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What changed in Elastic N.V.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Elastic N.V.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+533 added−529 removedSource: 10-K (2024-06-14) vs 10-K (2023-06-16)

Top changes in Elastic N.V.'s 2024 10-K

533 paragraphs added · 529 removed · 427 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

110 edited+20 added−20 removed57 unchanged
Biggest changeImmediately prior to the completion of our initial public offering (“IPO”) on October 10, 2018, we converted into a public company with limited liability ( naamloze vennootschap ) under Dutch law and changed our name to Elastic N.V. We are a distributed company, which means our workforce is distributed globally. Accordingly, we do not have a principal executive office.
Biggest changeCorporate Information 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.
Engineering 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.
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.
Our training offerings enable our users to gain the necessary skills to develop, deploy, and manage our software. Customer Support We endeavor to make it easy for users to download, install, deploy and use the Elastic Stack and our solutions.
Our training offerings enable our users to gain the skills necessary to develop, deploy, and manage our software. Customer Support We endeavor to make it easy for users to download, install, deploy and use the Elastic Stack and our solutions.
Examples of these capabilities 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 all with a single search. • Developer friendliness.
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. • Developer friendliness.
We have a global network of systems integrators, channel partners, and referral partner relationships that help deliver our products to various business and government customers around the world. • OEM and MSP partners. Our original equipment manufacturing (“OEM”) and managed service provider (“MSP”) partners embed an Elastic subscription into the products or services they offer to their customers.
We have a global network of systems integrators, channel partners, and referral partner relationships that help deliver our products to business and government customers around the world. • OEM and MSP partners. Our original equipment manufacturing (“OEM”) and managed service provider (“MSP”) partners embed an Elastic subscription into the products or services they offer to their customers.
They 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.
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.
Machine learning capabilities such as anomaly detection, forecasting, and categorization are tightly integrated with the Elastic Stack to automatically model the behavior of data, such as trends and periodicity, in real time in order to identify issues faster, streamline root cause analysis, and reduce false positives.
Machine learning capabilities such as anomaly detection, forecasting, and categorization are tightly integrated with the Elastic Stack 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.
Its central management user interfaces (“UI”) make it easier to operate the Elastic Stack at scale. • Home for Solutions. Kibana is where our users and customers access the user interfaces for our Search, Observability, and Security solutions. Kibana provides core services, like security, alerting, and data visualization components.
Its central management user interfaces make it easier to operate the Elastic Stack at scale. • Home for solutions. Kibana is where our users and customers access the user interfaces for our Search, Observability, and Security solutions. Kibana provides core services, like security, alerting, and data visualization components.
The source code of features in the Elastic Stack is generally visible to the public in the form of “open code.” Our Solutions We have built a number of solutions into the Elastic Stack to make it easier for organizations to use our software for common use cases. Our solutions include: • Search.
The source code of features in the Elastic Stack is generally visible to the public in the form of “open code.” Our Solutions We have built a number of solutions into the Elastic Stack to make it easier for organizations to use our software for common use cases. Our solutions include the following: • Search.
Community gives us an 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.
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.
Everything stored in Elasticsearch is indexed by default, so that 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.
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.
The principal competitive factors for companies in our industry are: • product capabilities, including speed, scale, and relevance, with which to power search experiences; 11 Table of Contents • an extensible product “stack” that enables developers to build a wide variety of solutions; • powerful and flexible technology that can manage a broad variety and large volume of data; • ease of deployment and ease of use; • ability to address a variety of evolving customer needs and use cases; • strength and execution of sales and marketing strategies; • flexible deployment model across public or private clouds, hybrid environments, or multi-cloud environments; • productized solutions engineered to be rapidly adopted to address specific applications; • mindshare with developers and IT and security executives; • adoption of products by many types of users and decision makers (developers, architects, DevOps personnel, IT professionals, security analysts, and departmental and organizational leaders); • enterprise-grade technology that is secure and reliable; • size of customer base and level of user adoption; • quality of training, consulting, and customer support; • brand awareness and reputation; and • low total cost of ownership.
The principal competitive factors for companies in our industry are: • product capabilities, including speed, scale, and relevance, with which to power search AI experiences; • an extensible product “stack” that enables developers to build a wide variety of solutions; • powerful and flexible technology that can manage a broad variety and large volume of data; • ease of deployment and ease of use; • ability to address a variety of evolving customer needs and use cases; • strength and execution of sales and marketing strategies; • flexible deployment model across public or private clouds, hybrid environments, or multi-cloud environments; • productized solutions engineered to be rapidly adopted to address specific applications; • mindshare with developers and IT and security executives; • adoption of products by many types of users and decision makers (developers, architects, DevOps personnel, IT professionals, security analysts, and departmental and organizational leaders); • enterprise-grade technology that is secure and reliable; • size of customer base and level of user adoption; • quality of training, consulting, and customer support; • brand awareness and reputation; and • low total cost of ownership.
We will continue to engage with developers globally 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, to grow our user community. 5 Table of Contents • Expand our customer base by acquiring new customers.
We will 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. 7 Table of Contents • Expand our customer base by acquiring new customers.
Elasticsearch also detects node failures and hardware or network issues and automatically protects user data by ejecting the failing or inaccessible nodes and creating new replicas of the data. • Security. 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 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. 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.
Technology Features of the Elastic Stack Elasticsearch is the heart of the Elastic Stack, where users store, search, and analyze data. Key features of Elasticsearch include the following: • Store any type of data.
Technology Features of the Elastic Stack Elasticsearch is the heart of the Elastic Stack, where users store, search, and analyze data. Key features of Elasticsearch include the following: • Storage of any type of data.
With our business model, where users can download and use many of our features for free, 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.
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.
We also engage with our customers on an ongoing basis through a customer success team, to ensure customer satisfaction and expand their usage of our technology. Partners We maintain partner relationships that help us market and deliver our products to our customers and complement our community. Our partner relationships include the following: • Cloud providers.
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. Partners We maintain partner relationships that help us market and deliver our products to our customers and complement our community. Our partner relationships include the following: • Cloud providers.
Diversity, Equity and Inclusion Our focus on DEI is critical to how we develop, strengthen and sustain a sense of belonging and inclusion among all Elasticians. Balanced Teams. We strive to be an employer of choice for a diverse and inclusive workforce through our talent brand, talent attraction, development, and retention efforts.
Diversity, Equity and Inclusion Our focus on DEI is critical to how we develop, strengthen and sustain a sense of belonging and inclusion among all employees. Balanced Teams. We strive to be an employer of choice for a diverse and inclusive workforce through our talent brand, talent attraction, development, and retention efforts.
We make our platform available as a hosted, managed service across major cloud providers (Amazon Web Services (“AWS”), Google Cloud Platform (“GCP”), and Microsoft Azure) in more than 50 public cloud regions globally. Customers can also deploy our platform across hybrid clouds, public or private clouds, and multi-cloud environments.
We make our platform available as a hosted, managed 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.
Kibana’s query, filtering, and data summarization capabilities reflect Elasticsearch’s powerful query domain specific language and aggregation framework while making it interactive. • Manage the Elastic Stack. Kibana presents a broad user interface showing the health of Elastic Stack components and provides cluster alerts to notify administrators of problems.
Kibana’s query, filtering, and data summarization capabilities reflect Elasticsearch’s powerful query domain specific language and aggregation framework while making it interactive. • Management of the Elastic Stack. Kibana presents a broad user interface showing the health of Elastic Stack components and provides cluster alerts to notify administrators of problems.
In addition, as of April 30, 2023, 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, as of April 30, 2024, 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.
All of these actions help us build a powerful commercial business model that we believe is optimized for product-led growth. Our customers often significantly expand their usage of our products and services over time.
All of these actions help us build a powerful commercial business model that we believe is optimized for product-driven growth. Our customers often significantly expand their usage of our products and services over time.
Technology partners represent a deeper collaboration than community contributions and are distinct from distribution-oriented relationships like OEMs and MSP partners. Services We offer consulting and training as part of our offerings 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.
Technology partners represent a deeper collaboration than community contributions and are distinct from distribution-oriented relationships like OEMs and MSP partners. Services 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.
With sensible defaults, and no upfront schema definition necessary, Elasticsearch makes it easy to start simple and fine-tune as datasets grow. • Vector search. Elastic natively supports vector search as part of ESRE, which enables a wide range of advanced search use cases that improve relevance, including sophisticated search ranking, image search, question answering, and more.
With sensible defaults, and no upfront schema definition necessary, Elasticsearch makes it easy to start with simple storage solutions and fine-tune them as datasets grow. • Vector search. Elastic natively supports vector search as part of ESRE, which enables a wide range of advanced search use cases that improve relevance, including sophisticated search ranking, image search, question answering, and more.
We also conduct specific programs to develop managers and leaders at Elastic, including our flagship leadership development program - Leading Strategically, an externally-led program focused on high-performing leaders who possess the potential to have a significant strategic impact on the achievement of our long-term objectives. Total Rewards Compensation, Benefits and Well-being .
We also conduct specific programs to develop managers and leaders at Elastic, including an externally-led leadership development program focused on high-performing leaders who possess the potential to have a significant strategic impact on the achievement of our long-term objectives. Total Rewards Compensation, Benefits and Well-being .
It offers an easy getting-started experience, featuring streamlined download and deployment, sensible defaults, a simple and intuitive query language that just works, and no need to define a schema up front. Administrative tasks such as securing the Elastic Stack are intuitive and integrated into the user experience, as are investigative tasks such as data visualization. • Flexibility.
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 Elastic Stack are intuitive and integrated into the user experience, as are investigative tasks such as data visualization. • Flexibility.
However, 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.
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.
As data volumes and formats explode, this sophisticated approach to search and relevance is becoming important for use cases where delivering maximum relevance is critical. • Machine learning, AI, and alerting.
As data volumes and formats proliferate, this sophisticated approach to search and relevance is becoming important for use cases where delivering maximum relevance is critical. • Machine learning, AI, and alerting.
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, 2023, we had approximately 20,200 customers compared to over 18,600 customers and over 15,000 customers as of April 30, 2022 and 2021, respectively.
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, 2024, we had approximately 21,000 customers compared to approximately 20,200 customers and over 18,600 customers as of April 30, 2023 and 2022, respectively.
The query language also includes a composable aggregation framework that enables users to summarize, slice, and analyze structured or semi-structured datasets across multiple dimensions.
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.
Our principal competitors include: • For Search and other platform use cases: offerings such as Solr (open source offering) and Lucidworks Fusion, search tools including Google, Coveo, and Algolia. • For Observability: software vendors with specific observability solutions to analyze logging data, metrics, APM data, or infrastructure uptime, such as Splunk, New Relic, Dynatrace, AppDynamics (owned by Cisco Systems), and Datadog. • For Security: security vendors such as Splunk, Azure Sentinel (by Microsoft), CrowdStrike, Carbon Black (owned by VMware), McAfee, and Symantec (owned by Broadcom). • Certain cloud hosting providers and managed service providers, including AWS, that offer products or services based on a forked version of the Elastic Stack.
