Elastic Reports Strong Fourth Quarter and Fiscal 2022 Financial Results

Rhea-AI Summary

Elastic (NYSE: ESTC) reported robust financial results for Q4 and FY22, with total revenue of $239.4 million in Q4, reflecting a 35% year-over-year increase, and $862.4 million for FY22, up 42%. Elastic Cloud revenue soared 71% in Q4 to $87.7 million and 80% for the fiscal year. However, GAAP net losses per share were $0.70 in Q4 and $2.20 for FY22. The company forecasts Q1 FY23 revenue between $244 million and $246 million, marking 27% growth year-over-year.

Positive

• Q4 revenue of $239.4 million, up 35% YoY.
• Elastic Cloud revenue reached $87.7 million in Q4, a 71% YoY increase.
• Total FY22 revenue of $862.4 million, up 42% YoY.
• Elastic Cloud revenue for FY22 was $298.6 million, an 80% YoY growth.
• Strong customer growth with over 18,600 subscription customers.
• Guidance for Q1 FY23 revenue between $244 million and $246 million.

Negative

• GAAP operating loss of $59.6 million in Q4.
• GAAP net loss per share of $0.70 in Q4 and $2.20 for FY22.
• Operating cash flow was negative at $3.1 million in Q4.

Q4 Revenue of $239.4 million, Up 35% year-over-year (37% in constant currency)

Q4 Elastic Cloud Revenue of $87.7 million, Up 71% year-over-year (72% in constant currency)

FY22 Revenue of $862.4 million, Up 42% year-over-year (41% in constant currency)

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Elastic (NYSE: ESTC) (“Elastic”), the company behind Elasticsearch and the Elastic Stack, announced strong results for its fourth quarter and full fiscal year (ended April 30, 2022).

Fourth Quarter Fiscal 2022 Financial Highlights

• Total revenue was $239.4 million, an increase of 35% year-over-year, or 37% on a constant currency basis
• Elastic Cloud revenue was $87.7 million, an increase of 71% year-over-year, or 72% on a constant currency basis
• GAAP operating loss was $59.6 million; GAAP operating margin was -25%
• Non-GAAP operating loss was $7.9 million; non-GAAP operating margin was -3%
• GAAP net loss per share was $0.70; non-GAAP net loss per share was $0.16
• Operating cash flow was -$3.1 million with adjusted free cash flow of -$5.3 million
• Cash and cash equivalents were $860.9 million as of April 30, 2022

Full Fiscal 2022 Financial Highlights

• Total revenue was $862.4 million, an increase of 42% year-over-year, or 41% on a constant currency basis
• Elastic Cloud revenue was $298.6 million, an increase of 80% year-over-year, or 79% on a constant currency basis
• GAAP operating loss was $173.7 million; GAAP operating margin was -20%
• Non-GAAP operating profit was $0.9 million; non-GAAP operating margin was 0%
• GAAP net loss per share was $2.20; non-GAAP net loss per share was $0.33
• Operating cash flow was $5.7 million with adjusted free cash flow of $10.7 million

“We had a strong fourth quarter and closed out an excellent year, driven by robust growth in Elastic Cloud, which grew 80% year-over-year in fiscal year 2022, and increased to 37% of total revenue in Q4,” said Ash Kulkarni, CEO, Elastic. “The strong momentum in Elastic Cloud puts us on the path to deliver over 50% of total revenue from Elastic Cloud exiting Q4 of fiscal year 2024, which is ahead of our prior outlook. The enormous market opportunity, the strategic relevance of our solutions to our customers and partners, and the momentum in Elastic Cloud make us confident that we can achieve $2 billion in total revenue in fiscal year 2025.”

