Q3 Revenue of $113.2 million, Up 60%
year-over-year (61% in constant currency)
SaaS Revenue of $25.1 million, Up 114%
year-over-year (118% in constant currency)
Calculated Billings of $122.9 million, Up 54%
year-over-year (56% in constant currency)
Elastic N.V. (NYSE: ESTC) (“Elastic”), the company behind
Elasticsearch and the Elastic Stack, announced strong results for
its third quarter of fiscal 2020 (ended January 31, 2020).
Third Quarter Fiscal 2020 Financial Highlights
- Total revenue was $113.2 million, an increase of 60%
year-over-year, or 61% on a constant currency basis.
- SaaS revenue was $25.1 million, an increase of 114%
year-over-year, or 118% on a constant currency basis.
- Calculated billings was $122.9 million, an increase of 54%
year-over-year, or 56% on a constant currency basis.
- Deferred revenue was $209.8 million, an increase of 52%
year-over-year.
- GAAP operating loss was $42.3 million; GAAP operating margin
was -37%.
- Non-GAAP operating loss was $20.2 million; non-GAAP operating
margin was -18%.
- GAAP net loss per share was $0.55; non-GAAP net loss per share
was $0.28.
- Operating cash flow was -$23.2 million with free cash flow of
-$24.2 million.
- Cash and cash equivalents were $294.1 million as of January 31,
2020.
“We’re pleased with our revenue growth of 60% year-over-year in
Q3,” said Shay Banon, Elastic’s founder and chief executive
officer. “Our strategy of building enterprise search,
observability, and security solutions on a single technology stack
that can be deployed anywhere is clearly resonating with both users
and customers.”
In a separate news release issued today, the Company announced
that its Chief Revenue Officer, Aaron Katz, has, based on mutual
agreement and effective immediately, transitioned into an advisory
role until August 1, 2020, and that it has begun a search for his
successor. Justin Hoffman, Senior Vice President of Sales, who is a
core member of the Company’s executive leadership team and has
already been leading Sales for all of the Americas and EMEA for
almost seven years, will lead worldwide Sales in the near term.
Third Quarter Fiscal 2020 Key Metrics and Recent Business
Highlights
Key Customer Metrics:
- Total subscription customer count was over 10,500, compared to
over 9,700 in Q2.
- Total customer count with Annual Contract Value “ACV” greater
than $100,000 was over 570, compared to over 525 in Q2.
- Subscription revenue represented 92% of total revenue.
- Net Expansion Rate continued to be greater than 130%.
Product Releases and Other Business Highlights:
- Released version 7.6 of the Elastic Stack, which makes
Elasticsearch queries even faster and adds more turnkey machine
learning capabilities; version 7.6 also brings other improvements,
including:
- Meta engines, a new feature, that allows large companies to
unify and scale their application search by searching across
multiple engines.
- New public cloud integrations that bring deeper visibility into
cloud operations, and machine learning-powered log categorization
for simplified log analysis, both of which drive significant value
for observability use cases.
- The generally available release of Elastic SIEM, which includes
a new SIEM detection engine and rules aligned with the MITRE
ATT&CK knowledge base for automating threat detection and
minimizing mean time to detect (MTTD).
- Increased visibility into Microsoft Windows activity with
Elastic Endpoint Security, bringing an increased level of
protection to enterprises with large Windows footprints.
- Released Elastic Cloud on Kubernetes 1.0 into general
availability, giving users a seamless way of deploying, managing,
and operating the Elastic Stack on Kubernetes.
- Announced the general availability of App Search on Elastic
Cloud, bringing an easy-to-use cloud experience and flexible
pricing model to App Search users everywhere and extending the
power of App Search to all users of the Elasticsearch Service.
- Announced the general availability of the Elasticsearch Service
on Microsoft Azure and expanded availability to Tokyo; expanded
Google Cloud Platform availability to Montréal and Mumbai.
- Held 10 successful Elastic{ON} Tour events to educate and
engage with Elastic’s community of users, customers, and partners
in Warsaw, Denver, Atlanta, Stockholm, Paris, Melbourne, Frankfurt,
Anaheim, Madrid, and Columbus, with waitlists driven by strong
demand.
