of acquired intangibles

 

4,277

 

 

 

3,538

 

 

 

11,644

 

 

 

10,630

 

Acquisition-related expenses

 

2,731

 

 

 

 

 

 

4,999

 

 

 

 

Non-GAAP operating income (loss)

$

195

 

 

$

(11

)

 

$

8,772

 

 

$

(6,030

)

Operating Margin Reconciliation(1):

 

 

 

 

 

 

 

GAAP operating margin

 

(20.5

)%

 

 

(21.9

)%

 

 

(18.3

)%

 

 

(21.4

)%

Stock-based compensation expense

 

16.7

%

 

 

16.1

%

 

 

15.7

%

 

 

15.2

%

Employer payroll taxes on employee stock transactions

 

0.7

%

 

 

3.6

%

 

 

1.4

%

 

 

2.4

%

Amortization of acquired intangibles

 

1.9

%

 

 

2.3

%

 

 

1.9

%

 

 

2.5

%

Acquisition-related expenses

 

1.2

%

 

 

0.0

%

 

 

0.8

%

 

 

0.0

%

Non-GAAP operating margin

 

0.1

%

 

 

0.0

%

 

 

1.4

%

 

 

(1.4

)%

Net Loss Reconciliation:

 

 

 

 

 

 

 

GAAP net loss

$

(56,726

)

 

$

(37,974

)

 

$

(138,238

)

 

$

(86,133

)

Stock-based compensation expense

 

37,393

 

 

 

25,227

 

 

 

97,553

 

 

 

65,305

 

Employer payroll taxes on employee stock transactions

 

1,643

 

 

 

5,685

 

 

 

8,634

 

 

 

10,436

 

Amortization of acquired intangibles

 

4,277

 

 

 

3,538

 

 

 

11,644

 

 

 

10,630

 

Acquisition-related expenses

 

2,731

 

 

 

 

 

 

4,999

 

 

 

 

Income tax(2)

 

(148

)

 

 

(427

)

 

 

(679

)

 

 

(577

)

Non-GAAP net loss

$

(10,830

)

 

$

(3,951

)

 

$

(16,087

)

 

$

(339

)

Non-GAAP net loss per share attributable to ordinary shareholders, basic and diluted

$

(0.12

)

 

$

(0.04

)

 

$

(0.17

)

 

$

 

Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted

 

93,015,185

 

 

 

88,341,038

 

 

 

92,140,919

 

 

 

86,296,028

 

(1) Totals may not sum, due to rounding. Gross margin, operating margin, and earnings per share are calculated based upon the respective underlying, non-rounded data.

(2) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

 

Elastic N.V.

RECONCILIATION OF GAAP TO NON-GAAP DATA

(amounts in thousands)

(Unaudited)

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cost of revenue reconciliation:

 

 

 

 

 

 

 

GAAP cost of license - self-managed

$

501

 

 

$

346

 

 

$

1,242

 

 

$

1,039

 

Amortization of acquired intangibles

 

(501

)

 

 

(346

)

 

 

(1,242

)

 

 

(1,039

)

Non-GAAP cost of license - self -managed

$

 

 

$

 

 

$

 

 

$

 

GAAP cost of subscription - self-managed and SaaS

$

47,076

 

 

$

31,426

 

 

$

126,097

 

 

$

86,464

 

Stock-based compensation expense

 

(2,064

)

 

 

(1,839

)

 

 

(6,262

)

 

 

(5,065

)

Employer payroll taxes on employee stock transactions

 

(147

)

 

 

(267

)

 

 

(474

)

 

 

(487

)

Amortization of acquired intangibles

 

(2,545

)

 

 

(1,764

)

 

 

(6,314

)

 

 

(5,289

)

Non-GAAP cost of subscription - self-managed and SaaS

$

42,320

 

 

$

27,556

 

 

$

113,047

 

 

$

75,623

 

GAAP cost of professional services

$

13,707

 

 

$

10,196

 

 

$

37,491

 

 

$

27,744

 

Stock-based compensation expense

 

(1,726

)

 

 

(1,359

)

 

 

(4,593

)

 

 

(3,287

)

Employer payroll taxes on employee stock transactions

 

(113

)

 

 

(322

)

 

 

(591

)

 

 

(424

)

Non-GAAP cost of professional services

$

11,868

 

 

$

8,515

 

 

$

32,307

 

 

$

24,033

 