Fourth Quarter Fiscal 2022 Key Metrics and Recent Business Highlights

Key Customer Metrics

• Total subscription customer count was over 18,600, compared to over 17,900 in Q3 FY22, and over 15,000 in Q4 FY21
• Total customer count with Annual Contract Value (ACV) greater than $100,000 was over 960, compared to over 890 in Q3 FY22, and over 730 in Q4 FY21
• Net Expansion Rate was just under 130%, and was flat compared to Q3 FY22

Cloud Partner Momentum

• Announced expanded collaboration with AWS to accelerate momentum and build, market, and deliver seamless access for shared customers
• Announced expanded strategic partnership with Microsoft to simplify cloud operations, launch co-selling activities, and make it easy to bring data from Azure services into Elastic, and added four new Azure regions in the Americas, Asia, and Africa
• Joined the Data Cloud Alliance, led by Google Cloud, as a founding member to accelerate the path to value creation and solve the modern data challenges of today’s enterprises

Product Innovations and Updates

• Announced Elastic 8.1 with new capabilities to help customers defend against cyberattacks and accelerate app development with expanded data integrations, faster indexing speeds, and more efficient storage utilization
• Announced Elastic 8.2 with new capabilities that enable customers to build seamless search experiences, accelerate troubleshooting of cloud-native services, and streamline security analyst workflows
• Enhanced machine learning and natural language processing capabilities across both releases to deliver more relevant results
• Achieved Payment Card Industry Data Security Standard (PCI-DSS) compliance across all Elastic Cloud regions

Other Business Highlights

• Named a Strong Performer by Forrester Research in The Forrester Wave™: Endpoint Detection and Response (EDR) Providers, Q2 2022
• Appointed Carolyn Herzog as chief legal officer
• Appointed Janesh Moorjani as chief operating officer in addition to his role as chief financial officer

Financial Outlook

The Company is providing the following guidance:

For the first quarter of fiscal 2023 (ending July 31, 2022):

• Total revenue is expected to be between $244 million and $246 million, representing 27% year-over-year growth at the midpoint (32% year-over-year constant currency growth at the midpoint)
• Non-GAAP operating margin is expected to be between -3.8% and -2.8%
• Non-GAAP net loss per share is expected to be between $0.20 and $0.16, assuming between 94.0 million and 95.0 million weighted average ordinary shares outstanding

For fiscal 2023 (ending April 30, 2023):

• Total revenue is expected to be between $1,080 million and $1,086 million, representing 26% year-over-year growth at the midpoint (29% year-over-year constant currency growth at the midpoint)
• Non-GAAP operating margin is expected to be between 0.0% and 0.5%
• Non-GAAP net loss per share is expected to be between $0.36 and $0.28, assuming between 95.0 million and 97.0 million weighted average ordinary shares outstanding

See the section titled “Forward-Looking Statements” below for information on the factors that could cause our actual results to differ materially. We present forward-looking non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled “About Non-GAAP Financial Measures” for an explanation of these non-GAAP measures. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures for operating margin and net loss per share is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of the costs and expenses that may be incurred in the future. These items necessary to reconcile such non-GAAP measures could be material and have a significant impact on the Company’s results computed in accordance with GAAP.

Conference Call and Webcast

Elastic’s executive management team will host a conference call today at 2:00 p.m. PT/5:00 p.m. ET to discuss the Company’s financial results and business outlook. A live audio webcast of the conference call will be available through Elastic’s Investor Relations website at ir.elastic.co. Slides will accompany the webcast. The replay of the webcast and slides will be available for two months.

About Elastic

Elastic (NYSE: ESTC) is a leading platform for search-powered solutions. We help organizations, their employees, and their customers accelerate the results that matter. With solutions in Enterprise Search, Observability, and Security, we enhance customer and employee search experiences, keep mission-critical applications running smoothly, and protect against cyber threats. Delivered wherever data lives, in one cloud, across multiple clouds, or on-premise, Elastic enables its customers to achieve new levels of success at scale and on a single platform. Learn more at elastic.co.

Elastic and associated marks are trademarks or registered trademarks of Elastic N.V. and its subsidiaries. All other company and product names may be trademarks of their respective owners.

Use of Non-GAAP Financial Measures

In relation to constant currency non-GAAP financial measures, the only reconciling item between GAAP financial measures and non-GAAP financial measures is the effect of foreign currency rate fluctuations. Further details on how we calculate such effects can be found in the definition of “Constant Currency” below. Reconciliations of other GAAP financial measures to their respective non-GAAP financial measures are included at the end of this press release following the accompanying financial data. For a description of non-GAAP financial measures, including the reasons management uses each measure, please see the section of this press release titled “About Non-GAAP Financial Measures.”

Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risk and uncertainties, which include, but are not limited to, statements regarding our expected financial results for the fiscal quarter ending July 31, 2022 and the fiscal year ending April 30, 2023, our expectations regarding demand for our products and solutions and our future revenue, our assessments of the strength of our solutions and products, the expected performance or benefits of our offerings, our expectations regarding market and growth opportunities and our ability to address those opportunities, our expectations regarding the growth and adoption of our Elastic Cloud offering, and the expected benefits of our investments. These forward-looking statements are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Our expectations and beliefs in light of currently available information regarding these matters may not materialize. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements due to uncertainties, risks, and changes in circumstances, including but not limited to those related to: our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses (which include changes in sales and marketing, research and development and general and administrative expenses), and our ability to achieve and maintain future profitability; the effects of currency movements on our financial results, our ability to continue to deliver and improve our offerings and develop new offerings, including security-related product and Elastic Cloud offerings; customer acceptance and purchase of our existing offerings and new offerings, including the expansion and adoption of our Elastic Cloud offerings; our inability to realize value from investments in the business, including R&D investments and strategic transactions; our ability to maintain and expand our user and customer base; the impact of the COVID-19 pandemic, including any variants, on the macroeconomic environment, on our business, operations, hiring and financial results, and on businesses of our customers and partners, including their spending priorities, the effect of lockdowns, restrictions and new regulations; the impact of our licensing model on the use and adoption of our software; our pricing model strategies and their anticipated impacts on our business and results of operations; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our international expansion strategy; our operating results and cash flows; our beliefs and objectives for future operations; the sufficiency of our capital resources; our ability to successfully execute our go-to-market strategy, including by expanding our relationships with our partners, and expand in our existing markets and into new markets, and our ability to forecast customer retention and expansion; and general market, political, economic and business conditions (including impacts arising from the ongoing military conflict between Russia and Ukraine).

Any additional or unforeseen effect from the COVID-19 pandemic or ongoing conflict between Russia and Ukraine may exacerbate these risks. Additional risks and uncertainties that could cause actual outcomes and results to differ materially are included in our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2021 and any subsequent reports filed with the SEC. SEC filings are available on the Investor Relations section of Elastic’s website at ir.elastic.co and the SEC’s website at www.sec.gov. Elastic assumes no obligation to, and does not currently intend to, update any such forward-looking statements, except as required by law.

Contact Information
Nikolay Beliov
Elastic Investor Relations
ir@elastic.co

Lisa Boughner
Elastic Corporate Communications
lisa.boughner@elastic.co

Elastic N.V. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands, except share and per share amounts) (Unaudited)
	Three Months Ended April 30,								Year Ended April 30,
		2022				2021				2022				2021
Revenue
License - self-managed	$	22,507			$	22,321			$	76,964			$	67,994
Subscription - self-managed and SaaS		199,207				142,218				721,806				499,345
Total subscription revenue		221,714				164,539				798,770				567,339
Professional services		17,641				13,071				63,604				41,150
Total revenue		239,355				177,610				862,374				608,489
Cost of revenue
Cost of license - self-managed		306				347				1,548				1,386
Cost of subscription - self-managed and SaaS		50,559				34,663				176,656				121,127
Total cost of revenue - subscription		50,865				35,010				178,204				122,513
Cost of professional services		16,499				10,797				53,990				38,541
Total cost of revenue		67,364				45,807				232,194				161,054
Gross profit		171,991				131,803				630,180				447,435
Operating expenses
Research and development		78,867				55,437				273,761				199,203
Sales and marketing		118,603				82,165				406,658				273,877
General and administrative		34,143				31,278				123,441				103,833
Total operating expenses		231,613				168,880				803,860				576,913
Operating loss		(59,622	)			(37,077	)			(173,680	)			(129,478	)
Other income (expense), net
Interest expense		(6,389	)			(107	)			(20,716	)			(185	)
Other income (expense), net		(2,884	)			(553	)			(3,393	)			7,949
Loss before income taxes		(68,895	)			(37,737	)			(197,789	)			(121,714	)
Provision for (benefit from) income taxes		(3,285	)			5,564				6,059				7,720
Net loss	$	(65,610	)		$	(43,301	)		$	(203,848	)		$	(129,434	)
Net loss per share attributable to ordinary shareholders, basic and diluted	$	(0.70	)		$	(0.48	)		$	(2.20	)		$	(1.48	)
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted		93,806,902				90,028,822				92,547,145				87,207,094

