FinanceLooker

Excrept from filing document 2025-04-30

We are a distributed company Accordingly we do not have a principal executive office For purposes of compliance with applicable requirements of the Securities Act of 1933 as amended and the Securities Exchange Act of 1934 as amended any shareholder communication required to be sent to our principal executive offices may be directed to the email address ir elastic co or to Elastic N V 88 Kearny St Floor 19 San Francisco CA 94108
The aggregate market value of the ordinary shares held by non affiliates of the registrant based on the closing price of the ordinary shares on the New York Stock Exchange on October 31 2024 the last business day of the registrant s second fiscal quarter was approximately 8 3 billion
Portions of the registrant s definitive proxy statement relating to the registrant s 2025 annual general meeting of shareholders are incorporated by reference into Part III of this Annual Report on Form 10 K where indicated Such definitive proxy statement will be filed with the U S Securities and Exchange Commission within 120 days after the end of the registrant s fiscal year ended April 30 2025
All information presented herein is based on our fiscal calendar Unless otherwise stated references to particular years quarters months or periods refer to the Company s fiscal years ended April 30 and the associated quarters months and periods within those fiscal years We refer to our fiscal year ended April 30 2025 as fiscal 2025 to our fiscal year ended April 30 2024 as fiscal 2024 and to our fiscal year ended April 30 2023 as fiscal 2023
The Elastic design logo Elastic and our other registered or common law trademarks service marks or trade names appearing in this Annual Report on Form 10 K are the property of Elastic N V and its subsidiaries Other trademarks and trade names referred to in this Annual Report on Form 10 K are the property of their respective owners Solely for convenience trademarks and trade names referred to in this Annual Report on Form 10 K may appear without the or symbols
This Annual Report on Form 10 K contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended the Securities Act and Section 21E of the Securities Exchange Act of 1934 as amended the Exchange Act which involve substantial risks and uncertainties Forward looking statements generally relate to future events or our future financial or operating performance In some cases you can identify forward looking statements because they contain words such as may might will should expects plans anticipates could intends target projects contemplates believes estimates predicts potential or continue or the negative of these words or other similar terms or expressions that concern our expectations strategy plans or intentions Forward looking statements contained in this Annual Report on Form 10 K include but are not limited to statements about
the impact of macroeconomic conditions including declining rates of economic growth inflationary pressures changing interest rates changes in U S federal spending evolving international trade policies and environments and other conditions discussed in this report on information technology IT spending sales cycles and other factors affecting the demand for our offerings and our results of operations
our future financial performance including our expectations regarding our revenue cost of revenue gross profit or gross margin operating expenses which include changes in sales and marketing research and development and general and administrative expenses and our ability to achieve and maintain future profitability
the impact of geopolitical conditions including the evolving conflicts in the Middle East and Russia s war with Ukraine on our business and on the businesses of our customers and partners including their spending priorities
In addition statements that we believe and similar statements reflect our beliefs and opinions These statements are based upon information available to us as of the date of this Annual Report on Form 10 K and while we believe this information forms a reasonable basis for such statements the information may be limited or incomplete and our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of all potentially available relevant information These statements are inherently uncertain and subject to the risks and other factors described in the section titled Risk Factors in Part I Item 1A and elsewhere in this report Among other limitations our forward looking statements may not reflect the potential impact of any future acquisitions mergers dispositions joint ventures or investments that we may make As a result investors are cautioned not to place undue reliance on any forward looking statements
The forward looking statements made in this Annual Report on Form 10 K relate only to events or circumstances on the date as of which such statements are made We undertake no obligation to update any forward looking statements after the date as of which they are made or to conform such statements to actual results or revised expectations except as required by law We may not actually achieve the plans intentions or expectations disclosed in our forward looking statements
The following is a summary of the key risks and uncertainties associated with our business industry and ownership of our ordinary shares The summary below does not contain all of the information that may be important to you and you should read this summary together with the more complete discussion of the risks and uncertainties we face which are set forth in Part I Item 1A Risk Factors in this Annual Report on Form 10 K
Information technology spending sales cycles and other factors affecting the demand for our offerings and our results of operations have been and may continue to be negatively impacted by current macroeconomic conditions including declining rates of economic growth inflationary pressures increased interest rates changes in U S federal spending evolving international trade policies and environments and other conditions discussed in this report and by the evolving conflicts in the Middle East and Russia s war with Ukraine
We may not be successful in our artificial intelligence initiatives and ethical and regulatory issues relating to the use of AI in our offerings may result in new or enhanced governmental or regulatory scrutiny reputational harm damage to our competitive position and liability
Our future growth business and results of operations will be harmed if we are not able to keep pace with technological and competitive developments increase sales of our subscriptions to new and existing customers renew existing customers subscriptions respond effectively to evolving markets offer high quality support services or maintain and enhance our brand
Our limited history with consumption based arrangements for our Elastic Cloud offerings is not adequate to enable us to accurately predict the long term rate of customer adoption or renewal or the impact those arrangements will have on our near term or long term revenue and operating results
Our international business exposes us to a variety of risks and if we are not successful in sustaining and expanding our international business we may incur additional losses and our revenue growth could be harmed
If our partners including cloud providers systems integrators channel partners referral partners original equipment manufacturing OEM and managed service provider MSP partners and technology partners fail to perform or we are unable to maintain successful relationships with them our ability to market sell and distribute our solution may be limited
We could incur substantial costs as a result of any claim of infringement misappropriation or violation of another party s intellectual property rights including as a result of the indemnity provisions in various agreements
Our business is subject to a variety of government and industry regulations as well as other obligations including compliance with export control trade sanctions anti bribery anti corruption and anti money laundering laws
If industry or financial analysts do not publish research or reports about our business or if they issue inaccurate or unfavorable research regarding our ordinary shares our share price and trading volume could decline
Elastic the Search AI Company enables its customers to transform data into answers actions and outcomes with Search AI While search technology revolutionized information retrieval through its ability to instantly return relevant results from massive datasets it struggles when it comes to understanding context and generating insights AI on the other hand excels at analyzing complex patterns and generating insights but it lacks the ability to find and access specific information within vast data stores Elastic s Search AI Platform our platform combines the precision of search with the intelligence of AI to help our customers and community solve real time business problems unlock potential value and achieve better outcomes Our platform available as either a cloud service or a self managed software allows our customers to find insights and drive AI and machine learning use cases from large amounts of data
We offer three Search AI powered solutions Elasticsearch Elastic Observability and Elastic Security that are built on our platform We help organizations their employees and their customers find what they need faster while keeping mission critical applications and infrastructure running smoothly and protecting against cyber threats
As digital transformation continues to drive mission critical business functions to the cloud we believe that every company must incorporate search AI capabilities across IT and line of business organizations to find the answers that matter from all of its data in real time and at scale
Our platform is able to ingest data from any source in any format and perform search analysis and visualization of that data With Elasticsearch at its core our platform is a highly scalable document store and search engine and is the unified data store for all of our solutions and use cases Featuring a common solution agnostic user interface with powerful drag and drop visual analytics centralized management capabilities and the world s most downloaded open source vector database our platform gives developers a full suite of sophisticated retrieval algorithms and the ability to integrate with large language models LLM It delivers the comprehensive set of capabilities developers need to build maintain and secure next generation applications and services In addition our out of the box solutions Elastic Observability and Elastic Security deliver fast time to value for common use cases and paired with our developer centric platform which is extensible and customizable allow us to innovate quickly and differentiate our offerings at every level
We make our platform available as a service across major cloud providers Amazon Web Services AWS Google Cloud Platform GCP and Microsoft Azure in more than 55 public cloud regions globally Customers can also deploy our platform across hybrid clouds public or private clouds and multi cloud environments
Our business model is based primarily on a combination of paid service offerings Elastic Cloud Hosted and Elastic Cloud Serverless and free and paid proprietary self managed software Elastic Self Managed Our paid offerings for our platform are sold via subscription through resource based pricing and all customers and users have access to varying levels of features across all solutions In Elastic Cloud our family of cloud based offerings we offer various subscription tiers tied to different features For users who download our software we make some of the features of our software available free of charge allowing us to engage with a broad community of developers and practitioners and introduce them to the value of our platform
We believe in the importance of an open software development model and we develop the majority of our software in public repositories under an open source GNU Affero General Public License v3 AGPL license as well as under a proprietary license Unlike some companies we do not build an enterprise version that is separate from our free distribution We maintain a single code base across both our self managed software and Elastic hosted services All of these actions help us build a powerful commercial business model that we believe is optimized for product driven growth Elastic has always been committed to open source and an open development process with transparent and direct engagement with our community The core of Elasticsearch and Kibana a user interface are open source under an AGPL license and our open source code is housed in public repositories
Our customers often significantly expand their usage of our products and services over time Expansion includes increasing the number of developers and practitioners using our products increasing the utilization of our products for a particular use case and utilizing our products to address new use cases We focus some of our direct sales efforts on encouraging this type of expansion within our customer base both within as well as across solutions Because our business model provides access to all solutions with resource based pricing we make it easy for customers to expand across use cases
Our business has experienced rapid growth around the world As of April 30 2025 we had approximately 21 500 customers compared to approximately 21 000 customers and approximately 20 200 customers as of April 30 2024 and 2023 respectively Our total revenue was 1 483 billion 1 267 billion and 1 069 billion for the years ended April 30 2025 2024 and 2023 respectively representing year over year growth of 17 for the year ended April 30 2025 and 19 for the year ended April 30 2024 Subscriptions accounted for 93 of our total revenue for the years ended April 30 2025 and 2024 and 92 of our total revenue for the year ended April 30 2023 Revenue from customers located outside the United States accounted for 44 42 and 41 of our total revenue for the years ended April 30 2025 2024 and 2023 respectively
We recorded a net loss of 108 1 million for the year ended April 30 2025 a net income of 61 7 million for the year ended April 30 2024 and a net loss of 236 2 million for the year ended April 30 2023 We may incur net losses in the foreseeable future Our net cash provided by operating activities was 266 2 million 148 8 million and 35 7 million for the years ended April 30 2025 2024 and 2023 respectively
Our platform includes a powerful set of solutions able to ingest and store data from any source in any format and perform search analysis and visualization usually in milliseconds Our platform can be used by developers and IT decision makers to power a variety of use cases We also offer software solutions built on the Search AI Platform that address a wide variety of use cases Our platform and each of our solutions Elasticsearch Elastic Observability and Elastic Security are designed to run in public or private clouds in hybrid environments or in multi cloud environments
At its core our platform is powered by Elasticsearch a distributed real time vector database and analytics engine and data store for all types of data including textual numerical geospatial structured and unstructured Our platform includes a user interface known as Kibana that is the visualization layer for data stored in Elasticsearch this layer is also the management and configuration interface for all parts of our platform
Elastic has spent years infusing its platform with a strong foundational suite of AI and machine learning capabilities from support for external machine learning models to native vector search capabilities supervised and unsupervised machine learning and solution capabilities that improve search relevance and identify anomalies Elastic enables organizations to integrate generative AI and large language models by building key capabilities into its products
Paid features enable capabilities such as automating anomaly detection on time series data at scale through machine learning facilitating compliance with data security and privacy regulations supporting search across low cost cold and frozen data tiers and allowing real time notifications and alerts The source code of features included as part of our platform is generally visible to the public in the form of open source
Our search solution provides a powerful foundation for building search AI powered applications Key use cases for Elasticsearch include generative AI and retrieval augmented generation search applications and foundational capabilities for building search experiences to support websites and portals e commerce mobile app search customer support and workplace search
Our observability solution enables unified analysis across the IT ecosystem of applications networks and infrastructure Observability includes log analytics to search analyze and visualize petabytes of structured and unstructured logs infrastructure monitoring to gain visibility across cloud on premises Kubernetes serverless and hosts Application Performance Monitoring APM to stream native production grade OpenTelemetry without proprietary agents and gain broad language support to deliver insight to pinpoint code issues and debug faster digital experience monitoring to improve user experience with synthetic testing real user monitoring RUM and uptime monitoring AI for IT operations AIOps always on machine learning analysis that instantly surfaces anomalies patterns correlations and root cause and LLM observability to track latency errors prompts responses usage and costs for all major LLM services
Our security solution provides unified protection to prevent detect and respond to threats Our Search AI driven security analytics solution includes Security Information and Event Management SIEM with integrations to network host user and cloud data sources Elastic Security enables investigations incident management shareable analytics and workflow automation through Security Orchestration Automation and Response SOAR and extended protection within SIEM with third party integrations and first party protections for both Endpoint Security prevention detection and response and Cloud Security cloud posture assessment vulnerability management and cloud workload protection
Our platform and our solutions can be deployed in public or private clouds in hybrid environments or in multi cloud environments to satisfy various user and customer needs Elastic Cloud our family of cloud based offerings inclusive of both Elastic Cloud Hosted and Elastic Cloud Serverless is hosted on major public cloud providers We also partner with other cloud providers that offer our software to users on their cloud platform as a hosted offering
Users can also download and manage their own deployments of our platform and our solutions To help with more complex deployment scenarios we offer paid proprietary products to deliver centralized provisioning management and monitoring across multiple deployments
Our platform can find matches for search criteria in milliseconds within even the largest structured and unstructured datasets Its schemaless structure and inverted indices enable real time search of high volumes of structured unstructured and time series data
Our platform is a distributed system and can scale It has the ability to subdivide search indices into multiple pieces called shards which enables data volume to be scaled horizontally and operations to be distributed across hundreds of systems or more A developer running hundreds of nodes has the same user experience as a developer running a single node on a laptop
Our platform uses multiple analytical techniques including both traditional and AI powered relevance techniques to determine the similarity between stored data and queries generating highly relevant results reflecting a deep understanding of text and context Its sophisticated yet developer friendly query language permits advanced search and analytics Additionally the speed of our platform permits query iteration further enhancing the relevance of search results
Our platform is engineered to take a user from data to dashboard or inquiry to insight in minutes It offers an easy getting started experience featuring streamlined download and deployment sensible defaults a simple and intuitive query language and no need to define a schema up front Administrative tasks such as securing the platform are intuitive and integrated into the user experience as are investigative tasks such as data visualization
Our platform is able to ingest filter store search and analyze data in any form whether structured or unstructured These capabilities enable our platform to generate insights from a wide variety of data sources for a broad range of use cases The flexibility of our platform also enables users to begin using our products along with their existing systems which lowers barriers to adoption
Our platform can be used by developers as a foundation for addressing a wide variety of use cases Our open approach to building our platform empowers developers to innovate and utilize it to fit their specific needs Additionally our developer community actively engages with us to improve and expand our platform
We continue to invest in our platform solutions and services to extend into new use cases industries geographies and customers We regularly deliver new and enhanced capabilities to our customers such as the enhanced AI technology now integrated in our platform through regular releases to which everyone has access based on our subscription model We continue to offer comprehensive Generative AI GAI capabilities in several key areas offering organizations tools and infrastructure to leverage GAI including vector search capabilities inference and retrieval APIs embedding and relevance models agentic workflows data ingestion data management and domain specific applications We view our Search AI capabilities as a major competitive differentiator for our products and intend to continue to invest in additional features and functionality related to AI We also recently released Elastic Cloud Serverless as an additional paid service offering for our customers Our technology investments include foundational platform capabilities as well as solution enhancements for our target use cases
With our engineering efforts focused on the user experience we continue to develop software that makes our products easier to use and adopt for both developers and non developers We plan to continue to engage with developers globally to grow our user community through a wide range of touch points such as community meetups global community groups hackathons our global events our user conferences which we call ElasticON and engagement on our website user forums and code repositories
We engage our community and our partners to drive awareness and to invest in our sales and marketing team to grow our customer base Through Elastic Cloud we provide the fastest and easiest way to get started with a free trial However there is no free subscription tier in Elastic Cloud Self managed users can easily download our software directly from our website and access many features free of charge which also facilitates adoption We offer varied deployment options to cater to a wide range of customer use cases Our sales and marketing team conducts campaigns to drive further awareness and adoption within the user community As a result many of our sales prospects including those in executive level conversations are already familiar with our technology prior to entering into a commercial relationship with us Additionally we leverage our network of partners to drive awareness and expand our sales and marketing reach to target new customers
We continue to invest in helping users and customers be successful with our products We view initial success with our products as a path to drive expansion to new use cases and projects and larger deployments within organizations We often enter an organization through a single developer or a small team for an initial project or use case with an objective to quickly solve a technical challenge or business problem Because of the rapid success with our products knowledge of Elastic often spreads within an organization to new teams of developers architects IT operations personnel security personnel and senior executives leading to more use cases for our products and solutions and larger deployments at higher subscription tier levels
As users and customers increasingly want to consume highly scalable cloud solutions we believe that Elastic Cloud continues to represent a significant growth opportunity We plan to continue to invest resources in driving further innovation and increasing the adoption of Elastic Cloud We recently launched a new Elastic Cloud Serverless offering that simplifies operational management of our platform delivering easier onboarding and autoscaling across security observability and search solutions
We continue to pursue partnerships to further the development of our platform and our customer reach Our partners assist us in driving awareness of Elastic and our products using our platform to address customer requirements and extending our reach in geographic areas and verticals where we do not have a formal sales presence
We intend to continue to pursue acquisitions selectively Since inception we have selectively pursued strategic acquisitions to drive product and market expansion The focus of our most recent acquisitions has been to enhance the technology underlying our Security and Observability offerings
Organizations of all sizes across many industries including enterprises educational institutions and government entities purchase our products for a variety of use cases As of April 30 2025 we had approximately 21 500 customers compared to approximately 21 000 and approximately 20 200 customers as of April 30 2024 and 2023 respectively One customer a channel partner accounted for 12 of total revenue for the year ended April 30 2025 and 11 of total revenue for the year ended April 30 2024 No customer accounted for 10 or more of our total revenue for the year ended April 30 2023
We have experienced quarterly fluctuations and seasonality in our sales and results of operations based on our entry into agreements with new and existing customers customer usage patterns for our consumption based arrangements and the mix between annual and monthly contracts entered into in each reporting period Seasonality in our sales cycle generally reflects a trend toward the highest sales in our fourth fiscal quarter and lowest sales in our first fiscal quarter We believe this seasonality might become more pronounced as we continue to target large enterprise customers
We intend to continue to invest in our research and development capabilities to extend our products Research and development expense totaled 365 8 million 342 0 million and 313 5 million for the years ended April 30 2025 2024 and 2023 respectively We plan to continue to devote significant resources to research and development
Our engineering organization focuses on enhancing existing products and developing new features that are easy to use and can be run in any environment including in public or private clouds in hybrid environments or in multi cloud environments With a globally distributed engineering team we are able to recruit hire and retain high quality experienced developers technology leads and product managers and operate at a rapid pace to drive product releases fix bugs and create new product offerings
Our software development process is based on iterative releases of our platform We are organized in small functional teams with a high degree of autonomy and accountability Our distributed and highly modular team structure and well defined software development processes also allow us to successfully incorporate acquired technologies
We make it easy for users to begin using our products in order to drive rapid adoption Users can either sign up for a free trial on Elastic Cloud or download our software directly from our website without any sales interaction and immediately begin using the full set of features Users can also sign up for Elastic Cloud through public cloud marketplaces
With our business model where users can download and use many of our features free of charge our sales prospects are often already familiar with or using our platform We conduct low touch campaigns to keep users and customers engaged once they have begun using Elastic Cloud or have downloaded our software This process includes providing high quality content documentation webinars videos and blogs through our website We also drive high touch engagement with qualified prospects and customers to drive further awareness adoption and expansion of our products with paid subscriptions The majority of our new customers use Elastic Cloud Many of these customers start with limited initial spending on our products but can significantly increase their spending over time
Our sales teams are organized primarily by geography and secondarily by customer segments We rely on inside sales development representatives to qualify leads based on the likelihood they will result in a purchase We pursue sales opportunities both through our direct sales force and with the assistance of our partners including through cloud marketplaces Our relationships within customer organizations often extend beyond the initial users of the technology and include technology and business decision makers at various levels We also engage with our customers on an ongoing basis through a customer success team to ensure customer satisfaction and expand their use of our technology
We work with many of the major cloud providers to increase awareness of our products and make it easy to access our software We partner with Amazon Google and Microsoft to offer Elastic Cloud on AWS GCP and Microsoft Azure respectively through direct purchase from us or their respective marketplaces We also partner with other cloud providers to offer our free and paid proprietary features to users on their cloud platforms
Our OEM and MSP partners embed an Elastic subscription into the products or services they offer to their customers OEM and MSP partners are able to include Elastic s proprietary features in their product receive ongoing support from Elastic for product development and receive support for end customer issues related to Elastic
Our technology partners collaborate with Elastic to create a standardized solution for end users that includes technology from both Elastic and the partner Technology partners represent a deeper collaboration than community contributions and are distinct from distribution oriented relationships like OEM and MSP partners
Our AI ecosystem provides customers with a curated comprehensive set of AI technologies and tools integrated with the Elasticsearch vector database designed to speed time to market ROI delivery and innovation The Elastic AI Ecosystem includes integrations with Anthropic s Claude Cohere Confluent Dataiku DataRobot Galileo Hugging Face LangChain LlamaIndex Mistral AI NVIDIA OpenAI Protect AI RedHat Vectorize io and Unstructured along with all of the major hyperscalers consisting of Amazon Web Services AWS Google Cloud and Microsoft
We offer consulting and training to assist customers in accelerating their success with our software Our consulting team consists of engineers and architects who bring hands on experience and deep technical knowledge to a project Our training offerings enable our users to gain the skills necessary to develop deploy and manage our software
However in many situations such as those involving complex enterprise IT environments large deployments and novel use cases our users require our support Accordingly we include support as part of the subscriptions we sell for our products Our global support organization consists of engineers who provide technical support services including troubleshooting technical audits cluster tuning and upgrade assistance Our support team is globally distributed and provides coverage 24 hours per day 365 days per year across multiple languages
Our platform consists of our three solutions Elasticsearch Elastic Observability and Elastic Security and software that supports our various deployment alternatives Because our solutions are built on top of a common platform innovations and new capabilities in our platform may benefit many of our solutions Our customers can customize and extend our solutions to fit their needs by leveraging the power of our platform and our developer capabilities
Our platform combines powerful parts of traditional search engines such as an inverted index to power fast full text search and a column store for analytics with native support for a wide range of data types including text dates numbers geospatial data date numeric ranges and IP addresses With sensible defaults and no upfront schema definition necessary our platform makes it easy to start with simple storage solutions and fine tune them as datasets grow
Elasticsearch is the most downloaded open source vector database allowing users to create store and search vector embeddings at scale By adding the ability to combine text and vector search for hybrid retrieval and filtering ranking and re ranking capabilities to deliver the most relevant results we go beyond traditional vector databases Elastic has the only platform with Better Binary Quantization to reduce the memory required without sacrificing accuracy and provide native integrations to the leading AI providers
Customers use Elasticsearch to build generative AI applications on private data RAG enables them to ground LLMs on a specific corpus of data without needing to train or fine tune models Elasticsearch excels at producing the most relevant context for grounding LLMs using RAG while also delivering enterprise grade security based on document and field level permissions that ensure data privacy and security When using RAG with Elastic customers also benefit from built in tools and models that cover the entire RAG workflow from ingest and inference to retrieval and LLM integration giving developers everything they need to build RAG based applications
Machine learning capabilities such as anomaly detection forecasting and categorization are a tightly integrated part of our platform so as to automatically model the behavior of data such as trends and periodicity in real time to identify issues faster streamline root cause analysis and reduce false positives Without these capabilities it can be very difficult to identify issues such as infrastructure problems or intruders in real time across complex high volume fast moving datasets In the last few years we have also added native support for vector search and model management for advanced machine learning models
The Elasticsearch query domain specific language is a flexible expressive search language that exposes a rich set of query capabilities across any kind of data From simple Boolean operators to custom relevance functions users can articulate exactly what they are looking for and bring their own definition of relevance The query language also includes a composable aggregation framework that enables users to summarize disaggregate and analyze structured or semi structured datasets across multiple dimensions Examples of these capabilities all with a single search include tracking the top ten users by expenditure level looking at data week over week analyzing data across geographies and drilling down into details with specific filters
Elasticsearch has consistent well documented application programming interfaces APIs that work the same way on one node during initial development as on a hundred nodes in production Elasticsearch also ships with a number of language clients that provide a natural way to integrate with a variety of popular programming frameworks reducing the learning curve and leading to a shorter time to realizing value
Everything stored in Elasticsearch is indexed by default so users do not need to decide in advance what queries they will want to run Our architecture optimizes throughput time to data availability and query latency Elasticsearch can index millions of events per second and newly added data can be available for search nearly instantly
Elasticsearch is designed to scale horizontally and be resilient to node or hardware failures As nodes join a cluster data is automatically re balanced and queries and indexing are spread across the new nodes seamlessly This makes it easy to add hardware to increase indexing throughput or improve query throughput Elasticsearch also detects node failures and hardware or network issues and automatically protects user data by eliminating the failing or inaccessible nodes and creating new replicas of the data
Security features give administrators the rights to grant specific levels of access to their various types of users such as IT operations and application teams Elasticsearch serves as the central authentication hub for our entire platform Security features include encrypted communications and encryption at rest role based access control single sign on and authentication field level attribute level and document level security and audit logging
Kibana our platform s user interface allows users to manage our platform and to visualize data Additionally the interfaces for many of our solutions e g Elastic Observability and Elastic Security are built into this interface Key features of our user interface include the following
Our platform s user interface provides interactive data views visualizations and dashboards powered by structured filtering and unstructured search to enable users to get to answers more quickly Diverse user needs are supported by a variety of data visualization types such as simple line and bar charts purpose built geospatial and time series visualizations tree diagrams network diagrams heatmaps scatter plots and histograms
Our user interface illustrates the health of our platform s various components and provides timely alerts to notify administrators of any problems Its central management user interfaces make it easier to operate our platform at scale
Our user interface is where our users and customers access our three solutions Elasticsearch Elastic Observability and Elastic Security It provides core services like security alerting and data visualization components which make it easy for users to discover all of the capabilities our platform and solutions provide
Our user interface is designed to be extensible Users interested in a highly specialized visualization type not distributed by default can customize experiences and make these customizations available to the community Dozens of customizations have been shared by the community via Elastic documentation and code sharing platforms such as GitHub
Our solutions are designed to minimize time to value and deployment costs of using our platform for common use cases The functionality of our solutions often includes specialized data collection through standardized APIs or custom agents and custom user interfaces for specific data analytics visualizations workflows and actions
Customers can bring the focused power of our platform to their company website ecommerce site or applications with sophisticated retrieval algorithms and the ability to integrate with large language models Elastic delivers seamless scalability tunable relevance controls thorough documentation well maintained clients a refined set of APIs intuitive dashboards and robust analytics to build a leading search experience Customers can build rich applications directly on top of Elasticsearch or they can use our Application Search framework to rapidly build and customize search applications
Customers can deploy internal workplace search to bring modern search to collaborative decisions and experiences Elastic seamlessly connects to some of the world s most widely adopted productivity tools customer relationship management platforms cloud storage platforms collaboration tools operation management platforms and content management systems Custom sources provide a set of APIs that let customers and users ingest any type of content from even more sources while preserving access control information
Index search and analyze structured and unstructured logs at large scale to monitor the health and performance of an organization s services infrastructure and applications Users can analyze and visualize information extracted from logs to understand system behavior and trends to optimize performance and preemptively address potential issues By querying logs in ad hoc ways users can triage troubleshoot and resolve performance issues
