What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-06-10 compared with 2024-06-14 · 112 added, 128 removed, 355 unchanged (40% of the section changed)

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A discussion of our financial condition and results of operations for the year ended April 30, 2023 and year-to-year comparisons between the years ended April 30, 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended April 30, 2024, filed with the SEC on June 14, 2024.

Elastic, the Search AI Company, enables our customers to find the answers they need in real time, using all of their data, at scale.

Our platform, combines the power of search with AI to help companies solve real-time business problems, unlock potential value, and achieve better outcomes.

Our platform, available as both a hosted, managed service across public clouds as well as self-managed software, allows our customers to find insights and drive AI and machine learning use cases from large amounts of data.

We offer three search-powered solutions – Search, Observability, and Security – that are built on the platform.

We help organizations, their employees, and their customers find what they need faster, while keeping mission-critical applications running smoothly, and protecting against cyber threats.

Our platform is built on the Elastic Stack, a powerful set of software products that ingest data from any source, in any format, and perform search, analysis, and visualization of that data.

At the core of the Elastic Stack is Elasticsearch - a highly scalable document store and search engine, and the unified data store for all of our solutions and use cases.

Our platform also includes the ESRE, which combines advanced AI with Elastic’s text search to give developers a full suite of sophisticated retrieval algorithms and the ability to integrate with large language models.

The Elastic Stack can be used by developers and IT decision makers to power a variety of use cases.

It is a distributed, real-time vector search and analytics engine and data store for all types of data, including textual, numerical, geospatial, structured, and unstructured.

We make our platform available as a hosted, managed service across major cloud providers.

Elastic, the Search AI Company, enables its customers to transform data into answers, actions, and outcomes with Search AI.

Our platform combines the precision of search with the intelligence of AI to help our customers and community solve real-time business problems, unlock potential value, and achieve better outcomes.

Our platform, available as either a cloud service or a self-managed software, allows our customers to find insights and drive AI and machine learning use cases from large amounts of data.

We offer three Search AI-powered solutions—Elasticsearch, Elastic Observability, and Elastic Security—that are built on our platform.

We help organizations, their employees, and their customers find what they need faster, while keeping mission-critical applications and infrastructure running smoothly and protecting against cyber threats.

Our platform is able to ingest data from any source, in any format, and perform search, analysis, and visualization of that data.

With Elasticsearch at its core, our platform is a highly scalable document store and search engine, and is the unified data store for all of our solutions and use cases.

Featuring a common, solution-agnostic user interface with powerful drag-and-drop visual analytics, centralized management capabilities, and the world's most downloaded open source vector database, our platform gives developers a full suite of sophisticated retrieval algorithms and the ability to integrate with large language models (“LLM”).

It delivers the comprehensive set of capabilities developers need to build, maintain, and secure next-generation applications and services.

Our platform can be used by developers and IT decision makers to power a variety of use cases.

We make our platform available as a service across major cloud providers.

Customers can also deploy our platform across hybrid clouds, public or private clouds, and multi-cloud environments.

As digital transformation drives mission-critical business functions to the cloud, we believe that every company must incorporate search AI capabilities across IT and line-of-business organizations to find the answers that matter from all of its data in real-time and at scale.

Our business model is based primarily on a combination of a paid Elastic-managed hosted service offering and paid and free proprietary self-managed software.

As digital transformation continues to drive mission-critical business functions to the cloud, we believe that every company must incorporate search AI capabilities across IT and line-of-business organizations to find the answers that matter from all of its data in real time and at scale.

Our business model is based primarily on a combination of paid service offerings (Elastic Cloud Hosted and Elastic Cloud Serverless) and free and paid proprietary self-managed software (Elastic Self-Managed).

Our paid offerings for our platform are sold via subscription through resource-based pricing, and all customers and users have access to varying levels of features across all solutions.

In Elastic Cloud, our family of cloud-based offerings, we offer various subscription tiers tied to different features.

For users who download our software, we make some of the features of our software available free of charge, allowing us to engage with a broad community of developers and practitioners and introduce them to the value of the Elastic Stack.

We believe in the importance of an open software development model, and we develop the majority of our software in public repositories as open code under a proprietary license.

