The global Enterprise Search market is estimated to grow 13% annually to $9 billion by the year 2026 from $3.72 billion in 2019. The continued adoption of cloud computing and Software as a Service (SaaS) are driving the adoption of hosted enterprise search solutions across organizations. Elastic (NYSE: ESTC) is a leading player in the open source Big Data search sector.
For the recently reported third quarter, Elastic’s revenues grew 60% over the year to $113.2 million with SaaS revenues growing 114% over the year. Net loss was $0.55 per share. On an adjusted basis, net loss was $0.28 per share. The market was looking for revenues of $107.8 million with a loss of $0.35 per share.
By segment, subscription revenues grew 61% over the year to $104.2 million. Within the segment, licensed, self managed revenues grew 54% to $14.5 million and subscription which includes self managed and SaaS grew 63% over the year to $89.7 million. Professional services for the quarter grew 44% over the year to $9 million.
Among key metrics, calculated billings for the company grew 54% over the year to $122.9 million. Total subscription customer count grew from 9,700 a quarter ago to over 10,500 at the end of the third quarter. Total customer count with Annual Contract Value (ACV) of more than $100,000 grew to 570 from 525 in the previous quarter. Net Expansion Rate continued to be more than 130%.
Elastic expects to end the current quarter with revenues of $119-$120 million with an adjusted net loss of $0.32-$0.30 per share. It expects to end the year with revenues of $423-$424 million and an adjusted net loss of $1.13-$1.12 per share. The market was looking for revenues of $118.7 million for the quarter with a net loss of $0.33 per share and revenues of $416.6 million for the year with a net loss of $1.23 per share.
Elastic’s Product Upgrade
Elastic realizes that the growing adoption of SaaS services across enterprises require a search engine that is fast, scalable, and relevant. It is keeping its search engine relevant in this environment by adding several new features. For instance, it made its proprietary app search offering natively available through the Elasticsearch Service on Elastic Cloud so that customers can deploy all of its solutions from a single space. The recently released upgrade of Elastic Stack accelerates Elasticsearch queries and adds more turnkey machine learning capabilities. It includes Meta engines, a feature that allows companies to unify and scale their application search by searching across multiple engines. It is also adapting its solution to the cloud by announcing more public cloud integrations for deeper visibility into cloud operations. Elastic is leveraging machine learning capabilities for log categorization for simplified log analysis.
During the quarter, Elastic also deepened visibility for securing Windows endpoints. It paired the new capability with its SIEM detection engine to offer an enhanced layered prevention. The security offering now comes with a curated list of over 100 pre-packaged rules that automate threat detection, reduce dwell time, and align with minor attack industry standards. Also by keeping SIEM open, it continues to work with the community to build out a library of detection rules.
Elastic’s stock is currently trading at $55 with a market capitalization of $4.6 billion. It had listed in October 2018 by selling stock at $36 apiece to raise $252 million at a valuation of $2.5 billion. Prior to the listing, Elastic had raised funding of $104 million from investors including Index Ventures, Benchmark, New Enterprise Associates, SV Angel, and Data Collective. The stock hit a 52-week high of $104.10 in July last year. Earlier this month, the stock market turbulence sent the stock falling to a 52-week low of $39.01.