PRESS RELEASE
Elastic Reports Strong Fourth Quarter and Fiscal 2022 Financial Results
Q4 Elastic Cloud Revenue of $87.7 million, Up 71% year-over-year (72% in constant currency)
FY22 Revenue of $862.4 million, Up 42% year-over-year (41% in constant currency)
Contact information
Nikolay Beliov
Elastic Investor Relations
Lisa Boughner
Elastic Corporate Communications
Elastic (NYSE: ESTC) ("Elastic"), the company behind Elasticsearch and the Elastic Stack, announced strong results for its fourth quarter and full fiscal year (ended April 30, 2022).
Fourth Quarter Fiscal 2022 Financial Highlights
- Total revenue was $239.4 million, an increase of 35% year-over-year, or 37% on a constant currency basis
- Elastic Cloud revenue was $87.7 million, an increase of 71% year-over-year, or 72% on a constant currency basis
- GAAP operating loss was $59.6 million; GAAP operating margin was -25%
- Non-GAAP operating loss was $7.9 million; non-GAAP operating margin was -3%
- GAAP net loss per share was $0.70; non-GAAP net loss per share was $0.16
- Operating cash flow was -$3.1 million with adjusted free cash flow of -$5.3 million
- Cash and cash equivalents were $860.9 million as of April 30, 2022
Full Fiscal 2022 Financial Highlights
- Total revenue was $862.4 million, an increase of 42% year-over-year, or 41% on a constant currency basis
- Elastic Cloud revenue was $298.6 million, an increase of 80% year-over-year, or 79% on a constant currency basis
- GAAP operating loss was $173.7 million; GAAP operating margin was -20%
- Non-GAAP operating profit was $0.9 million; non-GAAP operating margin was 0%
- GAAP net loss per share was $2.20; non-GAAP net loss per share was $0.33
- Operating cash flow was $5.7 million with adjusted free cash flow of $10.7 million
“We had a strong fourth quarter and closed out an excellent year, driven by robust growth in Elastic Cloud, which grew 80% year-over-year in fiscal year 2022, and increased to 37% of total revenue in Q4,” said Ash Kulkarni, CEO, Elastic. “The strong momentum in Elastic Cloud puts us on the path to deliver over 50% of total revenue from Elastic Cloud exiting Q4 of fiscal year 2024, which is ahead of our prior outlook. The enormous market opportunity, the strategic relevance of our solutions to our customers and partners, and the momentum in Elastic Cloud make us confident that we can achieve $2 billion in total revenue in fiscal year 2025.”
Fourth Quarter Fiscal 2022 Key Metrics and Recent Business Highlights
Key Customer Metrics
- Total subscription customer count was over 18,600, compared to over 17,900 in Q3 FY22, and over 15,000 in Q4 FY21
- Total customer count with Annual Contract Value (ACV) greater than $100,000 was over 960, compared to over 890 in Q3 FY22, and over 730 in Q4 FY21
- Net Expansion Rate was just under 130%, and was flat compared to Q3 FY22
Cloud Partner Momentum
- Announced expanded collaboration with AWS to accelerate momentum and build, market, and deliver seamless access for shared customers
- Announced expanded strategic partnership with Microsoft to simplify cloud operations, launch co-selling activities, and make it easy to bring data from Azure services into Elastic, and added four new Azure regions in the Americas, Asia, and Africa
- Joined the Data Cloud Alliance, led by Google Cloud, as a founding member to accelerate the path to value creation and solve the modern data challenges of today’s enterprises
Product Innovations and Updates
- Announced Elastic 8.1 with new capabilities to help customers defend against cyberattacks and accelerate app development with expanded data integrations, faster indexing speeds, and more efficient storage utilization
- Announced Elastic 8.2 with new capabilities that enable customers to build seamless search experiences, accelerate troubleshooting of cloud-native services, and streamline security analyst workflows
- Enhanced machine learning and natural language processing capabilities across both releases to deliver more relevant results
- Achieved Payment Card Industry Data Security Standard (PCI-DSS) compliance across all Elastic Cloud regions
Other Business Highlights
- Named a Strong Performer by Forrester Research in The Forrester Wave™: Endpoint Detection and Response (EDR) Providers, Q2 2022
- Appointed Carolyn Herzog as chief legal officer
- Appointed Janesh Moorjani as chief operating officer in addition to his role as chief financial officer
Financial Outlook
The Company is providing the following guidance:
For the first quarter of fiscal 2023 (ending July 31, 2022):
- Total revenue is expected to be between $244 million and $246 million, representing 27% year-over-year growth at the midpoint (32% year-over-year constant currency growth at the midpoint)
- Non-GAAP operating margin is expected to be between -3.8% and -2.8%
- Non-GAAP net loss per share is expected to be between $0.20 and $0.16, assuming between 94.0 million and 95.0 million weighted average ordinary shares outstanding
For fiscal 2023 (ending April 30, 2023):
- Total revenue is expected to be between $1,080 million and $1,086 million, representing 26% year-over-year growth at the midpoint (29% year-over-year constant currency growth at the midpoint)
- Non-GAAP operating margin is expected to be between 0.0% and 0.5%
- Non-GAAP net loss per share is expected to be between $0.36 and $0.28, assuming between 95.0 million and 97.0 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. We present forward-looking non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled “About Non-GAAP Financial Measures” for an explanation of these non-GAAP measures. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures for operating margin and net loss per share 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. These items necessary to reconcile such non-GAAP measures could be material and have a significant impact on the Company’s results computed in accordance with GAAP.
