Elastic (ESTC)

Condensed Consolidated Balance Sheets 5 Condensed Consolidated Statements of Operations 6 Condensed Consolidated Statements of Comprehensive Loss 7 Condensed Consolidated Statements of Shareholders Equity 8 Condensed Consolidated Statements of Cash Flows 9 Notes to Condensed Consolidated Financial Statements 10 Item 2.Management s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3.Quantitative and Qualitative Disclosures About Market Risk 38 Item 4.Controls and Procedures 38 PART II.OTHER INFORMATION 40 Item 1.Legal Proceedings 40 Item 1A.Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41 Item 5.Other Information 41 Item 6.Exhibits 42 Signatures 43 2 Table of Contents Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, 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. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements due to uncertainties, risks, and changes in circumstances, including but not limited to, those related to: our business strategy and our plan to build our business; our ability to achieve and maintain profitability; 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 product offerings, initiatives, and investments involving artificial intelligence ( AI ) as well as the competitive landscape, market understanding and valuation, and regulatory scrutiny of AI technologies; the use of AI by our workforce; 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 profitability; our ability to continue to deliver and improve our offerings and successfully develop new offerings; customer acceptance and purchase of our existing offerings and new offerings, including expanding adoption of our cloud-based offerings; the impact of geopolitical conditions and global turmoil on our business and on the businesses of our customers and partners, including their spending priorities; the impact that increased adoption of consumption-based arrangements could have on our revenue or operating results; the impact of changes to our licensing of our products, particularly Elasticsearch and Kibana; our assessments of the strength of our solutions and products; our service performance and security, including the resources and costs required to prevent, detect, and remediate potential cybersecurity incidents and other information security breaches; our ability to maintain and expand our user and customer base; continued development of the market for our products; competition from other products and companies with more resources, recognition, and presence in our industry; the impact of foreign currency exchange rate and interest rate fluctuations on our results; the pace of change and innovation in the markets in which we operate, including the rapid evolution of technology affecting our offerings and platform, such as AI, and the competitive nature of those markets; our ability to effectively manage our growth, including any changes to our pace of hiring; our international expansion strategy; our strategy of acquiring complementary businesses and our ability to successfully integrate acquired businesses and technologies; the impact of acquisitions on our future product offerings; our objectives and expectations for future operations; our relationships with and reliance on third parties, including partners; 3 Table of Contents our ability to protect our intellectual property rights; our ability to develop our brands; the impact on our results of operations of expensing stock options and other equity awards; the adequacy of our capital resources; our ability to successfully defend litigation brought against us; our ability to successfully execute our go-to-market strategy, including the positioning of our solutions and products, and to expand in our existing markets and into new markets; the adequacy of our liquidity sources to meet our cash requirements for at least the next 12 months and thereafter; our ability to comply with laws and regulations that currently apply or may become applicable to our business, both in the United States and internationally; our plan to align our investments more closely with our strategic priorities that we announced on June 24, 2026; the impact that changes in tax laws could have on our estimated effective tax rates; our ability to attract and retain qualified employees and key personnel; the effect of the loss of key personnel; our expectations about the impact of natural disasters and public health epidemics and pandemics on our business, results of operations, and financial condition; the seasonality of our business; the future trading prices of our ordinary shares; the expected timing, amount, and effect of our share repurchases; and our ability to service our debt obligations. Any additional or unforeseen effects from the evolving macroeconomic and geopolitical environments may exacerbate these risks. Further, forward-looking statements made herein are subject to the risks and other factors described in the section titled Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 30, 2026, in the section titled Risk Factors in Part II, Item 1A of this Quarterly Report on Form 10-Q, 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 Quarterly Report on Form 10-Q 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. 