Elastic N.V. CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share and per share amounts) (Unaudited)
	As of April 30, 2022				As of April 30, 2021
Assets
Current assets:
Cash and cash equivalents	$	860,949			$	400,814
Restricted cash		2,688				2,894
Accounts receivable, net of allowance for credit losses of $2,700 and $2,344 as of April 30, 2022 and April 30, 2021, respectively		215,228				160,415
Deferred contract acquisition costs		43,628				36,089
Prepaid expenses and other current assets		41,215				37,002
Total current assets		1,163,708				637,214
Property and equipment, net		7,207				8,881
Goodwill		303,906				198,851
Operating lease right-of-use assets		25,437				25,464
Intangible assets, net		45,800				36,286
Deferred contract acquisition costs, non-current		74,419				50,263
Deferred tax assets		5,811				3,697
Other assets		16,643				12,516
Total assets	$	1,642,931			$	973,172
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	28,403			$	7,248
Accrued expenses and other liabilities		53,930				28,909
Accrued compensation and benefits		68,002				52,525
Operating lease liabilities		11,219				8,528
Deferred revenue		431,776				352,805
Total current liabilities		593,330				450,015
Deferred revenue, non-current		33,518				44,895
Long-term debt, net		566,520				—
Operating lease liabilities, non-current		16,482				19,649
Other liabilities, non-current		17,648				7,782
Total liabilities		1,227,498				522,341
Commitments and contingencies
Shareholders’ equity:
Convertible preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of April 30, 2022 and April 30, 2021		—				—
Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 94,174,914 and 90,533,985 shares issued and outstanding as of April 30, 2022 and April 30, 2021, respectively		990				948
Treasury stock		(369	)			(369	)
Additional paid-in capital		1,250,108				1,071,675
Accumulated other comprehensive loss		(18,130	)			(8,105	)
Accumulated deficit		(817,166	)			(613,318	)
Total shareholders’ equity		415,433				450,831
Total liabilities and shareholders’ equity	$	1,642,931			$	973,172

Elastic N.V. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (Unaudited)
	Three Months Ended April 30,								Year Ended April 30,
		2022				2021				2022				2021
Cash flows from operating activities
Net loss	$	(65,610	)		$	(43,301	)		$	(203,848	)		$	(129,434	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization		5,170				4,381				19,728				17,237
Amortization of deferred contract acquisition costs		17,365				12,536				60,738				40,991
Amortization of debt issuance costs		249				—				803				—
Non-cash operating lease cost		2,377				2,671				8,636				7,927
Stock-based compensation expense, net of amounts capitalized		43,641				28,375				140,612				93,680
Deferred income taxes		(2,211	)			321				(2,430	)			33
Foreign currency transaction (gain) loss		277				(44	)			1,984				(9,507	)
Other		—				(153	)			98				(142	)
Changes in operating assets and liabilities:
Accounts receivable, net		(71,988	)			(39,283	)			(62,187	)			(24,037	)
Deferred contract acquisition costs		(35,521	)			(26,525	)			(96,755	)			(81,137	)
Prepaid expenses and other current assets		(777	)			(9,009	)			(3,427	)			(4,192	)
Other assets		1,628				(9,344	)			825				(4,107	)
Accounts payable		6,584				1,546				21,036				(4,775	)
Accrued expenses and other liabilities		9,653				6,422				27,192				8,118
Accrued compensation and benefits		13,089				9,726				17,775				3,867
Operating lease liabilities		(2,450	)			(2,512	)			(8,888	)			(7,914	)
Deferred revenue		75,474				62,628				83,780				115,937
Net cash provided by (used in) operating activities		(3,050	)			(1,565	)			5,672				22,545
Cash flows from investing activities
Purchases of property and equipment		(1,498	)			(1,180	)			(2,485	)			(3,912	)
Capitalization of internal-use software costs		(705	)			(317	)			(4,932	)			(317	)
Business acquisitions, net of cash acquired		—				—				(119,854	)			—
Other		—				1,391				—				2,711
Net cash used in investing activities		(2,203	)			(106	)			(127,271	)			(1,518	)
Cash flows from financing activities
Proceeds from the issuance of senior notes		—				—				575,000				—
Proceeds from issuance of ordinary shares upon exercise of stock options		8,870				9,704				36,410				77,258
Payments of debt issuance costs		—				—				(9,283	)			—
Net cash provided by financing activities		8,870				9,704				602,127				77,258
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(8,271	)			186				(20,599	)			6,034
Net increase (decrease) in cash, cash equivalents, and restricted cash		(4,654	)			8,219				459,929				104,319
Cash, cash equivalents, and restricted cash, beginning of period		868,291				395,489				403,708				299,389
Cash, cash equivalents, and restricted cash, end of period	$	863,637			$	403,708			$	863,637			$	403,708

