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press release

March 3, 2022, 4:05 p.m. EST

Elastic Reports Strong Third Quarter Fiscal 2022 Financial Results

Q3 Revenue of $223.9 million, Up 43% year-over-yearQ3 Elastic Cloud Revenue of $80.4 million, Up 79% year-over-year

MOUNTAIN VIEW, Calif., (BUSINESS WIRE) -- Elastic (“Elastic”), /zigman2/quotes/209635082/composite ESTC +1.38% the company behind Elasticsearch and the Elastic Stack, announced strong results for its third quarter of fiscal 2022 (ended January 31, 2022).

Third Quarter Fiscal 2022 Financial Highlights

  • Total revenue was $223.9 million, an increase of 43% year-over-year, as reported and on a constant currency basis

  • Elastic Cloud revenue was $80.4 million, an increase of 79% year-over-year, or 80% on a constant currency basis

  • GAAP operating loss was $45.8 million; GAAP operating margin was -20%

  • Non-GAAP operating profit was $0.2 million; non-GAAP operating margin was 0%

  • GAAP net loss per share was $0.61; non-GAAP loss per share was $0.12

  • Operating cash flow was $5.1 million with adjusted free cash flow of $15.8 million

  • Cash and cash equivalents were $864.4 million as of January 31, 2022

"We delivered another record quarter and exceeded our revenue expectations, fueled by increasing consumption trends in Elastic Cloud. Our cloud business grew 79% year-over-year and now accounts for 36% of total revenue,” said Ash Kulkarni, CEO, Elastic. “I look forward to us executing against the large and growing market opportunity ahead of us, particularly in cloud. I am confident that our demonstrated success, combined with the relevance of our solutions, enables us to capture this sizeable opportunity.”

Third Quarter Fiscal 2022 Key Metrics and Recent Business Highlights

Key Customer Metrics

  • Total subscription customer count was over 17,900, compared to over 17,000 in Q2 FY22, and over 13,800 in Q3 FY21

  • Total customer count with Annual Contract Value (ACV) greater than $100,000 was over 890, compared to over 830 in Q2 FY22, and over 670 in Q3 FY21

  • Net Expansion Rate was slightly above Q2 FY22 and just below 130%

Business Highlights

Cloud Momentum

  • Delivered a more simplified Elastic Cloud on AWS onboarding and trial experience and expanded cloud-native AWS integrations which include AWS FireLens, Amazon S3 Storage Lens, the Elastic Serverless Forwarder in the AWS Serverless Application Repository, Elastic and AWS Web Application Firewall, and the Elastic and AWS Network Firewall

Product Innovations

  • Announced Elastic 8.0 with major enhancements to Elasticsearch’s vector search capabilities, new native support for modern natural language processing models, increasingly simplified data onboarding, and a streamlined security experience

  • Announced Elastic 7.16 with new features enabling simplified data ingestion into the Elastic Search Platform, including dozens of prebuilt Elastic Agent data integrations, and observability tooling for continuous integration and continuous delivery (CI/CD) pipelines

Community Momentum

  • Hosted the second annual Elastic Community Conference with 2,000+ global attendees participating in more than 60 sessions

Financial Outlook

The Company is providing the following guidance:

For the fourth quarter of fiscal 2022 (ending April 30, 2022):

  • Total revenue is expected to be between $230 million and $232 million

  • Non-GAAP operating margin is expected to be between -5.5% and -4.5%

  • Non-GAAP net loss per share is expected to be between $0.24 and $0.20, assuming between 93.1 million and 94.1 million weighted average ordinary shares outstanding

For fiscal 2022 (ending April 30, 2022):

  • Total revenue is expected to be between $853 million and $855 million

  • Non-GAAP operating margin is expected to be between -0.4% and -0.2%

  • Non-GAAP net loss per share is expected to be between $0.42 and $0.38, assuming between 92.0 million and 93.0 million weighted average ordinary shares outstanding

See the section titled “Forward-Looking Statements” below for information on the factors that could cause our actual results to differ materially. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of the costs and expenses that may be incurred in the future. These items necessary to reconcile such non-GAAP measures could be material and have a significant impact on the Company’s results computed in accordance with GAAP.

Conference Call and Webcast

Elastic’s executive management team will host a conference call today at 2:00 p.m. PT/5:00 p.m. ET to discuss the Company’s financial results and business outlook. A live audio webcast of the conference call will be available through Elastic’s Investor Relations website at ir.elastic.co. Slides will accompany the webcast. The replay of the webcast and slides will be available for two months.