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 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 (NYSE: ESTC) is a leading platform for search-powered solutions. We help organizations, their employees, and their customers accelerate the results that matter. With solutions in Enterprise Search, Observability, and Security, we enhance customer and employee search experiences, keep mission-critical applications running smoothly, and protect against cyber threats. Delivered wherever data lives, in one cloud, across multiple clouds, or on-premise, Elastic enables its customers to achieve new levels of success at scale and on a single platform. 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
In relation to constant currency non-GAAP financial measures, the only reconciling item between GAAP financial measures and non-GAAP financial measures is the effect of foreign currency rate fluctuations. Further details on how we calculate such effects can be found in the definition of “Constant Currency” below. Reconciliations of other GAAP financial measures to their respective non-GAAP financial measures are included at the end of this press release following the accompanying financial data. For a description of 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 that involve substantial risk and uncertainties, which include, but are not limited to, statements regarding our expected financial results for the fiscal quarter ending July 31, 2022 and the fiscal year ending April 30, 2023, our expectations regarding demand for our products and solutions and our future revenue, our assessments of the strength of our solutions and products, the expected performance or benefits of our offerings, our expectations regarding market and growth opportunities and our ability to address those opportunities, our expectations regarding the growth and adoption of our Elastic Cloud offering, and the expected benefits of our investments. These forward-looking statements are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Our expectations and beliefs in light of currently available information regarding these matters may not materialize. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements due to uncertainties, risks, and changes in circumstances, including but not limited to those related to: our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses (which include changes in sales and marketing, research and development and general and administrative expenses), and our ability to achieve and maintain future profitability; the effects of currency movements on our financial results, our ability to continue to deliver and improve our offerings and develop new offerings, including security-related product and Elastic Cloud offerings; customer acceptance and purchase of our existing offerings and new offerings, including the expansion and adoption of our Elastic Cloud offerings; our inability to realize value from investments in the business, including R&D investments and strategic transactions; our ability to maintain and expand our user and customer base; the impact of the COVID-19 pandemic, including any variants, on the macroeconomic environment, on our business, operations, hiring and financial results, and on businesses of our customers and partners, including their spending priorities, the effect of lockdowns, restrictions and new regulations; the impact of our licensing model on the use and adoption of our software; our pricing model strategies and their anticipated impacts on our business and results of operations; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our international expansion strategy; our operating results and cash flows; our beliefs and objectives for future operations; the sufficiency of our capital resources; our ability to successfully execute our go-to-market strategy, including by expanding our relationships with our partners, and expand in our existing markets and into new markets, and our ability to forecast customer retention and expansion; and general market, political, economic and business conditions (including impacts arising from the ongoing military conflict between Russia and Ukraine).
Any additional or unforeseen effect from the COVID-19 pandemic or ongoing conflict between Russia and Ukraine may exacerbate these risks. Additional risks and uncertainties that could cause actual outcomes and results to differ materially are included in our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2021 and any subsequent reports 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, except as required by law.
