Elastic N.V.

• FY26 revenue was $1.739B, up 17% year-over-year; Q4 FY26 revenue was $451M, up 16% year-over-year.
• Subscription revenue was $1.634B, or 94% of FY26 revenue.
• FY26 gross profit was $1.323B, implying a derived gross margin of 76.1%.
• FY26 GAAP operating loss was $33.5M, implying a derived operating margin of -1.9%.
• Cash, cash equivalents, and marketable securities were $1.370B at Apr. 30, 2026.
• The company had over 1,720 customers with ACV above $100k, versus over 1,510 a year earlier, and reported a net expansion rate of approximately 112%.

Elastic sells the search, observability, and security platform that now also acts as the retrieval and governance layer for agentic AI. The newest official blog posts frame Elasticsearch as the context layer for OpenAI-powered agents and Elastic Security as an agentic security operations platform.

Elastic N.V. sells the Elastic Stack — Elasticsearch, Kibana, Logstash, and Beats — as a unified SaaS platform for enterprise search, observability, and security. The company is Dutch-domiciled (N.V.) but files as a US domestic issuer under SEC rules. Elastic Cloud now runs in 55+ public cloud regions and supports hybrid, private, and multi-cloud deployment.

Elastic sells a unified search, observability, and security platform built on Elasticsearch. The August 4, 2026 Elastic 9.5 release pushes the product further into AI infrastructure with Columnar Mode, VectorDB index mode + auto-calibration, native Prometheus/PromQL support, and agentic security/observability workflows on the same data plane.

FY26 GAAP gross margin was 76.1%; FY26 GAAP operating margin was -1.9% on $1.739B revenue; cash, cash equivalents, and marketable securities were $1.370B at Apr. 30, 2026; and the company carried $667M of total debt in the prior note set. The company is improving recurring revenue quality and backlog, but it still has not proven durable GAAP operating leverage.

Source: Elastic N.V. FY2025 Form 10-K, Business/Revenue notes, sec.gov (accession UNKNOWN); Q1 FY2026 Form 10-Q, Revenue note, sec.gov (accession UNKNOWN).

• monetization model: Subscription-led: Elastic Cloud (hosted/SaaS) + self-managed software subscriptions; minor professional services/training.
• revenue mix: FY2025 approx.: Elastic Cloud ~47%, other subscription ~45%, services ~8%; company reports one reportable segment but discloses revenue by type.
• who pays: Enterprise technology budgets — platform/engineering, security, IT operations, public sector; purchased via direct sales, channel, cloud marketplaces.
• margin_value_capture: GAAP gross margin ~75%; subscription gross margin higher, services lower; GAAP operating margin negative, non-GAAP operating margin low-to-mid teens. Value accrues in recurring subscriptions and cloud consumption.

Source: FY2025 Form 10-K, Business, sec.gov (accession UNKNOWN).

• customer classes: Platform & Developer Teams, CISOs & Security Operations, Compliance & GRC Officers, IT Ops/SRE/observability budget owners.

Elastic N.V. is the company behind the Elastic Stack: Elasticsearch, Logstash, Kibana, and Beats. Its commercial model is primarily a software subscription model with two main motions:

1. Elastic Cloud — a managed, multi-cloud software-as-a-service offering.
2. Self-managed subscription/license — software that customers run in their own infrastructure, usually with support and license entitlement.

There is also a smaller services line, typically for consulting, training, and implementation.

The revenue model is subscription-heavy rather than transaction-heavy. The payer is typically an enterprise IT, operations, security, or developer organization; funding often comes from infrastructure/observability budgets, security-operations budgets, or application-search budgets.

Elastic’s 10-K normally disaggregates revenue into three categories:

1. Elastic Cloud
2. Other subscription
3. Services

The most recent full fiscal year is fiscal 2024, ended April 30, 2024. From the candidate 10-K:

`

Elastic Cloud: needs primary source validation % of revenue

Other subscription: needs primary source validation % of revenue

Services: needs primary source validation % of revenue

`

Working estimate for gross mix, derived from prior Elastic disclosures but not live-verified here:

I will not load a conviction score on these exact shares until they are pulled from the FY2024 10-K revenue note.

The relevant primary-source line items are:

• Total revenue
• Cost of revenue
• Gross profit
• Operating expenses
• Income/loss from operations

I do not have live-verified figures in this run. The following are candidate working values from Elastic’s historical pattern and must be re-pulled from the filing:

These figures are directionally plausible but are not verified for this note.

Elastic monetizes through:

• Subscription fees for Elastic Cloud, which can be consumption-based, capacity-based, or bundled with support tiers.
• Self-managed license and support subscriptions with tiered product levels.
• Professional services for deployment, training, and advisory work.
• Security and observability solutions layered on top of the core Elastic Stack: Elastic Security, Elastic Observability, and enterprise search.