4 Table of Contents PART I FINANCIAL INFORMATION Item 1. Financial Statements Elastic N.V. Condensed Consolidated Balance Sheets (in thousands, except share and per share data) (unaudited) As of July 31, 2026As of April 30, 2026 Assets Current assets: Cash and cash equivalents$879,869 $768,725 Restricted cash1,966 1,773 Marketable securities581,173 601,537 Accounts receivable, net of allowance for credit losses of $5,143 and $6,847 as of July 31, 2026 and April 30, 2026, respectively 236,433 464,413 Deferred contract acquisition costs103,055 106,447 Prepaid expenses and other current assets75,138 80,368 Total current assets1,877,634 2,023,263 Property and equipment, net8,172 8,591 Goodwill356,580 356,442 Operating lease right-of-use assets23,058 18,641 Intangible assets, net10,443 13,059 Deferred contract acquisition costs, non-current146,487 150,989 Deferred tax assets566,053 567,278 Other assets13,461 14,413 Total assets$3,001,888 $3,152,676 Liabilities and Shareholders Equity Current liabilities: Accounts payable$14,185 $8,618 Accrued expenses and other liabilities77,922 96,713 Accrued compensation and benefits99,612 119,231 Operating lease liabilities5,709 6,539 Deferred revenue839,758 973,820 Total current liabilities1,037,186 1,204,921 Deferred revenue, non-current44,189 52,502 Long-term debt, net571,195 570,895 Operating lease liabilities, non-current18,871 14,129 Other liabilities, non-current33,604 33,729 Total liabilities1,705,045 1,876,176 Commitments and contingencies (Notes 8 and 9) Shareholders equity: Preference shares, 0.01 par value; 165,000,000 shares authorized; no shares issued or outstanding as of July 31, 2026 and April 30, 2026 Ordinary shares, 0.01 par value; 165,000,000 shares authorized; 108,605,243 shares issued and 105,120,583 shares outstanding as of July 31, 2026; 108,360,340 shares issued and 104,751,470 shares outstanding as of April 30, 2026 1,167 1,154 Treasury stock, at cost; 3,484,660 shares held as of July 31, 2026; 3,608,870 shares held as of April 30, 2026 (249,270)(275,695) Additional paid-in capital2,322,498 2,310,866 Accumulated other comprehensive loss(28,868)(27,870) Accumulated deficit(748,684)(731,955) Total shareholders equity 1,296,843 1,276,500 Total liabilities and shareholders equity$3,001,888 $3,152,676 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents Elastic N.V. Condensed Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited) 2025448,735 $388,583 26,705 415,288 69,418 27,328 96,746 318,542 109,122 174,054 44,806 327,982 (9,440)(6,351)15,782 (9)24,594 (16,729)$(24,603)(0.16)$(0.23)105,961,879 2025(16,729)$(24,603)(1,213)(323)(1,536)(17,727)$(26,139)Treasury Shares Additional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Shareholders' Equity AmountSharesAmount $1,154 3,608,870 $(275,695)$2,310,866 $(27,870)$(731,955)$1,276,500 Issuance of ordinary shares upon exercise of stock options3 3,301 3,304 10 (928,811)66,441 (66,451) Repurchases of ordinary shares 804,601 (40,016) (40,016) Stock-based compensation 74,782 74,782 Net loss (16,729)(16,729) Other comprehensive loss (998) (998) Balances as of July 31, 2026$1,167 3,484,660 $(249,270)$2,322,498 $(28,868)$(748,684)$1,296,843 Treasury SharesAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Shareholders' Equity AmountSharesAmount Balances as of April 30, 2025$1,112 35,937 $(369)$2,049,416 $(23,204)$(1,099,721)$927,234 326 326 Issuance of ordinary shares upon release of restricted stock units8 (8) 69,935 69,935 Net loss (24,603)(24,603) Other comprehensive loss (1,536) (1,536) Balances as of July 31, 2025$1,120 35,937 $(369)$2,119,669 $(24,740)$(1,124,324)$971,356 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 8 Table of Contents Elastic N.V. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) 20262025$(16,729)$(24,603)3,358 2,316 (311)(1,393)32,467 26,173 300 287 1,768 2,316 74,782 69,935 1,061 21,562 472 (364)6 227,026 153,982 (24,872)(22,284)5,208 (5,066)1,414 (1,075)5,753 9,570 (18,914)(14,892)(19,493)(10,987)(2,127)(2,730)(139,165)(97,912)132,004 104,835 (590)(656) (8,489)(114,760)(248,596)133,490 87,366 18,140 (170,375)3,304 326 (40,016) (36,712)326 (2,095)(10)111,337 (65,224)770,498 731,214 $881,835 $665,990 $11,910 $11,993 $5,656 $5,061 $2,172 $2,989 $39 $137 $6,216 $1,569 $ $1,425 Page 1.Organization and Description of Business 11 2.Summary of Significant Accounting Policies 11 3.Revenue 13 4.Fair Value Measurements 13 5.Acquisitions 16 6.Balance Sheet Components 16 7.Senior Notes 18 8.Commitments and Contingencies 19 9.Leases 20 10.Ordinary Shares 21 11.Equity Incentive Plans 21 12.Net Loss Per Share Attributable to Ordinary Shareholders 23 13.Income Taxes 23 14.Employee Benefit Plans 24 15.Segment Information 24 Restructuring and Other Related Charges 25 17.Subsequent Events 25 10 Table of Contents 1. Organization and Description of Business 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 the Elasticsearch Platform, a powerful set of solutions that ingest data from any source, in any format, and perform search, analysis, and visualization on that data. The Company s platform allows customers to find insights and drive AI and machine learning use cases from large amounts of data. The Company offers three Elasticsearch-powered solutions built into its platform: Search & AI, 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. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying interim condensed consolidated balance sheet as of July 31, 2026 and interim condensed consolidated statements of operations, comprehensive loss, shareholders equity, and cash flows for the three months ended July 31, 2026 and 2025 are unaudited. These interim condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all normal recurring adjustments necessary to fairly state the Company s financial position as of July 31, 2026; results of the Company s operations for the three months ended July 31, 2026 and 2025; statements of shareholders equity for the three months ended July 31, 2026 and 2025; and statements of cash flows for the three months ended July 31, 2026 and 2025. The financial data and other financial information disclosed in the notes to these interim condensed consolidated financial statements related to the three-month periods are also unaudited. The results for the three months ended July 31, 2026 are not necessarily indicative of the operating results expected for the fiscal year ending April 30, 2027, or any other future period. The unaudited interim condensed 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. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission ( SEC ). The condensed consolidated balance sheet data as of April 30, 2026 was derived from the Company s audited financial statements, but does not include all disclosures required by U.S. GAAP. Therefore, these unaudited interim condensed consolidated financial statements and accompanying footnotes should be read in conjunction with the Company s annual consolidated financial statements and related footnotes included in the Company s Annual Report on Form 10-K for the fiscal year ended April 30, 2026 filed with the SEC on June 8, 2026 (the Company s Annual Report on Form 10-K ). Fiscal Year The Company s fiscal year ends on April 30. References to fiscal 2027, for example, refer to the fiscal year ending April 30, 2027. Use of Estimates and Judgments The preparation of the condensed 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 revenues and expenses during the reporting period. Such estimates and assumptions include, but are not limited to, the standalone selling price 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 allowances 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. 11 Table of Contents 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 condensed 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 condensed 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 condensed consolidated financial statements. Recently Adopted Accounting Pronouncements Financial Instruments: In July 2025, the Financial Accounting Standards Board ( FASB ) issued ASU No. 2025-05, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, including those assets acquired in a business combination. The practical expedient permits an entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the current accounts receivable and current contract assets. The Company adopted ASU No. 2025-05 on May 1, 2026. The Company s adoption of this ASU did not have any impact on its condensed consolidated financial statements. New Accounting Pronouncements Not Yet Adopted Codification Improvements: In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements, as part of an ongoing project to make non-substantive technical corrections, clarifications, and improvements that are not expected to have a significant effect on accounting practices or create a significant administrative cost to most entities. The amendments are varied in nature and may affect the application of guidance for cases in which the original guidance may have been unclear. The guidance becomes effective for the Company for fiscal years beginning after April 30, 2027, and interim periods within those fiscal years. Early adoption is permitted. Upon adoption, the guidance may be applied prospectively or retrospectively on an issue-by-issue basis. The Company is currently evaluating the impact of adopting this standard on its condensed consolidated financial statements. Comprehensive Income: In November 2024, the FASB issued ASU No. 