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The risks and uncertainties described below are not the only ones we face.
−Removed: Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that could affect us.
−Removed: If any of the following risks occur, our business, financial condition, operating results and prospects could be materially and adversely affected.
−Removed: In that event, the price of our ordinary shares could decline, and you could lose part or all of your investment.
−Removed: In addition, major geopolitical events, including any worsening of the macroeconomic environment, may exacerbate the risks described below, any of which could have a material impact on us and additional impacts that are currently not known to us may arise.
+Added: Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that could adversely affect our business, financial condition, operating results and prospects.
Risks Related to our Business and Industry
−Removed: Our business and operations have experienced rapid growth, and if we do not appropriately manage future growth, if any, or are unable to improve our systems and processes, our business, financial condition, results of operations, and prospects may be adversely affected.
+Added: Our business and operations have experienced rapid growth, and if we do not appropriately manage our future growth or are unable to improve our systems and processes, our business, financial condition, results of operations, and prospects may be adversely affected.
We have experienced rapid growth and increased demand for our offerings.
−Removed: Our number of customers has increased significantly over the past several years, with our total number of customers growing from over 2,800 as of April 30, 2017 to approximately 21,000 as of April 30, 2024.
−Removed: The growth and expansion of our business and offerings place a continuous and significant strain on our management, operational, and financial resources.
+Added: The growth and expansion of our business and offerings place a significant strain on our management, operational, and financial resources.
In addition, as customers adopt our technology for an increasing number of use cases, we have had to support more complex commercial relationships.
−Removed: We may not be able to leverage, develop and retain qualified employees effectively enough to maintain our growth plans.
−Removed: We must continue to improve our information technology and financial infrastructure, our operating and administrative systems, our relationships with various partners and other third parties, and our ability to manage headcount and processes in an efficient manner to manage our growth effectively.
−Removed: Our failure to do so could result in increased costs, negatively affect our customers’ satisfaction with our offerings, and harm our results of operations.
−Removed: We have a history of losses and may not be able to achieve profitability or positive operating cash flow on a consistent basis.
−Removed: We incurred a net loss of $236.2 million and $203.8 million for the years ended April 30, 2023 and 2022, respectively, and have incurred losses in all prior years since our inception.
−Removed: As a result, we had an accumulated deficit of $991.6 million as of April 30, 2024.
−Removed: Although we had net income of $61.7 million for the year ended April 30, 2024, we expect to incur net losses in future years.
−Removed: We anticipate that our operating expenses will continue to increase substantially in the foreseeable future as we continue to enhance our offerings, broaden our customer base and pursue larger transactions, expand our sales and marketing activities, expand our operations, hire additional employees, and continue to develop our technology.
−Removed: These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently, or at all, to offset these higher expenses.
−Removed: Revenue growth may slow or revenue may decline for a number of reasons, including slowing demand for our offerings, increasing competition, or economic downturns, including as a result of rising rates of inflation and other macroeconomic events.
+Added: We may not be able to leverage, develop and retain qualified employees effectively enough to realize our growth plans.
+Added: Any failure by us to continue to improve our information technology and financial infrastructure, our operating and administrative systems, our relationships with our partners and other third parties, and our ability to manage headcount and processes in an efficient manner could result in increased costs, negatively affect our customers’ satisfaction with our offerings, and harm our results of operations.
+Added: We have a history of losses and may not be able to achieve profitability on a consistent basis.
+Added: We incurred net losses of $108.1 million and $236.2 million for the years ended April 30, 2025 and 2023, respectively, and have incurred losses in all but one of our prior fiscal years since our inception.
+Added: As a result, we had an accumulated deficit of $1.100 billion as of April 30, 2025.
+Added: Although we had net income of $61.7 million for the year ended April 30, 2024, we may incur net losses in future years.
+Added: Our operating expenses will continue to increase substantially in the foreseeable future as we continue to enhance our offerings, broaden our customer base and pursue larger transactions, expand our sales and marketing activities and other operations, hire additional employees, and continue to develop our technology.
+Added: These efforts may prove more expensive than we currently expect, and we may not succeed in increasing our revenue sufficiently, or at all, to offset these higher expenses.
+Added: Revenue growth may slow or revenue may decline because of slowing demand for our offerings, increasing competition, economic downturns, or other factors, including as a result of rising rates of inflation and other macroeconomic events.
You should not consider our revenue growth in prior periods as indicative of our future performance.
−Removed: Any failure to increase our revenue or grow our business could prevent us from achieving profitability at all or on a consistent basis, which would cause our business, financial condition, and results of operations to suffer.
−Removed: Additionally, although we generated positive operating cash flow in fiscal 2024, 2023, and 2022, any failure to grow our business could prevent us from achieving positive operating cash flow on a consistent basis, which could cause our business, financial condition, and results of operations to suffer.
−Removed: Unfavorable or uncertain conditions in our industry or the global economy or reductions in information technology spending, including as a result of adverse macroeconomic conditions, or the evolving conflict in Israel and Gaza and Russia’s war with Ukraine, could limit our ability to grow our business and negatively affect our results of operations.
+Added: Any failure by us to continue to increase our revenue and grow our business could prevent us from achieving profitability at all or on a consistent basis.
+Added: Unfavorable or uncertain conditions in our industry or the global economy or reductions in information technology spending, including as a result of adverse macroeconomic conditions, international trade policies, or geopolitical conflicts, could limit our ability to grow our business and negatively affect our results of operations.
Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our customers.
Current, future, or sustained economic uncertainties or downturns, whether actual or perceived, could adversely affect our business and results of operations.
−Removed: Negative conditions in the general economy both in the United States and in international markets, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, international trade relations, changes in inflation, foreign exchange and interest rate environments, recessionary fears, supply chain constraints, energy costs, political instability, natural catastrophes, warfare, infectious diseases and terrorist attacks, could cause a decrease in business investments by our customers and potential customers, including spending on information technology, and negatively affect the growth of our business.
+Added: Negative conditions in the general economy both in the United States and in international markets, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, international trade policies, changes in inflation, foreign exchange and interest rate environments, recessionary fears, supply chain constraints, energy costs, political instability and conflict, natural catastrophes, warfare, infectious diseases and terrorist attacks, could cause a decrease in business investments by our customers and potential customers, including spending on information technology, and negatively affect the growth of our business.
For example, inflation rates recently reached levels not seen in decades and have continued to create economic volatility as governments adjust interest rates in an attempt to manage the inflationary environment, which may further lead to our customers tightening their technology expenditures and investment.
−Removed: Further, the ongoing international political crisis resulting from the evolving conflict in Israel and Gaza and Russia’s war with Ukraine could continue to have significant negative macroeconomic consequences, including on the businesses of our customers, which could negatively impact their spending on our offerings.
−Removed: Any further disruptions or other adverse developments, or concerns or rumors about any such events or similar risks, in the financial services industry, both in the U.S.
−Removed: and in international markets, may lead to market-wide liquidity problems and may impact our or our customers’ liquidity and, as a result, negatively affect the level of customer spending on our offerings.
+Added: Further, the evolving conflicts in the Middle East and Russia’s war with Ukraine could continue to have significant negative macroeconomic consequences, including on the businesses of our customers, which could negatively impact their spending on our offerings.
+Added: Heightened global economic uncertainty and changes in economic conditions, including in international trade relations, legislation and regulations (including those related to trade policies, and taxation), enforcement priorities, or economic and monetary policies, could result in heightened diplomatic tensions or political and civil unrest, among other potential impacts, may have an adverse effect on the global economy as a whole and on our business, or may require us, our customers, and other stakeholders to significantly modify current business practices.
+Added: Any further disruptions or other adverse developments, or concerns or rumors about any such events or similar risks, in the financial services industry, both in the United States and in international markets, may lead to market-wide liquidity problems and may impact our or our customers’ liquidity and, as a result, negatively affect the level of customer spending on our offerings.
As a result of the foregoing conditions, our revenue may be disproportionately affected by longer and more unpredictable sales cycles, delays or reductions in customer consumption or in general information technology spending, and further impacts of changing foreign exchange rates.
−Removed: Further, current and prospective customers may choose to develop in-house software as an alternative to using our paid products.
−Removed: These factors could increase the amount of customer churn we have experienced recently and further slow consumption and overall customer expenditure.
+Added: Further, current and potential customers may choose to develop in-house software as an alternative to using our paid products.
+Added: These factors could increase the amount of customer attrition we have experienced recently and further slow consumption and overall customer expenditure.
Moreover, competitors may respond to market conditions by lowering prices.
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These requirements may add costs and could increase our expenses as we continue to expand the breadth of use and applications of AI technologies, including generative AI, further into our product offerings, or to address changes to AI technologies, frameworks, or regulations.
−Removed: Additionally, we may incur substantial costs in our sales and marketing efforts to promote and sell our offerings based on AI technologies, including but not limited to branding, product promotion, and demand generation as well as technical training and investments in resources for our sales personnel and partners.
−Removed: investments in building our product offerings and in sales and marketing, our product offerings may not be adopted by customers.
+Added: In addition, we may incur substantial costs in our sales and marketing efforts to promote and sell our offerings based on AI technologies, including costs for branding, product promotion, and demand generation, as well as for technical training, training material generation, and investments in resources for our sales personnel and partners.
+Added: Despite such investments in building our product offerings and in sales and marketing, our product offerings may not be adopted by customers.
We may not achieve significant revenue directly related to all of our AI-related initiatives for several years, if at all.
−Removed: Further, AI presents risks, challenges, and unintended consequences that could affect our ability to continue to incorporate the use of AI successfully in our business and solutions in new and novel ways.
−Removed: In addition, given the complex nature of AI technology, we face an evolving regulatory landscape and significant competition from other companies.
+Added: Further, AI presents risks, challenges, and unintended consequences that could affect our ability to continue to incorporate the use of AI successfully in our business and solutions in new ways.
+Added: Further, given the complex nature of AI technology, we face an evolving regulatory landscape and significant competition from other companies.
Competitors may incorporate AI into their products more quickly or more successfully than we do, which could impair our ability to compete effectively and adversely affect our financial results.
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Any of the foregoing could adversely affect our business, reputation, or financial results.
−Removed: Social, ethical, and regulatory issues relating to the use of AI and similar evolving technologies in our offerings may result in new or enhanced governmental or regulatory scrutiny, reputational harm, damage to our competitive position, and liability.
−Removed: We have invested in and plan to continue to invest in the research and development of artificial intelligence and machine learning technologies, including generative AI.
+Added: Ethical and regulatory issues relating to the use of AI and similar evolving technologies in our offerings may result in new or enhanced governmental or regulatory scrutiny, reputational harm, damage to our competitive position, and liability.
We view our continued investment in AI and generative AI research and development as an opportunity to enhance our products and services, strengthen our competitive advantage, and contribute to the responsible advancement of AI and generative AI technology.
−Removed: While we aim to do so in a responsible manner, social, ethical, regulatory, and legal issues relating to the use of new and evolving technologies such as AI and generative AI in our offerings may result in reputational harm and liability, as well as failures in regulatory compliance, and may cause us to incur additional research, development, and compliance costs.
−Removed: We are increasingly building into many of our offerings new software for integrating and creating the opportunity for our customers to integrate themselves as well as existing AI and generative AI tools in the market.
−Removed: As with many innovations, AI and generative AI present risks that could affect its adoption and contribution to our business.
−Removed: If we enable or offer solutions that draw controversy due to their perceived or actual impact on society, we may experience brand or reputational harm, competitive harm, or legal liability.
−Removed: Government regulation related to AI and generative AI use and ethics may also increase the burden and cost of research and development, testing, and maintenance and delay implementation of these technologies.
−Removed: The rapid evolution of AI will require the application of resources to develop, test and maintain our products and services to help ensure that AI and generative AI are implemented in a way that minimizes unintended, potentially harmful, or adverse impacts.
−Removed: It is possible that further laws and regulations will be adopted, or that existing laws and regulations may be interpreted, in ways that would affect our business and the ways in which we, our partners, and customers or potential customers use AI and machine learning technology, which may impact their use adoption of our solutions and may adversely affect our financial condition and our results of operations, including as a result of costs we incur to comply with such laws or regulations.
+Added: While we aim to do so in a responsible manner, the use of AI and generative AI in our products and services presents ethical and legal risks to our business, financial condition, and results of operations.
+Added: If our use of AI becomes controversial, we may experience loss of user trust, as well as brand or reputational harm, competitive injury, or legal liability.
+Added: The use of AI technologies also could expose us to an increased risk of cybersecurity threats and incidents and claims or other adverse effects from infringements or violations of intellectual property or other regulated activity.
+Added: Our use of such technologies could increase the risk of exposure of our or other parties’ proprietary confidential information, or other confidential or sensitive information, to unauthorized recipients, including inadvertent disclosure of confidential or sensitive information into publicly available third-party training sets.
+Added: Such risks related to the use of AI could, whether directly or indirectly, harm our results of operations, competitive position and business.
+Added: AI is the subject of evolving review by various domestic and international governmental and regulatory agencies, including the SEC and the Federal Trade Commission (“FTC”), and laws, rules, directives, and regulations governing the use of AI, such as the EU Artificial Intelligence Act, are changing and evolving rapidly.
+Added: We may not always be able to anticipate how to respond to these legal frameworks for AI use and we may have to expend resources to adjust or audit our products and services in certain jurisdictions, especially if the legal frameworks are not consistent across jurisdictions.
+Added: Any failure or perceived failure by us to comply with laws, rules, directives, and regulations governing the use of AI could have an adverse impact on our business.
If we experience a security incident, or unauthorized access to or other unauthorized processing of confidential information, including personal data, otherwise occurs, our software may be perceived as not being secure, customers may reduce the use of or stop using our products, and we may incur significant liabilities.
