Elastic (ESTC) Q2 Earnings: What To Expect

Jabin Bastian /
2022/11/29 4:08 am EST

Search software company Elastic (NYSE:ESTC) will be reporting earnings tomorrow after market close. Here's what to expect.

Last quarter Elastic reported revenues of $250 million, up 29.5% year on year, beating analyst revenue expectations by 1.51%. It was a mixed quarter for the company, with a strong top line growth but a decline in gross margin. The company added 50 enterprise customers paying more than $100,000 annually to a total of 1,010.

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% year on year to $261.6 million, slowing down from the 42.1% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted loss is expected to come in at -$0.10 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 7.32%.

Looking at Elastic's peers in the data and analytics software segment, some of them have already reported Q2 earnings results, giving us a hint what we can expect. Confluent delivered top-line growth of 47.9% year on year, beating analyst estimates by 4.76% and Alteryx reported revenues up 74.6% year on year, exceeding estimates by 12.1%. Confluent traded up 16.2% on the results, and Alteryx was up 10.10%. Read our full analysis of Confluent's results here and Alteryx's results here.

The whole tech sector has been facing a sell-off since late last year and while some of the software stocks have fared somewhat better, they have not been spared, with share price declining 7.22% over the last month. Elastic is down 6.95% during the same time, and is heading into the earnings with analyst price target of $97.50, compared to share price of $59.50.

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.