With 400 out of the box integrations and automatic import users gain visibility across cloud Kubernetes serverless on premises and hosts Intuitive visualizations and quick analysis supported by out of the box machine learning and preconfigured dashboards allow users to troubleshoot faster as well as measure performance targets for services such as availability latency traffic and errors using Service Level Objectives SLO
OpenTelemetry based APM delivers insights into application performance at the code level Users can instrument apps and see the lifecycle of a transaction across services from front end to back end This can give developers confidence in the code they ship and can give operational teams visibility into code level errors and performance bottlenecks to accelerate root cause analysis and resolution during an investigation
Customers and users can identify problem areas and improve the overall experiences of their end users as they navigate their digital assets With synthetic monitoring customers can track and monitor the availability of the hosts websites services and application endpoints that support business operations Through proactive monitoring with synthetic monitoring and RUM customers can detect troublesome components before they are reported by end users
Always on machine learning analysis instantly surfaces anomalies patterns correlations and root causes AI Assistant and advanced machine learning enable interactive natural language chat experience that integrates with enterprise knowledge bases to quickly resolve issues
Elastic delivers fast scalable detection and investigation across cloud network endpoint user and third party data Security data is normalized using Elastic Common Schema ECS and enriched to provide relevant context for analysis Analysts can search across all data pivot during investigations and review activity using timeline views and built in case tracking AI assisted features help identify related alerts and prioritize what matters most The platform is open and accessible giving teams full control over their data and the flexibility to adapt detections and workflows Built in SOAR capabilities streamline response by automating alert forwarding case creation and workflow integrations with external tools reducing manual effort without switching platforms
Elastic Security includes endpoint detection and response capabilities integrated directly into the SIEM These capabilities detect and block ransomware fileless attacks and hands on keyboard activity even on isolated hosts Endpoint data whether native or from third party tools can be analyzed alongside other telemetry to provide context and trigger automated response actions across systems
Elastic delivers XDR capabilities by correlating data across endpoints cloud network and user activity all within the SIEM Prebuilt rules machine learning jobs and AI driven analytics help detect multi stage attacks that cross domains By analyzing native and third party telemetry together in one interface Elastic reduces investigation time and eliminates context switching
Elastic provides cloud detection and response capabilities directly within the SIEM giving security teams visibility into activity across multi cloud environments It combines cloud workload monitoring with posture and vulnerability context Native telemetry from cloud providers and findings from third party CSPM tools can be ingested and analyzed together helping teams connect misconfigurations to real time threats This unified view across accounts and providers reduces blind spots and speeds up response to risks in modern cloud environments
Elastic has always been committed to an open development process with transparent and direct engagement with our community Our team extends beyond our employee base and includes all the users who download our software Our users interact with us on our website forums and on X formerly known as Twitter GitHub Stack Overflow Quora Facebook and other platforms
To build products that best meet our users needs we focus on and invest in building a strong community Each download of our platform is a new opportunity to educate our next contributor hear about a new use case explore the need for a new feature or meet a future member of the team Community is core to our identity binding our products closely together with our users Community gives us the ability to get their candid feedback creating a direct line of communication between our users and the builders of our products across all of our features including both free and paid capabilities and enabling us to make our products simpler and better
The Elastic community has a code of conduct that covers the behaviors of the Elastic community in any forum mailing list wiki website code repository Slack channel private correspondence or public meeting It is designed to ensure that the Elastic community is a space where members and users can freely and openly communicate collaborate and contribute both ideas and code This Elastic community code of conduct also covers our community ground rules be considerate be patient be respectful be nice communicate effectively and ask for help when unsure
Our market is highly competitive quickly evolving fragmented and subject to rapid changes in technology shifting customer needs and frequent introductions of new offerings Our principal competitors include
For Elasticsearch and other platform use cases offerings such as Apache Solr open source offering Lucidworks Fusion and MongoDB Atlas and search tools including Algolia Coveo Google Pinecone and Microsoft Azure Cognitive Search
Certain cloud hosting providers and managed service providers including AWS which offer products or services based on a forked version of our platform These offerings are not supported by Elastic and come without any of Elastic s proprietary features whether free or paid
We believe that we compare favorably to our competitors on the basis of the factors listed above However compared to us many of our competitors have substantially greater financial technical and other resources greater brand recognition larger sales forces and marketing budgets broader distribution networks and presence more established relationships with current or potential customers and partners more diverse product and services offerings and larger and more mature intellectual property portfolios Our competitors may be able to leverage these resources to gain business in a manner that discourages customers from purchasing our offerings
We expect that our industry will continue to attract new companies including smaller emerging companies which could introduce new offerings We may also expand into new markets and encounter additional competitors in such markets
While our products and solutions have various competitors across different use cases such as search applications and workplace search logging metrics APM business analytics and security analytics we believe that few competitors currently have the capabilities to address our entire range of use cases We believe our industry requires constant change and innovation and we plan to continue to evolve search as a foundational technology to solve the problems of today and new emerging problems in the future
We rely on a combination of patents patent applications registered and unregistered trademarks copyrights trade secrets license agreements confidentiality procedures non disclosure agreements with third parties and other contractual measures to safeguard our core technology and other intellectual property assets In addition we maintain a policy requiring our employees contractors and consultants to enter into confidentiality and invention assignment agreements As of April 30 2025 we had a number of active patents issued in both the United States and outside of the United States with expirations ranging from 2031 to 2042 In addition as of April 30 2025 we had numerous U S and international trademark registrations
The laws procedures and restrictions on which we rely may provide only limited protection and any of our intellectual property rights may be challenged invalidated circumvented infringed or misappropriated In addition the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States or other jurisdictions and we therefore may be unable to protect our proprietary technology in certain jurisdictions
In addition our technology incorporates software components licensed to the general public under open source software licenses such as the Apache Software License Version 2 0 Apache 2 0 and other permissive licenses We obtain many components from software developed and released by contributors for independent open source components of our technology Open source licenses grant licensees broad permissions to use copy modify and redistribute our platform As a result open source development and licensing practices can limit the value of our software copyright assets
For additional information about risks relating to our intellectual property see the section titled Risk Factors Risks Related to our Business and Industry in Item 1A of this Annual Report on Form 10 K
As of April 30 2025 we had a total of 3 537 employees in over 40 countries globally None of our U S employees are represented by a labor union In certain countries we have works councils or follow statutory requirements for employee representation through industry wide collective bargaining agreements
Elastic originated as a distributed company and continues to be distributed by design We have built our processes systems and teams so that employees can generally perform their jobs without needing to be physically present in the same room or even in the same time zone as their colleagues Just as distributed systems are more resilient we believe that a distributed workforce helps build a strong company that can scale and adapt as new challenges arise Our distributed model also expands our reach broadening our ability to attract talent across regions
At the core of our culture is our Source Code a shared set of ideas that guide our approach to business with an emphasis on delivering value for our customers while providing flexibility and balance for our employees empowering them to be their whole creative selves
We endeavor to be an employer of choice and strive to sustain a sense of inclusion and belonging among all employees with programs designed to foster community and an appreciation for the unique experiences and perspectives represented across Elasticians globally We are committed to ensuring that our employees have a voice and the opportunity to share their ideas and insights We formally seek employee feedback through regular employee experience surveys and the results of these surveys are reviewed at the company functional team and manager level
We support the continuous learning and development of all Elasticians through programs that develop skills for individual contributors leaders of others and leaders of the business We deliver learning and development both through on demand virtual learning and programs for specific teams or groups of emerging leaders To promote and reinforce our high standards of ethics and integrity throughout the entire company we require all employees to acknowledge their compliance with our Code of Business Conduct and Ethics and complete mandatory training on this code and on whistleblowing anti harassment discrimination anti retaliation and other key policies and standards
We aim to provide all our employees with a total rewards package that is market competitive emphasizing global consistency and local relevance We are committed to fair pay without regard to gender race or ethnicity We partner with an external firm to conduct pay equity analysis on a regular basis using established job groupings and control factors to promote appropriate comparisons We provide benefit programs designed to enable employees to meet their well being goals from starting a family to being at their physical and emotional best
Through our Elastic Cares program our employees can support the charitable organizations that matter most to them on a local and global level This program encompasses donation matching our nonprofit organization program which provides our technology for free to certain nonprofit organizations and our volunteer time off initiative
Our worldwide business activities are subject to various laws rules and regulations of the United States as well as of foreign governments Our compliance with existing or future governmental regulations including but not limited to those pertaining to global trade business acquisitions consumer and data protection and taxes could have material impacts on our business See Item 1A Risk Factors of this Annual Report on Form 10 K for a discussion of these potential impacts
We are a distributed company which means our workforce is distributed globally Accordingly we do not have a principal executive office We are registered with the trade register of the Dutch Chamber of Commerce under number 54655870 Our registered office is at Keizersgracht 281 1016 ED Amsterdam the Netherlands
Our website address is www elastic co Information contained on or that can be accessed through our website does not constitute part of this Annual Report on Form 10 K and references to our website address in this Annual Report on Form 10 K are inactive textual references only
We announce material information to the public about us our products and services and other matters through a variety of means including filings with the U S Securities and Exchange Commission SEC press releases public conference calls our website www elastic co the investor relations section of our website https ir elastic co our blog www elastic co blog and or social media including our account on X https x com elastic our Facebook page www facebook com elastic co and or LinkedIn account www linkedin com company elastic co to achieve broad non exclusionary distribution of information to the public We encourage investors and others to review the information we make public in these locations as such information could be deemed to be material information This list may be updated from time to time
We make available free of charge through our website our Annual Report on Form 10 K Quarterly Reports on Form 10 Q Current Reports on Form 8 K and all amendments to these reports as soon as reasonably practicable after we electronically file such material with or furnish it to the SEC
A description of the risks and uncertainties associated with our business industry and ownership of our ordinary shares is set forth below The risks and uncertainties described below are not the only ones we face Additional risks and uncertainties that we are unaware of or that we currently believe are not material may also become important factors that could adversely affect our business financial condition operating results and prospects
Our business and operations have experienced rapid growth and if we do not appropriately manage our future growth or are unable to improve our systems and processes our business financial condition results of operations and prospects may be adversely affected
We have experienced rapid growth and increased demand for our offerings The growth and expansion of our business and offerings place a significant strain on our management operational and financial resources In addition as customers adopt our technology for an increasing number of use cases we have had to support more complex commercial relationships We may not be able to leverage develop and retain qualified employees effectively enough to realize our growth plans Any failure by us to continue to improve our information technology and financial infrastructure our operating and administrative systems our relationships with our partners and other third parties and our ability to manage headcount and processes in an efficient manner could result in increased costs negatively affect our customers satisfaction with our offerings and harm our results of operations
We incurred net losses of 108 1 million and 236 2 million for the years ended April 30 2025 and 2023 respectively and have incurred losses in all but one of our prior fiscal years since our inception As a result we had an accumulated deficit of 1 100 billion as of April 30 2025 Although we had net income of 61 7 million for the year ended April 30 2024 we may incur net losses in future years Our operating expenses will continue to increase substantially in the foreseeable future as we continue to enhance our offerings broaden our customer base and pursue larger transactions expand our sales and marketing activities and other operations hire additional employees and continue to develop our technology These efforts may prove more expensive than we currently expect and we may not succeed in increasing our revenue sufficiently or at all to offset these higher expenses Revenue growth may slow or revenue may decline because of slowing demand for our offerings increasing competition economic downturns or other factors including as a result of rising rates of inflation and other macroeconomic events You should not consider our revenue growth in prior periods as indicative of our future performance Any failure by us to continue to increase our revenue and grow our business could prevent us from achieving profitability at all or on a consistent basis
Unfavorable or uncertain conditions in our industry or the global economy or reductions in information technology spending including as a result of adverse macroeconomic conditions international trade policies or geopolitical conflicts could limit our ability to grow our business and negatively affect our results of operations
Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our customers Current future or sustained economic uncertainties or downturns whether actual or perceived could adversely affect our business and results of operations Negative conditions in the general economy both in the United States and in international markets including conditions resulting from changes in gross domestic product growth financial and credit market fluctuations international trade policies changes in inflation foreign exchange and interest rate environments recessionary fears supply chain constraints energy costs political instability and conflict natural catastrophes warfare infectious diseases and terrorist attacks could cause a decrease in business investments by our customers and potential customers including spending on information technology and negatively affect the growth of our business For example inflation rates recently reached levels not seen in decades and have continued to create economic volatility as governments adjust interest rates in an attempt to manage the inflationary environment which may further lead to our customers tightening their technology expenditures and investment Further the evolving conflicts in the Middle East and Russia s war with Ukraine could continue to have significant negative macroeconomic consequences including on the businesses of our customers which could negatively impact their spending on our offerings
Heightened global economic uncertainty and changes in economic conditions including in international trade relations legislation and regulations including those related to trade policies and taxation enforcement priorities or economic and monetary policies could result in heightened diplomatic tensions or political and civil unrest among other potential impacts may have an adverse effect on the global economy as a whole and on our business or may require us our customers and other stakeholders to significantly modify current business practices Any further disruptions or other adverse developments or concerns or rumors about any such events or similar risks in the financial services industry both in the United States and in international markets may lead to market wide liquidity problems and may impact our or our customers liquidity and as a result negatively affect the level of customer spending on our offerings
As a result of the foregoing conditions our revenue may be disproportionately affected by longer and more unpredictable sales cycles delays or reductions in customer consumption or in general information technology spending and further impacts of changing foreign exchange rates Further current and potential customers may choose to develop in house software as an alternative to using our paid products These factors could increase the amount of customer attrition we have experienced recently and further slow consumption and overall customer expenditure Moreover competitors may respond to market conditions by lowering prices If the economic conditions of the general economy or markets in which we operate do not improve or worsen from present levels our business results of operations and financial condition could be adversely affected
AI presents new risks and challenges that may affect our business We have made and expect to continue to make continued investments to integrate AI and machine learning technology into our offerings including increasing our technical operations and engineering in these applications Rapid technological progress in the industry regarding new and emerging AI technologies such as generative AI may require additional investment in the development integration and maintenance of our product offerings as well as the development of appropriate technical protections and safeguards to maintain a responsible and ethical AI framework These requirements may add costs and could increase our expenses as we continue to expand the breadth of use and applications of AI technologies including generative AI further into our product offerings or to address changes to AI technologies frameworks or regulations In addition we may incur substantial costs in our sales and marketing efforts to promote and sell our offerings based on AI technologies including costs for branding product promotion and demand generation as well as for technical training training material generation and investments in resources for our sales personnel and partners Despite such investments in building our product offerings and in sales and marketing our product offerings may not be adopted by customers We may not achieve significant revenue directly related to all of our AI related initiatives for several years if at all
Further AI presents risks challenges and unintended consequences that could affect our ability to continue to incorporate the use of AI successfully in our business and solutions in new ways Further given the complex nature of AI technology we face an evolving regulatory landscape and significant competition from other companies Competitors may incorporate AI into their products more quickly or more successfully than we do which could impair our ability to compete effectively and adversely affect our financial results Data practices by us or others that result in controversy could also impair the acceptance of AI solutions which could undermine confidence in the decisions predictions analysis or other content that our AI related initiatives produce Any of the foregoing could adversely affect our business reputation or financial results
Ethical and regulatory issues relating to the use of AI and similar evolving technologies in our offerings may result in new or enhanced governmental or regulatory scrutiny reputational harm damage to our competitive position and liability
We view our continued investment in AI and generative AI research and development as an opportunity to enhance our products and services strengthen our competitive advantage and contribute to the responsible advancement of AI and generative AI technology While we aim to do so in a responsible manner the use of AI and generative AI in our products and services presents ethical and legal risks to our business financial condition and results of operations If our use of AI becomes controversial we may experience loss of user trust as well as brand or reputational harm competitive injury or legal liability The use of AI technologies also could expose us to an increased risk of cybersecurity threats and incidents and claims or other adverse effects from infringements or violations of intellectual property or other regulated activity Our use of such technologies could increase the risk of exposure of our or other parties proprietary confidential information or other confidential or sensitive information to unauthorized recipients including inadvertent disclosure of confidential or sensitive information into publicly available third party training sets Such risks related to the use of AI could whether directly or indirectly harm our results of operations competitive position and business
AI is the subject of evolving review by various domestic and international governmental and regulatory agencies including the SEC and the Federal Trade Commission FTC and laws rules directives and regulations governing the use of AI such as the EU Artificial Intelligence Act are changing and evolving rapidly We may not always be able to anticipate how to respond to these legal frameworks for AI use and we may have to expend resources to adjust or audit our products and services in certain jurisdictions especially if the legal frameworks are not consistent across jurisdictions Any failure or perceived failure by us to comply with laws rules directives and regulations governing the use of AI could have an adverse impact on our business
If we experience a security incident or unauthorized access to or other unauthorized processing of confidential information including personal data otherwise occurs our software may be perceived as not being secure customers may reduce the use of or stop using our products and we may incur significant liabilities
In the normal course of our business we receive collect manage store transmit and otherwise process large amounts of proprietary information and confidential data including personal data and other sensitive information relating to our operations products customers and business partners Any cybersecurity incident affecting our networks systems or those on which we rely could result in our loss of confidential information including personal data disruption to our operations significant remediation costs lost revenue increased insurance premiums damage to our reputation litigation regulatory investigations fines or other liabilities We face sophisticated and evolving cyber threats from individual hackers criminal groups and state sponsored organizations as well as risks that employees contractors or other insiders particularly those with connectivity to our systems may introduce vulnerabilities into our environments facilitate a cyber attack or take action to misappropriate our intellectual property and proprietary information
As a provider of security solutions we provide security services to many entities that are frequently and intensively targeted by some cyber threat actions such as U S government agencies defense contractors and non U S governments Our work protecting these entities increases the likelihood that we may be targeted by nation state actors including those from countries with a history of conducting cyber operations against such organizations We have been and may continue to be specifically targeted by threat actors for attacks intended to circumvent our security capabilities as an entry point into customers endpoints networks or systems Our industry continues to see a large volume of unauthorized scans of systems searching for vulnerabilities or misconfigurations to exploit Attempted cyber attacks of our systems can deploy such malicious techniques among others as phishing ransomware credential stuffing distributed denial of service network intrusions malware domain name system spoofing exploitation of zero day vulnerabilities and structural query language injection While our security systems and controls have successfully protected us against and mitigated the impacts of many past attacks of this nature we expect that we will experience similar incidents in the future
If our security measures are compromised we may face a loss in intellectual property protection our data or our customers data and our reputation may be damaged our business may suffer and we could be subject to claims demands regulatory investigations and other proceedings and indemnity obligations and otherwise incur significant liability Even the perception of inadequate security or an inability to maintain security certifications maintain a security program in line with industry standards or to comply with our customer or user agreements contracts with third party vendors or service providers or other contracts may damage our reputation cause a loss of confidence in our security solutions and negatively affect our ability to win new customers and retain existing customers Further we could be required to expend significant capital and other resources to address any security incident and we may face difficulties or delays in identifying and responding to any cybersecurity incident If our systems or networks or those on which we rely suffer severe damage disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner we could experience delays in reporting our financial results and we may lose revenue and profits as a result of our inability to timely produce distribute invoice and collect payments for our products and services
In addition many of our customers may use our software for processing their confidential information including business strategies financial and operational data personal information and other related data As a result unauthorized access to or use of our software or such data could result in the loss compromise corruption or destruction of our customers confidential information Such access or use could also hinder our ability to obtain and maintain information security certifications that support customers adoption of our products and our retention of those customers We expect to continue incurring significant costs in connection with our implementation of administrative technical and physical measures designed to protect the integrity of our customers data and prevent data loss misappropriation and other security incidents
We engage third party vendors and service providers to store and otherwise process some of our and our customers data including sensitive and personal information There have been and may continue to be significant supply chain attacks generally and our third party vendors and service providers may be targeted or affected by such attacks and other efforts to exploit cybersecurity vulnerabilities Our ability to monitor our third party vendors and service providers data security is limited Threat actors may be able to circumvent those security measures and gain unauthorized access to or cause misuse disclosure loss destruction or other unauthorized processing of our and our customers data including sensitive and personal information Further threat actors may attempt to deploy malicious code to users of the open source libraries leveraged by our products which could negatively affect us and those users
Techniques used to sabotage or obtain unauthorized access to systems or networks are constantly evolving and in some instances are not identified until launched against a target We and our third party vendors and service providers may be unable to anticipate these techniques react to them in a timely manner or implement adequate preventative measures Because of the complexity and interconnectedness of our systems and networks and those on which we rely the process of upgrading or patching our protective measures could itself create a risk of cybersecurity intrusions or system disruptions including for customers who rely upon or have exposure to such systems and networks
Limitations of liability provisions in our customer and user agreements contracts with third party vendors and service providers or other contracts may not be enforceable or adequate to protect us from any liabilities or damages with respect to any particular claim relating to a security incident We are subject to risks that our existing insurance coverage may not continue to be available on acceptable terms or available in sufficient amounts to cover claims related to a cybersecurity incident or that the insurer may deny coverage as to any future claim The successful assertion of claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies including premium increases or the imposition of large deductible or co insurance requirements could adversely affect our business
We derive a significant portion of our revenue from renewals of existing subscriptions although our customers may choose not to renew their subscriptions upon completion of the contract term Our subscriptions for self managed deployments typically range from one to three years while many of our Elastic Cloud customers purchase subscriptions either on a month to month basis or on a committed contract of generally one to three years in duration
Decisions by our customers concerning whether to renew their contracts depend on a number of factors including their budgets their satisfaction with our products and our customer support our products ability to integrate with new and changing technologies the frequency and severity of product outages our product uptime or latency and the pricing of our products or competing products If our customers renew their subscriptions they may renew for shorter subscription terms or on other terms that are less financially advantageous to us If our existing customers do not renew their subscriptions or renew on less favorable terms our revenue may grow more slowly than expected or decline
Our revenue growth rate may decline or even become negative if we are unable to increase sales of our subscriptions to new customers sell additional subscriptions to our existing customers or expand the value of our existing customers subscriptions
We offer certain features of our products with no payment required Customers purchase subscriptions to gain access to additional functionality and support Our future success depends on our ability to sell our subscriptions to new customers including to large enterprises and to expand the deployment of our offerings with existing customers by selling paid subscriptions to our existing users and expanding the value and number of existing customers subscriptions Our ability to sell new subscriptions depends on a number of factors including the prices of our offerings the prices of products offered by our competitors and the budgets of our customers We also face difficulty in displacing the products of incumbent competitors In addition a significant aspect of our sales and marketing focus is to expand deployments within existing customers The rate at which our existing customers purchase additional subscriptions and expand the value of existing subscriptions depends upon customers level of satisfaction with our offerings the nature and size of the deployments the desire to address additional use cases the perceived need for additional features and general economic conditions If our existing customers do not purchase additional subscriptions or expand the value of their subscriptions our Net Expansion Rate may decline We rely in large part on our customers to identify new use cases for our products in order to expand such deployments and grow our business If our customers do not recognize the potential of our offerings our business would be materially and adversely affected If our efforts to sell subscriptions to new customers and to expand deployments with existing customers are not successful our total revenue may decline and revenue growth rate may decline or even become negative and our business could suffer
We believe that we must offer cloud based products to address the market segment that prefers a cloud based solution and that our future success will depend significantly on the growth in adoption of Elastic Cloud our family of cloud based offerings For the years ended April 30 2025 2024 and 2023 Elastic Cloud contributed 46 43 and 40 of our total revenue respectively As the use of cloud based computing solutions is rapidly evolving it is difficult to predict the potential growth if any of general market adoption customer adoption and retention rates of our cloud based offerings We have incurred and will continue to incur substantial costs to develop sell and support our Elastic Cloud offerings We have entered into non cancelable multi year cloud hosting capacity commitments with some third party cloud providers which require us to pay for such capacity irrespective of actual usage Further as our cloud offering makes up an increasing percentage of our total revenue we expect to see increased associated cloud related costs such as hosting and infrastructure costs which may adversely impact our gross margins Demand for these offerings could decrease for reasons within or outside of our control including among other factors lack of customer acceptance technological challenges with bringing cloud offerings to market and maintaining those offerings information security data protection or privacy concerns our inability to properly manage and support our cloud based offerings competing technologies and products weakening economic conditions and decreases in corporate spending If we are not able to develop market or deliver cloud based offerings that satisfy customer requirements technically or commercially if our investments in cloud based offerings do not yield the expected return or if we are unable to decrease the cost of providing our cloud based offerings our business competitive position financial condition and results of operations may be harmed
Our results of operations including our revenue cost of revenue gross margin operating expenses cash flows and deferred revenue have fluctuated from quarter to quarter in the past and may continue to vary significantly in the future so that period to period comparisons of our results of operations may not be meaningful These variations may be further impacted as more of our Elastic Cloud customers adopt consumption based arrangements or as Elastic Cloud customers already on consumption based arrangements adjust their usage in response to the current macroeconomic environment These variations may also be impacted by internal reorganizations including reassignment of personnel to new roles or to new sales territories Accordingly our financial results in any one quarter should not be relied upon as indicative of future performance Our quarterly financial results may fluctuate as a result of a variety of factors many of which are outside of our control may be difficult to predict and may or may not fully reflect the underlying performance of our business Factors that may cause fluctuations in our quarterly financial results include the risks and uncertainties described in this Risk Factors section and elsewhere in this Annual Report on Form 10 K Fluctuations in our results could cause us to fail to meet the expectations of investors or securities analysts which could cause the trading price of our ordinary shares to fall substantially and result in costly lawsuits including securities class action suits against us which could have an adverse effect on our business
Historically we have experienced quarterly fluctuations and seasonality in our sales and results of operations based on the timing of our entry into agreements with new and existing customers customer usage patterns for our consumption based arrangements and the mix between annual and monthly contracts entered into each reporting period Trends in our business financial condition results of operations and cash flows are impacted by seasonality in our sales cycle which generally reflects a trend toward the highest sales in our fourth fiscal quarter and the lowest sales in our first fiscal quarter We expect that this seasonality will continue to affect our results of operations in the future and might become more pronounced as we continue to target larger enterprise customers
We do not have an adequate history with our consumption based arrangements for our Elastic Cloud offerings to accurately predict the long term rate of customer adoption or renewal or the impact those arrangements will have on our near term or long term revenue or operating results
