Elastic N.V 10-Q for FY2022 Q2

Elastic N.V. (ESTC)

10-Q 2021-12-09 For: 2021-10-31

Added on April 10, 2026

About this 10-Q

Elastic N.V filed this 10-Q on December 9, 2021, covering the quarter ended October 31, 2021 (FY2022 Q2).

Headline figures

Quarter ended October 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $205.98M; up 42.2% from $144.89M a year earlier
Net loss: $47.02M; compared with a net loss of $29.16M 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	40
Item 4.	Controls and Procedures	40

PART II.	OTHER INFORMATION	42

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 3.	Defaults Upon Senior Securities	74
Item 4.	Mine Safety Disclosures	74
Item 5.	Other Information	74
Item 6.	Exhibits	75
Signatures		76


	As of October 31, 2021		As of April 30, 2021
Assets
Current assets:
Cash and cash equivalents	$	876,059	$	400,814
Restricted cash	2,939		2,894
Accounts receivable, net of allowance for credit losses of $2,896 and $2,344 as of October 31, 2021 and April 30, 2021, respectively	157,831		160,415
Deferred contract acquisition costs	38,183		36,089
Prepaid expenses and other current assets	34,896		37,002
Total current assets	1,109,908		637,214
Property and equipment, net	7,510		8,881
Goodwill	291,790		198,851
Operating lease right-of-use assets	23,667		25,464
Intangible assets, net	48,620		36,286
Deferred contract acquisition costs, non-current	57,854		50,263
Deferred tax assets	3,824		3,697
Other assets	18,528		12,516
Total assets	$	1,561,701	$	973,172
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	17,684	$	7,248
Accrued expenses and other liabilities	43,277		28,909
Accrued compensation and benefits	55,827		52,525
Operating lease liabilities	9,454		8,528
Deferred revenue	354,148		352,805
Total current liabilities	480,390		450,015
Deferred revenue, non-current	36,165		44,895
Long-term debt, net	566,045		—
Operating lease liabilities, non-current	16,746		19,649
Other liabilities, non-current	12,555		7,782
Total liabilities	1,111,901		522,341
Commitments and contingencies (Note 8 and 9)
Shareholders’ equity:
Convertible preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of October 31, 2021 and April 30, 2021	—		—
Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 92,566,025 and 90,533,985 shares issued and outstanding as of October 31, 2021 and April 30, 2021, respectively	972		948
Treasury stock	(369)		(369)
Additional paid-in capital	1,153,408		1,071,675
Accumulated other comprehensive loss	(9,381)		(8,105)
Accumulated deficit	(694,830)		(613,318)
Total shareholders’ equity	449,800		450,831
Total liabilities and shareholders’ equity	$	1,561,701	$	973,172


	Three Months Ended October 31,				Six Months Ended October 31,
	2021		2020		2021		2020
Revenue
License - self-managed	$	18,117	$	15,514	$	34,338	$	30,393
Subscription - self-managed and SaaS	172,140		118,695		333,104		225,158
Total subscription revenue	190,257		134,209		367,442		255,551
Professional services	15,723		10,685		31,633		18,213
Total revenue	205,980		144,894		399,075		273,764
Cost of revenue
Cost of license - self-managed	395		347		741		693
Cost of subscription - self-managed and SaaS	41,847		29,148		79,021		55,038
Total cost of revenue - subscription	42,242		29,495		79,762		55,731
Cost of professional services	11,642		8,953		23,784		17,548
Total cost of revenue	53,884		38,448		103,546		73,279
Gross profit	152,096		106,446		295,529		200,485
Operating expenses
Research and development	63,763		46,688		123,145		92,366
Sales and marketing	94,953		64,474		182,986		120,625
General and administrative	30,555		23,705		57,607		45,434
Total operating expenses	189,271		134,867		363,738		258,425
Operating loss	(37,175)		(28,421)		(68,209)		(57,940)
Other income (expense), net
Interest expense	(6,332)		(4)		(8,152)		(13)
Other income (expense), net	(666)		(80)		352		10,814
Loss before income taxes	(44,173)		(28,505)		(76,009)		(47,139)
Provision for income taxes	2,850		653		5,503		1,020
Net loss	$	(47,023)	$	(29,158)	$	(81,512)	$	(48,159)
Net loss per share attributable to ordinary shareholders, basic and diluted	$	(0.51)	$	(0.34)	$	(0.89)	$	(0.56)
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted	92,206,199		86,373,166		91,703,786		85,275,474


	Three Months Ended October 31,				Six Months Ended October 31,
	2021		2020		2021		2020
Net loss	$	(47,023)	$	(29,158)	$	(81,512)	$	(48,159)
Other comprehensive loss:
Foreign currency translation adjustments	588		(479)		(1,276)		(10,537)
Other comprehensive loss	588		(479)		(1,276)		(10,537)
Total comprehensive loss	$	(46,435)	$	(29,637)	$	(82,788)	$	(58,696)


