Elastic N.V. (ESTC): history, ownership, mission, how it works & makes money

A Brief History of Elastic N.V.

Elastic N.V., a company specializing in search solutions, was founded in 2012. It went public in 2018, trading under the ticker symbol ESTC on the New York Stock Exchange. The company has since developed a robust suite of products, primarily centered on its Elasticsearch technology, which is widely used for search and data analytics across various industries.

Financial Performance Overview

As of July 31, 2024, Elastic N.V. reported total revenue of $347.4 million for the three months ended, marking an increase of 18% compared to $293.8 million in the same period in 2023. This revenue growth was primarily driven by a 20% increase in subscription revenue, which reached $323.8 million, up from $270.2 million in the prior year. Services revenue was relatively flat at $23.6 million compared to $23.5 million the previous year.

Cost of Revenue and Gross Margin

For the three months ended July 31, 2024, Elastic's total cost of revenue was $91.8 million, an increase from $77.5 million in the previous year. The gross profit for this period was $255.7 million, resulting in a total gross margin of 74%, consistent with the prior year's performance. The subscription gross margin remained stable at 79%, while the gross margin for services decreased significantly to 1% from 14% year-over-year.

Operating Expenses

Operating expenses for the quarter totaled $289.5 million, up from $252.5 million in Q1 2024. The increase was driven by a rise in research and development expenses, which amounted to $89.3 million, reflecting an 11% increase from $80.7 million in the previous year. Sales and marketing expenses also rose to $157.4 million from $133.2 million, marking an increase of 18%.

Net Loss and Income Tax Provision

Elastic N.V. reported a net loss of $49.2 million for the quarter, slightly higher than the $48.5 million loss in the previous year. The provision for income taxes increased by 51% to $20.1 million, driven by the growth in operations in taxable jurisdictions. The effective tax rate for the quarter was (69)%, compared to (38)% in the same period last year.

Liquidity and Capital Resources

As of July 31, 2024, Elastic's cash, cash equivalents, and marketable securities totaled approximately $1.147 billion, indicating a strong liquidity position. This figure represents a diverse portfolio of highly liquid, investment-grade fixed-income securities. The accumulated deficit stood at $1.041 billion, reflecting the company's ongoing investment in growth and innovation.

Recent Developments

In November 2023, Elastic N.V. acquired Opster Ltd. for $23 million, enhancing its capabilities in search technology. This strategic acquisition is expected to bolster Elastic's product offerings and market position.

Looking ahead, Elastic continues to focus on expanding its product suite and increasing market penetration, leveraging its strong financial position and innovative technology solutions.

A Who Owns Elastic N.V. (ESTC)

Ownership Structure

As of July 31, 2024, Elastic N.V. (ESTC) has a total of 102,724,366 ordinary shares issued and outstanding. The ownership structure is primarily divided among institutional investors, individual shareholders, and company insiders.

Major Shareholders

The following table outlines the major shareholders of Elastic N.V. as of July 31, 2024:

Recent Changes in Ownership

Over the past year, there have been fluctuations in the percentage ownership among the top institutional investors. Vanguard and BlackRock have increased their holdings slightly, while Fidelity has seen a minor decrease in their shareholding.

Insider Ownership

The total insider ownership is estimated at approximately 3.1% of the total shares outstanding. This includes shares held by executives and board members.

Market Performance

As of July 31, 2024, the market capitalization of Elastic N.V. is approximately $3.5 billion, reflecting a share price of around $34.00. The stock has seen a year-to-date increase of 12%.

Shareholder Meetings and Voting Rights

Ordinary shareholders of Elastic N.V. are entitled to vote at the Annual General Meeting (AGM) and any special meetings. Each share typically carries one vote.

Future Ownership Trends

Given the increasing interest in cloud-based solutions and the strong performance of Elastic Cloud, it is anticipated that institutional ownership may continue to rise, reflecting a growing confidence in the company's long-term growth prospects.

Financial Summary

The following table summarizes key financial metrics of Elastic N.V. as of July 31, 2024:

Conclusion on Ownership Dynamics

The ownership dynamics of Elastic N.V. reflect a strong institutional presence, indicating a favorable outlook from significant market players. The continued growth in cloud services and strategic investments suggest that ownership patterns may evolve as the company expands its market footprint.

Elastic N.V. (ESTC) Mission Statement

Elastic N.V. focuses on empowering organizations to unlock the potential of their data with a comprehensive suite of search-powered solutions. The company's mission is to provide users with the ability to explore, analyze, and visualize their data seamlessly.

Company Overview

As of July 31, 2024, Elastic N.V. had approximately 21,200 customers, an increase from 20,500 customers in the same period of the previous year. The majority of new customers are utilizing Elastic Cloud, with Elastic Cloud contributing 45% of total revenue for the three months ended July 31, 2024, compared to 41% for the same period in 2023.

Financial Performance

For the three months ended July 31, 2024, Elastic N.V. reported total revenue of $347.4 million, representing an 18% increase from $293.8 million in the same period of 2023. Subscription revenue was $323.8 million, up 20% from $270.2 million year-over-year.