About Elastic

Elastic is a search company built on a free and open heritage. Anyone can use Elastic products and solutions to get started quickly and frictionlessly. Elastic offers three solutions for enterprise search, observability, and security, built on one technology stack that can be deployed anywhere. From finding documents to monitoring infrastructure to hunting for threats, Elastic makes data usable in real time and at scale. Founded in 2012, Elastic is a distributed company with Elasticians around the globe. Learn more at elastic.co.

Elastic and associated marks are trademarks or registered trademarks of Elastic N.V. and its subsidiaries. All other company and product names may be trademarks of their respective owners.

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to Elastic’s financial results as determined in accordance with U.S. GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of this press release titled “About Non-GAAP Financial Measures.”

Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risk and uncertainties, which include, but are not limited to, statements regarding our expected financial results for the fiscal quarter and the fiscal year ending April 30, 2022, our expectations regarding demand for our products and solutions and our future revenue, our assessments of the strength of our solutions and products, the expected performance or benefits of our offerings, our expectations regarding market and growth opportunities and our ability to address those opportunities, our expectations regarding the growth and adoption of our Elastic Cloud offering, and the expected benefits of our investments. These forward-looking statements are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Our expectations and beliefs in light of currently available information regarding these matters may not materialize. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements due to uncertainties, risks, and changes in circumstances, including but not limited to those related to: our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses (which include changes in sales and marketing, research and development and general and administrative expenses), and our ability to achieve and maintain future profitability; our ability to continue to deliver and improve our offerings and develop new offerings, including security-related product and Elastic Cloud offerings; customer acceptance and purchase of our existing offerings and new offerings, including the expansion and adoption of our Elastic Cloud offerings; our inability to realize value from investments in the business, including R&D investments and strategic transactions; our ability to maintain and expand our user and customer base; the impact of the COVID-19 pandemic, including any variants, on the macroeconomic environment, on our business, operations, hiring and financial results, and on businesses of our customers and partners, including their spending priorities, the effect of lockdowns, restrictions and new regulations; the impact of our licensing model on the use and adoption of our software; the impact of foreign currency exchange rate and interest rate fluctuations on our results; our international expansion strategy; our operating results and cash flows; our beliefs and objectives for future operations; the sufficiency of our capital resources; our ability to successfully execute our go-to-market strategy, including by expanding our relationships with our partners, and expand in our existing markets and into new markets, and our ability to forecast customer retention and expansion; and general market, political, economic and business conditions.

Any additional or unforeseen effect from the COVID-19 pandemic may exacerbate these risks. Additional risks and uncertainties that could cause actual outcomes and results to differ materially are included in our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2021 and any subsequent reports filed with the SEC. SEC filings are available on the Investor Relations section of Elastic’s website at ir.elastic.co and the SEC’s website at www.sec.gov . Elastic assumes no obligation to, and does not currently intend to, update any such forward-looking statements, except as required by law.

Contact Information

Janice Oh Elastic Investor Relations
ir@elastic.co

Lisa Boughner Elastic Corporate Communications
lisa.boughner@elastic.co

Elastic N.V.
 
  Three Months Ended January 31,   Nine Months Ended January 31,
    2022       2021       2022       2021  
Revenue              
License - self-managed $ 20,119     $ 15,280     $ 54,457     $ 45,673  
Subscription - self-managed and SaaS   189,495       131,969       522,599       357,127  
Total subscription revenue   209,614       147,249       577,056       402,800  
Professional services   14,330       9,866       45,963       28,079  
Total revenue   223,944       157,115       623,019       430,879  
Cost of revenue              
Cost of license - self-managed   501       346       1,242       1,039  
Cost of subscription - self-managed and SaaS   47,076       31,426       126,097       86,464  
Total cost of revenue - subscription   47,577       31,772       127,339       87,503  
Cost of professional services   13,707       10,196       37,491       27,744  
Total cost of revenue   61,284       41,968       164,830       115,247  
Gross profit   162,660       115,147       458,189       315,632  
Operating expenses              
Research and development   71,749       51,400       194,894       143,766  
Sales and marketing   105,069       71,087       288,055       191,712  
General and administrative   31,691       27,121       89,298       72,555  
Total operating expenses   208,509       149,608       572,247       408,033  
Operating loss   (45,849 )     (34,461 )     (114,058 )     (92,401 )
Other income (expense), net              
Interest expense   (6,175 )     (65 )     (14,327 )     (78 )
Other income (expense), net   (861 )     (2,312 )     (509 )     8,502  
Loss before income taxes   (52,885 )     (36,838 )     (128,894 )     (83,977 )
Provision for income taxes   3,841       1,136       9,344       2,156  
Net loss $ (56,726 )   $ (37,974 )   $ (138,238 )   $ (86,133 )
Net loss per share attributable to ordinary shareholders, basic and diluted $ (0.61 )   $ (0.43 )   $ (1.50 )   $ (1.00 )
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted   93,015,185       88,341,038       92,140,919       86,296,028  
 