Because we recognize revenue under a consumption based arrangement based on actual customer consumption we do not have the same ability to predict the timing of revenue recognition as we do under subscription arrangements in which revenue is recognized on a predetermined schedule over the subscription term Moreover customers may consume our products at a different pace than we expect For example we have experienced and if adverse economic conditions persist may continue to experience slowing consumption as customers look to optimize their usage Additionally we have seen and may continue to see newer customers increase their consumption of our solutions at a slower pace than our more tenured customers For these reasons our revenue may be less predictable or more variable than our historical revenue and our actual results may differ materially from our forecasts
If we are not able to maintain and enhance our brand especially among developers and executives with budgetary control our ability to expand our customer base will be impaired and our business and operating results may be adversely affected
We believe that developing and maintaining widespread awareness of our brand especially with developers and executives with budgetary control within their organizations is critical to achieving widespread acceptance of our software and attracting new users and customers We also believe that the importance of brand recognition will increase as competition in our market increases Successfully maintaining and enhancing our brand will depend largely on the effectiveness of our marketing efforts our ability to maintain our customers trust our ability to continue to develop new functionality and use cases and our ability to successfully differentiate our products and platform capability from competitive products Brand promotion activities may not generate user or customer awareness or increase revenue Even if they do increase revenue any such increase may not offset the expenses we incur in building our brand For instance our continued focus and investment in our ElasticON user conferences and similar investments in our brand user engagement and customer engagement may not generate the desired customer awareness or a sufficient financial return If we fail to successfully promote and maintain our brand we may fail to attract or retain users and customers necessary to achieve the widespread brand awareness that is critical for broad customer adoption of our products which would adversely affect our business and results of operations
The market for our products is highly competitive quickly evolving fragmented and subject to rapid changes in technology shifting customer needs and frequent introductions of new offerings We believe that our ability to compete depends upon many factors some of which are beyond our control
Some of our current and potential competitors have longer operating histories significantly greater financial technical marketing and other resources stronger brand recognition broader global distribution and presence more established relationships with current or potential customers and partners and larger customer bases than we do These factors may allow our competitors to respond more quickly than we can to new or emerging technologies and changes in customer preferences These competitors may engage in more extensive research and development efforts undertake more far reaching and successful sales and marketing campaigns have more experienced sales professionals execute more successfully on their go to market strategy and have greater access to more markets and decision makers and adopt more aggressive pricing policies which may allow them to build larger customer bases than we have Claims made about our products by current and future competitors even if misleading may also negatively impact customer perceptions about us New start up companies that innovate and large competitors that are making significant investments in research and development may develop offerings that compete with or achieve greater market acceptance than our offerings which could attract customers away from our offerings and reduce our market share As market segments become increasingly crowded and competition intensifies we could potentially face increasing costs of goods and services sold If we are unable to anticipate or react effectively to these competitive challenges our competitive position would weaken which could adversely affect our business and results of operations
The market for search technologies including search observability and security is subject to rapid technological change innovation such as the use of AI evolving industry standards and changing regulations as well as changing customer needs requirements and preferences Our success depends on our ability to continue to innovate enhance existing products expand the use cases of our products anticipate and respond to changing customer needs requirements and preferences and develop and introduce in a timely manner new offerings that keep pace with technological and competitive developments
We have experienced delays in releasing new products deployment options and product enhancements and may experience similar delays in the future As a result in the past some of our customers deferred purchasing our products until the next upgrade was released Future delays or problems in the installation or implementation of our new releases may cause customers to forgo purchases of our products and purchase products of our competitors instead
The success of new product introductions depends on a number of factors that include timely and successful product development market acceptance our ability to manage the risks associated with new product releases the availability of software components for new products the effective management of development and other spending in connection with anticipated demand for new products the availability of newly developed products and the risk that new products may have defects in the early stages of introduction We have experienced bugs errors or other defects in new products and product updates and may have similar experiences in the future Further our ability to increase the usage of our products depends in part on the development of new use cases for our products which is typically driven by our developer community and may be outside of our control We also have invested and may continue to invest in the acquisition of complementary businesses technologies services products and other assets that we expect will expand the products that we can offer our customers We may make these investments without being certain that they will result in products or enhancements that will be accepted by existing or prospective customers If we are unable to enhance our existing products to meet evolving customer requirements increase adoption and usage of our products or develop new products or if our efforts to increase the usage of our products are more expensive than we expect our business results of operations and financial condition could be adversely affected
The markets for certain of our products such as our Search Observability and Security solutions are evolving and our products are relatively new in these markets Accordingly it is difficult to predict continued customer adoption and renewals for these products customers demand for these products the size growth rate expansion and longevity of these markets the entry of competitive products or the success of existing competitive products Our ability to penetrate these evolving markets depends on a number of factors including the cost performance and perceived value associated with our products If these markets do not continue to grow as expected or if we are unable to anticipate or react to changes in these markets our competitive position could weaken which could adversely affect our business and results of operations
The length of our sales cycle can be unpredictable particularly with respect to sales through our channel partners or sales to large customers and our sales efforts may require considerable time and expense which could negatively affect our cash flows and results of operations
Our results of operations may fluctuate in part because of the length and variability of the sales cycle of our subscriptions and the difficulty in making short term adjustments to our operating expenses Our results of operations depend upon sales to new customers including large customers and increasing sales to existing customers The length of our sales cycle from initial contact with our sales team to contractually committing to our subscriptions can vary substantially from customer to customer based on the complexity of our offerings as well as whether a sale is made directly by us or through a channel partner Our sales cycle can extend to more than a year for some customers and the length of sales cycles may be further extended as a result of worsening economic conditions In addition some customers have been scrutinizing their spending more carefully and reducing their consumption spending given the current uncertain economic environment and we generally expect this caution to continue We have also experienced and if adverse economic conditions persist may continue to experience longer and more unpredictable sales cycles As we target more of our sales efforts at larger enterprise customers we may face greater costs longer sales cycles greater competition and less predictability in completing some of our sales A customer s decision to use our solutions may be an enterprise wide decision which could require greater levels of education regarding the use cases of our products or protracted negotiations In addition larger customers may demand more configuration integration services and features It is difficult to predict exactly when or even if we will make a sale to a potential customer or if we can increase sales to our existing customers As a result large individual sales in some cases have occurred in quarters subsequent to those we expected or have not occurred at all Lengthened or unpredictable sales cycles that cause a loss or delay of one or more large transactions in a quarter could affect our cash flows and results of operations for that quarter and for future quarters These impacts are amplified in the short term when customers slow their consumption in response to the uncertain macroeconomic environment Because a substantial proportion of our expenses are relatively fixed in the short term our cash flows and results of operations could suffer if revenue falls below our expectations in a particular quarter
Because we recognize the vast majority of the revenue from subscriptions either based on actual consumption or ratably over the term of the relevant subscription period downturns or upturns in sales are not immediately reflected in full in our results of operations
Subscription revenue accounts for the substantial majority of our revenue constituting 93 of total revenue for the years ended April 30 2025 and 2024 and 92 of total revenue for the year ended April 30 2023 The effect of significant downturns in new or renewed sales of our subscriptions is not reflected in full in our results of operations until future periods We recognize the vast majority of our subscription revenue either based on actual consumption or ratably over the term of the relevant time period As a result much of the subscription revenue we report each fiscal quarter represents the recognition of deferred revenue from subscription contracts entered into during previous fiscal quarters Consequently a decline in new or renewed subscriptions in any one fiscal quarter will not be fully or immediately reflected in revenue in that fiscal quarter and will negatively affect our revenue in future fiscal quarters
We may not be able to maintain our prices and gross profits at levels that will allow us to achieve and maintain profitability The sales prices for our offerings may decline or we may introduce new pricing models for a variety of reasons including competitive pricing pressures discounts in anticipation of or in conjunction with the introduction of new offerings or promotional programs Competition continues to increase in the market segments in which we operate and we expect competition to continue to increase and lead to increased pricing pressures Larger competitors with more diverse offerings may reduce the price of offerings that compete with ours or may bundle them with other offerings Additionally currency fluctuations in some countries and regions and pressures from uncertain inflation and interest rate environments may negatively impact actual prices that customers and channel partners are willing to pay in those countries and regions Any decrease in the sales prices for our offerings may reduce our revenue and gross profit unless accompanied by an increase in volume to offset the effects of price decreases or in the case of gross profit unless accompanied by a corresponding decrease of sufficient magnitude in costs Gross profit could also be adversely impacted by a shift in the mix of our subscriptions from self managed to our cloud offering for which we incur hosting costs as well as by any increase in our mix of services relative to subscriptions
We expect our revenue mix to vary over time as a result of a number of factors any one of which or the cumulative effect of which may result in significant fluctuations in our gross margin and operating results We expect that revenue from Elastic Cloud which contributed 46 43 and 40 of our total revenue in fiscal 2025 2024 and 2023 respectively will continue to become a larger part of our revenue mix We may experience a shift in revenue mix from cloud to self managed in areas particularly affected by evolving international trade policies Under the differing revenue recognition policies applicable to our subscriptions and services shifts in our business mix from quarter to quarter could produce substantial variation in the revenue we recognize The variation in our revenue also may result from the growth of consumption based arrangements for our Elastic Cloud offerings where the revenue we recognize is tied to our customers actual usage of our products and from a further reduction in usage by customers already using a consumption based arrangement due to the uncertain macroeconomic environment Further our gross margins and operating results could be harmed by changes in revenue mix and costs together with numerous other factors including our entry into new markets or growth in lower margin markets our entry into markets with different pricing and cost structures pricing discounts and increased price competition
Our future success depends in part on our ability to continue to attract and retain highly skilled personnel The loss of the services of any of our key personnel the inability to attract or retain qualified personnel or delays in hiring required personnel particularly in engineering and sales may seriously harm our business financial condition and results of operations Our ability to attract additional qualified personnel may be impacted by the economic uncertainty and insecurity caused by macroeconomic factors and geopolitical events The loss of services of any of our key personnel also increases our dependency on other key personnel who remain with us Although we have entered into employment offer letters with our key personnel their employment is for no specific duration and constitutes at will employment We are also substantially dependent on the continued service of our existing engineering personnel because of the complexity of our products
Our future performance also depends on the continued service and continuing contributions of our senior management to execute our business strategy and to identify and pursue new opportunities and product innovations We do not maintain key person life insurance policies on any of our employees The loss of services of members of our senior management could significantly delay or prevent the achievement of our development and strategic objectives which could adversely affect our business financial condition and results of operations Any search for senior managers in the future or any search to replace the loss of any senior managers may be protracted and we may not be able to attract a qualified candidate or replacement in a timely manner or at all particularly as potential candidates may be less willing to change jobs in periods of unstable economic conditions caused by macroeconomic and geopolitical events
The industry in which we operate is generally characterized by significant competition for skilled personnel as well as high employee attrition The increased availability of hybrid or remote working arrangements within our industry has further expanded the pool of companies that can compete for our employees and employment candidates We may not be successful in attracting integrating or retaining qualified personnel to fulfill our current or future needs We may need to invest significant amounts of cash and equity to attract and retain new employees and we may never realize returns on these investments Further to the extent we hire personnel from competitors we may be subject to allegations that they have been improperly solicited that they have divulged proprietary or other confidential information or that their former employers own their inventions or other work product
If we do not effectively develop and expand our sales and marketing capabilities including expanding training and compensating our sales force we may be unable to add new customers increase sales to existing customers or expand the value of our existing customers subscriptions
We dedicate significant resources to sales and marketing initiatives including in markets in which we have limited or no experience Our business and results of operations will be harmed if our sales and marketing efforts do not generate significant revenue increases or generate increases that are smaller than anticipated
We may not achieve revenue growth from expanding our sales force if we are unable to hire train and retain talented and effective sales personnel We depend upon our sales force to obtain new customers and to drive additional sales to existing customers We believe that there is significant competition for sales personnel including sales representatives sales managers and sales engineers with the requisite skills and technical knowledge Our ability to achieve significant revenue growth will depend in large part on our success in recruiting training and retaining sufficient sales personnel to support our growth and as we introduce new products solutions and marketing strategies we may need to re train existing sales personnel Newly hired employees also require extensive training which may take significant time before they achieve full productivity Employees we have recently hired may not become productive as quickly as we expect and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business As we continue to grow rapidly a large portion of our sales force will have relatively little experience working with us our subscriptions and our business model Additionally we may need to evolve our sales compensation plans to drive the growth of our Elastic Cloud offerings with consumption based arrangements Such changes may have adverse consequences if they are not designed effectively Our growth and results of operations could be negatively impacted if we are unable to hire and train sufficient numbers of effective sales personnel our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time our sales personnel are not successful in obtaining new customers or increasing sales to our existing customer base or our sales and marketing programs including our sales compensation plans are not effective
After our products are deployed within our customers IT environments our customers depend upon our technical support services to resolve issues relating to our products If we do not succeed in helping our customers quickly resolve post deployment issues or provide effective ongoing support and education with respect to our products our ability to renew or sell additional subscriptions to existing customers or expand the value of existing customers subscriptions would be adversely affected and our reputation with potential customers could be damaged Many larger enterprise and government entity customers have more complex IT environments and require higher levels of support than smaller customers If we fail to meet the requirements of these larger customers we may be unsuccessful in increasing our sales to them
In addition it can take several months to recruit hire and train qualified technical support employees We may not be able to hire such employees fast enough to keep up with demand particularly if the sales of our offerings exceed our internal forecasts The uncertainty related to macroeconomic conditions may result in more competition for qualified employees and delays in hiring onboarding and training new employees To the extent that we are unsuccessful in hiring training and retaining adequate support resources our ability to provide adequate and timely support to our customers and our customers satisfaction with our offerings will be adversely affected Our failure to provide and maintain or a market perception that we do not provide or maintain high quality support services could have an adverse effect on our business and results of operations
If we cannot maintain the corporate culture that has contributed to our success we could lose the innovation creativity and entrepreneurial spirit we have worked to foster which could harm our business
We believe that our culture has been and will continue to be a key contributor to our success We expect to continue to hire as we expand If we do not continue to maintain our corporate culture as we grow we may be unable to foster the innovation creativity and entrepreneurial spirit we believe we need to support our growth Moreover many of our existing employees may be able to receive significant proceeds from sales of our ordinary shares in the public markets which could lead to employee attrition and disparities of wealth among our employees that might adversely affect relations among employees and our culture in general Additional headcount growth and employee turnover also may contribute to a change to our corporate culture which could harm our business
We are dependent on lead generation strategies including offers of free use of some of our product features and free trials of some of our paid features These strategies may not be successful in continuing to generate sufficient sales opportunities necessary to increase our revenue Many users never convert from the free use model or from free trials to the paid versions of our products To the extent that users do not become or we are unable to attract paying customers we will not realize the intended benefits of these marketing strategies and our ability to grow our revenue will be adversely affected
As of April 30 2025 we had customers located in over 125 countries as we pursue our strategy to continue to expand internationally In addition as of April 30 2025 as a result of our strategy of leveraging a distributed workforce we had employees located in over 40 countries Our current international operations involve and future initiatives may involve a variety of risks including
political and economic instability related to international disputes such as the evolving conflicts in the Middle East and Russia s war with Ukraine and the related impact on macroeconomic conditions as a result of such conflicts which may negatively impact our customers partners and vendors
different labor regulations especially in the European Union where labor laws are generally more advantageous to employees than in the United States including hourly wage and overtime regulations in these locations
exposure to many stringent regulations relating to privacy data protection and information security particularly in the European Union and potentially inconsistent laws and regulations in these areas across countries
challenges inherent in efficiently managing an increased number of employees over large geographic distances including the need to implement appropriate systems policies benefits and compliance programs
risks relating to enforcement of U S export control laws and regulations that include the Export Administration Regulations EAR trade and economic sanctions including restrictions promulgated by the Office of Foreign Assets Control OFAC and other similar trade protection regulations and measures in the United States or in other jurisdictions
exposure to liabilities under anti corruption and anti money laundering laws including the U S Foreign Corrupt Practices Act of 1977 as amended FCPA and similar applicable laws and regulations in other jurisdictions
If we are unable to address these difficulties and challenges or other problems encountered in connection with our international operations and expansion we might incur unanticipated liabilities or we might otherwise suffer harm to our business generally
Our future results depend in part on our ability to sustain and expand our penetration of the international markets in which we currently operate and to expand into additional international markets We sell our offerings in international markets through direct sales and our channel partner relationships Our ability to expand internationally will depend on our ability to deliver functionality and foreign language translations that reflect the needs of the international clients that we target International expansion involves various risks including the need to invest significant resources in such expansion and the possibility that returns on such investments will not be achieved in the near future or at all in these less familiar competitive environments We may also choose to conduct our international business through other partnerships If we are unable to identify partners or negotiate favorable terms for our partnership arrangements our international growth may be limited In addition we have incurred and may continue to incur significant expenses before we generate material revenue in particular international markets as we attempt to establish our presence in those markets
A portion of our revenue is generated and a portion of our expenses is incurred outside the United States in foreign currencies which exposes us to risk of fluctuations in foreign currency markets Specifically our results of operations and cash flows are subject to currency fluctuations primarily in Euro British Pound Sterling Japanese Yen Australian Dollar against the US Dollar Exchange rates have been volatile as a result of geopolitical conflicts and uncertain macroeconomic conditions and this volatility may continue The fluctuation of currencies in which we conduct business can both increase and decrease our overall revenue and expenses for any fiscal period In addition increased international sales and operating expenses incurred in future periods outside the United States in foreign currencies will increase our foreign currency risk If we are not able to successfully hedge against the risks associated with currency fluctuations our financial condition and results of operations could be adversely affected
Any need by us to raise additional capital or generate the significant capital necessary to expand our operations and invest in new offerings could limit our ability to compete and could harm our business
We may need to raise additional funds in the future and may not be able to obtain additional debt or equity financing on favorable terms if at all particularly during times of market volatility changes in the interest rate environment and general economic instability If we raise additional equity financing our shareholders may experience significant dilution of their ownership interests and the per share value of our ordinary shares could decline Further if we engage in debt financing the holders of debt would have priority for payment over the holders of our ordinary shares and we may be required to accept terms that restrict our ability to incur additional indebtedness We may also be required to take other actions that would otherwise be in the interests of the debt holders and force us to maintain specified liquidity or other financial ratios any of which could harm our business results of operations and financial condition If we need additional capital and cannot raise it on acceptable terms we may not be able among other actions to
We generate an increasing portion of our revenue from sales to U S and non U S government entities Sales to government entities are subject to a number of risks Selling to government entities can be highly competitive expensive and time consuming often requiring significant upfront time and expense without any assurance that these efforts will generate a sale Government certification and security requirements for products like ours may change thereby restricting our ability to sell into the U S federal government sector U S state or local government sector or government sectors of countries other than the United States until we have obtained the revised certification or met the changed security requirements If we are unable to timely meet such requirements our ability to compete for and retain federal government contracts may be diminished which could adversely affect our business results of operations and financial condition
Government entities may have statutory contractual or other legal rights to terminate contracts with us or our channel partners for convenience or due to a default and any such termination may adversely affect our future results Government demand and payment for our offerings may be affected by public sector budgetary cycles and funding authorizations with funding reductions or delays adversely affecting public sector demand for our offerings or preventing the exercise of options under multi year contracts There is pressure on governments to reduce spending both domestically and internationally particularly with respect to U S federal government agencies Actions by government entities to maximize efficiency and productivity may create further delays in government contracting due to uncertainties and employee reductions and create additional uncertainty regarding budgetary priorities all of which could adversely affect the timing funding and purchases of our offerings by U S and non U S government organizations
Contracts with government agencies including classified contracts are subject to extensive evolving and sometimes complex regulations as well as audits and reviews of contractors administrative processes and other contract related compliance obligations Breaches of government contracts failure to comply with applicable regulations failure to obtain and maintain required facility and or security clearances or unfavorable findings from government audits or reviews could result in contract terminations reputational harm or other adverse consequences including ineligibility to sell to government agencies in the future government refusal to continue buying our subscriptions or fines or civil or criminal liability which could adversely affect our results of operations
If we are unable to maintain successful relationships with our partners or if our partners fail to perform or we are unable to maintain successful relationships with them our business operations financial results and growth prospects could be adversely affected
We maintain partnership relationships with a variety of enterprises including cloud providers such as Amazon Google and Microsoft systems integrators channel partners referral partners OEM and MSP partners and technology partners to deliver offerings to our end customers and complement our broad community of users In particular we partner with various cloud providers to jointly market sell and deliver our Elastic Cloud offerings which in some instances also involves technical integration with such cloud providers Our ability to achieve revenue growth in the future will depend in part on our success in maintaining successful relationships with our partners and in helping our partners enhance their ability to market and sell our subscriptions If we are unable to maintain our relationships with these partners our business results of operations financial condition or cash flows could be harmed
Our agreements with our partners are generally non exclusive so that our partners may offer customers the offerings of several different companies including offerings that compete with ours or may themselves be or become competitors Some of these partners may also market sell and support offerings that compete with ours may devote more resources to the marketing sales and support of such competitive offerings may have incentives to promote our competitors offerings to the detriment of our offerings or may cease selling our offerings altogether If our partners do not effectively market and sell our offerings choose to use greater efforts to market and sell their own offerings or those of our competitors fail to provide adequate technical integration with their own offerings fail to meet the needs of our customers fail to deliver services to our customers or if we lose one or more of our channel partners our ability to expand our business and sell our offerings may be harmed Our partners may cease marketing our offerings with limited or no notice and with little or no penalty The loss of a substantial number of our partners our possible inability to replace them or the failure to recruit additional partners could harm our performance
In addition many of our new channel partners require extensive training and may take several months or more to become effective in marketing our offerings Our channel partner sales structure could subject us to lawsuits potential liability misstatement of revenue and reputational harm if for example any of our channel partners misrepresents the functionality of our offerings to customers or violates laws or our or their corporate policies including our terms of business which in turn could impact reported revenue deferred revenue and remaining performance obligations
In February 2021 with the release of version 7 11 of our platform we changed the source code of Elasticsearch and Kibana which had historically been licensed under Apache 2 0 to be dual licensed under Elastic License 2 0 and the Server Side Public License Version 1 0 SSPL at the user s election Neither the Elastic License nor the SSPL has been approved by the Open Source Initiative or is included in the Free Software Foundation s list of free software licenses Further neither has been interpreted by any court While the vast majority of downloads of Elasticsearch and Kibana from mid 2018 through early 2021 were licensed under the Elastic License the removal of the Apache 2 0 alternative could negatively impact certain developers for whom the availability of an open source license was important In addition some developers and the companies for whom they work may be hesitant to download or upgrade to new versions of Elasticsearch or Kibana under the Elastic License or SSPL because of uncertainty regarding how these licenses may be interpreted and enforced Other developers including competitors of Elastic such as Amazon have announced that they have forked Elasticsearch and Kibana which means they have developed their own product or service that is based on features of Elasticsearch and Kibana that we had previously made available under an open source license For example Amazon has launched an open source project called OpenSearch based on a forked version of our platform which is licensed under Apache 2 0 and has rebranded its existing Elasticsearch Service as OpenSearch Service The combination of uncertainty regarding our dual license model and the potential competition from the forked versions of our software may negatively impact adoption of Elasticsearch and Kibana which in turn could lead to reduced brand and product awareness and to a decline in paying customers which could harm our ability to grow our business or achieve profitability
We make the source code of our products available under Apache 2 0 the Elastic License as dual licensed under the Elastic License and SSPL depending on the product and version or the GNU Affero General Public License v3 Apache 2 0 is a permissive open source license that allows licensees to freely copy modify and distribute Apache 2 0 licensed software if they meet certain conditions The Elastic License is our proprietary source available license The Elastic License permits licensees to use copy modify and distribute the licensed software so long as they do not offer access to the software as a cloud service interfere with the license key or remove proprietary notices SSPL is a source available license that is based on the AGPL open source license and both SSPL and AGPL permit licensees to copy modify and distribute SSPL licensed software but expressly require licensees that offer the SSPL licensed software as a third party service to open source all of the software that they use to offer such service We rely upon the enforceability of the restrictions set forth in the Elastic License and SSPL to protect our proprietary interests If a court were to hold that the Elastic License or SSPL or certain aspects of these licenses are unenforceable others may be able to use our software to compete with us in the marketplace in a manner not subject to the restrictions set forth in the Elastic License or SSPL
If third parties offer inadequate or defective implementations of software that we have previously made available under an open source license we could experience lost sales and lack of market acceptance of our products
Certain cloud hosting providers and managed service providers including AWS offer hosted products or services based on a forked version of our platform which means they offer a service that includes some of the features that we had previously made available under an open source license These offerings are not supported by us and are delivered without any of our proprietary features whether free or paid We do not control how these third parties may use or offer our open source technology These third parties could inadequately or incorrectly implement our open source technology or fail to update such technology in light of changing technological or security requirements which could result in real or perceived defects security vulnerabilities errors or performance failures with respect to their offerings Users customers and potential customers could confuse these third party products with our products and attribute such defects security vulnerabilities errors or performance failures to our products Any damage to our reputation and brand from defective implementations of our open source software could result in lost sales and lack of market acceptance of our products and could adversely affect our business and growth prospects
Any person may obtain access to source code for the features of our software that we have licensed under open source or source available licenses Depending on the product and version of the Elastic software this source code is available under Apache 2 0 SSPL AGPL or the Elastic License Each of these licenses allows anyone subject to compliance with the conditions of the applicable license to redistribute our software in modified or unmodified form and use it to compete in our markets Such competition can develop without the degree of overhead and lead time required by traditional proprietary software companies because of the rights granted to licensees of open source and source available software It is possible for competitors to develop their own software including software based on our products potentially reducing the demand for our products and putting pricing pressure on our subscriptions For example Amazon offers some of the features that we had previously made available under an open source license as part of its AWS offering Through these offerings Amazon competes with us for potential customers and while Amazon cannot provide our proprietary software Amazon s offerings may reduce the demand for our products and the pricing of Amazon s offerings may limit our ability to adjust the prices of our products Competitive pressure in our markets generally may result in price reductions reduced operating margins and loss of market share
