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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________________________________________________________________________________________________________________________
FORM 10-Q
____________________________________________________________________________________________________________________________________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to
Commission File Number 001-38675
_____________________________________________________________________________________________________________________________________________________________________________________________
Elastic N.V.
(Exact name of registrant as specified in its charter)
____________________________________________________________________________________________________________________________________________________________________________________________
The Netherlands
98-1756035
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
Not Applicable1
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: Not Applicable1
____________________________________________________________________________________________________________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Ordinary shares, Par Value €0.01 Per ShareESTCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No ☒
As of February 26, 2024, the registrant had 100,807,523 ordinary shares, par value €0.01 per share, outstanding.
1 We are a distributed company. Accordingly, we do not have a principal executive office. For purposes of compliance with applicable requirements of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, any shareholder communication required to be sent to our principal executive offices may be directed to the email address ir@elastic.co.


Table of Contents
  Page
 
PART I.
  
Item 1.
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
  
PART II.
  
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our business strategy and our plan to build our business;
the impact of macroeconomic conditions, including declining rates of economic growth, inflationary pressures, increased interest rates, and other conditions discussed in this report, on information technology spending, sales cycles, and other factors affecting the demand for our offerings and our results of operations;
our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses (which include changes in sales and marketing, research and development and general and administrative expenses), and our ability to achieve and maintain future profitability;
our ability to continue to deliver and improve our offerings and successfully develop new offerings;
customer acceptance and purchase of our existing offerings and new offerings, including the expansion and adoption of our cloud-based offerings;
the impact of actions that we are taking to reduce our costs and rebalance investments;
the impact of the evolving conflict in Israel and Gaza and Russia’s invasion of Ukraine on our business and on the businesses of our customers and partners, including their spending priorities;
the impact that increased adoption of consumption-based arrangements could have on our revenue or operating results;
the impact of changes to our licensing of our products, particularly Elasticsearch and Kibana;
our assessments of the strength of our solutions and products;
our service performance and security, including the resources and costs required to prevent, detect and remediate potential security breaches or incidents, including by threat actors;
our ability to maintain and expand our user and customer base;
continued development of the market for our products;
competition from other products and companies with more resources, recognition and presence in our industry;
the impact of foreign currency exchange rate and interest rate fluctuations on our results;
the pace of change and innovation in the markets in which we operate and the competitive nature of those markets;
our ability to effectively manage our growth, including any changes to our pace of hiring;
our international expansion strategy;
our strategy of acquiring complementary businesses and our ability to successfully integrate acquired businesses and technologies;
the impact of acquisitions on our future product offerings;
our beliefs and objectives for future operations;
our relationships with and reliance on third parties, including partners;
our ability to protect our intellectual property rights;
our ability to develop our brands;
the impact of expensing stock options and other equity awards;
the sufficiency of our capital resources;
our ability to successfully defend litigation brought against us;
3

our ability to successfully execute our go-to-market strategy, including the positioning of our solutions and products, and to expand in our existing markets and into new markets;
sufficiency of cash to meet our cash needs for at least the next 12 months;
our ability to comply with laws and regulations that currently apply or may become applicable to our business both in the United States and internationally;
our ability to attract and retain qualified employees and key personnel;
the effect of the loss of key personnel;
our expectations about the impact of natural disasters and public health epidemics and pandemics on our business, results of operations and financial condition;
the seasonality of our business;
the future trading prices of our ordinary shares; and
our ability to service our debt obligations.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe this information forms a reasonable basis for such statements, the information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Our forward-looking statements may not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
You should not rely upon forward-looking statements expressed or implied by us as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations regarding future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” in Part II, Item 1A and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. Actual results, events, or circumstances could differ materially from those described or implied in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events or circumstances as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date on which they are made or to conform such statements to actual results or revised expectations, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements.
4

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Elastic N.V.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
As of
January 31, 2024
As of
April 30, 2023
Assets
Current assets:
Cash and cash equivalents$526,893 $644,167 
Restricted cash2,774 2,473 
Marketable securities488,133 271,041 
Accounts receivable, net of allowance for credit losses of $3,865 and $3,409 as of January 31, 2024 and April 30, 2023, respectively
229,946 260,919 
Deferred contract acquisition costs68,937 55,813 
Prepaid expenses and other current assets45,440 39,867 
Total current assets1,362,123 1,274,280 
Property and equipment, net5,512 5,092 
Goodwill319,546 303,642 
Operating lease right-of-use assets23,088 19,997 
Intangible assets, net23,822 29,104 
Deferred contract acquisition costs, non-current100,389 95,879 
Deferred tax assets218,693 7,412 
Other assets5,749 8,076 
Total assets$2,058,922 $1,743,482 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable$10,935 $35,151 
Accrued expenses and other liabilities64,835 63,532 
Accrued compensation and benefits78,049 76,483 
Operating lease liabilities12,788 12,749 
Deferred revenue561,665 528,704 
Total current liabilities728,272 716,619 
Deferred revenue, non-current23,521 34,248 
Long-term debt, net568,341 567,543 
Operating lease liabilities, non-current15,297 13,942 
Other liabilities, non-current15,654 12,233 
Total liabilities1,351,085 1,344,585 
Commitments and contingencies (Notes 8 and 9)



