Elastic N.V. (ESTC) released its first-quarter financial results after the market closed on Thursday, revealing a mixed bag of news for investors. While the company surpassed analysts’ expectations on both earnings and revenue, its revenue growth slowed due to changes in customer segmentation. This resulted in a significant decline in Elastic’s stock price after hours.
Elastic reported earnings per share of 35 cents, exceeding the consensus estimate of 25 cents by 40%. Quarterly revenue came in at $347.42 million, beating the consensus estimate by 0.79% and marking a 18.27% increase year-over-year. Elastic Cloud revenue specifically grew by 30% year-over-year, reaching $157 million.
The company also reported positive metrics in customer acquisition and engagement. The total number of customers with an Annual Contract Value (ACV) greater than $100,000 reached over 1,370, while the total subscription customer count was approximately 21,200. The Net Expansion Rate for the quarter was approximately 112%, indicating strong customer retention and expansion.
Despite these positive figures, Elastic’s CEO, Ash Kulkarni, acknowledged that the company faced challenges in the quarter. He stated that the volume of customer commitments was impacted by segmentation changes implemented at the beginning of the year, which are taking longer to settle than anticipated. Although Elastic is taking steps to address this issue, it will affect revenue growth for the current year.
Looking ahead, Elastic expects total revenue to be between $353 million and $355 million in the second quarter. This falls short of the $360.87 million consensus estimate, suggesting continued impact from the segmentation changes.
The market reacted negatively to the revenue slowdown, with Elastic shares plummeting 23.49% after hours, trading at $79.30 at the time of publication on Thursday. This underscores the importance of revenue growth for investors, even amidst strong earnings and positive customer metrics.