We believe in the importance of an open software development model, and we develop the majority of our software in public repositories under an open source AGPL license, as well as under a proprietary license.

Unlike some companies, we do not build an enterprise version that is separate from our free distribution.

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All of these actions help us build a powerful commercial business model that we believe is optimized for product-driven growth.

Elastic has always been committed to open source and an open development process with transparent and direct engagement with our community.

The core of Elasticsearch and Kibana (a user interface) are open source under an AGPL license, and our open source code is housed in public repositories.

We generate revenue primarily from sales of subscriptions to our platform.

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Elastic Cloud customers may also purchase subscriptions on a month-to-month basis without a commitment, with usage billed at the end of each month.

Subscriptions accounted for 93% and 92% of total revenue for the years ended April 30, 2024 and 2023, respectively.

Subscriptions accounted for 93% of total revenue for the years ended April 30, 2025 and 2024.

We also generate revenue from consulting and training services.

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They focus on both seeking to obtain new customers and on pursuing additional sales to existing customers.

In addition to our direct sales efforts, we also maintain partnerships to further extend our reach and awareness of our products around the world.

We have experienced significant growth, with revenue increasing to $1.267 billion for the year ended April 30, 2024 from $1.069 billion for the year ended April 30, 2023 and $862.4 million for the year ended April 30, 2022, representing year-over-year growth of 19% for the year ended April 30, 2024 and 24% for the year ended April 30, 2023.

In addition to our direct sales efforts, we maintain partnerships to further extend our reach and awareness of our products around the world.

We have experienced significant growth, with revenue increasing to $1.483 billion for the year ended April 30, 2025 from $1.267 billion for the year ended April 30, 2024 and $1.069 billion for the year ended April 30, 2023, representing year-over-year growth of 17% for the year ended April 30, 2025 and 19% for the year ended April 30, 2024.

For the years ended April 30, 2025, 2024 and 2023, revenue from outside the United States accounted for 44%, 42%, and 41% of our total revenue, respectively.

We had net income of $61.7 million for the year ended April 30, 2024, while we incurred net losses of $236.2 million and $203.8 million for the years ended April 30, 2023 and 2022, respectively.

We incurred net losses of $108.1 million and $236.2 million for the years ended April 30, 2025 and 2023, respectively, while we had net income of $61.7 million for the year ended April 30, 2024.

Our net cash provided by operating activities was $266.2 million, $148.8 million, and $35.7 million for the years ended April 30, 2025, 2024 and 2023, respectively.

We had an accumulated deficit of $991.6 million as of April 30, 2024 due to losses in all prior years.

We had an accumulated deficit of $1.100 billion as of April 30, 2025 due to losses in all but one of our prior years.

We may incur net losses in the future and there can be no assurance whether, or when, we may become profitable on a consistent basis.

We continue to make substantial investments in developing the Elastic Stack and expanding our global sales and marketing footprint.

We continue to make substantial investments in developing our platform and expanding our global sales and marketing footprint.

With a distributed team spanning over 40 countries, we are able to recruit, hire, and retain high-quality, experienced technical and sales personnel and operate at a rapid pace to drive product releases, fix bugs, and create and market new products.

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Current Economic Conditions

Macroeconomic events, including continued inflation, slower economic growth, and political unrest, continue to evolve and negatively impact worldwide economic activity.

Governmental and corporate responses to these factors, including rising interest rates, unpredictable and decreased spending, and layoffs, have added to the highly volatile macroeconomic landscape.

We have experienced and, if economic conditions do not reflect a sustained recovery, we may continue to experience longer and more unpredictable sales cycles, increased scrutiny of deals, slowing consumption and overall customer expenditures, and the impacts of changing foreign exchange rates with a strengthening or weakening U.S.

Macroeconomic events, including a possible resurgence in inflation, fluctuations in economic growth, changes in and uncertainty of international trade policies, and political unrest, continue to evolve and impact worldwide economic activity.

Governmental and corporate responses to these factors, including changing interest rates and unpredictable and decreased spending, will continue to affect the macroeconomic conditions.

We have experienced and, if economic conditions deteriorate, may continue to experience longer and more unpredictable sales cycles, increased scrutiny of prospective sales, slowing consumption and overall customer expenditures, and the impacts of changing foreign exchange rates with a strengthening or weakening U.S.