Shareholders’ equity:
Preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of January 31, 2024 and April 30, 2023
  
Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 100,792,010 shares issued and outstanding as of January 31, 2024 and 97,366,947 shares issued and outstanding as of April 30, 2023
1,060 1,024 
Treasury stock(369)(369)
Additional paid-in capital1,676,493 1,471,584 
Accumulated other comprehensive loss(18,840)(20,015)
Accumulated deficit(950,507)(1,053,327)
Total shareholders’ equity 707,837 398,897 
Total liabilities and shareholders’ equity$2,058,922 $1,743,482 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

Elastic N.V.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
Three Months Ended January 31,Nine Months Ended January 31,
2024202320242023
Revenue
Subscription$307,632 $255,613 $865,622 $728,638 
Services20,325 18,953 66,700 60,410 
Total revenue327,957 274,566 932,322 789,048 
Cost of revenue
Subscription63,976 56,146 181,238 164,798 
Services20,666 19,062 60,970 58,146 
Total cost of revenue84,642 75,208 242,208 222,944 
Gross profit243,315 199,358 690,114 566,104 
Operating expenses
Research and development87,202 77,472 248,000 231,689 
Sales and marketing141,621 126,717 408,020 379,902 
General and administrative40,896 34,711 117,530 103,724 
Restructuring and other related charges 29,805 754 29,805 
Total operating expenses269,719 268,705 774,304 745,120 
Operating loss(26,404)(69,347)(84,190)(179,016)
Other income (expense), net
Interest expense(6,368)(6,265)(19,023)(18,875)
Other income, net8,568 5,460 24,107 20,774 
Loss before income taxes(24,204)(70,152)(79,106)(177,117)
(Benefit from) provision for income taxes(200,328)2,422 (181,926)12,313 
Net income (loss)
$176,124 $(72,574)$102,820 $(189,430)
Net earnings (loss) per share attributable to ordinary shareholders
Basic
$1.76 $(0.76)$1.04 $(1.99)
Diluted
$1.69 $(0.76)$1.00 $(1.99)
Weighted-average shares used to compute net earnings (loss) per share attributable to ordinary shareholders
Basic100,282,179 96,052,025 99,099,210 95,327,131 
Diluted104,503,290 96,052,025 103,149,384 95,327,131 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

Elastic N.V.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
Three Months Ended January 31,Nine Months Ended January 31,
2024202320242023
Net income (loss)
$176,124 $(72,574)$102,820 $(189,430)
Other comprehensive income (loss):
Unrealized gain on available-for-sale securities2,606  999  
Foreign currency translation adjustments2,362 7,032 176 (1,874)
Other comprehensive income (loss)
4,968 7,032 1,175 (1,874)
Total comprehensive income (loss)
$181,092 $(65,542)$103,995 $(191,304)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

Elastic N.V.
Condensed Consolidated Statements of Shareholders’ Equity
(in thousands, except share data)
(unaudited)
Ordinary SharesTreasury
Shares
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Shareholders'
Equity
SharesAmount
Balances as of October 31, 202399,599,262 $1,048 $(369)$1,604,896 $(23,808)$(1,126,631)$455,136 
Issuance of ordinary shares upon exercise of stock options485,203 6 — 8,841 — — 8,847 
Issuance of ordinary shares upon release of restricted stock units707,545 6 — (6)— —  
Stock-based compensation— — — 62,762 — — 62,762 
Net income— — — — — 176,124 176,124 
Other comprehensive income— — — — 4,968 — 4,968 
Balances as of January 31, 2024100,792,010 $1,060 $(369)$1,676,493 $(18,840)$(950,507)$707,837 
Ordinary SharesTreasury
Shares
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Shareholders'
Equity
SharesAmount
Balances as of October 31, 202295,575,775 $1,005 $(369)$1,351,987 $(27,036)$(934,022)$391,565 
Issuance of ordinary shares upon exercise of stock options289,098 3 — 4,507 — — 4,510 
Issuance of ordinary shares upon release of restricted stock units570,403 6 — (6)— —  
Stock-based compensation— — — 54,456 — — 54,456 
Net loss— — — — — (72,574)(72,574)
Other comprehensive income— — — — 7,032 — 7,032 
Balances as of January 31, 202396,435,276 $1,014 $(369)$1,410,944 $(20,004)$(1,006,596)$384,989 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

