12 ms·

Elastic files for an IPO

326 points by foolano 8y ago

aventrix 8y ago
Interesting. My initial instinct is to compare them to MongoDB which IPO'd about a year ago. They seem to be doing quite well since, but then again, who hasn't in the tech sector? I will say I very much enjoy Elastic's suite of products, I can't say the same for MonogoDB.
- d4l3k 8y ago
  To be fair, both MongoDB and Elasticsearch have had serious issues as pointed out via the Jepsen tests. https://aphyr.com/posts/317-jepsen-elasticsearch https://aphyr.com/posts/317-jepsen-elasticsearch https://aphyr.com/posts/323-jepsen-elasticsearch-1-5-0 https://aphyr.com/posts/323-jepsen-elasticsearch-1-5-0 Though, all those issues have been fixed for both MongoDB and Elasticsearch so it's not necessarily fair to judge them based off past performance. https://www.elastic.co/guide/en/elasticsearch/resiliency/current/index.html https://www.elastic.co/guide/en/elasticsearch/resiliency/cur... https://www.mongodb.com/mongodb-3.4-passes-jepsen-test https://www.mongodb.com/mongodb-3.4-passes-jepsen-test
  - xaranke 8y ago
    The results for ElasticSearch are from 2015, curious to see how relevant they are now especially given that the team has been working on addressing these issues in the interim.
    - tschellenbach 8y ago
      Also elastic back then was used as a place where you copy your data, not your main data store. (Their positioning changed later) MongoDB was supposed to be used for your primary data store.
  - Fiahil 8y ago
    These jepsen tests cover elasticsearch 1.5, a large number of issues have been progressively fixed. We're now at ES 6
    - aisofteng 8y ago
      Note that 3 and 4 were skipped; ES 2 was followed by ES 6.
      - Argorak 8y ago
        ES 2 was followed by ES 5.
  - Thaxll 8y ago
    Those Jepsen are not that useful, I can point to you Postgres issues where it would corrupt the DB, does it means you shoudn't use Postgres?
    - baq 8y ago
      They're very useful - these posts compare actual functionality with the project's documentation.
- hendzen 8y ago
  There are key differences between MongoDB and Elastic. MongoDB (the company), has been very strategic about defending themselves from Amazon. Likely due to the AGPL licensing on MongoDB (the database), Amazon doesn't offer a hosted MongoDB - you have to buy MongoDB Atlas which runs on multiple cloud providers, including AWS, GCP and Azure. Coincidentally, Atlas subscriptions are the fastest growing part of MongoDB Inc's revenue, which is why investors are bullish on the company. Elastic (Apache licensed) has actually had their lunch eaten by Amazon to a much larger degree. Many businesses are purchasing hosted ES instances directly from Amazon via Amazon Elasticsearch service. The problem is bad enough that Elastic Inc had to write a marketing blog post about it [0]. Say what you will about MongoDB (the database), but MongoDB Inc. is the most successful open source software-based company since Red Hat. You can see it in the outperformance of $MDB compared to similarly timed open-source IPOs such as Hortonworks ($HDP) and Cloudera ($CLDR). [0] - https://www.elastic.co/blog/hosted-elasticsearch-services-roundup-elastic-cloud-and-amazon-elasticsearch-service https://www.elastic.co/blog/hosted-elasticsearch-services-ro...
  - mooreds 8y ago
    I can't speak for others, but I was looking to set up a quick elastic search cluster and Elastic's hosted offering beat the pants off of AWS ElasticSearch in terms of usability, polish, ease of getting started and security-by-default. Now, I don't have a lot of data in the cluster, so we'll see how performance is when that happens, but would definitely recommend Elastic's offering.
    - FridgeSeal 8y ago
      We recently moved our stuff at work from AWS to Elastic Cloud and it’s excellent. Performance is miles and above better, there’s actual security options on the clusters and there’s way more features.
      - busterarm 8y ago
        Huh? Elastic Cloud runs in either AWS or GCP. You get to choose but it's just between those. Unless you mean you were using AWS's ElasticSearch service... which is known to not be all that great. You could build ES clusters on AWS directly on EC2 and it would be cheaper than Cloud, unless what you're really looking for is that support contract. I spent a few months of my life learning ES inside and out and would choose this option every time. One of the best tech investments I've ever made.
trhway 8y ago
Interesting that JOBS act took so much care about executive compensation : " Implications of Being an Emerging Growth Company We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies. These reduced reporting requirements include: the requirement to present only two years of audited financial statements and only two years of related management’s discussion and analysis in this prospectus; an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting; reduced disclosure about our executive compensation arrangements; and an exemption from the requirements to obtain a non-binding advisory vote on executive compensation or shareholder approval of any golden parachute arrangements."