We continue to closely monitor the macroeconomic environment and its effects on our business and on global economic activity, including customer spending behavior.

See “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of additional risks.

Restructuring

During the three months ended April 30, 2024, we initiated a plan to realign business and strategic priorities which resulted in a reduction of our workforce.

In connection with this plan, we incurred a charge of $4.2 million primarily consisting of employee-related severance and termination benefits during the three months ended April 30, 2024.

The execution of this plan is expected to be substantially completed during the first quarter of fiscal 2025.

On November 30, 2022, we announced and began implementing a plan to align our investments more closely with our strategic priorities by reducing our workforce by approximately 13% and implementing certain facilities-related cost optimization actions.

In connection with this restructuring plan, we recorded $0.8 million and $31.3 million of restructuring and other related charges during the years ended April 30, 2024 and 2023, respectively.

The execution of this restructuring plan was completed during the first quarter of fiscal 2024.

See Note 16 “Restructuring and other related charges” in our accompanying Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.

See “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of risks.

Key Factors Affecting our Performance

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While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations.

Increasing adoption of Elastic Cloud.

Elastic Cloud, our family of cloud-based offerings, is an important growth opportunity for our business.

Organizations are increasingly looking for hosted deployment alternatives with reduced administrative burdens.

In some cases, users of our source available software that have been self-managing deployments of the Elastic Stack subsequently become paying subscribers of Elastic Cloud.

For the years ended April 30, 2024 and 2023, Elastic Cloud contributed 43% and 40% of our total revenue, respectively.

We believe that offering Elastic Cloud is important for achieving our long-term growth potential, and we expect Elastic Cloud’s contribution to our subscription revenue to continue to increase over time.

However, we expect that an increase in the relative contribution of Elastic Cloud to our business will continue to have a modest adverse impact on our gross margin as a result of the associated third-party hosting costs.

Developing new features for Elastic’s Search AI Platform.

Our platform is applied to various use cases by customers, including through the solutions we offer.

Our revenue is derived primarily from subscriptions of Search, Observability and Security built into our platform.

We believe that releasing additional features of our platform, including our solutions, drives usage of our products and ultimately drives our growth.

To that end, we plan to continue to invest in building new features and solutions that expand the capabilities of our platform.

These investments may adversely affect our operating results prior to generating benefits, to the extent that they ultimately generate benefits at all.

Growing the Elastic community.

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This reduces the time required for our sales force to educate potential customers on our solutions.

To capitalize on our opportunity, we intend to make further investments to keep the Elastic Stack accessible and well known to software developers around the world.

To capitalize on our opportunity, we intend to make further investments to keep our platform accessible and well known to software developers around the world.

We intend to continue to invest in our products and support and engage our user base and developer community through content, events, and conferences in the United States and internationally.

Our results of operations may fluctuate as we make these investments.

Developing new features for the Elastic Stack.

The Elastic Stack is applied to various use cases by customers, including through the solutions we offer.

Our revenue is derived primarily from subscriptions of Search, Observability and Security built into the Elastic Stack.

We believe that releasing additional features of the Elastic Stack, including our solutions, drives usage of our products and ultimately drives our growth.

To that end, we plan to continue to invest in building new features and solutions that expand the capabilities of the Elastic Stack.

These investments may adversely affect our operating results prior to generating benefits, to the extent that they ultimately generate benefits at all.

Growing our customer base by converting users of our software to paid subscribers.

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These investments are likely to occur before we realize the anticipated benefits of such investments, such that they may adversely affect our operating results in the near term.

We recently added the Affero General Public License as an option to license the free part of our Elasticsearch and Kibana source code that has been available under the Elastic License 2.0 and Server Side Public License Version 1.0.

AGPL is an Open Source Initiative approved open-source license.

We anticipate that the addition of this license will drive further engagement and adoption of our software in areas such as vector search within our large community, further increasing our appeal for driving AI and machine learning use cases from large amounts of data.

Subject to compliance with the conditions of AGPL, anyone may also redistribute our software in modified or unmodified form or use it to provide a competitive product or service offering.

Expanding within our current customer base.

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Our Net Expansion Rate was approximately 112% as of April 30, 2025.