Elastic N.V.
Condensed Consolidated Statements of Shareholders’ Equity
(in thousands, except share data)
(unaudited)
Ordinary SharesTreasury
Shares
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Shareholders'
Equity
SharesAmount
Balances as of April 30, 202397,366,947 $1,024 $(369)$1,471,584 $(20,015)$(1,053,327)$398,897 
Issuance of ordinary shares upon exercise of stock options1,200,589 13 — 19,477 — — 19,490 
Issuance of ordinary shares upon release of restricted stock units2,030,369 21 — (21)— —  
Issuance of ordinary shares under employee stock purchase plan194,105 2 — 9,109 — — 9,111 
Stock-based compensation— — — 176,344 — — 176,344 
Net income— — — — — 102,820 102,820 
Other comprehensive income— — — — 1,175 — 1,175 
Balances as of January 31, 2024100,792,010 $1,060 $(369)$1,676,493 $(18,840)$(950,507)$707,837 
Ordinary SharesTreasury
Shares
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Shareholders'
Equity
SharesAmount
Balances as of April 30, 202294,174,914 $990 $(369)$1,250,108 $(18,130)$(817,166)$415,433 
Issuance of ordinary shares upon exercise of stock options773,174 9 — 12,225 — — 12,234 
Issuance of ordinary shares upon release of restricted stock units1,487,188 15 — (15)— —  
Stock-based compensation— — — 148,626 — — 148,626 
Net loss— — — — — (189,430)(189,430)
Other comprehensive loss— — — — (1,874)— (1,874)
Balances as of January 31, 202396,435,276 $1,014 $(369)$1,410,944 $(20,004)$(1,006,596)$384,989 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9

Elastic N.V.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended January 31,
20242023
Cash flows from operating activities
Net income (loss)
$102,820 $(189,430)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization13,853 15,475 
Amortization of premium and accretion of discount on marketable securities, net(6,396) 
Amortization of deferred contract acquisition costs56,392 51,495 
Amortization of debt issuance costs798 763 
Non-cash operating lease cost8,148 8,354 
Asset impairment charges 6,242 
Stock-based compensation expense176,344 148,626 
Deferred income taxes(210,278)68 
Foreign currency transaction loss2,267 2,261 
Other(34)67 
Changes in operating assets and liabilities, net of impact of business acquisitions:
Accounts receivable, net31,044 14,050 
Deferred contract acquisition costs(74,089)(68,184)
Prepaid expenses and other current assets(5,512)7,671 
Other assets639 7,106 
Accounts payable(25,212)511 
Accrued expenses and other liabilities1,428 (6,272)
Accrued compensation and benefits1,509 (161)
Operating lease liabilities(9,096)(8,404)
Deferred revenue23,189 17,869 
Net cash provided by operating activities
87,814 8,107 
Cash flows from investing activities
Purchases of property and equipment(2,605)(1,019)
Business acquisitions, net of cash acquired(18,951) 
Purchases of marketable securities(358,273) 
Maturities of marketable securities150,223  
Net cash used in investing activities(229,606)(1,019)
Cash flows from financing activities
Proceeds from issuance of ordinary shares under employee stock purchase plan
9,111  
Proceeds from issuance of ordinary shares upon exercise of stock options
19,490 12,234 
Net cash provided by financing activities28,601 12,234 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(3,782)(2,914)
Net (decrease) increase in cash, cash equivalents, and restricted cash(116,973)16,408 
Cash, cash equivalents, and restricted cash, beginning of period646,640 863,637 
Cash, cash equivalents, and restricted cash, end of period$529,667 $880,045 
Supplemental disclosures of cash flow information
Cash paid for interest$24,156 $24,041 
Cash paid for income taxes, net$19,764 $6,536 
Cash paid for operating lease liabilities$10,510 $9,814 
Supplemental disclosures of non-cash investing and financing information
Changes in property and equipment included in accounts payable$359 $25 
Operating lease right-of-use assets for new lease obligations$11,235 $10,901 
Acquisition-related indemnity holdback$3,125 $ 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10

Elastic N.V.
Notes to Condensed Consolidated Financial Statements
(unaudited)