- eecc 8y ago
  I guess it’s clear whose JOB the act is all about ;)
xaranke 8y ago
Is it just me, or does 33 pages of risk factors seem pretty high?
- chadash 8y ago
  I used to put together deal documents similar to this when I worked in finance. It was literally my job to think about potential risks and then list them out. "Hey boss, this investment has possible earthquake risk, but that seems very remote; do I have to put that in?" "Yeah, put it in. No one reads the document anyway unless it goes to court and in that case, you can get dinged for leaving out stupid risk factors, but not for having them in."
  - paxy 8y ago
    Exactly. Serious investors aren't going to look at this list, but rather do their own research. This is basically to protect against lawsuits.
  - gammateam 8y ago
    I read them so that I can understand catalysts for a great trade, and jump on that when it happens. My favorite risk factor was "Timothy Sykes doesn't like us"
  - jpalomaki 8y ago
    Just read somewhere about research somebody had made regarding the risk statements (established) companies put out. The result was that statements getting changed correlated with stock price taking a hit in near term. Did not read the study itself. My explanation would be that since companies are not changing these for fun, they are probably changing them because they see some previously unexpected risk possibly manifesting itself and want to cover their back. Unfortunately, I can't find the pointer to the study or the article. Edit: Found the article, I guess this was posted to HN: https://www.theatlantic.com/magazine/archive/2018/09/the-secrets-in-your-inbox/565745/ https://www.theatlantic.com/magazine/archive/2018/09/the-sec... (search for NetApp to find the part about the study)
- pertsix 8y ago
chadash 8y ago
Just to be clear, $100M is what they are looking to raise, not their valuation. Their last valuation was about $700M in 2014, so presumably, they are looking for a valuation that exceeds that, most likely in the low billions.
- moxious 8y ago
  $100M is likely a placeholder amount. They're filing to go public and can adjust that figure later, it's not that strange to do so. I don't think $100M means much there, and relative to their overall valuation if $100M is all they wanted they'd likely have other options.
- dang 8y ago
  Thank you. That's confusing enough that I think we'll take $100M out of the title above.
mywittyname 8y ago
They have a 75% profit margin. $120mm profit from $160mm in revenue.
- blawson 8y ago
  I think you mean gross profit? I don't think they've every made a traditional profit.
- hendzen 8y ago
  You are misreading the financials. 120m is cost of revenue, not profit. They had a 52mm net loss in the last year ending April 30th.
  - mywittyname 8y ago
    Thanks
tomputer 8y ago
Slightly off topic: this quote from the SEC filing document: "Immediately prior to the completion of this offering, we intend to change our corporate form from a Dutch private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) into a Dutch public limited company (naamloze vennootschap) and change our corporate name from Elastic B.V. to Elastic N.V." As far as I know, Elasticsearch has no headquarters or offices in The Netherlands. I assume the company is only registered in The Netherlands for tax avoidance. If my assumption is true, despite that I like their products, this makes me a little sad. EDIT: my bad. I missed the tab Europe and Asia. They do seem to have an office in Amsterdam.
- tthisk 8y ago
  Isn’t the founder from the Netherlands? I’m fairly sure they also have a small office in Amsterdam, but most of their engineering is done by people working remotely.
  - dvirsky 8y ago
    No, he's Israeli, and Elastic started when he lived here. I don't think they have offices in Israel which is atypical.
    - tschellenbach 8y ago
      One of them is Dutch: https://www.linkedin.com/in/stevenschuurman/ https://www.linkedin.com/in/stevenschuurman/
- whalesalad 8y ago
  Taxes aren't really relevant when you are losing millions of dollars a year.
- juliesmith23 8y ago
  They have a thriving office in Amsterdam. One of my friend works there. Also they are distributed. Their engg team is all over the world.
whalesalad 8y ago
> We have incurred losses in all years since our incorporation. We incurred a net loss of $52.7 million in fiscal 2018, $52.0 million in fiscal 2017 and $18.6 million in the three months ended July 31, 2018. As a result, we had an accumulated deficit of $233.4 million as of July 31, 2018. Woah.
- samspenc 8y ago
