Elastic (ESTC) Q3 2026 earnings summary

Executive summary

• Q3 revenue grew 18% year-over-year to $450 million, driven by strong subscription and Elastic Cloud growth, with non-GAAP operating margin at 18.6%.

• Over 1,660 customers had annual contract value above $100,000, with more than 470 customers using AI capabilities and significant large deal momentum.

• Recognized as a leader in search, observability, and security analytics by major industry analysts.

• Net income for the quarter was $7.8 million, a turnaround from a net loss in the prior year quarter.

• Continued investment in R&D and sales to drive product innovation and customer expansion.

Financial highlights

• Subscription revenue reached $426 million, up 19% year-over-year; sales-led subscription revenue was $376 million, up 21% year-over-year.

• Elastic Cloud revenue grew 21% year-over-year; monthly Elastic Cloud revenue was $50 million, up 6% year-over-year.

• Non-GAAP gross margin was 78%–78.5%; subscription gross margin was 81%–82%.

• Adjusted free cash flow was $54 million, with a margin of 12%.

• Cash, cash equivalents, and marketable securities totaled $1.25 billion at quarter end; total debt was $571 million.

Outlook and guidance

• Q4 FY26 revenue expected between $445 million and $447 million (15% growth at midpoint); sales-led subscription revenue $371 million–$373 million (18% growth at midpoint).

• Full-year FY26 revenue guidance raised to $1.734 billion–$1.736 billion (17% growth at midpoint); sales-led subscription revenue $1.434 billion–$1.436 billion (20% growth at midpoint).

• FY26 non-GAAP operating margin expected at 16.3%; non-GAAP EPS $2.50–$2.54.

• The company believes its liquidity is sufficient to fund operations for at least the next 12 months.

• Ongoing investments in R&D and sales are expected to continue, with a focus on expanding the platform and customer base.