Elastic 2026 Q2 Earnings Revenue Beats Estimates as Losses Widen 101.5%

Elastic (ESTC) reported fiscal 2026 Q2 earnings on Nov 20, 2025, with revenue exceeding expectations and raised full-year guidance. The company’s losses, however, deepened significantly year-over-year.

Revenue

Elastic’s total revenue surged 15.9% year-over-year to $423.48 million, surpassing the $418.2 million consensus estimate. Subscription revenue accounted for the majority at $397.70 million, while Services contributed an additional $25.78 million. The growth was driven by strong demand for AI-powered search, observability, and security solutions, with Cloud revenue reaching $205.7 million (22% YoY growth).

Earnings/Net Income

Elastic’s net loss widened to $51.28 million in Q2 2026, a 101.5% increase from $25.45 million in Q2 2025. The per-share loss expanded to $0.48 from $0.25, marking a 92% wider deficit. Despite a non-GAAP operating margin of 16.5%, the company has posted losses for nine consecutive quarters, underscoring ongoing financial challenges.

Post-Earnings Price Action Review

Following the earnings release, Elastic’s stock initially rose 0.72% in after-hours trading but reversed to a 7.91% decline during the latest trading day. The stock tumbled 10.10% in the prior week and 5.33% month-to-date, reflecting mixed investor sentiment. Analysts noted that while the revenue beat and guidance raise signaled optimism, the widening losses and subpar billings growth created uncertainty.

CEO Commentary

CEO Ashutosh Kulkarni highlighted 16% revenue growth and a 16.5% non-GAAP operating margin, attributing success to AI adoption and large ACV deals. Strategic priorities include expanding GenAI use cases and platform consolidation, with CFO Navam Welihinda emphasizing disciplined spending and confidence in future growth.

Guidance

Elastic raised its FY2026 revenue guidance to $1.715–$1.721 billion (16% growth at midpoint), up from $1.679–$1.689 billion. Q3 2026 revenue is projected at $437–$439 million (15% growth), with non-GAAP diluted EPS expected between $0.63–$0.65.

Additional News

Elastic announced the acquisition of Jina AI to enhance multilingual and multimodal embedding capabilities, signaling a strategic push into GenAI. The company also returned $114 million to shareholders via a share repurchase program, buying 1.4 million shares at $84.45 apiece. Analysts at Wedbush and Scotiabank adjusted price targets following the earnings, with Wedbush lowering its target to $90 and Scotiabank to $76, citing competitive pressures and execution risks.

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