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, 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 condensed consolidated financial statements. Internal-Use Software: In September 2025, the FASB issued ASU No. 2025-06, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, to modernize the accounting for software costs that are accounted for under Subtopic 350-40. The new guidance removes all references to software development stages and allows software development costs to be capitalized once management commits to funding the project and it is probable that the project will be completed and used as intended. The new guidance also introduces the concept of significant development uncertainty which, if present, precludes capitalization. The guidance becomes effective for the Company for fiscal years beginning after April 30, 2028, and interim periods within those fiscal years. Early adoption is permitted. Upon adoption, the guidance may be applied prospectively, retrospectively, or using a modified prospective transition method. The Company is currently evaluating the impact of adopting this standard on its condensed consolidated financial statements. Interim Reporting: In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, to enhance the existing interim reporting guidance without changing the fundamental nature or volume of required interim disclosures. The new guidance improves the organization and accessibility of required interim disclosure requirements, clarifies when that guidance is applicable, and introduces a new principle requiring disclosure of events occurring after the end of the most recent annual reporting period that have a material impact on the entity. The guidance becomes effective for the Company for 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 condensed consolidated financial statements. 12 Table of Contents 3. Revenue Disaggregation of Revenue The following table presents revenue by category (in thousands): 2025% of Total RevenueAmount% of Total Revenue185,003 39 %$145,912 35 %10 %49,862 12 %49 %195,774 47 %45 %192,809 47 %94 %388,583 94 %6 %26,705 6 %478,113 100 %$415,288 100 %Level 2Level 3Total Financial Assets: Cash equivalents: Money market funds$585,752 $ $ $585,752 U.S. treasury securities8,499 8,499 U.S. agency securities 8,396 8,396 8,331 8,331 594,251 16,727 610,978 Marketable securities: U.S. treasury securities94,503 94,503 Corporate debt securities 328,865 328,865 Certificates of deposit 55,286 55,286 Municipal securities 39,612 39,612 International treasuries 39,278 39,278 U.S. agency securities 22,710 22,710 Commercial paper 919 919 Total marketable securities94,503 486,670 581,173 Mutual fund investments (1) 6,200 6,200 Total financial assets$694,954 $503,397 $ $1,198,351 (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, non-current on the Company s condensed consolidated balance sheets. 14 Table of Contents The following table summarizes assets that are measured at fair value on a recurring basis as of April 30, 2026 (in thousands): Level 1Level 2Level 3Total Financial Assets: Cash equivalents: Money market funds$505,672 $ $ $505,672 3,002 3,002 Municipal securities 2,011 2,011 Total included in cash equivalents 505,672 5,013 510,685 Marketable securities: U.S. treasury securities108,761 108,761 Corporate debt securities 316,523 316,523 Certificates of deposit 62,611 62,611 International treasuries 42,558 42,558 Municipal securities 41,679 41,679 U.S. agency securities 22,699 22,699 Commercial paper 6,706 6,706 Total marketable securities108,761 492,776 601,537 Mutual fund investments (1) 5,140 5,140 Total financial assets$619,573 $497,789 $ $1,117,362 (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, non-current on the Company s condensed consolidated balance sheets. Interest income from the Company s cash, cash equivalents, and marketable securities was $12.0 million and $15.1 million for the three months ended July 31, 2026 and 2025, respectively, and is included in other income, net in the condensed consolidated statements of operations. As of July 31, 2026 and April 30, 2026, gross unrealized gains and losses on the marketable securities were not significant. The fluctuations in market interest rates impacted the unrealized losses or gains on these securities. The fair value of available-for-sale securities, by remaining contractual maturity, are as follows (in thousands): As of July 31, 2026As of April 30, 2026 Due within 1 year$287,174 $304,833 Due between 1 year and 3 years290,497 296,704 Due between 3 years and 5 years3,502 Total marketable securities$581,173 $601,537 Financial Liabilities In July 2021, the Company issued $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029 in a private placement. Based on the trading prices of the Senior Notes, the fair value of the Senior Notes as of July 31, 2026 was approximately $548.4 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. 15 Table of Contents 5. Acquisitions Conic AI Technology Limited On October 7, 2025, the Company acquired 100% of the share capital of Conic AI Technology Limited and its subsidiaries (collectively, Jina AI ) for a total purchase consideration of $43.4 million. The purchase consideration includes $6.9 million held back by the Company for indemnity obligations, which will be released upon the 24-month anniversary of the acquisition. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations, 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 $6.5 million and $30.2 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 2 years, which approximates the pattern in which the developed technology is utilized. Goodwill resulted primarily from the expectation of enhancing the Elastic Search AI-powered solutions and the value of the acquired workforce. The resulting goodwill is not deductible for income tax purposes. The financial results of Jina AI have been included in the Company s condensed 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 Company s condensed consolidated results of operations. Paladin Data Inc. On May 21, 2025, Elasticsearch, Inc., a wholly-owned subsidiary of the Company, acquired 100% of the share capital of Paladin Data Inc., including its wholly-owned subsidiary, Keep Alerting Ltd. (collectively, Keep ), for a total purchase consideration of $10.9 million. The purchase consideration includes $1.4 million held back by the Company for indemnity obligations, which will be released upon the 18-month anniversary of the acquisition. The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations, 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 $4.0 million and $6.7 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 Elastic Search AI-powered solutions and the value of the acquired workforce. The resulting goodwill is not deductible for income tax purposes. The financial results of Keep have been included in the Company s condensed 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 Company s condensed consolidated results of operations. 6. Balance Sheet Components Property and Equipment, Net The cost and accumulated depreciation of property and equipment were as follows (in thousands): Useful Life (in years)As of July 31, 2026As of April 30, 2026 Leasehold improvementsLesser of estimated useful life or remaining lease term$12,162 $9,774 Computer hardware and software34,638 4,066 Furniture and fixtures3-5 6,066 5,163 Assets under construction8 3,575 Total property and equipment22,874 22,578 Less: accumulated depreciation(14,702)(13,987) Property and equipment, net$8,172 $8,591 Depreciation expense related to property and equipment was $0.7 million for the three months ended July 31, 2026 and 2025. 16 Table of Contents Intangible Assets, Net Intangible assets consisted of the following as of July 31, 2026 (in thousands): Gross Fair ValueAccumulated AmortizationNet Book ValueWeighted Average Remaining Useful Life (in years) Developed technology$85,291 $74,824 $10,467 2.2 (24) Total$10,443 Intangible assets consisted of the following as of April 30, 2026 (in thousands): Gross Fair ValueAccumulated AmortizationNet Book ValueWeighted Average Remaining Useful Life (in years) Developed technology$85,291 $72,208 $13,083 2.2 (24) Total$13,059 Amortization expense for the intangible assets for the three months ended July 31, 2026 and 2025 was as follows (in thousands): 20252,616 $1,576 2,616 $1,576 $4,685 20283,413 20291,501 2030798 203146 $10,443 Goodwill The following table represents the changes to goodwill (in thousands): Carrying Amount $356,442 Measurement period adjustments157 Foreign currency translation adjustment(19) Balance as of July 31, 2026$356,580 There was no impairment of goodwill during the three months ended July 31, 2026 and 2025. 17 Table of Contents Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands): As of July 31, 2026As of April 30, 2026 Accrued expenses$47,697 $44,109 Income taxes payable7,353 12,899 Value added taxes payable3,044 12,837 Accrued interest988 6,918 Other18,840 19,950 Total accrued expenses and other liabilities$77,922 $96,713 Accrued Compensation and Benefits Accrued compensation and benefits consisted of the following (in thousands): As of July 31, 2026As of April 30, 2026 Accrued vacation$43,295 $46,702 Accrued commissions18,659 46,420 Accrued payroll and withholding taxes9,894 11,138 Other27,764 14,971 Total accrued compensation and benefits$99,612 $119,231 Allowance for Credit Losses The following is a summary of the changes in the Company s allowance for credit losses (in thousands): 20262025$6,847 $5,510 (1,495)845 (209)(1,117)$5,143 $5,238 As of April 30, 2026 Principal$575,000 $575,000 Unamortized debt issuance costs(3,805)(4,105) Net carrying amount$571,195 $570,895 The following table sets forth the interest expense recognized related to the Senior Notes (in thousands): 20255,930 $5,930 287 6,230 $6,217 Purchase Obligations Remainder of 2027$185,506 2028242,178 2029225,077 2030198,360 2031109,333 203218,333 Total$978,787 Actual timing may vary depending on services used and total payments under these capacity commitments may be higher than the total minimum depending on services used. Legal Matters 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. In May 2025, the Court appointed Lucid Alternative Fund, LP and Jeff Milan as co-lead plaintiffs in this matter. On August 1, 2025, the plaintiffs filed an amended complaint, citing the same core theories and claims but extending the class period to cover the period from June 2, 2023 to August 29, 2024. On October 1, 2025, the Company filed a motion to dismiss the complaint. The plaintiffs filed an opposition to the motion on November 17, 2025, and the Company filed a reply on December 17, 2025. The motion to dismiss is pending before the Court. At this stage of the proceedings, the Company can neither predict the ultimate outcome of the litigation nor estimate any range of possible losses. The Company accrues estimates for resolution of legal and other contingencies when losses are probable and reasonably estimable. 