Elastic N.V. Q2 2026 (Fiscal) 10-Q Summary
Business Context and Reporting Period
This summary covers Elastic N.V.'s quarterly results for the period ended October 31, 2025 (Q2 of Fiscal Year 2026). Elastic is a distributed software company providing the Elastic Search AI Platform, which includes Elasticsearch, Elastic Observability, and Elastic Security. The company operates as a single reportable segment and generates revenue primarily through subscription services (94% of total revenue) and professional services.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Total Revenue | $423.5 million | $365.4 million | $838.8 million | $712.8 million |
| Gross Profit | $321.5 million | $272.2 million | $640.0 million | $527.8 million |
| Gross Margin | 76% | 74% | 76% | 74% |
| Operating Loss | $(8.2) million | $(4.4) million | $(17.7) million | $(38.3) million |
| Net Loss | $(51.3) million | $(25.5) million | $(75.9) million | $(74.7) million |
| Diluted EPS | $(0.48) | $(0.25) | $(0.71) | $(0.73) |
| Operating Cash Flow (YTD) | $131.4 million (vs. $91.1 million YTD 2025) | |||
| Cash & Marketable Securities | $1.396 billion (as of Oct 31, 2025) | |||
| Long-Term Debt | $570.3 million (net carrying value) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 16% year-over-year (YoY) for the quarter and 18% YoY for the six-month period. Subscription revenue grew 17% (quarter) and 18% (YTD), driven by a 22% increase in Elastic Cloud revenue.
- Margin Expansion: Gross margin improved to 76% from 74% YoY, primarily due to efficiencies in managing cloud infrastructure costs relative to revenue growth.
- Operating Expenses: Operating expenses increased significantly, with R&D up 23% and Sales & Marketing up 20% for the quarter, reflecting continued investment in product development and go-to-market expansion.
- Acquisitions: The company completed two acquisitions in the period: Conic AI Technology Limited (Jina AI) for $44.6 million and Paladin Data Inc. (Keep) for $10.9 million, adding $40.2 million to goodwill.
- Share Repurchases: In October 2025, the board authorized a $500 million share repurchase program. The company repurchased 1.35 million shares for approximately $114.1 million during the quarter.
Guidance, Outlook, and Risks
- Outlook: Management expects Elastic Cloud's contribution to subscription revenue to continue increasing, though this may modestly pressure gross margins due to third-party hosting costs. The company anticipates continued investment in R&D and sales/marketing to drive growth.
- Tax Legislation: The "One Big Beautiful Bill Act" (OBBBA) enacted in July 2025 introduced significant changes to U.S. federal tax law. While some provisions impacted the current period, others will affect future tax provisions. The company is assessing the full impact.
- Legal Proceedings: A securities class action lawsuit filed in February 2025 alleges false statements regarding business and financial results. The company filed a motion to dismiss in October 2025 and intends to defend vigorously; no loss estimate can be made at this time.
- Risks: Key risks include macroeconomic conditions affecting IT spending, competition, the impact of foreign currency fluctuations, and the ability to successfully integrate acquired businesses.
Investor Verification Checklist
- Verify the sustainability of the 16-18% revenue growth rate given the increased operating expense base.
- Monitor the impact of the new $500 million share repurchase program on future liquidity and cash reserves.
- Assess the integration progress and financial contribution of the Jina AI and Keep acquisitions.
- Review the final impact of the OBBBA tax legislation on the effective tax rate in future quarters.
- Track the status of the pending securities litigation and any potential settlement costs.