Elastic Reports Third Quarter Fiscal 2023 Financial Results
Elastic (NYSE: ESTC) reported its financial results for Q3 FY2023, revealing a total revenue of $275 million, marking a 23% increase year-over-year (or 27% in constant currency). Elastic Cloud revenue reached $111 million, up 38% year-over-year. GAAP operating loss was $69 million with a -25% operating margin, while non-GAAP operating income stood at $22 million, yielding an 8% margin. The company holds $878 million in cash reserves. Total subscription customers increased to approximately 19,900. Guidance for Q4 FY2023 estimates revenue of $276-$278 million and non-GAAP EPS between $0.08 and $0.10.
- Total revenue increased 23% year-over-year to $275 million.
- Elastic Cloud revenue grew 38% year-over-year to $111 million.
- Non-GAAP operating income reached $22 million, with an 8% margin.
- Total subscription customer count rose to approximately 19,900.
- Guidance for fiscal 2023 projects total revenue between $1,065 million and $1,067 million, a 24% year-over-year growth.
- GAAP operating loss of $69 million, with a -25% operating margin.
- GAAP net loss per share was $0.76.
Q3 Revenue of
Q3 Elastic Cloud Revenue of
Third Quarter Fiscal 2023 Financial Highlights
-
Total revenue was
, an increase of$275 million 23% year-over-year, or27% on a constant currency basis -
Elastic Cloud revenue was
, an increase of$111 million 38% year-over-year, or40% on a constant currency basis -
GAAP operating loss was
; GAAP operating margin was -$69 million 25% -
Non-GAAP operating income was
; non-GAAP operating margin was$22 million 8% -
GAAP net loss per share was
; non-GAAP diluted earnings per share was$0.76 $0.17 -
Operating cash flow was
with adjusted free cash flow of$7 million $19 million -
Cash and cash equivalents were
as of$878 million January 31, 2023
“We grew total revenue by
Third Quarter Fiscal 2023 Key Metrics and Recent Business Highlights
Key Customer Metrics
- Total subscription customer count was approximately 19,900 compared to approximately 19,700 in Q2 FY23, and over 17,900 in Q3 FY22
-
Total customer count with Annual Contract Value (ACV) greater than
was over 1,110, compared to over 1,050 in Q2 FY23, and over 890 in Q3 FY22$100,000 -
Net Expansion Rate was approximately
120%
Cloud Momentum
-
Elastic Cloud revenue represented
40% of total revenue versus36% in Q3 FY22 -
Doubled revenue from hyperscaler partner marketplaces with significant continuing momentum, including multiple transactions over
ACV$1M -
Partnered with cloud hyperscalers in go-to-market programs, including the
Google Cloud North American Partner Advisory Council and an AWS-led co-sell campaign aimed to drive AWS-originated opportunities to Elastic
Product Innovations and Updates
- Introduced new tools to implement and manage natural language processing across search indices to accelerate time to value and higher quality search results, including new dense vector optimizations with byte-sized integer per dimension
- Delivered interactive investigation guides, introduced new deception-based ransomware protection, and improved protections against data exfiltration through entity analytics in Elastic Security
