Elastic Sees 18% Revenue Growth Amid Strong GenAI Demand

Elastic's latest report highlights an 18% year-over-year revenue growth driven by solid sales execution, especially in generative AI. The company is optimistic about future performance as they exceed profitability guidance and expand customer commitments.

Date: 22-11-2024

AI Rating: 7

Elastic's second quarter fiscal 2025 earnings report demonstrates a robust performance characterized by significant growth in revenue and profitability metrics. Notably, total revenue reached $365 million, marking an 18% year-over-year increase. This growth can be attributed to several factors, including steady demand for generative AI applications and enhanced customer engagement.

Revenue from Elastic Cloud specifically grew 25% year over year, indicating strong interest in cloud solutions which now account for 46% of overall revenue. With over 1,420 customers spending over $100,000 annually, this reflects a solid expansion of their customer base.

Importantly, Elastic reported a non-GAAP operating margin of 17.6%, greater than previously expected, illustrating improved efficiencies and effective cost management. Furthermore, the non-GAAP diluted earnings per share for the quarter was reported at $0.59, hinting at a positive financial trajectory.

Free Cash Flow (FCF) for the quarter approximated $38 million, translating to a 10% adjusted free cash flow margin which indicates a solid liquidity position. The outlook remains optimistic with revenues expected to reach between $1.451 billion to $1.457 billion for the full fiscal year, projecting a 15% growth at the midpoint compared to the previous year.

However, it’s worth noting that despite a strong return to form in Q2, Elastic acknowledges challenges from the previous quarter that could slow growth pace in the second half of the year. The company is prudently managing expectations regarding consumption revenue fluctuations.

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