Our principal competitors include: • For Search and other platform use cases: offerings such as Lucidworks Fusion and Apache Solr (open source offering), search tools including Algolia, Coveo, and Google. • For Observability: software vendors with specific observability solutions to analyze logging data, metrics, APM data, or infrastructure uptime, such as AppDynamics (owned by Cisco Systems), Datadog, Dynatrace, New Relic, and Splunk (owned by Cisco Systems). 13 Table of Contents • For Security: security vendors such as Azure Sentinel (by Microsoft), Broadcom (which owns Carbon Black and Symantec), CrowdStrike, McAfee, and Splunk (owned by Cisco Systems). • Certain cloud hosting providers and managed service providers, including AWS, that offer products or services based on a forked version of the Elastic Stack.
Elasticsearch can easily index millions of events per second, and newly added data can be available for search nearly instantly. 8 Table of Contents • High scale and availability. Elasticsearch is designed to scale horizontally and be resilient to node or hardware failures.
Elasticsearch can index millions of events per second, and newly added data can be available for search nearly instantly. 10 Table of Contents • High scale and availability. Elasticsearch is designed to scale horizontally and be resilient to node or hardware failures.
Additionally, the interfaces for many of our solutions are built into Kibana. Key features of Kibana include the following: • Explore and visualize data stored in Elasticsearch. Kibana provides interactive data views, visualizations, and dashboards powered by structured filtering and unstructured search to enable users to get to answers more quickly.
Additionally, the interfaces for many of our solutions are built into Kibana. Key features of Kibana include the following: • Exploration and visualization of data stored in Elasticsearch. Kibana provides interactive data views, visualizations, and dashboards powered by structured filtering and unstructured search to enable users to get to answers more quickly.
Our business model is based primarily on a combination of a paid Elastic-managed hosted service offering and paid and free proprietary self-managed software. Our paid offerings for our platform are sold via subscription through resource-based pricing, and all customers and users have access to all solutions.
Our business model is based primarily on a combination of a paid Elastic-managed hosted service offering and paid and free proprietary self-managed software. 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 addition, we maintain a policy requiring our employees, contractors, and consultants to enter into confidentiality and invention assignment agreements. As of April 30, 2023, 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 2041.
In addition, we maintain a policy requiring our employees, contractors, and consultants to enter into confidentiality and invention assignment agreements. As of April 30, 2024, 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.
Many of these customers start with limited initial spending, but can significantly grow their spending. 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.
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.
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 Twitter account (https://twitter.com/elastic), Facebook page (www.facebook.com/elastic.co), and/or LinkedIn account (www.linkedin.com/company/elastic-co), in order to achieve broad, non-exclusionary distribution of information to the public.
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 (formerly known as Twitter) (https://x.com/elastic), our Facebook page (www.facebook.com/elastic.co), and/or LinkedIn account (www.linkedin.com/company/elastic-co), in order to achieve broad, non-exclusionary distribution of information to the public.
We pursue sales opportunities both through our direct sales force and as assisted by 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 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.
Subscriptions accounted for 92%, 93% and 93% of our total revenue for the years ended April 30, 2023, 2022 and 2021, respectively. Revenue from outside the United States accounted for 41%, 44% and 45% of our total revenue for the years ended April 30, 2023, 2022 and 2021, respectively.
Subscriptions accounted for 93%, 92% and 93% of our total revenue for the years ended April 30, 2024, 2023 and 2022, respectively. Revenue from outside the United States accounted for 42%, 41% and 44% of our total revenue for the years ended April 30, 2024, 2023 and 2022, respectively.
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, support diverse user needs. • Incorporate advanced analytics and machine learning from Elasticsearch.
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. • Incorporation of advanced analytics and machine learning from Elasticsearch.
Our users interact with us on our website forums and on Twitter, GitHub, Stack Overflow, Quora, Facebook, Weibo, WeChat, and other platforms. In order to build products that best meet our users’ needs, we focus on, and invest in, building a strong community.
Our users interact with us on our website forums and on X (formerly known as Twitter), GitHub, Stack Overflow, Quora, Facebook, and other platforms. In order to build products that best meet our users’ needs, we focus on, and invest in, building a strong community.
Seasonality 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 and the mix between annual and monthly contracts entered into in each reporting period.
Seasonality 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.
Elasticsearch has consistent, well-documented APIs that work the same way on one node during initial development as on a hundred nodes in production.
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.
With a distributed engineering team spanning over 30 countries, we are able to recruit, hire, and retain high-quality, experienced developers, tech 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 the Elastic Stack.
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. 8 Table of Contents Our software development process is based on iterative releases of the Elastic Stack.
We believe that we compare favorably on the basis of the factors listed above.
We believe that we compare favorably to our competitors on the basis of the factors listed above.
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. We will continue to invest in helping users and customers be successful with our products. • Extend our product leadership through continued investment in our technology.
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. • Extend our product leadership through continued investment in our technology.
Over 90 Beats have been shared by the community via Elastic documentation and many more are available through code sharing platforms such as GitHub. • Host protection. Specifically with Elastic Agent, we extend protection to hosts in addition to data transfer. Elastic Agent stops malware and ransomware and enables environment-wide visibility and advanced threat detection.
Over 90 Beats have been shared by the community via Elastic documentation and many more are available through code sharing platforms such as GitHub. • Host protection. Specifically with Elastic Agent, we extend protection to hosts in addition to data transfer.
The Elastic Stack The Elastic Stack is primarily composed of the following products: • Elasticsearch. Elasticsearch is the heart of the Elastic Stack. It is a distributed, real-time search and analytics engine and data store for all types of data, including textual, numerical, geospatial, structured, and unstructured. • Kibana. Kibana is the user interface for the Elastic Stack.
Elasticsearch is the heart of the Elastic Stack. It is a distributed, real-time vector search and analytics engine and data store for all types of data, including textual, numerical, geospatial, structured, and unstructured. • Kibana. Kibana is the user interface for the Elastic Stack. It is the visualization layer for data stored in Elasticsearch.
As users and customers increasingly want to consume highly-scalable cloud solutions, we believe that Elastic Cloud represents a significant growth opportunity. We plan to continue to invest resources in driving further innovation and increasing the adoption of Elastic Cloud. • Increase product adoption by improving ease of use and growing our user community.
As users and customers increasingly want to consume highly-scalable cloud solutions, we believe that Elastic Cloud represents a significant growth opportunity. We plan to continue to invest resources in driving further innovation and increasing the adoption of Elastic Cloud.
The focus of our most recent acquisitions has been to enhance the technology underlying our Security and Observability offerings. We intend to continue to pursue acquisitions selectively. Customers Organizations of all sizes, across many industries, including enterprises, educational institutions and government entities, purchase our products for a variety of use cases.
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. Customers Organizations of all sizes, across many industries, including enterprises, educational institutions and government entities, purchase our products for a variety of use cases.
Our total revenue was $1.1 billion, $862.4 million, and $608.5 million for the years ended April 30, 2023, 2022 and 2021, respectively, representing year-over-year growth of 24% for the year ended April 30, 2023 and 42% for the year ended April 30, 2022.
Our total revenue was $1.267 billion, $1.069 billion, and $862.4 million for the years ended April 30, 2024, 2023 and 2022, respectively, representing year-over-year growth of 19% for the year ended April 30, 2024 and 24% for the year ended April 30, 2023.
Seasonality in our sales cycle generally reflects a trend toward greater sales in our second and fourth fiscal quarters and lower sales in our first and third fiscal quarters. We believe this seasonality might become more pronounced as we continue to target large enterprise customers.
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.
Security includes: Security Information and Event Management (“SIEM”), with integrations to network, host, user, and cloud data sources, as well as workflow and operations, shareable analytics, incident management, and investigations; Endpoint Security, for prevention, detection and response with a single, stack-integrated agent; Extended Detection and Response (“XDR”), providing protection across infrastructure from SIEM to Endpoint; and Cloud Security, providing cloud posture assessment, vulnerability management, and cloud workload protection with one integrated solution. 4 Table of Contents Our Deployment Options The Elastic Stack 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.
Our AI-driven security analytics solution includes: Security Information and Event Management (“SIEM”), with integrations to network, host, user, and cloud data sources, as well as workflow and operations, shareable analytics, incident management, and investigations; extended protection with both third party integrations as well as first party protections for both Endpoint Security (prevention, detection, and response) and Cloud Security (cloud posture assessment, vulnerability management, and cloud workload protection). 6 Table of Contents Our Deployment Options The Elastic Stack 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.
By querying logs in ad hoc ways, users can triage, troubleshoot, and resolve performance issues. • Metrics. Metrics ingests, searches, visualizes, and analyzes numeric and time series data from IT systems, including applications, data stores, hosts, containers, cloud infrastructure, and more. Users can review performance and utilization trends to optimize and plan for future needs.
Metrics ingests, searches, visualizes, and analyzes numeric and time series data from IT systems, including applications, data stores, hosts, containers, cloud infrastructure, and more. Users can review performance and utilization trends to optimize and plan for future needs.
As of April 30, 2023, we had a total of 2,886 employees in over 40 countries globally. Over 30% of our workforce consists of women and employees who self-identify as non-binary. None of our employees are represented by a labor union.
As of April 30, 2024, we had a total of 3,187 employees in over 35 countries globally. Over 30% of our workforce consists of women and employees who self-identify as non-binary. None of our U.S. employees are represented by a labor union.
Our partners assist us in driving awareness of Elastic and our products, using the Elastic Stack to solve customer pain points, and extending our reach in geographic areas and verticals where we do not have a formal sales presence.
Our partners assist us in driving awareness of Elastic and our products, using the Elastic Stack to address customer requirements, and extending our reach in geographic areas and verticals where we do not have a formal sales presence. • Selectively pursue strategic acquisitions. We intend to continue to pursue acquisitions selectively.
The Elastic Stack can be used by developers to power a variety of use cases. We also offer software solutions built in the Elastic Stack that address a wide variety of use cases. The Elastic Stack and our solutions are designed to run in public or private clouds, in hybrid environments, or in multi-cloud environments.
We also offer software solutions built in the Elastic Stack that address a wide variety of use cases. The Elastic Stack and our solutions are designed to run in public or private clouds, in hybrid environments, or in multi-cloud environments. The Elastic Stack The Elastic Stack is primarily composed of the following products: • Elasticsearch.
For users who download our software, we make some of the features of our software available for free, allowing us to engage with a broad community of developers and practitioners and introduce them to the value of the Elastic Stack.
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 the Elastic Stack.
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 distributed across over 20 countries and provides coverage 24 hours per day, 365 days per year, across multiple languages.
