Elastic 2026 Q1 Earnings Sustained Losses Narrow, Revenue Grows 19.5%

Elastic reported its Q1 2026 earnings on August 29, 2025, delivering revenue growth above expectations but still operating at a net loss. The company raised its full-year revenue guidance and outlined plans for AI-driven innovation and sales optimization.

Elastic reported first-quarter revenue of $415.29 million, reflecting a 19.5% year-over-year increase. Subscription revenue, the company’s largest segment, drove the majority of the growth at $388.58 million, while services added an additional $26.70 million. The results exceeded expectations and prompted an upward revision of fiscal 2026 revenue guidance to $1.679 billion–$1.689 billion, representing mid-teens growth.

Elastic narrowed its net loss to $24.60 million, or $0.23 per share, a 50% improvement from the prior year’s $49.23 million, or $0.48 per share. Despite this progress, the company has posted losses in nine consecutive years during the same quarter, underscoring ongoing financial challenges. The earnings per share remains a negative figure, indicating continued operational losses.

The stock price of Elastic declined 9.87% during the latest trading day, though it gained 6.25% over the past week. Month-to-date, shares fell 3.33%, reflecting mixed investor sentiment.

The post-earnings trading strategy of buying Elastic shares when revenues miss estimates and holding for 30 days showed mixed results. The approach generated an 81.77% return, slightly underperforming the benchmark by 1.54%. The strategy’s low drawdown and Sharpe ratio of 0.24 suggest a relatively low-risk profile, although the 56.09% volatility indicates substantial price swings.

CEO Ashutosh Kulkarni praised the company’s Q1 performance, highlighting 20% revenue growth and 22% subscription revenue growth fueled by demand for the Elasticsearch AI platform. He emphasized AI’s role in driving growth in search, observability, and security, with over 2,200 customers using AI features. Kulkarni outlined strategic priorities including AI innovation, platform consolidation, and targeted sales segmentation, expressing confidence in Elastic’s ability to compete in key markets.

Elastic raised its full-year revenue guidance to $1.679 billion–$1.689 billion and expects non-GAAP diluted EPS of $2.29–$2.35. For Q2 2026, the company projects revenue of $415 million–$417 million, with non-GAAP operating margin around 16% and diluted EPS of $0.56–$0.58. Elastic also anticipates maintaining adjusted free cash flow margins at fiscal 2025 levels but expects a sequential decline in FCF for Q2 due to seasonality.

Additional News

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