Key Financial Metrics

Operating Expenses

Operating expenses for the three months ended July 31, 2024, totaled $289.5 million, compared to $252.5 million for the same period in 2023, marking a 15% increase. The breakdown of operating expenses is as follows:

Gross Margin Analysis

The overall gross margin for Elastic N.V. remained consistent at 74% for both Q1 2024 and Q1 2023. The subscription gross margin was 79%, while the service gross margin significantly decreased to 1%, down from 14% the previous year.

Cash and Liquidity Position

As of July 31, 2024, Elastic N.V. reported cash, cash equivalents, and marketable securities totaling $1.147 billion. The company has an accumulated deficit of $1.041 billion, reflecting the ongoing investments in growth strategies.

Market Position and Strategic Focus

Elastic N.V. continues to focus on expanding its global sales and marketing footprint, with a distributed team across 35 countries, enhancing its ability to drive product releases and customer engagement. The company aims to leverage its strengths in cloud-based offerings to meet the increasing demand for hosted solutions.

How Elastic N.V. (ESTC) Works

Company Overview

Elastic N.V. is a company that specializes in search and data analytics solutions, primarily through its Elastic Stack, which includes Elasticsearch, Kibana, Beats, and Logstash. The company operates on a subscription-based revenue model, providing various tiers of services and support.

Revenue Streams

Elastic generates revenue from two primary streams: subscription fees and professional services. As of July 31, 2024, the revenue breakdown is as follows:

Cost of Revenue

The cost of revenue primarily consists of expenses related to the delivery of subscription and service offerings. For the three months ended July 31, 2024, the costs were:

Gross Profit and Margin

Elastic's gross profit for the three months ended July 31, 2024, was $255,663 thousand with a total gross margin of 74%. The breakdown by service type is:

Operating Expenses

Operating expenses include research and development (R&D), sales and marketing, and general and administrative costs. For the three months ended July 31, 2024, the operating expenses were:

Net Loss

For the three months ended July 31, 2024, Elastic reported a net loss of $49,227 thousand, compared to a net loss of $48,508 thousand for the same period in 2023. The net loss per share attributable to ordinary shareholders was $0.48, compared to $0.50 in the prior year.

Liquidity and Capital Resources

As of July 31, 2024, Elastic's cash, cash equivalents, and marketable securities totaled $1.151 billion. The company recorded a provision for income taxes of $20,071 thousand, reflecting a 51% increase from the previous year.

Customer Base

As of July 31, 2024, Elastic had approximately 21,200 customers, an increase from 20,500 in the prior year. Customers with an annual contract value exceeding $100,000 numbered over 1,370, up from 1,190 in the previous year.

Employee Base

Elastic employed 3,299 individuals as of July 31, 2024, focusing on expanding its global sales and marketing efforts while investing significantly in R&D to enhance its offerings.

How Elastic N.V. (ESTC) Makes Money

Revenue Streams

Elastic N.V. generates revenue primarily from subscription sales to its software platform, which includes Elastic Cloud services. For the three months ended July 31, 2024, total revenue was $347.4 million, representing an 18% increase from $293.8 million in the same period of the previous year.

Subscription Revenue Breakdown

Subscription revenue accounted for 93% of total revenue in Q1 2024. A significant contributor to growth was the Elastic Cloud, which saw a 30% increase year-over-year and constituted 45% of total revenue in Q1 2024 compared to 41% in Q1 2023.

Cost of Revenue

The total cost of revenue for Q1 2024 was $91.8 million, an increase of 18% from $77.5 million in Q1 2023. The breakdown is as follows:

Gross Profit and Margin

Elastic's gross profit for Q1 2024 was $255.7 million with a gross margin of 74%, consistent with the same period the previous year. The gross margin for subscription services stood at 79%, while services revenue gross margin decreased to 1% from 14% in Q1 2023 due to rising personnel and subcontractor costs.

Operating Expenses

Total operating expenses for Q1 2024 reached $289.5 million, reflecting an increase of 15% from $252.5 million in Q1 2023. Key components include:

Net Loss

Elastic reported a net loss of $49.2 million for Q1 2024, slightly higher than the $48.5 million loss in Q1 2023. The loss per share attributable to ordinary shareholders was $(0.48) compared to $(0.50) in the prior year.

Customer Metrics

As of July 31, 2024, Elastic had approximately 21,200 customers, up from 20,500 the previous year. Notably, over 1,370 customers contributed more than $100,000 in annual contract value, a significant increase from 1,190 the year prior.

Financial Position

As of July 31, 2024, Elastic's total assets were valued at $2.15 billion, with total liabilities at $1.39 billion. The accumulated deficit stood at $1.04 billion, and shareholders’ equity was reported at $759.4 million.

Liquidity and Capital Resources

Elastic's principal sources of liquidity included cash, cash equivalents, and marketable securities totaling $1.15 billion as of July 31, 2024. The company has indicated that it expects to maintain sufficient resources to fund operations for the next 12 months.