Shares of enterprise software company Elastic (ESTC 15.90%) flew higher on Friday after it reported financial results for its fiscal second quarter of 2025. As of 10:15 a.m. ET, Elastic stock was up a strong 16%.
A great quarter for Elastic
Elastic’s financial report is turning heads because the numbers were far better than expected. Q2 revenue was up 18% year over year to $365 million, which was ahead of management’s guidance of $353 million to $355 million. Moreover, it was an acceleration from its 17% growth in the prior-year period.
Many prominent Wall Street analysts are increasing their price targets for Elastic stock in light of Q2 results. This includes Truist analyst Joel Fishbein, who increased his price target by a whopping 29% to $135 per share, according to The Fly. Fishbein noted that artificial intelligence (AI) products are driving adoption and spending for the company’s software.
Elastic’s software allows companies to search their data, and generative AI can help in that regard. Fishbein’s comments agree with commentary from CEO Ash Kulkarni, who said that it’s platform is becoming “a natural choice for customers building GenAI applications.” And investors loved the news.
Could Elastic outperform expectations again?
Elastic’s management did raise its full-year guidance. It now expects 15% growth this year, compared to prior guidance of 14% growth. And investors might note that this isn’t much of an increase. But there may be a reason for this — management appears to want to underpromise and overdeliver.
Elastic’s management noted that consumption trends can ebb and flow. And so while consumption was good in Q2, it built its guidance under the assumption that consumption could pull back. That said, it hasn’t noted a pullback yet. So Elastic might have some more pleasant surprises in coming quarters if current trends continue.
Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Truist Financial. The Motley Fool recommends Elastic. The Motley Fool has a disclosure policy.