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.
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.
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.
It is the visualization layer for data stored in Elasticsearch. It is also the management and configuration interface for all parts of the Elastic Stack.
It is also the management and configuration interface for all parts of the Elastic Stack.
Our technology investments within the Elastic Stack include foundational capabilities as well as solution enhancements for our target use cases. • Expand our strategic and regional partnerships.
Our technology investments within the Elastic Stack include foundational capabilities as well as solution enhancements for our target use cases. • Expand our strategic and regional partnerships. We will continue to pursue partnerships to further the development of the Elastic Stack and our customer reach.
Our recruiting approach is underpinned by the desire to create balanced teams at Elastic, which includes considering broad aspects of diversity from race and gender mix as well as diversity of thought, experience and tenure when recruiting new team members.
Our recruiting approach is underpinned by the desire to create balanced teams at Elastic, which includes considering broad aspects of diversity — not only race and gender, but also diversity of thought, experience and tenure.
When deployed together, SIEM and Endpoint Security provide a strong security posture with broad visibility on potential threats. XDR delivers a unified security stack, protecting across endpoints, cloud, and the broader environment, letting customers minimize vendor sprawl, harness actionable data, and provide defense in depth to minimize time to resolution. • Cloud Security.
XDR delivers a unified security stack, protecting across endpoints, cloud, and the broader environment, letting customers minimize vendor sprawl, harness actionable data, and provide defense in depth to minimize time to resolution. • Cloud Security.
To this end, our user community functions as a source of support and enables users to engage in self-help and collaboration. 7 Table of Contents However, in many situations, such as those involving complex enterprise IT environments, large deployments and novel use cases, our users require our support.
Our user community enables users to engage in self-help and collaboration. 9 Table of Contents 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.
With prebuilt Elastic Agent and Beats integrations, SIEM can ingest data from cloud, network, endpoints, applications, and other systems. With Elastic Common Schema (“ECS”), users can centrally analyze information like logs, flows, and contextual data from disparate data sources. SIEM provides an interactive workspace for security teams to detect and respond to threats.
Elastic SIEM automates threat detection and remediation, reducing mean time to detect (“MTTD”) and mean time to respond (“MTTR”). With prebuilt Elastic Agent and Beats integrations, SIEM can ingest data from cloud, network, endpoints, applications, and other systems. With Elastic Common Schema (“ECS”), users can centrally analyze information like logs, flows, and contextual data from disparate data sources.
For additional information about risks relating to our intellectual property, see the section titled “Risk Factors—Risks Related to our Business and Industry.” 12 Table of Contents Human Capital Management Our employees (whom we call “Elasticians”) and our culture are vital to Elastic’s long-term success.
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. Human Capital Management We believe that our employees (whom we call “Elasticians”) and our culture are vital to Elastic’s long-term success.
For the years ended April 30, 2023, 2022 and 2021, we incurred net losses of $236.2 million, $203.8 million and $129.4 million, respectively. We expect we will continue to incur net losses for the foreseeable future.
While we recorded net income of $61.7 million for the year ended April 30, 2024, we incurred net losses of $236.2 million and $203.8 million for the years ended April 30, 2023 and 2022, respectively. Although we recorded net income for the year ended April 30, 2024, we expect to incur net losses for the foreseeable future.
It is designed for ease of use and for speed, and can help stop threats in early stages of an attack. Endpoint Security includes protection against ransomware, malware, phishing, exploits, fileless attacks, and other threats. • XDR. XDR extends detection and response across the entire attack surface.
Endpoint Security combines prevention, detection, and response into a single, autonomous agent that can run even in isolated environments. It is designed for ease of use and for speed, and can help stop threats in early stages of an attack. Endpoint Security includes protection against ransomware, malware, phishing, exploits, fileless attacks, and other cybersecurity threats. • XDR.
We offer three search-powered solutions – Search, Observability, and Security – that are built into the platform. We help organizations, their employees, and their customers find what they need faster, while keeping mission-critical applications running smoothly, and protecting against cyber threats.
We help organizations, their employees, and their customers find what they need faster, while keeping mission-critical applications running smoothly, and protecting against cyber threats.
As of April 30, 2023, we had approximately 20,200 customers compared to over 18,600 customers and over 15,000 customers as of April 30, 2022 and 2021, respectively. No customer accounted for more than 10% of our total revenue for the years ended April 30, 2023, 2022, and 2021.
As of April 30, 2024, we had approximately 21,000 customers compared to approximately 20,200 customers and over 18,600 customers as of April 30, 2023 and 2022, respectively. One customer, a channel partner, accounted for 11% of total revenue for the year ended April 30, 2024.
As digital transformation drives mission critical business functions to the cloud, we believe that every company will need to build around a search-based relevance engine to find the answers that matter, from all of their data, in real-time, and at scale.
As digital transformation drives 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.
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.
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.
Item 1. Business Elastic is a data analytics company built on the power of search. Our platform, which is available as both a hosted, managed service across public clouds as well as self-managed software, allows our customers to find insights and drive artificial intelligence (“AI”) and machine learning use cases from large amounts of data.
Our platform, available as both a hosted, managed service across public clouds as well as 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-powered solutions – Search, Observability, and Security – that are built on the platform.
We have designed 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. Just as distributed systems are more resilient, we believe that being distributed helps build a strong company that can scale and adapt as new challenges arise.
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.
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 technologies that we have acquired. 6 Table of Contents We intend to continue to invest in our research and development capabilities to extend our products.
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. Sales and Marketing We make it easy for users to begin using our products in order to drive rapid adoption.
Teams can triage events and perform investigations, gathering evidence on an interactive timeline. SIEM also streamlines opening and updating cases, forwarding potential incidents to security operations workflows and IT ticketing systems. • Endpoint Security. Endpoint Security combines prevention, detection, and response into a single, autonomous agent that can even run in isolated environments.
SIEM provides an interactive workspace for security teams to detect and respond to threats. Teams can triage events and perform investigations, gathering evidence on an interactive timeline. SIEM also streamlines opening and updating cases, forwarding potential incidents to security operations workflows and IT ticketing systems. • Endpoint Security.
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, 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. 14 Table of Contents 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”).
Our human capital management efforts are focused on: • Attracting, engaging and retaining talent • Maintaining our strong company culture • Enhancing our diversity, equity and inclusion (“DEI”) • Continuing strong employee engagement • Facilitating continuous employee learning and development • Offering effective total rewards, including employee well-being Our management regularly updates our board of directors and its committees on human capital trends and employee-focused activities and initiatives.
We support both with human capital management efforts focused on: • Attracting, engaging and retaining a talented and diverse employee base • Maintaining our strong company culture • Enhancing our commitment to diversity, equity, and inclusion (“DEI”) • Facilitating strong employee engagement • Promoting continuous employee learning and development • Providing a comprehensive total rewards package that seeks to offer fair and consistent pay practices with an emphasis on employee well-being Our management regularly updates our board of directors and its committees on human capital trends and employee-focused activities and initiatives.
We strive to embed DEI deep within our culture through various initiatives, projects and programs, the centerpiece of which is the Elastician Resource Groups (“ERG”), which are organizationally sponsored, self-organized, Elastician-run groups.
We also received an A+ culture score from Comparably. Elastician Resource Groups. We strive to embed DEI deep within our culture through various initiatives, projects, and programs, the centerpiece of which is our Elastician Resource Groups (“ERGs”), which are company-sponsored, self-organized, employee-run groups aligned with specific shared identities, interests, affinity or allyship.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf our security measures are breached or otherwise compromised as a result of third-party action, employee or contractor error, defect, vulnerability, or bug in our products or products of third parties upon which we rely, malfeasance or otherwise, including any such breach or compromise resulting in someone obtaining unauthorized access to our confidential information, including personal data or the confidential information or personal data of our customers or others, or if any of these are perceived or reported to occur, we may suffer the loss, compromise, corruption, unavailability, or destruction of our or others’ confidential information and personal data, we may face a loss in intellectual property protection, our reputation may be damaged, our business may suffer and we could be subject to claims, demands, regulatory investigations and other proceedings, indemnity obligations, and otherwise incur significant liability.
Biggest changeWhile 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. 19 Table of Contents 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.
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, 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.
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 gross margins and operating results could be harmed by changes in revenue mix and costs, together with numerous other factors, including entry into new markets or growth in lower margin markets; entry into markets with different pricing and cost structures; pricing discounts; and increased price competition.
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.
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 of shareholders (the “General Meeting”), or—if authorized by the annual General Meeting or an extraordinary General Meeting—by a resolution of our board of directors.
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 of shareholders (“general meeting”), or if authorized by the annual general meeting or an extraordinary general meeting, by a resolution of our board of directors.
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 ESG Report, on our website, in our filings with the SEC, and elsewhere.
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.
Our sales cycle can extend to more than a year for some customers, and the length of sales cycles may be further impacted due to 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 to continue.
Our sales cycle can extend to more than a year for some customers, and the length of sales cycles may be further impacted due to 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.
If we sue to enforce our rights or are sued by a third party that claims that our products infringe, misappropriate or violate their rights, the litigation could be expensive and could divert our management resources from operations. 33 Table of Contents Any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more of the following: • cease selling or using products that incorporate the intellectual property rights that we allegedly infringe, misappropriate or violate; • make substantial payments for legal fees, settlement payments or other costs or damages; • obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or • redesign the allegedly infringing products to avoid infringement, misappropriation or violation, which could be costly, time-consuming or impossible.
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. 33 Table of Contents Any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more of the following: • cease selling or using products that incorporate the intellectual property rights that we allegedly infringe, misappropriate or violate; • make substantial payments for legal fees, settlement payments or other costs or damages; • obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or • redesign the allegedly infringing products to avoid infringement, misappropriation or violation, which could be costly, time-consuming or impossible.
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 use of third-party open source software within our products could negatively affect our ability to sell our products and subject us to possible litigation.
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 use of third-party open source software within our products could negatively affect our ability to sell our products and subject us to litigation.
We recognize the vast majority of our subscription revenue, either based on actual consumption, monthly, 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.
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.
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 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.
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.
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 breach or other security incident.
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.
Because we recognize the vast majority of the revenue from subscriptions, either based on actual consumption, monthly, 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.
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.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of this Annual Report on Form 10-K, 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.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of this Annual Report on Form 10-K, 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.
We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our ordinary shares in the foreseeable future.
We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends on our ordinary shares in the foreseeable future.
Breaches of government contracts, failure to comply with applicable regulations or unfavorable findings from government audits or reviews could result in contract terminations, reputational harm or other adverse consequences, including but not limited to ineligibility to sell to government agencies in the future, the government refusing to continue buying our subscriptions, a reduction of revenue, or fines or civil or criminal liability, which could adversely affect our results of operations in a material way.
