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ESTC
Earnings call · Jul 2026 (Q1 FY27)

Elastic N.V. Q1 FY27 earnings call ESTC

Aug 27, 2026 Source

Executive summary

Elastic Q1 FY27 — Strong Start with AI and Security Momentum

Elastic delivered a strong start to FY27, exceeding guided metrics with accelerated revenue growth driven by robust sales execution and increasing customer commitments to its AI-powered platform. The company is strategically investing in AI and observability, expanding its market reach, and maintaining a disciplined approach to profitability, positioning it for continued growth towards its midterm targets. Management highlighted the flexibility of its deployment models as a key differentiator.

Highlights

6

  • Total revenue was $478 million, growing 15% (15% CC) year-over-year, exceeding guidance.

  • Sales-led subscription revenue grew 18% (17% CC) to $399 million, demonstrating acceleration from Q4.

  • Non-GAAP operating margin reached 16.2%, surpassing the company's guidance.

  • CRPO grew 21% (20% CC) to $1.2 billion, sustaining 20% constant currency growth for the second consecutive quarter.

  • Added over 80 net new customers to the >$100k ACV cohort, the largest increase to date, with this segment now representing 90% of sales-led subscription revenue.

  • 37% of >$100k ACV customers are now using Elastic for AI, up from 21% a year ago, with 70 net additions quarter-over-quarter.

Concerns

3

  • The net expansion rate (NER) moved from 112% to 111% due to lower constant currency growth in the trailing four quarters.

  • Incurred $13 million of cash paid for restructuring and other charges in Q1 FY27.

  • Expects an additional $2 million to $5 million of restructuring charges for the remainder of fiscal year 2027.

Guidance & targets

CategoryTargetConfidence
Total Revenue
$486M-$487M
high materiality
High
Sales-led Subscription Revenue
$407.5M-$408.5M
high materiality
High
Non-GAAP Operating Margin
~19%
medium materiality
High
Non-GAAP Diluted EPS
$0.80-$0.82
high materiality
High
Total Revenue
$1.998B-$2.010B
high materiality
High
Sales-led Subscription Revenue
$1.682B-$1.694B
high materiality
High
Non-GAAP Operating Margin
~19.4%
medium materiality
High
Non-GAAP Diluted EPS
$3.29-$3.37
high materiality
High
Adjusted Free Cash Flow Margin
21.5%
medium materiality
High
GAAP Operating Margin
Positive
medium materiality
High
Total Revenue Growth
Accelerate
high materiality
High
Sales-led Subscription Revenue Growth
Accelerate
high materiality
High
Sales-led Subscription Revenue Growth
20%+
high materiality
High
Rule of 40
Improve
high materiality
High

ESTC operating KPIs by quarter

ESTC operating KPIs stated on its earnings calls, by fiscal quarter
KPI Jan 2026 Q3 FY26 Apr 2026 Q4 FY26This call Jul 2026 Q1 FY27Change vs prior quarter
Customers above an annual spend threshold ACV > $100,000
1,660+ Sales led subscription revenue accelerated to 21% alongside our growing cohort of $100,000 ACV customers, which now exceeds 1,660. Source transcript
1,720+ We ended the year with over 1,720 customers spending more than $100,000 in ACV. Source transcript
1,800+ We ended Q1 with more than 1,800 customers spending $100,000 or more in ACV. Source transcript
—
Customers above an annual spend threshold ACV >= $100,000 using AI
470+ We now have over 470 customers with an ACV of 100,000 or greater using us for AI. Source transcript
600+ We now have over 600 customers with an ACV of over 100,000 or greater using our AI capabilities. Source transcript
670+ That is more than 670 high-value customers now using Elastic for AI use cases with 70 net additions quarter-over-quarter in Q1. Source transcript
—
Remaining performance obligation (RPO) Current
~$1.06B CRPO accelerated to approximately $1.06 billion growing 19% as reported and 15% on a constant currency basis. Source transcript
$1.2B In Q4, we grew CRPO to $1.2 billion which was 20% growth, both as reported and on a constant currency basis as compared to 15% on a constant currency basis in Q3 FY '26. Source transcript
$1.2B Our CRPO in the first quarter was $1.2 billion, representing 21% growth as reported and 20% on a constant currency basis. Source transcript
0%
Remaining performance obligation (RPO) —
$1.98B In Q4, our RPO accelerated to $1.98 billion, growing 28% as reported and 27.4% in constant currency. Source transcript
$1.9B Our RPO for the first quarter was $1.9 billion, representing 27% growth, both as reported and on a constant currency basis. Source transcript
-4%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

CRPO $1.2B Q1 FY27

21% growth (20% CC)

Constant currency CRPO growth sustained 20% for the second consecutive quarter.

RPO $1.9B Q1 FY27

27% growth (27% CC)

Reflects customers deepening long-term commitments to Elastic as a core part of their AI infrastructure.

