Elastic N.V 10-Q for FY2021 Q2

Elastic N.V. (ESTC)

10-Q 2020-12-07 For: 2020-10-31

Added on April 10, 2026

About this 10-Q

Elastic N.V filed this 10-Q on December 7, 2020, covering the quarter ended October 31, 2020 (FY2021 Q2).

Headline figures

Quarter ended October 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $144.89M; up 43.3% from $101.11M a year earlier
Net loss: $29.16M; compared with a net loss of $49.97M a year earlier

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		Page
	Note Regarding Forward-Looking Statements	3
PART I.	FINANCIAL INFORMATION	5

Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Loss	7
	Condensed Consolidated Statements of Shareholders’ Equity	8
	Condensed Consolidated Statements of Cash Flows	10
	Notes to Condensed Consolidated Financial Statements (Unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43

PART II.	OTHER INFORMATION	44

Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 3.	Defaults Upon Senior Securities	72
Item 4.	Mine Safety Disclosures	72
Item 5.	Other Information	72
Item 6.	Exhibits	73
Signatures		74


	As of October 31, 2020		As of April 30, 2020
Assets
Current assets:
Cash and cash equivalents	$	348,986	$	297,081
Restricted cash	2,325		2,308
Accounts receivable, net of allowance for credit losses of $1,505 and $1,247 as of October 31, 2020 and April 30, 2020, respectively	132,523		128,690
Deferred contract acquisition costs	28,487		19,537
Prepaid expenses and other current assets	31,805		32,623
Total current assets	544,126		480,239
Property and equipment, net	8,004		7,760
Goodwill	198,196		197,877
Operating lease right-of-use assets	30,277		32,783
Intangible assets, net	43,362		50,455
Deferred contract acquisition costs, non-current	35,996		24,012
Deferred tax assets	3,685		3,164
Other assets	3,915		7,621
Total assets	$	867,561	$	803,911
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	9,213	$	11,485
Accrued expenses and other liabilities	21,824		22,210
Accrued compensation and benefits	46,975		48,409
Operating lease liabilities	7,863		7,639
Deferred revenue	262,257		231,681
Total current liabilities	348,132		321,424
Deferred revenue, non-current	46,959		28,021
Operating lease liabilities, non-current	25,032		27,827
Other liabilities, non-current	4,781		12,992
Total liabilities	424,904		390,264
Commitments and contingencies (Note 7)
Shareholders’ equity:
Convertible preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of October 31, 2020 and April 30, 2020	—		—
Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 87,204,991 and 82,856,978 shares issued and outstanding as of October 31, 2020 and April 30, 2020, respectively	908		856
Treasury stock	(369)		(369)
Additional paid-in capital	986,075		898,788
Accumulated other comprehensive loss	(11,914)		(1,377)
Accumulated deficit	(532,043)		(484,251)
Total shareholders’ equity	442,657		413,647
Total liabilities and shareholders’ equity	$	867,561	$	803,911


	Three Months Ended October 31,				Six Months Ended October 31,
	2020		2019		2020		2019
Revenue
License - self-managed	$	15,514	$	12,272	$	30,393	$	22,179
Subscription - self-managed and SaaS	118,695		79,407		225,158		151,890
Total subscription revenue	134,209		91,679		255,551		174,069
Professional services	10,685		9,427		18,213		16,747
Total revenue	144,894		101,106		273,764		190,816
Cost of revenue
Cost of license - self-managed	347		158		693		255
Cost of subscription - self-managed and SaaS	29,148		19,741		55,038		37,636
Total cost of revenue - subscription	29,495		19,899		55,731		37,891
Cost of professional services	8,953		8,862		17,548		17,121
Total cost of revenue	38,448		28,761		73,279		55,012
Gross profit	106,446		72,345		200,485		135,804
Operating expenses
Research and development	46,688		38,478		92,366		73,660
Sales and marketing	64,474		54,020		120,625		106,031
General and administrative	23,705		31,808		45,434		50,376
Total operating expenses	134,867		124,306		258,425		230,067
Operating loss	(28,421)		(51,961)		(57,940)		(94,263)
Other income (expense), net	(84)		1,684		10,801		2,615
Loss before income taxes	(28,505)		(50,277)		(47,139)		(91,648)
Provision for (benefit from) income taxes	653		(304)		1,020		94
Net loss	$	(29,158)	$	(49,973)	$	(48,159)	$	(91,742)
Net loss per share attributable to ordinary shareholders, basic and diluted	$	(0.34)	$	(0.64)	$	(0.56)	$	(1.20)
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted	86,373,166		77,772,406		85,275,474		76,202,865