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We face sophisticated and evolving cyber threats from individual hackers, criminal groups, and state-sponsored organizations, as well as risks that employees, contractors or other insiders, particularly those with connectivity to our systems, may introduce vulnerabilities into our environments, facilitate a cyber attack, or take action to misappropriate our intellectual property and proprietary information.
−Removed: As a provider of security solutions, we have been and may continue to be specifically targeted by threat actors for attacks intended to circumvent our security capabilities as an entry point into customers’ endpoints, networks, or systems.
+Added: As a provider of security solutions, we provide security services to many entities that are frequently and intensively targeted by some cyber threat actions, such as U.S.
+Added: government agencies, defense contractors, and non-U.S.
+Added: Our work protecting these entities increases the likelihood that we may be targeted by nation-state actors, including those from countries with a history of conducting cyber operations against such organizations.
+Added: We have been and may continue to be specifically targeted by threat actors for attacks intended to circumvent our security capabilities as an entry point into customers’ endpoints, networks, or systems.
Our industry continues to see a large volume of unauthorized scans of systems searching for vulnerabilities or misconfigurations to exploit.
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We and our third-party vendors and service providers may be unable to anticipate these techniques, react to them in a timely manner, or implement adequate preventative measures.
−Removed: Because of the complexity and interconnectedness of our systems and networks and those on which we rely, the process of upgrading or patching our protective measures could itself create a risk of cybersecurity issues or system disruptions, including for customers who rely upon, or have exposure to, such systems and networks.
+Added: Because of the complexity and interconnectedness of our systems and networks and those on which we rely, the process of upgrading or patching our protective measures could itself create a risk of cybersecurity intrusions or system disruptions, including for customers who rely upon, or have exposure to, such systems and networks.
Limitations of liability provisions in our customer and user agreements, contracts with third-party vendors and service providers or other contracts may not be enforceable or adequate to protect us from any liabilities or damages with respect to any particular claim relating to a security incident.
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The successful assertion of claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our business.
−Removed: Our ability to grow our business may suffer if we are unable to expand adoption of our Elastic Cloud offerings.
−Removed: We believe our future success will depend significantly on the growth in the adoption of Elastic Cloud, our family of cloud-based offerings.
−Removed: We have incurred and will continue to incur substantial costs to develop, sell and support our Elastic Cloud offerings.
−Removed: We have also entered into non-cancelable multi-year cloud hosting capacity commitments with certain third-party cloud providers, which require us to pay for such capacity irrespective of actual usage.
−Removed: We believe that we must offer a family of cloud-based products to address the market segment that prefers a cloud-based solution to a self-managed solution and that there will be increasing demand for cloud-based offerings of our products.
−Removed: For the years ended April 30, 2024, 2023, and 2022, Elastic Cloud contributed 43%, 40%, and 35% of our total revenue, respectively.
−Removed: However, as the use of cloud-based computing solutions is rapidly evolving, it is difficult to predict the potential growth, if any, of general market adoption, customer adoption, and retention rates of our cloud-based offerings.
−Removed: There could be decreased demand for our cloud-based offerings due to reasons within or outside of our control, including, among other factors, lack of customer acceptance, technological challenges with bringing cloud offerings to market and maintaining those offerings, information security, data protection, or privacy concerns, our inability to properly manage and support our cloud-based offerings, competing technologies and products, weakening economic conditions, and decreases in corporate spending.
−Removed: If we are not able to develop, market, or deliver cloud-based offerings that satisfy customer requirements technically or commercially, if our investments in cloud-based offerings do not yield the expected return, or if we are unable to decrease the cost of providing our cloud-based offerings, our business, competitive position, financial condition and results of operations may be harmed.
−Removed: Our operating results are likely to fluctuate from quarter to quarter, and our financial results in any one quarter should not be relied upon as indicative of future performance.
−Removed: Our results of operations, including our revenue, cost of revenue, gross margin, operating expenses, cash flow and deferred revenue, have fluctuated from quarter-to-quarter in the past and may continue to vary significantly in the future so that period-to-period comparisons of our results of operations may not be meaningful.
−Removed: These variations may be further impacted as more of our Elastic Cloud customers adopt consumption-based arrangements or as Elastic Cloud customers already on consumption-based arrangements optimize their usage in response to the current macroeconomic environment.
−Removed: Accordingly, our financial results in any one quarter should not be relied upon as indicative of future performance.
−Removed: Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, may be difficult to predict, and may or may not fully reflect the underlying performance of our business.
−Removed: Factors that may cause fluctuations in our quarterly financial results include the risks and uncertainties described in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K.
−Removed: The impact of one or more of these factors may cause our operating results to vary significantly.
−Removed: Such fluctuations in our results could cause us to fail to meet the expectations of investors or securities analysts, which could cause the trading price of our ordinary shares to fall substantially, and we could face costly lawsuits, including securities class action suits, which could have an adverse effect on our business.
−Removed: Seasonality may cause fluctuations in our sales and results of operations.
−Removed: Historically, we have experienced quarterly fluctuations and seasonality in our sales and results of operations based on the timing of our entry into agreements with new and existing customers, customer usage patterns for our consumption-based arrangements, and the mix between annual and monthly contracts entered into each reporting period.
−Removed: Trends in our business, financial condition, results of operations, and cash flows are impacted by seasonality in our sales cycle, which generally reflects a trend toward the highest sales in our fourth fiscal quarter and the lowest sales in our first fiscal quarter.
−Removed: We expect that this seasonality will continue to affect our results of operations in the future, and might become more pronounced as we continue to target larger enterprise customers.
If our existing customers do not renew their subscriptions, our business and results of operations may be adversely affected.
−Removed: We derive a significant portion of our revenue from renewals of existing subscriptions.
−Removed: Our customers have no contractual obligation to renew their subscriptions after the completion of their subscription term.
+Added: We derive a significant portion of our revenue from renewals of existing subscriptions, although our customers may choose not to renew their subscriptions upon completion of the contract term.
Our subscriptions for self-managed deployments typically range from one to three years, while many of our Elastic Cloud customers purchase subscriptions either on a month-to-month basis or on a committed contract of generally one to three years in duration.
−Removed: Our customers may decline to renew their contracts as a result of a number of factors, including their budgets, their satisfaction with our products and our customer support, our products’ ability to integrate with new and changing technologies, the frequency and severity of product outages, our product uptime or latency, and the pricing of our products or competing products.
−Removed: If our customers renew their subscriptions, they may renew for shorter subscription terms or on other terms that are less economically beneficial to us.
+Added: Decisions by our customers concerning whether to renew their contracts depend on a number of factors, including their budgets, their satisfaction with our products and our customer support, our products’ ability to integrate with new and changing technologies, the frequency and severity of product outages, our product uptime or latency, and the pricing of our products or competing products.
+Added: If our customers renew their subscriptions, they may renew for shorter subscription terms or on other terms that are less financially advantageous to us.
If our existing customers do not renew their subscriptions, or renew on less favorable terms, our revenue may grow more slowly than expected or decline.
−Removed: If we are unable to increase sales of our subscriptions to new customers, sell additional subscriptions to our existing customers, or expand the value of our existing customers’ subscriptions, our revenue growth rate may decline.
+Added: Our revenue growth rate may decline or even become negative if we are unable to increase sales of our subscriptions to new customers, sell additional subscriptions to our existing customers, or expand the value of our existing customers’ subscriptions.
We offer certain features of our products with no payment required.
−Removed: Customers purchase subscriptions in order to gain access to additional functionality and support.
+Added: Customers purchase subscriptions to gain access to additional functionality and support.
Our future success depends on our ability to sell our subscriptions to new customers, including to large enterprises, and to expand the deployment of our offerings with existing customers by selling paid subscriptions to our existing users and expanding the value and number of existing customers’ subscriptions.
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In addition, a significant aspect of our sales and marketing focus is to expand deployments within existing customers.
−Removed: The rate at which our existing customers purchase additional subscriptions and expand the value of existing subscriptions depends on a number of factors, including customers’ level of satisfaction with our offerings, the nature and size of the deployments, the desire to address additional use cases, the perceived need for additional features, and general economic conditions.
+Added: The rate at which our existing customers purchase additional subscriptions and expand the value of existing subscriptions depends upon customers’ level of satisfaction with our offerings, the nature and size of the deployments, the desire to address additional use cases, the perceived need for additional features, and general economic conditions.
If our existing customers do not purchase additional subscriptions or expand the value of their subscriptions, our Net Expansion Rate may decline.
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If our customers do not recognize the potential of our offerings, our business would be materially and adversely affected.
−Removed: If our efforts to sell subscriptions to new customers and to expand deployments at existing customers are not successful, our total revenue and revenue growth rate may decline, and our business could suffer.
−Removed: We do not have an adequate history with our consumption-based arrangements for our Elastic Cloud offerings to predict accurately the long-term rate of customer adoption or renewal, or the impact those arrangements will have on our near-term or long-term revenue or operating results.
−Removed: Because we recognize revenue under a consumption-based arrangement based on actual customer consumption, we do not have the same ability to predict the timing of revenue recognition as we do under subscription arrangements where revenue is recognized on a predetermined schedule over the subscription term.
+Added: If our efforts to sell subscriptions to new customers and to expand deployments with existing customers are not successful, our total revenue may decline and revenue growth rate may decline or even become negative, and our business could suffer.
+Added: Our ability to grow our business may suffer if we are unable to expand adoption of or realize expected return on investments in our Elastic Cloud offerings.
+Added: We believe that we must offer cloud-based products to address the market segment that prefers a cloud-based solution, and that our future success will depend significantly on the growth in adoption of Elastic Cloud, our family of cloud-based offerings.
+Added: For the years ended April 30, 2025, 2024, and 2023, Elastic Cloud contributed 46%, 43%, and 40% of our total revenue, respectively.
+Added: As the use of cloud-based computing solutions is rapidly evolving, it is difficult to predict the potential growth, if any, of general market adoption, customer adoption, and retention rates of our cloud-based offerings.
+Added: We have incurred and will continue to incur substantial costs to develop, sell and support our Elastic Cloud offerings.
+Added: We have entered into non-cancelable multi-year cloud hosting capacity commitments with some third-party cloud providers, which require us to pay for such capacity irrespective of actual usage.
+Added: Further, as our cloud offering makes up an increasing percentage of our total revenue, we expect to see increased associated cloud-related costs, such as hosting and infrastructure costs, which may adversely impact our gross margins.
+Added: Demand for these offerings could decrease for reasons within or outside of our control, including, among other factors, lack of customer acceptance, technological challenges with bringing cloud offerings to market and maintaining those offerings, information security, data protection, or privacy concerns, our inability to properly manage and support our cloud-based offerings, competing technologies and products, weakening economic conditions, and decreases in corporate spending.
+Added: If we are not able to develop, market, or deliver cloud-based offerings that satisfy customer requirements technically or commercially, if our investments in cloud-based offerings do not yield the expected return, or if we are unable to decrease the cost of providing our cloud-based offerings, our business, competitive position, financial condition, and results of operations may be harmed.
+Added: Our operating results are likely to fluctuate from quarter to quarter, and our financial results in any one quarter should not be relied upon as indicative of future performance.
+Added: Our results of operations, including our revenue, cost of revenue, gross margin, operating expenses, cash flows and deferred revenue, have fluctuated from quarter to quarter in the past and may continue to vary significantly in the future so that period-to-period comparisons of our results of operations may not be meaningful.
+Added: These variations may be further impacted as more of our Elastic Cloud customers adopt consumption-based arrangements or as Elastic Cloud customers already on consumption-based arrangements adjust their usage in response to the current macroeconomic environment.
+Added: These variations may also be impacted by internal reorganizations, including reassignment of personnel to new roles or to new sales territories.
+Added: Accordingly, our financial results in any one quarter should not be relied upon as indicative of future performance.
+Added: Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, may be difficult to predict, and may or may not fully reflect the underlying performance of our business.
+Added: Factors that may cause fluctuations in our quarterly financial results include the risks and uncertainties described in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K.
+Added: Fluctuations in our results could cause us to fail to meet the expectations of investors or securities analysts, which could cause the trading price of our ordinary shares to fall substantially and result in costly lawsuits, including securities class action suits against us, which could have an adverse effect on our business.
+Added: Seasonality in our sales cycle causes fluctuations in our results of operations.
+Added: Historically, we have experienced quarterly fluctuations and seasonality in our sales and results of operations based on the timing of our entry into agreements with new and existing customers, customer usage patterns for our consumption-based arrangements, and the mix between annual and monthly contracts entered into each reporting period.
+Added: Trends in our business, financial condition, results of operations, and cash flows are impacted by seasonality in our sales cycle, which generally reflects a trend toward the highest sales in our fourth fiscal quarter and the lowest sales in our first fiscal quarter.
+Added: We expect that this seasonality will continue to affect our results of operations in the future, and might become more pronounced as we continue to target larger enterprise customers.
+Added: We do not have an adequate history with our consumption-based arrangements for our Elastic Cloud offerings to accurately predict the long-term rate of customer adoption or renewal, or the impact those arrangements will have on our near-term or long-term revenue or operating results.
+Added: Because we recognize revenue under a consumption-based arrangement based on actual customer consumption, we do not have the same ability to predict the timing of revenue recognition as we do under subscription arrangements in which revenue is recognized on a predetermined schedule over the subscription term.
Moreover, customers may consume our products at a different pace than we expect.
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If we are not able to maintain and enhance our brand, especially among developers and executives with budgetary control, our ability to expand our customer base will be impaired and our business and operating results may be adversely affected.
−Removed: We believe that developing and maintaining widespread awareness of our brand, especially with developers and executives with budgetary control, is critical to achieving widespread acceptance of our software and attracting new users and customers.
+Added: We believe that developing and maintaining widespread awareness of our brand, especially with developers and executives with budgetary control within their organizations, is critical to achieving widespread acceptance of our software and attracting new users and customers.