- Announced a partnership with Defending Digital Campaigns (DDC),
a non-partisan organization that provides low- and no-cost security
products and services to federal election campaigns, to offer free
monitored Elastic Endpoint Security to U.S. presidential and
congressional campaigns during the 2020 election cycle.
- Appointed Alison Gleeson to the Elastic Board of Directors.
Gleeson is a globally recognized executive who was previously
Senior Vice President of Cisco's Americas organization.
- Welcomed Sally Jenkins as Chief Marketing Officer. Jenkins is a
results-driven marketing executive who was most recently Executive
Vice President and Chief Marketing Officer of Informatica.
Financial Outlook
The Company is providing the following guidance:
For its fourth quarter of fiscal 2020 (ending April 30,
2020):
- Total revenue is expected to be between $119 million and $120
million.
- Non-GAAP operating margin is expected to be between -20.5% and
-19.5%.
- Non-GAAP net loss per share is expected to be between $0.32 and
$0.30, assuming between 82 million and 83 million weighted average
ordinary shares outstanding.
For its fiscal year 2020 (ending April 30, 2020):
- Total revenue is expected to be between $423 million and $424
million.
- Non-GAAP operating margin is expected to be approximately
-20.5%, including approximately -2% related to the acquisition of
Endgame.
- Non-GAAP net loss per share is expected to be between $1.13 and
$1.12, assuming approximately 79 million weighted average ordinary
shares outstanding.
See the section titled “Forward-Looking Statements” below for
information on the factors that could cause our actual results to
differ materially. A reconciliation of non-GAAP guidance measures
to corresponding GAAP measures 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.
Conference Call and Webcast
Elastic’s executive management team will host a conference call
today at 2:00 p.m. PT/ 5:00 p.m. ET/ 11:00 p.m. CET to discuss the
Company’s financial results and business outlook. A live audio
webcast of the conference call will be available through Elastic’s
Investor Relations website at ir.elastic.co. Slides will accompany
the webcast. The replay of the webcast and slides will be available
for two months.
About Elastic
Elastic is a search company that powers enterprise search,
observability, and security solutions built on one technology stack
that can be deployed anywhere. From finding documents to monitoring
infrastructure to hunting for threats, Elastic makes data usable in
real time and at scale. Founded in 2012, Elastic is a distributed
company with Elasticians around the globe. Learn more at
elastic.co.
Elastic and associated marks are trademarks or registered
trademarks of Elastic N.V. and its subsidiaries. All other company
and product names may be trademarks of their respective owners.
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to Elastic’s
financial results as determined in accordance with U.S. GAAP are
included at the end of this press release following the
accompanying financial data. For a description of these non-GAAP
financial measures, including the reasons management uses each
measure, please see the section of this press release titled “About
Non-GAAP Financial Measures.”
Forward-Looking Statements
This press release contains forward-looking statements which
include, but are not limited to, expected financial results for the
fiscal quarter and the fiscal year ending April 30, 2020. These
forward-looking statements are subject to the safe harbor
provisions under the Private Securities Litigation Reform Act of
1995. Our expectations and beliefs regarding these matters may not
materialize. Actual outcomes and results may differ materially from
those contemplated by these forward-looking statements as a result
of uncertainties, risks, and changes in circumstances, including
but not limited to risks and uncertainties related to: our future
financial performance, including our expectations regarding our
revenue; cost of revenue; gross profit or gross margin; and
operating expenses (including changes in sales and marketing,
research and development and general and administrative expenses);
our ability to achieve, and maintain, future profitability; our
ability to continue to deliver and improve our offerings and
successfully develop new offerings; customer acceptance and
purchase of our existing offerings and new offerings; our ability
