Content analysis
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H.S. junior Good
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New words:
BEAT, criteria, demonstrated, disaggregated, disaggregation, erosion, gas, greenhouse, land, objective, reconciliation, retrospectively, shutdown, spectrum, transparency, verifiable, warranty
Removed:
accelerate, breached, commencing, Commissioner, conversion, EEA, evident, internally, navigate, Notwithstanding, submitted, substituting, virtual
Financial report summary
?Competition
Cisco Systems • Vmware • Splunk • New Relic • Crowdstrike Holdings Inc - Ordinary Shares • Datadog Inc - Ordinary Shares • Dynatrace • McAfeeRisks
- 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 a history of losses and may not be able to achieve profitability on a consistent basis or at all, and may not be able to achieve positive operating cash flow on a consistent basis. As a result, our business, financial condition, and results of operations may suffer.
- Our ability to grow our business will depend significantly on the expansion and adoption of our Elastic Cloud offerings.
- 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 invasion of Ukraine, could limit our ability to grow our business and negatively affect our results of operations.
- We may not be able to compete successfully against current and future competitors.
- If we are not able to keep pace with technological and competitive developments, our business will be harmed.
- Sales of our products could suffer if the markets for those products do not grow or if we fail to adapt and respond effectively to evolving markets.
- Any actual or perceived failure by us to comply with government or other obligations related to privacy, data protection and information security could adversely affect our business.
- If we experience a security incident, or unauthorized access to or other unauthorized processing of confidential information, including personal data, otherwise occurs, our software may be perceived as not being secure, customers may reduce the use of or stop using our products, and we may incur significant liabilities.
- Our operating results are likely to fluctuate from quarter to quarter, and our financial results in any one quarter should not be relied upon as indicative of future performance.
- We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and results of operations.
- If we are unable to increase sales of our subscriptions to new customers, sell additional subscriptions to our existing customers, or expand the value of our existing customers’ subscriptions, our future revenue and results of operations will be harmed.
- If our existing customers do not renew their subscriptions, our business and results of operations may be adversely affected.
- The length of our sales cycle can be unpredictable, particularly with respect to sales through our channel partners or sales to large customers, and our sales efforts may require considerable time and expense.
- Our decision to no longer offer Elasticsearch and Kibana under an open source license may harm the adoption of Elasticsearch and Kibana.
- We could be negatively impacted if the Elastic License or SSPL, under which some of our software is licensed, is not enforceable.
- Limited technological barriers to entry into the markets in which we compete may facilitate entry by other enterprises into our markets to compete with us.
- 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.
- Our failure to offer high-quality customer support could have an adverse effect on our business, reputation and results of operations.
- 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.
- We do not have an adequate history with our consumption-based arrangements for our Elastic Cloud offerings to predict accurately the long-term rate of customer adoption or renewal, or the impact those arrangements will have on our near-term or long-term revenue or operating results.
- We depend on our senior management and other key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could harm our business.
- A real or perceived defect, security vulnerability, error, or performance failure in our software could cause us to lose revenue, damage our reputation, and expose us to liability.
- 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.
- 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.
- If third parties offer inadequate or defective implementations of software that we have previously made available under an open source license, our reputation could be harmed.
- 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 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.
- If we are not able to maintain and enhance our brand, especially among developers, our ability to expand our customer base will be impaired and our business and operating results may be adversely affected.
- Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity and entrepreneurial spirit we have worked to foster, which could harm our business.
- If our channel partners fail to perform or we are unable to maintain successful relationships with them, our ability to market, sell and distribute our solutions will be more limited, and our results of operations and reputation could be harmed.
- If we are unable to maintain successful relationships with our partners, our business operations, financial results and growth prospects could be adversely affected.
- The sales prices of our offerings may decrease, which may reduce our gross profits and adversely affect our financial results.
- We expect our revenue mix to vary over time, which could harm our gross margin and operating results.
- Failure to establish, maintain and protect our proprietary technology and intellectual property rights could substantially harm our business and results of operations.
- We could incur substantial costs as a result of any claim of infringement, misappropriation or violation of another party’s intellectual property rights.
- Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, misappropriation, violation and other losses.
- 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.
- Social and ethical issues relating to the use of new and evolving technologies, such as AI, in our offerings may result in reputational harm and liability.
- We may not be able to realize the benefits of our marketing strategies to offer some of our product features for free and to provide free trials of some of our paid features.
- Our international operations and expansion expose us to a variety of risks.
- If we are not successful in sustaining and expanding our international business, we may incur additional losses and our revenue growth could be harmed.
- 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.
- Our generation of a portion of our revenue by sales to government entities subjects us to a number of risks.
- 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.
- Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions under which we could be obligated to pay additional taxes, which would harm our results of operations.
- Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.
- Seasonality may cause fluctuations in our sales and results of operations.
- 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.
- Failure to comply with anti-bribery, anti-corruption, and anti-money laundering laws could subject us to penalties and other adverse consequences.
- The evolving regulatory framework for machine learning technology and AI could adversely affect our operating results.
- The market price for our ordinary shares has been and is likely to continue to be volatile or may decline regardless of our operating performance.
- We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which would cause our stock price to decline.
- The concentration of our share ownership with insiders will likely limit your ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring shareholder approval.
- The issuance of additional ordinary shares in connection with financings, acquisitions, investments, our equity incentive plans or otherwise will dilute all other shareholders.
- 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.
- Sales of substantial amounts of our ordinary shares in the public markets, or the perception that they might occur, could reduce the price that our ordinary shares might otherwise attain.
- Certain anti-takeover provisions in our articles of association and under Dutch law may prevent or could make an acquisition of our company more difficult, limit attempts by our shareholders to replace or remove members of our board of directors and may adversely affect the market price of our ordinary shares.
- We are subject to the Dutch Corporate Governance Code but do not comply with all the suggested governance provisions of the Dutch Corporate Governance Code, which may affect your rights as a shareholder.
- We do not intend to pay dividends in the foreseeable future, so your ability to achieve a return on your investment will depend on appreciation in the price of our ordinary shares.
- Claims of U.S. civil liabilities may not be enforceable against us.
- U.S. persons who hold our ordinary shares may suffer adverse tax consequences if we are characterized as a passive foreign investment company.
- If a U.S. person is treated as owning at least 10% of our ordinary shares, such U.S. person may be subject to adverse U.S. federal income tax consequences.
- We may not be able to make distributions or repurchase shares without subjecting our shareholders to Dutch withholding tax.
- If we cease to be a Dutch tax resident for the purposes of a tax treaty concluded by the Netherlands and in certain other events, we could potentially be subject to a proposed Dutch dividend withholding tax in respect of a deemed distribution of our entire market value less paid-up capital.
- We have a substantial amount of indebtedness, which could adversely affect our financial condition.
- We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
- The indenture that governs the Senior Notes contains, and any of our future debt instruments may contain, terms which restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.
- We may be required to repurchase some of the Senior Notes upon a change of control triggering event.
- We may not benefit from our acquisition strategy.
- Catastrophic events, or man-made events such as terrorism, may disrupt our business.
- If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the trading price of our ordinary shares.
- If industry or financial analysts do not publish research or reports about our business, or if they issue inaccurate or unfavorable research regarding our ordinary shares, our share price and trading volume could decline, which could adversely affect our business.
- Our reputation and/or business could be negatively impacted by ESG matters and/or our reporting of such matters.
- If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our ordinary shares may decline, which could adversely affect our business.
Management Discussion
- Subscription revenue increased by $186.0 million, or 23%, for the year ended April 30, 2023 compared to the prior 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.
- Services revenue increased by $20.6 million, or 32%, for the year ended April 30, 2023 compared to the prior year. The increase in services revenue was attributable to increased adoption of our services offerings.
- Cost of subscription revenue increased by $41.1 million, or 23%, for the year ended April 30, 2023 compared to the prior year. This increase was primarily due to an increase of $38.3 million in cloud infrastructure costs due to increased Elastic Cloud subscription revenue. Additionally, intangible asset amortization increased by $1.3 million due to a full year of amortization on the intangibles acquired during the year ended April 30, 2022.