Operating expenses reconciliation:

 

 

 

 

 

 

 

GAAP research and development expense

$

71,749

 

 

$

51,400

 

 

$

194,894

 

 

$

143,766

 

Stock-based compensation expense

 

(16,029

)

 

 

(9,516

)

 

 

(41,784

)

 

 

(24,309

)

Employer payroll taxes on employee stock transactions

 

(663

)

 

 

(1,243

)

 

 

(2,916

)

 

 

(2,702

)

Acquisition-related expenses

 

(2,713

)

 

 

 

 

 

(3,695

)

 

 

 

Non-GAAP research and development expense

$

52,344

 

 

$

40,641

 

 

$

146,499

 

 

$

116,755

 

GAAP sales and marketing expense

$

105,069

 

 

$

71,087

 

 

$

288,055

 

 

$

191,712

 

Stock-based compensation expense

 

(12,545

)

 

 

(8,372

)

 

 

(30,798

)

 

 

(22,519

)

Employer payroll taxes on employee stock transactions

 

(512

)

 

 

(1,723

)

 

 

(3,874

)

 

 

(3,494

)

Amortization of acquired intangibles

 

(1,231

)

 

 

(1,428

)

 

 

(4,088

)

 

 

(4,302

)

Non-GAAP sales and marketing expenses

$

90,781

 

 

$

59,564

 

 

$

249,295

 

 

$

161,397

 

GAAP general and administrative expense

$

31,691

 

 

$

27,121

 

 

$

89,298

 

 

$

72,555

 

Stock-based compensation expense

 

(5,029

)

 

 

(4,141

)

 

 

(14,116

)

 

 

(10,125

)

Employer payroll taxes on employee stock transactions

 

(208

)

 

 

(2,130

)

 

 

(779

)

 

 

(3,329

)

Acquisition-related expenses

 

(18

)

 

 

 

 

 

(1,304

)

 

 

 

Non-GAAP general and administrative expense

$

26,436

 

 

$

20,850

 

 

$

73,099

 

 

$

59,101

 

About Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe the non-GAAP measures listed below are useful in evaluating our operating performance. We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In particular, free cash flow is not a substitute for cash used in operating activities. Additionally, the utility of free cash flow as a measure of our liquidity is further limited as it does not represent the total increase or decrease in our cash balance for a given period. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation of our historical non-GAAP financial measures to their most directly comparable financial measure stated in accordance with U.S. GAAP has been provided in the financial statement tables included in this press release. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures and key metrics as analytical tools. Investors are encouraged to review these reconciliations, and not to rely on any single financial measure to evaluate our business.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, and amortization of acquired intangible assets. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Non-GAAP Operating Income (Loss) and Non-GAAP Operating Margin

We define non-GAAP operating income (loss) and non-GAAP operating margin as GAAP operating loss and GAAP operating margin, respectively, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, and acquisition-related expenses. We believe non-GAAP operating income (loss) and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Non-GAAP Net Earnings (Loss) Per Share

We define non-GAAP net earnings (loss) per share as GAAP net loss per share, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses and the tax effects related to the foregoing. We believe non-GAAP net earnings (loss) per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this metric generally eliminates the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin

Adjusted free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities adjusted for cash paid for interest less cash used for investing activities for purchases of property and equipment, and capitalized internal-use software costs. Adjusted free cash flow margin is calculated as adjusted free cash flow divided by total revenue. Adjusted free cash flow does not represent residual cash flow available for discretionary expenditures since, among other things, we have mandatory debt service requirements.

Calculated Billings

We define calculated billings as total revenue plus the increase (decrease) in total deferred revenue as presented on or derived from our consolidated statements of cash flows less the (increase) decrease in total unbilled accounts receivable in a given period. Calculated billings exclude deferred revenue and unbilled accounts receivable acquired through acquisitions in the period of acquisition. We typically invoice our customers annually in advance, and to a lesser extent multi-year in advance, quarterly in advance, monthly in advance, monthly in arrears or upon delivery. Our management uses calculated billings to understand and evaluate our near-term cash flows and operating results.

Constant Currency

We compare the percent change in certain results from one period to another period using constant currency information to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. In presenting this information, current and comparative prior period results are converted into United States dollars at the exchange rates in effect on the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.

Janice Oh Elastic Investor Relations ir@elastic.co

Lisa Boughner Elastic Corporate Communications lisa.boughner@elastic.co

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