Elastic stock fell Friday despite fiscal Q1 report that beat Wall Street forecasts for the enterprise data software company. Shares jumped by as much as 20% late Thursday and into Friday morning before reversing lower during regular trading.
San Francisco-based Elastic said that it earned an adjusted 60 cents per share for the July-ended quarter, up 71% from a year earlier. That easily beat the 42 cents per share that analysts polled by FactSet were forecasting. Sales increased 20% to $415 million, compared to analyst estimates of $397 million.
Elastic Chief Executive Ash Kulkarni said that Elastic's growth "directly demonstrates the value that Elastic's Search AI Platform delivers to our customers."
Year-over-year revenue growth for the company's Elastic Cloud offering — a key focus of investors — accelerated to 24% from 23% in the previous April-ended quarter.
For the current quarter, Elastic guided for sales of $416 million, ahead of estimates for $410 million. Elastic also raised its full-year sales guidance. The company said it expects fiscal 2026 sales of $1.684 billion at the midpoint of its given range, compared to a previous $1.663 billion. Elastic's fiscal year will end April 30.
On the stock market today, Elastic stock is down more than 2% at 85.60 in recent action.
Can Elastic Stock Bounce Back?
Analysts were largely positive about the results. Barclays analyst Raimo Lenschow wrote late Thursday that he expects the report will "revive interest" from investors for Elastic stock.
Elastic provides search software for enterprises, along with a broad suite of data software tools that run on cloud providers such as Microsoft's Azure, Amazon's Amazon Web Services and Alphabet's Google Cloud. The company's stock gained popularity in 2023 and parts of 2024 as a potential AI beneficiary.
But shares slumped earlier this year amid fears that AI algorithms could prove a threat to many software business models, rather than provide a boost. Elastic stock took a big hit following its fiscal Q4 results in late May. The company provided lower-than-expected sales guidance for its current fiscal 2026.
Overall, Elastic stock is down about 13% this year.
"It seems that AI investments around data are helping the overall space, and Elastic, with its unique position around search, is starting to benefit properly," Barclays' Lenschow wrote. He rates Elastic stock as overweight.
This week also saw strong earnings results from data software peers MongoDB and Snowflake. Elastic stock gained following those results and was up 11% for the week entering Friday's trading.
Jefferies analyst Brent Thill headlined his research note to clients Friday as data "infrastructure software is alive!" Thill had previously pushed back against the view that "AI is eating software."
The Jefferies analyst rates Elastic stock a buy but Thill noted that even Elastic's improved guidance signals "continued caution."
Elastic's IBD Composite Rating
Meanwhile, Elastic stock jumped back above its 50-day moving average with Thursday's gains. Shares climbed above Elastic's 200-day moving average early Friday before retreating beneath it, according to IBD MarketSurge.
Coming into the report, Elastic stock had an IBD Composite Rating of 65 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