- Added a new curated journey in Elastic Observability to accelerate root cause analysis and aid in the identification of performance or availability issues caused by application dependencies
Other Business Highlights
- Recognized as a Leader in the 2022 Gartner® Magic Quadrant™ for Insight Engines
-
Recognized as a Leader in The Forrester Wave™: Security Analytics Platforms, Q4 2022, and named a
Major Player in the IDC MarketScape: Worldwide SIEM 2022 Vendor Assessment - Named a Strong Performer in The Forrester Wave™: Artificial Intelligence For IT Operations (AIOps), Q4 2022
-
Hosted ElasticON Public Sector with more than 500 customers and prospects, and speakers from the
US Army ,Lawrence Livermore National Labs , and ECS -
Appointed
Mathew Donoghue as Chief Marketing Officer, focused on continuing to drive demand for the Company’s platform and solutions while delivering scalable growth
Financial Outlook
The Company is providing the following guidance for the fourth quarter of fiscal 2023 and is updating its prior full-year fiscal 2023 guidance as follows:
For the fourth quarter of fiscal 2023 (ending
-
Total revenue is expected to be between
and$276 million , representing$278 million 16% year-over-year growth at the midpoint (18% year-over-year constant currency growth at the midpoint) -
Non-GAAP operating margin is expected to be between
4.8% and5.2% -
Non-GAAP earnings per share is expected to be between
and$0.08 , assuming between 100 million and 101 million diluted weighted average ordinary shares outstanding$0.10
For fiscal 2023 (ending
-
Total revenue is expected to be between
and$1,065 million , representing$1,067 million 24% year-over-year growth at the midpoint (28% year-over-year constant currency growth at the midpoint) -
Non-GAAP operating margin is expected to be between
3.3% and3.4% -
Non-GAAP earnings per share is expected to be between
and$0.11 , assuming between 99 million and 100 million diluted weighted average ordinary shares outstanding$0.14
The current guidance assumes, among others, the following exchange rates:
See the section titled “Forward-Looking Statements” below for information on the factors that could cause our actual results to differ materially. We present historical and 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 “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of these non-GAAP measures. A reconciliation of forward-looking non-GAAP measures to the 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
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
Forward-Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties, which include, but are not limited to, statements regarding our expected financial results for the fiscal quarter and the fiscal year ending
Any additional or unforeseen effect from the uncertain macroeconomic environment, ongoing conflict between
Statement Regarding Use of Non-GAAP Financial Measures
In addition to our results determined in accordance with
Reconciliations of historical GAAP financial measures to their respective historical non-GAAP financial measures are included below. 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.
