Elastic Beats Q1 Estimates and Raises Guidance, Shares Surge

Elastic NV shares surged in early trading Friday after the company reported better-than-expected fiscal 2027 first-quarter results and raised its guidance.

• Elastic shares are challenging resistance. Why is ESTC hitting new highs?

Adjusted earnings per share came in at 70 cents, beating the consensus estimate of 58 cents. Sales rose 15% year-over-year to $478.113 million, surpassing the consensus estimate of $469.745 million. Sales-driven subscription revenue grew 18% year-over-year to $399 million.

Revenue growth on a constant-currency basis accelerated to 15% from 14% in the fourth quarter.

The company saw significant customer growth, particularly among customers with annual consumption exceeding $100,000, with 37% of those customers using Elastic for AI-related use cases.

Adjusted operating margin was 16.2%, above guidance, while subscription and total gross margins were 81% and 77%, respectively.

Elastic returned approximately $40 million to shareholders through the repurchase of approximately 800,000 shares.

Since launching its $500 million buyback program in October 2025, the company had deployed $380 million to repurchase 5.2 million shares as of quarter-end.

Strong AI Adoption

Elastic ended the quarter with over 1,800 customers with annual contract value of at least $100,000, adding more than 80 net new customers in that cohort—the largest quarterly increase to date.

These customers now contribute 90% of sales-driven subscription revenue, up from 87% in the same period last year.

AI adoption also improved, with over 37% of the $100,000-plus customer base using Elastic for AI use cases, up from 21% in the prior-year period; the company added 70 net new AI customers during the quarter.

Current remaining performance obligations grew 21% year-over-year to $1.2 billion, marking the second consecutive quarter of 20% growth on a constant-currency basis, while total remaining performance obligations grew 27% on both reported and constant-currency bases to $1.9 billion.

The net expansion rate was 111%, compared with 112% in the fourth quarter, and is expected to improve over four quarters as fiscal 2027 revenue growth accelerates on a constant-currency basis.

Elastic launched AI features including VectorDB, index patterns, auto-calibration, and Jina's multimodal and multilingual search for on-premises and air-gapped environments.

The company acquired Deductive AI to automate complex investigations using reinforcement learning and continued to strengthen security capabilities through Attack Discovery.

Guidance

For the second quarter, the company expects adjusted EPS of 80 cents to 82 cents, versus the consensus estimate of 80 cents. Additionally, Elastic expects sales of $486 million to $487 million, versus the market expectation of $483.397 million.

For the second quarter, Elastic expects sales-driven subscription revenue of $407.5 million to $408.5 million.

The company raised its fiscal 2027 adjusted EPS guidance from $3.21-$3.29 to $3.29-$3.37, above the $3.24 market estimate, and lifted its sales outlook from $1.985 billion-$2.0 billion to $1.998 billion-$2.010 billion, versus the consensus estimate of $1.993 billion.

Sales-driven subscription revenue is expected to be $1.682 billion-$1.694 billion, representing 17.4% reported growth and 17.5% constant-currency growth for the fiscal year.

Elastic expects an additional $2 million to $5 million in restructuring charges for the remainder of the fiscal year, after incurring approximately $20 million to date.

The company said it remains on track to achieve over 20% sales-driven subscription growth and improve its Rule of 40 performance.

ESTC Price Action: Elastic shares were up 21.26% at $101.54 in early trading Friday.