0001707753-25-000021
SEC filingRevenue grew 17% to $1.483B, driven by 26% Elastic Cloud growth; profitability improved with a shift to net income.
Elastic, the Search AI Company, enables customers to transform data into answers, actions, and outcomes by combining the precision of search with the intelligence of AI. Its Search AI Platform, available as a cloud service (Elastic Cloud Hosted and Elastic Cloud Serverless) or self-managed software, ingests data from any source and performs search, analysis, and visualization. The platform is built on Elasticsearch, a distributed, real-time vector database and analytics engine, with Kibana as the user interface. Elastic’s business model is based on resource-based subscription pricing, with a single code base across self-managed and hosted offerings. The core of Elasticsearch and Kibana is open source under the AGPL license.
Elastic offers three Search AI-powered solutions built on its platform: Elasticsearch, Elastic Observability, and Elastic Security. Elasticsearch provides search applications, generative AI and RAG capabilities, and workplace search. Elastic Observability includes log analytics, infrastructure monitoring, APM, digital experience monitoring, AIOps, and LLM observability. Elastic Security delivers SIEM, endpoint security, XDR, and cloud security. All solutions are available in public/private clouds, hybrid, or multi-cloud environments. Elastic Cloud is hosted on AWS, GCP, and Azure across more than 55 regions.
Elastic’s go-to-market combines direct sales, a network of partners (cloud providers, systems integrators, OEM/MSP, technology, and AI ecosystem partners), and low-touch self-service. Users can start with a free trial on Elastic Cloud or download free self-managed software. As of April 30, 2025, Elastic had approximately 21,500 customers. One channel partner accounted for 12% of total revenue in FY2025. Revenue from outside the U.S. represented 44% of total revenue in FY2025. Seasonality is observed, with highest sales in the fourth fiscal quarter.
The market is highly competitive. For search, competitors include Apache Solr, Lucidworks, Algolia, Coveo, Google, Pinecone, and Azure Cognitive Search. For observability: AppDynamics, Datadog, Dynatrace, New Relic, and Splunk. For security: Azure Sentinel, CrowdStrike, Google SecOps, Palo Alto Networks, and Splunk. Additionally, cloud providers like AWS offer forked versions without Elastic proprietary features. Elastic believes it competes favorably on product capabilities, ease of use, and flexible deployment, but acknowledges many competitors have greater resources.
Elastic’s growth strategies include: extending product leadership through AI investment; improving ease of use to increase adoption; acquiring new customers via community engagement and sales; expanding within existing customers through new use cases; increasing Elastic Cloud adoption; expanding partnerships; and pursuing strategic acquisitions.
As of April 30, 2025, Elastic had 3,537 employees in over 40 countries. The company is distributed by design. None of its U.S. employees are unionized; works councils or collective bargaining agreements exist in certain countries. Elastic emphasizes a culture of inclusion, continuous learning, and fair pay, with programs like Elastic Cares for charitable support.
For the fiscal year ended April 30, 2025, total revenue increased 17% to $1.483 billion from $1.267 billion in the prior year. Subscription revenue, which accounted for 93% of total revenue, grew 18% to $1.385 billion, driven largely by a 26% increase in Elastic Cloud revenue. Services revenue rose 9% to $98.8 million. Gross profit grew 18% to $1.103 billion, with total gross margin stable at 74%. Subscription gross margin improved slightly to 80% from 79%, benefiting from scale, while services gross margin declined sharply to 2% from 8% due to higher personnel and subcontractor costs growing faster than revenue. Operating loss improved to $54.9 million from $129.9 million, reflecting a 655 bps improvement in operating margin to (3.7%). Net loss was $108.1 million in FY2025 versus net income of $61.7 million in FY2024, which included a $184.5 million income tax benefit from the release of a valuation allowance. As a result, the effective tax rate was (242)% in FY2025 versus 150% in FY2024.
Subscription revenue remains the dominant driver, with Elastic Cloud contributing 46% of total revenue (up from 43%). The Net Expansion Rate was approximately 112% as of April 30, 2025, indicating strong expansion within the existing customer base. Services revenue grew modestly but at a lower margin, reflecting ongoing investment in the services organization.
Management expects Elastic Cloud’s contribution to continue increasing, with a modest adverse impact on gross margin due to third-party hosting costs. Operating expenses are expected to rise in absolute dollars as the company invests in R&D, sales, and marketing. The company believes existing cash and cash equivalents ($1.397 billion as of April 30, 2025) will be sufficient for at least the next 12 months, though it may require additional capital to support strategic initiatives. No formal financial guidance was provided in the MD&A section.
