Elastic Shows Robust Growth on the Back of GenAI & Cloud Expansion

Elastic demonstrated an impressive performance in its latest earnings release, handily beating consensus estimates for revenue and EPS, and even surprised Wall Street with its forecast. The earnings showed Elastic making significant strides across every segment of its business.

While much of Elastic’s growth is boosted by the current happenings in generative AI, the company is also taking a deliberate and strategic approach to growing its business across segments. For example, the company is increasingly playing in observability and has announced the completion of its acquisition of Opster.

Quarter Highlights

Elastic’s fiscal Q2 2024 earnings can be summarized as follows (for a detailed look, read our related Research Note):

  • Revenue Growth: 17% year-over-year increase in total revenue.
  • Elastic Cloud Growth: 31% year-over-year growth in the Elastic Cloud segment.
  • Non-GAAP Operating Margin: Achieved a non-GAAP operating margin of 13%.
  • Subscription Revenue: Represented 93% of total revenue with a 19% year-over-year increase.
  • Professional Services Revenue: Slight decrease with a 1% year-over-year decline.
  • Financial Health: Strong balance sheet with cash, cash equivalents, and marketable securities totaling $966 million.

Elastic’s 17% year-over-year increase in total revenue is impressive and reflects the increasing market demand for Elastic’s offerings. Elastic Cloud’s exceptional 31% growth is especially notable, highlighting the company’s successful pivot towards cloud-based services and solutions.

Achieving a 13% non-GAAP operating margin is also a key highlight, underscoring the company’s efficiency and profitability. Balancing expansion with profitability can be challenging in the tech industry, and Elastic’s ability to do so speaks volumes about its operational effectiveness and strategic planning.

Elastic’s subscription revenue, constituting a significant 93% of total revenue, experienced a 19% year-over-year increase, showing the company has a strong and growing customer base that values Elastic’s offerings.

Elastic’s financial performance this quarter paints a picture of a company that is not only growing in revenue but also managing its growth efficiently. As the company continues to expand its footprint in the cloud and AI sectors, its ability to sustain this growth momentum and operational efficiency will be critical in determining its long-term success.

Strong Forecast

Elastic’s CEO Ashutosh Kulkarni told us that the growth isn’t ending anytime soon, projecting a confident and optimistic forecast. For the third quarter of its fiscal 2024, the company anticipates total revenue to be $319 million to $321 million, signifying a robust year-over-year growth of approximately 17% at the midpoint. Additionally, Elastic expects a non-GAAP operating margin for the same quarter to fall between 11.5% and 12%.

Looking further ahead, Elastic has raised its outlook for its full fiscal year 2024. The company now expects total revenue to range between $1.247 billion and $1.253 billion, marking a 17% year-over-year growth at the midpoint.

Elastic is showing strong confidence in its ongoing business strategies and ability to continue capturing market demand, especially in its cloud services segment. Elastic’s projections demonstrate a balance between growth and profitability, indicative of the company’s strong positioning in the rapidly evolving landscape.


Elastic’s performance shows a company adeptly navigating the complexities of a hyper-competitive and challenging market. The year-over-year revenue increase, notably its surge in Elastic Cloud, underscores the growing market appetite for cloud-based solutions.

The company’s operating margin growth is particularly noteworthy, suggesting that Elastic isn’t just growing its top line; it’s doing so efficiently, maintaining profitability even as it scales. This balance is crucial in Elastic’s current growth phase, where rapid expansion often impacts the bottom line.

However, as with any company in a rapidly evolving segment, challenges loom. Maintaining the growth momentum in a fiercely competitive market, continually innovating in the fast-paced AI landscape, and successfully integrating its just-closed Opster acquisition will be key areas to watch. So far, Mr. Kulkarni and his leadership team are demonstrating exemplary execution.

Elastic’s stellar earnings paint a picture of a company that’s growing, profitable, and strategically positioned for the future. Its success is more than just being in the right place at the right time as AI explodes; Elastic is delivering the right set of enabling technologies and solutions to help a rapidly evolving industry find success. What a great position to be in.

Disclosure: The author is an industry analyst, and NAND Research an industry analyst firm, that engages in, or has engaged in, research, analysis, and advisory services with many technology companies, which may include those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.