Elastic (ESTC) Q1 2027 earnings summary

Executive summary

• Q1 FY27 total revenue reached $478.1 million, up 15% year-over-year, driven by strong growth in sales-led subscription and Elastic Cloud offerings, and robust AI adoption among high-value customers.

• Sales-led subscription revenue grew 18% to $399 million, with over 1,800 customers now having annual contract value greater than $100K.

• AI adoption surged, with over 37% of high-value customers using AI features, and continued innovation in AI, observability, and security, including new product releases and strategic acquisitions.

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

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

Financial highlights

• Subscription revenue was $449 million, up 15% year-over-year, with Elastic Cloud revenue up 20% and annual Elastic Cloud revenue up 27%.

• Current remaining performance obligations (CRPO) were $1.153 billion, up 21% year-over-year; deferred revenue was $883.9 million, up 17%.

• Subscription gross margin was 80–81%, total gross margin 74–77%, and non-GAAP operating margin 16.2%.

• 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.

Outlook and guidance

• FY27 total revenue guidance raised to $1.998–$2.010 billion (midpoint growth ~15.3%); sales-led subscription revenue at $1.682–$1.694 billion (midpoint growth ~17.5%).

• Non-GAAP operating margin forecasted at ~19.4%; non-GAAP EPS $3.29–$3.37; adjusted free cash flow margin ~21.5%.

• Q2 FY27 revenue expected at $486–$487 million (up ~15% year-over-year); sales-led subscription revenue $407.5–$408.5 million (up ~17%).

• Expect revenue and sales-led subscription revenue growth to accelerate in the second half, with Q4 as the peak growth quarter.

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