						Additional Paid-in Capital		Accumulated Other Comprehensive Loss				Total Shareholders' Equity
	Ordinary Shares			Treasury Shares						Accumulated Deficit
	Shares	Amount
Balances at July 31, 2021	91,770,228	$	963	$	(369)	$	1,112,845	$	(9,969)	$	(647,807)	$	455,663
Fair value of replacement equity awards attributable to pre-acquisition service	—	—		—		1,266		—		—		1,266
Issuance of ordinary shares upon exercise of stock options	690,538	8		—		9,844		—		—		9,852
Issuance of ordinary shares upon release of restricted stock units	105,259	1		—		(1)		—		—		—
Stock-based compensation	—	—		—		29,454		—		—		29,454
Net loss	—	—		—		—		—		(47,023)		(47,023)
Foreign currency translation	—	—		—		—		588		—		588
Balances at October 31, 2021	92,566,025	$	972	$	(369)	$	1,153,408	$	(9,381)	$	(694,830)	$	449,800

						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


☒			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	13
4.	Fair Value Measurements	14
5.	Acquisitions	14
6.	Balance Sheet Components	15
7.	Senior Notes	15
8.	Commitments and Contingencies	19
9.	Leases	20
10.	Ordinary Shares	21
11.	Equity Incentive Plans	21
12.	Net Loss Per Share Attributable to Ordinary Shareholders	23
13.	Income Taxes	24
14.	Employee Benefit Plans	24
15.	Segment Information	24
16.	Subsequent Events	25


October 31, 2021	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents:
Money market funds	$	571,829	$	—	—		$	571,829
Short-term bank deposit	—		1,800		—		1,800
Total	$	571,829	$	1,800	$	—	$	573,629


April 30, 2021	Level 1		Level 2	Level 3	Total
Financial Assets:
Cash and cash equivalents:
Money market funds	$	175,007	—	—	$	175,007


	As of October 31, 2021		As of April 30, 2021
Prepaid hosting costs	$	11,303	$	11,122
Prepaid software subscription costs	6,863		5,636
Prepaid value added taxes	4,831		9,408
Deposits	2,672		2,410
Prepaid taxes	2,167		1,694
Other	7,060		6,732
Total prepaid expenses and other current assets	$	34,896	$	37,002


	Useful Life (in years)			As of October 31, 2021		As of April 30, 2021
Leasehold improvements	Lesser of estimated useful life or remaining lease term			$	10,812	$	10,342
Computer hardware and software		3		1,531		2,319
Furniture and fixtures	3	-	5	6,040		5,971
Assets under construction				203		707
Total property and equipment				18,586		19,339
Less: accumulated depreciation				(11,076)		(10,458)
Property and equipment, net				$	7,510	$	8,881


October 31, 2021	Gross Fair Value		Accumulated Amortization		Net Book Value		Weighted Average Remaining Useful Life (in years)
Developed technology	$	64,530	$	25,360	$	39,170	3.9
Customer relationships	19,598		10,965		8,633		1.9
Trade names	2,872		2,054		818		1.9
Total	$	87,000	$	38,379	48,621		3.7
Foreign currency translation adjustment					(1)
Total					$	48,620


Remainder of 2022	$	8,068
2023	15,830
2024	12,656
2025	6,673
2026	3,940
2027	1,453
Total	$	48,620


	Carrying Amount
Balance as of April 30, 2021	$	198,851
Additions from acquisitions	93,064
Foreign currency translation adjustment	(125)
Balance as of October 31, 2021	$	291,790


	Six Months Ended October 31,
	2021		2020
Beginning balance	$	86,352	$	43,549
Capitalization of contract acquisition costs	38,255		39,107
Amortization of deferred contract acquisition costs	(28,570)		(18,173)
Ending balance	$	96,037	$	64,483


	Six Months Ended October 31,
	2021		2020
Beginning balance	$	397,700	$	259,702
Increases due to invoices issued, excluding amounts recognized as revenue during the period	238,822		201,784
Increase from acquisition, net of revenue recognized	1,001		—
Amounts transferred to deferred revenue from accrued expenses and other liabilities upon entering into contracts with customers, net of revenue recognized during the period	—		5,424
Revenue recognized that was included in deferred revenue balance at beginning of period	(247,210)		(157,694)
Ending balance	$	390,313	$	309,216


	Six Months Ended October 31,
	2021		2020
Beginning balance	$	2,344	$	1,247
Cumulative-effect adjustment from adoption of ASU 2016-13	—		(367)
Provision	2,221		1,233
Write-offs	(1,669)		(608)
Ending balance	$	2,896	$	1,505


	As of October 31, 2021
Principal	$	575,000
Unamortized debt issuance costs	(8,955)
Net carrying amount	$	566,045