We also believe that the importance of brand recognition will increase as competition in our market increases.
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Brand promotion activities may not generate user or customer awareness or increase revenue.
−Removed: Even if they do, any increase in revenue may not offset the expenses we incur in building our brand.
+Added: Even if they do increase revenue, any such increase may not offset the expenses we incur in building our brand.
For instance, our continued focus and investment in our ElasticON user conferences and similar investments in our brand, user engagement, and customer engagement may not generate the desired customer awareness or a sufficient financial return.
−Removed: If we fail to successfully promote and maintain our brand, we may fail to attract or retain users and customers necessary to realize a sufficient return on our brand-building efforts, or to achieve the widespread brand awareness that is critical for broad customer adoption of our products, which would adversely affect our business and results of operations.
+Added: If we fail to successfully promote and maintain our brand, we may fail to attract or retain users and customers necessary to achieve the widespread brand awareness that is critical for broad customer adoption of our products, which would adversely affect our business and results of operations.
We may not be able to compete successfully against current and future competitors.
The market for our products is highly competitive, quickly evolving, fragmented, and subject to rapid changes in technology, shifting customer needs, and frequent introductions of new offerings.
−Removed: We believe that our ability to compete depends upon many factors both within and beyond our control.
+Added: We believe that our ability to compete depends upon many factors, some of which are beyond our control.
Some of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources, stronger brand recognition, broader global distribution and presence, more established relationships with current or potential customers and partners, and larger customer bases than we do.
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These competitors may engage in more extensive research and development efforts, undertake more far-reaching and successful sales and marketing campaigns, have more experienced sales professionals, execute more successfully on their go-to-market strategy and have greater access to more markets and decision makers, and adopt more aggressive pricing policies, which may allow them to build larger customer bases than we have.
−Removed: New start-up companies that innovate and large competitors that are making significant investments in research and development may develop similar offerings that compete with our offerings or that achieve greater market acceptance than our offerings.
−Removed: This could attract customers away from our offerings and reduce our market share.
+Added: Claims made about our products by current and future competitors, even if misleading, may also negatively impact customer perceptions about us.
+Added: New start-up companies that innovate and large competitors that are making significant investments in research and development may develop offerings that compete with or achieve greater market acceptance than our offerings, which could attract customers away from our offerings and reduce our market share.
As market segments become increasingly crowded and competition intensifies, we could potentially face increasing costs of goods and services sold.
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The market for search technologies, including search, observability and security, is subject to rapid technological change, innovation (such as the use of AI), evolving industry standards, and changing regulations, as well as changing customer needs, requirements, and preferences.
−Removed: Our success depends upon our ability to continue to innovate, enhance existing products, expand the use cases of our products, anticipate and respond to changing customer needs, requirements, and preferences, and develop and introduce in a timely manner new offerings that keep pace with technological and competitive developments.
+Added: Our success depends on our ability to continue to innovate, enhance existing products, expand the use cases of our products, anticipate and respond to changing customer needs, requirements, and preferences, and develop and introduce in a timely manner new offerings that keep pace with technological and competitive developments.
We have experienced delays in releasing new products, deployment options, and product enhancements and may experience similar delays in the future.
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Future delays or problems in the installation or implementation of our new releases may cause customers to forgo purchases of our products and purchase products of our competitors instead.
−Removed: The success of new product introductions depends on a number of factors including, but not limited to, timely and successful product development, market acceptance, our ability to manage the risks associated with new product releases, the availability of software components for new products, the effective management of development and other spending in connection with anticipated demand for new products, the availability of newly developed products, and the risk that new products may have bugs, errors, or other defects or deficiencies in the early stages of introduction.
−Removed: We have experienced bugs, errors, or other defects or deficiencies in new products and product updates and may have similar experiences in the future.
−Removed: Furthermore, our ability to increase the usage of our products depends, in part, on the development of new use cases for our products, which is typically driven by our developer community and may be outside of our control.
−Removed: We also have invested, and may continue to invest, in the acquisition of complementary businesses, technologies, services, products and other assets that expand the products that we can offer our customers.
+Added: The success of new product introductions depends on a number of factors that include timely and successful product development, market acceptance, our ability to manage the risks associated with new product releases, the availability of software components for new products, the effective management of development and other spending in connection with anticipated demand for new products, the availability of newly developed products, and the risk that new products may have defects in the early stages of introduction.
+Added: We have experienced bugs, errors, or other defects in new products and product updates and may have similar experiences in the future.
+Added: Further, our ability to increase the usage of our products depends, in part, on the development of new use cases for our products, which is typically driven by our developer community and may be outside of our control.
+Added: We also have invested, and may continue to invest, in the acquisition of complementary businesses, technologies, services, products, and other assets that we expect will expand the products that we can offer our customers.
We may make these investments without being certain that they will result in products or enhancements that will be accepted by existing or prospective customers.
−Removed: If we are unable to successfully enhance our existing products to meet evolving customer requirements, increase adoption and usage of our products, develop new products, or if our efforts to increase the usage of our products are more expensive than we expect, our business, results of operations, and financial condition could be adversely affected.
+Added: If we are unable to enhance our existing products to meet evolving customer requirements, increase adoption and usage of our products, or develop new products, or if our efforts to increase the usage of our products are more expensive than we expect, our business, results of operations, and financial condition could be adversely affected.
Sales of our products could suffer if the markets for those products do not grow or if we fail to adapt and respond effectively to evolving markets.
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Our results of operations may fluctuate, in part, because of the length and variability of the sales cycle of our subscriptions and the difficulty in making short-term adjustments to our operating expenses.
−Removed: Our results of operations depend in part on sales to new customers, including large customers, and increasing sales to existing customers.
−Removed: The length of our sales cycle, from initial contact with our sales team to contractually committing to our subscriptions, can vary substantially from customer to customer based on deal complexity as well as whether a sale is made directly by us or through a channel partner.
−Removed: Our sales cycle can extend to more than a year for some customers, and the length of sales cycles may be further impacted due to worsening economic conditions.
+Added: Our results of operations depend upon sales to new customers, including large customers, and increasing sales to existing customers.
+Added: The length of our sales cycle, from initial contact with our sales team to contractually committing to our subscriptions, can vary substantially from customer to customer based on the complexity of our offerings as well as whether a sale is made directly by us or through a channel partner.
+Added: Our sales cycle can extend to more than a year for some customers, and the length of sales cycles may be further extended as a result of worsening economic conditions.
In addition, some customers have been scrutinizing their spending more carefully and reducing their consumption spending given the current uncertain economic environment, and we generally expect this caution to continue.
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As we target more of our sales efforts at larger enterprise customers, we may face greater costs, longer sales cycles, greater competition and less predictability in completing some of our sales.
−Removed: A customer’s decision to use our solutions may be an enterprise-wide decision, which may require greater levels of education regarding the use cases of our products or protracted negotiations.
+Added: A customer’s decision to use our solutions may be an enterprise-wide decision, which could require greater levels of education regarding the use cases of our products or protracted negotiations.
In addition, larger customers may demand more configuration, integration services, and features.
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Because we recognize the vast majority of the revenue from subscriptions, either based on actual consumption or ratably over the term of the relevant subscription period, downturns or upturns in sales are not immediately reflected in full in our results of operations.
−Removed: Subscription revenue accounts for the substantial majority of our revenue, constituting 93%, 92%, and 93% of total revenue for the years ended April 30, 2024, 2023 and 2022, respectively.
+Added: Subscription revenue accounts for the substantial majority of our revenue, constituting 93% of total revenue for the years ended April 30, 2025 and 2024, and 92% of total revenue for the year ended April 30, 2023.
The effect of significant downturns in new or renewed sales of our subscriptions is not reflected in full in our results of operations until future periods.
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The sales prices of our offerings may decrease, which may reduce our revenue and gross profits and adversely affect our financial results.
+Added: We may not be able to maintain our prices and gross profits at levels that will allow us to achieve and maintain profitability.
The sales prices for our offerings may decline or we may introduce new pricing models for a variety of reasons, including competitive pricing pressures, discounts, in anticipation of or in conjunction with the introduction of new offerings, or promotional programs.
−Removed: Competition continues to increase in the market segments in which we operate, and we expect competition to continue to increase, thereby leading to increased pricing pressures.
+Added: Competition continues to increase in the market segments in which we operate, and we expect competition to continue to increase and lead to increased pricing pressures.
Larger competitors with more diverse offerings may reduce the price of offerings that compete with ours or may bundle them with other offerings.
Additionally, currency fluctuations in some countries and regions and pressures from uncertain inflation and interest rate environments may negatively impact actual prices that customers and channel partners are willing to pay in those countries and regions.
−Removed: Any decrease in the sales prices for our offerings may reduce our revenue and gross profit, unless accompanied by an increase in volume to offset the effects of such price decreases, or in the case of gross profit, unless accompanied by a corresponding decrease of sufficient magnitude in costs.
−Removed: Gross profit could also be adversely impacted by a shift in the mix of our subscriptions from self-managed to our cloud offering, for which we incur hosting costs, as well as any increase in our mix of services relative to subscriptions.
−Removed: We may not be able to maintain our prices and gross profits at levels that will allow us to achieve and maintain profitability.
+Added: Any decrease in the sales prices for our offerings may reduce our revenue and gross profit, unless accompanied by an increase in volume to offset the effects of price decreases or, in the case of gross profit, unless accompanied by a corresponding decrease of sufficient magnitude in costs.
+Added: Gross profit could also be adversely impacted by a shift in the mix of our subscriptions from self-managed to our cloud offering, for which we incur hosting costs, as well as by any increase in our mix of services relative to subscriptions.
We expect our revenue mix to vary over time, which could harm our gross margin and operating results.
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We expect that revenue from Elastic Cloud, which contributed 46%, 43%, and 40% of our total revenue in fiscal 2025, 2024 and 2023, respectively, will continue to become a larger part of our revenue mix.
−Removed: Due to the differing revenue recognition policies applicable to our subscriptions and services, shifts in our business mix from quarter to quarter could produce substantial variation in revenue recognized.
−Removed: The variation in our revenue also may result from the growth of consumption-based arrangements for our Elastic Cloud offerings, where the revenue we recognize is tied to our customers’ actual usage of our products, and further reduction in usage by customers already using a consumption-based arrangement due to the uncertain macroeconomic environment.
+Added: We may experience a shift in revenue mix from cloud to self-managed in areas particularly affected by evolving international trade policies.
+Added: Under the differing revenue recognition policies applicable to our subscriptions and services, shifts in our business mix from quarter to quarter could produce substantial variation in the revenue we recognize.
+Added: The variation in our revenue also may result from the growth of consumption-based arrangements for our Elastic Cloud offerings, where the revenue we recognize is tied to our customers’ actual usage of our products, and from a further reduction in usage by customers already using a consumption-based arrangement due to the uncertain macroeconomic environment.
Further, our gross margins and operating results could be harmed by changes in revenue mix and costs, together with numerous other factors, including our entry into new markets or growth in lower margin markets;
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and increased price competition.
−Removed: We depend on our senior management and other key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could harm our business.
+Added: The loss of one or more members of our senior management and other key employees or an inability to attract and retain highly skilled employees could harm our business.
Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel.
The loss of the services of any of our key personnel, the inability to attract or retain qualified personnel, or delays in hiring required personnel, particularly in engineering and sales, may seriously harm our business, financial condition, and results of operations.
−Removed: Further, our ability to attract additional qualified personnel may be impacted by the economic uncertainty and insecurity caused by macroeconomic factors and geopolitical events.
+Added: Our ability to attract additional qualified personnel may be impacted by the economic uncertainty and insecurity caused by macroeconomic factors and geopolitical events.
The loss of services of any of our key personnel also increases our dependency on other key personnel who remain with us.
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We are also substantially dependent on the continued service of our existing engineering personnel because of the complexity of our products.
−Removed: Our future performance also depends on the continued service and continuing contributions of our senior management, particularly our Chief Executive Officer, Ashutosh Kulkarni, and Chief Technology Officer, co-founder and former Chief Executive Officer, Shay Banon, to execute on our business plan and to identify and pursue new opportunities and product innovations.
+Added: Our future performance also depends on the continued service and continuing contributions of our senior management to execute our business strategy and to identify and pursue new opportunities and product innovations.
We do not maintain key person life insurance policies on any of our employees.
−Removed: The loss of services of senior management could significantly delay or prevent the achievement of our development and strategic objectives, which could adversely affect our business, financial condition, and results of operations.
−Removed: Any search for senior management in the future or any search to replace the loss of any senior management may be protracted, and we may not be able to attract a qualified candidate or replacement, as applicable, in a timely manner or at all, particularly as potential candidates may be less willing to change jobs during the unstable economic conditions caused by macroeconomic and geopolitical events.
+Added: The loss of services of members of our senior management could significantly delay or prevent the achievement of our development and strategic objectives, which could adversely affect our business, financial condition, and results of operations.
+Added: Any search for senior managers in the future or any search to replace the loss of any senior managers may be protracted, and we may not be able to attract a qualified candidate or replacement in a timely manner or at all, particularly as potential candidates may be less willing to change jobs in periods of unstable economic conditions caused by macroeconomic and geopolitical events.
The industry in which we operate is generally characterized by significant competition for skilled personnel as well as high employee attrition.
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We may need to invest significant amounts of cash and equity to attract and retain new employees, and we may never realize returns on these investments.
−Removed: Also, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited, that they have divulged proprietary or other confidential information, or that their former employers own their inventions or other work product.
+Added: Further, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited, that they have divulged proprietary or other confidential information, or that their former employers own their inventions or other work product.
If we do not effectively develop and expand our sales and marketing capabilities, including expanding, training, and compensating our sales force, we may be unable to add new customers, increase sales to existing customers or expand the value of our existing customers’ subscriptions.
