Elastic (ESTC) Q1 2027 earnings summary

Executive summary

• Q1 FY27 revenue reached $478 million, up 15% year-over-year, driven by strong growth in sales-led subscription revenue and AI-powered solutions, with over 1,800 customers now having ACV greater than $100K.

• AI adoption surged, with over 37% of high-value customers using AI features, and strategic investments in sales capacity and product innovation drove pipeline improvements and competitive wins.

• Net loss narrowed to $16.7 million, reflecting improved operating leverage despite increased investments and restructuring charges.

• Customer demand was robust across all solution areas, especially in search, AI, and security, with significant expansion in the $100K+ ACV customer cohort.

• The company implemented a restructuring plan, reducing its workforce by 7% and incurring $19.9 million in related charges.

Financial highlights

• Subscription revenue grew 15% year-over-year to $449 million, with sales-led subscription revenue up 18% to $399 million.

• Elastic Cloud revenue grew 20% year-over-year to $235 million, with annual Elastic Cloud revenue up 27%.

• Adjusted free cash flow was $143 million, with a margin of 30%, despite $13 million in restructuring charges.

• Cash, cash equivalents, and marketable securities totaled $1.461 billion at quarter end.

• Over 80 net new $100K+ customers added, the largest sequential increase to date.

Outlook and guidance

• FY27 revenue guidance raised to $1.998–$2.010 billion (15.2%–15.3% growth), with sales-led subscription revenue expected at $1.682–$1.694 billion (17.4%–17.5% growth).

• Q2 FY27 revenue expected at $486–$487 million, with sales-led subscription revenue at $407.5–$408.5 million.

• Non-GAAP operating margin for FY27 expected at ~19.4%; adjusted free cash flow margin at ~21.5%.

• Non-GAAP diluted EPS guidance raised to $3.29–$3.37 for FY27.

• The restructuring plan is expected to be substantially completed by the end of Q3 FY27.