Elastic Earnings: Despite Macro Headwinds, Company Confident in Its Growth Opportunity

We are maintaining our $62 fair value estimate for narrow-moat Elastic after the firm reported fiscal fourth-quarter results in line with our estimate for revenue and exceeding our bottom-line estimate. Management's fiscal 2024 first-quarter guidance skewed on the conservative side, as weakness in demand is expected to persist for the first half of the upcoming fiscal year, driven by the challenging macroenvironment. Elastic also recently announced its AI-powered Elasticsearch Relevance Engine, which it believes will be a strong contender for generative artificial intelligence in enterprises. With the shares down 7% after hours, we would recommend investors wait for a more attractive entry point to invest in this Very High Uncertainty-rated company.