Elastic N.V. REVENUE BY TYPE (amounts in thousands, except percentages) (Unaudited)
	Three Months Ended April 30,												Year Ended April 30,
	2022						2021						2022						2021
	Amount			% of Total Revenue			Amount			% of Total Revenue			Amount			% of Total Revenue			Amount			% of Total Revenue
Elastic Cloud	$	87,652		37	%		$	51,335		29	%		$	298,615		35	%		$	166,319		27	%
Other subscription		134,062		56	%			113,204		64	%			500,155		58	%			401,020		66	%
Total subscription revenue		221,714		93	%			164,539		93	%			798,770		93	%			567,339		93	%
Professional services		17,641		7	%			13,071		7	%			63,604		7	%			41,150		7	%
Total revenue	$	239,355		100	%		$	177,610		100	%		$	862,374		100	%		$	608,489		100	%

Elastic N.V. RECONCILIATION OF GAAP TO NON-GAAP DATA CALCULATED BILLINGS (amounts in thousands) (Unaudited)
	Three Months Ended April 30,							Year Ended April 30,
		2022				2021			2022				2021
Total revenue	$	239,355			$	177,610		$	862,374			$	608,489
Add: Increase in deferred revenue		75,474				62,628			83,780				115,937
Less: Decrease (increase) in unbilled accounts receivable		(1,939	)			632			(4,041	)			(2,582	)
Calculated billings	$	312,890			$	240,870		$	942,113			$	721,844

Elastic N.V. RECONCILIATION OF GAAP TO NON-GAAP DATA ADJUSTED FREE CASH FLOW (amounts in thousands, except percentages) (Unaudited)
	Three Months Ended April 30,								Year Ended April 30,
		2022				2021				2022				2021
Net cash provided by (used in) operating activities	$	(3,050	)		$	(1,565	)		$	5,672			$	22,545
Less: Purchases of property and equipment		(1,498	)			(1,180	)			(2,485	)			(3,912	)
Less: Capitalization of internal-use software		(705	)			(317	)			(4,932	)			(317	)
Add: Interest paid on long-term debt		—				—				12,452				—
Adjusted free cash flow	$	(5,253	)		$	(3,062	)		$	10,707			$	18,316
Net cash used in investing activities	$	(2,203	)		$	(106	)		$	(127,271	)		$	(1,518	)
Net cash provided by financing activities	$	8,870			$	9,704			$	602,127			$	77,258
Net cash provided by (used in) operating activities (as a percentage of total revenue)		(1	)%			(1	)%			1	%			4	%
Less: Purchases of property and equipment (as a percentage of total revenue)		(1	)%			(1	)%			—	%			(1	)%
Less: Capitalization of internal-use software (as a percentage of total revenue)		—	%			—	%			(1	)%			—	%
Add: Interest paid on long-term debt (as a percentage of total revenue)		—	%			—	%			1	%			—	%
Adjusted free cash flow margin		(2	)%			(2	)%			1	%			3	%

