Elastic Reports Better-Than-Expected Q1 Results; Gives Guidance

Elastic NV (ESTC), an open-source search company, reported better-than-expected first-quarter results aided by 89% year-over-year revenue growth in its Elastic Cloud segment. Shares jumped as much as 6% on the news during the after-hours trading session on August 25.

Revenue for the quarter grew 50% year-over-year to $193.10 million, significantly higher than the Street’s estimate of $173.17 million.

Compared to the year-ago period, Elastic’s Calculated Billings increased 27% to $165 million, and Deferred Revenue grew 31% to $364.4 million. Also, at quarter-end, ESTC reported over 16,000 subscription customers, with more than 780 customers with an annual contract value of more than $1 million.

Additionally, the company posted earnings of $0.04 per share, down 33% year-over-year, but much better than analysts’ estimated loss of $0.10 per share. (See Elastic stock charts on TipRanks)

Commenting on the quarterly results, Shay Banon, founder, and CEO of the company said, “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…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.”

Based on its current performance, ESTC forecasts second-quarter revenue and loss to fall in the range of $193 – $195 million and $0.19 – $0.15 per share, respectively.

Moreover, for the full year 2022, the company projects revenue to be in the range of $808 – $814 million, while the consensus is pegged at $789 million. Also, the Fiscal 2022 loss is expected to fall in the range of $0.67 – $0.57 per share, compared to the consensus estimated loss of $0.50 per share.

In response to the solid results, Robert W. Baird analyst Jonathan Ruykhaver lifted the price target on the stock to $170 (7.6% upside potential) from $145 while maintaining a Hold rating.

The analyst notes that Elastic witnessed strong cloud momentum and the overall tone of management was optimistic around innovation across the product portfolio and competitive positioning.

Ruykhaver said, “Strengthening demand trends, strong execution, and increased investment into the business all suggest guidance for both F2Q and FY22 guidance remains conservative. Overall, we continue to appreciate Elastic’s ability to innovate, and continue to look to see more meaningful growth in large customers as a validation of the platform opportunity.”

Based on 12 Buys and 1 Hold, the stock has an overall Strong Buy consensus rating. The average Elastic price target of $177.08 implies 12.1% upside potential to current levels. Shares have gained 39.8% over the past year.

Furthermore, Elastic scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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