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, acquisition-related expenses, and restructuring and other related charges. 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 Earnings (Loss) Per Share
We define non-GAAP net earnings (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, restructuring and other related charges, litigation settlement, and the tax effects related to the foregoing. We believe non-GAAP net earnings (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.
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
Contact Information
Nikolay Beliov
Elastic Investor Relations
ir@elastic.co
PR-Team@elastic.co
|
||||||||||||||||
Condensed Consolidated Statements of Operations |
||||||||||||||||
(in thousands, except share and per share data) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
||||||||||||||
|
2023 |
2022 |
2023 |
2022 |
||||||||||||
Revenue |
|
|
|
|
||||||||||||
Subscription |
$ |
255,613 |
|
$ |
209,614 |
|
$ |
728,638 |
|
$ |
577,056 |
|
||||
Services |
|
18,953 |
|
|
14,330 |
|
|
60,410 |
|
|
45,963 |
|
||||
Total revenue |
|
274,566 |
|
|
223,944 |
|
|
789,048 |
|
|
623,019 |
|
||||
Cost of revenue |
|
|
|
|
||||||||||||
Subscription |
|
56,146 |
|
|
47,577 |
|
|
164,798 |
|
|
127,339 |
|
||||
Services |
|
19,062 |
|
|
13,707 |
|
|
58,146 |
|
|
37,491 |
|
||||
Total cost of revenue |
|
75,208 |
|
|
61,284 |
|
|
222,944 |
|
|
164,830 |
|
||||
Gross profit |
|
199,358 |
|
|
162,660 |
|
|
566,104 |
|
|
458,189 |
|
||||
Operating expenses |
|
|
|
|
||||||||||||
Research and development |
|
77,472 |
|
|
71,749 |
|
|
231,689 |
|
|
194,894 |
|
||||
Sales and marketing |
|
126,717 |
|
|
105,069 |
|
|
379,902 |
|
|
288,055 |
|
||||
General and administrative |
|
34,711 |
|
|
31,691 |
|
|
103,724 |
|
|
89,298 |
|
||||
Restructuring and other related charges |
|
29,805 |
|
|
— |
|
|
29,805 |
|
|
— |
|
||||
Total operating expenses |
|
268,705 |
|
|
208,509 |
|
|
745,120 |
|
|
572,247 |
|
||||
Operating loss |
|
(69,347 |
) |
|
(45,849 |
) |
|
(179,016 |
) |
|
(114,058 |
) |
||||
Other income (expense), net |
|
|
|
|
||||||||||||
Interest expense |
|
(6,265 |
) |
|
(6,175 |
) |
|
(18,875 |
) |
|
(14,327 |
) |
||||
Other income (expense), net |
|
5,460 |
|
|
(861 |
) |
|
20,774 |
|
|
(509 |
) |
||||
Loss before income taxes |
|
(70,152 |
) |
|
(52,885 |
) |
|
(177,117 |
) |
|
(128,894 |
) |
||||
Provision for income taxes |
|
2,422 |
|
|
3,841 |
|
|
12,313 |
|
|
9,344 |
|
||||
Net loss |
$ |
(72,574 |
) |
$ |
(56,726 |
) |
$ |
(189,430 |
) |
$ |
(138,238 |
) |
||||
Net loss per share attributable to ordinary shareholders, basic and diluted |
$ |
(0.76 |
) |
$ |
(0.61 |
) |
$ |
(1.99 |
) |
$ |
(1.50 |
) |
||||
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted |
|
96,052,025 |
|
|
93,015,185 |
|
|
95,327,131 |
|
|
92,140,919 |
|
|
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(in thousands, except share and per share data) |
|||||||
(unaudited) |
|||||||
|
As of
|
|
As of
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
877,683 |
|
|
$ |
860,949 |
|
Restricted cash |
|
2,362 |
|
|
|
2,688 |
|
Accounts receivable, net of allowance for credit losses of |
|
200,790 |
|
|
|
215,228 |
|
Deferred contract acquisition costs |
|
50,436 |
|
|
|
43,628 |
|
Prepaid expenses and other current assets |
|
33,457 |
|
|
|
41,215 |
|
