The Investor
28 Aug 2026, 11:15
Elastic Surges 17% as AI Demand Drives Strong Growth and Record Customer Additions
Elastic (NYSE: ESTC) shares jumped 17% in premarket trading after the company beat guidance across key metrics and showed accelerating enterprise demand for its AI, security and observability products.
Fiscal Q1 revenue increased 15% year over year to $478 million, while sales-led subscription revenue grew 18%. More importantly, current remaining performance obligations rose 21% to $1.15 billion and total RPO climbed 27%, providing strong visibility into future revenue. Elastic also posted non-GAAP EPS of $0.70 and generated $143 million in adjusted free cash flow.
AI appears to be strengthening Elastic’s growth position. Customers spending more than $100,000 annually increased to over 1,800 from 1,550 a year earlier, with Q1 delivering a record number of net additions to this group. Elastic is expanding its AI capabilities across vector search, cybersecurity and observability and recently announced a collaboration with OpenAI.
The outlook reinforced the positive reaction. Elastic expects FY27 revenue of $1.998–$2.010 billion, roughly 15% growth, while sales-led subscription revenue is projected to grow about 17.4%. Non-GAAP operating margin is expected to reach 19.4%, alongside an adjusted free cash flow margin of approximately 21.5%.
The 17% rally reflects a combination of strong forward indicators, accelerating large-customer adoption, AI-driven demand and improving profitability rather than simply the headline 15% revenue growth.
Elastic (NYSE: ESTC) shares jumped 17% in premarket trading after the company beat guidance across key metrics and showed accelerating enterprise demand for its AI, security and observability products.
Fiscal Q1 revenue increased 15% year over year to $478 million, while sales-led subscription revenue grew 18%. More importantly, current remaining performance obligations rose 21% to $1.15 billion and total RPO climbed 27%, providing strong visibility into future revenue. Elastic also posted non-GAAP EPS of $0.70 and generated $143 million in adjusted free cash flow.
AI appears to be strengthening Elastic’s growth position. Customers spending more than $100,000 annually increased to over 1,800 from 1,550 a year earlier, with Q1 delivering a record number of net additions to this group. Elastic is expanding its AI capabilities across vector search, cybersecurity and observability and recently announced a collaboration with OpenAI.
The outlook reinforced the positive reaction. Elastic expects FY27 revenue of $1.998–$2.010 billion, roughly 15% growth, while sales-led subscription revenue is projected to grow about 17.4%. Non-GAAP operating margin is expected to reach 19.4%, alongside an adjusted free cash flow margin of approximately 21.5%.
The 17% rally reflects a combination of strong forward indicators, accelerating large-customer adoption, AI-driven demand and improving profitability rather than simply the headline 15% revenue growth.