Contact Information
Nikolay Beliov
Elastic Investor Relations
ir@elastic.co
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 April 30, | Year Ended April 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Revenue | |||||||||||||||
License - self-managed | $ | 22,507 | $ | 22,321 | $ | 76,964 | $ | 67,994 | |||||||
Subscription - self-managed and SaaS | 199,207 | 142,218 | 721,806 | 499,345 | |||||||||||
Total subscription revenue | 221,714 | 164,539 | 798,770 | 567,339 | |||||||||||
Professional services | 17,641 | 13,071 | 63,604 | 41,150 | |||||||||||
Total revenue | 239,355 | 177,610 | 862,374 | 608,489 | |||||||||||
Cost of revenue | |||||||||||||||
Cost of license - self-managed | 306 | 347 | 1,548 | 1,386 | |||||||||||
Cost of subscription - self-managed and SaaS | 50,559 | 34,663 | 176,656 | 121,127 | |||||||||||
Total cost of revenue - subscription | 50,865 | 35,010 | 178,204 | 122,513 | |||||||||||
Cost of professional services | 16,499 | 10,797 | 53,990 | 38,541 | |||||||||||
Total cost of revenue | 67,364 | 45,807 | 232,194 | 161,054 | |||||||||||
Gross profit | 171,991 | 131,803 | 630,180 | 447,435 | |||||||||||
Operating expenses | |||||||||||||||
Research and development | 78,867 | 55,437 | 273,761 | 199,203 | |||||||||||
Sales and marketing | 118,603 | 82,165 | 406,658 | 273,877 | |||||||||||
General and administrative | 34,143 | 31,278 | 123,441 | 103,833 | |||||||||||
Total operating expenses | 231,613 | 168,880 | 803,860 | 576,913 | |||||||||||
Operating loss | (59,622 | ) | (37,077 | ) | (173,680 | ) | (129,478 | ) | |||||||
Other income (expense), net | |||||||||||||||
Interest expense | (6,389 | ) | (107 | ) | (20,716 | ) | (185 | ) | |||||||
Other income (expense), net | (2,884 | ) | (553 | ) | (3,393 | ) | 7,949 | ||||||||
Loss before income taxes | (68,895 | ) | (37,737 | ) | (197,789 | ) | (121,714 | ) | |||||||
Provision for (benefit from) income taxes | (3,285 | ) | 5,564 | 6,059 | 7,720 | ||||||||||
Net loss | $ | (65,610 | ) | $ | (43,301 | ) | $ | (203,848 | ) | $ | (129,434 | ) | |||
Net loss per share attributable to ordinary shareholders, basic and diluted | $ | (0.70 | ) | $ | (0.48 | ) | $ | (2.20 | ) | $ | (1.48 | ) | |||
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted | 93,806,902 | 90,028,822 | 92,547,145 | 87,207,094 | |||||||||||
Elastic N.V. CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share and per share amounts) (Unaudited) | |||||||
As of | As of | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 860,949 | $ | 400,814 | |||
Restricted cash | 2,688 | 2,894 | |||||
Accounts receivable, net of allowance for credit losses of $2,700 and $2,344 as of April 30, 2022 and April 30, 2021, respectively | 215,228 | 160,415 | |||||
Deferred contract acquisition costs | 43,628 | 36,089 | |||||
Prepaid expenses and other current assets | 41,215 | 37,002 | |||||
Total current assets | 1,163,708 | 637,214 | |||||
Property and equipment, net | 7,207 | 8,881 | |||||
Goodwill | 303,906 | 198,851 | |||||
Operating lease right-of-use assets | 25,437 | 25,464 | |||||
Intangible assets, net | 45,800 | 36,286 | |||||
Deferred contract acquisition costs, non-current | 74,419 | 50,263 | |||||
Deferred tax assets | 5,811 | 3,697 | |||||
Other assets | 16,643 | 12,516 | |||||
Total assets | $ | 1,642,931 | $ | 973,172 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 28,403 | $ | 7,248 | |||
Accrued expenses and other liabilities | 53,930 | 28,909 | |||||
Accrued compensation and benefits | 68,002 | 52,525 | |||||
Operating lease liabilities | 11,219 | 8,528 | |||||
Deferred revenue | 431,776 | 352,805 | |||||
Total current liabilities | 593,330 | 450,015 | |||||
