Search AI platform provider Elastic (NYSE: ESTC) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 17.7% year on year to $449.9 million. Guidance for next quarter’s revenue was better than expected at $446 million at the midpoint, 0.8% above analysts’ estimates. Its non-GAAP profit of $0.73 per share was 13% above analysts’ consensus estimates.
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Elastic (ESTC) Q4 CY2025 Highlights:
- Revenue: $449.9 million vs analyst estimates of $438.4 million (17.7% year-on-year growth, 2.6% beat)
- Adjusted EPS: $0.73 vs analyst estimates of $0.65 (13% beat)
- Adjusted Operating Income: $83.5 million vs analyst estimates of $76.79 million (18.6% margin, 8.7% beat)
- Revenue Guidance for Q1 CY2026 is $446 million at the midpoint, above analyst estimates of $442.4 million
- Subscription Revenue Growth Guidance for Q1 CY2026 is 15% constant-currency growth year-on-year
- Management raised its full-year Adjusted EPS guidance to $2.52 at the midpoint, a 3.7% increase
- Operating Margin: 0.1%, up from -1.2% in the same quarter last year
- Free Cash Flow Margin: 11.9%, up from 6.1% in the previous quarter
- Net Revenue Retention Rate: 112%, in line with the previous quarter
- Billings: $520.8 million at quarter end, up 15.3% year on year
- Market Capitalization: $6.11 billion
Company Overview
Built on the powerful open-source Elasticsearch technology that powers search functionality for thousands of websites worldwide, Elastic (NYSE: ESTC) provides a search and AI platform that helps organizations find insights from their data, monitor applications, and protect against security threats.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Elastic’s 24.8% annualized revenue growth over the last five years was solid. Its growth beat the average software company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Elastic’s annualized revenue growth of 17.6% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Elastic reported year-on-year revenue growth of 17.7%, and its $449.9 million of revenue exceeded Wall Street’s estimates by 2.6%. Company management is currently guiding for a 14.8% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 12.6% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Elastic’s billings came in at $520.8 million in Q4, and over the last four quarters, its growth was underwhelming as it averaged 12.5% year-on-year increases. This alternate topline metric grew slower than total sales, meaning the company recognizes revenue faster than it collects cash - a headwind for its liquidity that could also signal a slowdown in future revenue growth. 
Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
Elastic’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 112% in Q4. This means Elastic would’ve grown its revenue by 12% even if it didn’t win any new customers over the last 12 months.
Elastic has a good net retention rate, proving that customers are satisfied with its software and getting more value from it over time, which is always great to see.
Key Takeaways from Elastic’s Q4 Results
It was great to see Elastic’s full-year EPS guidance top analysts’ expectations. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, Q1 guidance for constant-currency subscription revenue growth year-on-year was slightly below. Overall, this print was still solid. The market seemed to be hoping for more, and the stock traded down 12.1% to $54.16 immediately following the results.
So do we think Elastic is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