−Removed: We dedicate significant resources to sales and marketing initiatives, which require us to invest significant financial and other resources, including in markets in which we have limited or no experience.
−Removed: Our business and results of operations will be harmed if our sales and marketing efforts do not generate significant revenue increases or increases that are smaller than anticipated.
+Added: We dedicate significant resources to sales and marketing initiatives, including in markets in which we have limited or no experience.
+Added: Our business and results of operations will be harmed if our sales and marketing efforts do not generate significant revenue increases or generate increases that are smaller than anticipated.
We may not achieve revenue growth from expanding our sales force if we are unable to hire, train, and retain talented and effective sales personnel.
−Removed: We depend on our sales force to obtain new customers and to drive additional sales to existing customers.
+Added: We depend upon our sales force to obtain new customers and to drive additional sales to existing customers.
We believe that there is significant competition for sales personnel, including sales representatives, sales managers, and sales engineers, with the requisite skills and technical knowledge.
Our ability to achieve significant revenue growth will depend, in large part, on our success in recruiting, training and retaining sufficient sales personnel to support our growth, and as we introduce new products, solutions, and marketing strategies, we may need to re-train existing sales personnel.
−Removed: New hires also require extensive training, which may take significant time before they achieve full productivity.
−Removed: Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business.
−Removed: As we continue to grow rapidly, a large percentage of our sales force will have relatively little experience working with us, our subscriptions, and our business model.
+Added: Newly hired employees also require extensive training, which may take significant time before they achieve full productivity.
+Added: Employees we have recently hired may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business.
+Added: As we continue to grow rapidly, a large portion of our sales force will have relatively little experience working with us, our subscriptions, and our business model.
Additionally, we may need to evolve our sales compensation plans to drive the growth of our Elastic Cloud offerings with consumption-based arrangements.
Such changes may have adverse consequences if they are not designed effectively.
−Removed: If we are unable to hire and train sufficient numbers of effective sales personnel, our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time, our sales personnel are not successful in obtaining new customers or increasing sales to our existing customer base, or our sales and marketing programs, including our sales compensation plans, are not effective, our growth and results of operations could be negatively impacted.
+Added: Our growth and results of operations could be negatively impacted if we are unable to hire and train sufficient numbers of effective sales personnel, our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time, our sales personnel are not successful in obtaining new customers or increasing sales to our existing customer base, or our sales and marketing programs, including our sales compensation plans, are not effective.
Our failure to offer high-quality customer support could have an adverse effect on our business and results of operations.
−Removed: After our products are deployed within our customers’ IT environments, our customers depend on our technical support services to resolve issues relating to our products.
−Removed: If we do not succeed in helping our customers quickly resolve post-deployment issues or provide effective ongoing support and education on our products, our ability to renew or sell additional subscriptions to existing customers or expand the value of existing customers’ subscriptions would be adversely affected and our reputation with potential customers could be damaged.
+Added: After our products are deployed within our customers’ IT environments, our customers depend upon our technical support services to resolve issues relating to our products.
+Added: If we do not succeed in helping our customers quickly resolve post-deployment issues or provide effective ongoing support and education with respect to our products, our ability to renew or sell additional subscriptions to existing customers or expand the value of existing customers’ subscriptions would be adversely affected and our reputation with potential customers could be damaged.
Many larger enterprise and government entity customers have more complex IT environments and require higher levels of support than smaller customers.
−Removed: If we fail to meet the requirements of these enterprise customers, it may be more difficult to increase sales with them.
−Removed: Additionally, it can take several months to recruit, hire, and train qualified technical support employees.
+Added: If we fail to meet the requirements of these larger customers, we may be unsuccessful in increasing our sales to them.
+Added: In addition, it can take several months to recruit, hire, and train qualified technical support employees.
We may not be able to hire such employees fast enough to keep up with demand, particularly if the sales of our offerings exceed our internal forecasts.
−Removed: Due to the uncertainty related to macroeconomic conditions, there may also be more competition for qualified employees and delays in hiring, onboarding, and training new employees.
+Added: The uncertainty related to macroeconomic conditions may result in more competition for qualified employees and delays in hiring, onboarding, and training new employees.
To the extent that we are unsuccessful in hiring, training, and retaining adequate support resources, our ability to provide adequate and timely support to our customers, and our customers’ satisfaction with our offerings will be adversely affected.
−Removed: Our failure to provide and maintain, or a market perception that we do not provide or maintain, high-quality support services would have an adverse effect on our business and results of operations.
−Removed: Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity and entrepreneurial spirit we have worked to foster, which could harm our business.
+Added: Our failure to provide and maintain, or a market perception that we do not provide or maintain, high-quality support services could have an adverse effect on our business and results of operations.
+Added: If we cannot maintain the corporate culture that has contributed to our success, we could lose the innovation, creativity, and entrepreneurial spirit we have worked to foster, which could harm our business.
We believe that our culture has been and will continue to be a key contributor to our success.
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Moreover, many of our existing employees may be able to receive significant proceeds from sales of our ordinary shares in the public markets, which could lead to employee attrition and disparities of wealth among our employees that might adversely affect relations among employees and our culture in general.
−Removed: Additional headcount growth and employee turnover may result in a change to our corporate culture, which could harm our business.
+Added: Additional headcount growth and employee turnover also may contribute to a change to our corporate culture, which could harm our business.
We may not be able to realize the benefits of our marketing strategies to offer some of our product features free of charge and to provide free trials of some of our paid features.
−Removed: We are dependent upon lead generation strategies, including offering free use of some of our product features and free trials of some of our paid features.
+Added: We are dependent on lead generation strategies, including offers of free use of some of our product features and free trials of some of our paid features.
These strategies may not be successful in continuing to generate sufficient sales opportunities necessary to increase our revenue.
Many users never convert from the free use model or from free trials to the paid versions of our products.
−Removed: To the extent that users do not become, or we are unable to successfully attract, paying customers, we will not realize the intended benefits of these marketing strategies and our ability to grow our revenue will be adversely affected.
+Added: To the extent that users do not become, or we are unable to attract, paying customers, we will not realize the intended benefits of these marketing strategies and our ability to grow our revenue will be adversely affected.
Our international operations and expansion expose us to a variety of risks.
−Removed: As of April 30, 2024, we had customers located in over 125 countries, and our strategy is to continue to expand internationally.
+Added: As of April 30, 2025, we had customers located in over 125 countries as we pursue our strategy to continue to expand internationally.
In addition, as of April 30, 2025, as a result of our strategy of leveraging a distributed workforce, we had employees located in over 40 countries.
Our current international operations involve and future initiatives may involve a variety of risks, including:
−Removed: • political and economic instability related to international disputes, such as the evolving conflict in Israel and Gaza and Russia’s war with Ukraine and the related impact on macroeconomic conditions as a result of such conflicts, which may negatively impact our customers, partners, and vendors;
−Removed: • unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions;
−Removed: • different labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees than in the United States, including deemed hourly wage and overtime regulations in these locations;
+Added: • political and economic instability related to international disputes, such as the evolving conflicts in the Middle East and Russia’s war with Ukraine and the related impact on macroeconomic conditions as a result of such conflicts, which may negatively impact our customers, partners, and vendors;
+Added: • unexpected changes in regulatory requirements, taxes, trade laws, export quotas, custom duties or other trade restrictions;
+Added: • different labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees than in the United States, including hourly wage and overtime regulations in these locations;
+Added: • compliance with requirements to hire local employees to perform particular functions, which may not align with the manner in which we would otherwise operate our business;
• exposure to many stringent regulations relating to privacy, data protection, and information security, particularly in the European Union, and potentially inconsistent laws and regulations in these areas across countries;
−Removed: • changes in a specific country’s or region’s political or economic conditions;
−Removed: • the evolving relations between the United States and China;
−Removed: • changes in relations between the Netherlands and the United States;
+Added: • changes in a country’s or region’s political or economic conditions;
+Added: • changes in relations between the United States and the European Union, including individual member states, such as the Netherlands;
• risks resulting from changes in currency exchange rates and inflationary pressures;
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• risks relating to enforcement of U.S.
−Removed: export control laws and regulations including the Export Administration Regulations (“EAR”), trade and economic sanctions, including restrictions promulgated by the Office of Foreign Assets Control (“OFAC”), and other similar trade protection regulations and measures in the United States or in other jurisdictions;
+Added: export control laws and regulations that include the Export Administration Regulations (“EAR”), trade and economic sanctions, including restrictions promulgated by the Office of Foreign Assets Control (“OFAC”), and other similar trade protection regulations and measures in the United States or in other jurisdictions;
• risks relating to our third-party vendors and service providers’ storage and processing of some of our and our customers’ data, including any supply chain cybersecurity attacks;
−Removed: • reduced ability to timely collect amounts owed to us by our customers in countries where our recourse may be more limited;
+Added: • reduced ability to timely collect amounts owed to us by our customers in countries where our recourse for delinquent payments may be more limited;
• limitations on our ability to reinvest earnings from operations derived from one country to fund the capital needs of our operations in other countries;
−Removed: • political, economic and trade uncertainties or instability related to the United Kingdom's withdrawal from the European Union (Brexit);
• limited or unfavorable intellectual property protection;
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Our future results depend, in part, on our ability to sustain and expand our penetration of the international markets in which we currently operate and to expand into additional international markets.
−Removed: We depend on direct sales and our channel partner relationships to sell our offerings in international markets.
−Removed: Our ability to expand internationally will depend upon our ability to deliver functionality and foreign language translations that reflect the needs of the international clients that we target.
−Removed: Our ability to expand internationally involves various risks, including the need to invest significant resources in such expansion, and the possibility that returns on such investments will not be achieved in the near future or at all in these less familiar competitive environments.
+Added: We sell our offerings in international markets through direct sales and our channel partner relationships.
+Added: Our ability to expand internationally will depend on our ability to deliver functionality and foreign language translations that reflect the needs of the international clients that we target.
+Added: International expansion involves various risks, including the need to invest significant resources in such expansion, and the possibility that returns on such investments will not be achieved in the near future or at all in these less familiar competitive environments.
We may also choose to conduct our international business through other partnerships.
−Removed: If we are unable to identify partners or negotiate favorable terms, our international growth may be limited.
−Removed: In addition, we have incurred and may continue to incur significant expenses before we generate material revenue as we attempt to establish our presence in particular international markets.
+Added: If we are unable to identify partners or negotiate favorable terms for our partnership arrangements, our international growth may be limited.
+Added: In addition, we have incurred and may continue to incur significant expenses before we generate material revenue in particular international markets as we attempt to establish our presence in those markets.
We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and results of operations.
−Removed: A portion of our subscription revenue is generated, and a portion of our operating expenses is incurred, outside the United States in foreign currencies.
−Removed: Fluctuations in the value of the U.S.
−Removed: dollar versus foreign currencies, particularly with respect to the Euro and the British Pound Sterling, may impact our operating results when translated into U.S.
+Added: A portion of our revenue is generated, and a portion of our expenses is incurred, outside the United States in foreign currencies, which exposes us to risk of fluctuations in foreign currency markets.
+Added: Specifically, our results of operations and cash flows are subject to currency fluctuations primarily in Euro, British Pound Sterling, Japanese Yen, Australian Dollar against the US Dollar.
Exchange rates have been volatile as a result of geopolitical conflicts and uncertain macroeconomic conditions, and this volatility may continue.
−Removed: A strengthening of the U.S.
−Removed: dollar could adversely affect year-over-year growth and increase the real cost of our offerings to our non-U.S.
−Removed: dollar customers, leading to delays in the purchase of our offerings and the lengthening of our sales cycle.
−Removed: If, as has occurred in recent periods, the strength of the U.S.
−Removed: dollar increases, our financial condition and results of operations could be negatively affected.
−Removed: In addition, increased international sales in the future, including through our channel partners, may result in greater foreign currency-denominated sales, increasing our foreign currency risk.
−Removed: Moreover, operating expenses incurred outside the United States in foreign currencies are increasing and are subject to fluctuations due to changes in foreign currency exchange rates.
+Added: The fluctuation of currencies in which we conduct business can both increase and decrease our overall revenue and expenses for any fiscal period.
+Added: In addition, increased international sales and operating expenses incurred in future periods outside the United States in foreign currencies will increase our foreign currency risk.
If we are not able to successfully hedge against the risks associated with currency fluctuations, our financial condition and results of operations could be adversely affected.
Any need by us to raise additional capital or generate the significant capital necessary to expand our operations and invest in new offerings could limit our ability to compete and could harm our business.
−Removed: We may need to raise additional funds in the future, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all, particularly during times of market volatility, changes in the interest rate environment, and general economic instability.
+Added: We may need to raise additional funds in the future, and may not be able to obtain additional debt or equity financing on favorable terms, if at all, particularly during times of market volatility, changes in the interest rate environment, and general economic instability.
If we raise additional equity financing, our shareholders may experience significant dilution of their ownership interests and the per share value of our ordinary shares could decline.
−Removed: Furthermore, if we engage in debt financing, the holders of debt would have priority over the holders of our ordinary shares, and we may be required to accept terms that restrict our ability to incur additional indebtedness.
−Removed: We may also be required to take other actions that would otherwise be in the interests of the debt holders and force us to maintain specified liquidity or other ratios, any of which could harm our business, results of operations, and financial condition.
+Added: Further, if we engage in debt financing, the holders of debt would have priority for payment over the holders of our ordinary shares, and we may be required to accept terms that restrict our ability to incur additional indebtedness.
+Added: We may also be required to take other actions that would otherwise be in the interests of the debt holders and force us to maintain specified liquidity or other financial ratios, any of which could harm our business, results of operations, and financial condition.
If we need additional capital and cannot raise it on acceptable terms, we may not be able, among other actions, to:
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• respond to competitive pressures or unanticipated working capital requirements.