	As of October 31, 2021		As of April 30, 2021
Accrued expenses	$	22,865	$	12,772
Value added taxes payable	5,936		8,493
Accrued interest on Senior Notes	7,511		—
Income taxes payable	2,083		1,596
Other	4,882		6,048
Total accrued expenses and other liabilities	$	43,277	$	28,909


	As of October 31, 2021		As of April 30, 2021
Accrued vacation	$	25,351	$	24,078
Accrued commissions	17,025		17,581
Accrued payroll taxes and withholding taxes	9,014		5,522
Other	4,437		5,344
Total accrued compensation and benefits	$	55,827	$	52,525


	As of October 31, 2021		As of April 30, 2021
Unbilled accounts receivable, included in accounts receivable, net	$	4,595	$	5,204
Deferred contract acquisition costs	$	96,037	$	86,352
Deferred revenue	$	390,313	$	397,700


	Six Months Ended October 31, 2021
Contractual interest expense	$	7,511
Amortization of debt issuance costs	307
Total interest expense related to the Senior Notes	$	7,818


	As of October 31, 2021
Weighted average remaining lease term (years)	3.35
Weighted average discount rate	4.77	%


Years Ending April 30,
2022 (remaining six months)	$	5,038
2023	8,770
2024	6,722
2025	5,113
2026	2,803
Total minimum lease payments	28,446
Less imputed interest	(2,246)
Present value of future minimum lease payments	26,200
Less current lease liabilities	(9,454)
Operating lease liabilities, non-current	$	16,746


	As of October 31, 2021	As of April 30, 2021
Stock options issued and outstanding	5,913,745	7,611,016
RSUs issued and outstanding	3,074,014	3,301,283
Remaining shares available for future issuance under the 2012 Plan	20,206,345	15,737,819
Total ordinary shares reserved	29,194,104	26,650,118


			Six Months Ended October 31, 2021
Available at beginning of period			15,737,819
Awards authorized			4,526,699
RSUs granted			(646,434)
Stock options cancelled			229,975
RSUs cancelled			358,286
Available at end of period			20,206,345


	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, 2021	7,611,016	$	20.34	6.66	$	768,517
Stock options assumed in acquisitions	63,846	$	10.20
Stock options exercised	(1,530,746)	$	13.55
Stock options cancelled	(229,975)	$	36.23
Stock options assumed in acquisition cancelled	(396)	$	76.82
Balance as of October 31, 2021	5,913,745	$	21.37	6.31	$	899,706
Exercisable as of October 31, 2021	4,209,605	$	16.38	6.06	$	661,456


	Number of Awards	Weighted- Average Grant Date Fair Value
Outstanding and unvested at April 30, 2021	3,301,283	$	98.74
RSUs granted	646,434	$	144.78
RSUs released	(515,417)	$	85.72
RSUs cancelled	(358,286)	$	99.19
Outstanding and unvested at October 31, 2021	3,074,014	$	109.91


	As of October 31, 2021		As of April 30, 2021
United States	$	21,443	$	23,443
United Kingdom	5,986		7,151
The Netherlands	2,429		2,975
Rest of world	1,319		776
Total long-lived assets	$	31,177	$	34,345


	Three Months Ended October 31,				Change
	2021		2020		$		%

	(dollars in thousands)
Revenue
License - self-managed	$	18,117	$	15,514	$	2,603	17	%
Subscription - self-managed and SaaS	172,140		118,695		53,445		45	%
Total subscription revenue	190,257		134,209		56,048		42	%
Professional services	15,723		10,685		5,038		47	%
Total revenue	$	205,980	$	144,894	$	61,086	42	%


*			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.


Expiration			Date: The Options expire at 5:00 p.m. Eastern Time on the last business day coincident with or prior to the 10th anniversary of the Grant Date (the “Expiration Date”), unless fully exercised or terminated earlier.


			(i)			notice, in such manner and form as the Administrator may require from time to time, specifying the number of Shares to be purchased under the Options; and


			(ii)			full payment of the Exercise Price for the Shares or properly executed, irrevocable instructions, in such manner and form as the Administrator may require from time to time, to effectuate a broker-assisted cashless exercise, each in accordance with Section 2(d) of this Agreement; and


			(iii)			an executed copy of any other agreements requested by the Administrator pursuant to Section 2(e) of this Agreement.


			(i)			delivery of cash, certified or cashier’s check, money order or other cash equivalent acceptable to the Administrator in its discretion;


			(ii)			a broker-assisted cashless exercise in accordance with Regulation T of the Board of Governors of the Federal Reserve System through a brokerage firm approved by the Administrator;


			(iii)			subject to such limits as the Administrator may impose from time to time, tender (via actual delivery or attestation) to the Company of other shares of Common Stock of the Company which have a Fair Market Value on the date of tender equal to the Exercise Price, provided that tender of such shares will not result in the Company having to record a charge to earnings under United States generally accepted accounting principles then applicable to the Company;