Breaches of government contracts, failure to comply with applicable regulations or unfavorable findings from government audits or reviews could result in contract terminations, reputational harm or other adverse consequences, including but not limited to ineligibility to sell to government agencies in the future, government refusal to continue buying our subscriptions, a reduction of revenue, or fines or civil or criminal liability, which could adversely affect our results of operations in a material way.
There could be decreased demand for our cloud-based offerings due to reasons within or outside of our control, including, among other things, 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.
There could be decreased demand for our cloud-based offerings due to 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.
We and our third-party vendors and service providers may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventative measures.
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.
This deemed distribution will be subject to a 15% tax insofar it exceeds a franchise of EUR 50 million. The tax is payable by us as a withholding agent.
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.
Future delays or problems in the installation or implementation of our new releases may cause customers to forgo purchases of our products and purchase those of our competitors instead.
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.
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 enterprise customers, it may be more difficult to grow sales with them. Additionally, it can take several months to recruit, hire, and train qualified technical support employees.
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 enterprise customers, it may be more difficult to increase sales with them. Additionally, it can take several months to recruit, hire, and train qualified technical support employees.
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 included in our articles of association.
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.
In addition, 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.
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.
The principles and suggested governance provisions apply to our board of directors (in relation to role and composition, conflicts of interest and independency 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).
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).
If, as has occurred in prior periods, the strength of the U.S. dollar increases, our financial condition and results of operations could be negatively affected. In addition, increased international sales in the future, including through our channel partners, may result in greater foreign currency denominated sales, increasing our foreign currency risk.
If, as has occurred in recent periods, the strength of the U.S. dollar increases, our financial condition and results of operations could be negatively affected. In addition, increased international sales in the future, including through our channel partners, may result in greater foreign currency-denominated sales, increasing our foreign currency risk.
Further, 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.
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.
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. As we expand our international activities, our exposure to unauthorized copying and use of our products and proprietary information will likely increase.
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.
Risks Related to our Business and Industry Our business and operations have experienced rapid growth, and if we do not appropriately manage future growth, if any, or are unable to improve our systems and processes, our business, financial condition, results of operations, and prospects will be adversely affected. We have experienced rapid growth and increased demand for our offerings.
Risks Related to our Business and Industry Our business and operations have experienced rapid growth, and if we do not appropriately manage future growth, if any, 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.
Our technologies incorporate open source software from other developers, and we expect to continue to incorporate such open source software in our products in the future.
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.
We have also filed, and may 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 and may adversely affect the market price for our ordinary shares.
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.
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.
If any of the analysts who cover us issues an inaccurate or unfavorable opinion regarding our company, our stock price would likely decline. Furthermore, investors and analysts may not understand how our consumption-based arrangements differ from a typical subscription-based pricing model.
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 at existing customers are not successful, our total revenue and revenue growth rate may decline, and our business will suffer.
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 at existing customers are not successful, our total revenue and revenue growth rate may decline, and our business could suffer.
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 Russia’s invasion of Ukraine and the related impact on macroeconomic conditions as a result of such conflict, which may negatively impact our customers, partners, and vendors; • unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions; • different labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • exposure to many stringent, particularly in the European Union, and potentially inconsistent laws and regulations relating to privacy, data protection and information security; • changes in a specific country’s or region’s political or economic conditions; • the evolving relations between the United States and China; • changes in relations between the Netherlands and the United States; • risks resulting from changes in currency exchange rates and inflationary pressures; • risks resulting from the migration of invoicing from local billing entities to centralized regional billing entities; • the impact of public health epidemics or pandemics on our employees, partners, and customers; • challenges inherent to 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 including the Export Administration Regulations, and 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; • risks relating to our third-party vendors and service providers’ storage and processing of some of our and our customers’ data, including any supply chain cybersecurity attacks; • reduced ability to timely collect amounts owed to us by our customers in countries where our recourse may be more limited; • limitations on our ability to reinvest earnings from operations derived from one country to fund the capital needs of our operations in other countries; • political, economic and trade uncertainties or instability related to the United Kingdom's withdrawal from the European Union (Brexit); • limited or unfavorable intellectual property protection; and • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
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 conflict in Israel and Gaza 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; • unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions; • different labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees than in the United States, including deemed 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; • changes in a specific country’s or region’s political or economic conditions; • the evolving relations between the United States and China; • changes in relations between the Netherlands and the United States; • risks resulting from changes in currency exchange rates and inflationary pressures; • risks resulting from the migration of invoicing from local billing entities to centralized regional billing entities; • the impact of public health epidemics or pandemics on our employees, partners, and customers; • 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 including 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; • risks relating to our third-party vendors and service providers’ storage and processing of some of our and our customers’ data, including any supply chain cybersecurity attacks; • reduced ability to timely collect amounts owed to us by our customers in countries where our recourse may be more limited; • limitations on our ability to reinvest earnings from operations derived from one country to fund the capital needs of our operations in other countries; • political, economic and trade uncertainties or instability related to the United Kingdom's withdrawal from the European Union (Brexit); • limited or unfavorable intellectual property protection; and • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
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 aforementioned reporting and tax paying obligations.
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.
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. Further, analysts could downgrade our ordinary shares or publish unfavorable research about us.
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.
Our failure to provide and maintain, or a market perception that we do not provide or maintain, high-quality support services would have an adverse effect on our business, financial condition, and results of operations.
Our failure to provide and maintain, or a market perception that we do not provide or maintain, high-quality support services would have an adverse effect on our business and results of operations.
Additionally, currency fluctuations in certain 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.
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.
Moreover, we may not have incorporated third-party open source software in our software in a manner that is inconsistent with the terms of the applicable license or our current policies and procedures.
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.
This 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.
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.
Any need by us to raise additional capital or generate the significant capital necessary to expand our operations and invest in new offerings could reduce our ability to compete and could harm our business.
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.
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. Certain holders of our ordinary shares may not be able to exercise pre-emptive rights and as a result may experience substantial dilution upon future issuances of ordinary shares.
Any such issuance could result in 42 Table of Contents substantial dilution to our existing shareholders unless pre-emptive rights exist and cause the market price of our ordinary shares to decline. Certain holders of our ordinary shares may not be able to exercise pre-emptive rights and as a result may experience substantial dilution upon future issuances of ordinary shares.
We 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.
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.
If we are unable to successfully enhance our existing products to meet evolving customer requirements, increase adoption and usage of our products, develop new products, or if our efforts to increase the usage of our products are more expensive than we expect, then our business, results of operations, and financial condition would be adversely affected.
If we are unable to successfully enhance our existing products to meet evolving customer requirements, increase adoption and usage of our products, 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.
Further, we could be required to expend significant capital and other resources to address any security breach or incident, and we may face difficulties or delays in identifying and responding to any security breach or incident.
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.
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 (e.g., because of a conflicting requirement), companies are required to give the reasons for such noncompliance.
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, such as because of a conflicting requirement, companies are required to give the reasons for such noncompliance.
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. 29 Table of Contents Incorrect implementation or use of our software, or our customers’ failure to update our software, could result in customer dissatisfaction and negatively affect our business, operations, financial results, and growth prospects.
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. 31 Table of Contents Incorrect implementation or use of our software, or our customers’ failure to update our software, could result in customer dissatisfaction and negatively affect our reputation and growth prospects.
We believe that developing and maintaining widespread awareness of our brand, especially with developers, 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.
We believe that developing and maintaining widespread awareness of our brand, especially with developers and executives with budgetary control, 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.
If our website fails to rank prominently in unpaid search results, traffic to our website could decline and our business would be adversely affected. Our success depends in part on our ability to attract users through unpaid Internet search results on traditional web search engines, such as Google.
If our website fails to rank prominently in unpaid search results, traffic to our website could decline and revenue could be adversely affected. Our success depends in part on our ability to attract users through unpaid Internet search results on traditional web search engines, such as Google.
Our software and services, in some cases, are subject to U.S. export control laws and regulations including the Export Administration Regulations (“EAR”), and trade and economic sanctions maintained by OFAC as well as similar laws and regulations in the countries in which we do business.
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.
We believe that we must offer a family of cloud-based products to address the market segment that prefers a cloud-based solution to a self-managed solution and that there will be increasing demand for cloud-based offerings of our products. For the years ended April 30, 2023, 2022, and 2021, Elastic Cloud contributed 40%, 35%, and 27% of our total revenue, respectively.
We believe that we must offer a family of cloud-based products to address the market segment that prefers a cloud-based solution to a self-managed solution and that there will be increasing demand for cloud-based offerings of our products. For the years ended April 30, 2024, 2023, and 2022, Elastic Cloud contributed 43%, 40%, and 35% of our total revenue, respectively.
As such, 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.
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.
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 results of operations.
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.
Subscription revenue accounts for the substantial majority of our revenue, comprising 92%, 93%, and 93% of total revenue for the years ended April 30, 2023, 2022 and 2021, respectively. 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.
Subscription revenue accounts for the substantial majority of our revenue, constituting 93%, 92%, and 93% of total revenue for the years ended April 30, 2024, 2023 and 2022, respectively. 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.
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 further reduction in usage by customers already using a consumption-based arrangement due to the uncertain macroeconomic environment, may further contribute to the variation in our revenue.
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 further reduction in usage by customers already using a consumption-based arrangement due to the uncertain macroeconomic environment.
For example, inflation rates have recently reached levels not seen in decades and may continue 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 spend and investment.
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.
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. General Risk Factors We may not benefit from our acquisition strategy.
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. 46 Table of Contents General Risk Factors We may not benefit from our acquisition strategy.
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.
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. 48 Table of Contents Item 1B.
Similarly, the United Kingdom has implemented legislation that is substantially similar to the EU GDPR where 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, all of which may be subject to change with the introduction of the Data Protection and Digital Information (DPDI) Bill in 2022.
Similarly, the United Kingdom has implemented legislation that is substantially similar to the GDPR where 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, which may be subject to change with the introduction of the Data Protection and Digital Information (“DPDI”) Bill in 2023.
If we experience an interruption in service for any reason, our cloud offerings would similarly be interrupted. The ongoing effects Russia’s invasion of Ukraine, adverse economic conditions, and increased energy prices could also disrupt the supply chain of hardware needed to maintain our third-party data center operations.
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.
Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could expose us to greater than anticipated tax liabilities.
Risks Related to Taxation Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could expose us to greater than anticipated tax liabilities.
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 and our business will be adversely affected.
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 may not be able to maintain our prices and gross profits at levels that will allow us to achieve and maintain profitability. We expect our revenue mix to vary over time, which could harm our gross margin and operating results.
We may not be able to maintain our prices and gross profits at levels that will allow us to achieve and maintain profitability. 24 Table of Contents We expect our revenue mix to vary over time, which could harm our gross margin and operating results.
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.
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.
Subject to compliance with applicable rules and regulations, 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.
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.