−Removed: Our failure to have sufficient capital to do any of these things could limit our ability to compete and harm our business.
+Added: Our failure to have sufficient capital to take any of these actions could limit our ability to compete and harm our business.
Our generation of a portion of our revenue by sales to government entities subjects us to a number of risks.
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Government entities may have statutory, contractual, or other legal rights to terminate contracts with us or our channel partners for convenience or due to a default, and any such termination may adversely affect our future results.
−Removed: Government demand and payment for our offerings may be affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our offerings or exercise of options under multi-year contracts.
+Added: Government demand and payment for our offerings may be affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our offerings or preventing the exercise of options under multi-year contracts.
+Added: There is pressure on governments to reduce spending, both domestically and internationally, particularly with respect to U.S.
+Added: federal government agencies.
+Added: Actions by government entities to maximize efficiency and productivity may create further delays in government contracting due to uncertainties and employee reductions, and create additional uncertainty regarding budgetary priorities, all of which could adversely affect the timing, funding, and purchases of our offerings by U.S.
+Added: government organizations.
Contracts with government agencies, including classified contracts, are subject to extensive, evolving, and sometimes complex regulations, as well as audits and reviews of contractors’ administrative processes and other contract-related compliance obligations.
−Removed: Breaches of government contracts, failure to comply with applicable regulations or unfavorable findings from government audits or reviews could result in contract terminations, reputational harm or other adverse consequences, including but not limited to ineligibility to sell to government agencies in the future, government refusal to continue buying our subscriptions, a reduction of revenue, or fines or civil or criminal liability, which could adversely affect our results of operations in a material way.
+Added: Breaches of government contracts, failure to comply with applicable regulations, failure to obtain and maintain required facility and/or security clearances, or unfavorable findings from government audits or reviews could result in contract terminations, reputational harm or other adverse consequences, including ineligibility to sell to government agencies in the future, government refusal to continue buying our subscriptions, or fines or civil or criminal liability, which could adversely affect our results of operations.
If we are unable to maintain successful relationships with our partners, or if our partners fail to perform or we are unable to maintain successful relationships with them, our business operations, financial results, and growth prospects could be adversely affected.
−Removed: We maintain partnership relationships with a variety of partners, including cloud providers such as Amazon, Google, and Microsoft, systems integrators, channel partners, referral partners, OEM and MSP partners, and technology partners, to deliver offerings to our end customers and complement our broad community of users.
+Added: We maintain partnership relationships with a variety of enterprises, including cloud providers such as Amazon, Google, and Microsoft, systems integrators, channel partners, referral partners, OEM and MSP partners, and technology partners, to deliver offerings to our end customers and complement our broad community of users.
In particular, we partner with various cloud providers to jointly market, sell and deliver our Elastic Cloud offerings, which in some instances also involves technical integration with such cloud providers.
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Our agreements with our partners are generally non-exclusive, so that our partners may offer customers the offerings of several different companies, including offerings that compete with ours, or may themselves be or become competitors.
−Removed: Some of these partners may also market, sell, and support offerings that compete with ours, may devote more resources to the marketing, sales, and support of such competitive offerings, may have incentives to promote our competitors’ offerings to the detriment of our own or may cease selling our offerings altogether.
+Added: Some of these partners may also market, sell, and support offerings that compete with ours, may devote more resources to the marketing, sales, and support of such competitive offerings, may have incentives to promote our competitors’ offerings to the detriment of our offerings or may cease selling our offerings altogether.
If our partners do not effectively market and sell our offerings, choose to use greater efforts to market and sell their own offerings or those of our competitors, fail to provide adequate technical integration with their own offerings, fail to meet the needs of our customers, fail to deliver services to our customers, or if we lose one or more of our channel partners, our ability to expand our business and sell our offerings may be harmed.
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Our decision to no longer offer Elasticsearch and Kibana under an open source license may harm the adoption of Elasticsearch and Kibana.
−Removed: In February 2021, with the release of version 7.11 of the Elastic Stack, we changed the source code of Elasticsearch and Kibana which had historically been licensed under Apache 2.0, to be dual licensed under Elastic License 2.0 and the SSPL, at the user’s election.
+Added: In February 2021, with the release of version 7.11 of our platform, we changed the source code of Elasticsearch and Kibana, which had historically been licensed under Apache 2.0, to be dual licensed under Elastic License 2.0 and the Server Side Public License Version 1.0 (“SSPL”), at the user’s election.
Neither the Elastic License nor the SSPL has been approved by the Open Source Initiative or is included in the Free Software Foundation’s list of free software licenses.
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Other developers, including competitors of Elastic such as Amazon, have announced that they have “forked” Elasticsearch and Kibana, which means they have developed their own product or service that is based on features of Elasticsearch and Kibana that we had previously made available under an open source license.
−Removed: For example, Amazon has launched an open source project called OpenSearch based on a forked version of the Elastic Stack, which is licensed under Apache 2.0, and rebranded their existing Elasticsearch Service as OpenSearch Service.
+Added: For example, Amazon has launched an open source project called OpenSearch based on a forked version of our platform, which is licensed under Apache 2.0, and has rebranded its existing Elasticsearch Service as OpenSearch Service.
The combination of uncertainty regarding our dual license model and the potential competition from the forked versions of our software may negatively impact adoption of Elasticsearch and Kibana, which in turn could lead to reduced brand and product awareness and to a decline in paying customers, which could harm our ability to grow our business or achieve profitability.
−Removed: We could be negatively impacted if the Elastic License or SSPL, under which some of our software is licensed, is not enforceable.
−Removed: We make the source code of our products available under Apache 2.0, the Elastic License, or as dual licensed under the Elastic License and SSPL, depending on the product and version.
+Added: We could be negatively impacted if the source code licenses under which some of our software is licensed, is not enforceable.
+Added: We make the source code of our products available under Apache 2.0, the Elastic License, as dual licensed under the Elastic License and SSPL, depending on the product and version, or the GNU Affero General Public License v3.
Apache 2.0 is a permissive open source license that allows licensees to freely copy, modify and distribute Apache 2.0-licensed software if they meet certain conditions.
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The Elastic License permits licensees to use, copy, modify and distribute the licensed software so long as they do not offer access to the software as a cloud service, interfere with the license key or remove proprietary notices.
−Removed: SSPL is a source-available license that is based on the GNU Affero General Public License (“AGPL”) open source license and permits licensees to copy, modify and distribute SSPL-licensed software, but expressly requires licensees that offer the SSPL-licensed software as a third-party service to open source all of the software that they use to offer such service.
+Added: SSPL is a source-available license that is based on the AGPL open source license, and both SSPL and AGPL permit licensees to copy, modify and distribute SSPL-licensed software, but expressly require licensees that offer the SSPL-licensed software as a third-party service to open source all of the software that they use to offer such service.
We rely upon the enforceability of the restrictions set forth in the Elastic License and SSPL to protect our proprietary interests.
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If third parties offer inadequate or defective implementations of software that we have previously made available under an open source license, we could experience lost sales and lack of market acceptance of our products.
−Removed: Certain cloud hosting providers and managed service providers, including AWS, offer hosted products or services based on a forked version of the Elastic Stack, which means they offer a service that includes some of the features that we had previously made available under an open source license.
−Removed: These offerings are not supported by us and come without any of our proprietary features, whether free or paid.
+Added: Certain cloud hosting providers and managed service providers, including AWS, offer hosted products or services based on a forked version of our platform, which means they offer a service that includes some of the features that we had previously made available under an open source license.
+Added: These offerings are not supported by us and are delivered without any of our proprietary features, whether free or paid.
We do not control how these third parties may use or offer our open source technology.
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Limited technological barriers to entry into the markets in which we compete may facilitate entry by other enterprises into our markets to compete with us.
−Removed: Anyone may obtain access to source code for the features of our software that we have licensed under open source or source available licenses.
−Removed: Depending on the product and version of the Elastic software, this source code is available under Apache 2.0, SSPL, or the Elastic License.
+Added: Any person may obtain access to source code for the features of our software that we have licensed under open source or source available licenses.
+Added: Depending on the product and version of the Elastic software, this source code is available under Apache 2.0, SSPL, AGPL, or the Elastic License.
Each of these licenses allows anyone, subject to compliance with the conditions of the applicable license, to redistribute our software in modified or unmodified form and use it to compete in our markets.
−Removed: Such competition can develop without the degree of overhead and lead time required by traditional proprietary software companies, due to the rights granted to licensees of open source and source available software.
+Added: Such competition can develop without the degree of overhead and lead time required by traditional proprietary software companies because of the rights granted to licensees of open source and source available software.
It is possible for competitors to develop their own software, including software based on our products, potentially reducing the demand for our products and putting pricing pressure on our subscriptions.
For example, Amazon offers some of the features that we had previously made available under an open source license as part of its AWS offering.
−Removed: As such, Amazon competes with us for potential customers, and while Amazon cannot provide our proprietary software, Amazon’s offerings may reduce the demand for our offerings and the pricing of Amazon’s offerings may limit our ability to adjust the prices of our products.
+Added: Through these offerings, Amazon competes with us for potential customers, and while Amazon cannot provide our proprietary software, Amazon’s offerings may reduce the demand for our products and the pricing of Amazon’s offerings may limit our ability to adjust the prices of our products.
Competitive pressure in our markets generally may result in price reductions, reduced operating margins, and loss of market share.
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Our customers and some partners require training and experience in the proper use of, and the benefits that can be derived from, our products to maximize their potential value.
−Removed: If our products are not implemented, configured, updated, or used correctly or as intended, or in a timely manner, inadequate performance, errors, loss of data, corruptions, and/or security vulnerabilities may result.
+Added: If our products are not implemented, configured, updated, or used correctly or as intended, or in a timely manner, inadequate performance, errors, loss of data, corruptions, or security vulnerabilities may result.
For example, there have been, and may in the future continue to be, reports that some of our customers have not properly secured implementations of our products, which can result in unprotected data.
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Failure by us to provide adequate training and implementation services to our customers could result in lost opportunities for follow-on sales to these customers and decrease subscriptions by new customers, and adversely affect our business and growth prospects.
−Removed: If our website fails to rank prominently in unpaid search results, traffic to our website could decline and revenue could be adversely affected.
−Removed: Our success depends in part on our ability to attract users through unpaid Internet search results on traditional web search engines, such as Google.
+Added: If our website fails to rank prominently in unpaid (organic) search results, traffic to our website could decline and revenue could be adversely affected.
+Added: Our success depends in part on our ability to attract users through unpaid (organic) Internet search results on traditional web search engines, such as Google.
The number of users we attract to our website from search engines is due in large part to how and where our website ranks in unpaid search results.
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If any of these third parties experience difficulty meeting our requirements or standards, become unavailable due to extended outages or interruptions, temporarily or permanently cease operations, face financial distress or other business disruptions such as a security incident, or increase their fees, if our relationships with any of these providers deteriorate, or if any of the agreements we have entered into with such third parties are terminated or not renewed without adequate transition arrangements, we could suffer liabilities, penalties, fines, increased costs, and delays in our ability to provide customers with our products and services, our ability to manage our finances could be interrupted, receipt of payments from customers may be delayed, our processes for managing sales of our offerings could be impaired, our ability to generate and manage sales leads could be weakened, or our business operations could be disrupted.
−Removed: Further, our business operations may be disrupted by negative impacts of the evolving conflict in Israel and Gaza and Russia’s war with Ukraine on supply chains of our third-party service providers.
+Added: Further, our business operations may be disrupted by negative impacts of the evolving conflicts in the Middle East and Russia’s war with Ukraine on supply chains of our third-party service providers.
Any such disruptions may adversely affect our financial condition, results of operations, or cash flows until we replace such providers or develop replacement technology or operations.
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We will not be able to protect our intellectual property rights if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property rights.
−Removed: The source code of proprietary features for some versions of the Elastic Stack offered under certain licenses is publicly available, which may enable others to replicate our proprietary technology and compete more effectively with us.
+Added: The source code of proprietary features for some versions of our platform offered under certain licenses is publicly available, which may enable others to replicate our proprietary technology and compete more effectively with us.
If we fail to protect our intellectual property rights adequately, our competitors may gain access to our proprietary technology and our business may be harmed.
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In addition, any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by third parties.
−Removed: Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain and will vary by jurisdiction.
+Added: Further, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain and vary by jurisdiction.
Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create offerings that compete with ours.
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Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our products.
−Removed: Our ability to enforce such agreements could be adversely affected if a rule adopted by the Federal Trade Commission (“FTC”) in April 2024 withstands legal challenge.
−Removed: If the FTC rule takes effect, it would deem unlawful existing non-compete agreements entered into with workers who are not “senior executives,” and would ban us from entering into new non-compete agreements with any worker, including senior executives.
−Removed: The FTC states that whether a given prohibition constitutes a non-compete agreement is a fact-specific inquiry so that a confidentiality undertaking, if sufficiently broad, might be seen by the FTC as a prohibited non-compete agreement.
−Removed: To protect our intellectual property rights, we may be required to spend significant resources to monitor and protect our intellectual property rights.
+Added: To protect and monitor our intellectual property rights, we may be required to spend significant resources.
Litigation has previously been, and may in the future be, necessary to enforce and protect our intellectual property rights.
−Removed: Even if we prevail in such disputes, we may not be able to recover all or a portion of any judgments, and litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming, and distracting to management.
+Added: Even if we prevail in such disputes, we may not be able to recover all or a portion of any judgments, and litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming, and distracting to our management.
If unsuccessful, litigation could result in the impairment or loss of portions of our intellectual property.
−Removed: Further, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights.
+Added: Further, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of those rights.
Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products, impair the functionality of our products, delay introductions of new products, result in our being required to substitute inferior or more costly technologies into our products or incur warranty and indemnifications costs with our customers, or injure our reputation.
