Elastic NV (NYSE:ESTC) shares are surging early on Friday after the company posted better-than-expected first-quarter fiscal 2027 results and boosted guidance.
• Elastic stock is challenging resistance. Why did ESTC hit a new high?
Adjusted EPS of 70 cents beat the consensus estimate of 58 cents. Sales rose 15% year over year to $478.113 million and exceeded the $469.745 million consensus. Sales-led subscription revenue rose 18% year over year to $399 million.
Constant-currency revenue growth accelerated to 15% from 14% in the fourth quarter.
The company saw notable customer growth, particularly among customers spending more than $100,000 annually, with 37% of these customers using Elastic for AI-related use cases.
Adjusted operating margin was 16.2%, above guidance, while subscription and total gross margins were 81% and 77%, respectively.
Elastic returned about $40 million to shareholders through repurchases of approximately 800,000 shares.
Since launching its $500 million buyback program in October 2025, the company had used $380 million and repurchased 5.2 million shares as of quarter-end.
Strong AI Adoption
Elastic ended the quarter with more than 1,800 customers generating at least $100,000 in annual contract value (ACV), adding more than 80 customers to the cohort—the largest quarterly increase to date.
These customers now contribute 90% of sales-led subscription revenue, up from 87% a year ago.
AI adoption also increased, with more than 37% of the $100,000-plus cohort, or over 670 customers, using Elastic for AI use cases, up from 21% a year ago; 70 net AI customers were added during the quarter.
Current remaining performance obligations (cRPO) rose 21% year over year to $1.2 billion, with constant-currency growth at 20% for the second straight quarter, while RPO increased 27% to $1.9 billion on both reported and constant-currency bases.
Net expansion rate was 111% versus 112% in the fourth quarter, with improvement expected within four quarters as constant-currency revenue growth accelerates through fiscal 2027.
Elastic rolled out AI capabilities including VectorDB, Index Mode, auto-calibration and Jina’s multimodal and multilingual search for on-premises and air-gapped environments.
The company acquired Deductive AI to automate complex investigations using reinforcement learning and continued strengthening security with Attack Discovery.
Guidance
For the second quarter, the company expects adjusted EPS of 80 cents-82 cents versus the street view of 80 cents. Also, Elastic sees sales of $486 million-$487 million versus $483.397 million expected.
For the second quarter, Elastic expects sales-led subscription revenue of $407.5 million-$408.5 million.
The company raised its fiscal 2027 adjusted EPS guidance to $3.29-$3.37 from $3.21-$3.29, above the $3.24 estimate, and increased its sales outlook to $1.998 billion-$2.010 billion from $1.985 billion-$2 billion, compared with the $1.993 billion consensus.
Sales-led subscription revenue is projected at $1.682 billion-$1.694 billion, up 17.4% reported and 17.5% in constant currency for the fiscal year.
Elastic expects another $2 million-$5 million in restructuring charges after about $20 million for the remainder of the fiscal year.
The company says it remains on track to exceed 20% sales-led subscription growth and improve its Rule of 40 performance.
ESTC Stock Price Activity: Elastic shares were up 21.26% at $101.54 with early trading on Friday, according to Benzinga Pro.
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