Elastic N.V 10-Q for FY2021 Q1

Elastic N.V. (ESTC)

10-Q 2020-09-03 For: 2020-07-31

Added on April 10, 2026

About this 10-Q

Elastic N.V filed this 10-Q on September 3, 2020, covering the quarter ended July 31, 2020 (FY2021 Q1).

Headline figures

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

Revenue: $128.87M; up 43.7% from $89.71M a year earlier
Net loss: $19M; compared with a net loss of $41.77M 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	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39

PART II.	OTHER INFORMATION	40

Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	66
Item 6.	Exhibits	67
Signatures			68


	As of July 31, 2020		As of April 30, 2020
Assets
Current assets:
Cash and cash equivalents	$	350,418	$	297,081
Restricted cash	2,314		2,308
Accounts receivable, net of allowance for credit losses of $1,297 and $1,247 as of July 31, 2020 and April 30, 2020, respectively	87,266		128,690
Deferred contract acquisition costs	23,673		19,537
Prepaid expenses and other current assets	34,258		32,623
Total current assets	497,929		480,239
Property and equipment, net	7,905		7,760
Goodwill	198,413		197,877
Operating lease right-of-use assets	31,549		32,783
Intangible assets, net	46,903		50,455
Deferred contract acquisition costs, non-current	28,767		24,012
Deferred tax assets	3,531		3,164
Other assets	6,345		7,621
Total assets	$	821,342	$	803,911
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	11,669	$	11,485
Accrued expenses and other liabilities	17,833		22,210
Accrued compensation and benefits	42,916		48,409
Operating lease liabilities	7,718		7,639
Deferred revenue	237,261		231,681
Total current liabilities	317,397		321,424
Deferred revenue, non-current	40,250		28,021
Operating lease liabilities, non-current	26,518		27,827
Other liabilities, non-current	4,798		12,992
Total liabilities	388,963		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 July 31, 2020 and April 30, 2020	—		—
Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 85,737,645 and 82,856,978 shares issued and outstanding as of July 31, 2020 and April 30, 2020, respectively	890		856
Treasury stock	(369)		(369)
Additional paid-in capital	946,178		898,788
Accumulated other comprehensive loss	(11,435)		(1,377)
Accumulated deficit	(502,885)		(484,251)
Total shareholders’ equity	432,379		413,647
Total liabilities and shareholders’ equity	$	821,342	$	803,911


	Three months ended July 31,
	2020		2019
Revenue
License - self-managed	$	14,879	$	9,907
Subscription - self-managed and SaaS	106,463		72,483
Total subscription revenue	121,342		82,390
Professional services	7,528		7,320
Total revenue	128,870		89,710
Cost of revenue
Cost of license - self-managed	346		97
Cost of subscription - self-managed and SaaS	25,890		17,895
Total cost of revenue - subscription	26,236		17,992
Cost of professional services	8,595		8,259
Total cost of revenue	34,831		26,251
Gross profit	94,039		63,459
Operating expenses
Research and development	45,678		35,182
Sales and marketing	56,151		52,011
General and administrative	21,729		18,568
Total operating expenses	123,558		105,761
Operating loss	(29,519)		(42,302)
Other income, net	10,885		931
Loss before income taxes	(18,634)		(41,371)
Provision for income taxes	367		398
Net loss	$	(19,001)	$	(41,769)
Net loss per share attributable to ordinary shareholders, basic and diluted	$	(0.23)	$	(0.56)
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted	84,175,287		74,643,782


	Three months ended July 31,
	2020		2019
Net loss	$	(19,001)	$	(41,769)
Other comprehensive loss:
Foreign currency translation adjustments	(10,058)		382
Other comprehensive loss	(10,058)		382
Total comprehensive loss	$	(29,059)	$	(41,387)


