Is ESTC a good stock to buy now? We came across a great article about Elastic NV in the Investment Ledger substack. In this article, we will summarize the articles of bills in ESTC. Shares of Elastic NV are trading at $52.07 as of February 27. ESTC’s trailing and forward P/E were 125.08 and 18.80, respectively, according to Yahoo Finance.
Elastic NV, a search artificial intelligence (AI) company, provides software platforms that run in hybrid, public or private clouds, and multi-cloud environments in the US and internationally. ESTC represents a significant investment opportunity in the enterprise software space, especially as the market may undervalue it. The company, founded in the Netherlands in 2012, is a leader in managing unstructured data through its Elastic Stack, a widely adopted open source platform with more than 5.5 billion downloads and 120,000 GitHub stars.
Elastic has evolved into a full suite of enterprise solutions spanning from log management to search, monitoring and security, positioning itself as a critical infrastructure provider for AI-powered applications. Its tools are increasingly needed to feed proprietary enterprise data into LLMs, leverage AI intelligence, and support “hybrid search” workflows that combine vector and keyword search on a single platform.
Elastic’s “land and expand” model drives continued growth for SMBs by engaging customers through self-service cloud subscriptions and enterprise sales-led moves, then expanding product adoption. In FY25, total revenue reached $1.48 billion (+17% YoY), with cloud revenue representing 26% and subscription 93-94% of sales.
The enterprise customer base is expanding, with 1,510 customers generating more than $100k ACV, and new partners powered by GenAI are showing an ARR growth rate of 42%, more than double the historical average. It indicates a medium-term revenue growth target of 20%, supported by sales of GenAI products and increased adoption among existing customers.
Financially, Elastic is transitioning from a growth-focused phase to a self-financing phase, achieving a 16.5% non-GAAP operating margin in Q2 of FY26 and steadily moving toward the 40-point benchmark. With $1.4 billion in cash, management is prioritizing organic investments, strategic M&A, and share repurchases, including acquisitions like Jina AI and Keep Alerting to enhance GenAI and operational capabilities.
Currently trading at 3.8x EV/NTM sales and 21.2x EV/NTM FCF—significantly lower than peers like Snowflake and Datadog—the market is pricing in only 11–12% annual FCF growth, leaving significant upside if Elastic executes its operational initiatives. While risks of slower growth than peers and market skepticism remain, the combination of strong product mix, enterprise expansion, disciplined capital allocation, and attractive value elasticity make the high-fidelity asymmetric investment, especially as it transitions to a self-funding, profit-focused stage.
