Elastic NV (ESTC) Q4 2026 Earnings Call Highlights: Strong Revenue Growth and Strategic ...

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Total Revenue (Q4): $451 million, 16% growth as reported, 14% growth on a constant currency basis. Full-Year Revenue Growth (FY26): 17%. Non-GAAP Operating Margin (Q4): 14.8%. Non-GAAP Operating Margin (FY26): 16.4%. Sales-Led Subscription Revenue (Q4): $375 million, 19% growth as reported, 16% growth on a constant currency basis. CRPO (Q4): $1.2 billion, 20% growth both as reported and on a constant currency basis. RPO (Q4): $1.98 billion, 28% growth as reported, 27.4% growth on a constant currency basis. Adjusted Free Cash Flow Margin (FY26): Approximately 20%. Share Repurchase Program: $40 million returned in Q4, 68% of $500 million authorized amount used. Guidance for FY27 Total Revenue: $1.985 billion to $2 billion, 14.6% growth at the midpoint. Guidance for FY27 Non-GAAP Operating Margin: Approximately 19%. Guidance for FY27 Adjusted Free Cash Flow Margin: 21.5%.

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Release Date: May 28, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Elastic NV (NYSE:ESTC) finished the year strong, beating guidance across every key metric, marking the seventh consecutive quarter of disciplined field execution. The company saw a significant acceleration in CRPO growth to 20%, with organizations increasingly choosing Elastic for long-term AI transformations. Elastic achieved a 16% total revenue growth in Q4 and a non-GAAP operating margin of 14.8%, with full-year revenue growth of 17% and a non-GAAP operating margin of 16.4%. The company reported a record Q4 for $1 million deals, adding more than 30 net new customers to its $1 million-plus ACV cohort, with a 30% growth in customers spending over $5 million annually. Elastic's partnership with the Cybersecurity and Infrastructure Security Agency (CISA) is growing, with more civilian agencies switching to Elastic Cloud, indicating strong public sector momentum.

Negative Points

The shift towards cloud commitments impacted in-quarter Q4 revenue, as cloud commitments ramp over the year, unlike self-managed commitments which have upfront revenue recognition. There was a slight churn in the monthly cloud business, which grew only 3%, reflecting challenges in the SMB segment. Elastic's guidance for FY27 indicates a slower revenue growth rate of 14.6% year-over-year at the midpoint, compared to the previous year's growth. The company faces variability in customer preferences between self-managed and cloud deployments, impacting revenue recognition patterns. Elastic's pricing adjustments, including a 3% increase for cloud and a 5% increase for self-managed, may not significantly impact revenue due to the usage-based model.

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Q & A Highlights

Q: With the success in bookings, particularly in CRPO and RPS, what do you think is driving this customer unlock? Is it related to AI maturity or product advancements? Also, how is the CISA SIM as a service performing in the commercial market? A: Ashutosh Kulkarni, CEO: Our platform is being leveraged in several ways, including as a data store for AI applications, which is driving momentum. Our strong context capabilities and specialized AI agents for observability and security are also key factors. Regarding CISA SIM as a service, we're seeing significant success, with commitments exceeding initial expectations. This success is mirrored in commercial markets, where we're displacing incumbents and gaining traction.

Q: How should we interpret the CRPO growth of 20% as a leading indicator for your subscription sales growth target? A: Navam Welihinda, CFO: The CRPO growth reflects strong customer commitments, which will convert into revenue. We're entering the year with increased sales capacity, which supports an accelerating trajectory for both revenue and sales-led revenue. This positions us well to achieve our mid-term growth target of 20% sales subscription growth.

Q: Can you elaborate on the internal evolution and productivity gains from AI? Where will you focus hiring for net headcount growth? A: Ashutosh Kulkarni, CEO: AI-led automation is enhancing productivity across all functions, from engineering to marketing and finance. While enterprise selling remains interpersonal, we plan to grow our sales capacity significantly. In other areas, AI will allow us to scale differently, reducing the need for headcount growth in some functions.

Q: What are the dynamics between enterprise and SMB segments, particularly regarding cloud business churn? A: Navam Welihinda, CFO: Our focus is on sales-led subscription revenue, where we're seeing strong commitments. The monthly Elastic Cloud business grew 3%, aligning with expectations, while the annual cloud business grew 26%. The SMB segment, which is less of a focus, remains relatively flat.

Q: How is the Omni V5 release being received, and what impact could it have on platform usage? A: Ashutosh Kulkarni, CEO: The Omni models, which focus on embedding and re-ranking, open new opportunities by handling multimodal data like PDFs, audio, and video. This expands our total addressable market by enabling more workloads on our platform, though it doesn't necessarily increase compute usage.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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