to maintain and expand our user and customer base; the market for
our products not continuing to develop; competition from other
products; the impact of foreign currency exchange rate and interest
rate fluctuations on our results; our business strategy and our
plan to build our business; our ability to effectively manage our
growth; the pace of change and innovation in the markets in which
we participate and the competitive nature of those markets; our
international expansion strategy; our service performance and
security, including the resources and costs required to prevent,
detect and remediate potential security breaches; our operating
results and cash flows; our strategy of acquiring complementary
businesses and our ability to successfully integrate acquired
businesses and technologies; our relationships with third parties,
including partners; our ability to protect our intellectual
property rights; our ability to develop our brands; our ability to
attract and retain qualified employees and key personnel; the
impact of expensing stock options and other equity awards; the
sufficiency of our capital resources; our ability to successfully
defend litigation brought against us; our ability to successfully
expand in our existing markets and into new markets; sufficiency of
cash to meet cash needs for at least the next 12 months; our
ability to comply with laws and regulations that currently apply or
become applicable to our business both in the United States and
internationally; the future trading prices of our ordinary shares;
the impact of our acquisition of Endgame, Inc. on our operating
margin; the impact of our acquisition of Endgame, Inc. on Elastic’s
future product offerings; and general market, political, economic
and business conditions. Additional risks and uncertainties that
could cause actual outcomes and results to differ materially from
those contemplated by the forward-looking statements are included
under the caption “Risk Factors” and elsewhere in our most recent
filings with the Securities and Exchange Commission (the “SEC”),
including our Annual Report on Form 10-K for the fiscal year ended
April 30, 2019 and any subsequent reports on Form 10-K, Form 10-Q
or Form 8-K filed with the SEC. SEC filings are available on the
Investor Relations section of Elastic’s website at ir.elastic.co
and the SEC’s website at www.sec.gov. Elastic assumes no obligation
to, and does not currently intend to, update any such
forward-looking statements after the date of this release, except
as required by law.
Contact Information
Anthony Luscri Elastic Investor Relations ir@elastic.co
(650) 695-1055
Lisa Boughner Elastic Corporate Communications
lisa.boughner@elastic.co
Elastic N.V.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(amounts in thousands, except
share and per share amounts)
(Unaudited)
Three Months Ended January
31,
Nine Months Ended January
31,
2020
2019
2020
2019
Revenue
License - self-managed
$
14,495
$
9,406
$
36,674
$
26,850
Subscription - self-managed and SaaS
89,703
55,180
241,593
147,781
Total subscription revenue
104,198
64,586
278,267
174,631
Professional services
8,983
6,249
25,730
16,423
Total revenue
113,181
70,835
303,997
191,054
Cost of revenue
Cost of license - self-managed
347
96
602
290
Cost of subscription - self-managed and
SaaS
23,196
13,941
60,832
37,012
Total cost of revenue - subscription
23,543
14,037
61,434
37,302
Cost of professional services
9,862
6,387
26,983
17,266
Total cost of revenue
33,405
20,424
88,417
54,568
Gross profit
79,776
50,411
215,580
136,486
Operating expenses
Research and development
46,119
25,850
119,779
70,163
Sales and marketing
54,829
37,196
160,860
102,252
General and administrative
21,096
11,151
71,472
33,342
Total operating expenses
122,044
74,197
352,111
205,757
Operating loss
(42,268
)
(23,786
)
(136,531
)
(69,271
)
Other income (expense), net
(1,339
)
1,877
1,276
2,737
Loss before income taxes
(43,607
)
(21,909
)
(135,255
)
(66,534
)
Provision for (benefit from) income
taxes
674
(558
)
768
934
Net loss
$
(44,281
)
$
(21,351
)
$
(136,023
)
$
(67,468
)
Net loss per share attributable to
ordinary shareholders, basic and diluted
$
(0.55
)
$
(0.30
)
$
(1.75
)
$
(1.37
)
Weighted-average shares used to compute
net loss per share attributable to ordinary shareholders, basic and
diluted
80,737,237
70,725,336
77,713,604
49,261,240
Elastic N.V.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(amounts in thousands, except