  Thanks for posting these. These numbers and loss margins seem typical for a company in this line of service (cloud or self-hosted distributed databases or data services.) See similar recent IPOs for MongoDB, Cloudera and Hortonworks. Another useful section related to revenue in the paragraph just before the one you posted: > As of July 31, 2018, we had over 5,500 customers across over 80 countries and in a wide range of industries, compared to over 5,000 and 2,800 customers as of April 30, 2018 and 2017, respectively. Our revenue was $159.9 million and $88.2 million in fiscal 2018 and 2017, respectively, representing year-over-year growth of 81% for fiscal 2018. Our revenue was $56.6 million and $31.6 million in the three months ended July 31, 2018 and 2017, respectively, representing period-over-period growth of 79%. Subscriptions accounted for 93% and 90% of our total revenue in fiscal 2018 and 2017, respectively. Subscriptions accounted for 91% of our total revenue in the three months ended July 31, 2018. In fiscal 2018, revenue from outside the United States accounted for 39% of our total revenue.
  - ttul 8y ago
    Yes. You don’t get 80% growth at that scale without spending some money!
- fh973 8y ago
  Is this a data point for how well the open source business model works? Or are they just unnecessarily bloated?
  - ttul 8y ago
    No, this is a healthy high growth SaaS company.
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calcsam 8y ago
This is an extremely solid financial statement. $150M in revenue, growing ~100% per year; I'd project a valuation between $3B and $4B. Twilio, Mulesoft, and MongoDB are probably the best comparables here -- open-source and dev-tools based SaaS IPOs. All of these were very successful at IPO and afterwards, and even compared to these, Elastic looks great. * They're growing at almost 100% per year which is incredible. Twilio filed for IPO growing at 70% per year. Mulesoft was growing at 60%. Mongo was growing at 50% * Losing $50M on $150M of revenue. (Net margins of -33%). This is pretty reasonable and in line with Twilio and Mulesoft. MongoDB was significantly worse at -60% net margins. With that kind of growth I'd imagine something like a 220M ARR when they actually IPO, and valuation of 15-20x that.
- ncmncm 8y ago
  It is perhaps worth noting that the bulk of Mongo's operating losses were only paper: vesting stock options. I don't know why they wanted to keep that a secret from Wall Street, but it means that they got 6+ years' operating capital from the sale, not just 2. Keeping the secret meant they were motivated to shed people vesting too much, to make their apparent losses look smaller. Wall Street smoke 'n' mirrors strikes again.
- jedberg 8y ago
  Any time there is an IPO filing, I immediately come to the comments on HN, because there is always someone well versed in reading these things that can provide an excellent summary. Thank you!
  - ummonk 8y ago
    Honestly, SaaS is a relatively easy sector to value, since valuation tends to be a pretty straightforward multiple of ARR (with the exact multiple tending to be based on growth rate and (un)profitability). Throw in comparables of other IPOs with similar product types, and you can pretty reliably estimate how much a company will IPO at.
  - jimmy1 8y ago
    Now we are just missing the <pedandic explanation of why the technology isn't really all that great if you are a super hacker, but completely missing the point of creating a product that solves peoples problems and marketing+supporting it well> comment like... "It's really just a wrapper around Solr and a management layer bolted on top I don't understand all the rage!"
tschellenbach 8y ago
Anyone figure out which product/services are driving the majority of this revenue?
jacobkg 8y ago
Elastic’s signature product is ElasticSearch. They also make Kibana and Logstash https://www.elastic.co https://www.elastic.co
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bratao 8y ago
For anyone that for any reason is looking for an alternative to ElasticSearch/Solr: Try Vespa.ai The feature of live node removing/adding alone made my life so much easier. The performance and Machine Learning ranking is the icing on the cake!
- linkmotif 8y ago
  You mean there’s no refresh delay?
  - bratao 8y ago
    Oh yes! "Vespa is designed to be real time so once you your document has been accepted it is live in search. You can control visibility-delay which by default is 0: http://docs.vespa.ai/documentation/reference/services-content.html#visibility-delay http://docs.vespa.ai/documentation/reference/services-conten... "
    - linkmotif 8y ago
      Yes very interesting thanks for sharing. Have you used in production? Have you used the change steam functionality?
purplezooey 8y ago
Does this mean more Big Data IPOs coming? A few good private ones have been close.
wallflower 8y ago
