Shares in Elastic N.V. plunged nearly 25% in late trading today after the enterprise search software company warned of slower growth and fell short on outlook alongside an otherwise solid quarterly earnings report.

For its 2025 fiscal first quarter that ended on July 31, Elastic reported adjusted earnings per share of 35 cents, up from 25 cents per share in the first quarter of the previous year, on revenue of $347 million, up 18% year-over-year. Both were decent beats as analysts had expected adjusted earnings of 25 cents per share on revenue of $344.66 million.

Elastic ended the quarter with 1,370 customers with an annual contract value greater than $100,000, up from 1,330 in the previous quarter and 1,190 in the same quarter of last year. The company’s total subscription count as of the end of July sat at approximately 21,000, up from 20,500 at the same time last year.

Cloud revenue for the quarter rose 30% from a year ago, to $157 million. Cash flow in the quarter was $53 million and Elastic ended the quarter with $1.147 billion in cash, cash equivalents and marketable securities on hand.

Highlights in the quarter included the launch of Elastic Express Migration, a new incentive program to help organizations adopt Elastic’s Search AI quickly and efficiently. The company also announced its intent to add support for the Affero General Public License — a so-called “copyleft” license from the Free Software Foundation — as an option to license the free part of its source code.

In its earnings release, Chief Executive Officer Ash Kulkarni started positively, noting that the results in the quarter we solid and outperformed previous guidance, but then comes the catch and the reason why Elastic stock is down so heavily after hours.

“We had a slower start to the year with the volume of customer commitments impacted by segmentation changes that we made at the beginning of the year, which are taking longer than expected to settle,” Kulkarni wrote. “We have been taking steps to address this, but it will impact our revenue this year.”

With that warning, Elastic said that it expects fiscal second-quarter adjusted earnings per share of 37 to 39 cents on revenue of $353 million to $355 million. The earnings per share forecast was ahead of the 34 cents expected by analysts, but revenue fell short of an expected $360.8 million.

It was a similar story for Elastic’s full-year outlook, with the company forecasting earnings per share of $1.52 to $1.56 on revenue of $1.436 billion to $1.444 billion. The earnings per share outlook was ahead of an expected $1.42, but like the second quarter outlook, revenue fell short, as analysts had expected $1.478 billion.

Photo: Elastic