As large organizations expand their use of the Elastic Stack across multiple use cases, projects, divisions and users, they often begin to require centralized provisioning, management and monitoring across multiple deployments.

As large organizations expand their use of our platform across multiple use cases, projects, divisions and users, they often begin to require centralized provisioning, management and monitoring across multiple deployments.

To satisfy these requirements, our Enterprise subscription tier provides access to key orchestration and deployment management capabilities.

We will continue to focus some of our direct sales efforts on driving adoption of our paid offerings.

Increasing adoption of Elastic Cloud.

Elastic Cloud, our family of cloud-based offerings, is an important growth opportunity for our business.

Organizations are increasingly looking for hosted deployment alternatives with reduced administrative burdens.

In some cases, users of our source available software that have been self-managing deployments of our platform subsequently become paying subscribers of Elastic Cloud.

For the years ended April 30, 2025 and 2024, Elastic Cloud contributed 46% and 43% of our total revenue, respectively.

Components of Results of Operations

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Restructuring and other related charges primarily consist of employee-related severance and other termination benefits as well as lease impairment and other facilities-related charges.

Other Income (Expense), Net

Other Income, Net

Interest expense.

Interest expense primarily consists of interest on our Senior Notes.

Other income (expense), net.

Other income (expense), net primarily consists of interest income, gains and losses from transactions denominated in a currency other than the functional currency, and miscellaneous other non-operating gains and losses.

(Benefit from) Provision for Income Taxes

(Benefit from) provision for income taxes consists primarily of income taxes related to the Netherlands, U.S.

Other income, net.

Other income, net primarily consists of interest income, gains and losses from transactions denominated in a currency other than the functional currency, and miscellaneous other non-operating gains and losses.

Provision for (Benefit from) Income Taxes

Provision for (benefit from) income taxes consists primarily of income taxes related to the Netherlands, U.S.

federal and state, and foreign jurisdictions in which we conduct business.

Our effective tax rate is affected by recurring items, such as tax rates in jurisdictions outside the Netherlands and the relative amounts of income we earn in those jurisdictions, non-deductible stock-based compensation, and one-time tax benefits or charges, including in fiscal 2024 an income tax benefit related to a release of the valuation allowance against U.S.

federal and certain states’ deferred tax assets.

Our effective tax rate is affected by recurring items, such as tax rates in jurisdictions outside the Netherlands and the relative amounts of income we earn in those jurisdictions, non-deductible stock-based compensation, and one-time tax benefits, such as the release of a valuation allowance, or charges as well as the BEAT legislation in the United States.

Results of Operations

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(54,922) (129,902) (219,172)

Other income (expense), net

Other income, net

Interest expense (25,307) (26,132) (25,159)

Other income (expense), net 33,278 27,454 (3,393)

Other income, net 48,660 33,278 27,454

Loss before income taxes (31,569) (122,756) (216,877)

(Benefit from) provision for income taxes (184,476) 19,284 6,059

Net income (loss) $ 61,720 $ (236,161) $ (203,848)

Provision for (benefit from) income taxes 76,545 (184,476) 19,284

Net (loss) income $ (108,114) $ 61,720 $ (236,161)

(1) Includes stock-based compensation expense and related employer taxes as follows:

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(4) % (10) % (21) %

Other income (expense), net

Other income, net

Interest expense (1) % (2) % (2) %

Other income (expense), net 3 % 2 % — %

Other income, net 3 % 3 % 2 %

Loss before income taxes (2) % (9) % (21) %

(Benefit from) provision for income taxes (14) % 1 % 1 %

Net income (loss) 5 % (22) % (24) %

Provision for (benefit from) income taxes 5 % (14) % 1 %

Net (loss) income (7) % 5 % (22) %

(1) Includes stock-based compensation expense and related employer taxes as follows:

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Cost of subscription revenue increased by $36.3 million, or 15%, for the year ended April 30, 2025 compared to the prior year.

This increase was primarily due to an increase of $24.7 million in cloud infrastructure costs, $1.5 million in other third-party costs, $0.9 million in software and equipment expense, and $0.6 million in intangible assets amortization.

These increases were partially offset by a $1.2 million decrease in third-party consulting costs.

