Elastic(ESTC 5.39%) reported first quarter fiscal 2026 results on August 28, 2025, delivering $415 million in revenue (up 20% YoY) and a 16% non-GAAP operating margin. Management raised full-year revenue and EPS guidance, highlighting strong enterprise and AI-driven workload growth. The following insights detail Elastic's momentum in generative AI, security, and subscription revenue durability.

GenAI adoption accelerates Elastic Cloud growth

Elastic Cloud surpassed 2,200 customers using the platform for generative AI (GenAI) workloads, with more than 330 spending over $100,000 annually. The company added more million-dollar average contract value (ACV) customers in this category than in the previous two quarters combined, reflecting increased AI workload intensity and early-stage consumption growth.

"Now over 2,200 Elastic Cloud customers are using Elastic for Gen AI use cases, with over 330 of these customers spending $100,000 or more annually. In Q1, we added more million-dollar ACV Elastic Cloud customers using Elastic for JENNI use cases than the prior two quarters combined."
-- Ashutosh Kulkarni, Chief Executive Officer

This rapid expansion in high-value GenAI customers demonstrates Elastic's competitive positioning as a foundational platform for enterprise-scale AI, supporting a long-term revenue growth trajectory as adoption broadens.

Elastic security displaces legacy incumbents

Security was a major growth driver, with one-third of new and expansion deals in the segment coming from competitive displacements. The launch of the Elastic AI SOC engine (EASE) further differentiated the offering by integrating advanced threat detection and alert correlation on top of existing security information and event management (SIEM) systems, and the company secured a seven-figure expansion with a leading U.S. academic health system.

"In Q1, a third of our new and expansion wins in security involved competitive displacements. In one such deal from the quarter, one of the largest integrated academic health systems in The U.S., selected Elastic Security to replace its existing SIM solution. This 7-figure expansion deal marks the customer making a strategic shift from an incumbent solution towards a more scalable AI-driven security approach."
-- Ashutosh Kulkarni, Chief Executive Officer

Elastic's ability to win complex displacement deals and deliver differentiated AI-powered security capabilities positions it to capture market share as organizations consolidate legacy tools onto modern, unified platforms.

Sales-led subscription revenue remains durable

Sales-led subscription revenue, defined as all subscription revenue excluding monthly Elastic Cloud, grew 22% YoY to $339 million, marking the fourth consecutive quarter of mid-to-high teens growth following sales segmentation changes. The self-managed segment also contributed meaningfully alongside continued cloud growth, reinforcing overall subscription resiliency.

"Our sales-led subscription revenue grew 22% in Q2 2025, 18% in Q3 2025, 19% in Q4 2025, and now 22% this quarter. These consistent results demonstrate the durability of our team's execution."
-- Navam Molyanda, Chief Financial Officer

The sustained strength of sales-led subscriptions and diversified delivery models enhances Elastic's revenue visibility and business stability, supporting management's confidence in future performance.

Looking Ahead

Elastic raised full-year revenue guidance to $1.679 billion to $1.689 billion (approximately 14% YoY growth at the midpoint), with a non-GAAP operating margin of 16% and non-GAAP diluted EPS between $2.29 and $2.35. Next quarter, revenue is expected to be $415 million to $417 million and non-GAAP EPS $0.56 to $0.58. Management expects to sustain recent adjusted free cash flow margin levels, notes anticipated seasonality, and will move to annual customer count disclosure going forward.