Elastic N.V.

Software - Application • Technology • Amsterdam, Netherlands • ESTC (NYQ)

Quarter: Q4 2025 Reported: November 20, 2025 Sentiment: Positive

Elastic N.V., a search artificial intelligence (AI) company, provides software platforms to run in hybrid, public or private clouds, and multi-cloud environments in the United States and internationally. It primarily offers Elastic's Search AI Platform, a set of software products that ingest and store data from various sources and formats, as well as performs search, analysis, and visualization on that data. The company also provides Elastic search product a distributed, real-time vector database and analytics engine and data store for all types of data, including textual, numerical, geospatial, structured, and unstructured; Kibana, a user interface, management, and configuration interface for the platforms; Elasticsearch search platform, a platform with retrieval algorithms and the ability to integrate with large language models; and elastic security, a security solution that provides unified protection to prevent, detect, and respond to threats. In addition, it offers Elastic Observability, a solution that enables unified analysis, including Logs analytics to search and analyze petabytes of structured and unstructured logs; infrastructure monitoring to gain visibility across cloud, on-premises, Kubernetes, serverless, and hosts; Application Performance Monitoring to stream native production-grade; digital experience monitoring; and large language models. The company was incorporated in 2012 and is based in Amsterdam, the Netherlands.

Analysis Summary

This Form 8-K filing from Elastic N.V. (ESTC) details a significant compensation event rather than a traditional earnings call. Effective October 13, 2025, the Board of Directors approved a special one-time performance-based equity award for CEO Ashutosh Kulkarni, with a grant date fair value of $29.3 million.

Strategic Initiatives and Business Segment Analysis:
The core purpose of this award is to strengthen the alignment of Mr. Kulkarni's interests with shareholders and directly incentivize his leadership in executing a 'transformational growth strategy' to position Elastic as a 'leading developer platform for Generative AI.' This explicitly highlights Generative AI as a critical strategic pillar for Elastic's future growth and market expansion. The Board believes Mr. Kulkarni's deep expertise in AI, experience in driving profitable growth, and ability to advance technological capabilities are crucial for realizing this long-term opportunity and expanding market share in the AI space.

Management Commentary and Forward Guidance (Implicit):
While no explicit financial guidance was provided in this filing, the structure and ambition of the award serve as an implicit forward-looking statement. The Board's confidence in Mr. Kulkarni's ability to deliver 'significant growth' in revenue and non-GAAP operating margin, alongside transforming sales execution, suggests an optimistic outlook on the company's future performance and strategic direction.

Competitive Positioning and Market Trends:
The stated goal of becoming a 'leading developer platform for Generative AI' positions Elastic to aggressively compete and capitalize on the rapidly expanding artificial intelligence market. This indicates a strategic intent to be a foundational technology provider for AI development.

Detailed Award Structure and Performance Targets:
The special equity award consists of Performance-based Restricted Stock Units (PSUs) divided into four tranches. Vesting is contingent on a combination of rigorous conditions:
- **Share Price Appreciation Goals:** Measured from a baseline share price of $86.61. Targets range from +40% ($121.69) for Tranche 1 (20% weighting, 3-year performance period) to +129% ($198.15) for Tranche 4 (40% weighting, 5-year performance period). These goals must be achieved for any 30 consecutive trading days within the performance period.
- **Relative Total Shareholder Return (rTSR):** Performance is measured against the median of the Russell 3000 index during the final three months of the performance period. If Elastic's rTSR is below the median, the number of PSUs earned for that tranche will be reduced by 20%.
- **Continued Service:** Mr. Kulkarni must continuously serve as CEO for four years (for Tranche 1) and five years (for Tranches 2-4) to satisfy time-based vesting requirements.

Mr. Kulkarni has the opportunity to earn up to 456,491 ordinary shares if all conditions are met.

Risk Factors and Concerns Raised:
- The award is '100% at risk,' meaning Mr. Kulkarni will only receive value upon 'substantial and sustained shareholder value creation,' implying no guaranteed payout.
- Forfeiture conditions are strict, including resignation or termination for cause, or termination without cause (unless related to death/disability or a Change of Control).
- Achievement of the ambitious share price goals (up to +129%) is not guaranteed and depends heavily on market performance and successful execution of the Generative AI strategy.
- Meeting or exceeding the median rTSR of the Russell 3000 index presents a significant competitive challenge.

Analyst Q&A Highlights:
This Form 8-K filing does not include an analyst Q&A section.

Key Highlights

• CEO Ashutosh Kulkarni received a special one-time performance-based equity award valued at $29.3 million.
• The award is 100% at risk, contingent on rigorous share price appreciation and relative total shareholder returns (rTSR).
• It is designed to incentivize leadership in positioning Elastic as a 'leading developer platform for Generative AI'.
• Share price goals range from +40% to +129% over 3-5 year performance periods, from a baseline of $86.61.
• Vesting also requires Mr. Kulkarni's continuous service as CEO for 4-5 years.
• Relative TSR performance is measured against the median of the Russell 3000 index, with a 20% PSU reduction for underperformance.
• The award provides an opportunity to earn up to 456,491 ordinary shares.

Financial Metrics

eps

N/A

YoY: Not applicable

revenue

N/A N/A

YoY: Not applicable

guidance

net income

N/A N/A

YoY: Not applicable

Stock Performance (90 Days)

Data through Jan 16, 2026

Layoff Events

Earnings Calls

Positive Signals

• Board's approval of a substantial performance-based equity award signals strong confidence in CEO and future strategy.
• Explicit strategic focus on becoming a 'leading developer platform for Generative AI' indicates clear growth direction.
• Rigorous share price appreciation goals (up to +129%) demonstrate ambitious long-term growth expectations.
• Board's belief in CEO's expertise in AI and ability to drive profitable growth.
• Award structure emphasizes 'transformational growth' and 'substantial and sustained shareholder value creation'.

Risks & Concerns

— The award is '100% at risk'; no value is realized if ambitious performance targets are not met.
— Achievement of high share price goals (up to +129%) is subject to market conditions and successful execution.
— Relative TSR performance against the Russell 3000 index median presents a significant competitive challenge.
— CEO's continued service is a condition for vesting; resignation or termination for cause leads to forfeiture.
— The success of the 'Generative AI platform' strategy is a key dependency for the award's value realization.