11

1. Organization and Description of Business
Elastic N.V. (individually and together with its consolidated subsidiaries, “Elastic” or the “Company”) was incorporated under the laws of the Netherlands in 2012. The Company created the Elastic Stack, a powerful set of software products that ingest and store data from any source and in any format, and perform search, analysis, and visualization on that data. Developers build on top of the Elastic Stack to apply the power of search to their data and solve business problems. The Company offers three software solutions built into the Elastic Stack: Search, Observability, and Security. The Elastic Stack and the Company’s solutions are designed to run across hybrid clouds, public or private clouds, and multi-cloud environments.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim condensed consolidated balance sheet as of January 31, 2024, interim condensed consolidated statements of operations, comprehensive income (loss), and shareholders’ equity for the three and nine months ended January 31, 2024 and 2023, and interim condensed consolidated statements of cash flows for the nine months ended January 31, 2024 and 2023 are unaudited. These interim condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all normal recurring adjustments necessary to fairly state the Company’s financial position as of January 31, 2024; results of the Company’s operations for the three and nine months ended January 31, 2024 and 2023; statements of shareholders’ equity for the three and nine months ended January 31, 2024 and 2023; and statements of cash flows for the nine months ended January 31, 2024 and 2023. The financial data and other financial information disclosed in the notes to these interim condensed consolidated financial statements related to the three and nine month periods are also unaudited. The results for the three and nine months ended January 31, 2024 are not necessarily indicative of the operating results expected for the fiscal year ending April 30, 2024, or any other future period.
The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the financial statements of the Company and its wholly-owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.
Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed balance sheet data as of April 30, 2023 was derived from the Company’s audited financial statements, but does not include all disclosures required by U.S. GAAP. Therefore, these unaudited interim condensed consolidated financial statements and accompanying footnotes should be read in conjunction with the Company’s annual consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2023 filed with the SEC on June 16, 2023 (the “Company’s Annual Report on Form 10-K”).
Fiscal Year
The Company’s fiscal year ends on April 30. References to fiscal 2024, for example, refer to the fiscal year ended April 30, 2024.
Use of Estimates and Judgments
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Such estimates and assumptions include, but are not limited to, allocation of revenue between recognized and deferred amounts, deferred contract acquisition costs, allowance for credit losses, valuation of stock-based compensation, fair value of ordinary shares in periods prior to the Company’s initial public offering, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, whether an arrangement is or contains a lease, discount rate used for operating leases, and valuation allowance for deferred income taxes. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events.
12

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments or revise the carrying value of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s financial statements.
Significant Accounting Policies
There have been no changes to the Company’s significant accounting policies described in the Company’s Annual Report on Form 10-K that have had a material impact on its condensed consolidated financial statements and related notes.
Recently Adopted Accounting Pronouncements
Acquisitions: In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, improving consistency in accounting for acquired revenue contracts with customers in a business combination by requiring that acquirers apply ASC 606 to recognize contract assets and contract liabilities as if they had originated the contracts. If the acquiree prepared its financial statements in accordance with U.S. GAAP, the resulting acquired contract assets and liabilities should generally be consistent with the acquiree’s financial statements. The Company adopted ASU No. 2021-08 on May 1, 2023. The Company’s adoption of this ASU did not have a material impact on its condensed consolidated financial statements.
New Accounting Pronouncements Not Yet Adopted
Income Taxes: In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, requiring enhancements and further transparency to certain income tax disclosures. The new guidance requires consistent categories and greater disaggregation of information in the tax rate reconciliation and information about income taxes paid disaggregated by jurisdiction. The guidance becomes effective for the Company for the fiscal year ending April 30, 2026. Early adoption is permitted. Upon adoption, the guidance may be applied prospectively or retrospectively. The Company is currently evaluating the impact of adopting this standard on its condensed consolidated financial statements.
3. Revenue
Disaggregation of Revenue
The following table presents revenue by category (in thousands):
Three Months Ended January 31,Nine Months Ended January 31,
2024202320242023
Amount% of
Total
Revenue
Amount% of
Total
Revenue
Amount% of
Total
Revenue
Amount% of
Total
Revenue
Elastic Cloud$143,379 44 %$110,743 40 %$399,540 43 %$311,709 40 %
Other subscription164,253 50 %144,870 53 %466,082 50 %416,929 52 %
Total subscription307,632 94 %255,613 93 %865,622 93 %728,638 92 %
Services20,325 6 %18,953 7 %66,700 7 %60,410 8 %
Total revenue$327,957 100 %$274,566 100 %$932,322 100 %$789,048 100 %
Concentration of Credit Risk
No customer accounted for 10% or more of the Company’s net accounts receivable as of January 31, 2024. One customer, a channel partner, accounted for 12% of net accounts receivable as of April 30, 2023. The same customer accounted for 11% of total revenue during the three and nine months ended January 31, 2024. No customer accounted for 10% or more of the Company’s total revenue for the three and nine months ended January 31, 2023.
Deferred Revenue
The Company recognized revenue of $103.2 million and $474.4 million during the three and nine months ended January 31, 2024, respectively, and $86.1 million and $387.4 million during the three and nine months ended January 31, 2023, respectively, that was included in the deferred revenue balance at the beginning of each of the respective periods.
13

