ELASTIC (ESTC) jumped 19.31 percent Friday after beating first-quarter earnings and raising full-year guidance on the strength of AI-powered search and security products.
The enterprise search company reported fiscal 2027 Q1 revenue of $478 million, up 15 percent year over year. Adjusted EPS reached $0.70, exceeding Wall Street's $0.58 consensus estimate by 21 percent. Adjusted operating income climbed 19 percent to $77 million.
The outperformance was driven by new customer wins and expanded spending from existing accounts. Elastic now has more than 1,800 customers with annual contract values exceeding $100,000, up from 1,720 in Q4 fiscal 2026 and 1,550 in Q1 fiscal 2026.
For full-year fiscal 2027, Elastic projects revenue of approximately $2 billion, consistent with 15 percent growth, and adjusted EPS between $3.29 and $3.37.
CEO Ash Kulkarni attributed momentum to AI adoption across the company's core search and observability platforms. "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," he said. Kulkarni added the company entered fiscal 2027 "with growing momentum across search and AI, security, and observability."
Elastic's AI-driven product roadmap—converting raw data into actionable intelligence for enterprises—addresses a core pain point in the observability market. The company's ability to expand high-value customer cohorts while maintaining 19 percent operating income growth signals pricing power and improving unit economics. Watch for gross margin trends and net revenue retention in future quarters to confirm whether AI features are driving net-new seat expansion or simply deepening penetration in existing accounts.