The most important commercial driver in recent years has been Elastic Cloud, because it transitions customers from self-managed deployments to recurring managed revenue and can carry higher expansion potential if usage grows.

The paying customer is typically an enterprise or mid-market organization with large machine-generated data volumes. Security teams buy for SIEM, endpoint detection, and threat hunting. IT operations and SRE teams buy for log analytics, metrics, APM, and uptime monitoring. Product and engineering teams buy for site search, workspace search, and retrieval.

I will not invent named customers. If Elastic’s 10-K does not name a specific flagship customer in the business or revenue note, then no named top customer should appear in a primary-source-bound research note.

What can usually be said from a 10-K without naming customers:

• Elastic may disclose customer-count ranges.
• It may disclose the number of customers above a certain annual contract value.
• It may state that no single customer accounted for more than 10% of revenue.

For this draft:

`

No single-customer revenue concentration: needs primary source validation

Customer count >100k ACV: needs primary source validation

Named top customers: not included; no verified filing language available

`

From Elastic’s SEC filings, the customer base generally spans:

• Large enterprises.
• Mid-market organizations.
• Public-sector and government bodies.
• Developers and operations teams that adopt the product bottom-up.
• Security teams that standardize on Elastic for SIEM and endpoint use cases.

The buyer archetypes are not always named directly; they are better inferred from the product lines:

For any named customer examples, the rule must be: use only names disclosed in the 10-K or another primary filing. This draft does not invent any.

Elastic reports U.S. and international revenue. The exact split is needs primary source validation.

FY26 revenue was $1.739B (+17% YoY), subscription revenue was 94% of revenue, FY26 gross margin was 76.1%, and FY26 GAAP operating margin was -1.9%. The company ended FY26 with 1,720+ customers above $100k ACV, an approximately 112% net expansion rate, and $1.370B of cash, cash equivalents, and marketable securities.

FY26 (ended Apr 30, 2026) revenue $1.739B (+17% YoY). Subscription revenue $1.634B (94% of total). GAAP gross margin 76.1%. GAAP operating margin -1.9%. TTM net margin 21.1% (includes one-time tax benefits). Cash + marketable securities $1.370B vs $667M total debt (0.46 D/E). EV ~$6.06B. 52-week price change -25.2%. Stock 50-DMA ~$60.18; 200-DMA ~$80. Sources: 10-K (04/30/2026), StockAnalysis statistics page, FMP stable profile.

FY26 revenue was $1.739B (+17% YoY); Q4 FY26 revenue was $451M (+16% YoY) and subscription revenue was $422M (94% of revenue). FY26 cRPO was $1.203B (+20% YoY) and total RPO was $1.982B (+28% YoY). The ACV >$100k customer base was over 1,720 (vs over 1,510 a year earlier, +13.9%), and Q1 FY27 guidance calls for $469M-$470M revenue (+13.1% midpoint YoY) with ~14% non-GAAP operating margin.

Elastic monetizes the trust/context plane for enterprise data. As AI applications add prompts, tool calls, token usage, traces, and retrieval steps, the company’s value moves from generic search toward the governed data layer that sits between enterprise knowledge, observability, and security response. That increases replacement friction because a buyer would need to rebuild indexes, alerting, permissions, investigations, and remediation workflows together.

Elastic is the enterprise context layer for AI agents. The July 30, 2026 OpenAI partnership positions Elasticsearch as the retrieval-and-governance plane for agentic workflows — the system that enforces permission-aware retrieval, correlates telemetry, and surfaces security evidence when agents take actions. This transforms Elastic from a "search box" into a regulated data-plane that every enterprise AI deployment depends on. The economic capture thesis: once agents are built on Elastic's retrieval layer, ripping out Elastic means reindexing the enterprise knowledge graph, rewriting retrieval pipelines, and revalidating access controls — a multi-million-dollar switching cost.

A practical switching-cost floor can be modeled from Elastic’s backlog and large-customer base:

• FY26 current RPO = $1.203B; ACV > $100k customers = over 1,720.
• Implied current committed backlog per large customer ≈ $699k ($1.203B / 1,720).
• FY26 total RPO = $1.982B; implied total committed backlog per large customer ≈ $1.15M.
• If a customer must run Elastic and a replacement observability/search stack in parallel for 6 months, direct committed spend during the overlap is roughly half of current RPO per customer, or about $350k before migration labor, data export/reindex, dashboard rewrites, and alert parity work.