	Three Months Ended October 31,				Six Months Ended October 31,
	2020		2019		2020		2019
Net loss	$	(29,158)	$	(49,973)	$	(48,159)	$	(91,742)
Other comprehensive loss:
Foreign currency translation adjustments	(479)		(1,433)		(10,537)		(1,051)
Other comprehensive loss	(479)		(1,433)		(10,537)		(1,051)
Total comprehensive loss	$	(29,637)	$	(51,406)	$	(58,696)	$	(92,793)


						Additional Paid-in Capital		Accumulated Other Comprehensive Loss				Total Shareholders' Equity
	Ordinary Shares			Treasury Shares						Accumulated Deficit
	Shares	Amount
Balances at July 31, 2020	85,737,645	$	890	$	(369)	$	946,178	$	(11,435)	$	(502,885)	$	432,379

Issuance of ordinary shares upon exercise of stock options	1,379,823	16		—		15,962		—		—		15,978
Issuance of ordinary shares upon release of restricted stock units	87,523	2		—		(2)		—		—		—
Stock-based compensation	—	—		—		21,235		—		—		21,235
Reclassification of liability-classified awards	—	—		—		2,702		—		—		2,702
Net loss	—	—		—		—		—		(29,158)		(29,158)
Foreign currency translation	—	—		—		—		(479)		—		(479)
Balances at October 31, 2020	87,204,991	$	908	$	(369)	$	986,075	$	(11,914)	$	(532,043)	$	442,657

						Additional Paid-in Capital		Accumulated Other Comprehensive Loss				Total Shareholders' Equity
	Ordinary Shares			Treasury Shares						Accumulated Deficit
	Shares	Amount
Balances at July 31, 2019	76,259,361	$	782	$	(369)	$	614,532	$	(1,049)	$	(358,846)	$	255,050
Issuance of ordinary shares upon exercise of stock options	1,936,335	23		—		19,433		—		—		19,456
Issuance of ordinary shares upon release of restricted stock units	3,037	1		—		—		—		—		1
Ordinary shares issued in connection with the acquisition of Endgame	1,983,663	21		—		167,316		—		—		167,337
Ordinary shares issued in connection with the acquisition of Endgame held in escrow	235,031	2		—		19,824		—		—		19,826
Assumption of stock option plan as consideration for acquisition of Endgame	—	—		—		9,309		—		—		9,309
Repurchase of unvested RSAs	(4,585)	—		—		—		—		—		—
Stock-based compensation	—	—		—		13,583		—		—		13,583
Net loss	—	—		—		—		—		(49,973)		(49,973)
Foreign currency translation	—	—		—		—		(1,433)		—		(1,433)
Balances at October 31, 2019	80,412,842	$	829	$	(369)	$	843,997	$	(2,482)	$	(408,819)	$	433,156


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Note		Page
1.	Organization and Description of Business	12
2.	Summary of Significant Accounting Policies	12
3.	Revenue and Performance Obligations	14
4.	Fair Value Measurements	14
5.	Acquisitions	15
6.	Balance Sheet Components	17
7.	Commitments and Contingencies	20
8.	Leases	21
9.	Ordinary Shares	22
10.	Equity Incentive Plans	22
11.	Net Loss Per Share Attributable to Ordinary Shareholders	24
12.	Income Taxes	24
13.	Employee Benefit Plans	25
14.	Segment Information	25


