Elastic N.V. Q2 FY2026 earnings call

Key Points - Q2 was an outstanding quarter with 16% revenue growth and a 16.5% non-GAAP operating margin, driven by AI positively impacting all business areas. - Secured over 30 commitments valued over $1,000,000 in annual commitment value, including 5 deals over $10,000,000 and 2 over $20,000,000. - Achieved sales-led subscription revenue growth of 18% across Elastic Cloud and self-managed offerings. - IDC recognized Elastic as a leader in multiple Marketscape reports, including in the Worldwide Observability Platforms and Worldwide General Purpose Knowledge Discovery for Search reports. - Introduced new AI capabilities like AgentBuilder and acquired GINA AI to enhance vector search and Gen AI applications. - Saw strong demand for Gen AI applications, with over 2,450 customers on Elastic Cloud using it for Gen AI use cases.

In the second quarter, Elastic N.V. reported total revenue of $423,000,000, representing a 16% year-over-year growth. Sales-led subscription revenue was $349,000,000, growing 18% year-over-year. The current remaining performance obligation (CRPO) at the end of Q2 was approximately $971,000,000, which grew 17% year-over-year. The remaining performance obligation (RPO) grew 19% in the quarter, driven by strong deal momentum.

Fiscal 2026 Guidance - Raised full-year 2026 total revenue guidance to $437,000,000 to $439,000,000 (15% growth midpoint). - Sales-led subscription revenue guidance increased to $364,000,000 to $366,000,000 (17% growth midpoint). - Expected non-GAAP operating margin for 2026 is approximately 17.5%. - For full fiscal 2026, total revenue is expected to be in the range of $1,715,000,000 to $1,721,000,000 (16% growth midpoint). - Sales-led subscription revenue is expected to be $1,417,000,000 to $1,423,000,000 (18% growth midpoint). - Non-GAAP diluted earnings per share is expected to be in the range of $2.40 to $2.46.

Risks - Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks are detailed in the press release, slides on the Investor Relations website, and filings with the Securities and Exchange Commission.

Q: Matthew George Hedberg asks about the performance of non-AI native customers.

A: Ashutosh Kulkarni states that consumption is strong across all business areas, including traditional businesses like observability and security, and that strong commitment activity is driving this.

Q: Matthew George Hedberg follows up on billings lag.

A: Navam Welihinda mentions seasonality and the impact of the U.S. government shutdown in October as factors contributing to the billings lag, but notes that ACV growth to date is stronger than the prior year and that commitment momentum remains strong