5. Elastic N.V. (NYSE:ESTC)
Short Interest as % of Shares Outstanding: 4.33%
Number of Hedge Fund Holders: 58
Elastic N.V. (NYSE:ESTC), known for its expertise in search and artificial intelligence, offers a range of hosted and managed solutions that operate across hybrid, public, private, and multi-cloud environments, both in the U.S. and globally.
The company has gained recognition in the 5G sector due to its data analytics and search capabilities, which are essential for managing the extensive data generated by 5G networks. One of its flagship products is the Elastic Stack, which allows organizations to ingest, store, and analyze large volumes of structured and unstructured data in real time, a feature crucial for handling the complexities of 5G data environments.
The company’s Elastic Security platform is another significant offering, integrating functions such as Security Information and Event Management (SIEM), Security Orchestration, Automation, and Response (SOAR), and endpoint protection.
The comprehensive approach provides organizations with end-to-end visibility into their network operations, which is vital for detecting vulnerabilities and responding to threats promptly, especially within the dynamic context of 5G networks.
In 2023, it formed a partnership with Wilab to improve network observability and automation for 5G operators. The collaboration was aimed to integrate Elastic’s data analytics tools with Wilab’s Network Data Analytics Function (NWDAF).
It improves operators’ ability to monitor and manage their networks with greater efficiency. The integration facilitates anomaly detection, forecasting, and machine learning workflows, which enables more agile and precise network management.
For the first quarter of fiscal 2025, Elastic (NYSE:ESTC) reported non-GAAP EPS of $0.35, which surpassed the average analyst estimate of $0.25. Revenue for the quarter also exceeded expectations, reaching $347 million. It was $2.39 million above the forecast and represented an 18.1% increase year-over-year.
Despite this strong performance, the company’s guidance for the second quarter indicates a more modest growth trajectory, with revenue expected to be between $353 million and $355 million, a 14% increase from the previous year. The cautious outlook suggests potential difficulties in customer segmentation and broader economic challenges.
The company recently underwent a significant reorganization of its sales segmentation to better target large enterprises and mid-market customers. The restructuring has led to disruptions in the sales process and resulted in slower deal closures and a shortfall in customer commitments. Additionally, tighter budgets in Europe have caused delays in some deals, contributing to the results for the quarter. It is one of the worst 5G stocks to buy according to short sellers.
On a positive note, Elastic (NYSE:ESTC) has made significant advancements in product innovation. New features, such as Automatic Import for SIEM data onboarding and enhancements to their AI platform, have advaned its technological capabilities. The introduction of Elastic Cloud Serverless is another highlight, which strengthens the company’s position in the market.
According to our database, 58 hedge funds held stakes in Elastic (NYSE:ESTC) in the second quarter, with positions worth $1.2 billion. With 1.69 million shares, valued at $192.587 million, Tiger Global Management LLC is the largest shareholder of the company, as of June 30.
Artisan Partners stated the following regarding Elastic N.V. (NYSE:ESTC) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in Liberty Formula One, Elastic N.V. (NYSE:ESTC) and Onto Innovation. Elastic is a software company that specializes in search and data analysis solutions. Elastic’s search, observability and security solutions are built on the Elastic Search AI Platform, which thousands of companies use, including more than 50% of the Fortune 500. Customers use the software to gain visibility into their data, reduce mean-time-to-resolution and drive actionable outcomes. We believe the company will benefit from the rise of generative artificial intelligence (AI). It provides a differentiated offering due to the combination of a unique pricing model based on consumption, products that handle numerous data types and volumes, and an open architecture environment that offers generative AI development flexibility.”
