Total revenue for the quarter reached $423 million, a 16% year‑over‑year increase and 15% on a constant‑currency basis. Subscription revenue, the core of Elastic’s business, grew to $398 million, up 17% YoY and 16% constant‑currency, representing 94% of total revenue and underscoring the company’s shift from one‑time licensing to recurring cloud and self‑managed offerings.
Elastic’s non‑GAAP diluted earnings per share were $0.64, beating the consensus estimate of $0.58 by $0.06, or 10.3%. The beat was driven by disciplined cost management and a higher‑margin mix that included a 22% year‑over‑year rise in Elastic Cloud revenue, which totaled $206 million.
Segment analysis shows sales‑led subscription revenue grew 18% YoY, reflecting successful expansion into larger enterprise accounts and higher‑margin cloud services. Observability and security solutions contributed roughly 12% of subscription revenue, while the remaining 88% came from core search and data‑management offerings.
Management raised its outlook for the third quarter and full fiscal year. Q3 revenue guidance was increased to $437 million–$439 million, and full‑year 2026 revenue guidance was lifted to $1.715 billion–$1.721 billion. EPS guidance for Q3 was $0.63–$0.65, and full‑year EPS guidance was $2.40–$2.46, reflecting confidence in continued AI‑driven demand and operational leverage.
Despite the EPS beat, the market reacted negatively, with shares falling 12% in after‑hours trading. Analysts cited a revenue miss against some estimates, sales‑led subscription growth below internal targets, a deceleration in SaaS growth, and slightly softer cloud revenue as key drivers of the reaction. Management emphasized cost discipline and strategic investments in AI, noting the acquisition of Jina AI as a boost to its platform.
Headwinds include potential delays in federal renewals due to a government shutdown, while tailwinds stem from strong AI adoption and growing demand for unstructured data solutions. Elastic’s $500 million share‑repurchase program signals management’s confidence in the company’s long‑term prospects.
The company’s focus on AI, combined with its platform consolidation strategy, positions it to capture increasing enterprise spend on search, observability, and security solutions.
The revised article provides a complete, fact‑checked narrative that explains the drivers behind each metric and the implications for Elastic’s business and outlook.
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