Total subscription gross margin improved to 79% for the year ended April 30, 2024 compared to 78% for the prior year, primarily due to efficiencies realized in managing our subscription costs relative to revenue growth.

This increase was primarily due to an increase of $38.4 million in cloud infrastructure costs, partially offset by a decrease of $3.1 million in intangible assets amortization.

Subscription gross margin increased nominally to 80% for the year ended April 30, 2025 compared to 79% the prior year.

Cost of services revenue increased by $13.5 million, or 16%, for the year ended April 30, 2025 compared to the prior year.

This increase was primarily due to an increase of $7.2 million in personnel and related costs.

These costs were partially offset by decreases of $1.1 million in training and facility costs.

The increase in personnel and related costs included increases of $4.0 million in salaries and related taxes and $3.1 million in stock-based compensation.

Gross margin for services revenue was flat at 8% for the year ended April 30, 2024 compared to the prior year.

This increase was primarily due to increases of $6.8 million in personnel and related costs and $6.4 million in subcontractor costs.

Gross margin for services revenue was 2% for the year ended April 30, 2025 compared to 8% for the same period of the prior year.

The decrease in gross margin was primarily attributable to personnel and related costs and subcontractor costs growing at a higher rate than the growth in services revenue.

We continue to make investments in our services organization that we believe will be needed to support our continued growth.

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Research and development expense increased by $23.8 million, or 7%, for the year ended April 30, 2025 compared to the prior year as we continued to invest in the development of new and existing offerings.

Personnel and related costs increased by $22.1 million for the current year, while cloud infrastructure costs related to our research and development activities increased by $4.4 million and travel costs increased by $1.4 million.

The increase in personnel and related costs included increases of $13.4 million in stock-based compensation, $10.7 million in salaries and related taxes, and $2.0 million in employee benefits expense.

These increases were offset in part by a decrease in acquisition-related compensation of $4.4 million.

This increase was primarily due to increases of $22.2 million in personnel and related costs and $4.7 million in cloud infrastructure costs related to our research and development activities.

These increases were partially offset by a decrease of $3.4 million in travel costs.

The increase in personnel and related costs included increases of $16.5 million in salaries and related taxes, $3.8 million in stock-based compensation, and $3.1 million in employee benefits expense, partially offset by a decrease of $1.4 million in acquisition-related compensation.

Sales and marketing

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Sales and marketing expense increased by $57.5 million, or 10%, for the year ended April 30, 2025 compared to the prior year.

This increase was primarily due to increases of $34.8 million in personnel and related costs, $12.5 million in marketing expenses, and $9.3 million in travel costs.

These increases were partially offset by a decrease of $2.7 million in intangible assets amortization.

The increase in personnel and related costs included increases of $14.5 million in salaries and related taxes, $9.6 million in commissions expense, and $9.1 million in stock-based compensation.

This increase was primarily due to an increase of $55.8 million in personnel and related costs.

The increase in personnel and related costs included increases of $22.4 million in salaries and related taxes, $15.5 million in commission expense, $8.7 million in stock-based compensation, and $6.8 million in employee benefits expense.

General and administrative

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General and administrative expense increased by $14.6 million, or 9%, for the year ended April 30, 2025 compared to the prior year.

This increase was primarily due to increases of $13.8 million in personnel and related costs, $1.8 million in other miscellaneous non-income based taxes, $1.5 million in legal and professional fees, and $1.3 million in bad debt expense and allowance for credit losses.

These increases were partially offset by a decrease of $1.5 million in insurance costs.

The increase in personnel and related costs included increases of $9.0 million in stock-based compensation expense and $4.3 million in salaries and related taxes.

This increase was primarily due to increases of $11.8 million in personnel and related costs and $2.0 million in software and equipment expense.

The increase in personnel and related costs included increases of $5.8 million in salaries and related taxes, $3.2 million in stock-based compensation, and $1.5 million in employee benefits expense.

Restructuring and other related charges

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Restructuring and other related charges $ 225 $ 4,917 $ (4,692) (95) %

For the year ended April 30, 2024, we recorded restructuring and other related charges comprising employee-related severance and other termination benefits of approximately $4.9 million.