As of April 30, 2025, Elastic held $727.5 million in cash and cash equivalents and $669.7 million in marketable securities, totaling $1.40 billion in liquid assets. The company has no short-term debt; long-term debt consists solely of $575.0 million aggregate principal of 4.125% Senior Notes due July 2029, with a net carrying amount of $569.7 million. Shareholders' equity improved to $927.2 million from $738.2 million a year earlier, driven by stock-based compensation and equity issuances. Working capital (current assets less current liabilities) stands at $922.8 million.
Elastic has significant non-cancelable cloud hosting purchase commitments totaling $812.3 million, with annual minimums of $219.2 million (FY2026), $213.8 million (FY2027), $141.0 million (FY2028), $130.0 million (FY2029), and $108.3 million (FY2030). Additionally, other purchase commitments of $73.2 million exist primarily for corporate services and software licenses, mostly due within one year. Operating lease liabilities are $25.3 million (undiscounted $29.9 million) with a weighted-average remaining term of 5.1 years. The company also has $2.9 million in letters of credit outstanding. Remaining performance obligations (RPO) total $1.545 billion, of which 65% is expected to be recognized over the next 12 months and 90% within 24 months.
Elastic did not repurchase any shares during FY2025; treasury stock remains at $0.4 million (35,937 shares). No dividends have ever been declared. Debt activity was limited to amortization of debt issuance costs; no new debt was issued or repaid. Capital expenditures were $4.3 million (0.3% of revenue), primarily for property and equipment. The primary use of cash was for sales and marketing ($617 million) and R&D ($366 million), funded by operating cash flow of $266 million.
Elastic operates as a single reporting segment. Revenue is disaggregated into Elastic Cloud ($687.6 million, 46% of total), other subscriptions ($696.9 million, 47%), and services ($98.8 million, 7%). Geographically, the United States contributed $836.2 million (56%) and the rest of world $647.1 million (44%). No individual foreign country exceeded 10% of revenue. Long-lived assets (property and equipment and operating lease ROU assets) are concentrated in the U.S. ($16.5 million), Netherlands ($2.8 million), and UK ($2.8 million).
Elastic's risk factors highlight significant uncertainty around AI initiatives. The company has invested heavily in integrating AI and machine learning into its offerings, but faces rapid technological change, evolving regulation (e.g., EU AI Act), and intense competition. The risk that AI-related revenue may not materialize for several years is explicitly noted. Cybersecurity remains a top-tier risk: Elastic's role as a security provider for sensitive entities (U.S. government, defense contractors) makes it a target for nation-state actors. While past attacks were mitigated, future incidents could lead to data loss, remediation costs, and reputational damage.
Macroeconomic conditions—inflation, interest rate hikes, and geopolitical conflicts (Middle East, Russia-Ukraine)—are lengthening sales cycles and reducing customer consumption. The company notes that customers are optimizing usage under consumption-based arrangements, leading to revenue unpredictability. Foreign exchange volatility (EUR, GBP, JPY, AUD) adds another layer of financial uncertainty.
Competition is intense, particularly from Amazon's OpenSearch fork and other large players with greater resources. Elastic's decision to move away from open-source licensing (Apache 2.0) to Elastic License/SSPL may reduce developer adoption and brand awareness. The company's reliance on Elastic Cloud (46% of revenue) introduces margin pressure from hosting costs and consumption-based pricing, which also makes revenue less predictable.
Elastic has a history of losses ($108.1M in FY2025) and an accumulated deficit of $1.1B, despite one profitable year. The company's substantial debt ($575M in Senior Notes) imposes restrictive covenants and interest obligations. Seasonality and long sales cycles (especially for large enterprises) contribute to quarterly fluctuations. The loss of key personnel or failure to attract talent could hinder growth.
Evolving privacy laws (GDPR, U.S. state laws), AI regulation, and export controls (EAR, OFAC) pose compliance costs and operational restrictions. The company's international operations expose it to anti-corruption laws (FCPA, UK Bribery Act) and complex tax regimes (Dutch withholding tax, PFIC risks for U.S. holders).
Elastic relies on third-party cloud providers (AWS, Google, Microsoft) for Elastic Cloud; non-cancelable multi-year commitments create fixed costs regardless of usage. Supply chain disruptions from geopolitical events could affect hardware availability for data centers.
The provided filing excerpt does not contain the actual cash flow statement figures. The document includes the auditor's report and a reference to the Consolidated Statements of Cash Flows on page 74, but the numerical data for operating, investing, and financing cash flows, as well as net income, are not present in the text. Therefore, a detailed analysis of CFO vs. Net Income, capex intensity, or FCF coverage cannot be performed. The excerpt confirms that the cash flow statement is part of the financial statements but does not disclose any line items. No anomalies or working capital swings can be identified from the available information.