And it all started with Shay Banon attempting to build a cooking app for his wife who was a chef. > JAXenter: You started Compass, your first Lucene-based technology, in 2004. Do you remember how and why you became interested in Lucene in the first place? > Shay Banon: Reminiscing on Compass birth always puts a smile on my face. Compass, and my involvement with Lucene, started by chance. At the time, I was a newlywed that just moved to London to support my wife with her dream of becoming a chef. I was unemployed, and desperately in need of a job, so I decided to play around with “new age” technologies in order to get my skills more uptodate. Playing around with new technologies only works when you are actually trying to build something, so I decided to build an app that my wife could use to capture all the cooking knowledge she was gathering during her chef lessons. > I picked many different technologies for this cooking app, but at the core of it, in my mind, was a single search box where the cooking knowledge experience would start a single box where typing a concept, a thought, or an ingredient would start the path towards exploring what was possible. > This quickly led me to Lucene, which was the defacto search library available for Java at the time. I got immersed in it, and Compass was born out of the effort of trying to simplify using Lucene in your typical Java applications (conceptually, it simply started as a “Hibernate” (Java ORM library) for Lucene). > I got completely hooked with the project, and was working on it more than the cooking app itself, up to a point where it was taking most of my time. I decided to open source it a few months afterwards, and it immediately took off. Compass basically allowed users to easily map their domain model (the code that maps app/business concepts in a typical program) to Lucene, easily index them, and then easily search them. > That freedom caused people to start to use Compass, and Lucene, in situations that were wonderfully unexpected. Imagine already having the model of a Trade in your financial app, one could easily index that Trade using Compass into Lucene, and then search for it. The freedom of searching across any aspect of a Trade allowed users to convey this freedom to their users, which proved to be an extremely powerful concept. > Effectively, this allowed me to be in the front seat of talking and working with actual users that were discovering, as was I, the amazing power that search can have when it comes to delivering business value to their users. Oh, and btw, my wife is still waiting for that cooking app. Now, 10 years later, it is the basis of Elasticsearch. https://jaxenter.com/elasticsearch-founder-interview-112677.html https://jaxenter.com/elasticsearch-founder-interview-112677....
artellectual 8y ago
Elastic is a company I’ve been following from the start when they just had elasticsearch opensource project. Watching this company grow to this point has been inspirational. I really want to meet / talk to the people who made this company. They made open source work. I’m happy to use their products, filebeat, kibana, elasticsearch, and their cloud offering has been top notch. They got a lot of things right. Now elasticsearch even supports SQL as a query language. This is a company that you don’t hear often in the news, but they just kept their focus and shipped the goods. As you can tell by now I’m a hardcore fan of Elastic.
- ousta 8y ago
  i would be surprised if they were supporting sql as query language. do you mean by using spark sql?
  - vquemener 8y ago
    Actually, they really do support SQL as a query language : https://www.elastic.co/en/blog/an-introduction-to-elasticsearch-sql-with-practical-examples-part-1 https://www.elastic.co/en/blog/an-introduction-to-elasticsea...
    - ousta 8y ago
      yeah a "subset of SQL" and on the page you gave me 0 example of a JOIN. so no JOIN no SQL sorry
      - AtlasBarfed 8y ago
        "We support SQL on our distributed data platform" has to be the new big lie of distributed systems salespeople. I'm not saying that computing joins, aggegates, sorts, etc can't be done in a distributed fashion, it just takes time, a lot of network reliability/reattempts, and understanding of the approximate nature of results if there are ongoing "eventually consistent" updates rolling through the cluster(s).
ggm 8y ago
We pay them money but I have to say.. there are aspects to the model which freak me out -Like the relative paucity of good R hooks, the abortive attempt at an interface via dplyr basically died. Right now, its curl. Its http sucking and no real way past pagination. Or, how hard it can be to intuit the json you need, as a naieve user. Back porting from kibana is silly. Or how easily you can deploy a naieve cluster which hangs bigtime on large data. This thing is like PostGres and ZFS: you really can't fake it, you have to understand it. I see good potential in Elastic training
setheron 8y ago
Tl;Dr; should I buy?
softliving 8y ago
I like to see open source backers going public, they give a boost to open source community who want to share but do not want to just spend energy where they cannot get something out of it (money/fame/recognition or just a satisfaction of doing good). I am sure the people are proud of their work. Good luck with the IPO!