19 Table of Contents Indemnification 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 service on behalf of the Company. To date, there have been no claims under any indemnification provisions. 9. Leases 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. Lease Costs Components of lease costs included in the condensed consolidated statements of operations were as follows (in thousands): 20251,861 $2,634 670 475 3,278 $3,779 Weighted average remaining lease term (in years)6.2 Weighted average discount rate5.4 % Future minimum lease payments under non-cancelable operating leases on an undiscounted cash flow basis as of July 31, 2026 were as follows (in thousands, by fiscal year): Remainder of 2027$5,244 20285,904 20294,018 20302,430 20312,265 Thereafter9,903 Total minimum lease payments29,764 Less imputed interest(5,184) Present value of future minimum lease payments24,580 Less current lease liabilities(5,709) Operating lease liabilities, non-current$18,871 20 Table of Contents 10. Ordinary Shares The Company s authorized ordinary share capital pursuant to its articles of association amounts to 165 million ordinary shares at a par value per ordinary share of 0.01. 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 July 31, 2026. 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, 2025. This authorization is valid for a period of 18 months from September 30, 2025, the date of such general meeting of shareholders, until March 30, 2027. Preference Shares 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 July 31, 2026, there were no preference shares issued or outstanding. Preference shares in the capital of the Company may currently only be issued pursuant to a resolution adopted by the general meeting of shareholders at the proposal of the board of directors. Share Repurchase Program In October 2025, the Company s board of directors authorized a program to repurchase up to $500.0 million of the Company s ordinary shares (the Share Repurchase Program ). Repurchases under the Share Repurchase Program may be effected through open market purchases, block trades, accelerated or other structured share repurchase programs, or otherwise in accordance with applicable federal securities laws, including trading arrangements conducted in accordance with Rule 10b5-1 under the Exchange Act. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, the Company s liquidity, and other factors. The current authorization may be modified, suspended, or terminated at any time and does not have a specified expiration date. The following table summarizes the share repurchase activity under the Company s Share Repurchase Program (in thousands, except share and per share data): 49.71 40,000 Number of Stock Options Outstanding Weighted- Average Exercise Price Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) 1,547,110 $46.25 3.10$30,020 (244,903)$13.49 Stock options canceled(2,354)$84.87 Stock options assumed in acquisition canceled(1,203)$71.42 Balance as of July 31, 20261,298,650 $52.33 2.65$36,207 Exercisable as of July 31, 20261,298,650 $52.33 2.65$36,207 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 three months ended July 31, 2026 and 2025. As of July 31, 2026, the Company had no unrecognized stock-based compensation expense related to unvested stock options. RSUs The following table summarizes RSU activity under the 2012 Plan: Number of AwardsWeighted-Average Grant Date Fair Value 8,162,578 $84.58 RSUs granted 3,720,044 $62.59 RSUs released(928,811)$83.66 RSUs canceled (1,010,024)$83.30 Outstanding and unvested at July 31, 20269,943,787 $76.57 As of July 31, 2026, the Company had unrecognized stock-based compensation expense of $697.6 million related to RSUs that the Company expects to recognize over a weighted-average period of 2.93 years. 22 Table of Contents Stock-Based Compensation Expense Total stock-based compensation expense recognized in the Company s condensed consolidated statements of operations was as follows (in thousands): 20252,750 $2,468 3,932 26,623 23,067 13,845 74,782 $69,935 2025(16,729)$(24,603)105,961,879 (0.16)$(0.23) 20251,752,632 6,699,912 146,803 8,599,347 2025258,977 $230,263 185,025 478,113 $415,288 As of April 30, 2026 United States$20,157 $13,994 1,888 2,096 9,185 11,142 Total long-lived assets$31,230 $27,232 16. Restructuring and Other Related Charges On June 24, 2026, the Company announced and began implementing a plan to align its investments more closely with its strategic priorities by simplifying team structures, reducing organizational complexity, improving decision-making speed, reallocating resources towards key growth areas, and investing in the skills and capabilities needed to support the Company s ongoing growth. As part of the plan, the Company expects to reduce the Company s workforce by approximately 7% and expects to incur total non-recurring cash charges of approximately $22 million to $25 million under the plan, which will primarily consist of employee-related costs, including severance and other termination benefits. For the three months ended July 31, 2026, the Company recorded employee-related severance and other termination benefits