Deferred revenue, non-current | 33,518 | 44,895 | |||||
Long-term debt, net | 566,520 | — | |||||
Operating lease liabilities, non-current | 16,482 | 19,649 | |||||
Other liabilities, non-current | 17,648 | 7,782 | |||||
Total liabilities | 1,227,498 | 522,341 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Convertible preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of April 30, 2022 and April 30, 2021 | — | — | |||||
Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 94,174,914 and 90,533,985 shares issued and outstanding as of April 30, 2022 and April 30, 2021, respectively | 990 | 948 | |||||
Treasury stock | (369 | ) | (369 | ) | |||
Additional paid-in capital | 1,250,108 | 1,071,675 | |||||
Accumulated other comprehensive loss | (18,130 | ) | (8,105 | ) | |||
Accumulated deficit | (817,166 | ) | (613,318 | ) | |||
Total shareholders’ equity | 415,433 | 450,831 | |||||
Total liabilities and shareholders’ equity | $ | 1,642,931 | $ | 973,172 | |||
Elastic N.V. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (Unaudited) | |||||||||||||||
Three Months Ended April 30, | Year Ended April 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Cash flows from operating activities | |||||||||||||||
Net loss | $ | (65,610 | ) | $ | (43,301 | ) | $ | (203,848 | ) | $ | (129,434 | ) | |||
Adjustments to reconcile net loss to cash provided by (used in) operating activities: | |||||||||||||||
Depreciation and amortization | 5,170 | 4,381 | 19,728 | 17,237 | |||||||||||
Amortization of deferred contract acquisition costs | 17,365 | 12,536 | 60,738 | 40,991 | |||||||||||
Amortization of debt issuance costs | 249 | — | 803 | — | |||||||||||
Non-cash operating lease cost | 2,377 | 2,671 | 8,636 | 7,927 | |||||||||||
Stock-based compensation expense, net of amounts capitalized | 43,641 | 28,375 | 140,612 | 93,680 | |||||||||||
Deferred income taxes | (2,211 | ) | 321 | (2,430 | ) | 33 | |||||||||
Foreign currency transaction (gain) loss | 277 | (44 | ) | 1,984 | (9,507 | ) | |||||||||
Other | — | (153 | ) | 98 | (142 | ) | |||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable, net | (71,988 | ) | (39,283 | ) | (62,187 | ) | (24,037 | ) | |||||||
Deferred contract acquisition costs | (35,521 | ) | (26,525 | ) | (96,755 | ) | (81,137 | ) | |||||||
Prepaid expenses and other current assets | (777 | ) | (9,009 | ) | (3,427 | ) | (4,192 | ) | |||||||
Other assets | 1,628 | (9,344 | ) | 825 | (4,107 | ) | |||||||||
Accounts payable | 6,584 | 1,546 | 21,036 | (4,775 | ) | ||||||||||
Accrued expenses and other liabilities | 9,653 | 6,422 | 27,192 | 8,118 | |||||||||||
Accrued compensation and benefits | 13,089 | 9,726 | 17,775 | 3,867 | |||||||||||
Operating lease liabilities | (2,450 | ) | (2,512 | ) | (8,888 | ) | (7,914 | ) | |||||||
Deferred revenue | 75,474 | 62,628 | 83,780 | 115,937 | |||||||||||
Net cash provided by (used in) operating activities | (3,050 | ) | (1,565 | ) | 5,672 | 22,545 | |||||||||
Cash flows from investing activities | |||||||||||||||
Purchases of property and equipment | (1,498 | ) | (1,180 | ) | (2,485 | ) | (3,912 | ) | |||||||
Capitalization of internal-use software costs | (705 | ) | (317 | ) | (4,932 | ) | (317 | ) | |||||||
Business acquisitions, net of cash acquired | — | — | (119,854 | ) | — | ||||||||||
Other | — | 1,391 | — | 2,711 | |||||||||||
Net cash used in investing activities | (2,203 | ) | (106 | ) | (127,271 | ) | (1,518 | ) | |||||||
Cash flows from financing activities | |||||||||||||||
Proceeds from the issuance of senior notes | — | — | 575,000 | — | |||||||||||
Proceeds from issuance of ordinary shares upon exercise of stock options | 8,870 | 9,704 | 36,410 | 77,258 | |||||||||||