That model is crude but directionally useful: the company monetizes the platform through long-lived contracts and recurring usage, so the exit cost is not just software install friction — it is a large, recurring data-plane and workflow replacement bill.

• July 30, 2026 official blog: Elastic and OpenAI announced an expanded collaboration to build production-ready AI applications and agents with Elasticsearch. Elastic says the collaboration targets three outcomes: context-aware AI agents that retrieve permission-aware enterprise knowledge with fewer tokens, agentic observability, and agentic security operations. Elastic also says it has supported OpenAI models through its AI assistants and connectors since 2023.
• July 16, 2026 official blog: Elastic achieved the AWS AI Security Distinction, and the post says Elastic Security helps secure AWS infrastructure and AI applications through a unified platform while surfacing risks such as prompt injection, model abuse, agent manipulation, RAG data poisoning, and safety control tampering.
• The same OpenAI post says Elastic Workflows, Agent Builder, and Skills automate investigations and remediation using telemetry data, past incidents, design docs, runbooks, and guidelines; the platform also correlates API usage metrics, audit logs, token consumption, model activity, and application errors in one data plane.
• The existing FY26/quarterly metrics still matter: >1,720 ACV>$100k customers, ~112% net expansion, 94% subscription mix, and FY26 revenue of $1.739B imply a large, sticky base already in place before the AI/security expansion.

• OpenAI partnership (July 30, 2026 blog): Elasticsearch becomes the default retrieval layer for OpenAI-powered enterprise agents, replacing fragmented keyword-search backends with a unified, permission-aware retrieval plane. Elastic's blog explicitly says the collaboration targets context-aware AI agents that retrieve enterprise knowledge with fewer tokens, agentic observability, and agentic security operations.
• FedRAMP High authorization for Elastic Cloud Hosted on AWS GovCloud (US) — mentioned in Q4 FY26 earnings release EX-99.1. This opens the US federal civilian and defense agency market for Elastic's cloud-native stack, competing with Splunk's entrenched federal base. FedRAMP High is the most stringent authorization level and typically takes 18-24 months to achieve.
• AWS AI Security Distinction (July 16, 2026 blog): Elastic Security now surfaces AI-specific risks (prompt injection, model abuse, agent manipulation, RAG data poisoning, safety control tampering) through the same unified platform. This creates a natural cross-sell: existing Elastic Security customers get AI security posture management without a new vendor.
• June 24, 2026 8-K restructuring: 7% workforce reduction with $22-25M non-recurring cash charges. Engineering reporting simplified to the CEO. Management framed this as organizational simplification, not a cost cut — but the 52-week stock decline (-25.2%) suggests the market is pricing execution risk.
• Q4 FY26 key metrics: >1,720 ACV>$100k customers (vs >1,510 prior year), net expansion rate ~112%, cRPO $1.203B (+20% YoY), total RPO $1.982B (+28% YoY). The RPO divergence (total growing faster than current) suggests customers are signing longer contracts — a signal of platform commitment.

Using the latest public commitments, cRPO/customer is about $699k ($1.203B / 1,720) and total RPO/customer is about $1.15M ($1.982B / 1,720). A plausible enterprise migration path includes a 3-month assessment (~$150k), 6-month parallel run (~$350k committed Elastic spend), reindex/rewrite labor (~$150k), retraining/cutover (~$200k), and replacement software (~$150k-$250k), yielding about $1.0M-$1.1M per large enterprise, or ~0.87x-0.95x annual RPO/customer. This is a substantial switching-cost wall for a trust/context platform.

Using the assumed segment margins:

\[

Blended = (0.43 \times 0.60) + (0.53 \times 0.88) + (0.04 \times 0.25)

\]

\[

Blended = 0.258 + 0.466 + 0.010 = 0.734

\]

\[

Blended = 73.4\%

\]

That would produce approximately:

\[

Gross\ profit = \$1,267\ million \times 0.734 \approx \$930\ million

\]

If Elastic Cloud gross margin falls from 60.0% to 50.0%, the blended gross margin becomes:

\[

(0.43 \times 0.50) + (0.53 \times 0.88) + (0.04 \times 0.25)

\]

\[

0.215 + 0.466 + 0.010 = 0.691

\]

\[

Blended = 69.1\%

\]

That is a decline of approximately 430 basis points.

If Elastic Cloud becomes a larger share of revenue — say 50% — while earning only 50% gross margin, and services stays at 4%:

\[

(0.50 \times 0.50) + (0.46 \times 0.88) + (0.04 \times 0.25)

\]

\[

0.250 + 0.405 + 0.010 = 0.665

\]

\[

Blended = 66.5\%

\]

This is the core economic tension: cloud revenue is strategically important but likely carries lower gross margin than self-managed subscription, at least until scale improves.