Our products are inherently complex and despite extensive testing and quality control have in the past and may in the future contain defects or errors especially when first introduced or otherwise not perform as contemplated These defects security vulnerabilities errors or performance failures could cause damage to our reputation loss of customers or revenue product returns order cancelations service terminations or lack of market acceptance of our software As the use of our products including products that were recently acquired or developed expands to more sensitive secure or mission critical uses by our customers we may be subject to increased scrutiny potential reputational risk or potential liability if our software should fail to perform as contemplated in such deployments We have issued in the past and may need to issue in the future corrective releases of our software to fix these defects errors or performance failures which could require us to allocate significant research and development and customer support resources to address these problems
Any limitation of liability provisions that may be contained in our customer and partner agreements may not be effective as a result of existing or future applicable law or unfavorable judicial decisions The sale and support of our products entail the risk of liability claims which could be substantial in light of the use of our products in enterprise wide environments Our insurance against this liability may not be adequate to cover a potential claim
Interruptions or performance problems associated with our technology and infrastructure and our reliance on technologies from third parties may adversely affect our business operations and financial results
We rely on third party cloud platforms to host our cloud offerings If we experience an interruption in service for any reason our cloud offerings would similarly be interrupted The ongoing effects of geopolitical conflicts adverse economic conditions and increased energy prices could also disrupt the supply chain of hardware needed to maintain our third party data center operations An interruption in our services to our customers particularly as we increasingly attract more large customers than in the past could cause our customers internal and consumer facing applications to cease functioning which could have a material adverse effect on our business results of operations customer relationships and reputation
In addition our website and internal technology infrastructure may experience performance issues due to a variety of factors including infrastructure changes human or software errors website or third party hosting disruptions capacity constraints technical failures natural disasters or fraud or security attacks Our use of third party open source software may increase this risk If our website is unavailable or our users are unable to download our products or order subscriptions or services within a reasonable amount of time or at all our business could be harmed We expect to continue to make significant investments to maintain and improve website performance and to enable rapid releases of new features and applications for our products To the extent that we do not effectively upgrade our systems as needed and continually develop our technology to accommodate actual and anticipated changes in technology our business and results of operations may be harmed
Our products are often operated in large scale complex IT environments Our customers and some partners require training and experience in the proper use of and the benefits that can be derived from our products to maximize their potential value If our products are not implemented configured updated or used correctly or as intended or in a timely manner inadequate performance errors loss of data corruptions or security vulnerabilities may result For example there have been and may in the future continue to be reports that some of our customers have not properly secured implementations of our products which can result in unprotected data Because our customers rely on our software to manage a wide range of operations the incorrect implementation or use of our software our customers failure to update our software or our failure to train customers on how to use our software productively may result in customer dissatisfaction or negative publicity and may adversely affect our reputation and brand Failure by us to provide adequate training and implementation services to our customers could result in lost opportunities for follow on sales to these customers and decrease subscriptions by new customers and adversely affect our business and growth prospects
Our success depends in part on our ability to attract users through unpaid organic Internet search results on traditional web search engines such as Google The number of users we attract to our website from search engines is due in large part to how and where our website ranks in unpaid search results These rankings can be affected by a number of factors many of which are not in our direct control and they may change frequently For example a search engine may change its ranking algorithms methodologies or design layouts As a result links to our website may not be prominent enough to drive traffic to our website and we may not know how or otherwise be in a position to influence the results Any reduction in the number of users directed to our website could reduce our revenue or require us to increase our customer acquisition expenditures
Our success depends upon our relationships with third party service providers including providers of cloud hosting infrastructure customer relationship management systems financial reporting systems human resource management systems credit card processing platforms marketing automation systems and payroll processing systems among others If any of these third parties experience difficulty meeting our requirements or standards become unavailable due to extended outages or interruptions temporarily or permanently cease operations face financial distress or other business disruptions such as a security incident or increase their fees if our relationships with any of these providers deteriorate or if any of the agreements we have entered into with such third parties are terminated or not renewed without adequate transition arrangements we could suffer liabilities penalties fines increased costs and delays in our ability to provide customers with our products and services our ability to manage our finances could be interrupted receipt of payments from customers may be delayed our processes for managing sales of our offerings could be impaired our ability to generate and manage sales leads could be weakened or our business operations could be disrupted Further our business operations may be disrupted by negative impacts of the evolving conflicts in the Middle East and Russia s war with Ukraine on supply chains of our third party service providers Any such disruptions may adversely affect our financial condition results of operations or cash flows until we replace such providers or develop replacement technology or operations In addition our business may suffer if we are unsuccessful in identifying high quality service providers negotiating cost effective relationships with them or effectively managing these relationships
Our success depends to a significant degree on our ability to establish maintain and protect our proprietary technology methodologies know how and brand We rely on a combination of trademarks service marks copyrights patents trade secrets contractual restrictions and other intellectual property laws and confidentiality procedures to establish and protect our proprietary rights The steps we take to protect our intellectual property rights may be inadequate
We will not be able to protect our intellectual property rights if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property rights The source code of proprietary features for some versions of our platform offered under certain licenses is publicly available which may enable others to replicate our proprietary technology and compete more effectively with us If we fail to protect our intellectual property rights adequately our competitors may gain access to our proprietary technology and our business may be harmed In addition defending our intellectual property rights might entail significant expense and resource allocation Any patents trademarks or other intellectual property rights that we have or may obtain may be challenged by others or invalidated through administrative process or litigation Patent applications we file may not result in issued patents Even if we continue to seek patent protection in the future we may be unable to obtain further patent protection for certain aspects of our technology In addition any patents issued in the future may not provide us with competitive advantages or may be successfully challenged by third parties Further legal standards relating to the validity enforceability and scope of protection of intellectual property rights are uncertain and vary by jurisdiction
Despite our precautions it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create offerings that compete with ours Effective patent trademark copyright and trade secret protection may not be available to us in every country in which our products are available We may be unable to prevent third parties from acquiring domain names social media names or trademarks that are similar to infringe upon or diminish the value of our trademarks and other proprietary rights The laws of some countries are not as protective of intellectual property rights as those in the United States and mechanisms for enforcement of intellectual property rights may be inadequate to achieve our objectives As we expand our international activities our exposure to unauthorized copying and use of our products and proprietary information will likely increase
We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with other parties These agreements may not be effective in controlling access to and distribution of our proprietary information Further these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our products
To protect and monitor our intellectual property rights we may be required to spend significant resources Litigation has previously been and may in the future be necessary to enforce and protect our intellectual property rights Even if we prevail in such disputes we may not be able to recover all or a portion of any judgments and litigation brought to protect and enforce our intellectual property rights could be costly time consuming and distracting to our management If unsuccessful litigation could result in the impairment or loss of portions of our intellectual property Further our efforts to enforce our intellectual property rights may be met with defenses counterclaims and countersuits attacking the validity and enforceability of those rights Our inability to protect our proprietary technology against unauthorized copying or use as well as any costly litigation or diversion of our management s attention and resources could delay further sales or the implementation of our products impair the functionality of our products delay introductions of new products result in our being required to substitute inferior or more costly technologies into our products or incur warranty and indemnifications costs with our customers or injure our reputation
In recent years there has been significant litigation involving patents and other intellectual property rights in the software industry Companies providing software are increasingly bringing and becoming subject to suits alleging infringement misappropriation or violation of proprietary rights particularly patent rights and to the extent we gain greater market prominence we face a higher risk of being the subject of intellectual property infringement misappropriation or violation claims The risk of patent litigation has been amplified by the increase in the number of a type of patent holder which we refer to as a non practicing entity whose sole or principal business is to assert such claims and against whom our own intellectual property portfolio may provide little deterrent value We could incur substantial costs in prosecuting or defending any intellectual property litigation While we do not provide large language models our products and solutions may contain integrations of third party large language models which may indirectly expose us to copyright infringement or other intellectual property misappropriation claims depending on the datasets and training models used by such third parties in their AI and generative AI offerings If we sue to enforce our rights or are sued by a third party that claims that our products infringe misappropriate or violate its rights the litigation could be expensive and could divert our management resources from operations
If we are required to make substantial payments or undertake any of the other actions noted above as a result of any intellectual property infringement misappropriation or violation claims against us or any obligation to indemnify our customers for such claims such payments or actions could harm our business
Our agreements with customers and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement misappropriation or violation damages caused by us to property or persons or other liabilities relating to or arising from our software services or other contractual obligations Large indemnity payments could harm our business results of operations and financial condition Although we normally contractually limit our liability with respect to such indemnity obligations we may still incur substantial liability related to them Any dispute with a customer with respect to such obligations could have adverse effects on our relationship with that customer and other existing customers and new customers and harm our business and results of operations
Our technologies strategically incorporate open source software from other developers and we expect to continue to incorporate such open source software in our products in the future Few of the licenses applicable to open source software have been interpreted by courts and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products Moreover we may not have incorporated third party open source software in our software in a manner that is consistent with the terms of the applicable license or our current policies and procedures If we fail to comply with these licenses we may be subject to certain requirements including requirements that we offer our solutions that incorporate the open source software for no cost that we make available source code for modifications or derivative works we create based upon incorporating or using the open source software and that we license such modifications or derivative works under the terms of applicable open source licenses In addition some open source software may include output from generative AI software or other software that incorporates or relies on generative AI or other AI technologies The use of such open source software may expose us to risks as the intellectual property ownership and license rights including copyright of generative AI software and tools have not been fully interpreted by U S courts or been fully addressed by federal or state regulation or those of other international legal jurisdictions in which we do business Attempting to ensure our compliance in integrating such open source and generative AI components with licensing terms regulatory changes and our required intellectual property guidelines and legal requirements to do business may result in the expenditure of significant resources and in our failure to meet all relevant material software release timetables and requirements Moreover changes in supply chain and export control regulations imposed by the United States and other governments due to geopolitical changes and government policies may require us to make changes to some of our open source and other third party dependencies which may result in additional costs and may adversely impact customer use and adoption of our solutions
If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses we could incur significant legal expenses defending against such allegations and could be subject to significant damages enjoined from the sale of our products that contained the open source software and required to comply with onerous conditions or restrictions on these products which could disrupt the distribution and sale of these products In addition there have been claims challenging the ownership rights in open source software against companies that incorporate open source software into their products and the licensors of such open source software provide no warranties or indemnities with respect to such claims In any of these events we and our customers could be required to seek licenses from third parties in order to continue offering our products and to re engineer our products or discontinue the sale of our products if re engineering cannot be accomplished on a timely basis We and our customers may also be subject to suits by parties claiming infringement misappropriation or violation due to the reliance by our solutions on certain open source software and such litigation could be costly for us to defend or subject us to an injunction Some open source projects have known vulnerabilities and architectural instabilities and are provided on an as is basis which if not properly addressed could negatively affect the performance of our product Any of the foregoing could require us to devote additional research and development resources to re engineer our solutions could result in customer dissatisfaction and may adversely affect our business results of operations and financial condition
Our income tax obligations are based in part on our corporate structure and intercompany arrangements including the manner in which we develop value and use our intellectual property and the valuations of our intercompany transactions The tax laws applicable to our business including the laws of the Netherlands the United States and other jurisdictions are subject to change and interpretation Any new legislation or interpretations of existing legislation could impact our tax obligations in countries where we do business or cause us to change the way we operate our business and result in increased taxation of our international earnings
For example the Organisation for Economic Co operation and Development OECD G20 Inclusive Framework has been addressing the tax challenges arising from the digitalization of the economy including by releasing the OECD s Pillar One and Pillar Two blueprints on October 12 2020 Pillar One refers to the re allocation of taxing rights to jurisdictions where sustained and significant business is conducted regardless of a physical presence while Pillar Two establishes a minimum tax to be paid by multinational enterprises On December 15 2022 the Council of the EU formally adopted Directive EU 2022 2523 the Pillar Two Directive to achieve a coordinated implementation of Pillar Two in EU Member States consistent with EU law In the Netherlands this directive is implemented in the Minimum Tax Rate Act 2024
This measure ensures that multinational enterprises that are within the scope of the Pillar Two rules are subject to a corporate tax rate of at least 15 The Minimum Tax Rate Act 2024 currently does not have a material adverse effect on our financial results
The U S government has indicated that it intends to propose significant changes to the U S tax system Many aspects of these potential proposals are still under discussion and we are unable to predict which if any changes to the U S tax system will be enacted into law and what effects any enacted legislation might have on our tax liabilities The U S government also has indicated that the United States may impose retaliatory measures with respect to jurisdictions that have or are likely to put in place tax rules that are extraterritorial or disproportionately affect American companies The likelihood of these changes being enacted or implemented is unclear We are currently unable to predict whether such changes will occur and if they are adopted the impact such changes will have on our business
The United States has an alternative minimum tax called the Base Erosion and Anti Abuse Tax the BEAT that applies to certain U S corporations including Elastic for these purposes The BEAT is imposed on certain deductible amounts paid by a U S corporation that i has aggregate gross receipts of at least 500 million over its three prior taxable years and ii is at least 25 owned by a non U S person or otherwise related to a non U S person in specified circumstances The BEAT taxes modified taxable income of a U S corporation described above at a rate which increased to 10 in 2019 and will increase further to 12 5 in 2026 Thresholds for BEAT applicability could change or the BEAT tax rate could increase in connection with potential tax legislation sought by the U S government In general modified taxable income is calculated by adding back to the U S corporation s regular taxable income the amount of certain base erosion tax benefits with respect to payments to foreign affiliates as well as the base erosion percentage of any net operating loss deductions The BEAT applies only to the extent it exceeds the U S corporation s regular corporate income tax liability determined without regard to certain tax credits Compliance with and any changes to the BEAT under proposed U S government legislation or otherwise could have an adverse impact on our U S tax obligations operating results and cash flows
The applicability of sales use and other indirect tax laws or regulations on our business is uncertain Tax laws or regulations could be enacted or existing laws could be applied to us or our customers which could subject us to additional tax liability and related interest and penalties increase the costs of our services and adversely impact our business
The application of U S federal state local and non U S tax laws to services provided electronically is evolving New sales use value added goods and services consumption or other direct or indirect tax laws could be enacted at any time possibly with retroactive effect and could be applied solely or disproportionately to services provided over the Internet directly or through partners or could otherwise materially affect our financial position and operating results As we expand the scale of our international business activities any changes in the U S or non U S taxation of such activities may increase our worldwide effective tax rate and harm our business operating results and financial condition
In addition tax jurisdictions have differing rules and regulations governing sales use value added goods and services consumption and other taxes and these rules and regulations can be complex and are subject to varying interpretations that may change over time Existing tax laws could be interpreted changed modified or applied adversely to us possibly with retroactive effect which could require us or our customers to pay additional tax amounts on prior and future sales as well as require us or our customers to pay fines or penalties and interest for past amounts Although our customer contracts typically provide that our customers must pay all applicable sales and similar taxes our customers may be reluctant to pay back taxes and associated interest or penalties or we may determine that it would not be commercially feasible to seek reimbursement If we are required to collect and pay back taxes and associated interest and penalties or we are unsuccessful in collecting such amounts from our customers we could incur potentially substantial unplanned expenses thereby adversely impacting our operating results and cash flows Imposition of such taxes on our services in future periods could also adversely affect our sales activity and have an adverse impact on our operating results and cash flows
Based on our current corporate structure we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws the application of which can be uncertain The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles including increased tax rates new tax laws or revised interpretations of existing tax laws and precedents The taxing authorities of some of such jurisdictions may contest our methodologies for valuing developed technology or intercompany arrangements which could increase our worldwide effective tax rate and harm our financial position and results of operations Tax authorities examine and may audit our income tax returns and other non income tax returns such as payroll sales value added net worth or franchise property goods and services and excise taxes in both the United States and foreign jurisdictions It is possible that tax authorities may disagree with certain positions we have taken and any adverse outcome of such a review or audit could have a negative effect on our financial position and results of operations Further the determination of our worldwide provision for or benefit from income taxes and other tax liabilities requires significant judgment by management and there are transactions for which the ultimate tax determination is uncertain Although we believe that our estimates are reasonable the ultimate tax outcome may differ from the amounts recorded in our consolidated financial statements and may materially affect our financial results in the period or periods for which such determination is made
As of April 30 2025 we had net operating loss carryforwards NOL for Netherlands United States federal and state respectively and United Kingdom income tax purposes of 1 407 billion 546 3 million 551 2 million and 97 9 million respectively which may be utilized against future income taxes Limitations imposed by the applicable jurisdictions on our ability to utilize NOLs could cause income taxes to be paid earlier than would be paid if such limitations were not in effect and could cause such NOLs to expire unused in each case reducing or eliminating the benefit of such NOLs Further we may not be able to generate sufficient taxable income to utilize affected NOLs before they expire If any of these events occur we may not derive some or all of the expected benefits from our NOLs
A non U S corporation will generally be considered a passive foreign investment company PFIC for U S federal income tax purposes in any taxable year if either i at least 75 of its gross income for such year is passive income or ii at least 50 of the value of its assets based on an average of the quarterly values of the assets during such year is attributable to assets that produce or are held for the production of passive income the PFIC asset test For purposes of the PFIC asset test the value of our assets will generally be determined by reference to our market capitalization Based on our past and current projections of our income and assets we do not expect to be a PFIC for the current taxable year or for the foreseeable future Nevertheless a separate factual determination as to whether we are or have become a PFIC must be made each year after the close of such year Since our projections may differ from our actual business results and our market capitalization and the value of our assets may fluctuate we cannot assure you that we will not be or become a PFIC in the current taxable year or any future taxable year If we are a PFIC for any taxable year during which a U S person as defined in Section 7701 a 30 of the Internal Revenue Code of 1986 as amended holds our ordinary shares such U S person may be subject to adverse tax consequences Each U S person who holds our ordinary shares is strongly urged to consult such person s tax advisor regarding the application of these rules and the availability of any potential elections
If a U S person is treated as owning directly indirectly or constructively at least 10 of the total combined voting power of our shares or of the total value of our shares such shareholder may be treated as a United States shareholder with respect to each controlled foreign corporation in our group if any Because our group includes one or more U S subsidiaries certain of our non U S subsidiaries could be treated as controlled foreign corporations regardless of whether we are treated as a controlled foreign corporation A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U S taxable income its pro rata share of Subpart F income global intangible low taxed income and investments in U S property by controlled foreign corporations regardless of whether we make any distributions An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U S corporation We cannot provide any assurances that we will assist investors in determining whether we or any of our non U S subsidiaries is treated as a controlled foreign corporation or whether any investor is treated as a United States shareholder with respect to any such controlled foreign corporation or furnish to any investor who may be a United States shareholder information that may be necessary to comply with the reporting and tax paying obligations referred to above Failure to comply with these reporting obligations may subject a shareholder who is a United States shareholder to significant monetary penalties and may prevent from starting the statute of limitations with respect to such shareholder s U S federal income tax return for the year for which reporting was due A U S person should consult its tax advisors regarding the potential application of these rules to an investment in our ordinary shares
We have not paid a cash dividend on our ordinary shares in the past and we do not intend to pay any cash dividends to holders of our ordinary shares in the foreseeable future However if we ever do pay dividends or repurchase our shares then under current Dutch tax law the dividend paid or repurchase price paid may be subject to Dutch dividend withholding tax at a rate of 15 under the Dutch Dividend Withholding Tax Act
In addition dividends paid to related entities in designated low tax jurisdictions may be subject to an alternative withholding tax Alternative Withholding Tax at the highest Dutch corporate income tax rate in effect at the time of the distribution currently 25 8 An entity is considered related if i it has a Qualifying Interest in our company ii our company has a Qualifying Interest in the entity holding the ordinary shares or iii a third party has a Qualifying Interest in both our company and the entity holding the ordinary shares The term Qualifying Interest means a direct or indirectly held interest either by an entity individually or jointly if an entity is part of a qualifying unity
that enables such entity or such qualifying unity to exercise a definite influence over the decisions of another entity such as our company or an entity holding ordinary shares as the case may be and allows it to determine the other entity s activities The Alternative Withholding Tax will be reduced but not below zero with any Regular Dividend Withholding Tax imposed on distributions Based on currently applicable rates the overall effective rate of withholding of Regular Dividend Withholding Tax and Alternative Withholding Tax will not exceed the highest corporate income tax rate in effect at the time of the distribution currently 25 8
If we cease to be a Dutch tax resident for the purposes of a tax treaty concluded by the Netherlands and in certain other events we could potentially be subject to a proposed Dutch dividend withholding tax in respect of a deemed distribution of our entire market value less paid up capital
DWT Exit Tax we will be deemed to have distributed an amount equal to our entire market capitalization less recognized paid up capital immediately before the occurrence of certain events including if we cease to be a Dutch tax resident for purposes of a tax treaty concluded by the Netherlands with another jurisdiction and become for purposes of such tax treaty exclusively a tax resident of that other jurisdiction which is a qualifying jurisdiction A qualifying jurisdiction is a jurisdiction other than a member state of the EU EEA which does not impose a withholding tax on distributions or that does impose such a tax but that grants a step up for earnings attributable to the period before we become exclusively a resident in such jurisdiction This deemed distribution will be subject to a 15 tax insofar as it exceeds a franchise of EUR 50 million The tax will be payable by us as a withholding agent A full exemption applies to entities and individuals that are resident in an EU EEA member state or a state that has concluded a tax treaty with the Netherlands that contains a dividend article provided we submit a declaration confirming the satisfaction of applicable conditions by qualifying shareholders within one month following the taxable event We will be deemed to have withheld the tax on the deemed distribution and have a statutory right to recover this from our shareholders Dutch resident shareholders qualifying for the exemption are entitled to a credit or refund and non Dutch resident shareholders qualifying for the exemption are entitled to a refund subject to applicable statutory limitations provided the tax has been actually recovered from them
The DWT Exit Tax proposal has been amended several times since the initial proposal and is under ongoing discussion In addition a critical reaction from authorities to the latest proposal of law has been published It is therefore not certain whether the DWT Exit Tax will be enacted and if so in what form If enacted in its present form the DWT Exit Tax will have retroactive effect as from December 8 2021
We are subject to compliance risks and uncertainties under a variety of federal state local and foreign laws and regulations governing privacy data protection information security and the collection storage transfer use retention sharing disclosure protection and processing of personal data Privacy data protection and information security laws may be interpreted and applied differently depending on the jurisdiction and continue to evolve making it difficult to predict how they may develop and apply to us
The regulatory frameworks for these issues worldwide are rapidly evolving and are likely to remain uncertain for the foreseeable future Federal state or non U S government bodies or agencies have in the past adopted and may in the future adopt new laws and regulations or may enact amendments to existing laws and regulations affecting data protection data privacy or information security or regulating the use of the Internet as a commercial medium
In the United States many states have enacted such legislation These laws and regulations may include a private right of action for certain data breaches or for noncompliance with privacy or security obligations may provide for penalties and other remedies and may require us to incur substantial costs and expenses and liabilities in connection with our compliance Other U S states and the U S federal government are considering or are currently in the process of enacting similar privacy legislation or regulations Many obligations under these laws and legislative or regulatory proposals remain uncertain and we cannot fully predict their impact on our business Failure to comply with these varying laws and standards may subject us to investigations enforcement actions civil litigation fines and other penalties all of which may generate negative publicity and have a negative impact on our business
Internationally most jurisdictions in which we operate have established their own privacy data protection and information security legal frameworks with which we or our customers must comply Within the European Union the General Data Protection Regulation GDPR applies to the processing of personal data The GDPR imposes significant obligations upon our business and compliance with these obligations can vary depending on how different regulators may interpret them Failure to comply or perceived failure to comply can result in administrative fines of up to 20 million Euros or four percent of the group s annual global turnover whichever is higher Similarly the United Kingdom has implemented legislation that is substantially similar to the GDPR under which penalties for violations actual or perceived can be up to 17 5 million British Pound Sterling or four percent of the group s annual global turnover whichever is higher This legislation may be subject to change with the introduction of the Data Protection and Digital Information DPDI Bill in 2023 The potential impact of these legal requirements on our business remains unclear
We monitor privacy European case law regulatory changes and guidance from privacy authorities and we have been regularly refining and updating our data transfer risk assessments to document that in relying on the GDPR s Standard Contractual Clauses SCCs and their international equivalents we maintain the requisite level of privacy protection for our cross border transfers of personal data In July 2023 the European Commission adopted its adequacy decision on data transfers under the EU U S Data Privacy Framework DPF The adequacy decision provides a new lawful basis for trans Atlantic data transfers from data exporters in the EU to U S data importers who certify compliance with the DPF principles After the European Commission confirmed the good functioning of the DPF upon the first anniversary of the adequacy decision we successfully completed our self certification under the DPF for both our employee data and our customer data and we also have continued to maintain the SCCs in our internal and external agreements as a backup data transfer mechanism in case the DPF were to fail In light of these and other ongoing developments relating to EU U S trade relations and other cross border data transfers we may experience additional costs associated with increased compliance burdens which may negatively affect our ability to transfer personal data across our organization to customers or to third parties
In addition to government regulation industry groups have established or may establish new and different self regulatory standards that may legally or contractually apply to us or to our customers Moreover our customers increasingly expect us to comply with more stringent privacy data protection and information security requirements than those imposed by laws regulations or self regulatory requirements and we may be obligated contractually to comply with additional or different standards relating to our handling or protection of data on or by our offerings Any failure to meet our customers requirements may adversely affect our revenues and prospects for growth
We also expect that there will continue to be changes in interpretations of existing or new laws and regulations proposed laws and other obligations which could impair our or our customers ability to process personal data decrease demand for our offerings impact our marketing efforts increase our costs and impair our ability to maintain and grow our customer base and increase our revenue It is possible that these laws and regulations or other actual or asserted obligations relating to privacy data protection or information security may be interpreted and applied in manners that are or are alleged to be inconsistent with our data management practices or the features of our products In such an event we could face fines lawsuits regulatory investigations and other claims and penalties and we could be required to fundamentally change our products or our business practices any of which could have an adverse effect on our business
Data protection authorities and other regulatory bodies are increasingly focused on the use of online tracking tools and have issued or plan to issue rulings which may affect our marketing practices Any restrictions on using online analytics and tracking tools could lead to substantial costs require significant changes to our policies and practices limit the effectiveness of our marketing activities divert the attention of our technology personnel adversely affect our margins and subject us to additional liabilities
We publicly post privacy statements and other documentation regarding our practices concerning the processing use and disclosure of personal data Any failure or perceived failure by us to comply with such statements could result in potential actions by private parties regulatory bodies or government entities if the statements are alleged or found to be unfair or misrepresentative of our actual practices or inconsistent with legal requirements for such statements which could result in increased costs changes in our business practices or reputational harm
