Elastic (ESTC) stock rocketed higher late Thursday after the enterprise data software company reported fiscal second quarter earnings and sales that easily bested estimates.
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Elastic said that it earned an adjusted 59 cents per share on sales of $365 million for the October-ended quarter. Analysts polled by FactSet projected the San Francisco-based company would post adjusted earnings of 38 cents per share on sales of $352 million.
Sales increased 18% year-over-year while adjusted earnings increased 60%.
“Elastic delivered a strong second quarter supported by solid sales execution, exceeding our guidance across all revenue and profitability metrics,” Chief Executive Ash Kulkarni said in a news release. “In Q2 we saw strong customer commitments with key wins across all our solution areas, with continued momentum in GenAI and platform consolidation.”
For the current quarter, Elastic guided for sales of $368 million at the midpoint of its range. Prior to the company posting its results, analysts were projecting Elastic would tally $366 million in sales for the January-ending quarter, according to FactSet.
On the stock market today, Elastic stock rallied more than 17% to 111 in after-hours action.
Elastic Results Ease Some Concerns
Elastic also raised its guidance for fiscal year revenue to $1.454 billion at the midpoint of its range, representing 15% year-over-year growth for the April-ending period. That’s up from the 14% growth Elastic projected in its previous quarterly results in late August.
Shares sank 28% following Elastic’s fiscal Q1 report on Aug. 29, which included a weaker-than-expected sales forecast. At the time, the company blamed “segmentation changes” to its strategy for the slower start.
To analysts, the new quarterly results Thursday offered a relief.
“Growth rates were solid, but what is more important here is that results look like they stabilized compared to the low expectations investors had after the weaker Q1 comments that were triggered from the (go-to-market) changes at the beginning of the year,” Barclays analyst Raimo Lenschow wrote late Thursday.
Elastic Cloud revenue, a closely watched metric, grew 25% to $169 million.
Elastic Stock: Technical Ratings
Elastic provides the leading search software for enterprises, along with a broader suite of data software tools that run on cloud providers such as Microsoft Azure, Amazon Web Services and Google Cloud.
The earnings reaction is adding on to a strong day for Elastic stock. Shares gained 6.4% in Thursday trading. Elastic was among data software stocks to rally following strong results from Snowflake (SNOW) late Wednesday.
But overall it has been a turbulent year for Elastic, which is down 16% year-to-date. That’s after a strong 2023 in which its shares more than doubled in value.
Coming into the report, Elastic stock had an IBD Composite Rating of 58 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks typically have a Composite Rating of 90 or better.
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