Elastic delivered a strong second quarter supported by solid sales execution and customer commitments. In Q2, we meaningfully exceeded guidance across all revenue and profitability metrics. Revenue grew by 18% year over year. Cloud revenue grew by 25% year over year, and we delivered a non-GAAP operating margin of 18%.
— Ashutosh Kulkarni
03Detailed Report
ESTC
Company ESTC
Period
Q2 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 17, 2026
Swipe to view all report sections
Executive Summary
Elastic NV delivered a solid second quarter of fiscal 2025, marking a return to stronger sales execution after a challenging Q1. Revenue rose 18% year over year to $365.4 million, with Cloud revenue up 25% YoY and Elastic Cloud accounting for 46% of total revenue. Non-GAAP operating margin reached approximately 18% in Q2 (reported around 17.6-18%), underscoring improving operating leverage as the company continues to scale. The company also expanded its Gen AI momentum, with over 1,550 customers on Elastic Cloud using Gen AI use cases and three deals exceeding $1 million in annual contract value. Gross margin stood at 76.9%, and the company generated adjusted free cash flow of about $38 million, keeping a healthy liquidity profile with roughly $658.5 million in cash and equivalents and a net cash position of about $69 million. Management reiterated confidence in a long-term growth trajectory driven by Gen AI, vector database capabilities, and platform consolidation across security, observability, and search. In parallel, Elastic signaled a strategic transition in leadership with CFO Janesh Moorjani exiting later in the year and Eric Pringle stepping in as Interim CFO. Guidance was raised for the full year, with Q3 revenue guidance of $367–$369 million (+12% YoY at midpoint) and full-year revenue target of $1.451–$1.457 billion, along with a mid-teens non-GAAP operating margin target and EPS of $1.68–$1.72 for fiscal 2025. The quarter’s results and commentary imply a favorable long-run trajectory, though near-term headwinds include FX strength, variability in cloud consumption, and the impact of prior quarter under-commitment on year-over-year growth. Investors should monitor Gen AI adoption velocity, continued platform consolidation by customers, geographic mix, and the evolution of RPO trends as a read-through of demand pipeline.
Key Performance Indicators
Revenue
Increasing
365.36M
QoQ: 5.16% | YoY: 17.63%
Gross Profit
Increasing
272.18M
74.50% margin
QoQ: 6.46% | YoY: 18.07%
Operating Income
Increasing
-4.43M
QoQ: 86.85% | YoY: 79.45%
Net Income
Decreasing
-25.45M
QoQ: 48.30% | YoY: -2.64%
EPS
Increasing
0.48
QoQ: 200.00% | YoY: 292.00%
Revenue Trend
Margin Analysis
Financial Highlights
Revenue and gross profitability
- Total revenue: $365.361 million, up 18% year over year (YoY) and up 17% YoY in constant currency. QoQ growth was modestly positive (approximately 5% sequential, per quarter-to-quarter cues).
- Subscription revenue: $341.0 million, up 18% YoY.
- Elastic Cloud: 46% of total revenue in the quarter.
- Cloud revenue growth: 25% YoY.
- Professional services: $25.0 million, up 7% YoY.
Cost, margins, and profitability
- Gross margin: 76.9%, consistent with prior quarters.
- Operating income: -$4.43 million, margin around -1.21% (non-GAAP operating margin cited around 18% by management in commentary; GAAP margins reflected the small operating loss).
- EBITDA: $8.25 million; EBITDA margin about 2.25%.
- Net income: -$25.45 million; net income margin approximately -6.97%.
- Earnings per share (diluted): $0.48.
Cash flow and balance sheet
- Net cash provided by operating activities: $38.38 million.
- Free cash flow: $37.66 million.
- Cash and cash equivalents: $658.51 million; cash and short-term investments: $1.1976 billion aggregate liquid assets.
- Total debt: $589.31 million; net debt position: -$69.20 million (net cash).
- Balance sheet strength: Total assets $2.2315 billion; total stockholders’ equity $811.52 million.
Customer metrics and mix
- Customers with annual contract value (ACV) >$100K: >1,420.
- Total subscription customers: ~21,300; customers >$10K ACV: >4,480.
- Net expansion rate: ~112% (in line with expectations).
Operating and strategic metrics
- Elastic Cloud contributed 46% of revenue; self-managed and annual Cloud revenue expected to grow slightly in dollar terms in Q3.
- Gen AI traction: 1,550 Elastic Cloud customers using Gen AI use cases; >$100K cohort >240.
- Key deals: multiple seven-figure expansions and two seven-figure displacement deals in SIEM and cybersecurity.
- RPO commentary: Q2 RPO roughly flat YoY due to Q1 shortfall; sequentially up modestly; management cautions that consumption patterns can fluctuate and thus guided conservatively for H2.
Guidance snapshot
- Q3 2025: Revenue of $367–$369 million (about 12% YoY at midpoint, 13% in constant currency); non-GAAP operating margin ~15%; non-GAAP diluted EPS $0.46–$0.48.
- Full-year 2025: Revenue of $1.451–$1.457 billion (about 15% YoY at midpoint); non-GAAP operating margin ~13.5%; non-GAAP diluted EPS $1.68–$1.72.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
365.36M
17.63%
5.16%
Gross Profit
272.18M
18.07%
6.46%
Operating Income
-4.43M
79.45%
86.85%
Net Income
-25.45M
-2.64%
48.30%
EPS
0.48
292.00%
200.00%
Key Financial Ratios
Gross Profit Margin
Excellent
74.50%
Gross profit margin is exceptional, indicating strong pricing power and operational efficiency
Operating Profit Margin
Weak
-0.01%
Operating margin is below industry norms, profitability concerns
Net Profit Margin
Weak
-0.07%
Net profit margin is below industry norms, profitability concerns
Return on Assets
Weak
-0.01%
Return on assets suggests inefficient capital allocation
Return on Equity
Weak
-0.03%
Return on equity suggests inefficient capital allocation
Current Ratio
Healthy
1.99
Current ratio shows adequate liquidity to meet short-term obligations
Debt to Equity
Conservative
0.02
Debt-to-equity shows conservative leverage and low financial risk
P/E Ratio
Negative
-81.36x
Negative earnings make P/E ratio not meaningful
Price to Book
High Premium
10.21x
Very high premium suggests asset-light business model or lofty expectations
Management Insights Available for Members
Get exclusive access to management commentary, earnings call quotes, and forward guidance from company leadership.
Elastic N.V. (ESTC) QQ2 2026 Results — Gen AI Leadership Accelerates 16% Revenue Growth with Margin Expansion, Large Commitments, and Capital Return...