Elastic N.V.

Elastic reported first-quarter fiscal 2027 revenue of $478 million, up 15% year over year, with sales-led subscription revenue of $399 million, up 18% reported and 17% constant currency. Non-GAAP subscription gross margin was 81%, total gross margin was 77%, and non-GAAP operating margin was 16.2%. Adjusted free cash flow margin was 30%, despite about $13 million of cash paid for restructuring and other charges; total restructuring-related charges were approximately $20 million in the quarter. CRPO was $1.2 billion, up 21%, and RPO was $1.9 billion, up 27%. For Q2 fiscal 2027, Elastic guided to revenue of $486 million to $487 million, sales-led subscription revenue of $407.5 million to $408.5 million, non-GAAP operating margin of about 19%, and non-GAAP EPS of $0.80 to $0.82. For full-year fiscal 2027, the company raised guidance to revenue of $1.998 billion to $2.010 billion, sales-led subscription revenue of $1.682 billion to $1.694 billion, non-GAAP operating margin of about 19.4%, non-GAAP EPS of $3.29 to $3.37, and adjusted free cash flow margin of 21.5%.

Ash Kulkarni framed the quarter as evidence that Elastic is executing well on a multi-year platform strategy centered on search, AI, security, and observability. He emphasized that AI is shifting enterprise demand toward retrieval accuracy, cost efficiency, and agentic applications, which he said plays to Elastic’s strengths in hybrid search, first-party models, and agent tooling. He also highlighted new observability and security capabilities, including columnar mode, Prometheus ingestion, attack discovery, and Deductive AI, and repeatedly tied product innovation to competitive wins and broader platform expansion.

Navam Welihinda focused on the acceleration in constant currency revenue and subscription revenue, noting Q1 total revenue growth of 15%, sales-led subscription revenue growth of 17% constant currency, and second straight quarter of 20% constant currency CRPO growth. He said the company is seeing benefits from prior sales hiring, healthy consumption of commitments, and stronger new/expansion activity in the $100,000+ customer segment, which now contributes 90% of sales-led subscription revenue. On profitability, he cited 81% subscription gross margin, 77% total gross margin, 16.2% operating margin, and 30% adjusted free cash flow margin, along with roughly $40 million returned to shareholders via buybacks in the quarter and $380 million used under the $500 million repurchase program since launch. He also said GAAP operating margin should be positive in Q2 and for the full year, with about $2 million to $5 million of additional restructuring charges expected for the rest of fiscal 2027.

Analysts focused on the sustainability of the large-customer growth, the cloud mix, AI deployment patterns across cloud/on-prem/hybrid, the security opportunity in a post-‘Mythos’ world, observability metrics traction, and why management raised full-year guidance so early. Management said the $100,000+ cohort is benefiting from a stronger enterprise segmentation model, bigger and longer-term commitments, and higher AI adoption within that cohort, while cloud performance was solid with no unusual one-off dynamics. On guidance, Navam said the raise was driven by stronger pipeline, healthy consumption against commitments, and better sales capacity/productivity, while Ash repeatedly pointed to the company’s deployment flexibility and open platform as a moat.