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In recent years, there has been significant litigation involving patents and other intellectual property rights in the software industry.
−Removed: Companies providing software are increasingly bringing and becoming subject to suits alleging infringement, misappropriation or violation of proprietary rights, particularly patent rights, and to the extent we gain greater market visibility, we face a higher risk of being the subject of intellectual property infringement, misappropriation or violation claims.
+Added: Companies providing software are increasingly bringing and becoming subject to suits alleging infringement, misappropriation, or violation of proprietary rights, particularly patent rights, and to the extent we gain greater market prominence, we face a higher risk of being the subject of intellectual property infringement, misappropriation, or violation claims.
The risk of patent litigation has been amplified by the increase in the number of a type of patent holder, which we refer to as a non-practicing entity, whose sole or principal business is to assert such claims and against whom our own intellectual property portfolio may provide little deterrent value.
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• obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology;
−Removed: • redesign the allegedly infringing products to avoid infringement, misappropriation or violation, which could be costly, time-consuming or impossible.
+Added: • redesign the allegedly infringing products to avoid infringement, misappropriation or violation, which could be costly, time-consuming or impossible to effect.
If we are required to make substantial payments or undertake any of the other actions noted above as a result of any intellectual property infringement, misappropriation or violation claims against us or any obligation to indemnify our customers for such claims, such payments or actions could harm our business.
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If we fail to comply with these licenses, we may be subject to certain requirements, including requirements that we offer our solutions that incorporate the open source software for no cost, that we make available source code for modifications or derivative works we create based upon incorporating or using the open source software, and that we license such modifications or derivative works under the terms of applicable open source licenses.
−Removed: Additionally, some open source software may include output from generative AI software or other software that incorporates or relies on generative AI or other AI technologies.
+Added: In addition, some open source software may include output from generative AI software or other software that incorporates or relies on generative AI or other AI technologies.
The use of such open source software may expose us to risks as the intellectual property ownership and license rights, including copyright, of generative AI software and tools have not been fully interpreted by U.S.
courts or been fully addressed by federal or state regulation or those of other international legal jurisdictions in which we do business.
−Removed: Attempting to ensure compliance of integrating such open source and generative AI components with licensing terms, regulatory changes, and our required intellectual property guidelines and legal requirements to do business may result in the expenditure of significant resources and in our failure to meet all relevant, material software release timetables and requirements.
−Removed: Moreover, changes in supply chain and export control regulations imposed by the United States and other governments due to geopolitical changes and government policies may require us to make changes to certain of our open source and other third-party dependencies, which may result in additional costs and may adversely impact customer use and adoption of our solutions.
+Added: Attempting to ensure our compliance in integrating such open source and generative AI components with licensing terms, regulatory changes, and our required intellectual property guidelines and legal requirements to do business may result in the expenditure of significant resources and in our failure to meet all relevant, material software release timetables and requirements.
+Added: Moreover, changes in supply chain and export control regulations imposed by the United States and other governments due to geopolitical changes and government policies may require us to make changes to some of our open source and other third-party dependencies, which may result in additional costs and may adversely impact customer use and adoption of our solutions.
If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of our products that contained the open source software and required to comply with onerous conditions or restrictions on these products, which could disrupt the distribution and sale of these products.
In addition, there have been claims challenging the ownership rights in open source software against companies that incorporate open source software into their products, and the licensors of such open source software provide no warranties or indemnities with respect to such claims.
−Removed: In any of these events, we and our customers could be required to seek licenses from third parties in order to continue offering our products, and to re-engineer our products or discontinue the sale of our products in the event re-engineering cannot be accomplished on a timely basis.
+Added: In any of these events, we and our customers could be required to seek licenses from third parties in order to continue offering our products, and to re-engineer our products or discontinue the sale of our products if re-engineering cannot be accomplished on a timely basis.
We and our customers may also be subject to suits by parties claiming infringement, misappropriation, or violation due to the reliance by our solutions on certain open source software, and such litigation could be costly for us to defend or subject us to an injunction.
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Any new legislation or interpretations of existing legislation could impact our tax obligations in countries where we do business or cause us to change the way we operate our business and result in increased taxation of our international earnings.
−Removed: For example, the Organisation for Economic Co-operation and Development (“OECD”)/G20 Inclusive Framework has been working on addressing the tax challenges arising from the digitalization of the economy, including by releasing the OECD’s Pillar One and Pillar Two blueprints on October 12, 2020.
+Added: For example, the Organisation for Economic Co-operation and Development (“OECD”)/G20 Inclusive Framework has been addressing the tax challenges arising from the digitalization of the economy, including by releasing the OECD’s Pillar One and Pillar Two blueprints on October 12, 2020.
Pillar One refers to the re-allocation of taxing rights to jurisdictions where sustained and significant business is conducted, regardless of a physical presence, while Pillar Two establishes a minimum tax to be paid by multinational enterprises.
On December 15, 2022, the Council of the EU formally adopted Directive (EU) 2022/2523 (the “Pillar Two Directive”) to achieve a coordinated implementation of Pillar Two in EU Member States consistent with EU law.
−Removed: In the Netherlands, this directive has been implemented in the Minimum Tax Rate Act 2024 ( Wet minimumbelasting 2024 ).
−Removed: This measure will ensure that multinational enterprises that are within the scope of the Pillar Two rules will be subject to a corporate tax rate of at least 15%.
−Removed: We do not currently believe that the Minimum Tax Rate Act 2024 will have a material adverse effect on our financial results.
−Removed: In 2022, the United States enacted legislation implementing several changes to U.S.
−Removed: tax laws, including a 15% corporate alternative minimum tax on applicable corporations with an average adjusted financial statement income (AFSI) in excess of $1 billion for any three consecutive years preceding the tax year at issue.
−Removed: In addition, on January 1, 2022, a provision of the Tax Cuts and Jobs Act of 2017 went into effect that eliminates the option to deduct domestic research and development costs in the year incurred and instead requires taxpayers to amortize such costs over five years.
−Removed: These provisions do not materially affect our cash flows or deferred tax assets.
−Removed: The United States has enacted legislation imposing a new minimum tax called the Base Erosion and Anti-Abuse Tax (the “BEAT”) on certain U.S.
−Removed: corporations.
+Added: In the Netherlands, this directive is implemented in the Minimum Tax Rate Act 2024 ( Wet minimumbelasting 2024 ).
+Added: This measure ensures that multinational enterprises that are within the scope of the Pillar Two rules are subject to a corporate tax rate of at least 15%.
+Added: The Minimum Tax Rate Act 2024 currently does not have a material adverse effect on our financial results.
+Added: government has indicated that it intends to propose significant changes to the U.S.
+Added: Many aspects of these potential proposals are still under discussion and we are unable to predict which, if any, changes to the U.S.
+Added: tax system will be enacted into law, and what effects any enacted legislation might have on our tax liabilities.
+Added: government also has indicated that the United States may impose retaliatory measures with respect to jurisdictions that have, or are likely to, put in place tax rules that are extraterritorial or disproportionately affect American companies.
+Added: The likelihood of these changes being enacted or implemented is unclear.
+Added: We are currently unable to predict whether such changes will occur and, if they are adopted, the impact such changes will have on our business.
+Added: The United States has an alternative minimum tax called the Base Erosion and Anti-Abuse Tax (the “BEAT”) that applies to certain U.S.
+Added: corporations, including Elastic for these purposes.
The BEAT is imposed on certain deductible amounts paid by a U.S.
−Removed: corporation that (i) has aggregate gross receipts of at least $1.5 billion over its three prior taxable years and (ii) is at least 25%-owned by a non-U.S.
+Added: corporation that (i) has aggregate gross receipts of at least $500 million over its three prior taxable years and (ii) is at least 25%-owned by a non-U.S.
person (or otherwise related to a non-U.S.
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corporation described above at a rate which increased to 10% in 2019 and will increase further to 12.5% in 2026.
+Added: Thresholds for BEAT applicability could change or the BEAT tax rate could increase in connection with potential tax legislation sought by the U.S.
In general, modified taxable income is calculated by adding back to the U.S.
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corporation’s regular corporate income tax liability (determined without regard to certain tax credits).
+Added: Compliance with and any changes to the BEAT, under proposed U.S.
+Added: government legislation or otherwise, could have an adverse impact on our U.S.
+Added: tax obligations, operating results and cash flows.
The applicability of sales, use, and other indirect tax laws or regulations on our business is uncertain.
−Removed: Adverse tax laws or regulations could be enacted or existing laws could be applied to us or our customers, which could subject us to additional tax liability and related interest and penalties, increase the costs of our services and adversely impact our business.
+Added: Tax laws or regulations could be enacted or existing laws could be applied to us or our customers, which could subject us to additional tax liability and related interest and penalties, increase the costs of our services and adversely impact our business.
The application of U.S.
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In addition, tax jurisdictions have differing rules and regulations governing sales, use, value-added, goods and services, consumption, and other taxes, and these rules and regulations can be complex and are subject to varying interpretations that may change over time.
−Removed: Existing tax laws could be interpreted, changed, modified, or applied adversely to us (possibly with retroactive effect), which could require us or our customers to pay additional tax amounts on prior sales and going forward, as well as require us or our customers to pay fines or penalties and interest for past amounts.
+Added: Existing tax laws could be interpreted, changed, modified, or applied adversely to us (possibly with retroactive effect), which could require us or our customers to pay additional tax amounts on prior and future sales, as well as require us or our customers to pay fines or penalties and interest for past amounts.
Although our customer contracts typically provide that our customers must pay all applicable sales and similar taxes, our customers may be reluctant to pay back taxes and associated interest or penalties, or we may determine that it would not be commercially feasible to seek reimbursement.
If we are required to collect and pay back taxes and associated interest and penalties, or we are unsuccessful in collecting such amounts from our customers, we could incur potentially substantial unplanned expenses, thereby adversely impacting our operating results and cash flows.
−Removed: Imposition of such taxes on our services going forward could also adversely affect our sales activity and have an adverse impact on our operating results and cash flows.
+Added: Imposition of such taxes on our services in future periods could also adversely affect our sales activity and have an adverse impact on our operating results and cash flows.
Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions under which we could be obligated to pay additional taxes.
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The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents.
−Removed: The taxing authorities of some of such jurisdictions may challenge our methodologies for valuing developed technology or intercompany arrangements, which could increase our worldwide effective tax rate and harm our financial position and results of operations.
+Added: The taxing authorities of some of such jurisdictions may contest our methodologies for valuing developed technology or intercompany arrangements, which could increase our worldwide effective tax rate and harm our financial position and results of operations.
Tax authorities examine and may audit our income tax returns and other non-income tax returns, such as payroll, sales, value-added, net worth or franchise, property, goods and services, and excise taxes, in both the United States and foreign jurisdictions.
It is possible that tax authorities may disagree with certain positions we have taken, and any adverse outcome of such a review or audit could have a negative effect on our financial position and results of operations.
−Removed: Further, the determination of our worldwide provision for, or benefit from, income taxes and other tax liabilities requires significant judgment by management, and there are transactions where the ultimate tax determination is uncertain.
+Added: Further, the determination of our worldwide provision for, or benefit from, income taxes and other tax liabilities requires significant judgment by management, and there are transactions for which the ultimate tax determination is uncertain.
Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our consolidated financial statements and may materially affect our financial results in the period or periods for which such determination is made.
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Limitations imposed by the applicable jurisdictions on our ability to utilize NOLs could cause income taxes to be paid earlier than would be paid if such limitations were not in effect and could cause such NOLs to expire unused, in each case reducing or eliminating the benefit of such NOLs.
−Removed: Furthermore, we may not be able to generate sufficient taxable income to utilize affected NOLs before they expire.
+Added: Further, we may not be able to generate sufficient taxable income to utilize affected NOLs before they expire.
If any of these events occur, we may not derive some or all of the expected benefits from our NOLs.
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Nevertheless, a separate factual determination as to whether we are or have become a PFIC must be made each year (after the close of such year).
−Removed: Since our projections may differ from our actual business results and our market capitalization and value of our assets may fluctuate, we cannot assure you that we will not be or become a PFIC in the current taxable year or any future taxable year.
+Added: Since our projections may differ from our actual business results and our market capitalization and the value of our assets may fluctuate, we cannot assure you that we will not be or become a PFIC in the current taxable year or any future taxable year.
If we are a PFIC for any taxable year during which a U.S.
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person may be subject to adverse tax consequences.
−Removed: person who holds our ordinary shares is strongly urged to consult his, her or its tax advisor regarding the application of these rules and the availability of any potential elections.
+Added: person who holds our ordinary shares is strongly urged to consult such person’s tax advisor regarding the application of these rules and the availability of any potential elections.
person is treated as owning at least 10% of our ordinary shares, such U.S.
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federal income tax return for the year for which reporting was due.
−Removed: person should consult its advisors regarding the potential application of these rules to an investment in our ordinary shares.
−Removed: We may not be able to make distributions or repurchase shares without subjecting our shareholders to Dutch withholding tax.
−Removed: We have not paid a dividend on our ordinary shares in the past and we do not intend to pay any dividends to holders of our ordinary shares in the foreseeable future.
−Removed: See “Risks Related to Ownership of our Ordinary Shares - We do not intend to pay dividends in the foreseeable future, so your ability to achieve a return on your investment will depend on appreciation in the price of our ordinary shares.” However, if we ever do pay dividends or repurchase shares, then under current Dutch tax law, the dividend paid or repurchase price paid may be subject to Dutch dividend withholding tax at a rate of 15% under the Dutch Dividend Withholding Tax Act ( Wet op de dividendbelasting 1965 , “Regular Dividend Withholding Tax”), unless a domestic or treaty exemption applies.
+Added: person should consult its tax advisors regarding the potential application of these rules to an investment in our ordinary shares.