						Additional Paid-in Capital			Accumulated Other Comprehensive Loss				Total Shareholders' Equity
	Ordinary Shares							Treasury Shares							Accumulated Deficit
	Shares	Amount
Balances at April 30, 2020	82,856,978	$	856	$	(369)	$	898,788		$	(1,377)	$	(484,251)	$	413,647
Cumulative-effect adjustment from adoption of ASU 2016-13	—	—		—		—			—		367		367
Issuance of ordinary shares upon exercise of stock options	2,655,292	31		—		29,221			—		—		29,252
Issuance of ordinary shares upon release of restricted stock units	225,375	3		—		(3)			—		—		—
Stock-based compensation	—	—		—		18,172			—		—		18,172
Net loss	—	—		—		—			—		(19,001)		(19,001)
Foreign currency translation	—	—		—		—			(10,058)		—		(10,058)
Balances at July 31, 2020	85,737,645	$	890	$	(369)	$	946,178		$	(11,435)	$	(502,885)	$	432,379

						Additional Paid-in Capital			Accumulated Other Comprehensive Loss				Total Shareholders' Equity
	Ordinary Shares							Treasury Shares							Accumulated Deficit
	Shares	Amount
Balances at April 30, 2019	73,675,083	$	754	$	(369)	$	581,135		$	(1,431)	$	(317,077)	$	263,012
Issuance of ordinary shares upon exercise of stock options	2,533,891	27		—		20,086			—		—		20,113
Issuance of ordinary shares upon release of restricted stock units	50,387	1		—		(1)			—		—		—
Vesting of ordinary shares subject to repurchase	—	—		—		1,612			—		—		1,612
Stock-based compensation	—	—		—		11,700			—		—		11,700
Net loss	—	—		—		—			—		(41,769)		(41,769)
Foreign currency translation	—	—		—		—			382		—		382
Balances at July 31, 2019	76,259,361	$	782	$	(369)	$	614,532		$	(1,049)	$	(358,846)	$	255,050


☒			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	11
2.	Summary of Significant Accounting Policies	11
3.	Revenue and Performance Obligations	13
4.	Fair Value Measurements	13
5.	Acquisitions	14
6.	Balance Sheet Components	16
7.	Commitments and Contingencies	19
8.	Leases	20
9.	Ordinary Shares	21
10.	Equity Incentive Plans	21
11.	Net Loss Per Share Attributable to Ordinary Shareholders	23
12.	Income Taxes	23
13.	Employee Benefit Plans	23
14.	Segment Information	24


July 31, 2020	Level 1		Level 2	Level 3	Total
Financial Assets:
Cash and cash equivalents:
Money market funds	$	197,314	—	—	$	197,314


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 July 31, 2019

Pro forma revenue⁽¹⁾	$	95,404
Pro forma net loss ⁽¹⁾	$	(48,354)


	As of July 31, 2020		As of April 30, 2020
Prepaid hosting costs	$	11,805	$	12,228
Deposits	2,030		1,857
Prepaid software subscription costs	4,406		3,104
Prepaid taxes	3,387		3,612
Prepaid value added taxes	5,896		5,167
Other	6,734		6,655
Total prepaid expenses and other current assets	$	34,258	$	32,623


	Useful Life (in years)					As of July 31, 2020		As of April 30, 2020
Leasehold improvements	Lesser of estimated useful life or remaining lease term					$	7,182	$	8,405
Computer hardware and software		3		5,816		5,687
Furniture and fixtures	3	-	5	4,897		5,072
Assets under construction				2,371		1,661
Total property and equipment				20,266		20,825
Less: accumulated depreciation				(12,361)		(13,065)
Property and equipment, net				$	7,905	$	7,760


July 31, 2020	Gross Fair Value		Accumulated Amortization		Net Book Value		Weighted Average Remaining Useful Life (in years)
Developed technology	$	44,830	$	14,670	$	30,160	3.9
Customer relationships	19,598		4,361		15,237		3.2
Trade names	2,872		1,366		1,506		3.1
Total	$	67,300	$	20,397	$	46,903	3.6


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
Trade names	19,598		3,210		16,388		3.4
Customer relationships	2,872		1,223		1,649		3.4
Total	$	67,300	$	16,845	$	50,455	3.9


Remainder of 2021	$	10,617
2022	12,947
2023	11,890
2024	8,715
2025	2,734
Total	$	46,903


	Carrying Amount
Balance as of April 30, 2020	$	197,877
Foreign currency translation adjustment	536
Balance as of July 31, 2020	$	198,413


	As of July 31, 2020		As of April 30, 2020
Accrued expenses	$	8,835	$	10,864
Value added taxes payable	4,770		7,230
Income taxes payable	151		—
Other	4,077		4,116
Total accrued expenses and other liabilities	$	17,833	$	22,210


	As of July 31, 2020		As of April 30, 2020
Accrued vacation	$	20,301	$	17,971
Accrued commissions	8,701		16,259
Accrued payroll taxes and withholding taxes	7,541		7,588
Other	6,373		6,591
Total accrued compensation and benefits	$	42,916	$	48,409


	As of July 31, 2020		As of April 30, 2020
Unbilled accounts receivable, included in accounts receivable, net	$	3,197	$	2,622
Deferred contract acquisition costs	$	52,440	$	43,549
Deferred revenue	$	277,511	$	259,702


	Unbilled Accounts Receivable
	Three Months Ended July 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)
Revenue recognized during the period in excess of invoices issued	3,197		1,947
Ending balance	$	3,197	$	1,947


Balance at April 30, 2020	$	1,247
Cumulative-effect adjustment from adoption of ASU 2016-13	(367)
Provision	564
Write-offs	(147)
Balance at July 31, 2020	$	1,297


	As of July 31, 2020
Weighted average remaining lease term (years)	4.59
Weighted average discount rate	5.07	%


Years Ending April 30,
2021 (remaining nine months)	$	6,609
2022	8,281
2023	8,195
2024	7,203
2025	5,875
Thereafter	2,803
Total minimum lease payments	38,966
Less imputed interest	(4,730)
Present value of future minimum lease payments	34,236
Less current lease liabilities	(7,718)
Operating lease liabilities, non-current	$	26,518


	As of July 31, 2020	As of April 30, 2020
Stock options issued and outstanding	12,444,569	15,260,506
RSUs issued and outstanding	2,578,102	2,472,092
Remaining shares available for future issuance under the 2012 Plan	16,433,458	12,461,850
Total ordinary shares reserved	31,456,129	30,194,448


			Three Months Ended July 31, 2020
Available at beginning of period			12,461,850
Awards authorized			4,142,849
Stock options cancelled			160,144
RSUs granted			(401,360)
RSUs cancelled			69,975
Available at end of period			16,433,458


	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 exercised	(2,655,292)	$	11.10
Stock options cancelled	(160,144)	$	14.87
Stock options assumed in acquisition cancelled	(501)	$	74.57
Balance as of July 31, 2020	12,444,569	$	14.81	7.03	$	1,012,770
Exercisable as of July 31, 2020	6,359,419	$	11.77	6.70	$	536,864


	Number of Awards	Weighted- Average Grant Date Fair Value
Outstanding and unvested at April 30, 2020	2,472,092	$	66.78
RSUs granted	401,360	$	82.19
RSUs released	(225,375)	$	69.82
RSUs cancelled	(69,975)	$	69.35
Outstanding and unvested at July 31, 2020	2,578,102	$	68.84


	As of July 31, 2020		As of April 30, 2020
United States	$	29,172	$	30,373
United Kingdom	6,066		5,854
The Netherlands	3,519		3,529
Rest of world	697		787
Total long-lived assets	$	39,454	$	40,543


	Three months ended July 31,						Change
	2020		2019		$		%

	(dollars in thousands)
Revenue
License - self-managed	$	14,879	$	9,907	$	4,972	50	%
Subscription - self-managed and SaaS	106,463		72,483		33,980		47	%
Total subscription revenue	121,342		82,390		38,952		47	%
Professional services	7,528		7,320		208		3	%
Total revenue	$	128,870	$	89,710	$	39,160	44	%


#			Annexes, schedules, and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Elastic agrees to furnish supplementally a copy of any omitted attachment to the Securities and Exchange Commission on a confidential basis upon request.


*			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: September 3, 2020	By:		/s/ Shay Banon
		Name:	Shay Banon
		Title:	Chief Executive Officer and Chairman
			(Principal Executive Officer)


Date: September 3, 2020	By:		/s/ Janesh Moorjani
		Name:	Janesh Moorjani
		Title:	Chief Financial Officer
			(Principal Financial and Accounting Officer)