Why Elastic Stock Snapped Back Today
Key Points
Elastic is using artificial intelligence to help its clients make better use of their data.
Customers, in turn, are spending more on Elastic's platform.
- 10 stocks we like better than Elastic ›
Shares of Elastic (NYSE: ESTC) surged on Friday after the enterprise search company issued an upbeat growth forecast.
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AI-fueled gains
Elastic is integrating artificial intelligence (AI) into its core search technology to help its customers transform their data into actionable insights.
The strategy is working.
Elastic's total revenue jumped 15% year over year to $478 million in its fiscal 2027 first quarter, which ended on July 31.
The gains were driven by new customer wins and higher sales to existing clients. Customers with an annual contract value of more than $100,000 increased to more than 1,800, up from 1,720 in the fourth quarter and 1,550 in the first quarter of fiscal 2026.
"AI is reshaping the enterprise technology stack, and organizations are making deliberate choices about where to build and how to observe and secure their applications and data," CEO Ash Kulkarni said.
Better still, Elastic is growing more profitable as it expands its customer base. Its adjusted operating income climbed 19% to $77 million.
Elastic's adjusted earnings per share, in turn, increased 17% to $0.70. That surpassed Wall Street's estimates, which had called for per-share profits of $0.58.
Management sees more gains ahead
Elastic now expects its full-year revenue to grow roughly 15% to $2 billion, driving adjusted earnings per share of $3.29 to $3.37.
"We enter the year with growing momentum across search and AI, security, and observability -- and confidence in the trajectory of our business," Kulkarni said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Elastic. The Motley Fool has a disclosure policy.
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