Elastic finished fiscal 2026, the year ended April 30, 2026, with the kind of quarter that changes how the market categorizes a software company. Fourth quarter revenue came in at $451 million, up 16% year over year, capping a $1.739 billion fiscal year that grew 17%. The more interesting number sits below the revenue line: remaining performance obligations, the contracted backlog of future revenue, jumped 28% to $1.982 billion, while the portion due within twelve months grew 20% to $1.203 billion. Chief executive Ash Kulkarni tied the acceleration to organizations abandoning fragmented legacy applications and consolidating onto Elastic's platform for search, security, and observability, with customers making larger commitments over longer periods as Elastic becomes part of their artificial intelligence infrastructure. A business that grows its backlog faster than its revenue is a business with visibility, and that is the strongest single fact in this print.
The profitability story is improving too, though with an asterisk that investors need to see clearly. Non-GAAP operating income reached $285 million for the year, a 16.4% margin, and adjusted free cash flow came in at $346 million, or 20% of revenue. That puts Elastic's Rule of 40 score, the shorthand that adds revenue growth to free cash flow margin, at 37%, respectable territory for a company this size. But the headline GAAP numbers flatter the picture. GAAP diluted earnings per share of $3.43 for the year includes a one-time, non-cash income tax benefit of roughly $435 million from releasing a valuation allowance against deferred tax assets. Strip that out and the company that matters is the non-GAAP one, which earned $2.57 per diluted share. The trailing price to earnings multiple of 25.1x quoted by market data providers is built on that tax-inflated GAAP figure, so it understates what investors are actually paying.
Guidance then tempers the enthusiasm. For fiscal 2027 Elastic expects revenue of $1.985 to $2.000 billion, growth of about 14.6% at the midpoint, with the first quarter guided to just 13.1% growth. Management is guiding a deceleration even as the backlog accelerates, which is a mix of conservatism and mathematics: consumption-based revenue, monthly usage that gets billed as consumed, recognized against a large multi-year backlog takes time to flow through. The offset is margin. Elastic guided fiscal 2027 non-GAAP operating margin to roughly 19%, up from 16.4%, and adjusted free cash flow margin to about 21.5%. Earnings per share is guided to $3.21 to $3.29 on a non-GAAP basis, roughly 27% growth at the midpoint, which is where the operating leverage lives.
At $83.24, Elastic carries a market capitalization of $8.65 billion and sits well up its 52-week range of $42.05 to $96.07, having roughly doubled off the low. On a forward basis the stock trades at 21.5x expected earnings, with no dividend; buybacks, $340 million of them in fiscal 2026 alone, are the capital return vehicle. The strongest counterargument to the bull case is straightforward: the company itself is guiding growth down from 17% to the mid-teens, stock-based compensation still consumes 17.7% of revenue and keeps GAAP results in the red, and the open source license that powers Elastic's distribution also permits competitors to redistribute its code. The variables that decide the thesis are whether sales-led subscription growth, which ran at 20% for the year, can hold up as the smaller monthly cloud business stagnates, and whether the guided margin expansion actually arrives. If backlog conversion keeps outpacing the guide, the stock's premium survives; if growth settles near 13%, the multiple has room to compress.