share and per share amounts)
(Unaudited)
January 31, 2020
April 30, 2019
Assets
Current assets:
Cash and cash equivalents
$
294,076
$
298,000
Restricted cash
2,291
2,280
Accounts receivable, net of allowance for
doubtful accounts of $1,583 and $1,411 as of January 31, 2020 and
April 30, 2019, respectively
72,557
81,274
Deferred contract acquisition costs
14,885
17,215
Prepaid expenses and other current
assets
34,697
30,872
Total current assets
418,506
429,641
Property and equipment, net
7,958
5,448
Goodwill
198,774
19,846
Operating lease right-of-use assets
33,814
-
Intangible assets, net
54,005
6,723
Deferred contract acquisition costs,
non-current
17,015
8,935
Deferred tax assets
2,205
1,748
Other assets
9,572
13,397
Total assets
$
741,849
$
485,738
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable
$
13,098
$
4,450
Accrued expenses and other liabilities
19,351
18,740
Accrued compensation and benefits
31,607
22,147
Operating lease liabilities
7,292
-
Deferred revenue
189,208
158,243
Total current liabilities
260,556
203,580
Deferred revenue, non-current
20,586
12,423
Operating lease liabilities,
non-current
29,034
-
Other liabilities, non-current
13,231
6,723
Total liabilities
323,407
222,726
Commitments and contingencies
Shareholders’ equity:
Convertible preference shares, €0.01 par
value; 165,000,000 shares authorized, 0 shares issued and
outstanding as of January 31, 2020 and April 30, 2019
-
-
Ordinary shares, par value €0.01 per
share: 165,000,000 shares authorized; 81,574,811 and 73,675,083
shares issued and outstanding as of January 31, 2020 and April 30,
2019, respectively
842
754
Treasury stock
(369
)
(369
)
Additional paid-in capital
871,675
581,135
Accumulated other comprehensive loss
(606
)
(1,431
)
Accumulated deficit
(453,100
)
(317,077
)
Total shareholders’ equity
418,442
263,012
Total liabilities and shareholders’
equity
$
741,849
$
485,738
Elastic N.V.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(amounts in thousands)
(Unaudited)
Three Months Ended January
31,
Nine Months Ended January
31,
2020
2019
2020
2019
Cash flows from operating
activities
Net loss
$
(44,281
)
$
(21,351
)
$
(136,023
)
$
(67,468
)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization
5,235
1,378
8,573
4,386
Amortization of deferred contract
acquisition costs
6,660
5,870
20,581
14,718
Non-cash operating lease cost
2,156
-
5,170
-
Stock-based compensation expense
15,588
11,111
42,775
28,015
Non-cash acquisition expense settled with
shares
-
-
8,834
-
Deferred income taxes
50
(22
)
(621
)
888
Other
809
51
1,132
66
Changes in operating assets and
liabilities, net of impact of business acquisitions:
Accounts receivable, net
6,023
396
10,873
(2,228
)
Deferred contract acquisition costs
(9,416
)
(6,278
)
(26,441
)
(20,414
)
Prepaid expenses and other current
assets
(3,526
)
(4,741
)
(4,345
)
(9,598
)
Other assets
1,874
1,010
3,780
1,743
Accounts payable
2,900
(5,233
)
7,104
(366
)
Accrued expenses and other liabilities
(1,852
)
(925
)
1,520
6,730
Accrued compensation and benefits
(12,837
)
404
3,377
2,070
Operating lease liabilities
(1,798
)
-
(4,586
)
-
Deferred revenue
9,188
9,633
33,666
37,311
Net cash used in operating activities
(23,227
)
(8,697
)
(24,631
)
(4,147
)
Cash flows from investing
activities
Purchases of property and equipment
(1,007
)
(1,187
)
(4,237
)
(2,359
)
Business acquisitions, net of cash
acquired
-
-
(24,373
)
(1,986
)
Net cash used in investing activities
(1,007
)
(1,187
)
(28,610
)
(4,345
)
Cash flows from financing
activities
Net proceeds from issuance of ordinary
shares in initial public offering
-
-
-
269,514
Proceeds from issuance of ordinary shares
upon exercise of stock options
11,054
755
50,622
3,537
Payment of withholding taxes related to
acquisition expense settled in shares
-
-
(2,834
)
-
Repurchase of early exercised options
-
-
-
(500
)
Repayment of notes payable
(30
)
(53
)
(90
)
(73
)
Payment of deferred offering costs
-
(3,371
)
-
(5,673
)
Net cash provided by (used in) financing
activities
11,024
(2,669
)
47,698
266,805
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
2,029
196
1,630
(1,432
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(11,181
)
(12,357
)
(3,913
)
256,881
Cash, cash equivalents, and restricted
cash, beginning of period
307,548
320,847
300,280
51,609
Cash, cash equivalents, and restricted
cash, end of period
$
296,367
$
308,490
$
296,367
$
308,490
Elastic N.V.