326 points by foolano 8y ago

Interesting. My initial instinct is to compare them to MongoDB which IPO'd about a year ago. They seem to be doing quite well since, but then again, who hasn't in the tech sector? I will say I very much enjoy Elastic's suite of products, I can't say the same for MonogoDB.

d4l3k 8y ago
To be fair, both MongoDB and Elasticsearch have had serious issues as pointed out via the Jepsen tests. https://aphyr.com/posts/317-jepsen-elasticsearch https://aphyr.com/posts/317-jepsen-elasticsearch https://aphyr.com/posts/323-jepsen-elasticsearch-1-5-0 https://aphyr.com/posts/323-jepsen-elasticsearch-1-5-0 Though, all those issues have been fixed for both MongoDB and Elasticsearch so it's not necessarily fair to judge them based off past performance. https://www.elastic.co/guide/en/elasticsearch/resiliency/current/index.html https://www.elastic.co/guide/en/elasticsearch/resiliency/cur... https://www.mongodb.com/mongodb-3.4-passes-jepsen-test https://www.mongodb.com/mongodb-3.4-passes-jepsen-test
- xaranke 8y ago
  The results for ElasticSearch are from 2015, curious to see how relevant they are now especially given that the team has been working on addressing these issues in the interim.
  - tschellenbach 8y ago
    Also elastic back then was used as a place where you copy your data, not your main data store. (Their positioning changed later) MongoDB was supposed to be used for your primary data store.
- Fiahil 8y ago
  These jepsen tests cover elasticsearch 1.5, a large number of issues have been progressively fixed. We're now at ES 6
  - aisofteng 8y ago
    Note that 3 and 4 were skipped; ES 2 was followed by ES 6.
    - Argorak 8y ago
      ES 2 was followed by ES 5.
- Thaxll 8y ago
  Those Jepsen are not that useful, I can point to you Postgres issues where it would corrupt the DB, does it means you shoudn't use Postgres?
  - baq 8y ago
    They're very useful - these posts compare actual functionality with the project's documentation.
hendzen 8y ago
There are key differences between MongoDB and Elastic. MongoDB (the company), has been very strategic about defending themselves from Amazon. Likely due to the AGPL licensing on MongoDB (the database), Amazon doesn't offer a hosted MongoDB - you have to buy MongoDB Atlas which runs on multiple cloud providers, including AWS, GCP and Azure. Coincidentally, Atlas subscriptions are the fastest growing part of MongoDB Inc's revenue, which is why investors are bullish on the company. Elastic (Apache licensed) has actually had their lunch eaten by Amazon to a much larger degree. Many businesses are purchasing hosted ES instances directly from Amazon via Amazon Elasticsearch service. The problem is bad enough that Elastic Inc had to write a marketing blog post about it [0]. Say what you will about MongoDB (the database), but MongoDB Inc. is the most successful open source software-based company since Red Hat. You can see it in the outperformance of $MDB compared to similarly timed open-source IPOs such as Hortonworks ($HDP) and Cloudera ($CLDR). [0] - https://www.elastic.co/blog/hosted-elasticsearch-services-roundup-elastic-cloud-and-amazon-elasticsearch-service https://www.elastic.co/blog/hosted-elasticsearch-services-ro...
- mooreds 8y ago
  I can't speak for others, but I was looking to set up a quick elastic search cluster and Elastic's hosted offering beat the pants off of AWS ElasticSearch in terms of usability, polish, ease of getting started and security-by-default. Now, I don't have a lot of data in the cluster, so we'll see how performance is when that happens, but would definitely recommend Elastic's offering.
  - FridgeSeal 8y ago
    We recently moved our stuff at work from AWS to Elastic Cloud and it’s excellent. Performance is miles and above better, there’s actual security options on the clusters and there’s way more features.
    - busterarm 8y ago
      Huh? Elastic Cloud runs in either AWS or GCP. You get to choose but it's just between those. Unless you mean you were using AWS's ElasticSearch service... which is known to not be all that great. You could build ES clusters on AWS directly on EC2 and it would be cheaper than Cloud, unless what you're really looking for is that support contract. I spent a few months of my life learning ES inside and out and would choose this option every time. One of the best tech investments I've ever made.