+Added: We may not be able to make distributions or repurchase our shares without subjecting our shareholders to Dutch withholding tax.
+Added: We have not paid a cash dividend on our ordinary shares in the past and we do not intend to pay any cash dividends to holders of our ordinary shares in the foreseeable future.
+Added: However, if we ever do pay dividends or repurchase our shares, then under current Dutch tax law, the dividend paid or repurchase price paid may be subject to Dutch dividend withholding tax at a rate of 15% under the Dutch Dividend Withholding Tax Act ( Wet op de dividendbelasting 1965 , “Regular Dividend Withholding Tax”), unless a domestic or treaty exemption applies.
In addition, dividends paid to related entities in designated low-tax jurisdictions may be subject to an alternative withholding tax (“Alternative Withholding Tax”) at the highest Dutch corporate income tax rate in effect at the time of the distribution (currently 25.8%).
An entity is considered related if (i) it has a “Qualifying Interest” in our company, (ii) our company has a “Qualifying Interest” in the entity holding the ordinary shares, or (iii) a third party has a "Qualifying Interest" in both our company and the entity holding the ordinary shares.
−Removed: The term “Qualifying Interest” means a direct or indirectly held interest either by an entity individually or jointly if an entity is part of a collaborating group ( samenwerkende groep ) that enables such entity or such collaborating group to exercise a definite influence over another entity’s decisions, such as our company or an entity holding ordinary shares, as the case may be, and allows it to determine the other entity’s activities.
+Added: The term “Qualifying Interest” means a direct or indirectly held interest either by an entity individually or jointly if an entity is part of a qualifying unity ( kwalificerende eenheid ) that enables such entity or such qualifying unity to exercise a definite influence over the decisions of another entity, such as our company or an entity holding ordinary shares, as the case may be, and allows it to determine the other entity’s activities.
The Alternative Withholding Tax will be reduced, but not below zero, with any Regular Dividend Withholding Tax imposed on distributions.
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If we cease to be a Dutch tax resident for the purposes of a tax treaty concluded by the Netherlands and in certain other events, we could potentially be subject to a proposed Dutch dividend withholding tax in respect of a deemed distribution of our entire market value less paid-up capital.
−Removed: Under a proposal of law currently pending before the Dutch Parliament, the Emergency act conditional exit dividend withholding tax ( Spoedwet conditionele eindafrekening dividendbelasting , “DWT Exit Tax”), we will be deemed to have distributed an amount equal to our entire market capitalization less recognized paid-up capital immediately before the occurrence of certain events, including if we cease to be a Dutch tax resident for purposes of a tax treaty concluded by the Netherlands with another jurisdiction and become, for purposes of such tax treaty, exclusively a tax resident of that other jurisdiction which is a qualifying jurisdiction.
−Removed: A qualifying jurisdiction is a jurisdiction other than a member state of the EU/EEA which does not impose a withholding tax on distributions, or that does impose such tax but that grants a step-up for earnings attributable to the period before we become exclusively a resident in such jurisdiction.
+Added: Under a proposal of law currently pending before the Dutch Parliament, referred to as the Emergency act conditional exit dividend withholding tax ( Spoedwet conditionele eindafrekening dividendbelasting , “DWT Exit Tax”), we will be deemed to have distributed an amount equal to our entire market capitalization less recognized paid-up capital immediately before the occurrence of certain events, including if we cease to be a Dutch tax resident for purposes of a tax treaty concluded by the Netherlands with another jurisdiction and become, for purposes of such tax treaty, exclusively a tax resident of that other jurisdiction which is a qualifying jurisdiction.
+Added: A qualifying jurisdiction is a jurisdiction other than a member state of the EU/EEA which does not impose a withholding tax on distributions, or that does impose such a tax but that grants a step-up for earnings attributable to the period before we become exclusively a resident in such jurisdiction.
This deemed distribution will be subject to a 15% tax insofar as it exceeds a franchise of EUR 50 million.
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The DWT Exit Tax proposal has been amended several times since the initial proposal and is under ongoing discussion.
−Removed: In addition, a critical reaction from authorities to the latest proposal of law have been published.
+Added: In addition, a critical reaction from authorities to the latest proposal of law has been published.
It is therefore not certain whether the DWT Exit Tax will be enacted and if so, in what form.
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Federal, state, or non-U.S.
−Removed: government bodies or agencies have in the past adopted, and may in the future adopt, new laws and regulations or may make amendments to existing laws and regulations affecting data protection, data privacy and/or information security and/or regulating the use of the Internet as a commercial medium.
+Added: government bodies or agencies have in the past adopted, and may in the future adopt, new laws and regulations or may enact amendments to existing laws and regulations affecting data protection, data privacy, or information security or regulating the use of the Internet as a commercial medium.
In the United States, many states have enacted such legislation.
−Removed: These laws and regulations may include a private right of action for certain data breaches or noncompliance with privacy or security obligations, may provide for penalties and other remedies, and may require us to incur substantial costs and expenses and liabilities in connection with our compliance.
+Added: These laws and regulations may include a private right of action for certain data breaches or for noncompliance with privacy or security obligations, may provide for penalties and other remedies, and may require us to incur substantial costs and expenses and liabilities in connection with our compliance.
states and the U.S.
−Removed: federal government are considering or have enacted similar privacy legislation or regulations.
+Added: federal government are considering or are currently in the process of enacting similar privacy legislation or regulations.
Many obligations under these laws and legislative or regulatory proposals remain uncertain, and we cannot fully predict their impact on our business.
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Failure to comply, or perceived failure to comply, can result in administrative fines of up to 20 million Euros or four percent of the group’s annual global turnover, whichever is higher.
−Removed: Similarly, the United Kingdom has implemented legislation that is substantially similar to the GDPR where penalties for violations, actual or perceived, can be up to 17.5 million British Pound Sterling or four percent of the group’s annual global turnover, whichever is higher, which may be subject to change with the introduction of the Data Protection and Digital Information (“DPDI”) Bill in 2023.
−Removed: The potential impact to our business remains unclear.
−Removed: On May 22, 2023, Ireland’s Data Protection Commission (“DPC”) found that a company’s use of standard contractual clauses (“SCC”) in its data transfers failed to adequately protect the personal data of its European users, and fined that company approximately $1.3 billion.
−Removed: While the full implications of this DPC decision for other companies such as us are not yet clear, those implications may, among other matters, affect our ability to continue using SCCs in our contracts or subject us to increased risk of regulatory fines related to our use of SCCs.
−Removed: Furthermore, in July 2023, the European Commission adopted its adequacy decision on data transfers under the EU-U.S.
+Added: Similarly, the United Kingdom has implemented legislation that is substantially similar to the GDPR under which penalties for violations, actual or perceived, can be up to 17.5 million British Pound Sterling or four percent of the group’s annual global turnover, whichever is higher.
+Added: This legislation may be subject to change with the introduction of the Data Protection and Digital Information (“DPDI”) Bill in 2023.
+Added: The potential impact of these legal requirements on our business remains unclear.
+Added: We monitor privacy European case law, regulatory changes, and guidance from privacy authorities, and we have been regularly refining and updating our data transfer risk assessments to document that in relying on the GDPR’s Standard Contractual Clauses (“SCCs”) and their international equivalents we maintain the requisite level of privacy protection for our cross-border transfers of personal data.
+Added: In July 2023, the European Commission adopted its adequacy decision on data transfers under the EU-U.S.
Data Privacy Framework (“DPF”).
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data importers who certify compliance with the DPF principles.
−Removed: The DPF is currently being challenged, including by a member of the French Parliament.
−Removed: In light of these and other ongoing developments relating to cross-border data transfer, we may experience additional costs associated with increased compliance burdens, and this regulation may impact our ability to transfer personal data across our organization, to customers, or to third parties.
−Removed: In addition to government regulation, industry groups have established or may establish new and different self-regulatory standards that may legally or contractually apply to us or our customers.
−Removed: One example of such a self-regulatory standard is the Payment Card Industry Data Security Standard, known as PCI DSS, which relates to the processing of payment card information.
+Added: After the European Commission confirmed the good functioning of the DPF upon the first anniversary of the adequacy decision, we successfully completed our self-certification under the DPF for both our employee data and our customer data and, we also have continued to maintain the SCCs in our internal and external agreements, as a backup data transfer mechanism in case the DPF were to fail.
+Added: In light of these and other ongoing developments relating to EU-U.S.
+Added: trade relations and other cross-border data transfers, we may experience additional costs associated with increased compliance burdens, which may negatively affect our ability to transfer personal data across our organization, to customers, or to third parties.
+Added: In addition to government regulation, industry groups have established or may establish new and different self-regulatory standards that may legally or contractually apply to us or to our customers.
Moreover, our customers increasingly expect us to comply with more stringent privacy, data protection, and information security requirements than those imposed by laws, regulations, or self-regulatory requirements, and we may be obligated contractually to comply with additional or different standards relating to our handling or protection of data on or by our offerings.
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In such an event, we could face fines, lawsuits, regulatory investigations, and other claims and penalties, and we could be required to fundamentally change our products or our business practices, any of which could have an adverse effect on our business.
−Removed: Data protection authorities and other regulatory bodies are increasingly focused on the use of online tracking tools and have issued or plan to issue rulings which may impact our marketing practices.
+Added: Data protection authorities and other regulatory bodies are increasingly focused on the use of online tracking tools and have issued or plan to issue rulings which may affect our marketing practices.
Any restrictions on using online analytics and tracking tools could lead to substantial costs, require significant changes to our policies and practices, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, and subject us to additional liabilities.
We publicly post privacy statements and other documentation regarding our practices concerning the processing, use and disclosure of personal data.
−Removed: Any failure, or perceived failure, by us to comply with such statements could result in potential actions by regulatory bodies or government entities if they are found to be unfair or misrepresentative of our actual practices or inconsistent with legal requirements for such statements resulting in increased costs, changes in our business practices, or reputational harm.
+Added: Any failure, or perceived failure, by us to comply with such statements could result in potential actions by private parties, regulatory bodies or government entities if the statements are alleged or found to be unfair or misrepresentative of our actual practices or inconsistent with legal requirements for such statements, which could result in increased costs, changes in our business practices, or reputational harm.
We are subject to governmental export and import controls and economic sanctions programs that could impair our ability to compete in international markets or subject us to liability if we violate these controls.
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and foreign export control laws and regulations, trade and economic sanctions, or other similar laws, we could be subject to both civil and criminal penalties, including substantial fines, possible incarceration for employees and managers for willful violations, and the possible loss of our export or import privileges.
−Removed: Obtaining the necessary export license for a particular sale or offering may not be possible and may be time-consuming and may result in the delay or loss of sales opportunities.
−Removed: Furthermore, export control laws and economic sanctions in many cases prohibit the export of software and services to certain embargoed or sanctioned countries, governments and persons, as well as for prohibited end-uses.
+Added: Obtaining the necessary export license for a particular sale or offering may not be possible, may be time-consuming and may result in the delay or loss of sales opportunities.
+Added: Further, export control laws and economic sanctions in many cases prohibit the export of software and services to certain embargoed or sanctioned countries, governments, and persons, as well as for prohibited end uses.
Monitoring and ensuring compliance with these complex U.S.
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Various countries have enacted laws that could limit our ability to distribute our products and services or could limit our end customers’ ability to implement our products in those countries based on encryption in our offerings.
−Removed: Changes in our products or changes in export and import regulations in such countries may create delays in the introduction of our products and services into international markets, prevent our end customers with international operations from deploying our products globally or, in some cases, prevent or delay the export or import of our products and services to certain countries, governments or persons altogether.
+Added: Changes in our products or changes in export and import regulations in such countries may create delays in the introduction of our products and services into international markets, prevent our end customers with international operations from deploying our products globally or, in some cases, prevent or delay altogether the export or import of our products and services to certain countries, governments, or persons.
Reduced use of our products and services by, or decreased ability by us to export or sell our products to, existing or potential end customers with international operations could result from changes in export or import laws or regulations, economic sanctions, or related legislation;
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The market price for our ordinary shares has been and is likely to continue to be volatile or may decline regardless of our operating performance.
+Added: The market price of our ordinary shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including those resulting from the risks and uncertainties described in this “Risk Factors” section.
The stock markets, and securities of technology companies in particular, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies.
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In particular, stock prices of companies with significant operating losses have recently declined significantly, and in many instances more significantly than stock prices of companies with operating profits.
−Removed: The economic impact and uncertainty of changes in the inflation, interest and macroeconomic environments, and geopolitical conflicts exacerbated this volatility in both the overall stock markets and the market price of our ordinary shares.
−Removed: A significant decline in the price of our shares could have an adverse impact on investor confidence and employee retention.
−Removed: In the past, shareholders have instituted securities class action litigation following periods of market volatility.
−Removed: If we were to become involved in securities litigation, our involvement could subject us to substantial costs, divert resources and the attention of management from our operations and adversely affect our business.
−Removed: The market price of our ordinary shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including those resulting from the risks and uncertainties described in this “Risk Factors” section.
+Added: The economic impact and uncertainty of changes in the inflation, interest and macroeconomic environments, international trade relations, and geopolitical conflicts exacerbated this volatility in both the overall stock markets and the market price of our ordinary shares.
+Added: A significant decline in the price of our shares could subject us to securities class action litigation, such as the purported class action lawsuit filed against us in February 2025.
+Added: Our involvement in securities litigation could subject us to substantial costs, divert resources and the attention of management from our operations and adversely affect our business.
We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which would cause our stock price to decline.
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Guidance, as well as other expectations, are forward-looking and represent our management’s estimates as of the date of release and are based upon a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic, and competitive uncertainties and contingencies on our business, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions, some of which will change.
−Removed: Furthermore, analysts and investors may develop and publish their own forecasts concerning our financial results, which may form a consensus about our future performance.