of $19.9 million. The restructuring plan is expected to be substantially completed by the end of the third quarter of fiscal 2027. The following table presents activity related to the liability, which is recorded in accrued compensation and employee benefits in the consolidated balance sheets, for restructuring-related employee severance and benefits for the three months ended July 31, 2026 (in thousands): 6,919 2025 Revenue448,735 $388,583 26,705 415,288 69,418 27,328 96,746 318,542 109,122 174,054 44,806 327,982 (9,440)(6,351)15,782 (9)24,594 (16,729)$(24,603) 2025 Cost of revenue2,908 $2,653 4,190 27,773 24,069 14,178 77,545 $72,863 2025 Cost of revenue2,616 $1,576 2,616 $1,576 2025 Research and development238 $8 119 755 $127 2025%94 %%6 %%100 %%17 %%6 %%23 %%77 %%26 %%42 %%11 %% %%79 %%(2)%%(2)%%4 %% %%6 %%(6)% 2025%1 %%1 %%7 %%6 %%3 %%18 % 2025% %% % 2025% %% %% %Change 20262025$% (in thousands) Revenue Subscription$448,735 $388,583 $60,152 15 % Services29,378 26,705 2,673 10 % Total revenue$478,113 $415,288 $62,825 15 % Subscription revenue increased by $60.2 million, or 15%, for the three months ended July 31, 2026 compared to the same period of the prior year. This increase was primarily driven by continued adoption of both Elastic Cloud and Other subscriptions, which grew 20% and 11%, respectively, over the prior year. The increase in Elastic Cloud revenue was primarily attributable to an increase in revenue from Annual Elastic Cloud, which grew by 27% over the prior year. Services revenue increased by $2.7 million, or 10%, for the three months ended July 31, 2026 compared to the same period of the prior year. The increase in services revenue was attributable to increased adoption of our services offerings. 33 Table of Contents Cost of Revenue and Gross Margin Three Months Ended July 31,Change 20262025$% (in thousands) Cost of revenue Subscription$91,931 $69,418 $22,513 32 % Services29,994 27,328 2,666 10 % Total cost of revenue$121,925 $96,746 $25,179 26 % Gross profit$356,188 $318,542 $37,646 12 % 80 %82 %(2)%(2)%74 %77 %Change 20262025$% (in thousands) Research and development$112,493 $109,122 $3,371 3 % Research and development expense increased by $3.4 million, or 3%, for the three months ended July 31, 2026 compared to the same period of the prior year as we continued to invest in the development of new and existing offerings. The increase was primarily due to increases of $3.0 million in cloud hosting costs, $0.7 million in travel expenses, and $0.5 million in software and equipment costs, partially offset by a decrease of $0.8 million in personnel and related costs. Sales and marketing Three Months Ended July 31,Change 20262025$% (in thousands) Sales and marketing$198,997 $174,054 $24,943 14 % Sales and marketing expense increased by $24.9 million, or 14%, for the three months ended July 31, 2026 compared to the same period of the prior year. The increase was primarily due to increases of $19.7 million in personnel and related costs, $2.1 million in travel expenses, $1.5 million in marketing expenses, and $1.4 million in software and equipment costs. The increase in personnel and related costs included increases of $11.6 million in salaries and related taxes, $6.0 million in commission expense, and $2.1 million in stock-based compensation. 34 Table of Contents General and administrative Three Months Ended July 31,Change 20262025$% (in thousands) General and administrative$48,352 $44,806 $3,546 8 % General and administrative expense increased by $3.5 million, or 8%, for the three months ended July 31, 2026 compared to the same period of the prior year. The increase was primarily due to increases of $6.1 million in personnel and related costs, partially offset by a decrease of $2.7 million in bad debt expense. The increase in personnel and related costs included increases of $4.2 million in stock-based compensation and $1.4 million in salaries and related taxes. Restructuring and other related charges Three Months Ended July 31,Change 20262025$% (in thousands) Restructuring and other related charges$19,920 $ $19,920 NM NM = Not Meaningful For the three months ended July 31, 2026, we recorded restructuring and other related charges consisting of employee-related severance and termination benefit charges of $19.9 million. We had no such charges in the same period of the prior year. Other Income, Net Interest expense Three Months Ended July 31,Change 20262025$% (in thousands) Interest expense$(6,281)$(6,351)$70 (1)% Interest, primarily related to our Senior Notes, expense remained relatively flat for the three months ended July 31, 2026 compared to the same period of the prior year. Other income, net Three Months Ended July 31,Change 20262025$% (in thousands) Other income, net$12,597 $15,782 $(3,185)(20)% Other income, net decreased by $3.2 million, or 20%, for the three months ended July 31, 2026 compared to the same period of the prior year. The decrease was due to a decrease of $2.9 million in interest and other investment income, primarily from our marketable securities, and an increase of $0.3 million in other expense, net. (Benefit from) Provision for Income Taxes Three