Elastic Q1 revenue tops expectations, offers surprise profit, raises year view

Enterprise search technology company Elastic this afternoon reported fiscal Q1 revenue that topped analysts' expectations, and a surprise profit where analysts had expected a loss, and raised its forecast for revenue. 

The report sent Elastic shares up almost 4% in late trading. 

"Our cloud revenue grew 89%, year over year, we're very proud of that," CEO and founder Shay Banon told ZDNet in an interview via Zoom. 

"Next year, we expect to breach the $1 billion barrier," added Banon. "We've very excited about our growth.

Elastic's total revenue in the three months ended in July rose 50%, year over year, to $193.1 million, yielding a net profit of 4 cents a share, excluding some costs.

Analysts had been modeling $173.2 million and a 10-cent net loss per share.

Total cloud revenue of $61.5 million made up a third of total revenue.

Elastic's progress in cloud is being helped by the ability to have search function across different clouds where customers have workloads, Banon told ZDNet. 

Customers can deploy Elastic's Elasticsearch software on Amazon AWS and also GCP, and search across the two, for example. Elastic "move the search, we don't move the data," meaning that customers information stays where it is hosted. 

"That's pretty unique," said Banon. The ability to span clouds can save money in terms of cost of data hosting, claimed Banon.

"We have almost made the decision around which cloud meaningless to our customers," said Banon, "because they can just go and pick and choose, and we integrate with the marketplace." That integration has "required substantial investment on our part," said Banon. "I'm happy to start to see it panning out."

In a separate release, Elastic announced it has agreed to acquire five-year-old security startup Cmdwatch Security, Inc., of Vancouver, British Columbia, also known simply as Cmd, for undisclosed terms. 

The startup will bring runtime security capabilities to Elastic's observability and event management tools, with particular emphasis on protecting assets in cloud environments, including things such as Kubernetes installations.

Banon said observability tools such as application management and DevOps are on course to merge with security tools. 

"There is another phase of consolidation that is going to happen in the next five years in the market, which is that observability and security are going to start to merge together," said Banon. "Because while you observe, why not protect?"

For the current quarter, the company sees revenue of $193 million to $195 million, and net loss per share in a range of 15 cents to 19 cents. That compares to consensus for $188.7 million and a 14-cent loss per share.

For the full year, the company raised its outlook for revenue from a prior rang of $782 million to $708 million to a new range of $808 million to $814 million. That compares to consensus of $789 million. The company also lowered its outlook for profitability, forecasting a net loss of 57 cents to 67 cents a share, excluding some costs, below the prior outlook of 51 cents to 50 cents a share.