trhway 8y ago

Interesting that JOBS act took so much care about executive compensation : " Implications of Being an Emerging Growth Company We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies. These reduced reporting requirements include: the requirement to present only two years of audited financial statements and only two years of related management’s discussion and analysis in this prospectus; an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting; reduced disclosure about our executive compensation arrangements; and an exemption from the requirements to obtain a non-binding advisory vote on executive compensation or shareholder approval of any golden parachute arrangements."

eecc 8y ago
I guess it’s clear whose JOB the act is all about ;)

xaranke 8y ago

Is it just me, or does 33 pages of risk factors seem pretty high?

chadash 8y ago
I used to put together deal documents similar to this when I worked in finance. It was literally my job to think about potential risks and then list them out. "Hey boss, this investment has possible earthquake risk, but that seems very remote; do I have to put that in?" "Yeah, put it in. No one reads the document anyway unless it goes to court and in that case, you can get dinged for leaving out stupid risk factors, but not for having them in."
- paxy 8y ago
  Exactly. Serious investors aren't going to look at this list, but rather do their own research. This is basically to protect against lawsuits.
- gammateam 8y ago
  I read them so that I can understand catalysts for a great trade, and jump on that when it happens. My favorite risk factor was "Timothy Sykes doesn't like us"
- jpalomaki 8y ago
  Just read somewhere about research somebody had made regarding the risk statements (established) companies put out. The result was that statements getting changed correlated with stock price taking a hit in near term. Did not read the study itself. My explanation would be that since companies are not changing these for fun, they are probably changing them because they see some previously unexpected risk possibly manifesting itself and want to cover their back. Unfortunately, I can't find the pointer to the study or the article. Edit: Found the article, I guess this was posted to HN: https://www.theatlantic.com/magazine/archive/2018/09/the-secrets-in-your-inbox/565745/ https://www.theatlantic.com/magazine/archive/2018/09/the-sec... (search for NetApp to find the part about the study)
pertsix 8y ago

chadash 8y ago

Just to be clear, $100M is what they are looking to raise, not their valuation. Their last valuation was about $700M in 2014, so presumably, they are looking for a valuation that exceeds that, most likely in the low billions.

moxious 8y ago
$100M is likely a placeholder amount. They're filing to go public and can adjust that figure later, it's not that strange to do so. I don't think $100M means much there, and relative to their overall valuation if $100M is all they wanted they'd likely have other options.
dang 8y ago
Thank you. That's confusing enough that I think we'll take $100M out of the title above.

mywittyname 8y ago

They have a 75% profit margin. $120mm profit from $160mm in revenue.

blawson 8y ago
I think you mean gross profit? I don't think they've every made a traditional profit.
hendzen 8y ago
You are misreading the financials. 120m is cost of revenue, not profit. They had a 52mm net loss in the last year ending April 30th.
- mywittyname 8y ago
  Thanks

tomputer 8y ago

Slightly off topic: this quote from the SEC filing document: "Immediately prior to the completion of this offering, we intend to change our corporate form from a Dutch private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) into a Dutch public limited company (naamloze vennootschap) and change our corporate name from Elastic B.V. to Elastic N.V." As far as I know, Elasticsearch has no headquarters or offices in The Netherlands. I assume the company is only registered in The Netherlands for tax avoidance. If my assumption is true, despite that I like their products, this makes me a little sad. EDIT: my bad. I missed the tab Europe and Asia. They do seem to have an office in Amsterdam.

tthisk 8y ago
Isn’t the founder from the Netherlands? I’m fairly sure they also have a small office in Amsterdam, but most of their engineering is done by people working remotely.
- dvirsky 8y ago
  No, he's Israeli, and Elastic started when he lived here. I don't think they have offices in Israel which is atypical.
  - tschellenbach 8y ago
    One of them is Dutch: https://www.linkedin.com/in/stevenschuurman/ https://www.linkedin.com/in/stevenschuurman/
whalesalad 8y ago
Taxes aren't really relevant when you are losing millions of dollars a year.
juliesmith23 8y ago
They have a thriving office in Amsterdam. One of my friend works there. Also they are distributed. Their engg team is all over the world.

whalesalad 8y ago

> We have incurred losses in all years since our incorporation. We incurred a net loss of $52.7 million in fiscal 2018, $52.0 million in fiscal 2017 and $18.6 million in the three months ended July 31, 2018. As a result, we had an accumulated deficit of $233.4 million as of July 31, 2018. Woah.