Total current assets |
|
1,164,728 |
|
|
|
1,163,708 |
|
Property and equipment, net |
|
3,951 |
|
|
|
7,207 |
|
|
|
303,853 |
|
|
|
303,906 |
|
Operating lease right-of-use assets |
|
22,523 |
|
|
|
25,437 |
|
Intangible assets, net |
|
33,175 |
|
|
|
45,800 |
|
Deferred contract acquisition costs, non-current |
|
84,601 |
|
|
|
74,419 |
|
Deferred tax assets |
|
5,668 |
|
|
|
5,811 |
|
Other assets |
|
9,470 |
|
|
|
16,643 |
|
Total assets |
$ |
1,627,969 |
|
|
$ |
1,642,931 |
|
Liabilities and Shareholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
29,246 |
|
|
$ |
28,403 |
|
Accrued expenses and other liabilities |
|
58,091 |
|
|
|
53,930 |
|
Accrued compensation and benefits |
|
67,884 |
|
|
|
68,002 |
|
Operating lease liabilities |
|
12,839 |
|
|
|
11,219 |
|
Deferred revenue |
|
449,049 |
|
|
|
431,776 |
|
Total current liabilities |
|
617,109 |
|
|
|
593,330 |
|
Deferred revenue, non-current |
|
34,960 |
|
|
|
33,518 |
|
Long-term debt, net |
|
567,283 |
|
|
|
566,520 |
|
Operating lease liabilities, non-current |
|
16,725 |
|
|
|
16,482 |
|
Other liabilities, non-current |
|
6,903 |
|
|
|
17,648 |
|
Total liabilities |
|
1,242,980 |
|
|
|
1,227,498 |
|
Shareholders’ equity: |
|
|
|
||||
Convertible preference shares, |
|
— |
|
|
|
— |
|
Ordinary shares, par value |
|
1,014 |
|
|
|
990 |
|
|
|
(369 |
) |
|
|
(369 |
) |
Additional paid-in capital |
|
1,410,944 |
|
|
|
1,250,108 |
|
Accumulated other comprehensive loss |
|
(20,004 |
) |
|
|
(18,130 |
) |
Accumulated deficit |
|
(1,006,596 |
) |
|
|
(817,166 |
) |
Total shareholders’ equity |
|
384,989 |
|
|
|
415,433 |
|
Total liabilities and shareholders’ equity |
$ |
1,627,969 |
|
|
$ |
1,642,931 |
|
|
|||||||||||||||
Condensed Consolidated Statements of Cash Flows |
|||||||||||||||
(in thousands) |
|||||||||||||||
(unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Cash flows from operating activities |
|
|
|
|
|
|
|
||||||||
Net loss |
$ |
(72,574 |
) |
|
$ |
(56,726 |
) |
|
$ |
(189,430 |
) |
|
$ |
(138,238 |
) |
Adjustments to reconcile net loss to cash provided by operating activities: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
5,045 |
|
|
|
5,233 |
|
|
|
15,475 |
|
|
|
14,558 |
|
Amortization of deferred contract acquisition costs |
|
15,821 |
|
|
|
14,803 |
|
|
|
51,495 |
|
|
|
43,373 |
|
Amortization of debt issuance costs |
|
257 |
|
|
|
247 |
|
|
|
763 |
|
|
|
554 |
|
Non-cash operating lease cost |
|
2,705 |
|
|
|
2,417 |
|
|
|
8,354 |
|
|
|
6,259 |
|
Asset impairment charges |
|
6,242 |
|
|
|
— |
|
|
|
6,242 |
|
|
|
— |
|
Stock-based compensation expense, net of amounts capitalized |
|
54,456 |
|
|
|
37,393 |
|
|
|
148,626 |
|
|
|
96,971 |
|
Deferred income taxes |
|
148 |
|
|
|
30 |
|
|
|
68 |
|
|
|
(219 |
) |
Foreign currency transaction loss |
|
2,213 |
|
|
|
1,703 |
|
|
|
2,261 |
|
|
|
1,707 |
|
Other |
|
— |
|
|
|
— |
|
|
|
67 |
|
|
|
98 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
||||||||
Accounts receivable, net |
|
(11,143 |
) |
|
|
9,282 |
|
|
|
14,050 |
|
|
|
9,801 |
|
Deferred contract acquisition costs |
|
(24,615 |
) |
|
|
(21,957 |
) |
|
|
(68,184 |
) |
|
|
(61,234 |
) |
Prepaid expenses and other current assets |
|
(238 |
) |
|
|
(4,868 |
) |
|
|
7,671 |
|
|
|