 
Elastic N.V.
 
  As of
January 31, 2022
  As of
April 30, 2021
Assets  
Current assets:      
Cash and cash equivalents $ 864,363     $ 400,814  
Restricted cash   3,928       2,894  
Accounts receivable, net of allowance for credit losses of $2,729 and $2,344 as of January 31, 2022 and April 30, 2021, respectively   146,218       160,415  
Deferred contract acquisition costs   38,938       36,089  
Prepaid expenses and other current assets   39,405       37,002  
Total current assets   1,092,852       637,214  
Property and equipment, net   6,739       8,881  
Goodwill   304,155       198,851  
Operating lease right-of-use assets   21,454       25,464  
Intangible assets, net   49,948       36,286  
Deferred contract acquisition costs, non-current   62,980       50,263  
Deferred tax assets   3,765       3,697  
Other assets   17,403       12,516  
Total assets $ 1,559,296     $ 973,172  
Liabilities and Shareholders’ Equity      
Current liabilities:      
Accounts payable $ 21,792     $ 7,248  
Accrued expenses and other liabilities   42,110       28,909  
Accrued compensation and benefits   56,181       52,525  
Operating lease liabilities   8,983       8,528  
Deferred revenue   362,287       352,805  
Total current liabilities   491,353       450,015  
Deferred revenue, non-current   33,395       44,895  
Long-term debt, net   566,271        
Operating lease liabilities, non-current   14,879       19,649  
Other liabilities, non-current   21,089       7,782  
Total liabilities   1,126,987       522,341  
Commitments and contingencies      
Shareholders’ equity:      
Convertible preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of January 31, 2022 and April 30, 2021          
Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 93,420,927 and 90,533,985 shares issued and outstanding as of January 31, 2022 and April 30, 2021, respectively   982       948  
Treasury stock   (369 )     (369 )
Additional paid-in capital   1,197,570       1,071,675  
Accumulated other comprehensive loss   (14,318 )     (8,105 )
Accumulated deficit   (751,556 )     (613,318 )
Total shareholders’ equity   432,309       450,831  
Total liabilities and shareholders’ equity $ 1,559,296     $ 973,172  
 
 
Elastic N.V.
 
  Three Months Ended January 31,   Nine Months Ended January 31,
    2022       2021       2022       2021  
Cash flows from operating activities              
Net loss $ (56,726 )   $ (37,974 )   $ (138,238 )   $ (86,133 )
Adjustments to reconcile net loss to cash provided by operating activities:              
Depreciation and amortization   5,233       4,290       14,558       12,856  
Amortization of deferred contract acquisition costs   14,803       10,282       43,373       28,455  
Amortization of debt issuance costs   247             554        
Non-cash operating lease cost   2,417       1,822       6,259       5,256  
Stock-based compensation expense, net of amounts capitalized   37,393       25,227       96,971       65,305  
Deferred income taxes   30       (2 )     (219 )     (288 )
Foreign currency transaction (gain) loss   1,703       1,461       1,707       (9,463 )
Other         22       98       11  
Changes in operating assets and liabilities:              
Accounts receivable, net   9,282       15,183       9,801       15,246  
Deferred contract acquisition costs   (21,957 )     (16,740 )     (61,234 )     (54,612 )
Prepaid expenses and other current assets   (4,868 )     3,717       (2,650 )     4,817  
Other assets   2,534       1,197       (803 )     5,237  
Accounts payable   3,967       (3,683 )     14,452       (6,321 )
Accrued expenses and other liabilities   820       2,757       17,539       1,696  
Accrued compensation and benefits   863       (5,168 )     4,686       (5,859 )
Operating lease liabilities   (2,455 )     (1,867 )     (6,438 )     (5,402 )
Deferred revenue   11,768       18,877       8,306       53,309  
Net cash provided by operating activities   5,054       19,401       8,722       24,110  
Cash flows from investing activities              
Purchases of property and equipment   (236 )     (1,076 )     (987 )     (2,732 )
Capitalization of internal-use software costs   (1,514 )           (4,227 )      
Business acquisitions, net of cash acquired   (11,750 )           (119,854 )      
Other                     1,320  
Net cash used in investing activities   (13,500 )     (1,076 )     (125,068 )     (1,412 )
Cash flows from financing activities              
Proceeds from the issuance of senior notes               575,000        
Proceeds from issuance of ordinary shares upon exercise of stock options   6,709       22,324       27,540       67,554  
Payments of debt issuance costs   (49 )           (9,283 )      
Net cash provided by financing activities   6,660       22,324       593,257       67,554  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   (8,921 )     3,529       (12,328 )     5,848  
Net increase (decrease) in cash, cash equivalents, and restricted cash   (10,707 )     44,178       464,583       96,100  
Cash, cash equivalents, and restricted cash, beginning of period   878,998       351,311       403,708       299,389  
Cash, cash equivalents, and restricted cash, end of period $ 868,291     $ 395,489     $ 868,291     $ 395,489  
 