Elastic N.V. RECONCILIATION OF GAAP TO NON-GAAP DATA (amounts in thousands, except percentages, share and per share amounts) (Unaudited)
	Three Months Ended April 30,								Year Ended April 30,
		2022				2021				2022				2021
Gross Profit Reconciliation:
GAAP gross profit	$	171,991			$	131,803			$	630,180			$	447,435
Stock-based compensation expense		3,976				3,577				14,831				11,929
Employer payroll taxes on employee stock transactions		328				424				1,393				1,335
Amortization of acquired intangibles		2,947				2,109				10,503				8,437
Non-GAAP gross profit	$	179,242			$	137,913			$	656,907			$	469,136
Gross Margin Reconciliation(1):
GAAP gross margin		71.9	%			74.2	%			73.1	%			73.5	%
Stock-based compensation expense		1.7	%			2.0	%			1.7	%			2.0	%
Employer payroll taxes on employee stock transactions		0.1	%			0.2	%			0.2	%			0.2	%
Amortization of acquired intangibles		1.2	%			1.2	%			1.2	%			1.4	%
Non-GAAP gross margin		74.9	%			77.6	%			76.2	%			77.1	%
Operating Loss Reconciliation:
GAAP operating loss	$	(59,622	)		$	(37,077	)		$	(173,680	)		$	(129,478	)
Stock-based compensation expense		43,641				28,375				141,194				93,680
Employer payroll taxes on employee stock transactions		1,327				3,940				9,961				14,376
Amortization of acquired intangibles		4,139				3,537				15,783				14,167
Acquisition-related expenses		2,633				—				7,632				—
Non-GAAP operating income (loss)	$	(7,882	)		$	(1,225	)		$	890			$	(7,255	)
Operating Margin Reconciliation(1):
GAAP operating margin		(24.9	)%			(20.9	)%			(20.1	)%			(21.3	)%
Stock-based compensation expense		18.2	%			16.0	%			16.4	%			15.4	%
Employer payroll taxes on employee stock transactions		0.6	%			2.2	%			1.2	%			2.4	%
Amortization of acquired intangibles		1.7	%			2.0	%			1.8	%			2.3	%
Acquisition-related expenses		1.1	%			0.0	%			0.9	%			0.0	%
Non-GAAP operating margin		(3.3	)%			(0.7	)%			0.1	%			(1.2	)%
Net Loss Reconciliation:
GAAP net loss	$	(65,610	)		$	(43,301	)		$	(203,848	)		$	(129,434	)
Stock-based compensation expense		43,641				28,375				141,194				93,680
Employer payroll taxes on employee stock transactions		1,327				3,940				9,961				14,376
Amortization of acquired intangibles		4,139				3,537				15,783				14,167
Acquisition-related expenses		2,633				—				7,632				—
Income tax(2)		(817	)			(200	)			(1,496	)			(777	)
Non-GAAP net loss	$	(14,687	)		$	(7,649	)		$	(30,774	)		$	(7,988	)
Non-GAAP net loss per share attributable to ordinary shareholders, basic and diluted	$	(0.16	)		$	(0.08	)		$	(0.33	)		$	(0.09	)
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted		93,806,902				90,028,822				92,547,145				87,207,094

(1) Totals may not sum, due to rounding. Gross margin, operating margin, and earnings per share are calculated based upon the respective underlying, non-rounded data.

