Elastic N.V. Swings to $7.8M Profit in Q3 FY2026 as Revenue Climbs 18%

Elastic N.V. (NYSE: ESTC), a search and data analytics software company, reported net income of $7.8 million for the three months ending January 31, 2026, swinging from a net loss of $17.1 million in the same quarter a year earlier. The company posted diluted earnings per share of $0.07, compared to a loss of $0.16 per share in the prior-year period. Read more earnings reports.

Total revenue reached $449.9 million for the quarter, up 18% from $382.1 million a year ago. Subscription revenue, which accounts for the bulk of the company's business, climbed 19% to $425.7 million from $358.2 million. Services revenue edged up slightly to $24.2 million from $23.9 million.

For the nine months ending January 31, 2026, Elastic reported a net loss of $68.1 million, narrowing from a loss of $91.7 million in the year-ago period. Nine-month revenue totaled $1.29 billion, up 18% from $1.09 billion.

Operating Performance

Gross profit for the quarter was $343.4 million, representing a 76.3% margin, compared to $284.9 million and a 74.6% margin a year earlier. Operating income turned positive at $611,000, versus an operating loss of $4.6 million in the prior-year quarter.

Cost of subscription revenue increased to $81.4 million from $72.2 million, while cost of services revenue rose to $25.1 million from $24.9 million. Total cost of revenue was $106.4 million, up from $97.2 million.

Operating Expenses

Research and development spending climbed 22% to $114.4 million from $93.6 million. Sales and marketing expenses rose 15% to $176.8 million from $153.7 million. General and administrative costs increased to $51.6 million from $42.2 million.

For the nine-month period, total operating expenses reached $1.00 billion, up from $855.7 million in the prior year. The company reported an operating loss of $17.1 million for the nine months, compared to a loss of $42.9 million a year earlier.

Balance Sheet and Cash Flow

Cash and cash equivalents stood at $737.2 million as of January 31, 2026, up from $727.5 million at April 30, 2025. Marketable securities declined to $510.8 million from $669.7 million. Total current assets were $1.79 billion, down from $1.93 billion.

The company held long-term debt of $570.6 million as of January 31, 2026, versus $569.7 million nine months earlier. Deferred revenue, a key indicator of prepaid contracts, totaled $763.9 million in current liabilities, down from $802.1 million at the start of the fiscal year.

Cash provided by operating activities for the nine months was $174.2 million, compared to $179.2 million in the year-ago period. Free cash flow after property and equipment purchases was approximately $172.0 million.

Share Repurchases

Elastic repurchased 3.8 million shares for $300.1 million during the nine months ending January 31, 2026, compared to no repurchases in the prior year. The company's share count declined to 104.1 million outstanding shares from 105.5 million at April 30, 2025.

Treasury stock increased to $300.4 million from $369,000, reflecting the buyback activity. Total shareholders' equity declined to $791.0 million from $927.2 million at the start of the fiscal year.

Tax Position

The company recorded a tax benefit of $1.6 million for the quarter ending January 31, 2026, compared to a tax provision of $21.1 million in the prior-year quarter. For the nine-month period, the provision for income taxes was $75.6 million, up from $64.9 million.

Key Financial Metrics

The company's accumulated deficit stood at $1.17 billion as of January 31, 2026, compared to $1.10 billion at April 30, 2025. Goodwill increased to $358.5 million from $319.4 million, reflecting recent acquisition activity.