October 31, 2020	Level 1		Level 2	Level 3	Total
Financial Assets:
Cash and cash equivalents:
Money market funds	$	175,007	—	—	$	175,007


April 30, 2020	Level 1		Level 2	Level 3	Total
Financial Assets:
Cash and cash equivalents:
Money market funds	$	197,314	—	—	$	197,314


Cash paid	$	26,633
Ordinary shares	178,331
Assumption of stock option plan	9,309
Total consideration	$	214,273


Cash and cash equivalents	$	2,220
Restricted cash	40
Accounts receivable	2,661
Prepaid and other current assets	549
Operating lease right-of-use assets	4,363
Property and equipment	503
Intangible assets	53,800
Other assets	58
Goodwill	178,764
Accounts payable	(1,112)
Accrued expenses and other current liabilities	(3,035)
Accrued compensation and benefits	(5,042)
Operating lease liabilities, current	(981)
Deferred revenue, current	(3,532)
Deferred revenue, non-current	(2,661)
Operating lease liabilities, non-current	(3,551)
Other liabilities, non-current	(8,771)
Total purchase consideration	$	214,273


	Total		Estimated life (in years)
Developed technology	$	32,700	5
Customer relationships	19,200		4
Trade name	1,900		4
Total intangible assets	$	53,800


	Three Months Ended October 31, 2019		Six Months Ended October 31, 2019

Pro forma revenue (1)	$	105,450	$	200,854
Pro forma net loss (1)	$	(46,309)	$	(94,663)


	As of October 31, 2020		As of April 30, 2020
Prepaid hosting costs	$	9,842	$	12,228
Deposits	2,167		1,857
Prepaid software subscription costs	4,312		3,104
Prepaid taxes	3,786		3,612
Prepaid value added taxes	4,181		5,167
Other	7,517		6,655
Total prepaid expenses and other current assets	$	31,805	$	32,623


	Useful Life (in years)			As of October 31, 2020		As of April 30, 2020
Leasehold improvements	Lesser of estimated useful life or remaining lease term			$	8,070	$	8,405
Computer hardware and software		3		5,832		5,687
Furniture and fixtures	3	-	5	5,151		5,072
Assets under construction				1,852		1,661
Total property and equipment				20,905		20,825
Less: accumulated depreciation				(12,901)		(13,065)
Property and equipment, net				$	8,004	$	7,760


October 31, 2020	Gross Fair Value		Accumulated Amortization		Net Book Value		Weighted Average Remaining Useful Life (in years)
Developed technology	$	44,830	$	16,780	$	28,050	3.7
Customer relationships	19,598		5,653		13,945		2.9
Trade names	2,872		1,505		1,367		2.9
Total	$	67,300	$	23,938	$	43,362	3.4


April 30, 2020	Gross Fair Value		Accumulated Amortization		Net Book Value		Weighted Average Remaining Useful Life (in years)
Developed technology	$	44,830	$	12,412	$	32,418	4.1
Customer relationships	19,598		3,210		16,388		3.4
Trade names	2,872		1,223		1,649		3.4
Total	$	67,300	$	16,845	$	50,455	3.9


Remainder of 2021	$	7,076
2022	12,947
2023	11,890
2024	8,715
2025	2,734
Total	$	43,362


	Carrying Amount
Balance as of April 30, 2020	$	197,877
Foreign currency translation adjustment	319
Balance as of October 31, 2020	$	198,196


	As of October 31, 2020		As of April 30, 2020
Accrued expenses	$	11,796	$	10,864
Value added taxes payable	5,649		7,230
Other	4,379		4,116
Total accrued expenses and other liabilities	$	21,824	$	22,210


	As of October 31, 2020		As of April 30, 2020
Accrued vacation	$	21,553	$	17,971
Accrued commissions	14,919		16,259
Accrued payroll taxes and withholding taxes	5,658		7,588
Other	4,845		6,591
Total accrued compensation and benefits	$	46,975	$	48,409