We are subject to governmental export and import controls and economic sanctions programs that could impair our ability to compete in international markets or subject us to liability if we violate these controls
Our software and services in some cases are subject to U S export control laws and regulations including the EAR and trade and economic sanctions maintained by OFAC as well as similar laws and regulations in the countries in which we do business An export license may be required to export or re export our software and services to or import our software and services into certain countries and to certain end users or for certain end uses If we were to fail to comply with such U S and foreign export control laws and regulations trade and economic sanctions or other similar laws we could be subject to both civil and criminal penalties including substantial fines possible incarceration for employees and managers for willful violations and the possible loss of our export or import privileges Obtaining the necessary export license for a particular sale or offering may not be possible may be time consuming and may result in the delay or loss of sales opportunities Further export control laws and economic sanctions in many cases prohibit the export of software and services to certain embargoed or sanctioned countries governments and persons as well as for prohibited end uses Monitoring and ensuring compliance with these complex U S export control laws involves uncertainties because our offerings are widely distributed throughout the world and information available on the users of these offerings is in some cases limited Even though we take precautions in an effort to ensure that we and our partners comply with all relevant export control laws and regulations any failure by us or our partners to comply with such laws and regulations could have negative consequences for us including reputational harm government investigations and penalties
Various countries have enacted laws that could limit our ability to distribute our products and services or could limit our end customers ability to implement our products in those countries based on encryption in our offerings Changes in our products or changes in export and import regulations in such countries may create delays in the introduction of our products and services into international markets prevent our end customers with international operations from deploying our products globally or in some cases prevent or delay altogether the export or import of our products and services to certain countries governments or persons Reduced use of our products and services by or decreased ability by us to export or sell our products to existing or potential end customers with international operations could result from changes in export or import laws or regulations economic sanctions or related legislation shifts in the enforcement or scope of existing export import or sanctions laws or regulations or changes in the countries governments persons or technologies targeted by such export import or sanctions laws or regulations
We are required to comply with the FCPA the U K Bribery Act and other anti bribery anti corruption and anti money laundering laws in various U S and non U S jurisdictions We are subject to compliance risks as a result of our use of channel partners to sell our offerings abroad and our use of other third parties including recruiting firms professional employer organizations legal accounting and other professional advisors and local vendors to meet our needs in international markets We and these third parties may have direct or indirect interactions with officials and employees of government agencies or state owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of our channel partners and third party representatives as well as our employees representatives contractors partners and agents even if we do not authorize such activities While we have policies and procedures to address compliance with such laws our channel partners third party representatives employees contractors or agents may take actions in violation of our policies and applicable law for which we may be ultimately held responsible Any violation of the FCPA U K Bribery Act or other applicable anti bribery anti corruption laws and anti money laundering laws could result in whistleblower complaints adverse media coverage investigations loss of export privileges severe criminal or civil sanctions or suspension or debarment from U S government contracts all of which may have an adverse effect on our reputation business operating results and prospects
The market price of our ordinary shares may fluctuate significantly in response to numerous factors many of which are beyond our control including those resulting from the risks and uncertainties described in this Risk Factors section The stock markets and securities of technology companies in particular have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies In particular stock prices of companies with significant operating losses have recently declined significantly and in many instances more significantly than stock prices of companies with operating profits The economic impact and uncertainty of changes in the inflation interest and macroeconomic environments international trade relations and geopolitical conflicts exacerbated this volatility in both the overall stock markets and the market price of our ordinary shares A significant decline in the price of our shares could subject us to securities class action litigation such as the purported class action lawsuit filed against us in February 2025 Our involvement in securities litigation could subject us to substantial costs divert resources and the attention of management from our operations and adversely affect our business
We have provided and may continue to provide guidance and other expectations regarding our future performance in our quarterly and annual earnings conference calls quarterly and annual earnings releases or other public disclosures Guidance as well as other expectations are forward looking and represent our management s estimates as of the date of release and are based upon a number of assumptions and estimates that while presented with numerical specificity are inherently subject to significant business economic and competitive uncertainties and contingencies on our business many of which are beyond our control and are based upon specific assumptions with respect to future business decisions some of which will change Further analysts and investors may develop and publish their own forecasts concerning our financial results which may form a consensus about our future performance Our actual business results may vary significantly from such guidance or other expectations or that consensus due to a number of factors many of which are outside of our control including the global economic uncertainty and volatile financial market conditions characterizing the current macroeconomic environment and which could adversely affect our business and future operating results Further if we make downward revisions of our previously announced guidance or other expectations if we withdraw our previously announced guidance or other expectations or if our publicly announced guidance or other expectations of future operating results fail to meet expectations of securities analysts investors or other interested parties the price of our ordinary shares could decline In light of the foregoing investors should not unduly rely upon our guidance or other expectations in making an investment decision regarding our ordinary shares
The concentration of our share ownership with insiders will likely limit your ability to influence corporate matters including the ability to influence the outcome of director elections and other matters requiring shareholder approval
Our executive officers and directors together beneficially own a significant amount of our outstanding ordinary shares As a result these shareholders acting together will have significant influence over matters that require approval by our shareholders including matters such as adoption of the financial statements declarations of dividends the appointment and dismissal of directors capital increases amendment to our articles of association and approval of significant corporate transactions Corporate action might be taken even if other shareholders oppose them This concentration of ownership might also have the effect of delaying or preventing a change of control of us that other shareholders may view as beneficial
Our articles of association authorize us to issue up to 165 million ordinary shares and up to 165 million preference shares with such rights and preferences as are included in our articles of association On October 1 2024 our general meeting of shareholders general meeting empowered our board of directors to issue ordinary shares up to 20 of our issued share capital as of August 21 2024 for a period of 18 months until April 1 2026 the 2024 share issuance authorization In line with market practice for Dutch publicly traded companies we expect to renew this authorization annually at our general meeting Subject to compliance with applicable rules and regulations and the above authorization limitation we may issue ordinary shares or securities convertible into ordinary shares from time to time in connection with a financing acquisition investment our equity incentive plans or otherwise Any such issuance could result in substantial dilution to our existing shareholders unless pre emptive rights exist and cause the market price of our ordinary shares to decline
Holders of our ordinary shares in principle have a pro rata pre emptive right with respect to any issue of ordinary shares or the granting of rights to subscribe for ordinary shares unless Dutch law or our articles of association state otherwise or unless explicitly provided otherwise in a resolution by our general meeting or if authorized by the annual general meeting or an extraordinary general meeting by a resolution of our board of directors Our 2024 general meeting has empowered our board of directors to restrict or exclude pre emptive rights on ordinary shares issued pursuant to the 2024 share issuance authorization up to 10 of our issued share capital as of August 21 2024 for a period of 18 months until April 1 2026 which could cause existing shareholders to experience substantial dilution of their interest in us In line with market practice for Dutch publicly traded companies we expect to renew this authorization annually at our general meeting
As of April 30 2025 there were no preference shares issued or outstanding Preference shares in the capital of the Company may currently be issued pursuant to a resolution adopted by the general meeting at the proposal of the board of directors Pre emptive rights do not exist with respect to the issue of preference shares and holders of preference shares if any have no pre emptive right to acquire newly issued ordinary shares Also pre emptive rights do not exist with respect to the issue of shares or grant of rights to subscribe for shares to our employees or contributions in kind
Sales of a substantial number of shares of our ordinary shares in the public market particularly sales by our directors executive officers and significant shareholders or the perception that these sales could occur could adversely affect the market price of our ordinary shares and may make it more difficult for you to sell your ordinary shares at a time and price that you deem appropriate
We have also filed and will file in the future registration statements on Form S 8 under the Securities Act registering all ordinary shares that we may issue under our equity compensation plans which may in turn be sold in the public market and may adversely affect the market price for our ordinary shares
Certain anti takeover provisions in our articles of association and under Dutch law may prevent or could make an acquisition of our company more difficult limit attempts by our shareholders to replace or remove members of our board of directors and may adversely affect the market price of our ordinary shares
Our articles of association contain provisions that could delay or prevent a change in control of our company These provisions could also make it difficult for shareholders to appoint directors that are not nominated by the current members of our board of directors or take other corporate actions including effecting changes in our management These provisions include
the staggered three year terms of the members of our board of directors as a result of which only approximately one third of the members of our board of directors may be subject to election in any one year
a provision that the members of our board of directors may only be removed by a general meeting by a two thirds majority of votes cast representing at least 50 of our issued share capital if such removal is not proposed by our board of directors
a provision that the members of our board of directors may only be appointed upon binding nomination of the board of directors which can only be overruled with a two thirds majority of votes cast representing at least 50 of our issued share capital
As a Dutch company we are subject to the Dutch Corporate Governance Code The DCGC contains both principles and suggested governance provisions for management boards supervisory boards shareholders and general meetings financial reporting auditors disclosure compliance and enforcement standards The DCGC is based on a comply or explain principle Accordingly public companies are required to disclose in their annual reports filed in the Netherlands whether they comply with the suggested governance provisions of the DCGC If they do not comply with those provisions for example because of a conflicting requirement companies are required to give the reasons for such noncompliance The DCGC applies to all Dutch companies listed on a government recognized stock exchange whether in the Netherlands or elsewhere including the NYSE The principles and suggested governance provisions apply to our board of directors in relation to role and composition conflicts of interest and independence requirements board committees and remuneration shareholders and the general meeting for example regarding anti takeover protection and our obligations to provide information to our shareholders and financial reporting such as external auditor and internal audit requirements We aim to comply with all applicable provisions of the DCGC except where such provisions conflict with U S exchange listing requirements or with market practices in the United States or the Netherlands in which case we comply with such exchange listing requirements and market practices This compliance position may affect your rights as a shareholder and you may not have the same level of protection as a shareholder in a Dutch company that fully complies with the suggested governance provisions of the DCGC
We have never declared or paid any cash dividends on our shares We do not anticipate paying any cash dividends on our ordinary shares in the foreseeable future Were this position to change payment of future dividends may be made only if our equity exceeds the amount of the paid in and called up part of the issued share capital increased by the reserves required to be maintained by Dutch law or by our articles of association Accordingly investors must rely on sales of their ordinary shares after price appreciation which may never occur as the only way to realize any future gains on their investments
We are incorporated under the laws of the Netherlands and substantial portions of our assets are located outside of the United States In addition two members of our board of directors reside outside the United States As a result it may be difficult for investors to effect service of process within the United States upon us or such other persons residing outside the United States or to enforce outside the United States judgments obtained against such persons in U S courts in any action including actions predicated upon the civil liability provisions of the U S federal securities laws In addition it may be difficult for investors to enforce in original actions brought in courts in jurisdictions located outside the United States rights predicated upon the U S federal securities laws
There is no treaty between the United States and the Netherlands for the mutual recognition and enforcement of judgments other than arbitration awards in civil and commercial matters Therefore a final judgment rendered by any federal or state court in the United States based on civil liability whether or not predicated solely upon the U S federal securities laws would not be enforceable in the Netherlands unless the underlying claim is re litigated before a Dutch court of competent jurisdiction In such proceedings however a Dutch court may be expected to recognize the binding effect of a judgment of a federal or state court in the United States without re examination of the substantive matters adjudicated thereby if i the jurisdiction of the U S federal or state court has been based on internationally accepted principles of private international law ii the judgment resulted from legal proceedings compatible with Dutch notions of due process iii the judgment does not contravene public policy of the Netherlands and iv the judgment is not incompatible with an earlier judgment of a Dutch court between the same parties or an earlier judgment of a foreign court between the same parties in a dispute regarding the same subject and based on the same cause if that earlier foreign judgment is recognizable in the Netherlands
Based on the foregoing U S investors may not be able to enforce against us or members of our board of directors officers or certain experts named in our filings with the SEC who are residents of the Netherlands or countries other than the United States any judgments obtained in U S courts in civil and commercial matters including judgments under the U S federal securities laws
In addition there can be no assurance that a Dutch court would impose civil liability on us the members of our board of directors our officers or certain experts named in our filings with the SEC in an original action predicated solely upon the U S federal securities laws brought in a court of competent jurisdiction in the Netherlands against us or such members officers or experts
If industry or financial analysts do not publish research or reports about our business or if they issue inaccurate or unfavorable research regarding our ordinary shares our share price and trading volume could decline which could adversely affect our business
The trading market for our ordinary shares is influenced by the research and reports that industry or financial analysts publish about us or our business We do not control these analysts or the content and opinions included in their reports If any of the analysts who cover us issues an inaccurate or unfavorable opinion regarding our company our stock price would likely decline Further investors and analysts may not understand how our consumption based arrangements differ from a typical subscription based pricing model In addition the stock prices of many companies in the technology industry have declined significantly after those companies have failed to meet or significantly exceed the financial guidance publicly announced by the companies or the expectations of analysts or public investors If our financial results fail to meet or significantly exceed our announced guidance or the expectations of analysts or public investors our stock price may decline Analysts also could downgrade our ordinary shares or publish unfavorable research about us If one or more of the analysts who cover our company ceases to cover us or fails to publish reports on us regularly our profile in the financial markets could decrease which in turn could cause our stock price or trading volume to decline and could adversely affect our business
If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect our results of operations could fall below expectations of securities analysts and investors resulting in a decline in the trading price of our ordinary shares
The preparation of financial statements in conformity with accounting principles generally accepted in the United States GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances the results of which form the basis for making judgments about the carrying values of assets liabilities equity revenue and expenses that are not readily apparent from other sources Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions which could cause our results of operations to fall below our publicly announced guidance or the expectations of securities analysts and investors resulting in a decline in the market price of our ordinary shares Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition deferred contract acquisition costs acquired intangible assets and income taxes
We have a substantial amount of indebtedness and we may incur additional indebtedness in the future As of April 30 2025 we had 575 0 million aggregate principal amount of our 4 125 Senior Notes due July 15 2029 the Senior Notes outstanding Our indebtedness could have important consequences including
requiring a portion of our cash flows to be dedicated to debt service payments instead of other purposes thereby reducing the amount of cash flows available for working capital capital expenditures acquisitions and other general corporate purposes
In addition the indenture that governs the Senior Notes contains restrictive covenants that limit our ability to engage in activities that may be in our long term best interest Our failure to comply with those covenants could result in an event of default which if not cured or waived could result in the acceleration of substantially all of our indebtedness
Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and results of operations which in turn are subject to prevailing economic and competitive conditions and to certain financial business and other factors beyond our control We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal premium if any and interest on our indebtedness which could have a material adverse effect on our business results of operations and financial condition
If our cash flows and capital resources are insufficient to fund our debt service obligations we could face substantial liquidity problems and may be forced to reduce or delay investments and capital expenditures or to sell assets seek additional capital or restructure or refinance our indebtedness Our ability to restructure or refinance our debt will depend upon among other factors the condition of the capital markets and our financial condition at such time Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants which could further restrict our business operations The terms of existing or future debt instruments and the indenture that governs the Senior Notes may restrict us from adopting some of these alternatives In addition any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating which could harm our ability to incur additional indebtedness In the absence of such cash flows and resources we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations Any of these circumstances could have a material adverse effect on our business results of operations and financial condition
Further any future credit facility or other debt instrument may contain provisions that will restrict our ability to dispose of assets and use the proceeds from any such disposition We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations and any such failure to meet our scheduled debt service obligations could have a material adverse effect on our business results of operations and financial condition
The indenture that governs the Senior Notes contains and any of our future debt instruments may contain terms which restrict our current and future operations particularly our ability to respond to changes or to take certain actions
The indenture that governs the Senior Notes contains a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long term best interest including among other things restrictions on our ability to
As a result of these restrictions we are limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities The terms of any future indebtedness we may incur could include more restrictive covenants and may require us to maintain specified financial ratios and satisfy other financial condition tests We may not be able to maintain compliance with these covenants in the future and if we fail to do so we may not be able to obtain waivers from the relevant lenders and or amend the covenants
Our failure to comply with the restrictive covenants described above and or the terms of any future indebtedness from time to time could result in an event of default which if not cured or waived could result in our being required to repay these borrowings before their due date If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings our results of operations and financial condition could be adversely affected As a result our failure to comply with such restrictive covenants could have a material adverse effect on our business results of operations and financial condition
Holders of the Senior Notes can require us to repurchase the Senior Notes upon a change of control as defined in the indenture governing the Senior Notes at a repurchase price equal to 101 of the principal amount of the Senior Notes plus accrued and unpaid interest to but excluding the applicable repurchase date Our ability to repurchase the Senior Notes may be limited by law or the terms of other agreements relating to our indebtedness In addition we may not have sufficient funds to repurchase the Senior Notes or have the ability to arrange necessary financing on acceptable terms if at all A change of control may also constitute a default under or result in the acceleration of the maturity of our other then existing indebtedness Our failure to repurchase the Senior Notes would result in a default under the Senior Notes which may result in the acceleration of the Senior Notes and other then existing indebtedness We may not have sufficient funds to make any payments triggered by such acceleration which could result in foreclosure proceedings and our seeking protection under the U S bankruptcy code
As part of our business strategy we have in the past made and may in the future make investments through acquisition or otherwise in complementary companies products or technologies to augment our existing business We may not be able to identify suitable acquisition candidates or complete such acquisitions on favorable terms if at all If we do complete acquisitions we may not ultimately strengthen our competitive position or achieve our goals and business strategy we may be subject to claims or liabilities assumed from an acquired company product or technology and any acquisitions we complete could be viewed negatively by our customers investors and securities analysts In addition if we are unsuccessful at integrating future acquisitions or the technologies associated with such acquisitions into our company the revenue and results of operations of the combined company could be adversely affected Any integration process may require significant time and resources which may disrupt our ongoing business and divert management s attention from operations and we may not be able to manage the integration process successfully We may not successfully evaluate or utilize acquired technology or personnel realize anticipated synergies from acquisitions or accurately forecast the financial impact of an acquisition transaction and integration of such acquisition including accounting charges We may have to pay cash incur debt or issue equity or equity linked securities to pay for any future acquisitions each of which could adversely affect our financial condition or the market price of our ordinary shares The sale of equity or issuance of equity linked debt to finance any future acquisitions could result in dilution to our shareholders The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations We may incur unforeseen legal liability arising from prior or ongoing acts or omissions by the acquired businesses which are not discovered by due diligence during the acquisition process or that prove to have a greater than anticipated adverse impact There is no assurance that acquired businesses will have invested sufficient efforts in their own regulatory compliance and we may need to invest in and seek to improve the regulatory compliance controls and systems of such businesses We may acquire development stage companies that are not yet profitable and that require continued investment thereby reducing our cash available for other corporate purposes The occurrence of any of these risks could harm our business results of operations and financial condition
A significant natural disaster such as an earthquake fire flood or significant power outage could have an adverse impact on our business results of operations and financial condition The impact of climate change may increase these risks due to changes in weather patterns such as increases in storm intensity sea level rise melting of permafrost and temperature extremes in areas where we or our suppliers and customers conduct business Some of our management members and other employees are located in the San Francisco Bay Area a region known for seismic activity wildfires and other extreme weather events If our or our partners operations are hindered by any of the foregoing events we could experience sales delays supply chain disruptions and other negative impacts on our business In addition acts of terrorism acts of war including conflicts in the Middle East and Russia s war with Ukraine other geopolitical unrest or health issues such as a pandemic outbreak or fear of such events could cause disruptions in our business or the business of our partners customers or the economy as a whole Any disruption in the business of our partners or customers that affects sales in a fiscal quarter could have a significant adverse impact on our quarterly results for that and future quarters The potential impacts of these risks may be further increased if our disaster recovery plans prove to be inadequate
There is an increasing focus from regulators certain investors customers and other stakeholders concerning ESG matters both in the United States and internationally and companies across all industries are experiencing increased scrutiny of their ESG practices positions and reporting Investors customers regulators employees and other stakeholders have focused increasingly on ESG issues including among other matters climate change and greenhouse gas emissions human and civil rights and diversity and inclusion matters Expectations surrounding appropriate corporate behavior in these areas are continually evolving and often reflect a wide spectrum of viewpoints and interests In recent periods regulators have expressed contrary views with respect to a range of ESG matters Given the divergent nature of regulations and a lack of harmonization of ESG legal and regulatory environments across the jurisdictions in which we operate we may experience enhanced compliance risks and costs as well as opposing views from various stakeholders who may disagree with our actual or perceived positions on these matters
In addition changing laws regulations and standards relating to ESG matters are evolving creating uncertainty for public companies increasing legal and financial compliance costs and making some activities more time consuming We communicate certain ESG related initiatives and goals regarding ESG in our annual sustainability report on our website in our filings with the SEC and elsewhere These initiatives and goals coupled with the uncertainty regarding compliance with evolving ESG laws regulations and expectations could be difficult to achieve and costly to implement We could fail to achieve or be perceived to fail to achieve our ESG related initiatives and goals In addition we could be criticized for the timing scope or nature of these initiatives and goals or for any revisions to them If our ESG practices and disclosures do not meet evolving investor customer or other stakeholder expectations and societal and regulatory standards or if we experience an actual or perceived failure to achieve our ESG related initiatives and goals our ability to attract or retain employees and our attractiveness as an investment or as a business partner could be negatively impacted which could adversely affect our business
We are or in the future will be obligated to comply with new stringent climate related reporting requirements under California climate related reporting statutes laws of member states of the European Union implementing the EU Corporate Sustainability Reporting Directive and other laws and regulations These sustainability reporting frameworks will require us to provide at least annually detailed public disclosures about the greenhouse gas emissions and other climate related effects our activities produce the climate related operating and financial impacts risks and opportunities we face and the strategies we pursue to manage and adapt to the impacts of climate change We expect to incur substantial costs to prepare these disclosures If we fail to compile assess and report the required operating and accounting information in a timely manner and in accordance with mandatory reporting standards we could be exposed to fines and other sanctions and sustain harm to our reputation
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting we may be unable to accurately report our financial results or prevent fraud and investor confidence and the market price of our ordinary shares may decline which could adversely affect our business
As a public company in the United States we are subject to the Sarbanes Oxley Act which requires among other things that we maintain effective disclosure controls and procedures and internal control over financial reporting In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting we have expended and anticipate that we will continue to expend significant resources including accounting related costs and significant management oversight We have incurred and expect to continue to incur significant expenses and devote substantial management effort toward compliance with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act To assist us in complying with these requirements we may need to hire more employees in the future or engage outside consultants which will increase our operating expenses
Despite significant investment our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business Further weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future Any failure to implement or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that are required to be included in our periodic reports that we file with the SEC
Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information subject us to sanctions or investigations by the NYSE the SEC or other regulatory authorities and would likely cause the trading price of our ordinary shares to decline which could adversely affect our business
We face rapidly evolving and sophisticated threats of breaches of our systems and networks as well as those of our suppliers and third party service providers To mitigate this threat to our business we take a comprehensive approach to cybersecurity and expend corresponding resources on cybersecurity risk management strategy and governance
We integrate our policies standards processes and practices for assessing identifying and managing material risks from cybersecurity threats into our enterprise risk management program based on recognized frameworks and applicable standards Our cybersecurity program encompasses the key elements described below
We employ a cross functional risk based approach to identify and address anticipated and real time threats to our cybersecurity Our internal security risk and compliance personnel meet regularly to develop strategies for preserving the confidentiality integrity and availability of corporate customer and other third party information identifying preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents We maintain controls and procedures that are designed to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding public disclosure and reporting of such incidents if applicable can be made in a timely manner
At least annually we conduct a cybersecurity risk assessment that takes into account information from our internal security risk and compliance functions known information security vulnerabilities and information from external sources including reported security incidents that have affected other companies industry trends and evaluations by third parties and consultants We also conduct risk based cybersecurity tabletop exercises periodically to test our internal readiness and response planning
Our cybersecurity program includes a dedicated cybersecurity function led by our Chief Information Security Officer CISO As part of our cybersecurity function our Distributed Security Incident Response Team DSRT administers a program to monitor detect investigate respond to and escalate management of internal and external cybersecurity threats and incidents The DSRT provides threat intelligence information from internal and external resources to our CISO broader security and resiliency organization and relevant business units and functional areas as one source within our risk assessment process Our cybersecurity function partners closely with our Data Privacy organization led by the Business Integrity Officer and others within the Legal organization to ensure prompt response on data breach and any other regulatory notification requirements We have incident response and recovery plans that we test and evaluate for effectiveness in accordance with industry standards
t We have implemented controls designed to identify and mitigate cybersecurity threats associated with our use of certain third party service providers These providers are subject to security risk assessments at the time of onboarding contract renewal and upon detection of an increase in risk profile We use a variety of inputs in the risk assessments including information supplied by providers and third parties In addition we require these providers to meet appropriate security requirements controls and responsibilities and investigate security incidents that have impacted our third party providers
Our cybersecurity program is regularly assessed by consultants and third party auditors These assessments include information security maturity evaluations audits and independent reviews of our information security control environment and operating effectiveness The results of significant assessments are reported to management our board of directors and our Audit Committee We adjust our cybersecurity processes based on these results We have obtained industry certifications and attestations that demonstrate our dedication to protecting the data our customers entrust to us Information about such certifications can be found on our website
Our board of directors oversees the Company s risk management process It has delegated to our Audit Committee the primary responsibility for executing oversight of our cybersecurity risk management processes In performing this role the Audit Committee receives regular reports from our CISO and other members of management regarding the prevention detection mitigation and remediation of cybersecurity incidents including material security risks and information security vulnerabilities The Audit Committee also considers regular updates from management on our cybersecurity risk profile based on risk assessments progress of risk reduction initiatives third party auditor feedback control maturity assessments and relevant internal and industry cybersecurity incidents The Audit Committee reports quarterly to our board of directors regarding the Audit Committee s activities in overseeing cybersecurity risk management