(2) Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

Elastic N.V. RECONCILIATION OF GAAP TO NON-GAAP DATA (amounts in thousands) (Unaudited)
	Three Months Ended April 30,								Year Ended April 30,
		2022				2021				2022				2021
Cost of revenue reconciliation:
GAAP cost of license - self-managed	$	306			$	347			$	1,548			$	1,386
Amortization of acquired intangibles		(306	)			(347	)			(1,548	)			(1,386	)
Non-GAAP cost of license - self -managed	$	—			$	—			$	—			$	—
GAAP cost of subscription - self-managed and SaaS	$	50,559			$	34,663			$	176,656			$	121,127
Stock-based compensation expense		(2,106	)			(2,040	)			(8,368	)			(7,105	)
Employer payroll taxes on employee stock transactions		(207	)			(187	)			(681	)			(674	)
Amortization of acquired intangibles		(2,641	)			(1,762	)			(8,955	)			(7,051	)
Non-GAAP cost of subscription - self-managed and SaaS	$	45,605			$	30,674			$	158,652			$	106,297
GAAP cost of professional services	$	16,499			$	10,797			$	53,990			$	38,541
Stock-based compensation expense		(1,870	)			(1,537	)			(6,463	)			(4,824	)
Employer payroll taxes on employee stock transactions		(121	)			(237	)			(712	)			(661	)
Non-GAAP cost of professional services	$	14,508			$	9,023			$	46,815			$	33,056
Operating expenses reconciliation:
GAAP research and development expense	$	78,867			$	55,437			$	273,761			$	199,203
Stock-based compensation expense		(18,127	)			(10,958	)			(59,911	)			(35,267	)
Employer payroll taxes on employee stock transactions		(400	)			(968	)			(3,316	)			(3,670	)
Acquisition-related expenses		(2,409	)			—				(6,104	)			—
Non-GAAP research and development expense	$	57,931			$	43,511			$	204,430			$	160,266
GAAP sales and marketing expense	$	118,603			$	82,165			$	406,658			$	273,877
Stock-based compensation expense		(15,000	)			(9,062	)			(45,798	)			(31,581	)
Employer payroll taxes on employee stock transactions		(413	)			(1,905	)			(4,287	)			(5,399	)
Amortization of acquired intangibles		(1,192	)			(1,428	)			(5,280	)			(5,730	)
Non-GAAP sales and marketing expenses	$	101,998			$	69,770			$	351,293			$	231,167
GAAP general and administrative expense	$	34,143			$	31,278			$	123,441			$	103,833
Stock-based compensation expense		(6,538	)			(4,778	)			(20,654	)			(14,903	)
Employer payroll taxes on employee stock transactions		(186	)			(643	)			(965	)			(3,972	)
Acquisition-related expenses		(224	)			—				(1,528	)			—
Non-GAAP general and administrative expense	$	27,195			$	25,857			$	100,294			$	84,958

About Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe the non-GAAP measures listed below are useful in evaluating our operating performance. We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures and key metrics as analytical tools. Investors are encouraged to review the differences between GAAP financial measures and the corresponding non-GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, and amortization of acquired intangible assets. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Non-GAAP Operating Income (Loss) and Non-GAAP Operating Margin

We define non-GAAP operating income (loss) and non-GAAP operating margin as GAAP operating loss and GAAP operating margin, respectively, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, and acquisition-related expenses. We believe non-GAAP operating income (loss) and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Non-GAAP Net Loss Per Share

We define non-GAAP net loss per share as GAAP net loss per share, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses and the tax effects related to the foregoing. We believe non-GAAP net loss per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this metric generally eliminates the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin

Adjusted free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities adjusted for cash paid for interest less cash used for investing activities for purchases of property and equipment, and capitalized internal-use software costs. Adjusted free cash flow margin is calculated as adjusted free cash flow divided by total revenue. Adjusted free cash flow does not represent residual cash flow available for discretionary expenditures since, among other things, we have mandatory debt service requirements.

Calculated Billings

We define calculated billings as total revenue plus the increase (decrease) in total deferred revenue as presented on or derived from our consolidated statements of cash flows less the (increase) decrease in total unbilled accounts receivable in a given period. Calculated billings exclude deferred revenue and unbilled accounts receivable acquired through acquisitions in the period of acquisition. We typically invoice our customers annually in advance, and to a lesser extent multi-year in advance, quarterly in advance, monthly in advance, monthly in arrears or upon delivery. Our management uses calculated billings to understand and evaluate our near-term cash flows and operating results.

Constant Currency

We compare the percent change in certain results from one period to another period using constant currency information to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. In presenting this information, current and comparative prior period results are converted into United States dollars at the exchange rates in effect on the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220601005973/en/

Nikolay Beliov

Elastic Investor Relations

ir@elastic.co

Lisa Boughner

Elastic Corporate Communications

lisa.boughner@elastic.co

Source: Elastic N.V.

FAQ

What were Elastic's Q4 revenue results for FY22?

Elastic reported a Q4 revenue of $239.4 million, a 35% increase year-over-year.

How did Elastic Cloud perform in Q4 FY22?

Elastic Cloud revenue in Q4 FY22 was $87.7 million, increasing by 71% year-over-year.

What is Elastic's guidance for Q1 FY23?

Elastic expects Q1 FY23 revenue to be between $244 million and $246 million, reflecting 27% year-over-year growth.

What were Elastic's net losses per share in FY22?

For FY22, Elastic reported a GAAP net loss per share of $2.20.

How much total revenue did Elastic generate in FY22?

Elastic's total revenue for FY22 was $862.4 million, up 42% year-over-year.