Product announcements

ProductTypeDetails
Vector DB index mode and auto calibrationlaunch
Gena's multimodal and multilingual semantic search capabilitiesexpansion
Agent Builderupdate
Columnar mode in Elastic Search 9.5launch
Native Prometheus ingestion with PROMQL supportlaunch
Attack discoverymilestone

Deals & partnerships

Deductive AI Acquisition of a leader in AIR (AI-driven investigations)

Acquired Deductive AI, which has built a reinforcement learning harness that automates complex investigations by integrating upstream data with downstream signals to drive automated incident investigations.

NVIDIA Partnership around AI factory

Partnership with NVIDIA around their AI factory, supporting AI adoption across enterprises.

Dell Partnership around AI factory

Partnership with Dell around their AI factory, supporting AI adoption across enterprises.

Google Distributed Cloud OEMed capability

Google Distributed Cloud has OEMed Elastic's capability, extending reach and flexibility in deployment models.

Risks & headwinds

Restructuring charges FY27

$13M cash paid in Q1 FY27, additional $2M-$5M expected for remainder of FY27

Net expansion rate (NER) decline Q1 FY27 (trailing 4 quarters)

Moved from 112% to 111%

Mitigation:Expects NER to improve within 4 quarters as constant currency revenue acceleration builds through FY27.

Evolving threat landscape Ongoing

Vulnerabilities discovered and weaponized at machine speed

Mitigation:Investing in AI-driven automation for cyber defenders to detect, investigate, and mitigate threats at machine speed, moving security teams closer to 'Alert Zero'.

What to watch in Q2 FY27

Sales-led subscription revenue growth acceleration

H2 FY27
Current 17% CC (Q1 FY27)
Target Continued acceleration towards 20%+; Q4 having highest YoY growth

Why it matters

This is a key indicator of the company's ability to achieve its midterm financial targets and overall business momentum.

We expect total revenue and sales-led subscription revenue growth to accelerate in the second half with Q4 having the highest year-over-year growth for the year.

Q&A highlights

What is driving the record net additions to the >$100k ACV customer cohort, and is this sustainable?

The growth is attributed to the maturation of the sales organization's segmentation change from two years ago, leading to bigger and longer-term customer commitments. This cohort now represents 90% of sales-led subscription revenue, and AI penetration within it (37% vs 21% a year ago) drives higher growth propensity, indicating sustainability.

“Fundamentally, the way I think about it is that our new and expand motion, especially in our enterprise and mid-market high-propensity customers is working really well.”

asked by Matthew Hedberg · answered by Ashutosh Kulkarni

2 min read 5 chapters

Detailed narrative

AI-Driven Platform Strategy

Elastic is positioning its platform as essential for AI transformations, focusing on highly optimized data storage and retrieval for AI, supporting text, vector, and hybrid search across various data types. Recent innovations like Vector DB index mode and auto calibration aim to provide high retrieval accuracy at low cost, directly addressing developer needs for agentic applications. The company emphasizes its ability to bring the model to the data, rather than vice versa, due to the sheer volume and proprietary nature of enterprise information.

Observability Enhancements and Market Expansion

The company relaunched its metrics offering with Columnar mode in Elasticsearch 9.5 (technical preview), designed for time series data. This innovation significantly reduces storage costs to approximately 3 bytes per metric sample, improving efficiency, ingest, and query performance. This makes Elastic highly competitive in metrics and infrastructure monitoring, an area where it historically lacked major presence, and now includes native Prometheus ingestion with PROMQL support.

Security Leadership and Automation

Elastic continues to strengthen its security business, recognized as a leader in SIM and a strong performer in XDR by Gartner and Forrester. Attack discovery now autonomously investigates and validates threats, moving SOC teams towards 'Alert Zero' by turning alerts into prioritized real attacks. The company's fully integrated platform and AI capabilities are driving competitive wins in both public and private sectors, displacing incumbents with faster innovation and migration tooling.

Strategic Acquisitions and Partnerships

The acquisition of Deductive AI integrates reinforcement learning into the ObserveIT platform, aiming to build an 'agentic SRE' that automates incident detection, investigation, and remediation. Partnerships with NVIDIA and Dell around their AI factory, and with Google Distributed Cloud, further extend Elastic's reach and capabilities in the AI ecosystem, supporting diverse deployment models from commercial cloud to air-gapped environments.

Customer Adoption and Expansion

Elastic saw significant expansion within its customer base, particularly among those spending over $100,000 ACV, with 80 net additions in Q1, the highest ever. 37% of these high-value customers are now using Elastic for AI, up from 21% a year ago, indicating strong AI adoption. The flexibility of its open platform, supporting cloud, self-managed, and air-gapped deployments, is a key differentiator driving AI adoption across diverse industries and regulated environments.

AI-generated summary of the company's earnings call. Not investment advice.