SAN FRANCISCO - Elastic N.V. (NYSE: NYSE:ESTC) shares tumbled 26% on Friday after the search and analytics software company provided disappointing revenue guidance, overshadowing better-than-expected first quarter results.
The company reported Q1 adjusted earnings per share of $0.35, beating analyst estimates of $0.25. Revenue grew 18% YoY to $347 million, slightly above the $344.66 million consensus.
However, Elastic's outlook fell short of expectations. For Q2, the company forecast revenue of $353-355 million, below the $360.8 million analyst consensus. Full-year fiscal 2025 revenue guidance of $1.436-1.444 billion also missed the $1.478 billion Street estimate.
"We delivered solid first quarter results, outperforming the high end of our guidance for both revenue and profitability," said CEO Ash Kulkarni. "However, we had a slower start to the year with the volume of customer commitments impacted by segmentation changes that we made at the beginning of the year, which are taking longer than expected to settle."
Elastic Cloud revenue rose 30% YoY to $157 million in Q1, representing 45% of total revenue. The company ended the quarter with over 1,370 customers with annual contract value above $100,000.
Despite the revenue guidance miss, Elastic raised its full-year adjusted EPS outlook to $1.52-$1.56, above the prior $1.42 consensus.
Following the report, analysts at Bank of America downgraded ESTC to Neutral from Buy, lowering the price target to $93 from $140 per share. The bank said in a note that sales organization headaches are elevating execution risks. "Risks are now elevated from disruption in the
sales organization due to issues experienced during a strategic sales realignment, and EMEA demand softness," wrote BofA.
Meanwhile, Baird downgraded Elastic to Neutral, stating that "the sales execution missteps led to significant shortfalls in Q1 customer commitments." The firm wrote: "Our earlier bullish stance overlooked the impact of these GTM changes. While management is taking corrective actions, the recovery timeline remains uncertain (at least a couple of quarters), and management has prudently reduced its full-year guidance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.