Our cybersecurity program efforts are directed by our CISO who with the support of the Chief Financial Officer the Chief Product Officer and the Chief Legal Officer has the primary responsibility for assessing and managing material cybersecurity risks The CISO along with these members of our management acting as a group drive alignment on security decisions across the Company The CISO and various members of this group meet quarterly with the Audit Committee to review security performance metrics identify security risks and review mitigation strategies and assess the status of approved security enhancements Our CISO has served in various roles in information technology information security and risk management for over 28 years including serving as the Information Security Officer and Chief Security Officer of multiple companies
Although our Risk Factors section in this report presents information about the material cybersecurity risks we face we believe that risks from prior cybersecurity threats including as a result of any previous cybersecurity incidents have not materially affected our business to date Notwithstanding our investment in cybersecurity we may not be successful in identifying a cybersecurity risk or preventing or mitigating a cybersecurity incident or product security vulnerability that could have a material adverse effect on our business results of operations or financial condition Although we maintain cybersecurity insurance the costs related to cybersecurity incidents may not be fully insured For a discussion of cybersecurity risks affecting our business see Item 1A Risk Factors Risks Related to our Business and Industry If we experience a security incident or unauthorized access to or other unauthorized processing of confidential information including personal data otherwise occurs our software may be perceived as not being secure customers may reduce the use of or stop using our products and we may incur significant liabilities
As a distributed company we employ a distributed workforce with offices and employee hubs around the world All offices are leased and we do not own any real property We believe that our current facilities are adequate to meet our current needs and that if needed in the future suitable additional space will be available either to expand existing offices or hubs or to open offices or hubs in new locations
The information required by this Item is incorporated herein by reference to Part II Item 8 Financial Statements and Supplementary Data Note 8 Commitments and Contingencies Legal Matters of our accompanying Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10 K
From time to time we may be subject to legal proceedings and claims that arise in the ordinary course of business including patent commercial product liability employment class action whistleblower and other litigation and claims as well as governmental and other regulatory investigations and proceedings In addition third parties from time to time may assert claims against us in the form of letters and other communications We are not currently a party to any legal proceedings that if determined adversely to us would individually or taken together in our opinion have a material adverse effect on our business results of operations financial condition or cash flows Future litigation may be necessary to defend ourselves our partners and our customers by determining the scope enforceability and validity of third party proprietary rights or to establish our proprietary rights The results of any current or future litigation cannot be predicted with certainty and regardless of the outcome such litigation could have an adverse impact on us because of defense and settlement costs diversion of management resources and other factors
As of May 31 2025 there were 47 shareholders of record of our ordinary shares The number of such holders does not include beneficial owners of our ordinary shares that are held of record by brokers and other institutions on behalf of such beneficial owners
The graph below compares the cumulative total shareholder return on our ordinary shares with the cumulative total return on the S P 500 Index and the S P 500 Information Technology Index for our five most recent fiscal years The graph assumes 100 was invested at the market close on April 30 2020 Data for the S P 500 Index and the S P 500 Information Technology Index assume reinvestment of dividends
This performance graph shall not be deemed soliciting material or to be filed with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing by Elastic N V under the Securities Act or the Exchange Act
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in Part II Item 8 of this Annual Report on Form 10 K As discussed in the section titled Note Regarding Forward Looking Statements the following discussion and analysis contains forward looking statements that involve risks and uncertainties Our actual results could differ materially from those discussed below Factors that could cause or contribute to such difference include but are not limited to those identified below and those discussed in the section titled Risk Factors included in Part I Item 1A of this Annual Report on Form 10 K Our fiscal year end is April 30
This section of our Annual Report on Form 10 K discusses our financial condition and results of operations for the years ended April 30 2025 2024 and 2023 and year to year comparisons between the years ended April 30 2025 and 2024 A discussion of our financial condition and results of operations for the year ended April 30 2023 and year to year comparisons between the years ended April 30 2024 and 2023 that are not included in this Annual Report on Form 10 K can be found in Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10 K for the year ended April 30 2024 filed with the SEC on June 14 2024
Elastic the Search AI Company enables its customers to transform data into answers actions and outcomes with Search AI Our platform combines the precision of search with the intelligence of AI to help our customers and community solve real time business problems unlock potential value and achieve better outcomes Our platform available as either a cloud service or a self managed software allows our customers to find insights and drive AI and machine learning use cases from large amounts of data
We offer three Search AI powered solutions Elasticsearch Elastic Observability and Elastic Security that are built on our platform We help organizations their employees and their customers find what they need faster while keeping mission critical applications and infrastructure running smoothly and protecting against cyber threats
Our platform is able to ingest data from any source in any format and perform search analysis and visualization of that data With Elasticsearch at its core our platform is a highly scalable document store and search engine and is the unified data store for all of our solutions and use cases Featuring a common solution agnostic user interface with powerful drag and drop visual analytics centralized management capabilities and the world s most downloaded open source vector database our platform gives developers a full suite of sophisticated retrieval algorithms and the ability to integrate with large language models LLM It delivers the comprehensive set of capabilities developers need to build maintain and secure next generation applications and services Our platform can be used by developers and IT decision makers to power a variety of use cases
We make our platform available as a service across major cloud providers Customers can also deploy our platform across hybrid clouds public or private clouds and multi cloud environments As digital transformation continues to drive mission critical business functions to the cloud we believe that every company must incorporate search AI capabilities across IT and line of business organizations to find the answers that matter from all of its data in real time and at scale
Our business model is based primarily on a combination of paid service offerings Elastic Cloud Hosted and Elastic Cloud Serverless and free and paid proprietary self managed software Elastic Self Managed Our paid offerings for our platform are sold via subscription through resource based pricing and all customers and users have access to varying levels of features across all solutions In Elastic Cloud our family of cloud based offerings we offer various subscription tiers tied to different features For users who download our software we make some of the features of our software available free of charge allowing us to engage with a broad community of developers and practitioners and introduce them to the value of our platform
We believe in the importance of an open software development model and we develop the majority of our software in public repositories under an open source AGPL license as well as under a proprietary license Unlike some companies we do not build an enterprise version that is separate from our free distribution We maintain a single code base across both our self managed software and Elastic hosted services All of these actions help us build a powerful commercial business model that we believe is optimized for product driven growth Elastic has always been committed to open source and an open development process with transparent and direct engagement with our community The core of Elasticsearch and Kibana a user interface are open source under an AGPL license and our open source code is housed in public repositories
We generate revenue primarily from sales of subscriptions to our platform We offer various paid subscription tiers that provide different levels of rights to use proprietary features and access to support We do not sell support separately Our subscription agreements typically range from one to three years and are usually billed annually in advance Our subscription agreements are both term based and consumption based with the vast majority of Elastic Cloud subscriptions being consumption based We sell subscriptions in various currencies with the majority of our subscriptions contracted in U S dollars and a smaller portion contracted in Euro British Pound Sterling and other currencies Elastic Cloud customers may also purchase subscriptions on a month to month basis without a commitment with usage billed at the end of each month Subscriptions accounted for 93 of total revenue for the years ended April 30 2025 and 2024 We also generate revenue from consulting and training services
We make it easy for users to begin using our products in order to drive rapid adoption Users can either sign up for a free trial on Elastic Cloud or download our software directly from our website without any sales interaction and immediately begin using the full set of features Users can also sign up for Elastic Cloud through public cloud marketplaces We conduct low touch campaigns to keep users and customers engaged once they have begun using Elastic Cloud or have downloaded our software As of April 30 2025 we had approximately 21 500 customers compared to approximately 21 000 customers as of April 30 2024 The majority of our new customers use Elastic Cloud We define a customer as an entity that generated revenue in the quarter ending on the measurement date from an annual or month to month subscription Affiliated entities are typically counted as a single customer
Many of these customers start with limited initial spending on our products but can significantly increase their spending over time We drive high touch engagement with qualified prospects and customers to drive further awareness adoption and expansion of our products with paid subscriptions Expansion includes increasing the number of developers and practitioners using our products increasing the utilization of our products for a particular use case and utilizing our products to address new use cases The number of customers who represented greater than 100 000 in annual contract value ACV was over 1 510 and over 1 330 as of April 30 2025 and 2024 respectively The ACV of a customer s commitments is calculated based on the terms of that customer s subscriptions and represents the total committed annual subscription amount as of the measurement date Month to month subscriptions are not included in the calculation of ACV
Our sales teams are organized primarily by geography and secondarily by customer segments They focus on both seeking to obtain new customers and on pursuing additional sales to existing customers In addition to our direct sales efforts we maintain partnerships to further extend our reach and awareness of our products around the world
We have experienced significant growth with revenue increasing to 1 483 billion for the year ended April 30 2025 from 1 267 billion for the year ended April 30 2024 and 1 069 billion for the year ended April 30 2023 representing year over year growth of 17 for the year ended April 30 2025 and 19 for the year ended April 30 2024 For the years ended April 30 2025 2024 and 2023 revenue from outside the United States accounted for 44 42 and 41 of our total revenue respectively
We incurred net losses of 108 1 million and 236 2 million for the years ended April 30 2025 and 2023 respectively while we had net income of 61 7 million for the year ended April 30 2024 Our net cash provided by operating activities was 266 2 million 148 8 million and 35 7 million for the years ended April 30 2025 2024 and 2023 respectively We had an accumulated deficit of 1 100 billion as of April 30 2025 due to losses in all but one of our prior years We may incur net losses in the future and there can be no assurance whether or when we may become profitable on a consistent basis
We continue to make substantial investments in developing our platform and expanding our global sales and marketing footprint With a distributed team spanning over 40 countries we are able to recruit hire and retain high quality experienced technical and sales personnel and operate at a rapid pace to drive product releases fix bugs and create and market new products We had 3 537 employees as of April 30 2025
Macroeconomic events including a possible resurgence in inflation fluctuations in economic growth changes in and uncertainty of international trade policies and political unrest continue to evolve and impact worldwide economic activity Governmental and corporate responses to these factors including changing interest rates and unpredictable and decreased spending will continue to affect the macroeconomic conditions We have experienced and if economic conditions deteriorate may continue to experience longer and more unpredictable sales cycles increased scrutiny of prospective sales slowing consumption and overall customer expenditures and the impacts of changing foreign exchange rates with a strengthening or weakening U S dollar We continue to closely monitor the macroeconomic environment and its effects on our business and on global economic activity including customer spending behavior See Risk Factors in Part I Item 1A of this Annual Report on Form 10 K for a discussion of additional risks
We believe that the growth and future success of our business depends on many factors including those described below While each of these factors presents significant opportunities for our business they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations
Our platform is applied to various use cases by customers including through the solutions we offer Our revenue is derived primarily from subscriptions of Search Observability and Security built into our platform We believe that releasing additional features of our platform including our solutions drives usage of our products and ultimately drives our growth To that end we plan to continue to invest in building new features and solutions that expand the capabilities of our platform These investments may adversely affect our operating results prior to generating benefits to the extent that they ultimately generate benefits at all
Our strategy consists of providing access to source available software on both a paid and free of charge basis and fostering a community of users and developers Our strategy is designed to pursue what we believe to be significant untapped potential for the use of our technology After developers begin to use our software and start to participate in our developer community they become more likely to apply our technology to additional use cases and promote our technology within their organizations This reduces the time required for our sales force to educate potential customers on our solutions To capitalize on our opportunity we intend to make further investments to keep our platform accessible and well known to software developers around the world We intend to continue to invest in our products and support and engage our user base and developer community through content events and conferences in the United States and internationally Our results of operations may fluctuate as we make these investments
Our financial performance depends on growing our paid customer base by converting free users of our software into paid subscribers Our distribution model has resulted in rapid adoption by developers around the world We have invested and expect to continue to invest heavily in sales and marketing efforts to convert additional free users to paid subscribers Our investment in sales and marketing is significant given our large and diverse user base These investments are likely to occur before we realize the anticipated benefits of such investments such that they may adversely affect our operating results in the near term
We recently added the Affero General Public License as an option to license the free part of our Elasticsearch and Kibana source code that has been available under the Elastic License 2 0 and Server Side Public License Version 1 0 AGPL is an Open Source Initiative approved open source license We anticipate that the addition of this license will drive further engagement and adoption of our software in areas such as vector search within our large community further increasing our appeal for driving AI and machine learning use cases from large amounts of data Subject to compliance with the conditions of AGPL anyone may also redistribute our software in modified or unmodified form or use it to provide a competitive product or service offering
Our future growth and profitability depend on our ability to drive additional sales to existing customers Customers often expand the use of our software within their organizations by increasing the number of developers using our products increasing the utilization of our products for a particular use case and expanding use of our products to additional use cases We focus some of our direct sales efforts on encouraging these types of expansion within our customer base
We believe that a useful indication of how our customer relationships have expanded over time is through our Net Expansion Rate which is based upon trends in the rate at which customers increase their spend with us To calculate an expansion rate as of the end of a given month we start with the annualized spend from all such customers as of twelve months prior to that month end or Prior Period Value A customer s annualized spend is measured as its ACV or in the case of customers charged on usage based arrangements by annualizing the usage for that month We then calculate the annualized spend from these same customers as of the given month end or Current Period Value which includes any growth in the value of their subscriptions or usage and is net of contraction or attrition over the prior twelve months We then divide the Current Period Value by the Prior Period Value to arrive at an expansion rate The Net Expansion Rate at the end of any period is the weighted average of the expansion rates as of the end of each of the trailing twelve months The Net Expansion Rate includes the dollar weighted value of our subscriptions or usage that expand renew contract or experience attrition For instance if each customer had a one year subscription and renewed its subscription for the same amount the Net Expansion Rate would be 100 Customers who reduced their annual subscription dollar value contraction or did not renew their annual subscription attrition would adversely affect the Net Expansion Rate Our Net Expansion Rate was approximately 112 as of April 30 2025
As large organizations expand their use of our platform across multiple use cases projects divisions and users they often begin to require centralized provisioning management and monitoring across multiple deployments To satisfy these requirements our Enterprise subscription tier provides access to key orchestration and deployment management capabilities We will continue to focus some of our direct sales efforts on driving adoption of our paid offerings
Elastic Cloud our family of cloud based offerings is an important growth opportunity for our business Organizations are increasingly looking for hosted deployment alternatives with reduced administrative burdens In some cases users of our source available software that have been self managing deployments of our platform subsequently become paying subscribers of Elastic Cloud For the years ended April 30 2025 and 2024 Elastic Cloud contributed 46 and 43 of our total revenue respectively We believe that offering Elastic Cloud is important for achieving our long term growth potential and we expect Elastic Cloud s contribution to our subscription revenue to continue to increase over time However we expect that an increase in the relative contribution of Elastic Cloud to our business will continue to have a modest adverse impact on our gross margin as a result of the associated third party hosting costs
Our revenue is primarily generated through the sale of subscriptions to software which is either self managed by the user or hosted and managed by us in the cloud Subscriptions provide the right to use paid proprietary software features and access to support for our paid and unpaid software Our subscription agreements are either term based or consumption based with the vast majority of Elastic Cloud subscriptions being consumption based
A portion of the revenue from self managed subscriptions is generally recognized up front at the point in time when the license is delivered and the remainder is recognized ratably over the subscription term Revenue from subscriptions that require access to the cloud or that are hosted and managed by us is recognized ratably over the subscription term or on a usage basis for consumption based arrangements Both are presented within Subscription revenue in our consolidated statements of operations
Cost of subscription consists primarily of personnel and related costs for employees associated with supporting our subscription arrangements certain third party expenses and amortization of certain intangible and other assets Personnel and related costs comprise cash compensation benefits and stock based compensation to employees costs of third party contractors and allocated overhead costs Third party expenses consist of cloud hosting costs and other expenses directly associated with our customer support We expect our cost of subscription to increase in absolute dollars as our subscription revenue increases
Cost of services revenue consists primarily of personnel costs directly associated with delivery of training implementation and other services costs of third party contractors facility rental charges and allocated overhead costs We expect our cost of services to increase in absolute dollars as we invest in our business and as services revenue increases
Gross profit represents revenue less cost of revenue Gross margin or gross profit as a percentage of revenue has been and will continue to be affected by a variety of factors including the timing of our acquisition of new customers and our renewals with existing customers the average sales price of our subscriptions and services the amount of our revenue represented by hosted services the mix of subscriptions sold the mix of revenue between subscriptions and services the mix of services between consulting and training transaction volume growth and support case volume growth We expect our gross margin to fluctuate over time depending on the factors described above We expect our revenue from Elastic Cloud to continue to increase as a percentage of total revenue which we expect will continue to have a modest unfavorable impact on our gross margin as a result of the associated third party hosting costs
Research and development expense primarily consists of personnel and related costs and allocated overhead costs We expect our research and development expense to increase in absolute dollars for the foreseeable future as we continue to develop new technology and invest further in our existing products
Sales and marketing expense primarily consists of personnel and related costs commissions allocated overhead costs and costs related to marketing programs and user events Marketing programs consist of advertising events brand building and customer acquisition and retention activities We expect our sales and marketing expense to increase in absolute dollars as we expand our sales force and increase our investments in marketing resources We capitalize sales commissions and associated payroll taxes paid to internal sales personnel that are related to the acquisition of certain customer contracts Deferred contract acquisition costs are amortized over the expected benefit period
General and administrative expense primarily consists of personnel and related costs for our management finance legal human resources and other administrative employees Our general and administrative expense also includes professional fees accounting fees audit fees tax services and legal fees as well as insurance allocated overhead costs and other corporate expenses We expect our general and administrative expense to increase in absolute dollars as we increase the size of our general and administrative functions to support the growth of our business
Provision for benefit from income taxes consists primarily of income taxes related to the Netherlands U S federal and state and foreign jurisdictions in which we conduct business Our effective tax rate is affected by recurring items such as tax rates in jurisdictions outside the Netherlands and the relative amounts of income we earn in those jurisdictions non deductible stock based compensation and one time tax benefits such as the release of a valuation allowance or charges as well as the BEAT legislation in the United States
Subscription revenue increased by 207 9 million or 18 for the year ended April 30 2025 compared to the prior year This increase was primarily driven by continued adoption of Elastic Cloud which grew 26 over the prior year and increased to 46 of total revenue for the year ended April 30 2025 from 43 for the year ended April 30 2024
Services revenue increased by 8 1 million or 9 for the year ended April 30 2025 compared to the prior year The increase in services revenue was attributable to increased adoption of our services offerings
Cost of subscription revenue increased by 36 3 million or 15 for the year ended April 30 2025 compared to the prior year This increase was primarily due to an increase of 38 4 million in cloud infrastructure costs partially offset by a decrease of 3 1 million in intangible assets amortization Subscription gross margin increased nominally to 80 for the year ended April 30 2025 compared to 79 the prior year
Cost of services revenue increased by 13 5 million or 16 for the year ended April 30 2025 compared to the prior year This increase was primarily due to increases of 6 8 million in personnel and related costs and 6 4 million in subcontractor costs Gross margin for services revenue was 2 for the year ended April 30 2025 compared to 8 for the same period of the prior year The decrease in gross margin was primarily attributable to personnel and related costs and subcontractor costs growing at a higher rate than the growth in services revenue We continue to make investments in our services organization that we believe will be needed to support our continued growth Our gross margin for services may fluctuate or decline in the near term as we seek to expand our services business
Research and development expense increased by 23 8 million or 7 for the year ended April 30 2025 compared to the prior year as we continued to invest in the development of new and existing offerings This increase was primarily due to increases of 22 2 million in personnel and related costs and 4 7 million in cloud infrastructure costs related to our research and development activities These increases were partially offset by a decrease of 3 4 million in travel costs The increase in personnel and related costs included increases of 16 5 million in salaries and related taxes 3 8 million in stock based compensation and 3 1 million in employee benefits expense partially offset by a decrease of 1 4 million in acquisition related compensation
Sales and marketing expense increased by 57 5 million or 10 for the year ended April 30 2025 compared to the prior year This increase was primarily due to an increase of 55 8 million in personnel and related costs The increase in personnel and related costs included increases of 22 4 million in salaries and related taxes 15 5 million in commission expense 8 7 million in stock based compensation and 6 8 million in employee benefits expense
General and administrative expense increased by 14 6 million or 9 for the year ended April 30 2025 compared to the prior year This increase was primarily due to increases of 11 8 million in personnel and related costs and 2 0 million in software and equipment expense The increase in personnel and related costs included increases of 5 8 million in salaries and related taxes 3 2 million in stock based compensation and 1 5 million in employee benefits expense
Other income net increased by 15 4 million or 46 for the year ended April 30 2025 compared to the prior year The increase was due to increases of 10 3 million in interest and other investment income primarily from our marketable securities and 5 4 million in net foreign currency exchange gains
The provision for income taxes was 76 5 million for the year ended April 30 2025 compared to a benefit from income taxes of 184 5 million for the prior year Our effective tax rate was 242 and 150 of our net loss before income taxes for the years ended April 30 2025 and 2024 respectively Our effective tax rate is affected by recurring items such as tax rates in jurisdictions outside the Netherlands and the relative amounts of income we earn in those jurisdictions and non deductible stock based compensation as well as one time tax benefits or charges
We maintain a full valuation allowance against our deferred tax assets in the Netherlands and the United Kingdom To the extent sufficient positive evidence becomes available the Company may release all or a portion of the Netherlands valuation allowance in one or more future periods A release of the valuation allowance if any would result in the recognition of certain deferred tax assets and a material income tax benefit for the period in which such release is recorded
As of April 30 2025 our principal sources of liquidity were cash cash equivalents and marketable securities totaling 1 397 billion Our cash cash equivalents and marketable securities consist of highly liquid investment grade fixed income securities We believe that the credit quality of the securities portfolio is strong and diversified among industries and individual issuers
We have generated significant operating losses from our operations as reflected in our accumulated deficit of 1 100 billion as of April 30 2025 We have historically incurred and expect to continue to incur operating losses and may generate negative cash flows from operations in the future due to the investments we intend to make As a result we may require additional capital resources to execute on our strategic initiatives to grow our business
We believe that our existing cash cash equivalents and marketable securities and cash from our future operations will be sufficient to fund our operating and capital needs for at least the next 12 months despite the uncertainty in the changing market and macroeconomic conditions Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward looking statement and involves risks and uncertainties Our actual results could vary as a result of and our future capital requirements both near term and long term will depend on many factors including our growth rate the timing and extent of spending to support our research and development efforts the expansion of sales and marketing activities the timing of new introductions of solutions or features and the continuing market acceptance of our solutions and services
We may in the future enter into arrangements to acquire or invest in complementary businesses services and technologies including intellectual property rights We have based this estimate on assumptions that may prove to be wrong and we could use our available capital resources sooner than we currently expect
In July 2021 we issued long term debt of 575 0 million represented by our Senior Notes and we may be required to seek additional equity or debt financing As market conditions warrant we may from time to time seek to purchase our outstanding debt securities or loans including the Senior Notes in privately negotiated or open market transactions by tender offer or otherwise
In the event that additional financing is required from outside sources we may not be able to raise such financing on terms acceptable to us or at all If we are unable to raise additional capital when desired or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital our business operating results and financial condition would be adversely affected
Net cash provided by operating activities during the year ended April 30 2025 was 266 2 million which resulted from adjustments for non cash charges of 430 4 million partially offset by net loss of 108 1 million and a net cash outflow of 56 2 million from changes in operating assets and liabilities Non cash charges primarily consisted of 257 8 million for stock based compensation expense 96 7 million for amortization of deferred contract acquisition costs 57 4 million in deferred income taxes and 12 3 million of depreciation and intangible asset amortization expense The net cash outflow from changes in operating assets and liabilities resulted from a 106 7 million increase in deferred contract acquisition costs as our sales commissions increased due to increased business volume a 48 9 million increase in accounts receivable net a 36 1 million increase in prepaid expenses and other assets and a 11 9 million decrease in operating lease liabilities
Net cash provided by operating activities during the year ended April 30 2024 was 148 8 million which resulted from net income of 61 7 million and adjustments for non cash charges of 123 7 million partially offset by a net cash outflow of 36 6 million from changes in operating assets and liabilities Non cash charges primarily consisted of 239 1 million for stock based compensation expense 78 5 million for amortization of deferred contract acquisition costs 18 0 million of depreciation and intangible asset amortization expense 11 0 million
The net cash outflow from changes in operating assets and liabilities resulted from an increase in deferred contract acquisition costs of 119 8 million as our sales commissions increased due to increased business volume an increase of 63 5 million in accounts receivable
These outflows were partially offset by inflows from a 134 6 million increase in deferred revenue and a net increase of 25 5 million in accounts payable accrued expenses and accrued compensation and benefits
during the year ended April 30 2025 was primarily due to purchases of marketable securities of 549 6 million and purchases of property and equipment of 4 3 million partially offset by sales maturities and redemptions of marketable securities of 435 3 million
Our principal commitments consist of our purchase obligations under non cancelable agreements for cloud hosting subscription software sales and marketing and general corporate services future non cancelable minimum rental payments under operating leases for our offices and interest payments due on our Senior Notes As of April 30 2025 we had purchase commitments of 812 3 million related to cloud hosting services future minimum lease payment commitments of 29 9 million and purchase commitments of 73 2 million related to other contracts See Note 8 Commitments and contingencies and Note 9 Leases of our accompanying Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10 K for additional information
In July 2021 we issued 575 0 million aggregate principal amount of Senior Notes in a private placement Interest on the Senior Notes is payable semi annually in arrears on January 15 and July 15 of each year See Note 7 Senior Notes of our accompanying Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10 K for additional information
As of April 30 2025 we had 2 9 million in letters of credit outstanding in favor of certain landlords for office space These letters of credit expire on various dates through 2028 with some of these obligations renewing annually
Our contractual commitment amounts are associated with agreements that are enforceable and legally binding and do not include obligations under contracts that we can cancel without a significant penalty Purchase orders issued in the ordinary course of business are also excluded as our purchase orders represent authorizations to purchase rather than binding agreements
We have also excluded unrecognized tax benefits from the contractual obligations A variety of factors could affect the timing of payments for the liabilities related to unrecognized tax benefits Therefore we cannot reasonably estimate the timing of such payments We believe that these matters will likely not be resolved in the next 12 months and accordingly we have classified the estimated liability as non current in the consolidated balance sheets See Note 13 Income Taxes of our accompanying Notes to our Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10 K for additional information
In preparing our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America we are required to make estimates assumptions and judgments that affect the amounts reported on our financial statements and the accompanying disclosures Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment We base our estimates assumptions and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances These estimates may change in future periods and will be recognized in the consolidated financial statements as new events occur and additional information becomes known Actual results could differ from those estimates and any such differences may be material to our financial statements We believe that the critical accounting policies and estimates set forth below involve a higher degree of judgment and complexity in their application than our other significant accounting policies
Accounting policies that have a significant impact on our results are described in Note 2 Summary of Significant Accounting Policies to our accompanying Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10 K The accounting policies discussed in this section are those that we consider to involve a greater degree of judgment and complexity Accordingly these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations
Due to current macroeconomic developments and conditions estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment These estimates and assumptions may change in future periods and will be recognized in the consolidated financial statements as new events occur and additional information becomes known To the extent our actual results differ materially from those estimates and assumptions our future financial statements could be affected
Our contracts with customers include varying terms and conditions and identifying and evaluating the impact of these terms and conditions on revenue recognition requires significant judgment We apply judgment in determining the customer s ability and intent to pay which is based on a variety of factors including the customer s historical payment experience or in the case of a new customer the customer s credit reputation and financial or other pertinent information At contract inception we evaluate whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation We have concluded that our contracts with customers generally do not contain warranties that give rise to a separate performance obligation
