Elastic (NYSE:ESTC) shares dropped ~5% on Friday after the application software company reported its first quarter results that showed slower cloud revenue growth.
Late Thursday, the company reported adj EPS of -$0.15 on revenue of $250.1M (+29.5% Y/Y), both exceeding Wall Streets estimates.
Elastic Cloud revenue of $97.7M grew 59% Y/Y or 62% in constant currency but Barclays noted a deceleration in cloud revenue, stating that “we think buy-side expectations on cloud revenue were around mid-60s growth so the initial reaction is likely negative.”
Adj. gross margin slipped from 77.6% from year-ago quarter to 73.9%. The company ended the quarter with $848.8M.
Elastic CEO Ash Kulkarni said, “Despite increased foreign exchange headwinds, we are executing well against our plan to achieve $2B in total revenue in fiscal year 2025. We remain confident in our outlook given our belief in the mission-criticality of our solutions to our customers, and our momentum in Elastic Cloud, and we are raising our constant-currency revenue growth guidance for the year.”
FY23 outlook: The company reaffirmed its revenue outlook for the year, expecting $1.08B and $1.086B vs. $1.09B consensus, representing 26 Y/Y growth at the midpoint (30% Y/Y constant currency growth at the midpoint). Adj. operating margin is expected to be between 0.3% and 0.7%, while adj. net loss per share is expected to be between $0.31 and $0.25 vs. -$0.27 consensus.