Why Elastic NV (NYSE: ESTC) stock is crashing

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Elastic NV (NYSE: ESTC) stock lost over 13.1% in the pre-market session of 5th December, 2019 (Source: Google finance) after the company posted bad results for the second quarter of FY 20. The company reported a fiscal second-quarter loss of $50 million compared to a loss of $27.5 million in the year-ago period. The company has generated the Operating cash flow of $0.3 million with free cash flow of -$1.4 million. At the end of October 2019, the cash and cash equivalents were $305.2 million.

ESTC in the second quarter of FY 20 has reported the adjusted loss per share of 22 cents, beating the analysts’ estimates for the adjusted loss per share of 31 cents, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 59 percent to $101.1 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $96.4 million. SaaS revenue grew 106% to $20.6 million year-over-year and calculated billings rose 41% to $125.3 million year-over-year, or 45% on a constant currency basis. The company posted the Non-GAAP operating loss of $18.4 million and non-GAAP operating margin of -18% for the quarter.

Elastic expects a fiscal third-quarter loss to be in the range of 36 cents to 34 cents a share on revenue expected to be in the range of $106 million to $108 million. The analysts surveyed by FactSet had projected a loss of 33 cents a share on revenue of $105.8 million. The company expects a fiscal third-quarter Non-GAAP operating margin to be between -26.0% and -24.0%.

For fiscal 2020, the company expects the total revenue to be in the range of $415 million and $417 million, Non-GAAP operating margin is expected to be in the range of -23.0% and -22.0%, that includes approximately -2% related to the acquisition of Endgame and Non-GAAP net loss per share is expected to be in the range of $1.24 and $1.17, that assumes between 78 million and 80 million weighted average ordinary shares outstanding.

Meanwhile, ESTC during the second quarter had completed the acquisition of Endgame, Inc., which leads in endpoint security and threat prevention, detection, and response. The company during the period had introduced Elastic Endpoint Security, that is leading endpoint protection solution which integrates with Elastic SIEM in the Elastic Stack, and eliminates endpoint pricing. It enables the companies to automatically and flexibly respond to threats in real time, whether in the cloud, on-premises, or in hybrid environments.

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