The economic impact and uncertainty of changes in the inflation, interest and macroeconomic environments, and Russia’s invasion of Ukraine have 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 have an adverse impact on investor confidence and employee retention.
The economic impact and uncertainty of changes in the inflation, interest and macroeconomic environments, 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 have an adverse impact on investor confidence and employee retention.
Even the perception of inadequate security or an inability to maintain security certifications 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 impact our ability to win new customers and retain existing customers.
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.
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 our customers. One example of such a self-regulatory standard is the Payment Card Industry Data Security Standard (“PCI DSS”), which relates to the processing of payment card information.
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 our customers. One example of such a self-regulatory standard is the Payment Card Industry Data Security Standard, known as PCI DSS, which relates to the processing of payment card information.
If we are unable to identify partners or negotiate favorable terms, our international growth may be limited. In addition, we have incurred and may continue to incur significant expenses in advance of generating material revenue as we attempt to establish our presence in particular international markets.
If we are unable to identify partners or negotiate favorable terms, our international growth may be limited. In addition, we have incurred and may continue to incur significant expenses before we generate material revenue as we attempt to establish our presence in particular international markets.
Risks Related to Regulatory Matters 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.
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.
Any failure, or perceived failure, by us to comply with such statements could result in potential actions by regulatory bodies or governmental entities if they are found to be unfair or misrepresentative of our actual practices resulting in increased costs, changes in our business practices, or reputational harm.
Any failure, or perceived failure, by us to comply with such statements could result in potential actions by regulatory bodies or government entities if they are found to be unfair or misrepresentative of our actual practices or inconsistent with legal requirements for such statements resulting in increased costs, changes in our business practices, or reputational harm.
In February 2021, with the release of version 7.11 of the Elastic Stack, 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.
In February 2021, with the release of version 7.11 of the Elastic Stack, 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 SSPL, at the user’s election.
The taxing authorities of the jurisdictions in which we operate may challenge 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.
The taxing authorities of some of such jurisdictions may challenge 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.
Because we recognize revenue under a consumption-based arrangement based on actual customer consumption, we do not have the same visibility into the timing of revenue recognition as we do under subscription arrangements where revenue is recognized on a predetermined schedule over the subscription term. Additionally, customers may consume our products at a different pace than we expect.
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 where revenue is recognized on a predetermined schedule over the subscription term. Moreover, customers may consume our products at a different pace than we expect.
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 business could suffer if we fail to maintain satisfactory relationships with third-party service providers on which we rely for many aspects of our business.
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 business operations and sales performance could be disrupted if we fail to maintain satisfactory relationships with third-party service providers on which we rely for many aspects of our business.
If we are unable to maintain successful relationships with our partners, our business operations, financial results and growth prospects could be adversely affected.
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.
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, or fail to deliver services to our customers, our ability to grow our business and sell our offerings may be harmed.
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.
As we continue to grow rapidly, a large percentage 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 not designed effectively.
As we continue to grow rapidly, a large percentage 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.
The DCGC applies to all Dutch companies listed on a government-recognized stock exchange, whether in the Netherlands or elsewhere, including the New York Stock Exchange (“NYSE”).
The DCGC applies to all Dutch companies listed on a government-recognized stock exchange, whether in the Netherlands or elsewhere, including the NYSE.
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, or Russia’s invasion of Ukraine, could limit our ability to grow our business and negatively affect our results of operations.
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, or the evolving conflict in Israel and Gaza and Russia’s war with Ukraine, could limit our ability to grow our business and negatively affect our results of operations.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
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 and the mix between annual and monthly contracts entered in each reporting period.
Seasonality may cause fluctuations in our sales and results of operations. 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.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe 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. Item 4. Mine Safety Disclosures. Not applicable. 48 Table of Contents PART II
Biggest changeThe 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. Item 4. Mine Safety Disclosures Not applicable. 50 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Record As of May 31, 2023 there were 66 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.
Biggest changeThe 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. Dividend Policy We have never declared or paid any cash dividends on our ordinary shares, and we do not anticipate declaring or paying cash dividends in the foreseeable future.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information for Ordinary Shares Our ordinary shares began trading on the NYSE under the symbol “ESTC” on October 5, 2018. Prior to that date, there was no public trading market for our ordinary shares.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Ordinary Shares Our ordinary shares are listed on the NYSE under the trading symbol “ESTC.” Holders of Record As of May 31, 2024 there were 58 shareholders of record of our ordinary shares.
The offering price of our ordinary shares in our initial public offering, which had a closing stock price of $70.00 on October 5, 2018, was $36.00 per share. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our ordinary shares.
Data for the S&P 500 Index and the S&P 500 Information Technology Index assume reinvestment of dividends. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our ordinary shares.
The graph assumes $100 was invested at the market close on October 5, 2018, which was our initial trading day, in our ordinary shares. Data for the S&P 500 Index and the S&P 500 Information Technology Index assume reinvestment of dividends.
Stock Performance Graph 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, 2019.
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Dividend Policy We have never declared or paid any dividends on our ordinary shares, and we do not anticipate declaring or paying dividends in the foreseeable future. Stock Performance Graph 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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended April 30, 2023 2022 2021 (in thousands) Revenue Subscription $ 984,762 $ 798,770 $ 567,339 Services 84,227 63,604 41,150 Total revenue 1,068,989 862,374 608,489 Cost of revenue (1)(2)(3) Subscription 219,306 178,204 122,513 Services 77,320 53,990 38,541 Total cost of revenue 296,626 232,194 161,054 Gross profit 772,363 630,180 447,435 Operating expenses (1)(2)(3)(4) Research and development 313,454 273,761 199,203 Sales and marketing 503,537 406,658 273,877 General and administrative 143,247 123,441 103,833 Restructuring and other related charges 31,297 — — Total operating expenses 991,535 803,860 576,913 Operating loss (1)(2)(3)(4) (219,172) (173,680) (129,478) Other income (expense), net Interest expense (25,159) (20,716) (185) Other income (expense), net 27,454 (3,393) 7,949 Loss before income taxes (216,877) (197,789) (121,714) Provision for income taxes 19,284 6,059 7,720 Net loss $ (236,161) $ (203,848) $ (129,434) (1) Includes stock-based compensation expense as follows: Year Ended April 30, 2023 2022 2021 (in thousands) Cost of revenue Subscription $ 8,308 $ 8,368 $ 7,105 Services 9,435 6,463 4,824 Research and development 80,170 59,911 35,267 Sales and marketing 68,943 45,798 31,581 General and administrative 37,183 20,654 14,903 Total stock-based compensation expense $ 204,039 $ 141,194 $ 93,680 55 Table of Contents (2) Includes employer payroll taxes on employee stock transactions as follows: Year Ended April 30, 2023 2022 2021 (in thousands) Cost of revenue Subscription $ 422 $ 681 $ 674 Services 423 712 661 Research and development 2,458 3,316 3,670 Sales and marketing 2,420 4,287 5,399 General and administrative 1,410 965 3,972 Total employer payroll tax on stock transactions $ 7,133 $ 9,961 $ 14,376 (3) Includes amortization of acquired intangible assets as follows: Year Ended April 30, 2023 2022 2021 (in thousands) Cost of revenue Subscription $ 11,781 $ 10,503 $ 8,437 Sales and marketing 4,887 5,280 5,730 Total amortization of acquired intangibles $ 16,668 $ 15,783 $ 14,167 (4) Includes acquisition-related expenses as follows: Year Ended April 30, 2023 2022 2021 (in thousands) Research and development $ 5,875 $ 6,104 $ — General and administrative 103 1,528 — Total acquisition-related expenses $ 5,978 $ 7,632 $ — 56 Table of Contents The following table sets forth selected consolidated statements of operations data for each of the periods indicated as a percentage of total revenue: Year Ended April 30, 2023 2022 2021 Revenue Subscription 92 % 93 % 93 % Services 8 % 7 % 7 % Total revenue 100 % 100 % 100 % Cost of revenue (1)(2)(3) Subscription 21 % 21 % 20 % Services 7 % 6 % 6 % Total cost of revenue 28 % 27 % 26 % Gross profit 72 % 73 % 74 % Operating expenses (1)(2)(3)(4) Research and development 29 % 32 % 33 % Sales and marketing 47 % 47 % 45 % General and administrative 14 % 14 % 17 % Restructuring and other related charges 3 % — % — % Total operating expenses 93 % 93 % 95 % Operating loss (1)(2)(3)(4) (21) % (20) % (21) % Other income (expense), net Interest expense (2) % (3) % — % Other income (expense), net 2 % — % 1 % Loss before income taxes (21) % (23) % (20) % Provision for income taxes 1 % 1 % 1 % Net loss (22) % (24) % (21) % (1) Includes stock-based compensation expense as follows: Year Ended April 30, 2023 2022 2021 Cost of revenue Subscription 1 % 1 % 1 % Services 1 % 1 % 1 % Research and development 8 % 7 % 6 % Sales and marketing 6 % 5 % 5 % General and administrative 3 % 2 % 2 % Total stock-based compensation expense 19 % 16 % 15 % 57 Table of Contents (2) Includes employer payroll taxes on employee stock transactions as follows: Year Ended April 30, 2023 2022 2021 Cost of revenue Subscription — % — % — % Services — % — % — % Research and development 1 % — % — % Sales and marketing — % 1 % 1 % General and administrative — % — % 1 % Total employer payroll tax on stock transactions 1 % 1 % 2 % (3) Includes amortization of acquired intangible assets as follows: Year Ended April 30, 2023 2022 2021 Cost of revenue Subscription 1 % 1 % 1 % Sales and marketing 1 % 1 % 1 % Total amortization of acquired intangibles 2 % 2 % 2 % (4) Includes acquisition-related expenses as follows: Year Ended April 30, 2023 2022 2021 Research and development 1 % 1 % — % Total acquisition-related expenses 1 % 1 % — % Comparison of Fiscal Years Ended April 30, 2023 and 2022 Revenue Year Ended April 30, Change 2023 2022 $ % (in thousands) Revenue Subscription $ 984,762 $ 798,770 $ 185,992 23 % Services 84,227 63,604 20,623 32 % Total revenue $ 1,068,989 $ 862,374 $ 206,615 24 % Subscription revenue increased by $186.0 million, or 23%, for the year ended April 30, 2023 compared to the prior year.
