Elastic (ESTC) Q2 2026 earnings summary

Executive summary

• Q2 FY26 revenue grew 16% year-over-year to $423–$423.5 million, driven by strong subscription and Elastic Cloud growth, with non-GAAP operating margin at 16.5%.

• Over 1,600 customers now have annual contract value above $100,000, reflecting continued enterprise adoption and large deal momentum.

• AI adoption accelerated, fueling platform consolidation in security and observability, and driving new GenAI use cases.

• The company completed acquisitions of Jina AI and Keep to enhance AI-powered and multilingual search capabilities.

• $500 million share repurchase program initiated, with $114–$114.1 million executed in Q2.

Financial highlights

• Total Q2 revenue reached $423–$423.5 million, up 16% year-over-year; subscription revenue was $397.7–$398 million, up 17%.

• Elastic Cloud revenue grew 22% year-over-year to $206 million, now representing 49% of total revenue.

• Sales-led subscription revenue was $349 million, up 18% year-over-year.

• Adjusted free cash flow was $26 million (6% margin); cash, cash equivalents, and marketable securities totaled $1.396–$1.4 billion.

• Net expansion rate remained stable at approximately 112%.

Outlook and guidance

• Q3 FY26 revenue guidance: $437–$439 million (15% growth at midpoint); sales-led subscription revenue $364–$366 million (17% growth at midpoint).

• Full-year FY26 revenue guidance raised to $1.715–$1.721 billion (16% growth at midpoint); sales-led subscription revenue $1.417–$1.423 billion (18% growth at midpoint).

• Non-GAAP operating margin expected at 16.25% for FY26; non-GAAP diluted EPS $2.40–$2.46.

• Over 50% of the $500 million share repurchase program expected to be used in FY26.

• Management expects Elastic Cloud's contribution to increase, with modest pressure on gross margin due to third-party hosting costs.