For the year ended April 30, 2023, we recorded restructuring and other related charges comprising employee-related severance and other termination benefits of approximately $23.3 million, facilities-related charges of approximately $6.2 million, and $1.8 million of other restructuring-related charges.

Restructuring and other related charges decreased by $4.7 million for the year ended April 30, 2025 compared to the prior year due to lower employee-related severance and termination benefit charges.

Other Income, Net

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Interest expense $ (25,307) $ (26,132) $ 825 (3) %

Interest expense primarily related to interest on our Senior Notes and remained relatively flat for the year ended April 30, 2024 compared to the prior year.

Interest expense remained relatively flat for the year ended April 30, 2025 compared to the prior year.

Other income, net

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Other income, net $ 48,660 $ 33,278 $ 15,382 46 %

Other income, net increased by $5.8 million to $33.3 million for the year ended April 30, 2024 from $27.5 million for the prior year.

The increase was primarily due to an increase of $19.7 million in investment income due to new investments in marketable securities and higher interest earned on money market funds.

The effects of these increases were partially offset by an increase in net foreign currency transaction losses of $3.7 million.

Additionally, during the year ended April 30, 2023, a one-time favorable settlement of a legal claim increased other income by $10.2 million, further offsetting the year-over-year increase in investment income.

(Benefit from) Provision for Income Taxes

Other income, net increased by $15.4 million, or 46%, for the year ended April 30, 2025 compared to the prior year.

The increase was due to increases of $10.3 million in interest and other investment income primarily from our marketable securities and $5.4 million in net foreign currency exchange gains.

Provision for (Benefit from) Income Taxes

Year Ended April 30, Change

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(in thousands)

(Benefit from) provision for income taxes $ (184,476) $ 19,284 $ (203,760) NM

NM = Not Meaningful

The benefit from income taxes was $184.5 million for the year ended April 30, 2024 compared to a provision for income taxes of $19.3 million for the prior year.

Our effective tax rate was 150% and (9)% of our loss before income taxes for the years ended April 30, 2024 and 2023, respectively.

Provision for (benefit from) income taxes $ 76,545 $ (184,476) $ 261,021 (141) %

The provision for income taxes was $76.5 million for the year ended April 30, 2025 compared to a benefit from income taxes of $184.5 million for the prior year.

Our effective tax rate was (242)% and 150% of our net loss before income taxes for the years ended April 30, 2025 and 2024, respectively.

Our effective tax rate is affected by recurring items, such as tax rates in jurisdictions outside the Netherlands and the relative amounts of income we earn in those jurisdictions and non-deductible stock-based compensation as well as one-time tax benefits or charges.

The increase in tax benefit during the year ended April 30, 2024 was driven primarily by the release of a valuation allowance against U.S.

federal and certain states’ deferred tax assets of $250.7 million, partially offset by tax expense in the current year resulting from growth in business operations in jurisdictions where we are subject to tax.

The benefit from income taxes for the year ended April 30, 2024 was driven primarily by a release of a valuation allowance against U.S.

federal and certain states’ deferred tax assets of $250.7 million.

We maintain a full valuation allowance against our deferred tax assets in the Netherlands and the United Kingdom.

To the extent sufficient positive evidence becomes available, the Company may release all or a portion of the Netherlands valuation allowance in one or more future periods.

A release of the valuation allowance, if any, would result in the recognition of certain deferred tax assets and a material income tax benefit for the period in which such release is recorded.

Liquidity and Capital Resources

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We believe that the credit quality of the securities portfolio is strong and diversified among industries and individual issuers.

We have generated significant operating losses from our operations as reflected in our accumulated deficit of $991.6 million as of April 30, 2024.

We have historically incurred, and expect to continue to incur, operating losses and may generate negative cash flows from operations in the future due to the investments we intend to make and, as a result, we may require additional capital resources to execute on our strategic initiatives to grow our business.

We have generated significant operating losses from our operations as reflected in our accumulated deficit of $1.100 billion as of April 30, 2025.

We have historically incurred, and expect to continue to incur, operating losses and may generate negative cash flows from operations in the future due to the investments we intend to make.

As a result, we may require additional capital resources to execute on our strategic initiatives to grow our business.

We believe that our existing cash, cash equivalents, and marketable securities and cash from our future operations will be sufficient to fund our operating and capital needs for at least the next 12 months, despite the uncertainty in the changing market and macroeconomic conditions.