Biggest changeYear Ended April 30, 2024 2023 2022 (in thousands) Revenue Subscription $ 1,176,606 $ 984,762 $ 798,770 Services 90,715 84,227 63,604 Total revenue 1,267,321 1,068,989 862,374 Cost of revenue (1)(2) Subscription 246,285 219,306 178,204 Services 83,794 77,320 53,990 Total cost of revenue 330,079 296,626 232,194 Gross profit 937,242 772,363 630,180 Operating expenses (1)(2)(3) Research and development 341,951 313,454 273,761 Sales and marketing 559,648 503,537 406,658 General and administrative 160,628 143,247 123,441 Restructuring and other related charges 4,917 31,297 — Total operating expenses 1,067,144 991,535 803,860 Operating loss (1)(2)(3) (129,902) (219,172) (173,680) Other income (expense), net Interest expense (26,132) (25,159) (20,716) Other income (expense), net 33,278 27,454 (3,393) Loss before income taxes (122,756) (216,877) (197,789) (Benefit from) provision for income taxes (184,476) 19,284 6,059 Net income (loss) $ 61,720 $ (236,161) $ (203,848) (1) Includes stock-based compensation expense and related employer taxes as follows: Year Ended April 30, 2024 2023 2022 (in thousands) Cost of revenue Subscription $ 9,378 $ 8,730 $ 9,049 Services 13,365 9,858 7,175 Research and development 98,174 82,628 63,227 Sales and marketing 82,023 71,363 50,085 General and administrative 47,519 38,593 21,619 Total stock-based compensation expense and related employer taxes $ 250,459 $ 211,172 $ 151,155 (2) Includes amortization of acquired intangible assets as follows: Year Ended April 30, 2024 2023 2022 (in thousands) Cost of revenue Subscription $ 12,353 $ 11,781 $ 10,503 Sales and marketing 2,143 4,887 5,280 Total amortization of acquired intangibles $ 14,496 $ 16,668 $ 15,783 57 Table of Contents (3) Includes acquisition-related expenses as follows: Year Ended April 30, 2024 2023 2022 (in thousands) Research and development $ 1,385 $ 5,875 $ 6,104 General and administrative 1,065 103 1,528 Total acquisition-related expenses $ 2,450 $ 5,978 $ 7,632 The following table sets forth selected consolidated statements of operations data for each of the periods indicated as a percentage of total revenue: Year Ended April 30, 2024 2023 2022 Revenue Subscription 93 % 92 % 93 % Services 7 % 8 % 7 % Total revenue 100 % 100 % 100 % Cost of revenue (1)(2) Subscription 19 % 21 % 21 % Services 7 % 7 % 6 % Total cost of revenue 26 % 28 % 27 % Gross profit 74 % 72 % 73 % Operating expenses (1)(2)(3) Research and development 27 % 29 % 32 % Sales and marketing 44 % 47 % 47 % General and administrative 13 % 14 % 14 % Restructuring and other related charges — % 3 % — % Total operating expenses 84 % 93 % 93 % Operating loss (1)(2)(3) (10) % (21) % (20) % Other income (expense), net Interest expense (2) % (2) % (3) % Other income (expense), net 3 % 2 % — % Loss before income taxes (9) % (21) % (23) % (Benefit from) provision for income taxes (14) % 1 % 1 % Net income (loss) 5 % (22) % (24) % (1) Includes stock-based compensation expense and related employer taxes as follows: Year Ended April 30, 2024 2023 2022 Cost of revenue Subscription 1 % 1 % 1 % Services 1 % 1 % 1 % Research and development 8 % 9 % 7 % Sales and marketing 6 % 6 % 6 % General and administrative 4 % 3 % 2 % Total stock-based compensation expense and related employer taxes 20 % 20 % 17 % 58 Table of Contents (2) Includes amortization of acquired intangible assets as follows: Year Ended April 30, 2024 2023 2022 Cost of revenue Subscription 1 % 1 % 1 % Sales and marketing — % 1 % 1 % Total amortization of acquired intangibles 1 % 2 % 2 % (3) Includes acquisition-related expenses as follows: Year Ended April 30, 2024 2023 2022 Research and development — % 1 % 1 % General and administrative — % — % — % Total acquisition-related expenses — % 1 % 1 % Comparison of Fiscal Years Ended April 30, 2024 and 2023 Revenue Year Ended April 30, Change 2024 2023 $ % (in thousands) Revenue Subscription $ 1,176,606 $ 984,762 $ 191,844 19 % Services 90,715 84,227 6,488 8 % Total revenue $ 1,267,321 $ 1,068,989 $ 198,332 19 % Subscription revenue increased by $191.8 million, or 19%, for the year ended April 30, 2024 compared to the prior year.
Net Cash Provided by Financing Activities Net cash provided by financing activities of $17.5 million during the year ended April 30, 2023 was due to the proceeds from stock option exercises.
Net cash provided by financing activities of $17.5 million during the year ended April 30, 2023 was due to the proceeds from stock option exercises.
It is a distributed, real-time search and analytics engine and data store for all types of data, including textual, numerical, geospatial, structured, and unstructured. We make our platform available as a hosted, managed service across major cloud providers. Customers can also deploy our platform across hybrid clouds, public or private clouds, and multi-cloud environments.
It is a distributed, real-time vector search and analytics engine and data store for all types of data, including textual, numerical, geospatial, structured, and unstructured. We make our platform available as a hosted, managed service across major cloud providers. Customers can also deploy our platform across hybrid clouds, public or private clouds, and multi-cloud environments.
See “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of additional risks. Key Factors Affecting our Performance We believe that the growth and future success of our business depends on many factors, including those described below.
See “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of risks. Key Factors Affecting our Performance We believe that the growth and future success of our business depends on many factors, including those described below.
Personnel and related costs, or personnel 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. Services.
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. Services.
Our strategy consists of providing access to source available software, on both a paid and free 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.
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.
However, we expect that an increase in the relative contribution of Elastic Cloud to our business will have a modest adverse impact on our gross margin as a result of the associated third-party hosting costs. Growing the Elastic community.
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. Growing the Elastic community.
Research and development expense primarily consists of personnel 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.
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.
Contractual Obligations and Commitments Our principal commitments consist of our purchase obligations under non-cancelable agreements for cloud hosting, subscription software, and sales and marketing, future non-cancelable minimum rental payments under operating leases for our offices, and interest payments due on our Senior Notes.
Contractual Obligations and Commitments Our principal commitments primarily consist of our purchase obligations under non-cancelable agreements for cloud hosting, subscription software, and sales and marketing, future non-cancelable minimum rental payments under operating leases for our offices, and interest payments due on our Senior Notes.
This section of our Annual Report on Form 10-K discusses our financial condition and results of operations for the years ended April 30, 2023 and 2022 and year-to-year comparisons between the years ended April 30, 2023 and 2022.
This section of our Annual Report on Form 10-K discusses our financial condition and results of operations for the years ended April 30, 2024, 2023, and 2022, and year-to-year comparisons between the years ended April 30, 2024 and 2023.
All of these actions help us build a powerful commercial business model that we believe is optimized for product-led growth. 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.
All of these actions help us build a powerful commercial business model that we believe is optimized for product-driven growth. 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.
We focus some of our direct sales efforts on encouraging these types of expansion within our customer base. 52 Table of Contents 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.
We focus some of our direct sales efforts on encouraging these types of expansion within our customer base. 54 Table of Contents 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.
These outflows were partially offset by a $95.6 million increase in deferred revenue, a net increase of $18.9 million in accounts payable, accrued expenses and accrued compensation and benefits, and a decrease of $9.8 million in prepaid expenses and other assets.
These outflows were partially offset by inflows from a $95.6 million increase in deferred revenue, a net increase of $18.9 million in accounts payable, accrued expenses and accrued compensation and benefits, and a decrease of $9.8 million in prepaid expenses and other assets.
Our platform also includes the ESRE, which combines advanced AI with Elastic’s text search to give developers a full suite of sophisticated retrieval algorithms and the ability to integrate with large language models. The Elastic Stack can be used by developers to power a variety of use cases.
Our platform also includes the ESRE, which combines advanced AI with Elastic’s text search to give developers a full suite of sophisticated retrieval algorithms and the ability to integrate with large language models. The Elastic Stack can be used by developers and IT decision makers to power a variety of use cases.
We sell subscriptions in various currencies, with the majority of our subscriptions contracted in US 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.
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.
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.
Purchase orders issued in the ordinary course of business are also excluded, as our purchase orders represent authorizations to purchase rather than binding agreements. 63 Table of Contents 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.
The net cash outflow from changes in operating assets and liabilities was the result of an increase in deferred contract acquisition costs of $102.0 million as our sales commissions increased due to increased business volume, an increase of $46.4 million in accounts receivable, and a decrease of $11.4 million in operating lease liabilities.
The net cash outflow from changes in operating assets and liabilities resulted from an increase in deferred contract acquisition costs of $102.0 million as our sales commissions increased due to increased business volume, an increase of $46.4 million in accounts receivable, and a decrease of $11.4 million in operating lease liabilities.
A discussion of our financial condition and results of operations for the year ended April 30, 2021 and year-to-year comparisons between the years ended April 30, 2022 and 2021 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, 2022, filed with the SEC on June 21, 2022.
A discussion of our financial condition and results of operations for the year ended April 30, 2022 and year-to-year comparisons between the years ended April 30, 2023 and 2022 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, 2023, filed with the SEC on June 16, 2023.
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.
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. 64 Table of Contents Our sales commissions plan incorporates different commission rates for contracts with new customers and incremental sales to existing customers, and for subsequent subscription renewals.
We believe that our existing cash, cash equivalents, and marketable securities 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.
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.
Subscriptions provide the right to use paid proprietary software features and access to support for our paid and unpaid software. Our subscription agreements are both term-based and consumption-based, with the vast majority of Elastic Cloud subscriptions being consumption-based.
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.
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 about the Senior Notes. 62 Table of Contents As of April 30, 2023, we had $2.3 million in letters of credit outstanding in favor of certain landlords for office space.
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 about the Senior Notes. As of April 30, 2024, we had $2.3 million in letters of credit outstanding in favor of certain landlords for office space.
Our business model is based primarily on a combination of a paid Elastic-managed hosted service offering and paid and free proprietary self-managed software. Our paid offerings for our platform are sold via subscription through resource-based pricing, and all customers and users have access to all solutions.
Our business model is based primarily on a combination of a paid Elastic-managed hosted service offering and paid and free proprietary self-managed software. 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.
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 evangelize our technology within their organizations. This reduces the time required for our sales force to educate potential leads on our solutions.
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.
Subscriptions accounted for 92%, 93%, and 93% of total revenue for the years ended April 30, 2023, 2022, and 2021, respectively. We also generate revenue from consulting and training services. 50 Table of Contents We make it easy for users to begin using our products in order to drive rapid adoption.
Subscriptions accounted for 93% and 92% of total revenue for the years ended April 30, 2024 and 2023, respectively. We also generate revenue from consulting and training services. 52 Table of Contents We make it easy for users to begin using our products in order to drive rapid adoption.
In July 2021, we issued long-term debt of $575.0 million, and we may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.
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. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.
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 the Elastic Stack subsequently become paying subscribers of Elastic Cloud. For the years ended April 30, 2023, 2022, and 2021, Elastic Cloud contributed 40%, 35%, and 27% of our total revenue, respectively.
