Elastic posted revenue of $382.1 million and earnings of 63 cents per share. That’s well above expectations. Cloud revenue rose 26%, and shares jumped 14%. The company is betting on AI innovation and continued growth.
Enterprise search technology company Elastic reported earnings of 63 cents per share. This excludes certain costs such as equity compensation, which far exceeded analysts’ consensus expectations of 47 cents. Revenue grew 17% to $382.1 million, well above Wall Street’s $368.3 million forecast. Elastic’s growth was even stronger on cloud revenue, which rose 26% from last year, to $180 million.
As a result, shares shot up more than 14% in after-hours trading, completely erasing an earlier 2% decline. Investors even took for granted the net loss of $17 million in the quarter, compared with a net profit of $176.1 million a year ago.
Elastics CEO Ash Kulkarni said the company exceeded expectations on all key revenue and profit indicators. According to him, the results reflect the company’s continued growth. The success is said to be due to strong sales performance, sustained market demand for the products and the fast pace of innovation.
The company develops an enterprise-grade search platform based on the open-source tool Elasticsearch. This is used by enterprises to store, search and analyze large amounts of structured and unstructured data in real-time. The platform is essential for enterprises that need complex search functionality.
In addition, Elastic also provides tools for application observation and threat detection, allowing organizations to visualize these better and monitor their applications and networks.
Special tool for LLMs
In recent months, Elastic has positioned itself as a key player in the enterprise AI revolution. The company claims its platform is ideal for large language models (LLMs), helping them sift through vast amounts of information and deliver more accurate, reliable, timely answers.
Elastic even developed a specialized tool for LLMs called Elastic Search AI Lake. That solution decouples storage and computing power. This makes it possible to scale searches on much larger amounts of data with fast query performance, both for traditional structured data and vectorized unstructured information. According to Kulkarni, this product is attracting a lot of interest.
Elastic expects further growth
The company expects the strong performance to continue. For the current quarter, Elastic anticipates revenue between $379 million and $381 million, representing growth of about 13% and well above the market expectation of $374.2 million.
In addition, Elastic announced that it appointed Navam Welihinda, former executive at Grammarly and HashiCorp as its new CFO. The company praised his experience in scaling HashiCorp’s IPO and his knowledge of generating revenue from open source products.