Elastic reported earnings that significantly exceeded both analyst and management expectations, showcasing robust cloud and subscription growth.
Elastic (ESTC 14.22%) is a provider in search AI technology, offering solutions for search, observability, and security. On Feb. 27, 2025, it released its third-quarter earnings for fiscal 2025, showcasing standout results that surpassed both internal and analyst forecasts. The company reported a non-GAAP earnings per share (EPS) of $0.63 and revenue of $382M, both outperforming management guidance and analyst predictions significantly. This robust performance, amid market trends favoring elastic cloud adoption, signals a strong operational quarter.
| Metric | Q3 FY2025 | Q3 Estimate | Q3 FY2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP Diluted) | $0.63 | $0.47 | $0.36 | +75.0% |
| Revenue | $382M | $368M | $328M | +17.0% |
| Elastic Cloud Revenue | $180M | – | $143M | +26.0% |
| Non-GAAP Operating Margin | 17% | – | 13.2% | +3.8 pp |
| Adjusted Free Cash Flow | $99M | – | $63M | +57.1% |
Source: Analyst estimates provided by FactSet. Management expectations based on management’s guidance, as provided in 2024-11-21 earnings report.
Elastic’s Business Snapshot
Elastic offers a platform combining search, observability, and security solutions, powered by its Elastic Stack, which includes products like Elasticsearch and Kibana for real-time data analysis. This core technology supports a wide range of applications, from search functions to security threat detection.
Recently, Elastic has focused on expanding cloud adoption and enhancing its subscription-based model. Its business leverages cloud growth through strategic partnerships with major providers, facilitating elastic, scalable solutions. Its pricing strategy, which ties costs to resource usage, supports deep integration across customer operations.
Quarterly Performance and Achievements
In Q3 FY2025, Elastic reported a Non-GAAP EPS of $0.63, significantly exceeding the analyst expectation of $0.47. This robust earnings result was supported by a revenue of $382 million, outpacing analyst estimates of $368 million and notably surpassing management’s guidance of up to $369 million. Key growth drivers included a 26% increase in Elastic Cloud revenue year over year, highlighting its strong market presence and adoption within its cloud offerings.
Elastic’s non-GAAP operating margin improved to 17%, outperforming the anticipated 15% set by management. This improvement reflects strong operational execution and the company’s focus on optimizing its cloud and subscription services, which now account for 94% of total revenue. Notably, Elastic Cloud saw revenue climb to $180 million, marking a 26% year-over-year growth.
The quarter also highlighted Elastic’s innovation in product offerings with the introduction of the Elastic Rerank Model and the general availability of Elastic Cloud Serverless. These product advancements emphasize its place in search AI technology. Additionally, subscription revenue sustained its position with a steady customer base, reaching approximately 21,350, bolstering recurring revenue streams.
On a quarterly comparison, Elastic increased its total customer count to 1,460 with annual contract values surpassing $100,000, further cementing its strategic footprint and customer loyalty. While the financial metrics remain strong, potential competition in the cloud and AI sectors requires Elastic to maintain its differentiation strategies.
Outlook and Forward Strategy
Looking ahead to Q4, Elastic projects revenue between $379 million and $381 million, sustaining a trajectory of double-digit growth of 13% compared to the prior year. The full fiscal 2025 revenue guidance remains between $1.474 billion and $1.476 billion. The company is committed to continuing its efforts in cloud adoption and advanced AI driven solutions.
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