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 the Elastic Stack subsequently become paying subscribers of Elastic Cloud. For the years ended April 30, 2024 and 2023, Elastic Cloud contributed 43% and 40% of our total revenue, respectively.
In July 2021, we issued $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029 in a private placement. Interest on the Senior Notes is payable semi-annually in arrears on January 15 and July 15 of each year.
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.
In order to capitalize on our opportunity, we intend to make further investments to keep the Elastic Stack 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 U.S. and internationally.
To capitalize on our opportunity, we intend to make further investments to keep the Elastic Stack 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.
The number of customers who represented greater than $100,000 in annual contract value (“ACV”) was over 1,160, over 960, and over 730 as of April 30, 2023, 2022, and 2021 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.
The number of customers who represented greater than $100,000 in annual contract value (“ACV”) was over 1,330 and over 1,160 as of April 30, 2024 and 2023, 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.
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, but can significantly grow their spending.
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.
The Net Expansion Rate includes the dollar-weighted value of our subscriptions or usage that expand, renew, contract, or attrit. For instance, if each customer had a one-year subscription and renewed its subscription for the exact same amount, then the Net Expansion Rate would be 100%.
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 117% as of April 30, 2023.
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 110% as of April 30, 2024.
We have experienced and, if economic conditions continue to decline, we may continue to experience longer and more unpredictable sales cycles, increased scrutiny of deals, slowing consumption and overall customer expenditures, and the impacts of changing foreign exchange rates with a strengthening or weakening U.S. dollar.
We have experienced and, if economic conditions do not reflect a sustained recovery, we may continue to experience longer and more unpredictable sales cycles, increased scrutiny of deals, slowing consumption and overall customer expenditures, and the impacts of changing foreign exchange rates with a strengthening or weakening U.S. dollar.
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. Services. Services is composed of consulting services as well as public and private training.
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. Services.
The investments are likely to occur in advance of the anticipated benefits resulting from such investments, such that they may adversely affect our operating results in the near term. Expanding within our current customer base. Our future growth and profitability depend on our ability to drive additional sales to existing customers.
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. Expanding within our current customer base. Our future growth and profitability depend on our ability to drive additional sales to existing customers.
Current Economic Conditions Recent and current macroeconomic events, including inflation, slower economic growth, political unrest, and concerns about the stability of banks, continue to evolve and negatively impact worldwide economic activity. Governmental and corporate responses to these factors including rising interest rates, unpredictable and decreased spending, and layoffs, have added to the highly volatile macroeconomic landscape.
Current Economic Conditions Macroeconomic events, including continued inflation, slower economic growth, and political unrest, continue to evolve and negatively impact worldwide economic activity. Governmental and corporate responses to these factors, including rising interest rates, unpredictable and decreased spending, and layoffs, have added to the highly volatile macroeconomic landscape.
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 2,886 employees as of April 30, 2023.
With a distributed team spanning over 35 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 3,187 employees as of April 30, 2024.
We have historically incurred, and expect to continue to incur, operating losses and may generate negative cash flows from operations on an annual basis for the foreseeable future due to the investments we intend to make as described above, and as a result, we may require additional capital resources to execute on our strategic initiatives to grow our business.
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 and, as a result, we may require additional capital resources to execute on our strategic initiatives to grow our business.
Revenue for services is recognized as these services are delivered. Cost of Revenue Subscription. 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.
Services is composed of implementation and other consulting services as well as public and private training. Revenue for services is recognized as these services are delivered. Cost of Revenue Subscription. 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.
We expect we will continue to incur net losses for the foreseeable future. There can be no assurance whether, or when, we may become profitable. We continue to make substantial investments in developing the Elastic Stack and expanding our global sales and marketing footprint.
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 the Elastic Stack and expanding our global sales and marketing footprint.
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, 2023, we had approximately 20,200 customers compared to over 18,600 customers and over 15,000 customers as of April 30, 2022 and 2021, respectively. The majority of our new customers use Elastic Cloud.
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, 2024, we had approximately 21,000 customers compared to approximately 20,200 customers as of April 30, 2023. The majority of our new customers use Elastic Cloud.
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 initial conversion of users into customers and additional sales to existing customers.
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.
We have experienced significant growth, with revenue increasing to $1.1 billion for the year ended April 30, 2023 from $862.4 million for the year ended April 30, 2022 and $608.5 million for the year ended April 30, 2021, representing year-over-year growth of 24% for the year ended April 30, 2023 and 42% for the year ended April 30, 2022.
We have experienced significant growth, with revenue increasing to $1.267 billion for the year ended April 30, 2024 from $1.069 billion for the year ended April 30, 2023 and $862.4 million for the year ended April 30, 2022, representing year-over-year growth of 19% for the year ended April 30, 2024 and 24% for the year ended April 30, 2023.
Net Cash Used in Investing Activities Net cash used in investing activities of $273.0 million during the year ended April 30, 2023 was primarily due to the purchase of marketable securities of $270.3 million . In addition, we incurred $2.7 million of capital expenditures during the year.
These expenditures were offset by cash provided by maturities and redemptions of marketable securities of $271.4 million. Net cash used in investing activities of $273.0 million during the year ended April 30, 2023 was primarily due to the purchase of marketable securities of $270.3 million. In addition, we incurred $2.7 million of capital expenditures during the year.
This increase was primarily driven by continued adoption of Elastic Cloud which grew 42% over the same period and increased to 40% of total revenue for the year ended April 30, 2023 from 35% for the year ended April 30, 2022.
This increase was primarily driven by continued adoption of Elastic Cloud, which grew 29% over the prior year and increased to 43% of total revenue for the year ended April 30, 2024 from 40% for the year ended April 30, 2023.
For users who download our software, we make some of the features of our software available for free, allowing us to engage with a broad community of developers and practitioners and introduce them to the value of the Elastic Stack.
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 the Elastic Stack.
Restructuring and other related charges Year Ended April 30, Change 2023 2022 $ % (in thousands) Restructuring and other related charges $ 31,297 $ — $ 31,297 100 % For the year ended April 30, 2023, we recorded restructuring and other related charges comprising employee-related severance and other termination benefits of approximately $23.3 million, facilities-related charges of approximately $6.2 million, and $1.8 million of other restructuring-related charges while we had no such charges in the prior year.
For the year ended April 30, 2023, we recorded restructuring and other related charges comprising employee-related severance and other termination benefits of approximately $23.3 million, facilities-related charges of approximately $6.2 million, and $1.8 million of other restructuring-related charges.
Our effective tax rate was (8.9)% and (3.1%) of our net loss before taxes for the years ended April 30, 2023 and 2022, respectively.
Our effective tax rate was 150% and (9)% of our loss before income taxes for the years ended April 30, 2024 and 2023, respectively.
Operating Expenses Research and development Year Ended April 30, Change 2023 2022 $ % (in thousands) Research and development $ 313,454 $ 273,761 $ 39,693 14 % Research and development expense increased by $39.7 million, or 14%, for the year ended April 30, 2023 compared to the prior year as we continued to invest in the development of new and existing offerings.
Operating Expenses Research and development Year Ended April 30, Change 2024 2023 $ % (in thousands) Research and development $ 341,951 $ 313,454 $ 28,497 9 % Research and development expense increased by $28.5 million, or 9%, for the year ended April 30, 2024 compared to the prior year as we continued to invest in the development of new and existing offerings.
Overview Elastic is a data analytics company built on the power of search. Our platform, which is available as both a hosted, managed service across public clouds as well as self-managed software, allows our customers to find insights and drive AI and machine learning use cases from large amounts of data.
Our platform, available as both a hosted, managed service across public clouds as well as 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-powered solutions – Search, Observability, and Security – that are built on the platform.
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 adversely impact our gross margin as a result of the associated hosting costs. 53 Table of Contents Operating Expenses Research and development.
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. 55 Table of Contents Operating Expenses Research and development.
Sales and marketing expense primarily consists of personnel 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 salesforce and increase our investments in marketing resources.
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.
The following table summarizes our cash flows for the periods presented: Year Ended April 30, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 35,662 $ 5,672 $ 22,545 Net cash used in investing activities $ (272,952) $ (127,271) $ (1,518) Net cash provided by financing activities $ 17,471 $ 602,127 $ 77,258 61 Table of Contents Net Cash Provided By Operating Activities Net cash provided by operating activities during the year ended April 30, 2023 was $35.7 million, which resulted from adjustments for non-cash charges of $307.2 million, mostly offset by a net loss of $236.2 million and net cash outflow of $35.4 million from changes in operating assets and liabilities.
The following table summarizes our cash flows for the periods presented: Year Ended April 30, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 148,762 $ 35,662 $ 5,672 Net cash used in investing activities $ (287,960) $ (272,952) $ (127,271) Net cash provided by financing activities $ 40,054 $ 17,471 $ 602,127 Net Cash Provided by Operating Activities 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.
As of April 30, 2023, we had purchase commitments of $542.8 million related to cloud hosting services, future minimum lease payment commitments of $28.4 million, and purchase commitments of $43.8 million related to other contracts.
As of April 30, 2024, we had purchase commitments of $424.6 million related to cloud hosting services, future minimum lease payment commitments of $26.7 million, and purchase commitments of $47.8 million related to other contracts.
The net cash outflow from changes in operating assets and liabilities was the result of an increase of $62.2 million in accounts receivable due to higher billings and timing of collections from our customers, an increase in deferred contract acquisition costs of $96.8 million as our sales commissions increased due to increased business volume, a decrease of $8.9 million in operating lease liabilities, and an increase of $2.6 million in prepaid expenses and other assets.
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, a decrease of $12.4 million in operating lease liabilities, and an increase of $1.0 million in prepaid expenses and other assets .
We expect that the implementation of the workforce reductions and facilities cost optimization will be substantially completed by the end of the first quarter of fiscal 2024. 51 Table of Contents See Note 16 “Restructuring and other related charges” in our accompanying Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information about this plan.
The execution of this restructuring plan was completed during the first quarter of fiscal 2024. 53 Table of Contents See Note 16 “Restructuring and other related charges” in our accompanying Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.
Primarily consists of interest income, gains and losses from transactions denominated in a currency other than the functional currency, and miscellaneous other non-operating gains and losses. Provision for Income Taxes Provision for income taxes consists primarily of income taxes related to the Netherlands, U.S. federal and state, and foreign jurisdictions in which we conduct business.
(Benefit from) Provision for Income Taxes (Benefit from) provision for income taxes consists primarily of income taxes related to the Netherlands, U.S. federal and state, and foreign jurisdictions in which we conduct business.
As digital transformation drives mission critical business functions to the cloud, we believe that every company will need to build around a search-based relevance engine to find the answers that matter, from all of their data, in real-time, and at scale.
As digital transformation drives 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.
General and administrative Year Ended April 30, Change 2023 2022 $ % (in thousands) General and administrative $ 143,247 $ 123,441 $ 19,806 16 % General and administrative expense increased by $19.8 million, or 16%, for the year ended April 30, 2023 compared to the prior year.