Unbilled Accounts Receivable
Unbilled accounts receivable is recorded as part of accounts receivable, net in the Company’s condensed consolidated balance sheets. As of January 31, 2024 and April 30, 2023, unbilled accounts receivable was $3.1 million and $2.2 million, respectively.
Remaining Performance Obligations
As of January 31, 2024, the Company had $1.176 billion of remaining performance obligations. As of January 31, 2024, the Company expects to recognize approximately 91% of its remaining performance obligations as revenue over the next 24 months and the remainder thereafter.
Deferred Contract Acquisition Costs
Amortization expense with respect to deferred contract acquisition costs was $20.4 million and $56.4 million for the three and nine months ended January 31, 2024, respectively, and $15.8 million and $51.5 million for the three and nine months ended January 31, 2023, respectively. The Company did not recognize any impairment of deferred contract acquisition costs for the periods presented.
4. Fair Value Measurements
Financial Assets
The Company measures financial assets and liabilities that are measured at fair value on a recurring basis at each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company considers all highly liquid investments, including money market funds with an original maturity of three months or less at the date of purchase, to be cash equivalents. The Company’s marketable securities are classified as available for sale and considered to be available for use in current operations and, therefore, the Company classifies them within current assets on the condensed consolidated balance sheet.
The Company uses quoted prices in active markets for identical assets to determine the fair value of its Level 1 investments. For Level 2 investments, the Company uses inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.
The following table summarizes assets that are measured at fair value on a recurring basis as of January 31, 2024 (in thousands):
Level 1Level 2Level 3Total
Financial Assets:
Cash and cash equivalents:
Money market funds$189,846 $ $ $189,846 
U.S. treasury securities14,993   14,993 
Certificates of deposit
 2,230  2,230 
Total included in cash and cash equivalents204,839 2,230  207,069 
Marketable securities:
Certificates of deposit 33,177  33,177 
Commercial paper 38,757  38,757 
Municipal securities 25,894  25,894 
U.S. treasury securities109,777   109,777 
International treasuries 7,188  7,188 
Corporate debt securities
 232,030  232,030 
U.S. agency bonds 41,310  41,310 
Total marketable securities109,777 378,356  488,133 
Total financial assets$314,616 $380,586 $ $695,202 
14

The following table summarizes assets that are measured at fair value on a recurring basis as of April 30, 2023 (in thousands):
Level 1Level 2Level 3Total
Financial Assets:
Cash and cash equivalents:
Money market funds$194,261 $ $ $194,261 
U.S. agency securities 27,406  27,406 
Certificates of deposit 21,750  21,750 
Commercial paper 60,750  60,750 
Total included in cash and cash equivalents194,261 109,906  304,167 
Marketable securities:
Certificates of deposit 31,645  31,645 
Commercial paper 33,735  33,735 
U.S. treasury securities47,627   47,627 
Corporate debt securities 118,228  118,228 
U.S. agency bonds 39,806  39,806 
Total marketable securities47,627 223,414  271,041 
Total financial assets$241,888 $333,320 $ $575,208 
Interest income from the Company’s cash, cash equivalents and marketable securities was $7.8 million and $20.9 million for the three and nine months ended January 31, 2024, respectively, and $6.2 million and $10.9 million for the three and nine months ended January 31, 2023, respectively, and is included in other income, net in the condensed consolidated statements of operations.
As of January 31, 2024 and April 30, 2023, unrealized gains and losses on the marketable securities were immaterial. The fluctuations in market interest rates impact the unrealized losses or gains on these securities.
The fair value of available-for-sale securities, by remaining contractual maturity, are as follows (in thousands):
As of
January 31, 2024
As of
April 30, 2023
Due within 1 year$252,415 $168,264 
Due between 1 year and 3 years235,718 102,777 
Total marketable securities$488,133 $271,041 
Financial Liabilities
In July 2021, the Company issued $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029 (the “Senior Notes”) in a private placement. Based on the trading prices of the Senior Notes, the fair value of the Senior Notes as of January 31, 2024 was approximately $523.0 million. While the Senior Notes are recorded at cost, the fair value of the Senior Notes was determined based on quoted prices in markets that are not active; accordingly, the Senior Notes are categorized as Level 2 for purposes of the fair value measurement hierarchy.
5. Acquisitions
Opster Ltd.
On November 30, 2023, the Company acquired 100% of the share capital of Opster Ltd. (“Opster”) for a total purchase consideration of $22.8 million. The purchase consideration includes $3.1 million held back by the Company for indemnity obligations which will be released upon the 18-month anniversary of the acquisition.
15