Our contracts often contain multiple performance obligations For these contracts we account for individual performance obligations separately if they are distinct We apply significant judgment in identifying and accounting for each performance obligation based on our evaluation of the terms and conditions in contracts The transaction price is allocated to the separate performance obligations on a relative standalone selling price SSP basis We determine the SSP based on the prices at which we separately sell these products assuming the majority of such prices fall within a pricing range For instances in which the SSP is not directly observable such as when we do not sell the software license separately we derive the SSP using information that may include market conditions and other observable and unobservable inputs which can require significant judgment Individual products and services typically have more than one SSP due to the stratification of such products and services by quantity subscription term sales channel and other circumstances If one of the performance obligations is outside of the SSP range we allocate the transaction price considering the midpoint of the SSP range We also consider whether there are any additional material rights inherent in a contract and if so we allocate a portion of the transaction price to such rights based on the relative SSP
Deferred contract acquisition costs represent costs that are incremental to the acquisition of customer contracts which consist mainly of sales commissions and associated payroll taxes We determine whether costs should be deferred based on sales compensation plans if the commissions are in fact incremental and would not have occurred absent the customer contract
Our sales commissions plan incorporates different commission rates for contracts with new customers and incremental sales to existing customers and for subsequent subscription renewals Sales commissions for renewal of a subscription contract are not considered commensurate with the commissions paid for contracts with new customers and incremental sales to existing customers given the substantive difference in commission rates in proportion to their respective contract values Commissions paid for contracts with new customers and incremental sales to existing customers are amortized over an estimated period of benefit of five years while commissions paid for renewal contracts are amortized based on the pattern of the associated revenue recognition over the related contractual renewal period for the pool of renewal contracts We determine the period of benefit for commissions paid for contracts with new customers and incremental sales to existing customers by taking into consideration its initial estimated customer life and the technological life of its software and related significant features Commissions paid on services are typically amortized in accordance with the associated revenue as the commissions paid on new and renewal services are commensurate with each other Amortization of deferred contract acquisition costs is recognized in sales and marketing expense in the consolidated statements of operations
We apply significant judgment in determining the fair value of the intangible assets acquired which involves the use of significant estimates and assumptions These estimates can include but are not limited to future expected cash flows from acquired customers and acquired technology from a market participant perspective costs to rebuild developed technology useful lives and discount rates While we use our best estimates and judgments our estimates are inherently uncertain
Deferred income tax balances reflect the effects of temporary differences between the financial reporting and tax bases of our assets and liabilities using enacted tax rates expected to apply when taxes are actually paid or recovered In addition deferred tax assets are recorded for net operating loss and credit carryforwards
A valuation allowance is provided against deferred tax assets unless it is more likely than not that they will be realized based on all available positive and negative evidence Such evidence which requires management s judgment includes but is not limited to recent cumulative earnings or losses expectations of future taxable income by taxing jurisdiction and the carry forward periods available for the utilization of deferred tax assets To the extent sufficient positive evidence becomes available we may release all or a portion of our valuation allowance in one or more future periods
Future valuation allowance releases if any would result in the recognition of certain deferred tax assets which may include a material income tax benefit for the period in which such release is recorded See Note 13 Income Taxes of our accompanying Notes to Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10 K for additional information
We had cash cash equivalents restricted cash and marketable securities totaling 1 401 billion as of April 30 2025 Our cash cash equivalents and restricted cash are held in cash deposits and money market funds and our marketable securities are held in time deposits and corporate and government debt securities The primary objectives of our investment activities are the preservation of capital the fulfillment of liquidity needs and the fiduciary control of cash and investments We do not enter into investments for trading or speculative purposes Due to the short term nature of these instruments we do not believe that an immediate 10 increase or decrease in interest rates would have a material effect on the fair value of our investment portfolio Declines in interest rates however would reduce our future interest income
In July 2021 we issued 575 0 million aggregate principal amount of Senior Notes in a private placement The fair value of the Senior Notes is subject to market risk In addition the fair market value of the Senior Notes is exposed to interest rate risk Generally the fair market value of our fixed interest rate Senior Notes will increase as interest rates fall and decrease as interest rates rise The interest rate and market value changes affect the fair value of the Senior Notes but do not impact our financial position cash flows or results of operations due to the fixed nature of the debt obligation Additionally we carry the Senior Notes at face value less unamortized debt issuance cost on our balance sheet and we present the fair value for required disclosure purposes only
Our revenue and expenses are primarily denominated in U S dollars and to a lesser extent the Euro British Pound Sterling and other currencies To date we have not had a formal hedging program with respect to foreign currency but we may adopt such a program in the future if our exposure to foreign currency were to become more significant For business conducted outside of the United States we may have both revenue and costs incurred in the local currency of the subsidiary creating a partial natural hedge Although changes to exchange rates have not had a material impact on our net operating results to date we will continue to reassess our foreign exchange exposure as we continue to grow our business globally
We have experienced and will continue to experience fluctuations in our operating results as a result of transaction gains or losses related to remeasurement of certain asset and liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded An immediate 10 increase or decrease in the relative value of the U S dollar to other currencies could have a material effect on our revenue operating expenses and net loss income As a component of other income net we recognized foreign currency transaction losses of 2 5 million 3 4 million and 0 4 million for the years ended April 30 2025 2024 and 2023 respectively
As of April 30 2025 our cash cash equivalents restricted cash and marketable securities were primarily denominated in U S dollars Euros and British Pound Sterling A 10 increase or decrease in exchange rates as of such date would have had an impact of approximately 9 2 million on our cash cash equivalents restricted cash and marketable securities balances
We have audited the accompanying consolidated balance sheets of Elastic N V and its subsidiaries the Company as of April 30 2025 and 2024 and the related consolidated statements of operations of comprehensive loss income of shareholders equity and of cash flows for each of the three years in the period ended April 30 2025 including the related notes collectively referred to as the consolidated financial statements We also have audited the Company s internal control over financial reporting as of April 30 2025 based on criteria established in
In our opinion the consolidated financial statements referred to above present fairly in all material respects the financial position of the Company as of April 30 2025 and 2024 and the results of its operations and its cash flows for each of the three years in the period ended April 30 2025 in conformity with accounting principles generally accepted in the United States of America Also in our opinion the Company maintained in all material respects effective internal control over financial reporting as of April 30 2025 based on criteria established in
The Company s management is responsible for these consolidated financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in Management s Report on Internal Control over Financial Reporting appearing under Item 9A Our responsibility is to express opinions on the Company s consolidated financial statements and on the Company s internal control over financial reporting based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances We believe that our audits provide a reasonable basis for our opinions
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that i relates to accounts or disclosures that are material to the consolidated financial statements and ii involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
As described in Note 2 to the consolidated financial statements management applies the following steps in their determination of revenue to be recognized i identification of the contract with a customer ii identification of the performance obligations in the contract iii determination of the transaction price iv allocation of the transaction price to the performance obligations and v recognition of revenue when the Company satisfies each performance obligation The Company s contracts include varying terms and conditions and identifying and evaluating the impact of these terms and conditions on revenue recognition requires significant judgment For the fiscal year ended April 30 2025 the Company s revenue was 1 483 million
The principal considerations for our determination that performing procedures relating to revenue recognition specifically the identification and evaluation of terms and conditions in contracts is a critical audit matter are the significant judgment by management in identifying and evaluating terms and conditions in contracts that impact revenue recognition This in turn led to a high degree of auditor judgment subjectivity and effort in performing procedures and in evaluating the audit evidence to determine whether terms and conditions in contracts were appropriately identified and evaluated by management
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to the revenue recognition process including controls related to the identification and evaluation of terms and conditions in contracts that impact revenue recognition These procedures also included i testing the completeness and accuracy of management s identification and evaluation of the specific terms with customers by examining revenue contracts on a sample basis and ii assessing the terms and conditions of the contract including their impact on revenue recognition
Elastic N V individually and together with its consolidated subsidiaries Elastic or the Company was incorporated under the laws of the Netherlands in 2012 The Company created Elastic s Search AI Platform a powerful set of software products that ingest and store data from any source and in any format and perform search analysis and visualization on that data Developers build on top of the Company s platform to apply the power of search to their data and solve business problems The Company offers three software solutions built into its platform Elasticsearch Elastic Observability and Elastic Security The Company s platform and its solutions are designed to run across hybrid clouds public or private clouds and multi cloud environments
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America U S GAAP and include the financial statements of the Company and its wholly owned subsidiaries All intercompany transactions and accounts have been eliminated in consolidation
The preparation of the consolidated financial statements in conformity with U S GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period Such estimates and assumptions include but are not limited to the standalone selling price SSP for each distinct performance obligation included in customer contracts with multiple performance obligations the period of benefit for deferred contract acquisition costs allowance for credit losses valuation of stock based compensation fair value of acquired intangible assets and goodwill useful lives of acquired intangible assets and property and equipment whether an arrangement is or contains a lease discount rate used for operating leases and valuation allowance for deferred income taxes The Company bases these estimates on historical and anticipated results trends and various other assumptions that it believes are reasonable under the circumstances including assumptions as to future events
Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment As of the date of issuance of these consolidated financial statements the Company is not aware of any specific event or circumstance that would require the Company to update its estimates or judgments or revise the carrying value of the Company s assets or liabilities These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated financial statements as soon as they become known Actual results could differ from those estimates and any such differences may be material to the Company s consolidated financial statements
based on the currency of the primary economic environment in which each subsidiary operates Items included in the financial statements of such subsidiaries are measured using that functional currency The Company periodically re assesses its operations to determine if previous conclusions are still valid Changes in functional currencies are applied prospectively if the operations encounter a significant and permanent change
For the subsidiaries where the U S dollar is the functional currency foreign currency denominated monetary assets and liabilities are re measured into U S dollars at current exchange rates and foreign currency denominated nonmonetary assets and liabilities are re measured into U S dollars at historical exchange rates Gains or losses from foreign currency re measurement and settlements are included in other income net in the consolidated statements of operations For the years ended April 30 2025 2024 and 2023 the Company recognized re measurement losses of 2 5 million 3 4 million and 0 4 million respectively
For subsidiaries where the functional currency is other than the U S dollar the Company uses the period end exchange rates to translate assets and liabilities the average monthly exchange rates to translate revenue and expenses and historical exchange rates to translate shareholders equity into U S dollars The Company records foreign currency translation gains and losses in accumulated other comprehensive loss as a component of shareholders equity in the consolidated balance sheets
The Company considers all highly liquid investments including money market funds with an original maturity of three months or less at the date of purchase to be cash equivalents The carrying amount of the Company s cash equivalents approximates fair value due to the short maturities of these instruments The Company s restricted cash consists primarily of cash deposits with financial institutions in support of letters of credit in favor of certain landlords for non cancelable lease agreements
Cash cash equivalents and restricted cash as reported in the Company s consolidated statements of cash flows includes the aggregate amounts of cash and cash equivalents and the restricted cash as shown on the consolidated balance sheets Cash cash equivalents and restricted cash as reported in the Company s consolidated statements of cash flows consists of the following in thousands
The Company s marketable securities consist of highly liquid investment grade fixed income securities The Company determines the appropriate classification of its investments at the time of purchase and reevaluates such designation at each balance sheet date The Company has classified and accounted for its marketable securities as available for sale debt securities as the Company may sell these securities at any time for use in its current operations or for other purposes including prior to maturity As a result the Company has classified its marketable securities within current assets on the consolidated balance sheets
Available for sale debt securities are recorded at fair value each reporting period Premiums and discounts are amortized or accreted over the life of the related available for sale debt security as an adjustment to yield using the effective interest method Interest income is recognized when earned Unrealized gains and losses on these marketable securities are reported as a separate component of accumulated other comprehensive loss until realized Realized gains and losses are determined based on the specific identification method and are reported in other income net in the consolidated statements of operations
For available for debt securities in an unrealized loss position the Company first assesses whether it intends to sell the security or it is more likely than not that the Company will be required to sell the security before the recovery of its entire amortized cost basis If either of these criteria is met the security s amortized cost basis is written down to fair value through other income net in the consolidated statements of operations If neither of these criteria are met the Company evaluates whether the decline in fair value below amortized cost is due to credit or non credit related factors In making this assessment the Company considers the extent to which fair value is less than amortized cost any changes to the rating of the security by a rating agency and any adverse conditions specifically related to the security among other factors Credit related unrealized losses are recognized as an allowance for expected credit losses of available for sale securities on the consolidated balance sheets with a corresponding charge in other income net in the consolidated statements of operations Non credit related unrealized losses are included in accumulated other comprehensive loss
with respect to assets and liabilities that are measured at fair value Under this standard fair value is defined as the price that would be received to sell an asset or paid to transfer a liability an exit price in an orderly transaction between market participants at the reporting date The accounting guidance establishes a three tiered hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows
Level 2 Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets and liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
The Company s financial instruments consist of cash equivalents marketable securities mutual fund investments held in a rabbi trust accounts receivable accounts payable and accrued liabilities Cash equivalents are stated at amortized cost which approximates fair value at the balance sheet dates due to the short period of time to maturity Marketable securities and mutual fund investments are recorded at fair value Accounts receivable accounts payable and accrued liabilities are stated at their carrying value which approximates fair value due to the short time to the expected receipt or payment date
Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash cash equivalents restricted cash marketable securities and accounts receivable The primary focus of the Company s investment strategy is to preserve capital and meet liquidity requirements The Company maintains its cash accounts with financial institutions where at times deposits exceed federal insurance limits The Company invests its excess cash in highly rated money market funds and in short term investments
The Company extends credit to customers in the normal course of business The Company performs credit analyses and monitors the financial health of its customers to reduce credit risk Trade accounts receivable are recorded at the invoiced amount and do not bear interest Management performs ongoing credit evaluations of customers and maintains allowances for potential credit losses on customers accounts when deemed necessary
Accounts receivable primarily consists of amounts billed currently due from customers The Company s accounts receivable are subject to collection risk Gross accounts receivable are reduced for this risk by an allowance for credit losses This allowance is for estimated losses resulting from the inability of the Company s customers to make required payments The Company determines the need for an allowance for credit losses based on various factors including past collection experience credit quality of the customer age of the receivable balance and current economic conditions as well as specific circumstances arising with individual customers Accounts receivables are written off against the allowance when management determines a balance is uncollectible and the Company no longer actively pursues collection of the receivable The Company does not typically offer right of refund in its contracts The allowance for credit losses reflects the Company s best estimate of probable losses inherent in the Company s receivables portfolio Unbilled accounts receivable represents amounts for which the Company has recognized revenue pursuant to the Company s revenue recognition policy for fulfilled obligations not yet billed
Software development costs for software to be sold leased or otherwise marketed are expensed as incurred until the establishment of technological feasibility at which time those costs are capitalized until the product is available for general release to customers and amortized over the estimated life of the product Technological feasibility is established upon the completion of a working prototype that has been certified as having no critical bugs and is a release candidate To date costs to develop software that is marketed externally have not been capitalized as the current software development process is essentially completed concurrently with the establishment of technological feasibility As such all related software development costs are expensed as incurred and included in research and development expense in the consolidated statements of operations
Costs related to software acquired developed or modified solely to meet the Company s internal requirements with no substantive plans to market such software at the time of development and costs related to the development of web based product are capitalized during the application development stage Costs incurred during the preliminary planning and evaluation stage of the project and during the post implementation operational stage are expensed as incurred Costs incurred during the application development stage of the project are capitalized
The Company also capitalizes qualifying implementation costs incurred in a hosting arrangement that is a service contract These costs are amortized on a straight line basis over the expected life of the service contract including consideration of the reasonably certain renewal periods and are presented in the same income statement line items as the service for the related hosting arrangement The Company did not capitalize any costs during the years ended April 30 2025 and 2024 All previously capitalized costs are recorded in other assets non current on the consolidated balance sheets
Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight line method Upon retirement or sale the cost of assets disposed of and the related accumulated depreciation are removed from the financial statements and any resulting gain or loss is reflected within the consolidated statements of operations There was no material gain or loss incurred as a result of retirement or sale in the periods presented Repair and maintenance costs are expensed as incurred
Leases arise from contractual obligations that convey the right to control the use of identified property plant or equipment for a period of time in exchange for consideration The Company determines whether an arrangement is or contains a lease at inception based on whether there is an identified asset and whether the Company controls the use of the identified asset throughout the period of use At the lease commencement date the Company determines the lease classification between finance and operating and recognizes a right of use asset and corresponding lease liability for each lease component A right of use asset represents the Company s right to use an underlying asset and a lease liability represents the Company s obligation to make payments during the lease term The operating lease right of use asset also includes any lease payments made and excludes lease incentives Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option Lease expense for minimum lease payments is recognized on a straight line basis over the lease term The Company accounts for lease components and non lease components as a single lease component Leases with an initial term of twelve months or less are classified as short term leases and therefore are not recognized on the consolidated balance sheets and are expensed on a straight line basis within the consolidated statements of operations
The lease liability is initially measured as the present value of the remaining lease payments over the lease term The discount rate used to determine the present value is the Company s incremental borrowing rate unless the interest rate implicit in the lease is readily determinable The Company estimates its incremental borrowing rate based on the information available at the lease commencement date for borrowings with a similar term The right of use asset is initially measured as the present value of the lease payments adjusted for initial direct costs prepaid lease payments to lessors and lease incentives
When the Company acquires a business the Company allocates the purchase price which is the sum of the consideration provided and may consist of cash equity or a combination of the two in a business combination to the identifiable assets and liabilities of the acquired business at their estimated respective fair values The Company recognizes and measures contract assets and contract liabilities acquired in a business combination on the acquisition date in accordance with ASC 606
The excess of the purchase price over the amount allocated to the identifiable assets and liabilities if any is recorded as goodwill Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including but not limited to the selection of valuation methodologies estimates of future revenue and cash flows costs to rebuild developed technology discount rates and selection of comparable companies The Company s estimates of fair value are based on assumptions believed to be reasonable but which are inherently uncertain and unpredictable and as a result actual results may differ from estimates During the measurement period the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill Upon the conclusion of the measurement period any subsequent adjustments are recorded to other income net in the consolidated statements of operations
When the Company issues stock based or cash awards to an acquired company s shareholders the Company evaluates whether the awards are consideration or compensation for post acquisition services The evaluation includes among other things whether the vesting of the awards is contingent on the continued employment of the acquired company s shareholders beyond the acquisition date If continued employment is required for vesting the awards are treated as compensation for post acquisition services and recognized as expense over the requisite service period
Acquisition related transaction costs incurred by the Company are not included as a component of consideration transferred but are accounted for as an operating expense in the period in which the costs are incurred
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations accounted for using the acquisition method and is not amortized The Company tests goodwill for impairment at least annually in the fourth quarter of each year or more frequently if events or changes in circumstances indicate that goodwill may be impaired For the purposes of impairment testing the Company has determined that it has one operating segment and one reporting unit The Company s test of goodwill impairment starts with a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test If qualitative factors indicate that the fair value of the reporting unit is more likely than not less than its carrying amount then a quantitative goodwill impairment test is performed For the quantitative analysis the Company compares the fair value of its reporting unit to its carrying value If the estimated fair value exceeds book value goodwill is considered not to be impaired and no additional steps are necessary However if the fair value of the reporting unit is less than book value then goodwill will be impaired by the amount that the carrying amount exceeds the implied fair value There was no impairment of goodwill recorded for the years ended April 30 2025 2024 and 2023
The Company evaluates the recoverability of long lived assets including property and equipment and amortizable acquired intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable Such events and changes may include significant changes in performance relative to expected operating results significant changes in asset use significant negative industry or economic trends and changes in the Company s business strategy Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate If such review indicates that the carrying amount of long lived assets is not recoverable the carrying amount of such assets is reduced to fair value During the year ended April 30 2023 the Company recorded asset impairment charges comprising impairment of operating lease right of use assets and the associated furniture equipment and leasehold improvements of 5 1 million and 1 1 million respectively for exited leased office spaces associated with the Company s restructuring plan The Company determined that there were no events or changes in circumstances that indicated that its long lived assets were impaired during the years ended April 30 2025 and 2024
In addition to the recoverability assessment the Company periodically reviews the remaining estimated useful lives of property and equipment and amortizable intangible assets If the estimated useful life assumption for any asset is changed the remaining unamortized balance would be depreciated or amortized over the revised estimated useful life on a prospective basis
The Company generates revenue primarily from the sale of self managed subscriptions which include licenses for proprietary features support and maintenance and from the sale of software as a service SaaS subscriptions The Company also generates revenue from services which consist of consulting and training
Under ASC 606 the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for those goods and services The Company s contracts include varying terms and conditions and identifying and evaluating the impact of these terms and conditions on revenue recognition requires significant judgment In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements the Company performs the following steps
The Company contracts with its customers through order forms which in some cases are governed by master sales agreements The Company determines that it has a contract with a customer when the order form has been approved each party s rights regarding the products or services to be transferred can be identified the payment terms for the services can be identified the Company has determined the customer has the ability and intent to pay and the contract has commercial substance The Company applies judgment in determining the customer s ability and intent to pay which is based on a variety of factors including the customer s historical payment experience or in the case of a new customer the customer s credit reputation and financial or other pertinent information At contract inception the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation The Company has concluded that its contracts with customers generally do not contain warranties that give rise to a separate performance obligation
Performance obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are both capable of being distinct whereby the customer can benefit from the products or services either on their own or together with other resources that are readily available from third parties or from the Company and are distinct in the context of the contract whereby the transfer of the products and services is separately identifiable from other promises in the contract
The Company s self managed subscriptions include both a license providing the right to use proprietary features in its software as well as an obligation to provide support on both open source and proprietary features and maintenance The Company s SaaS products provide access to hosted software as well as support which the Company considers to be a single performance obligation
Services related performance obligations relate to the provision of consulting and training services These services are distinct from subscriptions and do not result in significant customization of the software
The transaction price is the total amount of consideration the Company expects to be entitled to in exchange for the subscriptions and services in a contract Variable consideration is included in the transaction price if in the Company s judgment it is probable that a significant future reversal of cumulative revenue under the contract will not occur None of the Company s contracts contain a significant financing component
If the contract contains a single performance obligation the entire transaction price is allocated to the single performance obligation For contracts that contain multiple performance obligations the Company allocates the transaction price to each performance obligation based on a relative SSP The SSP is determined based on the prices at which the Company separately sells these products assuming the majority of such prices fall within a pricing range For instances in which the SSP is not directly observable such as when the Company does not sell the software license separately the Company derives the SSP using information that may include market conditions and other observable and unobservable inputs which can require significant judgment Individual products and services typically have more than one SSP due to the stratification of such products and services by quantity subscription term sales channel and other circumstances If one of the performance obligations is outside of the SSP range the Company allocates the transaction price considering the midpoint of the SSP range The Company also considers whether there are any additional material rights inherent in a contract and if so the Company allocates a portion of the transaction price to such rights based on the relative SSP
Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised product or service to the customer Revenue for SaaS offerings that relate to a specified amount of services is recognized on a consumption basis as the customer utilizes the services Revenue from SaaS offerings that are stand ready arrangements is recognized ratably over the contract period as the Company satisfies the performance obligation The Company s self managed subscriptions include both upfront revenue recognition when the license is delivered as well as revenue recognized ratably over the contract period for support and maintenance based on the stand ready nature of these subscription elements
The Company generates sales directly through its sales team and through its channel partners Sales to channel partners are made at a discount and revenues are recorded at this discounted price once all the revenue recognition criteria above are met To the extent that the Company offers rebates incentives or joint marketing funds to such channel partners recorded revenues are reduced by this amount Channel partners generally receive an order from an end customer prior to placing an order with the Company Payment from channel partners is not contingent on the partner s collection from end customers
The timing of revenue recognition may differ from the timing of invoicing to customers For annual contracts the Company typically invoices customers at the time of entering into the contract For multi year agreements the Company generally invoices customers on an annual basis prior to each anniversary of the contract start date The Company records unbilled accounts receivable related to revenue recognized in excess of amounts invoiced as the Company has an unconditional right to invoice and receive payment in the future related to those fulfilled obligations Contract liabilities consist of deferred revenue which is recognized over the contractual period
Deferred contract acquisition costs represent costs that are incremental to the acquisition of customer contracts which consist mainly of sales commissions and associated payroll taxes The Company determines whether costs should be deferred based on sales compensation plans if the commissions are in fact incremental and would not have occurred absent the customer contract
Sales commissions for renewal of a subscription contract are not considered commensurate with the commissions paid for contracts with new customers and incremental sales to existing customers given the substantive difference in commission rates in proportion to their respective contract values Commissions paid for contracts with new customers and incremental sales to existing customers are amortized over an estimated period of benefit of five years while commissions paid for renewal contracts are amortized based on the pattern of the associated revenue recognition over the related contractual renewal period for the pool of renewal contracts The Company determines the period of benefit for commissions paid for contracts with new customers and incremental sales to existing customers by taking into consideration its initial estimated customer life and the technological life of its software and related significant features Commissions paid on services are typically amortized in accordance with the associated revenue as the commissions paid on new and renewal services are commensurate with each other Amortization of deferred contract acquisition costs is recognized in sales and marketing expense in the consolidated statements of operations
The Company periodically reviews the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs
Cost of revenue consists primarily of costs related to providing subscriptions and services to the Company s customers including personnel costs salaries bonuses and benefits and stock based compensation and related expenses for customer support and services personnel as well as cloud infrastructure costs third party contractors depreciation of fixed assets amortization associated with acquired intangible assets and allocated overhead
Research and development costs are expensed as incurred and consist primarily of personnel costs including salaries bonuses and benefits and stock based compensation Research and development costs also include depreciation and allocated overhead
Advertising costs are charged to operations as incurred and recorded in sales and marketing expense in the consolidated statements of operations Advertising costs were 22 5 million 26 0 million and 22 4 million for the years ended April 30 2025 2024 and 2023 respectively