	As of October 31, 2020		As of April 30, 2020
Unbilled accounts receivable, included in accounts receivable, net	$	3,046	$	2,622
Deferred contract acquisition costs	$	64,483	$	43,549
Deferred revenue	$	309,216	$	259,702


	Unbilled Accounts Receivable
	Six Months Ended October 31,
	2020		2019
Beginning balance	$	2,622	$	1,710
Amounts transferred to accounts receivable from unbilled accounts receivable presented at the beginning of the period	(2,622)		(1,710)
Additions through acquisition	—		321
Revenue recognized during the period in excess of invoices issued	3,046		2,309
Ending balance	$	3,046	$	2,630


Balance at April 30, 2020	$	1,247
Cumulative-effect adjustment from adoption of ASU 2016-13	(367)
Provision	1,233
Write-offs	(608)
Balance at October 31, 2020	$	1,505


	As of October 31, 2020
Weighted average remaining lease term (years)	4.33
Weighted average discount rate	5.06	%


Years Ending April 30,
2021 (remaining six months)	$	4,546
2022	8,542
2023	8,259
2024	7,179
2025	5,870
Thereafter	2,804
Total minimum lease payments	37,200
Less imputed interest	(4,305)
Present value of future minimum lease payments	32,895
Less current lease liabilities	(7,863)
Operating lease liabilities, non-current	$	25,032


	As of October 31, 2020	As of April 30, 2020
Stock options issued and outstanding	10,757,903	15,260,506
RSUs issued and outstanding	2,617,676	2,472,092
Remaining shares available for future issuance under the 2012 Plan	16,612,806	12,461,850
Total ordinary shares reserved	29,988,385	30,194,448


			Six Months Ended October 31, 2020
Available at beginning of period			12,461,850
Awards authorized			4,142,849
Stock options granted			(40,129)
Stock options cancelled			506,718
RSUs granted			(668,605)
RSUs cancelled			210,123
Available at end of period			16,612,806


	Stock options Outstanding
	Number of Stock Options Outstanding	Weighted- Average Exercise Price		Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Balance as of April 30, 2020	15,260,506	$	14.17	7.27	$	767,795
Stock options granted	40,129	$	99.78
Stock options exercised	(4,035,115)	$	11.25
Stock options cancelled	(506,718)	$	19.19
Stock options assumed in acquisition cancelled	(899)	$	75.00
Balance as of October 31, 2020	10,757,903	$	15.33	6.93	$	925,989
Exercisable as of October 31, 2020	5,926,542	$	12.36	6.56	$	527,662


	Number of Awards	Weighted- Average Grant Date Fair Value
Outstanding and unvested at April 30, 2020	2,472,092	$	66.78
RSUs granted	668,605	$	88.20
RSUs released	(312,898)	$	76.33
RSUs cancelled	(210,123)	$	52.15
Outstanding and unvested at October 31, 2020	2,617,676	$	72.28


	As of October 31, 2020		As of April 30, 2020
United States	$	27,701	$	30,373
United Kingdom	6,369		5,854
The Netherlands	3,147		3,529
Rest of world	1,064		787
Total long-lived assets	$	38,281	$	40,543


	Three Months Ended October 31,				Change
	2020		2019		$		%

	(dollars in thousands)
Revenue
License - self-managed	$	15,514	$	12,272	$	3,242	26	%
Subscription - self-managed and SaaS	118,695		79,407		39,288		49	%
Total subscription revenue	134,209		91,679		42,530		46	%
Professional services	10,685		9,427		1,258		13	%
Total revenue	$	144,894	$	101,106	$	43,788	43	%


*			The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.


Date: December 7, 2020	By:		/s/ Shay Banon
		Name:	Shay Banon
		Title:	Chief Executive Officer and Chairman
			(Principal Executive Officer)


Date: December 7, 2020	By:		/s/ Janesh Moorjani
		Name:	Janesh Moorjani
		Title:	Chief Financial Officer
			(Principal Financial and Accounting Officer)