The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations, and, accordingly, the total purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. The total purchase price allocated to developed technology and goodwill was $6.0 million and $15.9 million, respectively. The fair value assigned to developed technology was determined using the cost to recreate approach. The developed technology asset is being amortized on a straight-line basis over the useful life of 5 years, which approximates the pattern in which the developed technology is utilized. Goodwill resulted primarily from the expectation of enhancing the efficiency and management of the Elastic Stack and is not deductible for income tax purposes.
The financial results of Opster have been included in the Company’s condensed consolidated results of operations since the acquisition date. Pro forma and historical results of operations for this acquisition have not been presented as they were not material to the condensed consolidated results of operations.
6. Balance Sheet Components
Property and Equipment, Net
The cost and accumulated depreciation of property and equipment were as follows (in thousands):
Useful Life (in years)As of
January 31, 2024
As of
April 30, 2023
Leasehold improvementsLesser of estimated useful life or remaining lease term$12,281 $10,081 
Computer hardware and software33,310 2,220 
Furniture and fixtures
3-5
6,898 6,093 
Assets under construction651 1,734 
Total property and equipment23,140 20,128 
Less: accumulated depreciation(17,628)(15,036)
Property and equipment, net$5,512 $5,092 
Depreciation expense related to property and equipment was $0.9 million and $2.6 million for the three and nine months ended January 31, 2024, respectively, and $0.8 million and $2.9 million for the three and nine months ended January 31, 2023, respectively. During the three and nine months ended January 31, 2023, the Company recorded asset impairment charges related to the exit from leased office space, which included $1.1 million of furniture, equipment, and leasehold improvements. See Note 16 for further details.
Intangible Assets, Net
Intangible assets consisted of the following as of January 31, 2024 (in thousands):
Gross Fair ValueAccumulated AmortizationNet Book ValueWeighted Average
Remaining
Useful Life
(in years)
Developed technology$76,130 $52,275 $23,855 2.8
Customer relationships19,598 19,598  0.0
Trade names2,872 2,872  0.0
Total$98,600 $74,745 $23,855 2.8
Foreign currency translation adjustment(33)
Total$23,822 
16

Intangible assets consisted of the following as of April 30, 2023 (in thousands):
Gross Fair ValueAccumulated AmortizationNet Book ValueWeighted Average
Remaining
Useful Life
(in years)
Developed technology$70,130 $43,136 $26,994 2.7
Customer relationships19,598 17,641 1,957 0.4
Trade names2,872 2,686 186 0.4
Total$92,600 $63,463 $29,137 2.5
Foreign currency translation adjustment(33)
Total$29,104 
Amortization expense for the intangible assets for the three and nine months ended January 31, 2024 and 2023 was as follows (in thousands):
Three Months Ended January 31,Nine Months Ended January 31,
2024202320242023
Cost of revenue – subscription$3,186 $2,977 $9,139 $8,902 
Sales and marketing 1,232 2,143 3,695 
Total amortization of acquired intangible assets$3,186 $4,209 $11,282 $12,597 
The expected future amortization expense related to the intangible assets as of January 31, 2024 was as follows (in thousands, by fiscal year):
Remainder of 2024$3,098 
20259,239 
20266,278 
20273,267 
20281,224 
Thereafter716 
Total$23,822 
Goodwill
The following table represents the changes to goodwill (in thousands):
Carrying Amount
Balance as of April 30, 2023$303,642 
Addition from acquisition
15,830 
Foreign currency translation adjustment74 
Balance as of January 31, 2024$319,546 
There was no impairment of goodwill during the nine months ended January 31, 2024 and 2023.
17

Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
As of
January 31, 2024
As of
April 30, 2023
Accrued expenses$30,697 $24,163 
Income taxes payable14,628 9,738 
Value added taxes payable5,360 9,403 
Accrued interest988 6,918 
Other13,162 13,310 
Total accrued expenses and other liabilities$64,835 $63,532 
Accrued Compensation and Benefits
Accrued compensation and benefits consisted of the following (in thousands):
As of
January 31, 2024
As of
April 30, 2023
Accrued vacation$31,346 $30,026 
Accrued commissions18,946 26,175 
Accrued payroll and withholding taxes13,495 6,586 
Other14,262 13,696 
Total accrued compensation and benefits$78,049 $76,483 
Allowance for Credit Losses
The following is a summary of the changes in the Company’s allowance for credit losses (in thousands):
Nine Months Ended January 31,
20242023
Beginning balance$3,409 $2,700 
Bad debt expense2,189 1,276 
Accounts written off(1,733)(1,781)
Ending balance$3,865 $2,195 
7. Senior Notes
In July 2021, the Company issued $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029 in a private placement.
Interest on the Senior Notes is payable semi-annually in arrears on January 15 and July 15 of each year. The Company received net proceeds from the offering of the Senior Notes of $565.7 million after deducting underwriting commissions of $7.2 million and incurred additional issuance costs of $2.1 million. Total debt issuance costs of $9.3 million are being amortized to interest expense using the effective interest method over the term of the Senior Notes. The Company may redeem the Senior Notes, in whole or in part, at any time prior to July 15, 2024 at a price equal to 100% of the principal amount thereof plus a “make-whole” premium and accrued and unpaid interest, if any. The Company may at its election redeem all or a part of the Senior Notes on or after July 15, 2024, on any one or more occasions, at the redemption prices set forth in the indenture governing the Senior Notes (the “Indenture”), plus, in each case, accrued and unpaid interest thereon, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to July 15, 2024, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the Senior Notes outstanding under the Indenture with the net cash proceeds of one or more equity offerings at a redemption price equal to 104.125% of the principal amount of the Senior Notes then outstanding, plus accrued and unpaid interest thereon, if any, to, but excluding, the applicable redemption date. The Company may also at its election redeem the Senior Notes in whole, but not in part, at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, if certain changes in tax law occur as set forth in the Indenture.
If the Company experiences a change of control triggering event (as defined in the Indenture), the Company must offer to repurchase the Senior Notes at a repurchase price equal to 101% of the principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest, if any, to the repurchase date.
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The Indenture contains covenants limiting the Company’s ability and the ability of certain subsidiaries to create liens on certain assets to secure debt; grant a subsidiary guarantee of certain debt without also providing a guarantee of the Senior Notes; and consolidate or merge with or into, or sell or otherwise dispose of all or substantially all of its assets to, another person. These covenants are subject to a number of limitations and exceptions. Certain of these covenants will not apply during any period in which the Senior Notes are rated investment grade by Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services.
The net carrying amount of the Senior Notes was as follows (in thousands):
As of
January 31, 2024
As of
April 30, 2023
Principal$575,000 $575,000 
Unamortized debt issuance costs(6,659)(7,457)
Net carrying amount$568,341 $567,543 
The following table sets forth the interest expense recognized related to the Senior Notes (in thousands):
Three Months Ended January 31,Nine Months Ended January 31,
2024202320242023
Contractual interest expense$5,930 $5,930 $17,789 $17,789 
Amortization of debt issuance costs269 257 798 763 
Total interest expense related to the Senior Notes$6,199 $6,187 $18,587 $18,552 
8. Commitments and Contingencies
Cloud Hosting Commitments
During the nine months ended January 31, 2024, there were no material changes, outside the ordinary course of business, to the Company’s contractual obligations and commitments reported in the Company's Annual Report on Form 10-K.
Letters of Credit
The Company had a total of $2.3 million in letters of credit outstanding in favor of certain landlords for office space as of January 31, 2024.
Legal Matters
From time to time, the Company has become involved in claims and other legal matters arising in the ordinary course of business. The Company investigates these claims as they arise. Although claims are inherently unpredictable, the Company is currently not aware of any matters that, if determined adversely to the Company, would individually or taken together have a material adverse effect on its business, results of operations, financial position or cash flows.
The Company accrues estimates for resolution of legal and other contingencies when losses are probable and reasonably estimable.
Indemnification
The Company enters into indemnification provisions under its agreements with other companies in the ordinary course of business, including business partners, landlords, contractors and parties performing its research and development. Pursuant to these arrangements, the Company agrees to indemnify, hold harmless, and reimburse the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company’s activities. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is not material. The Company maintains commercial general liability insurance and product liability insurance to offset certain of the Company’s potential liabilities under these indemnification provisions.
In addition, the Company indemnifies its officers, directors and certain key employees against certain liabilities that may arise as a result of their affiliation with the Company. To date, there have been no claims under any indemnification provisions.
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9. Leases
The Company’s leases provide for rental of corporate office space under non-cancelable operating lease agreements that expire at various dates through fiscal 2030. The Company does not have any finance leases.
Lease Costs
Components of lease costs included in the condensed consolidated statements of operations were as follows (in thousands):
Three Months Ended January 31,Nine Months Ended January 31,
2024202320242023
Operating lease cost$3,120 $3,088 $8,960 $9,539 
Short-term lease cost334 381 1,308 1,729 
Variable lease cost527 219 1,049 446 
Total lease cost$3,981 $3,688 $11,317 $11,714 
Lease term and discount rate information are summarized as follows:
As of
January 31, 2024
Weighted average remaining lease term (in years)2.85
Weighted average discount rate5.10 %
Future minimum lease payments under non-cancelable operating leases on an undiscounted cash flow basis as of January 31, 2024 were as follows (in thousands, by fiscal year):
Remainder of 2024$3,603 
202512,955 
20267,398 
20272,704 
20282,359 
Thereafter1,101 