−Removed: Our actual business results may vary significantly from such guidance or other expectations or that consensus due to a number of factors, many of which are outside of our control, including due to the global economic uncertainty and financial market conditions caused by the current macroeconomic environment, and which could adversely affect our business and future operating results.
−Removed: Furthermore, if we make downward revisions of our previously announced guidance or other expectations, if we withdraw our previously announced guidance or other expectations, or if our publicly announced guidance or other expectations of future operating results fail to meet expectations of securities analysts, investors or other interested parties, the price of our ordinary shares could decline.
+Added: Further, analysts and investors may develop and publish their own forecasts concerning our financial results, which may form a consensus about our future performance.
+Added: Our actual business results may vary significantly from such guidance or other expectations or that consensus due to a number of factors, many of which are outside of our control, including the global economic uncertainty and volatile financial market conditions characterizing the current macroeconomic environment, and which could adversely affect our business and future operating results.
+Added: Further, if we make downward revisions of our previously announced guidance or other expectations, if we withdraw our previously announced guidance or other expectations, or if our publicly announced guidance or other expectations of future operating results fail to meet expectations of securities analysts, investors or other interested parties, the price of our ordinary shares could decline.
In light of the foregoing, investors should not unduly rely upon our guidance or other expectations in making an investment decision regarding our ordinary shares.
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Our articles of association authorize us to issue up to 165 million ordinary shares and up to 165 million preference shares with such rights and preferences as are included in our articles of association.
−Removed: On October 5, 2023, our general meeting of shareholders (the “2023 General Meeting”) empowered our board of directors to issue ordinary shares up to 20% of our issued share capital as of August 21, 2023, for a period of 18 months from October 5, 2023 (the “2023 share issuance authorization”).
−Removed: In line with market practice for Dutch publicly traded companies, we expect to renew this authorization annually at our general meeting of shareholders.
+Added: On October 1, 2024, our general meeting of shareholders (“general meeting”) empowered our board of directors to issue ordinary shares up to 20% of our issued share capital as of August 21, 2024, for a period of 18 months until April 1, 2026 (the “2024 share issuance authorization”).
+Added: In line with market practice for Dutch publicly traded companies, we expect to renew this authorization annually at our general meeting.
Subject to compliance with applicable rules and regulations and the above authorization limitation, we may issue ordinary shares or securities convertible into ordinary shares from time to time in connection with a financing, acquisition, investment, our equity incentive plans or otherwise.
−Removed: Any such issuance could result in
−Removed: substantial dilution to our existing shareholders unless pre-emptive rights exist and cause the market price of our ordinary shares to decline.
+Added: Any such issuance could result in substantial dilution to our existing shareholders unless pre-emptive rights exist and cause the market price of our ordinary shares to decline.
Certain holders of our ordinary shares may not be able to exercise pre-emptive rights and as a result may experience substantial dilution upon future issuances of ordinary shares.
−Removed: Holders of our ordinary shares in principle have a pro rata pre-emptive right with respect to any issue of ordinary shares or the granting of rights to subscribe for ordinary shares, unless Dutch law or our articles of association state otherwise or unless explicitly provided otherwise in a resolution by our general meeting of shareholders (“general meeting”), or if authorized by the annual general meeting or an extraordinary general meeting, by a resolution of our board of directors.
−Removed: Our 2023 general meeting has empowered our board of directors to limit or exclude pre-emptive rights on ordinary shares issued pursuant to the 2023 share issuance authorization, up to 10% of our issued share capital as of August 21, 2023 for a period of 18 months from October 5, 2023, which could cause existing shareholders to experience substantial dilution of their interest in us.
+Added: Holders of our ordinary shares in principle have a pro rata pre-emptive right with respect to any issue of ordinary shares or the granting of rights to subscribe for ordinary shares, unless Dutch law or our articles of association state otherwise or unless explicitly provided otherwise in a resolution by our general meeting, or if authorized by the annual general meeting or an extraordinary general meeting, by a resolution of our board of directors.
+Added: Our 2024 general meeting has empowered our board of directors to restrict or exclude pre-emptive rights on ordinary shares issued pursuant to the 2024 share issuance authorization, up to 10% of our issued share capital as of August 21, 2024 for a period of 18 months until April 1, 2026, which could cause existing shareholders to experience substantial dilution of their interest in us.
In line with market practice for Dutch publicly traded companies, we expect to renew this authorization annually at our general meeting.
As of April 30, 2025, there were no preference shares issued or outstanding.
−Removed: Preference shares in the capital of the Company may currently be issued pursuant to a resolution adopted by the general meeting of shareholders at the proposal of the board of directors.
+Added: Preference shares in the capital of the Company may currently be issued pursuant to a resolution adopted by the general meeting at the proposal of the board of directors.
Pre-emptive rights do not exist with respect to the issue of preference shares and holders of preference shares, if any, have no pre-emptive right to acquire newly issued ordinary shares.
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• minimum shareholding thresholds, based on nominal value, for shareholders to call general meetings of our shareholders or to add items to the agenda for those meetings.
−Removed: We are subject to the Dutch Corporate Governance Code but do not comply with all the suggested governance provisions of the Dutch Corporate Governance Code, which may affect your rights as a shareholder.
−Removed: As a Dutch company, we are subject to the Dutch Corporate Governance Code (“DCGC”).
+Added: We are subject to the Dutch Corporate Governance Code but do not comply with all the suggested governance provisions of that law, which may affect your rights as a shareholder.
+Added: As a Dutch company, we are subject to the Dutch Corporate Governance Code.
The DCGC contains both principles and suggested governance provisions for management boards, supervisory boards, shareholders and general meetings, financial reporting, auditors, disclosure, compliance and enforcement standards.
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Accordingly, public companies are required to disclose in their annual reports, filed in the Netherlands, whether they comply with the suggested governance provisions of the DCGC.
−Removed: If they do not comply with those provisions, such as because of a conflicting requirement, companies are required to give the reasons for such noncompliance.
+Added: If they do not comply with those provisions, for example because of a conflicting requirement, companies are required to give the reasons for such noncompliance.
The DCGC applies to all Dutch companies listed on a government-recognized stock exchange, whether in the Netherlands or elsewhere, including the NYSE.
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We aim to comply with all applicable provisions of the DCGC except where such provisions conflict with U.S.
−Removed: exchange listing requirements or with market practices in the United States or the Netherlands.
+Added: exchange listing requirements or with market practices in the United States or the Netherlands, in which case we comply with such exchange listing requirements and market practices.
This compliance position may affect your rights as a shareholder, and you may not have the same level of protection as a shareholder in a Dutch company that fully complies with the suggested governance provisions of the DCGC.
−Removed: We do not intend to pay dividends in the foreseeable future, so your ability to achieve a return on your investment will depend on appreciation in the price of our ordinary shares.
+Added: We do not intend to pay cash dividends in the foreseeable future, so your ability to achieve a return on your investment will depend upon appreciation in the price of our ordinary shares.
We have never declared or paid any cash dividends on our shares.
−Removed: We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends on our ordinary shares in the foreseeable future.
+Added: We do not anticipate paying any cash dividends on our ordinary shares in the foreseeable future.
Were this position to change, payment of future dividends may be made only if our equity exceeds the amount of the paid-in and called-up part of the issued share capital, increased by the reserves required to be maintained by Dutch law or by our articles of association.
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In such proceedings, however, a Dutch court may be expected to recognize the binding effect of a judgment of a federal or state court in the United States without re-examination of the substantive matters adjudicated thereby, if (i) the jurisdiction of the U.S.
−Removed: federal or state court has been based on internationally accepted principles of private international law, (ii) the judgment resulted from legal proceedings compatible with Dutch notions of due process, (iii) the judgment does not contravene public policy of the Netherlands and (iv) the judgment is not incompatible with (x) an earlier judgment of a Dutch court between the same parties, or (y) an earlier judgment of a foreign court between the same parties in a dispute regarding the same subject and based on the same cause, if that earlier foreign judgment is recognizable in the Netherlands.
+Added: federal or state court has been based on internationally accepted principles of private international law, (ii) the judgment resulted from legal proceedings compatible with Dutch notions of due process, (iii) the judgment does not contravene public policy of the Netherlands and (iv) the judgment is not incompatible with an earlier judgment of a Dutch court between the same parties, or an earlier judgment of a foreign court between the same parties in a dispute regarding the same subject and based on the same cause, if that earlier foreign judgment is recognizable in the Netherlands.
Based on the foregoing, U.S.
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If any of the analysts who cover us issues an inaccurate or unfavorable opinion regarding our company, our stock price would likely decline.
−Removed: Furthermore, investors and analysts may not understand how our consumption-based arrangements differ from a typical subscription-based pricing model.
+Added: Further, investors and analysts may not understand how our consumption-based arrangements differ from a typical subscription-based pricing model.
In addition, the stock prices of many companies in the technology industry have declined significantly after those companies have failed to meet, or significantly exceed, the financial guidance publicly announced by the companies or the expectations of analysts or public investors.
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If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the trading price of our ordinary shares.
−Removed: The preparation of financial statements in conformity with accounting principles generally accepted in the U.S.
−Removed: requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
−Removed: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of this Annual Report on Form 10-K, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue, and expenses that are not readily apparent from other sources.
+Added: The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
+Added: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue, and expenses that are not readily apparent from other sources.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our ordinary shares.
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If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness.
−Removed: Our ability to restructure or refinance our debt will depend on, among other factors, the condition of the capital markets and our financial condition at such time.
+Added: Our ability to restructure or refinance our debt will depend upon, among other factors, the condition of the capital markets and our financial condition at such time.
Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
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We may not benefit from our acquisition strategy.
−Removed: As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies to augment our existing business.
+Added: As part of our business strategy, we have in the past made, and may in the future make, investments through acquisition or otherwise in complementary companies, products, or technologies to augment our existing business.
We may not be able to identify suitable acquisition candidates or complete such acquisitions on favorable terms, if at all.
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The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
+Added: We may incur unforeseen legal liability arising from prior or ongoing acts or omissions by the acquired businesses which are not discovered by due diligence during the acquisition process or that prove to have a greater than anticipated adverse impact.
+Added: There is no assurance that acquired businesses will have invested sufficient efforts in their own regulatory compliance, and we may need to invest in and seek to improve the regulatory compliance controls and systems of such businesses.
We may acquire development stage companies that are not yet profitable, and that require continued investment, thereby reducing our cash available for other corporate purposes.
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Some of our management members and other employees are located in the San Francisco Bay Area, a region known for seismic activity, wildfires and other extreme weather events.
−Removed: If our or our partners’ abilities are hindered by any of the foregoing events, we could experience sales delays, supply chain disruptions, and other negative impacts on our business.
−Removed: In addition, acts of terrorism, acts of war, including the evolving conflict in Israel and Gaza and Russia’s war with Ukraine, other geopolitical unrest or health issues, such as a pandemic outbreak, or fear of such events, could cause disruptions in our business or the business of our partners, customers or the economy as a whole.
+Added: If our or our partners’ operations are hindered by any of the foregoing events, we could experience sales delays, supply chain disruptions, and other negative impacts on our business.
+Added: In addition, acts of terrorism, acts of war, including conflicts in the Middle East and Russia’s war with Ukraine, other geopolitical unrest or health issues, such as a pandemic outbreak, or fear of such events, could cause disruptions in our business or the business of our partners, customers or the economy as a whole.
Any disruption in the business of our partners or customers that affects sales in a fiscal quarter could have a significant adverse impact on our quarterly results for that and future quarters.
−Removed: All of the aforementioned risks may be further increased if our disaster recovery plans prove to be inadequate.
+Added: The potential impacts of these risks may be further increased if our disaster recovery plans prove to be inadequate.
Our reputation and/or business could be negatively impacted by ESG matters and/or our reporting of such matters.
There is an increasing focus from regulators, certain investors, customers, and other stakeholders concerning ESG matters, both in the United States and internationally, and companies across all industries are experiencing increased scrutiny of their ESG practices, positions, and reporting.
−Removed: Investors, customers, regulators, employees, and other stakeholders have focused increasingly on ESG issues, including, among other matters, climate change and greenhouse gas emissions, human and civil rights, and DEI matters.
+Added: Investors, customers, regulators, employees, and other stakeholders have focused increasingly on ESG issues, including, among other matters, climate change and greenhouse gas emissions, human and civil rights, and diversity and inclusion matters.
Expectations surrounding appropriate corporate behavior in these areas are continually evolving and often reflect a wide spectrum of viewpoints and interests.
+Added: In recent periods, regulators have expressed contrary views with respect to a range of ESG matters.
+Added: Given the divergent nature of regulations and a lack of harmonization of ESG legal and regulatory environments across the jurisdictions in which we operate, we may experience enhanced compliance risks and costs as well as opposing views from various stakeholders who may disagree with our actual or perceived positions on these matters.
In addition, changing laws, regulations and standards relating to ESG matters are evolving, creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming.
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We are, or in the future will be, obligated to comply with new stringent climate-related reporting requirements under California climate-related reporting statutes, laws of member states of the European Union implementing the EU Corporate Sustainability Reporting Directive, and other laws and regulations.
−Removed: These sustainability reporting frameworks will require us to provide, at least annually, detailed public disclosures about the greenhouse gas emissions and other climate-related effects our activities produce, the climate-related operating and financial risks we face, and the strategies we pursue to reduce and adapt to the impacts of climate change.
+Added: These sustainability reporting frameworks will require us to provide, at least annually, detailed public disclosures about the greenhouse gas emissions and other climate-related effects our activities produce, the climate-related operating and financial impacts, risks, and opportunities we face, and the strategies we pursue to manage and adapt to the impacts of climate change.
We expect to incur substantial costs to prepare these disclosures.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.