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In July 2021, we issued long-term debt of $575.0 million, represented by our Senior Notes, and we may be required to seek additional equity or debt financing.

In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

As market conditions warrant, we may from time to time seek to purchase our outstanding debt securities or loans, including the Senior Notes, in privately negotiated or open market transactions, by tender offer or otherwise.

In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all.

If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, operating results and financial condition would be adversely affected.

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Net cash provided by operating activities $ 266,168 $ 148,762 $ 35,662

$ 148,762 $ 35,662 $ 5,672

Net cash used in investing activities $ (118,668) $ (287,960) $ (272,952)

$ (287,960) $ (272,952) $ (127,271)

Net cash provided by financing activities $ 40,947 $ 40,054 $ 17,471

$ 40,054 $ 17,471 $ 602,127

Net Cash Provided By Operating Activities

Net cash provided by operating activities during the year ended April 30, 2025 was $266.2 million, which resulted from adjustments for non-cash charges of $430.4 million, partially offset by net loss of $108.1 million and a net cash outflow of $56.2 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of $257.8 million for stock-based compensation expense, $96.7 million for amortization of deferred contract acquisition costs, $57.4 million in deferred income taxes, and $12.3 million of depreciation and intangible asset amortization expense.

The net cash outflow from changes in operating assets and liabilities resulted from a $106.7 million increase in deferred contract acquisition costs as our sales commissions increased due to increased business volume, a $48.9 million increase in accounts receivable, net, a $36.1 million increase in prepaid expenses and other assets, and a $11.9 million decrease in operating lease liabilities .

These outflows were partially offset by inflows from a $147.1 million increase in deferred revenue.

Net cash provided by operating activities during the year ended April 30, 2024 was $148.8 million, which resulted from net income of $61.7 million and adjustments for non-cash charges of $123.7 million, partially offset by a net cash outflow of $36.6 million from changes in operating assets and liabilities.

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These outflows were partially offset by inflows from a $134.6 million increase in deferred revenue and a net increase of $25.5 million in accounts payable, accrued expenses, and accrued compensation and benefits.

Net cash provided by operating activities during the year ended April 30, 2023 was $35.7 million, which resulted from adjustments for non-cash charges of $307.2 million, mostly offset by a net loss of $236.2 million and net cash outflow of $35.4 million from changes in operating assets and liabilities.

Non-cash charges primarily consisted of $204.0 million for stock-based compensation expense, $68.9 million for amortization of deferred contract acquisition costs, $20.2 million of depreciation and intangible asset amortization expense, $10.9 million in non-cash operating lease costs, and $6.2 million of asset impairment charges.

The net cash outflow from changes in operating assets and liabilities resulted from an increase in deferred contract acquisition costs of $102.0 million as our sales commissions increased due to increased business volume, an increase of $46.4 million in accounts receivable, and a decrease of $11.4 million in operating lease liabilities.

These outflows were partially offset by inflows from a $95.6 million increase in deferred revenue, a net increase of $18.9 million in accounts payable, accrued expenses and accrued compensation and benefits, and a decrease of $9.8 million in prepaid expenses and other assets.

Net Cash Used In Investing Activities

Net cash used in investing activities of $288.0 million during the year ended April 30, 2024 was primarily due to the purchase of marketable securities of $536.8 million, business acquisitions, net of cash acquired, of $19.1 million, and capital expenditures of $3.5 million .

Net cash used in investing activities of $118.7 million during the year ended April 30, 2025 was primarily due to purchases of marketable securities of $549.6 million and purchases of property and equipment of $4.3 million, partially offset by sales, maturities, and redemptions of marketable securities of $435.3 million.

These expenditures were offset by cash provided by maturities and redemptions of marketable securities of $271.4 million.

Net cash used in investing activities of $273.0 million during the year ended April 30, 2023 was primarily due to the purchase of marketable securities of $270.3 million.

In addition, we incurred $2.7 million of capital expenditures during the year.

Net Cash Provided By Financing Activities

Net cash provided by financing activities of $40.1 million during the year ended April 30, 2024 was due to the proceeds from stock option exercises and purchases under our employee stock purchase plan.

