What happened

Shares of Elastic (NYSE:ESTC) climbed 12.8% in August, according to data from S&P Global Market Intelligence. The stock gained ground thanks to broader market momentum, new feature and service announcements, and quarterly results that topped the market's expectations. 

^SPX Chart

^SPX data by YCharts.

Elastic announced new features including malware and threat-identification protections and a version of its enterprise search services available under its free distribution tier. These new features, combined with strong first-quarter earnings results and a rally for tech stocks, helped the stock post double-digit gains last month. 

A magnifying glass.

Image source: Getty Images.

So what

Elastic published first-quarter results on Aug. 26, delivering sales and earnings that topped Wall Street's targets. The company posted adjusted earnings per share of $0.06 on revenue of $128.87 million, while the average analyst estimate had called for a loss of $0.18 per share on sales of $120.94 million. Sales were up 43.7% year over year in the period, and software-as-a-service (SaaS) revenue climbed 86% to reach $32.6 million.

Now what

Elastic stock has given up some of last month's gains in September's trading. The company's share price has slipped roughly 9% in the month so far amid a sell-off for the broader market. 

^SPX Chart

^SPX data by YCharts.

Elastic is guiding for second-quarter revenue to come in between $129 million and $131 million, and it expects an adjusted loss per share between $0.20 and $0.22 for the period. For the full year, the company is targeting sales between $544 million and $550 million and an adjusted per-share loss between $0.69 and $0.83.

The company has a market capitalization of roughly $8.6 billion and is valued at 15.75 times this year's expected sales. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.