Elastic N.V. Q4 FY2025 earnings call

• Innovation and Growth: Elastic achieved 16% revenue growth in Q4, with Elastic Cloud growing 23%. Non-GAAP operating margin was 15%. Ended FY 2025 with over 1,510 customers spending over $100,000 and over 210 customers with over $1 million in committed annual contract value.
• GenAI and Consolidation: Over 2,000 Elastic Cloud customers using Elastic for GenAI, with over 310 spending $100,000+ annually. 25% of $1 million+ ACV customers using Elastic for GenAI. Announced BBQ technology for vector compression, and secured deals like a 7-figure expansion with a global financial institution.
• Partnerships: Strategic collaboration with AWS, partnership with Google where Elasticsearch is first third-party native grounding engine on Vertex AI. Acquired Keep for AIOps.
• Go-to-Market: Annual sales kickoff completed, focusing on enterprise and mid-market customers. Serverless offering in general availability, and new SIEM migration tool.

In the fourth quarter, total revenue was $388 million, growing 16% on an as-reported and constant currency basis. Subscription revenue was $362 million, growing 16% as reported and 17% in constant currency. Elastic Cloud within subscription revenue grew 23% on an as-reported and constant currency basis. Subscription revenue excluding monthly cloud was $315 million, growing 19% in Q4 as reported and in constant currency. For fiscal year 2025, subscription revenue excluding monthly cloud was $1.195 billion, growing 20% as reported and 21% in constant currency. Current remaining performance obligations (CRPO) in Q4 were approximately $1 billion, growing 18% year-over-year and 17% in constant currency. Customers with more than $1 million in annual contract value grew approximately 27% with 45 net new customers, and those with more than $100,000 in annual contract value grew approximately 14% with 180 net new customers.

For fiscal Q1 2026, total revenue is expected to be in the range of $396 million to $398 million (14% year-over-year growth at the midpoint or 13% year-over-year constant currency growth at the midpoint). Non-GAAP operating margin for the first quarter of fiscal 2026 is expected to be approximately 11.5%. Non-GAAP diluted earnings per share is in the range of $0.41 to $0.43. For fiscal year 2026, total revenue is expected to be in the range of $1.655 billion to $1.670 billion (12% year-over-year growth at the midpoint or 11% year-over-year constant currency growth at the midpoint). Non-GAAP operating margin for the full fiscal 2026 is expected to be approximately 16%. Non-GAAP diluted earnings per share is in the range of $2.24 to $2.32. Guidance is conservative due to macro uncertainty, especially U.S. public sector pressure.

• Macro conditions and evolving market dynamics.
• U.S. public sector constraints affecting sales cycles.
• Potential headwinds to consumption from Q2-Q4.

Q: Pinjalim Bora asked about guidance conservatism and leading indicators.

A: Navam Molyanda discussed guidance conservatism due to macro uncertainty and emphasized subscription revenue less monthly cloud as a key metric.

Q: Sanjit Singh inquired about RAG adoption and Elastic's positioning.

A: Ashutosh Kulkarni talked about RAG being durable as it's critical for providing real-time context to language models.

Q: Sanjit Singh followed up on cloud performance and seasonal patterns.

A: Navam Molyanda explained cloud growth considering days-adjusted basis and seasonal patterns.

Q: Severin asked about go-to-market transformation and GenAI trajectory.

A: Ashutosh Kulkarni discussed sales capacity expansion, security specialization, and GenAI use cases.

Q: Raimo Lenschow inquired about revenue contribution from different parts and monthly cloud.

A: Ashutosh Kulkarni and Navam Molyanda talked about revenue contribution from enterprise/mid-market and monthly cloud being flat in 2026.

Q: Tyler Radke asked about AI commitments and public sector impact.

A: Ashutosh Kulkarni and Navam Molyanda explained AI commitments in large customers and public sector diversification.

Q: Howard Ma asked about AI search momentum and cloud growth.

A: Ashutosh Kulkarni and Navam Molyanda discussed AI impact on both cloud and self-managed, and public sector headwinds.

Q: Kash Rangan asked about refining go-to-market for growth.

A: Ashutosh Kulkarni talked about sales-led motion targeting enterprise/mid-market and adding security specialization.

Q: George Iwanyc asked about portfolio usage in large customers and vertical linearity.

A: Ashutosh Kulkarni and Navam Molyanda discussed portfolio usage in large customers and vertical linearity.

Q: Brent Thill asked about sales productivity and AI in sales.

A: Ashutosh Kulkarni talked about sales productivity and AI use in sales teams.