REVENUE BY TYPE
(amounts in thousands, except
percentages)
(Unaudited)
Three Months Ended January
31,
Nine Months Ended January
31,
2020
2019
2020
2019
% of
% of
% of
% of
Total
Total
Total
Total
Amount
Revenue
Amount
Revenue
Amount
Revenue
Amount
Revenue
Self-managed subscription
$
79,105
70
%
$
52,846
74
%
$
214,947
71
%
$
142,564
74
%
License
14,495
13
%
9,406
13
%
36,674
12
%
26,850
14
%
Subscription
64,610
57
%
43,440
61
%
178,273
59
%
115,714
60
%
SaaS
25,093
22
%
11,740
17
%
63,320
21
%
32,067
17
%
Total subscription revenue
104,198
92
%
64,586
91
%
278,267
92
%
174,631
91
%
Professional services
8,983
8
%
6,249
9
%
25,730
8
%
16,423
9
%
Total revenue
$
113,181
100
%
$
70,835
100
%
$
303,997
100
%
$
191,054
100
%
Elastic N.V.
RECONCILIATION OF GAAP TO
NON-GAAP DATA
CALCULATED BILLINGS
(amounts in thousands)
(Unaudited)
Three Months Ended January
31,
Nine Months Ended January
31,
2020
2019
2020
2019
Total revenue
$
113,181
$
70,835
$
303,997
$
191,054
Add: Increase in total deferred
revenue
9,188
9,633
33,666
37,311
Less: (Increase) decrease in unbilled
accounts receivable
535
(639
)
(64
)
(794
)
Calculated billings
$
122,904
$
79,829
$
337,599
$
227,571
Elastic N.V.
RECONCILIATION OF GAAP TO
NON-GAAP DATA
FREE CASH FLOW
(amounts in thousands, except
percentages)
(Unaudited)
Three Months Ended January
31,
Nine Months Ended January
31,
2020
2019
2020
2019
Net cash used in operating activities
$
(23,227
)
$
(8,697
)
$
(24,631
)
$
(4,147
)
Less: Purchases of property and
equipment
(1,007
)
(1,187
)
(4,237
)
(2,359
)
Free cash flow
$
(24,234
)
$
(9,884
)
$
(28,868
)
$
(6,506
)
Net cash used in investing activities
$
(1,007
)
$
(1,187
)
$
(28,610
)
$
(4,345
)
Net cash provided by (used in) financing
activities
$
11,024
$
(2,669
)
$
47,698
$
266,805
Net cash used in operating activities (as
a percentage of total revenue)
(21
)%
(12
)%
(8
)%
(2
)%
Less: Purchases of property and equipment
(as a percentage of total revenue)
(1
)%
(2
)%
(1
)%
(1
)%
Free cash flow margin
(21
)%
(14
)%
(9
)%
(3
)%
Elastic N.V.
