
Elastic N.V.

ESTC (Elastic N.V.) trades at 2.7x EV/Revenue — attractively valued for a search/observability company with best-in-class gross margins (74%) and healthy growth (+18% YoY). The business is approaching profitability at 0% EBIT margins. Forward PE of 21x.
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Elastic provides a unified search and analytics platform that helps enterprises find, analyze, and visualize data across their organizations. Their core product, the Elastic Stack, powers everything from website search to cybersecurity monitoring to AI applications for over 20,000 customers including Fortune 500 companies. They make money primarily through cloud subscriptions and on-premise software licenses, with increasing focus on AI-powered search capabilities.
Elastic is riding the AI wave as enterprises need sophisticated search capabilities to power AI applications and manage exploding data volumes. Revenue is accelerating with 17.6% growth expected in 2026 and 21% growth in their core sales-led subscription business. The company is successfully displacing legacy vendors by offering a unified platform that replaces fragmented enterprise tools, with particular strength in the massive cybersecurity and observability markets.
Elastic demonstrates strong unit economics with 74% gross margins reflecting their software-centric model, while operating margins have expanded to 18.6% as they achieve scale. The company generates healthy free cash flow (~12% margins) and is returning capital via share buybacks, having completed 60% of their $500M program. They're successfully balancing growth investments with profitability expansion.
Elastic competes in the crowded data analytics space against giants like Splunk (now Cisco), Datadog, and cloud providers, but differentiates through their open-source heritage and unified search platform. Their key moat lies in their Elasticsearch engine's performance and the network effects from their large developer community. Recent partnerships with NVIDIA for GPU acceleration and technical innovations like 12x faster vector indexing help maintain their technical edge.
The company delivered exceptional Q3 results, beating guidance across all metrics with 18% revenue growth and strong AI adoption metrics. Management raised full-year guidance and highlighted robust pipeline heading into Q4, with particular strength in large enterprise deals. The consistent execution over six quarters has built credibility with investors and validates their AI strategy.
Analysts are increasingly bullish on Elastic's AI positioning and consistent execution, with the company tracking toward management's medium-term targets of 20%+ subscription growth. The main debate centers on whether they can maintain growth acceleration as AI adoption matures and how effectively they can compete against larger cloud providers. Recent quarters have built confidence in management's ability to deliver.
Elastic is successfully transforming from a traditional search company into an AI-powered data platform, with accelerating growth driven by enterprise AI adoption and strong execution that's delivering both top-line momentum and expanding margins.
| '25E | '26E | '27E | '28E | |
|---|---|---|---|---|
| Revenue | $1.5B | $1.7B | $2.0B | $2.2B |
| Growth | — | +18% | +13% | +14% |
| EBITDA | — | $372M | $414M | $217M |
| Growth | — | +11% | (48%) | |
| FCF | $262M | $239M | $278M | $95M |
| Margin | 18% | 14% |
Siren Fusion 2026: The Convergence of People, Technology and Ideas
Elastic N.V. (ESTC) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript
Elastic N.V. (ESTC) Q3 2026 Earnings Call Transcript
Elastic Reports Third Quarter Fiscal 2026 Financial Results
Elastic Introduces Best-in-Class Embedding Models for High Performance Semantic Search
| 14% |
| 4% |
| EPS (PF) | $1.94 | $2.52 | $2.85 | $3.32 |
| Growth | — | +30% | +13% | +16% |
| PF Op Inc | — | $613M | $695M | $545M |