 
Elastic N.V.
 
  Three Months Ended January 31,   Nine Months Ended January 31,
  2022   2021   2022   2021
  Amount   % of   Amount   % of   Amount   % of   Amount   % of
Elastic Cloud $ 80,402   36 %   $ 44,929   29 %   $ 210,963   34 %   $ 114,984   27 %
Other subscription 129,212   58 %   102,320   65 %   366,093   59 %   287,816   66 %
Total subscription revenue 209,614   94 %   147,249   94 %   577,056   93 %   402,800   93 %
Professional services 14,330   6 %   9,866   6 %   45,963   7 %   28,079   7 %
Total revenue $ 223,944   100 %   $ 157,115   100 %   $ 623,019   100 %   $ 430,879   100 %
 
 
Elastic N.V.
 
  Three Months Ended January 31,   Nine Months Ended January 31,
    2022       2021       2022       2021  
Total revenue $ 223,944     $ 157,115     $ 623,019     $ 430,879  
Add: Increase in deferred revenue   11,768       18,877       8,306       53,309  
Less: Increase in unbilled accounts receivable   (2,711 )     (2,790 )     (2,102 )     (3,214 )
Calculated billings $ 233,001     $ 173,202     $ 629,223     $ 480,974  
 
 
Elastic N.V.
 
  Three Months Ended January 31,   Nine Months Ended January 31,
    2022       2021       2022       2021  
Net cash provided by operating activities $ 5,054     $ 19,401     $ 8,722     $ 24,110  
Less: Purchases of property and equipment   (236 )     (1,076 )     (987 )     (2,732 )
Less: Capitalization of internal-use software   (1,514 )           (4,227 )      
Add: Interest paid on long-term debt   12,452             12,452     $  
Adjusted free cash flow $ 15,756     $ 18,325     $ 15,960     $ 21,378  
Net cash used in investing activities $ (13,500 )   $ (1,076 )   $ (125,068 )   $ (1,412 )
Net cash provided by financing activities $ 6,660     $ 22,234     $ 593,257     $ 67,554  
Net cash provided by operating activities (as a percentage of total revenue)   2 %     13 %     1 %     6 %
Less: Purchases of property and equipment (as a percentage of total revenue)   %     (1 )%     %     (1 )%
Less: Capitalization of internal-use software (as a percentage of total revenue)   (1 )%     %     %     %
Add: Interest paid on long-term debt (as a percentage of total revenue)   6 %     %     2 %     %
Adjusted free cash flow margin   7 %     12 %     3 %     5 %
 
 
Elastic N.V.
 
