Elastic N.V. (ESTC) Surges on Strong Q3 Results, Driven by Search AI and Cloud Revenue Growth

Elastic N.V. (ESTC), the company behind Elasticsearch and the elastic Stack, has reported solid third-quarter fiscal 2025 results, with sales growth of 17% to $382 million and adjusted margins expanding 350 basis points to 17%. The firm's cloud offering, Elastic Cloud, continues to gain traction and now constitutes 47% of Elastic's sales, up from 44% a year ago.



Elastic's strong performance was driven by its focus on search AI and cloud revenue, which contributed to its outperformance during the quarter. The company's search analytics platform has been chosen as a core part of many companies' IT infrastructure stacks for building Generative AI (GenAI) applications, leading to increased customer adoption and revenue growth. Additionally, the stability in cloud consumption patterns has contributed to Elastic's Q3 results, with the company's cloud offering gaining traction and now constituting 47% of its sales.



Elastic's investment in generative AI applications has also positively impacted its customer base and total subscription customer count. The company has seen a substantial increase in customers interested in building generative AI applications, which has driven momentum in its business. This is evident in the growth of customers with an Annual Contract Value (ACV) greater than $100,000 and the total subscription customer count.

Elastic's strong Q3 results and future growth prospects are reflected in its financial guidance for the current quarter and full year. The company projects EPS of $1.91 to $1.96 and revenue of $1.474 billion to $1.476 billion, indicating its confidence in its future growth prospects driven by its focus on search AI and cloud revenue.

In conclusion, Elastic N.V.'s (ESTC) strong Q3 results, driven by its focus on search AI and cloud revenue, have contributed to its outperformance during the quarter. The company's investment in generative AI applications has positively impacted its customer base and total subscription customer count, setting the stage for continued growth and success.