samspenc 8y ago
Thanks for posting these. These numbers and loss margins seem typical for a company in this line of service (cloud or self-hosted distributed databases or data services.) See similar recent IPOs for MongoDB, Cloudera and Hortonworks. Another useful section related to revenue in the paragraph just before the one you posted: > As of July 31, 2018, we had over 5,500 customers across over 80 countries and in a wide range of industries, compared to over 5,000 and 2,800 customers as of April 30, 2018 and 2017, respectively. Our revenue was $159.9 million and $88.2 million in fiscal 2018 and 2017, respectively, representing year-over-year growth of 81% for fiscal 2018. Our revenue was $56.6 million and $31.6 million in the three months ended July 31, 2018 and 2017, respectively, representing period-over-period growth of 79%. Subscriptions accounted for 93% and 90% of our total revenue in fiscal 2018 and 2017, respectively. Subscriptions accounted for 91% of our total revenue in the three months ended July 31, 2018. In fiscal 2018, revenue from outside the United States accounted for 39% of our total revenue.
- ttul 8y ago
  Yes. You don’t get 80% growth at that scale without spending some money!
fh973 8y ago
Is this a data point for how well the open source business model works? Or are they just unnecessarily bloated?
- ttul 8y ago
  No, this is a healthy high growth SaaS company.

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calcsam 8y ago

This is an extremely solid financial statement. $150M in revenue, growing ~100% per year; I'd project a valuation between $3B and $4B. Twilio, Mulesoft, and MongoDB are probably the best comparables here -- open-source and dev-tools based SaaS IPOs. All of these were very successful at IPO and afterwards, and even compared to these, Elastic looks great. * They're growing at almost 100% per year which is incredible. Twilio filed for IPO growing at 70% per year. Mulesoft was growing at 60%. Mongo was growing at 50% * Losing $50M on $150M of revenue. (Net margins of -33%). This is pretty reasonable and in line with Twilio and Mulesoft. MongoDB was significantly worse at -60% net margins. With that kind of growth I'd imagine something like a 220M ARR when they actually IPO, and valuation of 15-20x that.

ncmncm 8y ago
It is perhaps worth noting that the bulk of Mongo's operating losses were only paper: vesting stock options. I don't know why they wanted to keep that a secret from Wall Street, but it means that they got 6+ years' operating capital from the sale, not just 2. Keeping the secret meant they were motivated to shed people vesting too much, to make their apparent losses look smaller. Wall Street smoke 'n' mirrors strikes again.
jedberg 8y ago
Any time there is an IPO filing, I immediately come to the comments on HN, because there is always someone well versed in reading these things that can provide an excellent summary. Thank you!
- ummonk 8y ago
  Honestly, SaaS is a relatively easy sector to value, since valuation tends to be a pretty straightforward multiple of ARR (with the exact multiple tending to be based on growth rate and (un)profitability). Throw in comparables of other IPOs with similar product types, and you can pretty reliably estimate how much a company will IPO at.
- jimmy1 8y ago
  Now we are just missing the <pedandic explanation of why the technology isn't really all that great if you are a super hacker, but completely missing the point of creating a product that solves peoples problems and marketing+supporting it well> comment like... "It's really just a wrapper around Solr and a management layer bolted on top I don't understand all the rage!"

tschellenbach 8y ago

Anyone figure out which product/services are driving the majority of this revenue?

jacobkg 8y ago

Elastic’s signature product is ElasticSearch. They also make Kibana and Logstash https://www.elastic.co https://www.elastic.co

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bratao 8y ago

For anyone that for any reason is looking for an alternative to ElasticSearch/Solr: Try Vespa.ai The feature of live node removing/adding alone made my life so much easier. The performance and Machine Learning ranking is the icing on the cake!

linkmotif 8y ago
You mean there’s no refresh delay?
- bratao 8y ago
  Oh yes! "Vespa is designed to be real time so once you your document has been accepted it is live in search. You can control visibility-delay which by default is 0: http://docs.vespa.ai/documentation/reference/services-content.html#visibility-delay http://docs.vespa.ai/documentation/reference/services-conten... "
  - linkmotif 8y ago
    Yes very interesting thanks for sharing. Have you used in production? Have you used the change steam functionality?

purplezooey 8y ago

Does this mean more Big Data IPOs coming? A few good private ones have been close.