Payments of debt issuance costs | — | — | (9,283 | ) | — | ||||||||||
Net cash provided by financing activities | 8,870 | 9,704 | 602,127 | 77,258 | |||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (8,271 | ) | 186 | (20,599 | ) | 6,034 | |||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (4,654 | ) | 8,219 | 459,929 | 104,319 | ||||||||||
Cash, cash equivalents, and restricted cash, beginning of period | 868,291 | 395,489 | 403,708 | 299,389 | |||||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | 863,637 | $ | 403,708 | $ | 863,637 | $ | 403,708 | |||||||
Elastic N.V. REVENUE BY TYPE (amounts in thousands, except percentages) (Unaudited) | |||||||||||||||||||||||
Three Months Ended April 30, | Year Ended April 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Amount | % of Total Revenue | Amount | % of Total Revenue | Amount | % of Total Revenue | Amount | % of Total Revenue | ||||||||||||||||
Elastic Cloud | $ | 87,652 | 37 | % | $ | 51,335 | 29 | % | $ | 298,615 | 35 | % | $ | 166,319 | 27 | % | |||||||
Other subscription | 134,062 | 56 | % | 113,204 | 64 | % | 500,155 | 58 | % | 401,020 | 66 | % | |||||||||||
Total subscription revenue | 221,714 | 93 | % | 164,539 | 93 | % | 798,770 | 93 | % | 567,339 | 93 | % | |||||||||||
Professional services | 17,641 | 7 | % | 13,071 | 7 | % | 63,604 | 7 | % | 41,150 | 7 | % | |||||||||||
Total revenue | $ | 239,355 | 100 | % | $ | 177,610 | 100 | % | $ | 862,374 | 100 | % | $ | 608,489 | 100 | % | |||||||
Elastic N.V. RECONCILIATION OF GAAP TO NON-GAAP DATA CALCULATED BILLINGS (amounts in thousands) (Unaudited) | ||||||||||||||
Three Months Ended April 30, | Year Ended April 30, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||
Total revenue | $ | 239,355 | $ | 177,610 | $ | 862,374 | $ | 608,489 | ||||||
Add: Increase in deferred revenue | 75,474 | 62,628 | 83,780 | 115,937 | ||||||||||
Less: Decrease (increase) in unbilled accounts receivable | (1,939 | ) | 632 | (4,041 | ) | (2,582 | ) | |||||||
Calculated billings | $ | 312,890 | $ | 240,870 | $ | 942,113 | $ | 721,844 | ||||||
Elastic N.V. RECONCILIATION OF GAAP TO NON-GAAP DATA ADJUSTED FREE CASH FLOW (amounts in thousands, except percentages) (Unaudited) | |||||||||||||||
Three Months Ended April 30, | Year Ended April 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net cash provided by (used in) operating activities | $ | (3,050 | ) | $ | (1,565 | ) | $ | 5,672 | $ | 22,545 | |||||
Less: Purchases of property and equipment | (1,498 | ) | (1,180 | ) | (2,485 | ) | (3,912 | ) | |||||||
Less: Capitalization of internal-use software | (705 | ) | (317 | ) | (4,932 | ) | (317 | ) | |||||||
Add: Interest paid on long-term debt | — | — | 12,452 | — | |||||||||||
Adjusted free cash flow | $ | (5,253 | ) | $ | (3,062 | ) | $ | 10,707 | $ | 18,316 | |||||
Net cash used in investing activities | $ | (2,203 | ) | $ | (106 | ) | $ | (127,271 | ) | $ | (1,518 | ) | |||
Net cash provided by financing activities | $ | 8,870 | $ | 9,704 | $ | 602,127 | $ | 77,258 | |||||||
Net cash provided by (used in) operating activities (as a percentage of total revenue) | (1 | )% | (1 | )% | 1 | % | 4 | % | |||||||
Less: Purchases of property and equipment (as a percentage of total revenue) | (1 | )% | (1 | )% | — | % | (1 | )% | |||||||
Less: Capitalization of internal-use software (as a percentage of total revenue) | — | % | — | % | (1 | )% | — | % | |||||||
Add: Interest paid on long-term debt (as a percentage of total revenue) | — | % | — | % | 1 | % | — | % | |||||||