  Three Months Ended January 31,   Nine Months Ended January 31,
    2022       2021       2022       2021  
Gross Profit Reconciliation:              
GAAP gross profit $ 162,660     $ 115,147     $ 458,189     $ 315,632  
Stock-based compensation expense   3,790       3,198       10,855       8,352  
Employer payroll taxes on employee stock transactions   260       589       1,065       911  
Amortization of acquired intangibles   3,046       2,110       7,556       6,328  
Non-GAAP gross profit $ 169,756     $ 121,044     $ 477,665     $ 331,223  
Gross Margin Reconciliation(1):              
GAAP gross margin   72.6 %     73.3 %     73.5 %     73.3 %
Stock-based compensation expense   1.7 %     2.0 %     1.7 %     1.9 %
Employer payroll taxes on employee stock transactions   0.1 %     0.4 %     0.2 %     0.2 %
Amortization of acquired intangibles   1.4 %     1.3 %     1.2 %     1.5 %
Non-GAAP gross margin   75.8 %     77.0 %     76.7 %     76.9 %
Operating Loss Reconciliation:              
GAAP operating loss $ (45,849 )   $ (34,461 )   $ (114,058 )   $ (92,401 )
Stock-based compensation expense   37,393       25,227       97,553       65,305  
Employer payroll taxes on employee stock transactions   1,643       5,685       8,634       10,436  
Amortization of acquired intangibles   4,277       3,538       11,644       10,630  
Acquisition-related expenses   2,731             4,999        
Non-GAAP operating income (loss) $ 195     $ (11 )   $ 8,772     $ (6,030 )
Operating Margin Reconciliation(1):              
GAAP operating margin   (20.5 )%     (21.9 )%     (18.3 )%     (21.4 )%
Stock-based compensation expense   16.7 %     16.1 %     15.7 %     15.2 %
Employer payroll taxes on employee stock transactions   0.7 %     3.6 %     1.4 %     2.4 %
Amortization of acquired intangibles   1.9 %     2.3 %     1.9 %     2.5 %
Acquisition-related expenses   1.2 %     0.0 %     0.8 %     0.0 %
Non-GAAP operating margin   0.1 %     0.0 %     1.4 %     (1.4 )%
Net Loss Reconciliation:              
GAAP net loss $ (56,726 )   $ (37,974 )   $ (138,238 )   $ (86,133 )
Stock-based compensation expense   37,393       25,227       97,553       65,305  
Employer payroll taxes on employee stock transactions   1,643       5,685       8,634       10,436  
Amortization of acquired intangibles   4,277       3,538       11,644       10,630  
Acquisition-related expenses   2,731             4,999        
Income tax [(2)]   (148 )     (427 )     (679 )     (577 )
Non-GAAP net loss $ (10,830 )   $ (3,951 )   $ (16,087 )   $ (339 )
Non-GAAP net loss per share attributable to ordinary shareholders, basic and diluted $ (0.12 )   $ (0.04 )   $ (0.17 )   $  
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted   93,015,185       88,341,038       92,140,919       86,296,028  

[(1)] Totals may not sum, due to rounding. Gross margin, operating margin, and earnings per share are calculated based upon the respective underlying, non-rounded data.

[(2) ] Non-GAAP financial information for the quarter is adjusted for a tax rate equal to our annual estimated tax rate on non-GAAP income. This rate is based on our estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating the non-GAAP financial measures presented above as well as significant tax adjustments. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied to our estimated annual tax rates as described above, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

 
Elastic N.V.
 
  Three Months Ended January 31,   Nine Months Ended January 31,
    2022       2021       2022       2021  
Cost of revenue reconciliation:              
GAAP cost of license - self-managed $ 501     $ 346     $ 1,242     $ 1,039  
Amortization of acquired intangibles   (501 )     (346 )     (1,242 )     (1,039 )
Non-GAAP cost of license - self -managed $     $     $     $  
GAAP cost of subscription - self-managed and SaaS $ 47,076     $ 31,426     $ 126,097     $ 86,464  
Stock-based compensation expense   (2,064 )     (1,839 )     (6,262 )     (5,065 )
Employer payroll taxes on employee stock transactions   (147 )     (267 )     (474 )     (487 )
Amortization of acquired intangibles   (2,545 )     (1,764 )     (6,314 )     (5,289 )
Non-GAAP cost of subscription - self-managed and SaaS $ 42,320     $ 27,556     $ 113,047     $ 75,623  
GAAP cost of professional services $ 13,707     $ 10,196     $ 37,491     $ 27,744  
Stock-based compensation expense   (1,726 )     (1,359 )     (4,593 )     (3,287 )
Employer payroll taxes on employee stock transactions   (113 )     (322 )     (591 )     (424 )
Non-GAAP cost of professional services $ 11,868     $ 8,515     $ 32,307     $ 24,033  
Operating expenses reconciliation:              
GAAP research and development expense $ 71,749     $ 51,400     $ 194,894     $ 143,766  
Stock-based compensation expense   (16,029 )     (9,516 )     (41,784 )     (24,309 )
Employer payroll taxes on employee stock transactions   (663 )     (1,243 )     (2,916 )     (2,702 )
Acquisition-related expenses   (2,713 )           (3,695 )      
Non-GAAP research and development expense $ 52,344     $ 40,641     $ 146,499     $ 116,755  
GAAP sales and marketing expense $ 105,069     $ 71,087     $ 288,055     $ 191,712  
Stock-based compensation expense   (12,545 )     (8,372 )     (30,798 )     (22,519 )
Employer payroll taxes on employee stock transactions   (512 )     (1,723 )     (3,874 )     (3,494 )
Amortization of acquired intangibles   (1,231 )     (1,428 )     (4,088 )     (4,302 )
Non-GAAP sales and marketing expenses $ 90,781     $ 59,564     $ 249,295     $ 161,397  
GAAP general and administrative expense $ 31,691     $ 27,121     $ 89,298     $ 72,555  
Stock-based compensation expense   (5,029 )     (4,141 )     (14,116 )     (10,125 )
Employer payroll taxes on employee stock transactions   (208 )     (2,130 )     (779 )     (3,329 )
Acquisition-related expenses   (18 )           (1,304 )      
Non-GAAP general and administrative expense $ 26,436     $ 20,850     $ 73,099     $ 59,101  

About Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe the non-GAAP measures listed below are useful in evaluating our operating performance. We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In particular, free cash flow is not a substitute for cash used in operating activities. Additionally, the utility of free cash flow as a measure of our liquidity is further limited as it does not represent the total increase or decrease in our cash balance for a given period. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation of our historical non-GAAP financial measures to their most directly comparable financial measure stated in accordance with U.S. GAAP has been provided in the financial statement tables included in this press release. Investors are cautioned that there are a number of limitations associated with the use of non-GAAP financial measures and key metrics as analytical tools. Investors are encouraged to review these reconciliations, and not to rely on any single financial measure to evaluate our business.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, and amortization of acquired intangible assets. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Non-GAAP Operating Income (Loss) and Non-GAAP Operating Margin

We define non-GAAP operating income (loss) and non-GAAP operating margin as GAAP operating loss and GAAP operating margin, respectively, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, and acquisition-related expenses. We believe non-GAAP operating income (loss) and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics generally eliminate the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Non-GAAP Net Earnings (Loss) Per Share

We define non-GAAP net earnings (loss) per share as GAAP net loss per share, excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses and the tax effects related to the foregoing. We believe non-GAAP net earnings (loss) per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this metric generally eliminates the effects of certain variables from period to period for reasons unrelated to overall operating performance.

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin

Adjusted free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities adjusted for cash paid for interest less cash used for investing activities for purchases of property and equipment, and capitalized internal-use software costs. Adjusted free cash flow margin is calculated as adjusted free cash flow divided by total revenue. Adjusted free cash flow does not represent residual cash flow available for discretionary expenditures since, among other things, we have mandatory debt service requirements.

Calculated Billings

We define calculated billings as total revenue plus the increase (decrease) in total deferred revenue as presented on or derived from our consolidated statements of cash flows less the (increase) decrease in total unbilled accounts receivable in a given period. Calculated billings exclude deferred revenue and unbilled accounts receivable acquired through acquisitions in the period of acquisition. We typically invoice our customers annually in advance, and to a lesser extent multi-year in advance, quarterly in advance, monthly in advance, monthly in arrears or upon delivery. Our management uses calculated billings to understand and evaluate our near-term cash flows and operating results.

Constant Currency

We compare the percent change in certain results from one period to another period using constant currency information to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. In presenting this information, current and comparative prior period results are converted into United States dollars at the exchange rates in effect on the last day of our prior fiscal year, rather than the actual exchange rates in effect during the respective periods.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220303005804/en/

SOURCE: Elastic N.V.

Janice Oh
Elastic Investor Relations
ir@elastic.co Lisa Boughner
Elastic Corporate Communications
lisa.boughner@elastic.co

COMTEX_403455691/2456/2022-03-03T16:05:29

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

Copyright Business Wire 2022

/zigman2/quotes/209635082/composite
US : U.S.: NYSE
$ 84.94
+1.16 +1.38%
Volume: 445,588
Aug. 15, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$7.95 billion
Rev. per Employee
$289,582
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