(2,650 |
) |
Other assets |
|
2,297 |
|
|
|
2,534 |
|
|
|
7,106 |
|
|
|
(803 |
) |
Accounts payable |
|
(11,809 |
) |
|
|
3,967 |
|
|
|
511 |
|
|
|
14,452 |
|
Accrued expenses and other liabilities |
|
(4,627 |
) |
|
|
820 |
|
|
|
(6,272 |
) |
|
|
17,539 |
|
Accrued compensation and benefits |
|
5,786 |
|
|
|
863 |
|
|
|
(161 |
) |
|
|
4,686 |
|
Operating lease liabilities |
|
(2,831 |
) |
|
|
(2,455 |
) |
|
|
(8,404 |
) |
|
|
(6,438 |
) |
Deferred revenue |
|
40,037 |
|
|
|
11,768 |
|
|
|
17,869 |
|
|
|
8,306 |
|
Net cash provided by operating activities |
|
7,170 |
|
|
|
5,054 |
|
|
|
8,107 |
|
|
|
8,722 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
||||||||
Purchases of property and equipment |
|
(197 |
) |
|
|
(236 |
) |
|
|
(1,019 |
) |
|
|
(987 |
) |
Capitalization of internal-use software |
|
— |
|
|
|
(1,514 |
) |
|
|
— |
|
|
|
(4,227 |
) |
Business acquisitions, net of cash acquired |
|
— |
|
|
|
(11,750 |
) |
|
|
— |
|
|
|
(119,854 |
) |
Net cash used in investing activities |
|
(197 |
) |
|
|
(13,500 |
) |
|
|
(1,019 |
) |
|
|
(125,068 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
||||||||
Proceeds from the issuance of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
575,000 |
|
Proceeds from issuance of ordinary shares upon exercise of stock options |
|
4,510 |
|
|
|
6,709 |
|
|
|
12,234 |
|
|
|
27,540 |
|
Payments of debt issuance costs |
|
— |
|
|
|
(49 |
) |
|
|
— |
|
|
|
(9,283 |
) |
Net cash provided by financing activities |
|
4,510 |
|
|
|
6,660 |
|
|
|
12,234 |
|
|
|
593,257 |
|
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
9,940 |
|
|
|
(8,921 |
) |
|
|
(2,914 |
) |
|
|
(12,328 |
) |
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
21,423 |
|
|
|
(10,707 |
) |
|
|
16,408 |
|
|
|
464,583 |
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
858,622 |
|
|
|
878,998 |
|
|
|
863,637 |
|
|
|
403,708 |
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
880,045 |
|
|
$ |
868,291 |
|
|
$ |
880,045 |
|
|
$ |
868,291 |
|
|
||||||||||||||||||||||||
Revenue by Type |
||||||||||||||||||||||||
(in thousands, except percentages) |
||||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||||||||||
|
Amount |
|
% of
|
|
Amount |
|
% of
|
|
Amount |
|
% of
|
|
Amount |
|
% of
|
|||||||||
Elastic Cloud |
$ |
110,743 |
|
40 |
% |
|
$ |
80,402 |
|
36 |
% |
|
$ |
311,709 |
|
40 |
% |
|
$ |
210,963 |
|
34 |
% |
|
Other subscription |
|
144,870 |
|
53 |
% |
|
|
129,212 |
|
58 |
% |
|
|
416,929 |
|
52 |
% |
|
|
366,093 |
|
59 |
% |
|
Total subscription |
|
255,613 |
|
93 |
% |
|
|
209,614 |
|
94 |
% |
|
|
728,638 |
|
92 |
% |
|
|
577,056 |
|
93 |
% |
|
Services |
|
18,953 |
|
7 |
% |
|
|
14,330 |
|
6 |
% |
|
|
60,410 |
|
8 |
% |
|
|
45,963 |
|
7 |
% |
|
Total revenue |
$ |
274,566 |
|
100 |
% |
|
$ |
223,944 |
|
100 |
% |
|
$ |
789,048 |
|
100 |
% |
|
$ |
623,019 |
|
100 |
% |
|
||||||||||||||
Reconciliation of GAAP to Non-GAAP Data |
||||||||||||||
Supplementary Information |
||||||||||||||
(in thousands, except percentages) |
||||||||||||||
(unaudited) |
||||||||||||||
|
Three Months Ended
|
|
% Change
|
|
% Change
Year Over Year
|
|
% Change
|
|
% Change
Quarter Over
|
|||||
Revenue |
|
|
|
|
|
|
|
|
|
|||||
Elastic Cloud |
$ |
110,743 |
|
