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Elastic reported Q1 FY2027 revenue of $478.1 million, above the $469.6 million consensus and up from $415.3 million a year earlier. Adjusted earnings per share of $0.70 also exceeded the $0.58 consensus. The company’s revenue came in above its own quarterly guidance.
The filing attributed subscription revenue growth to adoption of Elastic Cloud and other subscriptions, with annual Elastic Cloud driving the cloud increase. It also said services revenue grew as customers adopted more of those offerings.
Elastic reported a diluted loss per share of −$0.16, compared with a loss of −$0.23 a year earlier. Gross margin fell to 74.5% from 76.7%; the filing attributed lower subscription gross margin primarily to cloud hosting costs rising faster than revenue. Operating margin was −4.93%, compared with −2.27% a year earlier.
The company reported free cash flow of $131.4 million, up from $104.2 million. The filing said operating cash flow included an inflow from a decrease in accounts receivable, partly offset by a decrease in deferred revenue.
| Q1 FY2027 | Q1 FY2026 | Change | |
|---|---|---|---|
| Revenue | $478.1 million | $415.3 million | 15.1% |
| Diluted EPS | −$0.16 | −$0.23 | — |
| Gross margin | 74.5% | 76.7% | −2.2 percentage points |
| Operating margin | −4.93% | −2.27% | −2.7 percentage points |
| Free cash flow | $131.4 million | $104.2 million | 26.1% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $0.70 | $0.58 | Beat by 20.7% |
| Revenue | $478.1 million | $469.6 million | Beat by 1.82% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
| Against its own guidance | For | Guided | Reported | Result |
|---|---|---|---|---|
| Revenue | Q1 FY2027 | $469.0 million–$470.0 million | $478.1 million | Above the guide |
What management said on the call
CEO Ashutosh Kulkarni said demand extended across Elastic’s offerings, particularly search and AI and security. He said more than 670 high-value customers were using Elastic for AI and described longer customer commitments as part of the quarter’s growth in that group.
Asked about additions to the high-value customer tier, Kulkarni pointed to changes in sales segmentation and to both new business and expansion within existing accounts. CFO Navam Welihinda said customers using AI had a higher growth propensity than those not using it. He declined to disclose security revenue as a percentage of total revenue, while describing security as a growth area.
Kulkarni said Elastic had acquired Deductive AI to add automated investigation capabilities to its observability platform. He also discussed a new columnar mode for time-series data and said a customer had added observability to an existing security deployment. In response to questions about competition, he said Elastic’s support for cloud and self-managed deployments gave customers choices, including in regulated environments.
On cloud consumption, Welihinda said annual cloud growth improved while monthly cloud revenue remained roughly flat. He noted that cloud consumption can vary from quarter to quarter. Asked about gross margins, he said subscription margins could fluctuate but that, over time, “these gross margins are expected to improve” as serverless reaches scale.
For the year ahead, Welihinda said sales capacity, consumption of prior commitments and new and expanded commitments supported his outlook. In Q&A, he cited “the strong pipeline build” alongside consumption and sales productivity as reasons for the guidance. He said Elastic’s land-and-expand model remained unchanged, with expansion coming from existing products and cross-selling.
Guidance
Elastic raised its full-year FY2027 outlook after the quarter. The company now expects non-GAAP diluted earnings per share of $3.29 to $3.37 and a non-GAAP operating margin of approximately 19.4%, both above its previous guidance. CFO Navam Welihinda also said Elastic had raised its full-year revenue outlook.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Free cash flow growth, Adjusted Margin | FY2027 | 21.5% | — | New |
| EPS, non-GAAP | FY2027 | $3.29–$3.37 | $3.21–$3.29 | Raised |
| Operating margin, non-GAAP | FY2027 | 19.4% | 19.0% | Raised |
| Revenue, Sales Led Subscription Non Gaap | FY2027 | $1.7 billion–$1.7 billion | — | New |
| Revenue | FY2027 | $2.0 billion–$2.0 billion | $2.0 billion–$2.0 billion | Raised |
| EPS, non-GAAP | Q2 FY2027 | $0.80–$0.82 | Q1 FY2027: $0.57–$0.59 | Raised |
| Operating margin, non-GAAP | Q2 FY2027 | 19.0% | Q1 FY2027: 14.0% | Raised |
| Operating margin, GAAP | Q2 FY2027 | Elastic expects a positive GAAP operating margin in Q2 FY2027. | — | — |
| Revenue, Sales Led Subscription Non Gaap | Q2 FY2027 | $407.5 million–$408.5 million | — | New |
| Revenue | Q2 FY2027 | $486.0 million–$487.0 million | Q1 FY2027: $469.0 million–$470.0 million; reported $478.1 million | Raised |
| Revenue | Q4 FY2027 | Elastic expects Q4 FY2027 to have the year’s highest year-over-year total revenue growth. | — | — |
| Operating expenses, Restructuring Remainder of Year | FY2027 | $2.0 million–$5.0 million | — | New |
| Free cash flow growth, Non Gaap Margin | FY2027 | 21.5% | 21.5% | Held |
| Revenue, Sales Led Subscription | FY2027 | $1.7 billion–$1.7 billion | $1.7 billion–$1.7 billion | Held |
| Revenue, Sales Led Subscription | Q2 FY2027 | $407.5 million–$408.5 million | Q1 FY2027: $392.0 million–$393.0 million | Raised |
| Revenue growth, Sales Led Subscription Growth | FY2029 | 20.0% | — | New |
| Operating margin, non-GAAP | FY2029 | 25.0% | — | New |
| Headcount, Sales | FY2027 | Elastic expects to add sales headcount meaningfully in FY2027. | — | — |
| Headcount | FY2027 | Elastic expects to increase its total headcount on a net basis in FY2027. | — | — |