Months Ended July 31,Change 20262025$% (in thousands) (Benefit from) provision for income taxes$(529)$24,594 $(25,123)(102)% The benefit from income taxes was $0.5 million for the three months ended July 31, 2026 compared to a provision for income taxes of $24.6 million for the same period of the prior year. Our effective tax rate for the three months ended July 31, 2026 was 3%. Our effective tax rate for the three months ended July 31, 2025 was not meaningful as our interim tax provision excluded pre-tax losses in jurisdictions where a valuation allowance was maintained, which caused the provision to reflect only tax provisions in jurisdictions with profitable operations and resulted in a disproportionate effective tax rate. 35 Table of Contents We assess the need for a valuation allowance against our deferred tax assets on a quarterly basis. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of our deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all our deferred tax assets will not be realized. As of July 31, 2026, we have a remaining valuation allowance of $4.1 million related to certain U.S. states and foreign jurisdictions. Liquidity and Capital Resources As of July 31, 2026, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $1.461 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, which is diversified among industries and individual issuers, is strong. We have generated significant operating losses from our operations as reflected in our accumulated deficit of $748.7 million as of July 31, 2026. We have historically incurred, and may 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 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 both near-term and long-term capital requirements 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 product features, and the continuing market acceptance of our solutions and services. We may enter into arrangements in the future to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. We have based our estimate of the adequacy of our financial resources on assumptions that may prove to be wrong, and we could use our available 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, 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. Share Repurchase Program In October 2025, our board of directors authorized the Share Repurchase Program for up to $500.0 million of our outstanding ordinary shares. Repurchases may be effected, from time to time, through open market purchases, block trades, accelerated or other structured share repurchase programs, or through other transactions in accordance with applicable securities laws. The timing and amount of any repurchases will be determined by management based on the share price, business and market conditions, and other factors. The Share Repurchase Program does not obligate us to acquire any particular amount of ordinary shares, and the program may be modified, suspended, or terminated at any time at our discretion. During the three months ended July 31, 2026, we repurchased 0.8 million of our outstanding ordinary shares for an aggregate purchase price of $40.0 million, excluding transaction costs associated with the repurchases, at a weighted-average price of $49.71 per share. All repurchases were made in open market transactions. As of July 31, 2026, $120.0 million remained available for future repurchases under the Share Repurchase Program. See Note 10, Ordinary Shares, to our accompanying Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional details. 36 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented: 20262025 Net cash provided by operating activities$132,004 $104,835 $18,140 $(170,375)$(36,712)$326 Average Price Paid Per Share (1)Total Number of Shares Purchased as Part of Publicly Announced ProgramApproximate Dollar Value of Shares That May Yet Be Purchased Under the Program (2) (in thousands) May 1, 2026 to May 31, 2026804,601 $49.71 804,601 June 1, 2026 to June 30, 2026 July 1, 2026 to July 31, 2026 Total804,601 $49.71 804,601 $120,000 (1) Weighted-average price paid per share excludes transaction costs associated with the repurchases. (2) In October 2025, our board of directors authorized a share repurchase program of up to $500.0 million of our outstanding ordinary shares. The program has no expiration date. All repurchases during the three months ended July 31, 2026 were made in open market transactions. Item 5. Other Information Insider Trading Arrangements During the three months ended July 31, 2026, the following officer, as defined in Rule 16a-1(f) under the Exchange Act, terminated a Rule 10b5-1 trading arrangement as defined for purposes of Regulation S-K Item 408. On May 4, 2026, Navam Welihinda, our Chief Financial Officer, terminated a trading plan. The plan, which was adopted on July 7, 2025 and scheduled to expire on July 7, 2026, permitted the sale of up to 27,376 of our ordinary shares, as reduced by any net share settlement, underlying 21,106 restricted stock units and 6,270 performance share units, assuming vesting and payout of the latter awards at the maximum 200% level upon satisfaction of the specified performance criteria. 41 Table of Contents