The stock jumped about 7 percent today, extending a week-long run that has pushed the price to a new high for the year. We think this is mostly about excitement for the company's role in AI, especially after its recent partnership with OpenAI.
Our view
Elastic is becoming a key bridge for companies that want to use their own private data with AI models. If you have been thinking about buying it, the price has run up quite a bit lately, so it is worth waiting for a quieter moment.
Elastic is adding new features to its security platform that use AI to automatically find and respond to cyber attacks. The goal is to reach what the company calls alert zero, a state where security teams can actually keep up with the flood of warnings they receive every day.
This matters because security is one of the three main ways customers use Elastic. By making its tools better at handling high-speed AI threats, the company makes its software harder for big companies to replace.
Elastic and OpenAI partner to connect private data to AI
Elastic is working more closely with OpenAI to help businesses build AI agents that can actually see their private internal files. While OpenAI's models are smart, they do not have access to a company's private spreadsheets or databases unless a search tool like Elasticsearch finds and feeds that data to them.
This partnership directly supports our view that Elastic is a vital bridge for AI. It positions the company as the preferred way for developers to ground powerful AI models in real, private company data.
New AI search tools for secure, offline environments
Elastic is now offering Jina AI models for on-premises and air-gapped environments, which are computer networks kept physically isolated from the internet for security. This allows organizations in highly regulated sectors like government or defense to use advanced AI search without sending data to the cloud. While most of the market is moving to the cloud, this helps Elastic win and keep customers with the strictest security needs who cannot use standard third-party AI services.
Morgan Stanley downgraded the stock to Equal Weight, which is their way of saying they expect it to perform about the same as the rest of the market. They set a price target of $66, which is slightly below where the stock is currently trading.
This kind of downgrade often happens when analysts think the current price already reflects the good news about AI growth. While it might cause some short-term selling, it does not change the underlying fact that the company is growing its cash flow and becoming more profitable.
Elastic received a specific AI Security distinction from Amazon Web Services (AWS), the world's largest cloud provider. This confirms that Elastic's tools meet Amazon's technical standards for helping customers protect their data in the cloud. This is a routine but helpful validation. It makes it easier for companies already using Amazon's cloud to trust and buy Elastic's security software.
Analysts have recently cooled on the stock, highlighted by a downgrade from Morgan Stanley in late July. While 22 of 34 analysts still rate it a buy, the average price target of $61 sits 19% below the current price.
Average target$61.13-19%vs $75.11 today
TodayAvg price
Low $49High $85
Buy34 analysts
0Bearish
12Neutral
22Bullish
FirmRatingPrice TargetDate
Morgan Stanley
Equal Weight
$66
7/21/2026
UBS
Buy
$85
5/29/2026
D.A. Davidson
—
$60
5/29/2026
Stifel Nicolaus
Buy
$65
5/29/2026
Wolfe Research
—
$55
5/29/2026
Cantor Fitzgerald
Neutral
$59
5/26/2026
Redburn Partners
Neutral
$49
4/23/2026
Goldman Sachs
Neutral
$50
4/21/2026
Morgan Stanley
Equal Weight
$110→$80
2/19/2026
D.A. Davidson
—
$80
11/21/2025
Piper Sandler
Overweight
$110
11/21/2025
RBC Capital
Outperform
$125→$115
11/21/2025
Elastic earnings
The company has a perfect track record of clearing the bars set by analysts. Management consistently sets targets they can beat, usually by a double-digit margin on profits.
Earnings history
EstimateBeatMiss
Elastic past earnings results
Expected
Actual
Surprise
EPS
$0.56
$0.61
+8.7%
Revenue
$447M
$451M
+0.9%
Key highlights
Cloud growth slowing: Total cloud revenue grew 20% to $217 million this quarter, but this was a step down from the 22% growth seen over the full year. Much of the slowdown came from the monthly cloud business, which grew just 3% to $48 million as some customers shifted toward longer, sales-led contracts.
Large customer base expanding: The company ended the year with 1,720 customers who pay more than $100,000 annually, an increase from 1,510 such customers a year ago. These larger clients are essential for long term stability because they are making bigger commitments to use the platform as a core part of their artificial intelligence setup.
Backlog growth accelerating: Total remaining performance obligations, which represents the value of all signed contracts not yet recognized as revenue, grew 28% to $1.982 billion. This is a significant jump compared to the 16% total revenue growth this quarter, suggesting that customers are signing much longer and larger deals than they have in the past.
Aggressive share buybacks: Elastic spent $340 million to repurchase 4.4 million of its own shares during the fiscal year at an average price of $76.91 per share. This returned significant cash to shareholders and reduced the total number of shares outstanding, even as the company used $37 million for a business acquisition earlier in the year.
Moderate growth outlook: For the full year ahead, the company expects revenue between $1.985 billion and $2.000 billion, which would be a growth rate of roughly 14.6% at the midpoint. This represents a slowdown from the 17% growth achieved this past year, though the company expects to expand its adjusted free cash flow margin to 21.5%.
Our take: This was a solid quarter where the underlying contract growth looked much better than the current revenue figures. While the monthly cloud business is cooling, the 28% surge in total backlog shows that big companies are locking in for the long haul. This strengthens the case that Elastic is becoming a permanent piece of the modern AI software stack.
Elastic’s next earnings date
Q1 2027
AUG
27
Expectation
EPS
$0.58
Revenue
$470M
Metrics we are tracking
Metric
Expectations
Status
Large Customer Growth
Number of $100k+ customers growing above 12% annually
14% growth in Q4 FY2026
Net Expansion Rate
Staying above 110% for four consecutive quarters
112% as of Q4 FY2026
Adjusted FCF Margin
Maintaining a margin of at least 20%
20% in FY2026
RPO Growth
Total remaining performance obligations growing faster than 20%