Compensation expense related to stock awards issued to employees and directors including stock options and restricted stock units RSUs which include performance share units PSUs is measured at the fair value on the date of the grant and recognized over the requisite service period The fair value of stock options and purchase rights issued to employees under the 2022 Employee Stock Purchase Plan 2022 ESPP is estimated on the date of the grant using the Black Scholes option pricing model The fair value of RSUs is estimated on the date of the grant based on the fair value of the Company s underlying ordinary shares Compensation expense for stock options and RSUs is recognized on a straight line basis over the requisite service period and over the six month offering period for ordinary shares purchased under the 2022 ESPP Compensation expense relating to PSUs is recognized using the accelerated attribution method over the requisite service period when it is probable that the performance condition will be satisfied The Company recognizes forfeitures as they occur
Costs incurred in connection with the issuance of debt are deferred and amortized as interest expense over the term of the related debt using the effective interest method To the extent that the debt is outstanding these amounts are reflected in the consolidated balance sheets as direct deductions from the carrying amount of the outstanding borrowings
The Company calculates basic net loss earnings per share by dividing the net loss income by the weighted average number of ordinary shares outstanding during the period less shares subject to repurchase Diluted net loss earnings per share is computed by giving effect to all potentially dilutive ordinary share equivalents outstanding for the period including stock options RSUs and ESPP shares
Ordinary shares of the Company that are repurchased are recorded as treasury shares at cost and are included as a component of shareholders equity As of April 30 2025 and 2024 the Company had 35 937 treasury shares that were repurchased at an average price of 10 30 per share
The Company s Chief Executive Officer is its chief operating decision maker CODM The Company s CODM reviews discrete financial information at the consolidated level to make operating decisions allocate resources and evaluate financial performance The Company operates in one operating segment and therefore one reportable segment
The CODM uses consolidated net loss income to measure segment profit or loss to evaluate the Company s overall performance and identify any underlying trends in the business to facilitate the allocation of resources to support strategic priorities and capital allocation needs including personnel related and other financial or capital resources
Significant segment expenses that are reviewed and utilized by the CODM at the consolidated level to manage the Company s operations include cost of revenue research and development sales and marketing and general and administrative expenses which are presented in the Company s consolidated statements of operations Other segment items that impact net loss income include interest expense other income net and the provision for benefit from income taxes which are presented in the Company s consolidated statements of operations
The Company is subject to income taxes in the Netherlands and numerous foreign jurisdictions These foreign jurisdictions may have different statutory rates than the Netherlands The Company records a provision for benefit from income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method Under this method the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and the tax basis of assets and liabilities as well as for operating losses and tax credit carryforwards Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled The Company records a valuation allowance to reduce its deferred tax assets to the net amount that it believes is more likely than not to be realized
provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination including resolutions of any related appeals or litigation processes on the basis of the technical merits The Company has assessed its income tax positions and recorded tax benefits for all years subject to examination based on the Company s evaluation of the facts circumstances and information available at each period end For those tax positions where the Company has determined there is a greater than 50 likelihood that a tax benefit will be sustained the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information For those income tax positions where it is determined there is less than a 50 likelihood that a tax benefit will be sustained no tax benefit has been recognized
Although the Company believes that it has adequately reserved for its uncertain tax positions the Company can provide no assurance that the final tax outcome of these matters will not be materially different As the Company expands internationally it will face increased complexity and the Company s unrecognized tax benefits may increase in the future The Company makes adjustments to its reserves when facts and circumstances change such as the closing of a tax audit or the refinement of an estimate To the extent that the final tax outcome of these matters is different than the amounts recorded such differences will affect the provision for benefit from income taxes in the period in which such determination is made
which provides updates to qualitative and quantitative reportable segment disclosure requirements including enhanced disclosures about significant segment expenses and increased interim disclosure requirements among others The Company adopted ASU No 2023 07 during the fiscal year ended April 30 2025 on a retrospective basis The Company s adoption of this ASU did not have a material impact on its consolidated financial statements
requiring enhancements and further transparency to certain income tax disclosures The new guidance requires consistent categories and greater disaggregation of information in the tax rate reconciliation and information about income taxes paid disaggregated by jurisdiction The guidance becomes effective for the Company for fiscal years beginning after April 30 2025 Early adoption is permitted Upon adoption the guidance may be applied prospectively or retrospectively The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements
requiring more detailed disclosures about specified categories of expenses included in certain expense captions presented on the face of the income statement The guidance becomes effective for the Company for fiscal years beginning after April 30 2027 and interim periods within fiscal years beginning after April 30 2028 Early adoption is permitted Upon adoption the guidance may be applied prospectively or retrospectively The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements
No customer accounted for 10 or more of net accounts receivable as of April 30 2025 One customer a channel partner accounted for 13 of net accounts receivable as of April 30 2024 The same customer accounted for 12 and 11 of total revenue during the years ended April 30 2025 and 2024 respectively No customer accounted for 10 or more of the Company s total revenue for the year ended April 30 2023
The Company recognized revenue of 660 9 million 522 8 million and 430 7 million for the years ended April 30 2025 2024 and 2023 respectively that was included in the deferred revenue balance at the beginning of each of the respective periods
Unbilled accounts receivable is recorded as part of accounts receivable net in the Company s consolidated balance sheets As of April 30 2025 and April 30 2024 unbilled accounts receivable was 2 5 million
Remaining performance obligations RPO represent the amount of contracted future revenue that has not been recognized including deferred revenue and non cancelable contracted amounts that will be invoiced and recognized as revenue in future periods The Company s RPO excludes performance obligations from on demand arrangements as there are no minimum purchase commitments associated with such arrangements
As of April 30 2025 the Company had 1 545 billion of RPO of which the Company expects to recognize approximately 65 as revenue over the next twelve months approximately 90 over the next twenty four months and the remainder thereafter
Amortization expense with respect to deferred contract acquisition costs was 96 7 million 78 5 million and 68 9 million for the years ended April 30 2025 2024 and 2023 respectively The Company did not recognize any impairment of deferred contract acquisition costs for the years ended April 30 2025 2024 and 2023
1 Mutual fund investments are held in an irrevocable rabbi trust for payment obligations to non qualified deferred compensation plan participants The investments are recorded as part of other assets in the Company s consolidated balance sheets
1 Mutual fund investments are held in an irrevocable rabbi trust for payment obligations to non qualified deferred compensation plan participants The investments are recorded as part of other assets in the Company s consolidated balance sheets
Interest income from the Company s cash cash equivalents and marketable securities was 48 3 million 28 1 million and 17 7 million for the years ended April 30 2025 2024 and 2023 respectively and is included in other income net in the consolidated statements of operations
As of April 30 2025 and April 30 2024 gross unrealized gains and losses on the marketable securities were insignificant The fluctuations in market interest rates impacted the unrealized losses or gains on these securities
In July 2021 the Company issued 575 0 million aggregate principal amount of 4 125 Senior Notes due July 15 2029 the Senior Notes in a private placement Based on the trading prices of the Senior Notes the fair value of the Senior Notes as of April 30 2025 was approximately 543 3 million While the Senior Notes are recorded at cost the fair value of the Senior Notes was determined based on quoted prices in markets that are not active accordingly the Senior Notes are categorized as Level 2 for purposes of the fair value measurement hierarchy
On November 30 2023 the Company acquired 100 of the share capital of Opster Ltd Opster for a total purchase consideration of 23 0 million The purchase consideration includes 3 0 million held back by the Company for indemnity obligations which will be released upon the 18 month anniversary of the acquisition
and accordingly the total purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date The total purchase price allocated to developed technology and goodwill was 6 0 million and 15 9 million respectively The fair value assigned to developed technology was determined using the cost to recreate approach The developed technology asset is being amortized on a straight line basis over the useful life of 5 years which approximates the pattern in which the developed technology is utilized Goodwill resulted primarily from the expectation of enhancing the efficiency and management of Elastic s Search AI Platform and is not deductible for income tax purposes
The financial results of Opster have been included in the Company s consolidated results of operations since the acquisition date Pro forma and historical results of operations for this acquisition have not been presented as they were not material to the consolidated results of operations
Depreciation expense related to property and equipment was 3 1 million 3 5 million and 3 6 million for the years ended April 30 2025 2024 and 2023 respectively During the year ended April 30 2023 the Company recorded asset impairment charges related to the exit from leased office space which included 1 1 million of furniture equipment and leasehold improvements
Interest on the Senior Notes is payable semi annually in arrears on January 15 and July 15 of each year Total debt issuance costs of 9 3 million are being amortized to interest expense using the effective interest method over the term of the Senior Notes The Company may at its election redeem all or a part of the Senior Notes on any one or more occasions at the redemption prices set forth in the indenture governing the Senior Notes the Indenture plus in each case accrued and unpaid interest thereon if any to but excluding the applicable redemption date The Company may also at its election redeem the Senior Notes in whole but not in part at a price equal to 100 of the principal amount thereof plus accrued and unpaid interest if any if certain changes in tax law occur as set forth in the Indenture
If the Company experiences a change of control triggering event as defined in the Indenture the Company must offer to repurchase the Senior Notes at a repurchase price equal to 101 of the principal amount of the Senior Notes to be repurchased plus accrued and unpaid interest if any to the repurchase date
The Indenture contains covenants limiting the Company s ability and the ability of certain subsidiaries to create liens on certain assets to secure debt grant a subsidiary guarantee of certain debt without also providing a guarantee of the Senior Notes and consolidate or merge with or into or sell or otherwise dispose of all or substantially all of its assets to another person These covenants are subject to a number of limitations and exceptions Certain of these covenants will not apply during any period in which the Senior Notes are rated investment grade by Moody s Investors Service Inc and Standard Poor s Ratings Services
The Company has future purchase obligations related to general corporate services subscription software and sales and marketing contracts As of April 30 2025 the Company had purchase commitments of 73 2 million related to these contracts primarily due within the next twelve months
From time to time the Company has become involved in claims and other legal matters arising in the ordinary course of business The Company investigates these claims as they arise Although claims are inherently unpredictable the Company is currently not aware of any matters that if determined adversely to the Company would individually or taken together have a material adverse effect on its business results of operations financial position or cash flows
On February 11 2025 an alleged shareholder of the Company filed a complaint in the United States District Court for the Eastern District of New York against the Company and one of its executive officers Ashutosh Kulkarni as well as a former executive officer of the Company Janesh Moorjani on behalf of a putative class of shareholders of the Company who purchased or otherwise acquired the Company s ordinary shares during the period from May 31 2024 to August 29 2024 The complaint captioned In re Elastic N V Securities Litigation alleges that the defendants made materially false and misleading statements and omitted material information about the Company s business and financial results during the foregoing period in violation of Sections 10 b and 20 a of the Exchange Act and Exchange Act Rule 10b 5 which allegedly resulted in artificially inflated prices of the Company s shares The complaint states that plaintiffs seek damages and attorneys fees and costs The Company intends to defend this case vigorously At this early state of the proceedings the Company can neither predict the ultimate outcome of the litigation nor estimate any range of possible losses
The Company enters into indemnification provisions under its agreements with other companies in the ordinary course of business including business partners landlords contractors and parties performing its research and development Pursuant to these arrangements the Company agrees to indemnify hold harmless and reimburse the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company s activities The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable The Company to date has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements As a result the Company believes the fair value of these agreements is not material The Company maintains commercial general liability insurance and product liability insurance to offset certain of the Company s potential liabilities under these indemnification provisions
In addition the Company indemnifies its officers directors and certain key employees against certain liabilities that may arise as a result of their affiliation with the Company To date there have been no claims under any indemnification provisions
From time to time the Company may realize a gain contingency although recognition will not occur until cash is received or the gain is deemed as realizable In connection with a favorable settlement of a legal claim the Company recognized a gain of 0 4 million and 10 4 million included in other income net in the accompanying consolidated statements of operations for the years ended April 30 2024 and 2023 respectively
The Company s leases provide for rental of corporate office space under non cancelable operating lease agreements that expire at various dates through fiscal 2036 The Company does not have any finance leases
Future minimum lease payments as of April 30 2025 include future cash payments on leases with corresponding right of use assets which were written down for impairment due to facilities related cost optimization actions during the year ended April 30 2023 During the year ended April 30 2023 the Company recorded an impairment charge of 5 1 million related to the exit from leased office space
Each holder of ordinary shares has the right to one vote per ordinary share The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and when proposed by the Company s board of directors and adopted by the general meeting of shareholders subject to the prior rights of holders of all classes of shares outstanding having priority rights to dividends No dividends have been declared from the Company s inception through April 30 2025
The board of directors has been authorized by the general meeting of shareholders on the Company s behalf to issue the Company s ordinary shares and grant rights to acquire the Company s ordinary shares in an amount up to 20 of the issued share capital of the Company as of August 21 2024 This authorization is valid for a period of 18 months from October 1 2024 the date of such general meeting of shareholders until April 1 2026
The Company s authorized preference share capital pursuant to its articles of association amounts to 165 million preference shares at a par value per preference share of 0 01 Each holder of preference shares has rights and preferences including the right to one vote per preference share As of April 30 2025 there were no preference shares issued or outstanding
In August 2022 the Company s board of directors adopted and in October 2022 the Company s shareholders approved the 2022 ESPP The Company reserved 6 0 million of the Company s ordinary shares for future purchase and issuance under the 2022 ESPP in January 2023 The 2022 ESPP allows eligible employees to acquire ordinary shares of the Company at a discount at periodic intervals through accumulated payroll deductions Eligible employees purchase ordinary shares of the Company during a purchase period at 85 of the market value of the ordinary shares at either the beginning or end of an offering period whichever is lower Offering periods under the 2022 ESPP are approximately six months long and begin on each of March 16 or September 16 or the next trading day thereafter
The Company issued 364 236 and 345 165 ordinary shares under the 2022 ESPP during the years ended April 30 2025 and 2024 respectively Stock based compensation expense recognized related to the 2022 ESPP was 9 2 million 7 1 million and 0 9 million for the years ended April 30 2025 2024 and 2023 respectively
In September 2012 the Company s board of directors adopted and the Company s shareholders approved the 2012 Stock Option Plan which was amended and restated in September 2018 and further amended in December 2021 as amended and restated the 2012 Plan Under the 2012 Plan the board of directors the compensation committee as administrator of the 2012 Plan and any other duly authorized committee may grant stock options and other equity based awards such as RSUs which include PSUs to eligible employees directors and consultants to attract and retain talented personnel for positions of substantial responsibility to provide additional incentive to employees directors and consultants and to promote the success of the Company s business
The Company s board of directors compensation committee or other duly authorized committee determines the vesting schedule for all equity based awards Stock options and RSUs granted to employees generally vest over four years subject to the employees continued service to the Company The Company s compensation committee may explicitly deviate from the general vesting schedules in its approval of an equity based award as it may deem appropriate Stock options expire ten years after the date of grant Stock options and RSUs that are canceled under certain conditions become available for future grant or sale under the 2012 Plan unless the 2012 Plan is terminated
Aggregate intrinsic value represents the difference between the exercise price of the stock options to purchase the Company s ordinary shares and the fair value of the Company s ordinary shares No stock options were granted during the years ended April 30 2025 and 2024
As of April 30 2025 the Company had unrecognized stock based compensation expense of 3 8 million related to unvested stock options that the Company expects to recognize over a weighted average period of 0 89 years
The determination of the fair value of stock based options on the date of grant using an option pricing model is affected by the fair value of the Company s ordinary shares as well as assumptions regarding a number of complex and subjective variables The Company uses the Black Scholes option pricing model to calculate the fair value of stock options which requires the use of assumptions including actual and projected employee stock option exercise behaviors expected price volatility of the Company s ordinary shares the risk free interest rate and expected dividends
The expected term represents the period that options are expected to be outstanding For option grants that are considered to be plain vanilla the Company determines the expected term using the simplified method The simplified method deems the term to be the average of the time to vesting and the contractual life of the options
Due to the fact that the Company has limited trading history of its ordinary shares the expected volatility is derived from the average historical stock volatilities of several unrelated public companies within the Company s industry that the Company considers to be comparable to its own business over a period equivalent to the option s expected term
The Company s expected volatility and expected term involve management s best estimates both of which impact the fair value of the option calculated under the Black Scholes option pricing model and ultimately the expense that will be recognized over the life of the option
The following outstanding potentially dilutive ordinary shares were excluded from the computation of diluted net loss earnings per share attributable to ordinary shareholders for the periods presented because the impact of including them would have been antidilutive
The Company is incorporated in the Netherlands but operates in various countries with differing tax laws and rates The geographical breakdown of loss before provision for benefit from income taxes is summarized as follows in thousands
The Company s effective tax rate substantially differed from the Dutch statutory tax rate of 25 8 primarily due to the valuation allowance for the Netherlands and waiver of certain deductions subject to the BEAT A reconciliation of income taxes at the statutory income tax rate to the provision for benefit from income taxes included in the consolidated statements of operations is as follows in thousands except for rates
Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities Management assesses whether it is more likely than not that some portion or all of the deferred tax assets will be realized Deferred tax assets are reduced by a valuation allowance where management has concluded it is more likely than not that the deferred tax assets will not be realized The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income Management makes estimates and judgments about future taxable income based on assumptions that are consistent with the Company s plans and estimates
The valuation allowance for deferred tax assets as of April 30 2025 and 2024 was 437 5 million and 386 9 million respectively As the Company has generated losses since inception in the Netherlands and is anticipated to have cumulative losses for the foreseeable future management maintains a full valuation allowance against the net deferred tax assets in this jurisdiction In addition the United Kingdom jurisdiction is also anticipated to have cumulative losses for the foreseeable future and as such a valuation allowance has been established for this jurisdiction The valuation allowance for the Netherlands deferred tax assets as of April 30 2025 and 2024 was 390 5 million and 344 5 million respectively and the valuation allowance for the United Kingdom deferred tax assets as of April 30 2025 and 2024 was 24 3 million and 19 4 million respectively In addition the Company carries a valuation allowance against certain United States state deferred tax assets which was 22 7 million and 23 0 million as of April 30 2025 and 2024 respectively To the extent sufficient positive evidence becomes available the Company may release all or a portion of the Netherlands valuation allowance in one or more future periods A release of the valuation allowance if any would result in the recognition of certain deferred tax assets and a material income tax benefit for the period in which such release is recorded
As of April 30 2025 the Company had net operating loss carryforwards for Netherlands United States federal and state respectively and United Kingdom income tax purposes of 1 407 billion 546 3 million 551 2 million and 97 9 million respectively with losses being carried forward indefinitely and beginning to expire in the year ending April 30 2026 for the United States federal and state respectively with Netherlands and United Kingdom losses being carried forward indefinitely The Company also has research and development tax credit carryforwards for United States federal and state respectively Canada and Spain for income tax purposes of 34 6 million 9 3 million 1 1 million and 1 4 million respectively which begin to expire on April 30 2039 April 30 2026 April 30 2042 and April 30 2041 respectively The Company also has research and development tax credit carryforwards for Australia income tax purposes of 0 6 million being carried forward indefinitely The deferred tax assets associated with the net operating loss carryforwards and other tax attributes in the Netherlands and the United Kingdom are subject to a full valuation allowance
provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination including resolutions of any related appeals or litigation processes on the basis of the technical merits The Company has assessed its income tax positions and recorded tax benefits for all years subject to examination based on the Company s evaluation of the facts circumstances and information available at each period end
Although the Company believes that it has adequately reserved for its uncertain tax positions the Company can provide no assurance that the final tax outcome of these matters will not be materially different As the Company continues to grow in size it will face increased complexity and the Company s unrecognized tax benefits may increase in the future The Company adjusts its reserves when facts and circumstances change such as the closing of a tax audit or the refinement of an estimate To the extent that the final tax outcome of these matters is different than the amounts recorded such differences will affect the provision for income taxes in the period in which such determination is made
The Company had unrecognized tax benefits of 29 6 million as of April 30 2025 of which none would impact the effective tax rate before consideration of any valuation allowance The activity within the Company s unrecognized tax benefits is summarized as follows in thousands
Approximately 1 6 million of the increase for the year ended April 30 2025 for tax positions taken in prior periods is primarily due to the filing of tax returns during the fiscal year Approximately 5 4 million of the increase in tax positions related to the current period is primarily from research and development tax credits generated for the year ended April 30 2025
The Company s policy is to recognize penalties and interest accrued on any unrecognized tax benefits as a component of income tax expense The Company recognized interest and penalties of 0 9 million for the year ended April 30 2025 and 0 2 million for both of the years ended April 30 2024 and 2023 The amount of accrued interest and penalties recorded on the consolidated balance sheets as of April 30 2025 and 2024 was 1 3 million and 0 4 million respectively
The Company is subject to periodic examination of income tax returns by various domestic and international tax authorities During the year ended April 30 2025 the Company was subject to new audits by various tax authorities
The Company does not anticipate any significant increases or decreases in its uncertain tax positions within the next twelve months The Company files tax returns in multiple jurisdictions including the Netherlands and United States The Company s tax filings for fiscal years starting with the year ended April 30 2018 remain open in various tax jurisdictions
Withholding taxes associated with the repatriation of earnings or for temporary differences related to investments in non Dutch subsidiaries have not been provided for as the Company intends to reinvest the earnings of such subsidiaries indefinitely As of April 30 2025 there were cumulative earnings of 213 4 million from the non U S subsidiaries and a deficit from the U S subsidiaries of 825 6 million If such earnings were to be repatriated they would be exempt from taxation in the Netherlands and the amount of dividend withholding taxes from such foreign jurisdictions would be 5 7 million due to the various income tax treaties between the Netherlands and the respective foreign jurisdictions
In 2021 the Organization for Economic Cooperation and Development OECD published Pillar Two Model Rules defining a global minimum tax which calls for the taxation of large corporations at a minimum rate of 15 The OECD has since issued administrative guidance providing transition and safe harbor rules concerning the implementation of the Pillar Two global minimum tax A number of countries have proposed or enacted legislation to implement core elements of the Pillar Two proposal Pillar Two did not have a significant impact on the Company s consolidated financial statements for the year ended April 30 2025 The Company continues to monitor the impact of proposed and enacted global tax legislation
The Company has a defined contribution plan in the United States intended to qualify under Section 401 of the Internal Revenue Code the 401 k Plan The Company has contracted with a third party provider to act as a custodian and trustee and to process and maintain the records of participant data Substantially all the expenses incurred for administering the 401 k Plan are paid by the Company The 401 k Plan covers substantially all U S employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre tax basis The Company makes contributions to the 401 k Plan of up to 6 of the participating employee s W 2 earnings and wages The Company recorded 19 6 million 18 4 million and 17 9 million for the years ended April 30 2025 2024 and 2023 respectively related to the 401 k Plan
The Company also has defined contribution and other employee benefit plans in certain other countries for which the Company recorded 14 6 million 12 7 million and 9 4 million for the years ended April 30 2025 2024 and 2023 respectively
On May 21 2025 the Company acquired 100 of the share capital of Keep Alerting Ltd an open source AIOps company for cash consideration of approximately 10 0 million Headquartered in Israel Keep Alerting Ltd unifies alerts and automates incident remediation helping users manage alerts to improve operational efficiency and service reliability
The acquisition will be accounted for as a business combination and accordingly the purchase price will be allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values on the acquisition date The Company is in the process of finalizing the purchase price allocation for the transaction
We maintain disclosure controls and procedures as defined in Rule 13a 15 e and Rule 15d 15 e under the Exchange Act that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded processed summarized and reported within the time periods specified in the SEC s rules and forms Disclosure controls and procedures include without limitation controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management including our principal executive and principal financial officers as appropriate to allow timely decisions regarding required disclosure
Our management with the participation of our Chief Executive Officer and our Chief Financial Officer has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a 15 e and 15d 15 e under the Exchange Act as of the end of the period covered by this Annual Report on Form 10 K Based on such evaluation our Chief Executive Officer and Chief Financial Officer have concluded that as of April 30 2025 our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act a is recorded processed summarized and reported within the time periods specified by the SEC rules and forms and b is accumulated and communicated to our management including our Chief Executive Officer and our Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a 15 f and Rule 15d 15 f under the Exchange Act Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of April 30 2025 based on the criteria established in
Based on the results of its evaluation our management concluded that our internal control over financial reporting was effective as of April 30 2025 The effectiveness of our internal control over financial reporting as of April 30 2025 has been audited by PricewaterhouseCoopers LLP an independent registered public accounting firm as stated in its report which is included in Part II Item 8 of this Annual Report on Form 10 K
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a 15 d and 15d 15 d under the Exchange Act that occurred during the quarter ended April 30 2025 that materially affected or are reasonably likely to materially affect our internal control over financial reporting
Our management including our Chief Executive Officer and our Chief Financial Officer believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level However our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud A control system no matter how well conceived and operated can provide only reasonable not absolute assurance that the objectives of the control system are met Further the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs Because of the inherent limitations in all control systems no evaluation of controls can provide absolute assurance that all control issues and instances of fraud if any have been detected These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of a simple error or mistake Additionally controls can be circumvented by the individual acts of some persons by collusion of two or more people or by management override of the controls The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions over time controls may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate Because of the inherent limitations in a cost effective control system misstatements due to error or fraud may occur and not be detected
We are providing the following disclosure in lieu of filing a Current Report on Form 8 K relating to Item 5 02 Departure of Directors or Certain Officers Election of Directors Appointment of Certain Officers Compensatory Arrangements of Certain Officers
On June 5 2025 the Company appointed Ms Bone who currently serves as Group Vice President Chief Accounting Officer at the Company as Elastic s principal accounting officer to succeed Mr Welihinda in such position effective as of June 9 2025
Ms Bone age 59 has served in her current role at the Company since April 2019 Prior to her current position Ms Bone served in various senior leadership and finance roles at Wind River a global leader in delivering software for the intelligent edge from September 2000 to December 2018 including as Chief Financial Officer Senior Vice President of Finance and Administration Chief Accounting Officer and Corporate Controller Ms Bone qualified as a Chartered Accountant in England and holds a B Sc degree in Economics with honors emphasis in accounting from the University of Hull United Kingdom
During our last fiscal quarter no director or officer as defined in Rule 16a 1 f under the Exchange Act adopted or terminated a Rule 10b5 1 trading arrangement or a non Rule 10b5 1 trading arrangement each as defined for purposes of Regulation S K Item 408
The information required by this Item 10 other than the information set forth in the next paragraph is incorporated herein by reference to our definitive proxy statement for our 2025 annual general meeting of shareholders the 2025 Proxy Statement which will be filed with the SEC within 120 days after the end of our year ended April 30 2025
We have adopted our Code of Conduct applicable to all of our employees officers and directors including our Chief Executive Officer Chief Financial Officer and other senior financial officers The full text of the Code of Conduct is available on our website at elastic co The audit committee of our board of directors is responsible for overseeing the Code of Conduct The board of directors or its designated committee must approve any waivers of the Code of Conduct for members of the board of directors or executive officers including our Chief Executive Officer Chief Financial Officer and other senior financial officers To the extent required by SEC rules we intend to disclose any amendments to the Code of Conduct or any waivers of its requirements for the benefit of our Chief Executive Officer Chief Financial Officer or other senior financial officers on our website within any period that may be required under SEC rules from time to time
We have adopted insider trading policies and procedures governing the purchase sale and or other dispositions of our securities by directors officers and employees or us that are reasonably designed to promote compliance with insider trading laws rules and regulations and any listing standards applicable to us A copy of such policies and procedures is filed as Exhibit 19 1 to this report
All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable or because the information required is already included in the financial statements or the notes to those financial statements
The certifications attached as Exhibits 32 1 and 32 2 hereto accompany this Annual Report on Form 10 K pursuant to 18 U S C Section 1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 and shall not be deemed filed by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934 as amended or the Exchange Act and are not to be incorporated by reference into any of the Registrant s filings under the Securities Act irrespective of any general incorporation language contained in any such filing
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 as amended the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature appears below constitutes and appoints Ashutosh Kulkarni and Navam Welihinda and each of them as his or her true and lawful attorney in fact and agent with full power of substitution and resubstitution for such individual in any and all capacities to sign any and all amendments to this Annual Report on Form 10 K and to file the same with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission granting unto said attorneys in fact and agents and each of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully for all intents and purposes as he or she might or could do in person hereby ratifying and confirming all that said attorneys in fact and agents or any of them or the individual s substitute may lawfully do or cause to be done by virtue hereof
Pursuant to the requirements of the Securities Exchange Act of 1934 as amended this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated

Company Name	Elastic N.V. Vist SEC web-site
Category	SERVICES-PREPACKAGED SOFTWARE
Trading Symbol	ESTC