38 |
% |
|
40 |
% |
|
7 |
% |
|
7 |
% |
Other subscription |
$ |
144,870 |
|
12 |
% |
|
17 |
% |
|
5 |
% |
|
5 |
% |
Total subscription |
$ |
255,613 |
|
22 |
% |
|
26 |
% |
|
6 |
% |
|
6 |
% |
Total revenue |
$ |
274,566 |
|
23 |
% |
|
27 |
% |
|
4 |
% |
|
4 |
% |
Total deferred revenue |
$ |
484,009 |
|
22 |
% |
|
25 |
% |
|
12 |
% |
|
9 |
% |
Total remaining performance obligations |
$ |
997,225 |
|
16 |
% |
|
18 |
% |
|
11 |
% |
|
7 |
% |
|
Nine Months Ended
|
|
% Change
|
|
% Change
Year Over Year
|
|
||||||||
Revenue |
|
|
|
|
|
|
||||||||
Elastic Cloud |
$ |
311,709 |
|
48 |
% |
|
51 |
% |
|
|||||
Other subscription |
$ |
416,929 |
|
14 |
% |
|
20 |
% |
|
|||||
Total subscription |
$ |
728,638 |
|
26 |
% |
|
31 |
% |
|
|||||
Total revenue |
$ |
789,048 |
|
27 |
% |
|
31 |
% |
|
|
||||||||||||||||
Reconciliation of GAAP to Non-GAAP Data |
||||||||||||||||
Adjusted Free Cash Flow |
||||||||||||||||
(in thousands, except percentages) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
Net cash provided by operating activities |
$ |
7,170 |
|
|
$ |
5,054 |
|
|
$ |
8,107 |
|
|
$ |
8,722 |
|
|
Less: Purchases of property and equipment |
|
(197 |
) |
|
|
(236 |
) |
|
|
(1,019 |
) |
|
|
(987 |
) |
|
Less: Capitalization of internal-use software |
|
— |
|
|
|
(1,514 |
) |
|
|
— |
|
|
|
(4,227 |
) |
|
Add: Interest paid on long-term debt |
|
11,859 |
|
|
|
12,452 |
|
|
|
23,719 |
|
|
|
12,452 |
|
|
Adjusted free cash flow (1) |
$ |
18,832 |
|
|
$ |
15,756 |
|
|
$ |
30,807 |
|
|
$ |
15,960 |
|
|
Net cash used in investing activities |
$ |
(197 |
) |
|
$ |
(13,500 |
) |
|
$ |
(1,019 |
) |
|
$ |
(125,068 |
) |
|
Net cash provided by financing activities |
$ |
4,510 |
|
|
$ |
6,660 |
|
|
$ |
12,234 |
|
|
$ |
593,257 |
|
|
Net cash provided by operating activities (as a percentage of total revenue) |
|
3 |
% |
|
|
2 |
% |
|
|
1 |
% |
|
|
1 |
% |
|
Less: Purchases of property and equipment (as a percentage of total revenue) |
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
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) |
|
4 |
% |
|
|
6 |
% |
|
|
3 |
% |
|
|
2 |
% |
|
Adjusted free cash flow margin |
|
7 |
% |
|
|
7 |
% |
|
|
4 |
% |
|
|
3 |
% |
(1) Adjusted free cash flow includes |
|
|||||||||||||||
Reconciliation of GAAP to Non-GAAP Data |
|||||||||||||||
(in thousands, except percentages, share and per share data) |
|||||||||||||||
(unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Gross Profit Reconciliation: |
|
|
|
|
|
|
|
||||||||
GAAP gross profit |
$ |
199,358 |
|
|
$ |
162,660 |
|
|
$ |
566,104 |
|
|
$ |
458,189 |
|
Stock-based compensation expense |
|
4,692 |
|
|
|
3,790 |
|
|
|
13,419 |
|
|
|
10,855 |
|
Employer payroll taxes on employee stock transactions |
|
255 |
|
|
|
260 |
|
|
|
705 |
|
|
|
1,065 |
|
Amortization of acquired intangibles |
|
2,977 |
|
|
|
3,046 |
|
|
|
8,902 |
|
|
|
7,556 |
|
Non-GAAP gross profit |
$ |
207,282 |
|
|
$ |
169,756 |
|
|
$ |
589,130 |
|
|
$ |
477,665 |
|
Gross Margin Reconciliation(1): |
|
|
|
|
|
|
|
||||||||
GAAP gross margin |
|
72.6 |
% |
|
|
72.6 |
% |
|
|
71.7 |
% |
|
|
73.5 |
% |
Stock-based compensation expense |
|
1.7 |
% |
|
|
1.7 |
% |
|
|
1.7 |
% |
|
|
1.7 |
% |
Employer payroll taxes on employee stock transactions |