RECONCILIATION OF GAAP TO
NON-GAAP DATA
(amounts in thousands, except
percentages, share and per share amounts)
(Unaudited)
Three months ended January
31,
Nine months ended January
31,
2020
2019
2020
2019
Gross Profit Reconciliation:
GAAP gross profit
$
79,776
$
50,411
$
215,580
$
136,486
Stock-based compensation expense
1,887
1,459
4,947
2,956
Employer payroll taxes on employee stock
transactions
37
-
457
-
Amortization of acquired intangibles
3,007
734
4,659
2,141
Non-GAAP gross profit
$
84,707
$
52,604
$
225,643
$
141,583
Gross Margin Reconciliation(1):
GAAP gross margin
70.5
%
71.2
%
70.9
%
71.4
%
Stock-based compensation expense
1.7
%
2.1
%
1.6
%
1.5
%
Employer payroll taxes on employee stock
transactions
0.0
%
0.0
%
0.2
%
0.0
%
Amortization of acquired intangibles
2.7
%
1.0
%
1.5
%
1.1
%
Non-GAAP gross margin
74.8
%
74.3
%
74.2
%
74.1
%
Operating Loss Reconciliation:
GAAP operating loss
$
(42,268
)
$
(23,786
)
$
(136,531
)
$
(69,271
)
Stock-based compensation expense
15,588
11,111
42,775
28,015
Employer payroll taxes on employee stock
transactions
739
-
6,648
-
Amortization of acquired intangibles
4,458
772
6,518
2,256
Acquisition-related expenses
1,328
173
17,762
780
Non-GAAP operating loss
$
(20,155
)
$
(11,730
)
$
(62,828
)
$
(38,220
)
Operating Margin
Reconciliation(1):
GAAP operating margin
(37.3
)%
(33.6
)%
(44.9
)%
(36.3
)%
Stock-based compensation expense
13.8
%
15.7
%
14.1
%
14.7
%
Employer payroll taxes on employee stock
transactions
0.7
%
0.0
%
2.2
%
0.0
%
Amortization of acquired intangibles
3.9
%
1.1
%
2.1
%
1.2
%
Acquisition-related expenses
1.2
%
0.2
%
5.8
%
0.4
%
Non-GAAP operating margin
(17.8
)%
(16.6
)%
(20.7
)%
(20.0
)%
Net Loss Reconciliation:
GAAP net loss
$
(44,281
)
$
(21,351
)
$
(136,023
)
$
(67,468
)
Stock-based compensation expense
15,588
11,111
42,775
28,015
Employer payroll taxes on employee stock
transactions
739
-
6,648
-
Amortization of acquired intangibles
4,458
772
6,518
2,256
Acquisition-related expenses
1,328
173
17,762
780
Income tax(2)
(51
)
(1,856
)
(1,165
)
(4,138
)
Non-GAAP net loss
$
(22,219
)
$
(11,151
)
$
(63,485
)
$
(40,555
)
Non-GAAP net loss per share
attributable to ordinary shareholders, basic and
diluted(1)
$
(0.28
)
$
(0.16
)
$
(0.82
)
$
(0.82
)
Weighted-average shares used to compute
net loss per share attributable to ordinary shareholders, basic and
diluted
80,737,237
70,725,336
77,713,604
49,261,240
(1) Totals may not sum, due to rounding.
Gross margin, operating margin, and earnings 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 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.
Elastic N.V.
RECONCILIATION OF GAAP TO
NON-GAAP DATA
(amounts in thousands)
(Unaudited)
Three months ended January
31,
Nine months ended January
31,
2020
2019
2020
2019
Cost of revenue reconciliation:
GAAP cost of license - self-managed
$
347
$
96
$
602
$
290
Amortization of acquired intangibles
(347
)
(96
)
(602
)
(290
)
Non-GAAP cost of license - self
-managed
$
-
$
-
$
-
$
-
GAAP cost of subscription - self-managed
and SaaS
$
23,196
$
13,941
$
60,832
$
37,012
Stock-based compensation expense
(1,008
)
(1,095
)
(2,869
)
(2,188
)
Employer payroll taxes on employee stock
transactions(1)
(21
)
-
(321
)
-
Amortization of acquired intangibles
(2,660
)
(638
)
(4,057
)
(1,851
)
Non-GAAP cost of subscription -
self-managed and SaaS
$
19,507
$
12,208
$
53,585
$
32,973
GAAP cost of professional services
$
9,862
$
6,387
$
26,983
$
17,266
Stock-based compensation expense
(879
)
(364
)
(2,078
)
(768
)
Employer payroll taxes on employee stock
transactions(1)
(16
)
-
(136
)
-
Non-GAAP cost of professional services
$
8,967
$
6,023
$
24,769
$
16,498
Operating expenses
reconciliation:
GAAP research and development expense
$
46,119
$
25,850
$
119,779
$
70,163
Stock-based compensation expense
(6,256
)
(4,604
)
(17,087
)
(11,386
)
Employer payroll taxes on employee stock
transactions(1)
(238
)
-
(1,886
)
-
Acquisition-related expenses
-
(173
)
(34
)
(521
)
Non-GAAP research and development
expense
$
39,625
$
21,073
$
100,772
$
58,256
GAAP sales and marketing expense
$
54,829
$
37,196
$
160,860
$
102,252
Stock-based compensation expense
(4,540
)
(3,471
)
(13,506
)
(8,085
)
Employer payroll taxes on employee stock
transactions(1)
(335
)
-
(2,816
)
-
Amortization of acquired intangibles
(1,451
)
(38
)
(1,859
)
(115
)
Acquisition-related expenses
(395
)
-
(508
)
-
Non-GAAP sales and marketing expenses
$
48,108
$
33,687
$
142,171
$
94,052
GAAP general and administrative
expense
$
21,096
$
11,151
$
71,472
$
33,342
Stock-based compensation expense
(2,905
)
(1,577
)
(7,235
)
(5,588
)
Employer payroll taxes on employee stock
transactions(1)
(129
)
-
(1,489
)
-
Acquisition-related expenses
(933
)
-
(17,220
)
(259
)
Non-GAAP general and administrative
expense
$
17,129
$
9,574
$
45,528
$
27,495
(1) Information not meaningful for three
and nine months ended January 31, 2019.
About Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S.
GAAP, we believe the non-GAAP measures listed below are useful in
evaluating our operating performance. We use these non-GAAP
financial measures to evaluate our ongoing operations and for
internal planning and forecasting purposes. We believe that
non-GAAP financial information, when taken collectively, may be
helpful to investors because it provides consistency and
comparability with past financial performance. However, non-GAAP
financial information is presented for supplemental informational
purposes only, has limitations as an analytical tool and should not
be considered in isolation or as a substitute for financial
information presented in accordance with U.S. GAAP. In particular,
free cash flow is not a substitute for cash used in operating
activities. Additionally, the utility of free cash flow as a
measure of our liquidity is further limited as it does not
represent the total increase or decrease in our cash balance for a
given period. In addition, other companies, including companies in
our industry, may calculate similarly-titled non-GAAP measures
differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of our
non-GAAP financial measures as tools for comparison. A
reconciliation of our historical non-GAAP financial measures to
their most directly comparable financial measure stated in
accordance with U.S. GAAP has been provided in the financial
statement tables included in this press release. Investors are
cautioned that there are a number of limitations associated with
the use of non-GAAP financial measures and key metrics as
analytical tools. Investors are encouraged to review these
reconciliations, and not to rely on any single financial measure to
evaluate our business.
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 Loss and Non-GAAP Operating Margin
We define non-GAAP operating 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, and acquisition-related expenses. We believe non-GAAP
operating 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 Loss Per Share
We define non-GAAP net 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 and the tax effects
related to the foregoing. We believe non-GAAP net 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.
Free Cash Flow and Free Cash Flow Margin
Free cash flow is a non-GAAP financial measure that we define as
net cash (used in) provided by operating activities less purchases
of property and equipment. Free cash flow margin is calculated as
free cash flow divided by total revenue. We believe that free cash
flow and free cash flow margin are useful indicators of liquidity
that provide information to management and investors about the
amount of cash generated from our core operations that, after the
purchases of property and equipment, can be used for strategic
initiatives, including investing in our business and selectively
pursuing acquisitions and strategic investments.
Calculated Billings
We define calculated billings as total revenue plus the increase
in total deferred revenue as presented on or derived from our
consolidated statements of cash flows less the (increase) decrease
in total unbilled accounts receivable in a given period. Calculated
billings exclude deferred revenue and unbilled accounts receivable
acquired through acquisitions. We typically invoice our customers
annually in advance, and to a lesser extent multi-year in advance,
quarterly in advance, monthly in advance, monthly in arrears or
upon delivery. Our management uses calculated billings to
understand and evaluate our near term cash flows and operating
results.
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 United States dollars at the exchange rates in
effect on the last day of our prior fiscal year, rather than the
actual exchange rates in effect during the respective periods.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200226005887/en/
Anthony Luscri Elastic Investor Relations ir@elastic.co
(650) 695-1055
Lisa Boughner Elastic Corporate Communications
lisa.boughner@elastic.co
Elastic NV (NYSE:ESTC)
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