General and administrative Year Ended April 30, Change 2024 2023 $ % (in thousands) General and administrative $ 160,628 $ 143,247 $ 17,381 12 % General and administrative expense increased by $17.4 million, or 12%, for the year ended April 30, 2024 compared to the prior year.
Our net cash provided by operating activities was $35.7 million, $5.7 million, and $22.5 million for the years ended April 30, 2023, 2022 and 2021, respectively. We have experienced losses in each year since our incorporation and as of April 30, 2023, had an accumulated deficit of $1.1 billion.
Our net cash provided by operating activities was $148.8 million, $35.7 million, and $5.7 million for the years ended April 30, 2024, 2023 and 2022, respectively. We had an accumulated deficit of $991.6 million as of April 30, 2024 due to losses in all prior years.
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, as well as one-time tax benefits or charges. 54 Table of Contents Results of Operations The following tables set forth our results of operations for the periods presented in dollars and as a percentage of our total revenue.
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 or charges, including in fiscal 2024 an income tax benefit related to a release of the valuation allowance against U.S. federal and certain states’ deferred tax assets. 56 Table of Contents Results of Operations The following table sets forth our results of operations for the periods presented.
We also consider if 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 a relative SSP. 63 Table of Contents Deferred Contract Acquisition Costs 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 also consider if 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 a relative SSP.
On November 30, 2022, we announced and began implementing a plan to align our investments more closely with our strategic priorities by reducing our workforce by approximately 13% and implementing certain facilities-related cost optimization actions. We incurred $31.3 million in restructuring and other related charges during the year ended April 30, 2023.
The execution of this plan is expected to be substantially completed during the first quarter of fiscal 2025. On November 30, 2022, we announced and began implementing a plan to align our investments more closely with our strategic priorities by reducing our workforce by approximately 13% and implementing certain facilities-related cost optimization actions.
These increases were partially offset by a $9.2 million decrease in legal and professional fees and a $0.8 million decrease in consulting expense. The increase in personnel and related costs includes an increase of $16.5 million in stock-based compensation expense, an increase of $9.1 million in salaries and related taxes, and an increase of $2.1 million in employee benefits expense.
The increase in personnel and related costs included increases of $13.4 million in stock-based compensation, $10.7 million in salaries and related taxes, and $2.0 million in employee benefits expense. These increases were offset in part by a decrease in acquisition-related compensation of $4.4 million.
Liquidity and Capital Resources As of April 30, 2023, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $915.2 million. Our cash and 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.
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 $991.6 million as of April 30, 2024.
Sales and marketing Year Ended April 30, Change 2023 2022 $ % (in thousands) Sales and marketing $ 503,537 $ 406,658 $ 96,879 24 % 59 Table of Contents Sales and marketing expense increased by $96.9 million, or 24%, for the year ended April 30, 2023 compared to the prior year.
Sales and marketing Year Ended April 30, Change 2024 2023 $ % (in thousands) Sales and marketing $ 559,648 $ 503,537 $ 56,111 11 % Sales and marketing expense increased by $56.1 million, or 11%, for the year ended April 30, 2024 compared to the prior year.
Our platform is built on the Elastic Stack, a powerful set of software products that ingest data from any source, in any format, and perform search, analysis, and visualization of that data.
We help organizations, their employees, and their customers find what they need faster, while keeping mission-critical applications running smoothly, and protecting against cyber threats. Our platform is built on the Elastic Stack, a powerful set of software products that ingest data from any source, in any format, and perform search, analysis, and visualization of that data.
The increase in personnel and related costs includes an increase of $20.3 million in stock-based compensation, an increase of $6.9 million in salaries and related taxes, and an increase of $2.8 million in employee benefits expense.
The increase in personnel and related costs included increases of $14.5 million in salaries and related taxes, $9.6 million in commissions expense, and $9.1 million in stock-based compensation.
We capitalize sales commissions and associated payroll taxes paid to internal sales personnel that are related to the acquisition of customer contracts. Sales commissions costs are amortized over the expected benefit period. General and administrative. General and administrative expense primarily consists of personnel costs for our management, finance, legal, human resources, and other administrative employees.
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.
Services revenue increased by $20.6 million, or 32%, for the year ended April 30, 2023 compared to the prior year.
Services revenue increased by $6.5 million, or 8%, for the year ended April 30, 2024 compared to the prior year. The increase in services revenue was attributable to increased adoption of our services offerings.
Other income (expense), net Year Ended April 30, Change 2023 2022 $ % (in thousands) Other income (expense), net $ 27,454 $ (3,393) $ 30,847 (909) % Other income, net was $27.5 million for the year ended April 30, 2023 compared to Other expense, net of $3.4 million for the prior year.
Other income, net Year Ended April 30, Change 2024 2023 $ % (in thousands) Other income, net $ 33,278 $ 27,454 $ 5,824 21 % Other income, net increased by $5.8 million to $33.3 million for the year ended April 30, 2024 from $27.5 million for the prior year.
Non-cash charges primarily consisted of $140.6 million for stock-based compensation expense, $60.7 million for amortization of deferred contract acquisition costs, $19.7 million of depreciation and intangible asset amortization expense, $8.6 million in non-cash operating lease costs, net foreign currency transaction loss of $2.0 million, amortization of debt issuance costs of $0.8 million, and $0.1 million of other expenses which were partially offset by an increase of $2.4 million in deferred tax assets.
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 in non-cash operating lease costs, $1.9 million from foreign currency transaction loss, and $1.1 million for amortization of debt issuance costs, the effects of which were partially offset by $217.2 million in deferred income taxes primarily related to the release of a valuation allowance, net and $8.8 million from amortization of premium and accretion of discount on marketable securities, net .
This increase was primarily due to an increase of $15.5 million in personnel and related costs, including increases of $10.5 million in salaries and related taxes, $3.0 million in stock-based compensation, and $1.7 million in employee benefits expense driven by an increase in headcount in our services organization.
This increase was primarily due to an increase of $7.2 million in personnel and related costs. These costs were partially offset by decreases of $1.1 million in training and facility costs. The increase in personnel and related costs included increases of $4.0 million in salaries and related taxes and $3.1 million in stock-based compensation.
We continue to closely monitor the macroeconomic environment and its effects on our business and on global economic activity, including customer spending behavior.
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.
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.
General and administrative. 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.
Net cash used in investing activities of $127.3 million during the year ended April 30, 2022 was primarily due to cash used in acquisitions of $119.9 million, capitalization of $4.9 million in internal-use software costs, and $2.5 million of capital expenditures during the year.
Net Cash Used in Investing Activities Net cash used in investing activities of $288.0 million during the year ended April 30, 2024 was primarily due to the purchase of marketable securities of $536.8 million, business acquisitions, net of cash acquired, of $19.1 million, and capital expenditures of $3.5 million .
Net cash provided by operating activities during the year ended April 30, 2022 was $5.7 million, which resulted from a net loss of $203.8 million adjusted for non-cash charges of $230.2 million and net cash outflow of $20.6 million from changes in operating assets and liabilities.
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. 62 Table of Contents Net cash provided by operating activities during the year ended April 30, 2023 was $35.7 million, which resulted from adjustments for non-cash charges of $307.2 million, mostly offset by a net loss of $236.2 million and net cash outflow of $35.4 million from changes in operating assets and liabilities.
Net cash provided by financing activities of $602.1 million during the year ended April 30, 2022 was due to the proceeds of $575.0 million from the issuance of long-term debt and $36.4 million of proceeds from stock option exercises, partially offset by $9.3 million payments of debt issuance costs.
Net Cash Provided by Financing Activities Net cash provided by financing activities of $40.1 million during the year ended April 30, 2024 was due to the proceeds from stock option exercises and purchases under our employee stock purchase plan.
Other Income (Expense), Net Interest expense Year Ended April 30, Change 2023 2022 $ % (in thousands) Interest expense $ (25,159) $ (20,716) $ (4,443) 21 % Interest expense increased by $4.4 million, or 21%, for the year ended April 30, 2023 compared to the prior year.
Other Income, Net Interest expense Year Ended April 30, Change 2024 2023 $ % (in thousands) Interest expense $ (26,132) $ (25,159) $ (973) 4 % Interest expense primarily related to interest on our Senior Notes and remained relatively flat for the year ended April 30, 2024 compared to the prior year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+1 added−1 removed3 unchanged
Biggest changeAlthough 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. 64 Table of Contents We have experienced and will continue to experience fluctuations in net loss 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.
Biggest changeWe 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.
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 income (loss).
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 should become more significant.
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.
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. Foreign Currency Risk Our revenue and expenses are primarily denominated in U.S. dollars, and to a lesser extent the Euro, British Pound Sterling, and other currencies.
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. 65 Table of Contents Foreign Currency Risk Our revenue and expenses are primarily denominated in U.S. dollars, and to a lesser extent the Euro, British Pound Sterling, and other currencies.
In July 2021, we issued $575.0 million aggregate principal amount of 4.125% Senior Notes due 2029 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.
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.
A 10% increase or decrease in exchange rates as of such date would have had an impact of approximately $19.3 million on our cash, cash equivalents, restricted cash, and marketable securities balances. 65 Table of Contents
A 10% increase or decrease in exchange rates as of such date would have had an impact of approximately $10.9 million on our cash, cash equivalents, restricted cash, and marketable securities balances. 66 Table of Contents
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.
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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We have operations both within the United States and internationally, and we are exposed to interest rate risk and foreign currency risk in the ordinary course of our business. Interest Rate Risk We had cash, cash equivalents, restricted cash, and marketable securities totaling $917.7 million as of April 30, 2023.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We have operations both within the United States and internationally, and we are exposed to interest rate risk and foreign currency risk in the ordinary course of our business. Interest Rate Risk We had cash, cash equivalents, restricted cash, and marketable securities totaling $1.087 billion as of April 30, 2024.
Our cash, cash equivalents, and restricted cash are held in cash deposits and money market funds. 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.
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.
As a component of other income, net, we recognized a foreign currency transaction loss of $0.4 million and $3.6 million for the years ended April 30, 2023 and 2022, respectively, and a foreign currency transaction gain of $7.7 million for the year ended April 30, 2021.
As a component of other income, net, we recognized foreign currency transaction losses of $3.4 million, $0.4 million, and $3.6 million for the years ended April 30, 2024, 2023, and 2022, respectively. As of April 30, 2024, our cash, cash equivalents, restricted cash, and marketable securities were primarily denominated in U.S. dollars, Euros, and British Pound Sterling.
Removed
As of April 30, 2023, our cash, cash equivalents, restricted cash, and marketable securities were primarily denominated in U.S. dollars, Euros, and British Pound Sterling.
Added
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.

Other ESTC 10-K year-over-year comparisons