Elastic (ESTC) Q1 Earnings Report Preview: What To Look For

Radek Strnad /
2022/08/24 5:13 am EDT
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Search software company Elastic (NYSE:ESTC) will be announcing earnings results tomorrow after market close. Here's what investors should know.

Last quarter Elastic reported revenues of $239.3 million, up 34.7% year on year, beating analyst revenue expectations by 3%. It was a mixed quarter for the company, with a strong top line growth but an underwhelming guidance for the next year. The company added 70 enterprise customers paying more than $100,000 annually to a total of 960.

Is Elastic buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Elastic's revenue to grow 27.5% year on year to $246.3 million, slowing down from the 49.8% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted loss is expected to come in at -$0.17 per share.

Elastic Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 7.95%.

Looking at Elastic's peers in the data and analytics software segment, some of them have already reported Q1 earnings results, giving us a hint of what we can expect. Confluent delivered top-line growth of 57.8% year on year, beating analyst estimates by 5.71% and Palantir reported revenues up 25.9% year on year, exceeding estimates by 0.27%. Confluent traded up 7.72% on the results, and Palantir was down 11.1%. Read our full analysis of Confluent's results here and Palantir's results here.

There has been positive sentiment among investors in the software segment, with the stocks up on average 3.12% over the last month. Elastic is up 6.81% during the same time, and is heading into the earnings with with analyst price target of $101.4, compared to share price of $81.5.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.