RBC Capital analysts provided their views on Elastic N.V. (NYSE:ESTC) following the company’s Analyst Day, with the key takeaways including (1) additional details around the platform differentiation within Observability, Security, and Enterprise Search, (2) management being all in on the cloud, and (3) additional details on the journey to revenue of $2 billion and several hundred bps of annual margin improvement by 2025.
According to the analysts, the punchline is that as the cloud mix-shift continues from 37% of revenue in 2022, 39% in Q1/23, 50% by Q4/24, and likely another 6—7 point increase in 2025, cloud momentum provides a natural 3% year-over-year revenue acceleration in 2024 and another 3% in 2025. As such, management believes this makes the 36% revenue CAGR for 2023—25 realistic vs. 34% growth in Q1/23.