Adjusted free cash flow margin | (2 | )% | (2 | )% | 1 | % | 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 April 30, | Year Ended April 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Gross Profit Reconciliation: | |||||||||||||||
GAAP gross profit | $ | 171,991 | $ | 131,803 | $ | 630,180 | $ | 447,435 | |||||||
Stock-based compensation expense | 3,976 | 3,577 | 14,831 | 11,929 | |||||||||||
Employer payroll taxes on employee stock transactions | 328 | 424 | 1,393 | 1,335 | |||||||||||
Amortization of acquired intangibles | 2,947 | 2,109 | 10,503 | 8,437 | |||||||||||
Non-GAAP gross profit | $ | 179,242 | $ | 137,913 | $ | 656,907 | $ | 469,136 | |||||||
Gross Margin Reconciliation(1): | |||||||||||||||
GAAP gross margin | 71.9 | % | 74.2 | % | 73.1 | % | 73.5 | % | |||||||
Stock-based compensation expense | 1.7 | % | 2.0 | % | 1.7 | % | 2.0 | % | |||||||
Employer payroll taxes on employee stock transactions | 0.1 | % | 0.2 | % | 0.2 | % | 0.2 | % | |||||||
Amortization of acquired intangibles | 1.2 | % | 1.2 | % | 1.2 | % | 1.4 | % | |||||||
Non-GAAP gross margin | 74.9 | % | 77.6 | % | 76.2 | % | 77.1 | % | |||||||
Operating Loss Reconciliation: | |||||||||||||||
GAAP operating loss | $ | (59,622 | ) | $ | (37,077 | ) | $ | (173,680 | ) | $ | (129,478 | ) | |||
Stock-based compensation expense | 43,641 | 28,375 | 141,194 | 93,680 | |||||||||||
Employer payroll taxes on employee stock transactions | 1,327 | 3,940 | 9,961 | 14,376 | |||||||||||
Amortization of acquired intangibles | 4,139 | 3,537 | 15,783 | 14,167 | |||||||||||
Acquisition-related expenses | 2,633 | — | 7,632 | — | |||||||||||
Non-GAAP operating income (loss) | $ | (7,882 | ) | $ | (1,225 | ) | $ | 890 | $ | (7,255 | ) | ||||
Operating Margin Reconciliation(1): | |||||||||||||||
GAAP operating margin | (24.9 | )% | (20.9 | )% | (20.1 | )% | (21.3 | )% | |||||||
Stock-based compensation expense | 18.2 | % | 16.0 | % | 16.4 | % | 15.4 | % | |||||||
Employer payroll taxes on employee stock transactions | 0.6 | % | 2.2 | % | 1.2 | % | 2.4 | % | |||||||
Amortization of acquired intangibles | 1.7 | % | 2.0 | % | 1.8 | % | 2.3 | % | |||||||
Acquisition-related expenses | 1.1 | % | 0.0 | % | 0.9 | % | 0.0 | % | |||||||
Non-GAAP operating margin | (3.3 | )% | (0.7 | )% | 0.1 | % | (1.2 | )% | |||||||
Net Loss Reconciliation: | |||||||||||||||
GAAP net loss | $ | (65,610 | ) | $ | (43,301 | ) | $ | (203,848 | ) | $ | (129,434 | ) | |||
Stock-based compensation expense | 43,641 | 28,375 | 141,194 | 93,680 | |||||||||||
Employer payroll taxes on employee stock transactions | 1,327 | 3,940 | 9,961 | 14,376 | |||||||||||
Amortization of acquired intangibles | 4,139 | 3,537 | 15,783 | 14,167 | |||||||||||
Acquisition-related expenses | 2,633 | — | 7,632 | — | |||||||||||
Income tax(2) | (817 | ) | (200 | ) | (1,496 | ) | (777 | ) | |||||||
Non-GAAP net loss | $ | (14,687 | ) | $ | (7,649 | ) | $ | (30,774 | ) | $ | (7,988 | ) | |||
Non-GAAP net loss per share attributable to ordinary shareholders, basic and diluted | $ | (0.16 | ) | $ | (0.08 | ) | $ | (0.33 | ) | $ | (0.09 | ) | |||
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted | 93,806,902 | 90,028,822 | 92,547,145 | 87,207,094 | |||||||||||
(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 April 30, | Year Ended April 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Cost of revenue reconciliation: | |||||||||||||||
GAAP cost of license - self-managed | $ | 306 | $ | 347 | $ | 1,548 | $ | 1,386 | |||||||
Amortization of acquired intangibles | (306 | ) | (347 | ) | (1,548 | ) | (1,386 | ) | |||||||
Non-GAAP cost of license - self -managed | $ | — | $ | — | $ | — | $ | — | |||||||
GAAP cost of subscription - self-managed and SaaS | $ | 50,559 | $ | 34,663 | $ | 176,656 | $ | 121,127 | |||||||