|
0.1 |
% |
|
|
0.1 |
% |
|
|
0.1 |
% |
|
|
0.2 |
% |
Amortization of acquired intangibles |
|
1.1 |
% |
|
|
1.4 |
% |
|
|
1.1 |
% |
|
|
1.2 |
% |
Non-GAAP gross margin |
|
75.5 |
% |
|
|
75.8 |
% |
|
|
74.7 |
% |
|
|
76.7 |
% |
Operating Income Reconciliation: |
|
|
|
|
|
|
|
||||||||
GAAP operating loss |
$ |
(69,347 |
) |
|
$ |
(45,849 |
) |
|
$ |
(179,016 |
) |
|
$ |
(114,058 |
) |
Stock-based compensation expense |
|
54,456 |
|
|
|
37,393 |
|
|
|
148,626 |
|
|
|
97,553 |
|
Employer payroll taxes on employee stock transactions |
|
1,699 |
|
|
|
1,643 |
|
|
|
4,881 |
|
|
|
8,634 |
|
Amortization of acquired intangibles |
|
4,209 |
|
|
|
4,277 |
|
|
|
12,597 |
|
|
|
11,644 |
|
Acquisition-related expenses |
|
899 |
|
|
|
2,731 |
|
|
|
5,100 |
|
|
|
4,999 |
|
Restructuring and other related charges |
|
29,805 |
|
|
|
— |
|
|
|
29,805 |
|
|
|
— |
|
Non-GAAP operating income |
$ |
21,721 |
|
|
$ |
195 |
|
|
$ |
21,993 |
|
|
$ |
8,772 |
|
Operating Margin Reconciliation(1): |
|
|
|
|
|
|
|
||||||||
GAAP operating margin |
|
(25.3 |
) % |
|
|
(20.5 |
) % |
|
|
(22.7 |
) % |
|
|
(18.3 |
) % |
Stock-based compensation expense |
|
19.8 |
% |
|
|
16.7 |
% |
|
|
18.8 |
% |
|
|
15.7 |
% |
Employer payroll taxes on employee stock transactions |
|
0.6 |
% |
|
|
0.7 |
% |
|
|
0.6 |
% |
|
|
1.4 |
% |
Amortization of acquired intangibles |
|
1.5 |
% |
|
|
1.9 |
% |
|
|
1.6 |
% |
|
|
1.9 |
% |
Acquisition-related expenses |
|
0.3 |
% |
|
|
1.2 |
% |
|
|
0.6 |
% |
|
|
0.8 |
% |
Restructuring and other related charges |
|
10.9 |
% |
|
|
— |
% |
|
|
3.8 |
% |
|
|
— |
% |
Non-GAAP operating margin |
|
7.9 |
% |
|
|
0.1 |
% |
|
|
2.8 |
% |
|
|
1.4 |
% |
Net Income (Loss) Reconciliation: |
|
|
|
|
|
|
|
||||||||
GAAP net loss |
$ |
(72,574 |
) |
|
$ |
(56,726 |
) |
|
$ |
(189,430 |
) |
|
$ |
(138,238 |
) |
Stock-based compensation expense |
|
54,456 |
|
|
|
37,393 |
|
|
|
148,626 |
|
|
|
97,553 |
|
Employer payroll taxes on employee stock transactions |
|
1,699 |
|
|
|
1,643 |
|
|
|
4,881 |
|
|
|
8,634 |
|
Amortization of acquired intangibles |
|
4,209 |
|
|
|
4,277 |
|
|
|
12,597 |
|
|
|
11,644 |
|
Acquisition-related expenses |
|
899 |
|
|
|
2,731 |
|
|
|
5,100 |
|
|
|
4,999 |
|
Restructuring and other related charges |
|
29,805 |
|
|
|
— |
|
|
|
29,805 |
|
|
|
— |
|
Litigation settlement |
|
— |
|
|
|
— |
|
|
|
(10,150 |
) |
|
|
— |
|
Income tax(2) |
|
(1,599 |
) |
|
|
(148 |
) |
|
|
1,929 |
|
|
|
(679 |
) |
Non-GAAP net income (loss) |
$ |
16,895 |
|
|
$ |
(10,830 |
) |
|
$ |
3,358 |
|
|
$ |
(16,087 |
) |
Non-GAAP net earnings (loss) per share attributable to ordinary shareholders, basic(1) |
$ |
0.18 |
|
|
$ |
(0.12 |
) |
|
$ |
0.04 |
|
|
$ |
(0.17 |
) |
Non-GAAP net earnings (loss) per share attributable to ordinary shareholders, diluted(1) |
$ |
0.17 |
|
|
$ |
(0.12 |
) |
|
$ |
0.03 |
|
|
$ |
(0.17 |
) |
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic |
|
96,052,025 |
|
|
|
93,015,185 |
|
|
|
95,327,131 |
|
|
|
92,140,919 |
|
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, diluted |
|
98,902,515 |
|
|
|
93,015,185 |
|
|
|
98,834,408 |
|
|
|
92,140,919 |
(1) Totals may not sum, due to rounding. Gross margin, operating margin, and earnings (loss) 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 other 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. |