Total minimum lease payments30,120 
Less imputed interest(2,035)
Present value of future minimum lease payments28,085 
Less current lease liabilities(12,788)
Operating lease liabilities, non-current$15,297 
Future minimum lease payments as of January 31, 2024 include future cash payments on leases with corresponding right-of-use assets which were written down for impairment due to facilities-related cost optimization actions during the three and nine months ended January 31, 2023. During the three and nine months ended January 31, 2023, the Company recorded an impairment charge of $5.1 million related to the exit from leased office space. See Note 16 for further details.
10. Ordinary Shares
The Company’s authorized ordinary share capital pursuant to its articles of association amounts to 165 million ordinary shares at a par value per ordinary share of €0.01.
Each holder of ordinary shares has the right to one vote per ordinary share. The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and when proposed by the Company’s board of directors and adopted by the general meeting of shareholders, subject to the prior rights of holders of all classes of shares outstanding having priority rights to dividends. No dividends have been declared from the Company’s inception through January 31, 2024.
The board of directors has been authorized by the general meeting of shareholders, on the Company’s behalf, to issue the Company’s ordinary shares and grant rights to acquire the Company’s ordinary shares in an amount up to 20% of the issued share capital of the Company as of August 21, 2023. This authorization is valid for a period of 18 months from October 5, 2023.
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Ordinary Shares Reserved for Issuance
The Company has reserved ordinary shares for issuance as follows:
As of
January 31, 2024
As of
April 30, 2023
Stock options issued and outstanding2,732,289 4,038,238 
RSUs issued and outstanding (1)
7,895,146 7,494,399 
Available for future grants
20,105,501 17,564,133 
Available for employee stock purchases5,805,895 6,000,000 
Total ordinary shares reserved
36,538,831 35,096,770 
(1) Includes 116,523 PSUs issued and outstanding as of January 31, 2024.
Preference Shares
The Company’s authorized preference share capital pursuant to its articles of association amounts to 165 million preference shares at a par value per preference share of €0.01. Each holder of preference shares has rights and preferences, including the right to one vote per preference share. As of January 31, 2024, there were no preference shares issued or outstanding.
Preference shares in the capital of the Company may currently only be issued pursuant to a resolution adopted by the general meeting of shareholders at the proposal of the board of directors.
11. Equity Incentive Plans
2022 Employee Stock Purchase Plan
In August 2022, the Company’s board of directors adopted and, in October 2022, the Company’s shareholders approved the 2022 Employee Stock Purchase Plan (“2022 ESPP”). The Company reserved 6.0 million of the Company’s ordinary shares for future purchase and issuance under the 2022 ESPP in January 2023. The 2022 ESPP allows eligible employees to acquire ordinary shares of the Company at a discount at periodic intervals through accumulated payroll deductions. Eligible employees purchase ordinary shares of the Company during a purchase period at 85% of the market value of the Company’s ordinary shares at either the beginning or end of an offering period, whichever is lower. Offering periods under the 2022 ESPP are approximately six months long and begin on each of March 16 or September 16 or the next trading day thereafter.
For the nine months ended January 31, 2024, 194,105 ordinary shares were purchased under the 2022 ESPP. No ordinary shares were purchased under the 2022 ESPP during the three months ended January 31, 2024. Stock-based compensation expense recognized related to the 2022 ESPP was $1.7 million and $5.3 million for the three and nine months ended January 31, 2024, respectively.
2012 Stock Option Plan
In September 2012, the Company’s board of directors adopted and the Company’s shareholders approved the 2012 Stock Option Plan, which was amended and restated in September 2018 and further amended in December 2021 (as amended and restated, the “2012 Plan”). Under the 2012 Plan, the board of directors, the compensation committee, as administrator of the 2012 Plan, and any other duly authorized committee may grant stock options and other equity-based awards, such as Restricted Stock Awards (“RSAs”), Restricted Stock Units (“RSUs”), and performance-based RSUs (“PSUs”), to eligible employees, directors, and consultants to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company’s business.
The Company’s board of directors, compensation committee, or other duly authorized committee determines the vesting schedule for all equity-based awards. Stock options and RSUs granted to employees generally vest over four years, subject to the employees’ continued service to the Company. During the nine months ended January 31, 2024, the Company granted PSUs that vest over three years with a one-year performance period. The Company’s compensation committee may explicitly deviate from the general vesting schedules in its approval of an equity-based award, as it may deem appropriate. Stock options expire ten years after the date of grant. Stock options, RSAs and RSUs (including PSUs) that are canceled under certain conditions become available for future grant or sale under the 2012 Plan unless the 2012 Plan is terminated.
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The equity awards available for grant were as follows: 
Nine Months Ended January 31, 2024
Available at beginning of fiscal year17,564,133 
Awards authorized4,868,347 
Options canceled
104,137 
RSUs granted (1)
(3,261,660)
RSUs canceled (2)
830,544 
Available at end of period20,105,501 
(1) Includes 132,960 PSUs granted during the nine months ended January 31, 2024.
(2) Includes 16,437 PSUs canceled during the nine months ended January 31, 2024.
Stock Options
The following table summarizes stock option activity:
Stock Options Outstanding
Number of
Stock Options
Outstanding
Weighted-
Average
Exercise
Price
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value
(in thousands)
Balance as of April 30, 20234,038,238 $32.74 5.35$134,778 
Stock options exercised(1,200,589)$16.23 
Stock options canceled(104,137)$98.35 
Stock options assumed in acquisition canceled(1,223)$75.42 
Balance as of January 31, 20242,732,289 $37.47 4.89$223,029 
Exercisable as of January 31, 20242,439,399 $30.88 4.57$214,206 
Aggregate intrinsic value represents the difference between the exercise price of the stock options to purchase the Company’s ordinary shares and the fair value of the Company’s ordinary shares. The weighted-average grant-date fair value per share of stock options granted was $48.56 for the nine months ended January 31, 2023. No stock options were granted during the three months ended January 31, 2023.
As of January 31, 2024, the Company had unrecognized stock-based compensation expense of $15.8 million related to unvested stock options that the Company expects to recognize over a weighted-average period of 1.83 years.
RSUs
The following table summarizes RSU activity under the 2012 Plan: