Elastic NV (NYSE:ESTC) Reports Mixed Q2 2026 Results with Revenue Miss and Strong Earnings Beat

Elastic NV (NYSE:ESTC) reported financial results for its second quarter of fiscal 2026 that presented a complex picture for investors, leading to a notable decline in its stock price during after-hours trading. The company, a provider of search-powered data analytics solutions, delivered a top-line revenue figure that narrowly missed analyst expectations while simultaneously posting a significant bottom-line earnings beat.

Quarterly Performance Versus Estimates

The company reported total revenue of $423 million for the quarter ended October 31, 2025, representing a solid 16% year-over-year increase. However, this figure came in slightly below the analyst consensus estimate of $426.5 million. In contrast, the company's profitability on a non-GAAP basis was a clear highlight. Non-GAAP earnings per share came in at $0.64, which was substantially above the $0.59 per share that analysts had projected.

Key financial metrics from the quarter include:

• Total Revenue: $423 million (16% YoY growth) vs. Estimate of $426.5 million
• Non-GAAP EPS: $0.64 vs. Estimate of $0.59
• Elastic Cloud Revenue: $206 million (22% YoY growth)
• Current Remaining Performance Obligations: $971 million (17% YoY growth)
• Non-GAAP Operating Income: $70 million
• Operating Cash Flow: $27 million

Market Reaction and Financial Outlook

Despite the earnings beat, the market's immediate reaction was negative, with the stock falling over 12% in after-hours trading. This suggests that investor focus may have been on the revenue miss or other forward-looking indicators. The company's guidance for the upcoming third quarter appears to be a contributing factor. Management expects revenue between $437 million and $439 million, which at its midpoint is approximately 2% above the current analyst consensus of $429 million. However, the company's full-year revenue guidance of $1.715 billion to $1.721 billion aligns closely with the analyst estimate of $1.735 billion, potentially failing to provide the positive surprise that investors were seeking.

The company's outlook for profitability remains strong. For the next quarter, it forecasts a non-GAAP operating margin of approximately 17.5% and non-GAAP EPS between $0.63 and $0.65.

Strategic and Operational Highlights

Beyond the financial figures, Elastic emphasized robust operational execution and strategic advancements, particularly in artificial intelligence. The company reported having over 1,600 customers with an Annual Contract Value greater than $100,000, up from over 1,420 in the same period last year. Its Net Expansion Rate remained healthy at approximately 112%.

CEO Ash Kulkarni stated that AI was "positively impacting all areas of our business," a claim supported by a series of product announcements. Key innovations highlighted during the quarter included:

• The launch of Agent Builder, a context engineering platform for creating AI agents.
• The introduction of the Elastic Inference Service for GPU-accelerated AI workflows.
• The acquisition of Jina AI to deepen the company's search capabilities.
• Numerous recognitions as a Leader in industry analyst reports for search, security, and observability.

Furthermore, the company activated its $500 million share repurchase program, buying back approximately 1.4 million shares during the quarter for about $114 million.

Conclusion

Elastic's second quarter was characterized by a strong profitability performance that exceeded expectations, countered by a slight revenue miss and a forward outlook that may not have met the market's elevated expectations. The subsequent drop in share price indicates that investors are weighing these mixed signals carefully. The company's continued innovation in AI and sustained growth in its cloud and enterprise customer base provide a solid foundation, but the market will be watching closely to see if top-line growth can re-accelerate to match its bottom-line strength.

For a more detailed look at upcoming earnings dates and analyst estimates, you can review the earnings and estimates page for ESTC.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. The information presented is based on publicly available data and should not be relied upon as the sole basis for an investment decision.