Elastic N.V. (NYSE:ESTC) shares jumped more than 18% pre-open Friday after the company reported Q2 results, with EPS of $0.37 coming in better than the consensus estimate of $0.24.
Revenue grew 17% year-over-year to $311 million, beating the consensus estimate of $304.44M. Elastic Cloud revenue was $135M, representing an increase of 31% year-over-year.
Total subscription customer count in Q2 was approximately 20,700 compared to approximately 20,500 in Q1/24, and over 19,700 in Q2/23. Total customer count with annual contract value (ACV) greater than $100,000 was over 1,220 compared to over 1,190 in Q1/24, and over 1,050 in Q2/23.
For Q3/24, the company expects EPS in the range of $0.30-$0.32, compared to the consensus of $0.28, and revenue of $319-$321M, compared to the consensus of $318.6M.
For the full year, the company sees EPS at $1.06-$1.15, compared to the consensus of $1.09, and revenue at $1.247-$1.253 billion, compared to the consensus estimate of $1.247 billion.
Wells Fargo analysts upgraded the stock's rating to Overweight as they expect revenue growth "will bottom out in FQ4 and accelerate in FY25 largely driven by GenAI and share gains in the Log/SIEM markets."
"We believe Elastic is well-positioned to capture GenAI workloads, leveraging key features like ESRE and vector search. Elastic is also capitalizing on recent M&A activity to gain share in the log analytics/SIEM markets, leveraging the new ESQL, which makes it easier to convert from a legacy vendor. Finally, we see further upside to the current valuation (~5x EV/Sales) if either of these new catalysts take off," the analysts said.
Oppenheimer analysts remain bullish on the stock as they also highlighted AI strength.
"We believe Elastic can sustain its momentum as it helps customers consolidate observability and security spend and as adoption for GenAI increases, driving upgrades to higher price tiers and supporting consumption growth, and longer-term, a rebound in NRR. Overall, we remain positive and believe Elastic is well-positioned to address the GenAI opportunity."
Additional reporting by Senad Karaahmetovic