wallflower 8y ago

And it all started with Shay Banon attempting to build a cooking app for his wife who was a chef. > JAXenter: You started Compass, your first Lucene-based technology, in 2004. Do you remember how and why you became interested in Lucene in the first place? > Shay Banon: Reminiscing on Compass birth always puts a smile on my face. Compass, and my involvement with Lucene, started by chance. At the time, I was a newlywed that just moved to London to support my wife with her dream of becoming a chef. I was unemployed, and desperately in need of a job, so I decided to play around with “new age” technologies in order to get my skills more uptodate. Playing around with new technologies only works when you are actually trying to build something, so I decided to build an app that my wife could use to capture all the cooking knowledge she was gathering during her chef lessons. > I picked many different technologies for this cooking app, but at the core of it, in my mind, was a single search box where the cooking knowledge experience would start a single box where typing a concept, a thought, or an ingredient would start the path towards exploring what was possible. > This quickly led me to Lucene, which was the defacto search library available for Java at the time. I got immersed in it, and Compass was born out of the effort of trying to simplify using Lucene in your typical Java applications (conceptually, it simply started as a “Hibernate” (Java ORM library) for Lucene). > I got completely hooked with the project, and was working on it more than the cooking app itself, up to a point where it was taking most of my time. I decided to open source it a few months afterwards, and it immediately took off. Compass basically allowed users to easily map their domain model (the code that maps app/business concepts in a typical program) to Lucene, easily index them, and then easily search them. > That freedom caused people to start to use Compass, and Lucene, in situations that were wonderfully unexpected. Imagine already having the model of a Trade in your financial app, one could easily index that Trade using Compass into Lucene, and then search for it. The freedom of searching across any aspect of a Trade allowed users to convey this freedom to their users, which proved to be an extremely powerful concept. > Effectively, this allowed me to be in the front seat of talking and working with actual users that were discovering, as was I, the amazing power that search can have when it comes to delivering business value to their users. Oh, and btw, my wife is still waiting for that cooking app. Now, 10 years later, it is the basis of Elasticsearch. https://jaxenter.com/elasticsearch-founder-interview-112677.html https://jaxenter.com/elasticsearch-founder-interview-112677....

artellectual 8y ago

Elastic is a company I’ve been following from the start when they just had elasticsearch opensource project. Watching this company grow to this point has been inspirational. I really want to meet / talk to the people who made this company. They made open source work. I’m happy to use their products, filebeat, kibana, elasticsearch, and their cloud offering has been top notch. They got a lot of things right. Now elasticsearch even supports SQL as a query language. This is a company that you don’t hear often in the news, but they just kept their focus and shipped the goods. As you can tell by now I’m a hardcore fan of Elastic.

ousta 8y ago
i would be surprised if they were supporting sql as query language. do you mean by using spark sql?
- vquemener 8y ago
  Actually, they really do support SQL as a query language : https://www.elastic.co/en/blog/an-introduction-to-elasticsearch-sql-with-practical-examples-part-1 https://www.elastic.co/en/blog/an-introduction-to-elasticsea...
  - ousta 8y ago
    yeah a "subset of SQL" and on the page you gave me 0 example of a JOIN. so no JOIN no SQL sorry
    - AtlasBarfed 8y ago
      "We support SQL on our distributed data platform" has to be the new big lie of distributed systems salespeople. I'm not saying that computing joins, aggegates, sorts, etc can't be done in a distributed fashion, it just takes time, a lot of network reliability/reattempts, and understanding of the approximate nature of results if there are ongoing "eventually consistent" updates rolling through the cluster(s).

ggm 8y ago

We pay them money but I have to say.. there are aspects to the model which freak me out -Like the relative paucity of good R hooks, the abortive attempt at an interface via dplyr basically died. Right now, its curl. Its http sucking and no real way past pagination. Or, how hard it can be to intuit the json you need, as a naieve user. Back porting from kibana is silly. Or how easily you can deploy a naieve cluster which hangs bigtime on large data. This thing is like PostGres and ZFS: you really can't fake it, you have to understand it. I see good potential in Elastic training

setheron 8y ago

Tl;Dr; should I buy?

softliving 8y ago

I like to see open source backers going public, they give a boost to open source community who want to share but do not want to just spend energy where they cannot get something out of it (money/fame/recognition or just a satisfaction of doing good). I am sure the people are proud of their work. Good luck with the IPO!