|
||||||||||||||||
Reconciliation of GAAP to Non-GAAP Data |
||||||||||||||||
(in thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
Cost of revenue reconciliation: |
|
|
|
|
|
|
|
|||||||||
GAAP subscription |
$ |
56,146 |
|
|
$ |
47,076 |
|
|
$ |
164,798 |
|
|
$ |
126,097 |
|
|
Stock-based compensation expense |
|
(2,163 |
) |
|
|
(2,064 |
) |
|
|
(6,352 |
) |
|
|
(6,262 |
) |
|
Employer payroll taxes on employee stock transactions |
|
(128 |
) |
|
|
(147 |
) |
|
|
(381 |
) |
|
|
(474 |
) |
|
Amortization of acquired intangibles |
|
(2,977 |
) |
|
|
(2,545 |
) |
|
|
(8,902 |
) |
|
|
(6,314 |
) |
|
Non-GAAP subscription |
$ |
50,878 |
|
|
$ |
42,320 |
|
|
$ |
149,163 |
|
|
$ |
113,047 |
|
|
GAAP services |
$ |
19,062 |
|
|
$ |
13,707 |
|
|
$ |
58,146 |
|
|
$ |
37,491 |
|
|
Stock-based compensation expense |
|
(2,529 |
) |
|
|
(1,726 |
) |
|
|
(7,067 |
) |
|
|
(4,593 |
) |
|
Employer payroll taxes on employee stock transactions |
|
(127 |
) |
|
|
(113 |
) |
|
|
(324 |
) |
|
|
(591 |
) |
|
Non-GAAP services |
$ |
16,406 |
|
|
$ |
11,868 |
|
|
$ |
50,755 |
|
|
$ |
32,307 |
|
|
Operating expenses reconciliation: |
|
|
|
|
|
|
|
|||||||||
GAAP research and development expense |
$ |
77,472 |
|
|
$ |
71,749 |
|
|
$ |
231,689 |
|
|
$ |
194,894 |
|
|
Stock-based compensation expense |
|
(20,905 |
) |
|
|
(16,029 |
) |
|
|
(58,378 |
) |
|
|
(41,784 |
) |
|
Employer payroll taxes on employee stock transactions |
|
(557 |
) |
|
|
(663 |
) |
|
|
(1,842 |
) |
|
|
(2,916 |
) |
|
Acquisition-related expenses |
|
(870 |
) |
|
|
(2,713 |
) |
|
|
(5,034 |
) |
|
|
(3,695 |
) |
|
Non-GAAP research and development expense |
$ |
55,140 |
|
|
$ |
52,344 |
|
|
$ |
166,435 |
|
|
$ |
146,499 |
|
|
GAAP sales and marketing expense |
$ |
126,717 |
|
|
$ |
105,069 |
|
|
$ |
379,902 |
|
|
$ |
288,055 |
|
|
Stock-based compensation expense |
|
(19,096 |
) |
|
|
(12,545 |
) |
|
|
(50,756 |
) |
|
|
(30,798 |
) |
|
Employer payroll taxes on employee stock transactions |
|
(787 |
) |
|
|
(512 |
) |
|
|
(1,828 |
) |
|
|
(3,874 |
) |
|
Amortization of acquired intangibles |
|
(1,232 |
) |
|
|
(1,231 |
) |
|
|
(3,695 |
) |
|
|
(4,088 |
) |
|
Non-GAAP sales and marketing expenses |
$ |
105,602 |
|
|
$ |
90,781 |
|
|
$ |
323,623 |
|
|
$ |
249,295 |
|
|
GAAP general and administrative expense |
$ |
34,711 |
|
|
$ |
31,691 |
|
|
$ |
103,724 |
|
|
$ |
89,298 |
|
|
Stock-based compensation expense |
|
(9,763 |
) |
|
|
(5,029 |
) |
|
|
(26,073 |
) |
|
|
(14,116 |
) |
|
Employer payroll taxes on employee stock transactions |
|
(100 |
) |
|
|
(208 |
) |
|
|
(506 |
) |
|
|
(779 |
) |
|
Acquisition-related expenses |
|
(29 |
) |
|
|
(18 |
) |
|
|
(66 |
) |
|
|
(1,304 |
) |
|
Non-GAAP general and administrative expense |
$ |
24,819 |
|
|
$ |
26,436 |
|
|
$ |
77,079 |
|
|
$ |
73,099 |
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230302005451/en/
Nikolay Beliov
Elastic Investor Relations
ir@elastic.co
PR-Team@elastic.co
Source:
FAQ
What were Elastic's Q3 FY2023 revenue results?
How did Elastic Cloud revenue perform in Q3 FY2023?
What is the guidance for Elastic's Q4 FY2023?
What was Elastic's non-GAAP EPS for Q3 FY2023?