Stock-based compensation expense | (2,106 | ) | (2,040 | ) | (8,368 | ) | (7,105 | ) | |||||||
Employer payroll taxes on employee stock transactions | (207 | ) | (187 | ) | (681 | ) | (674 | ) | |||||||
Amortization of acquired intangibles | (2,641 | ) | (1,762 | ) | (8,955 | ) | (7,051 | ) | |||||||
Non-GAAP cost of subscription - self-managed and SaaS | $ | 45,605 | $ | 30,674 | $ | 158,652 | $ | 106,297 | |||||||
GAAP cost of professional services | $ | 16,499 | $ | 10,797 | $ | 53,990 | $ | 38,541 | |||||||
Stock-based compensation expense | (1,870 | ) | (1,537 | ) | (6,463 | ) | (4,824 | ) | |||||||
Employer payroll taxes on employee stock transactions | (121 | ) | (237 | ) | (712 | ) | (661 | ) | |||||||
Non-GAAP cost of professional services | $ | 14,508 | $ | 9,023 | $ | 46,815 | $ | 33,056 | |||||||
Operating expenses reconciliation: | |||||||||||||||
GAAP research and development expense | $ | 78,867 | $ | 55,437 | $ | 273,761 | $ | 199,203 | |||||||
Stock-based compensation expense | (18,127 | ) | (10,958 | ) | (59,911 | ) | (35,267 | ) | |||||||
Employer payroll taxes on employee stock transactions | (400 | ) | (968 | ) | (3,316 | ) | (3,670 | ) | |||||||
Acquisition-related expenses | (2,409 | ) | — | (6,104 | ) | — | |||||||||
Non-GAAP research and development expense | $ | 57,931 | $ | 43,511 | $ | 204,430 | $ | 160,266 | |||||||
GAAP sales and marketing expense | $ | 118,603 | $ | 82,165 | $ | 406,658 | $ | 273,877 | |||||||
Stock-based compensation expense | (15,000 | ) | (9,062 | ) | (45,798 | ) | (31,581 | ) | |||||||
Employer payroll taxes on employee stock transactions | (413 | ) | (1,905 | ) | (4,287 | ) | (5,399 | ) | |||||||
Amortization of acquired intangibles | (1,192 | ) | (1,428 | ) | (5,280 | ) | (5,730 | ) | |||||||
Non-GAAP sales and marketing expenses | $ | 101,998 | $ | 69,770 | $ | 351,293 | $ | 231,167 | |||||||
GAAP general and administrative expense | $ | 34,143 | $ | 31,278 | $ | 123,441 | $ | 103,833 | |||||||
Stock-based compensation expense | (6,538 | ) | (4,778 | ) | (20,654 | ) | (14,903 | ) | |||||||
Employer payroll taxes on employee stock transactions | (186 | ) | (643 | ) | (965 | ) | (3,972 | ) | |||||||
Acquisition-related expenses | (224 | ) | — | (1,528 | ) | — | |||||||||
Non-GAAP general and administrative expense | $ | 27,195 | $ | 25,857 | $ | 100,294 | $ | 84,958 | |||||||
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 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. 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 the differences between GAAP financial measures and the corresponding non-GAAP financial measures, 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 Income (Loss) and Non-GAAP Operating Margin
We define non-GAAP operating income (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 income (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.
Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin
Adjusted free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities adjusted for cash paid for interest less cash used for investing activities for purchases of property and equipment, and capitalized internal-use software costs. Adjusted free cash flow margin is calculated as adjusted free cash flow divided by total revenue. Adjusted free cash flow does not represent residual cash flow available for discretionary expenditures since, among other things, we have mandatory debt service requirements.
Calculated Billings
We define calculated billings as total revenue plus the increase (decrease) 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 in the period of acquisition. 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.