Net cash provided by financing activities of $17.5 million during the year ended April 30, 2023 was due to the proceeds from stock option exercises.

Net cash provided by financing activities of $40.9 million during the year ended April 30, 2025 was due to proceeds from stock option exercises and purchases under our employee stock purchase plan.

Net cash provided by financing activities of $40.1 million during the year ended April 30, 2024 was due to proceeds from stock option exercises and purchases under our employee stock purchase plan.

Contractual Obligations and Commitments

Our principal commitments primarily consist of our purchase obligations under non-cancelable agreements for cloud hosting, subscription software, and sales and marketing, future non-cancelable minimum rental payments under operating leases for our offices, and interest payments due on our Senior Notes.

Our principal commitments consist of our purchase obligations under non-cancelable agreements for cloud hosting, subscription software, sales and marketing, and general corporate services, future non-cancelable minimum rental payments under operating leases for our offices, and interest payments due on our Senior Notes.

As of April 30, 2025, we had purchase commitments of $812.3 million related to cloud hosting services, future minimum lease payment commitments of $29.9 million, and purchase commitments of $73.2 million related to other contracts.

Subsequent to April 30, 2024, we executed an operating lease agreement for an office space with an expected commencement date in the third quarter of fiscal 2025.

The lease term is approximately 11 years with undiscounted future minimum lease payments of approximately $12.4 million.

See Note 8, “Commitments and contingencies,” and Note 9, “Leases,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional discussion of our cloud hosting obligations and future non-cancelable minimum rental payments, respectively.

In July 2021, we issued $575.0 million aggregate principal amount of Senior Notes in a private placement.

Interest on the Senior Notes is payable semi-annually in arrears on January 15 and July 15 of each year.

See Note 7, “Senior Notes,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information about the Senior Notes.

See Note 7, “Senior Notes,” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

As of April 30, 2025, we had $2.9 million in letters of credit outstanding in favor of certain landlords for office space.

These letters of credit renew annually and expire on various dates through 2025.

These letters of credit expire on various dates through 2028, with some of these obligations renewing annually.

Our contractual commitment amounts are associated with agreements that are enforceable and legally binding and do not include obligations under contracts that we can cancel without a significant penalty.

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Therefore, we cannot reasonably estimate the timing of such payments.

We believe that these matters will likely not be resolved in the next 12 months and accordingly we have classified the estimated liability as non-current in the consolidated balance sheet.

For further information see Note 13, “Income taxes,” of our accompanying Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

We believe that these matters will likely not be resolved in the next 12 months and accordingly we have classified the estimated liability as non-current in the consolidated balance sheets.

See Note 13, “Income Taxes,” of our accompanying Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we are required to make estimates, assumptions and judgments that affect the amounts reported on our financial statements and the accompanying disclosures.

In preparing our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, we are required to make estimates, assumptions and judgments that affect the amounts reported on our financial statements and the accompanying disclosures.

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment.

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Our contracts with customers include varying terms and conditions, and identifying and evaluating the impact of these terms and conditions on revenue recognition requires significant judgment.

We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit, reputation, and financial or other information pertaining to the customer.

We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, the customer’s credit, reputation, and financial or other pertinent information.

At contract inception, we evaluate whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation.

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For these contracts, we account for individual performance obligations separately if they are distinct.

We apply significant judgment in identifying and accounting for each performance obligation, as a result of evaluating the terms and conditions in contracts.

We apply significant judgment in identifying and accounting for each performance obligation based on our evaluation of the terms and conditions in contracts.

The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis.

We determine the SSP based on the prices at which we separately sell these products assuming the majority of these fall within a pricing range.

In instances where SSP is not directly observable, such as when we do not sell the software license separately, we derive the SSP using information that may include market conditions and other observable and unobservable inputs, which can require significant judgment.

There is typically more than one SSP for individual products and services due to the stratification of those products and services by quantity, term of the subscription, sales channel and other circumstances.

We determine the SSP based on the prices at which we separately sell these products assuming the majority of such prices fall within a pricing range.

For instances in which the SSP is not directly observable, such as when we do not sell the software license separately, we derive the SSP using information that may include market conditions and other observable and unobservable inputs, which can require significant judgment.

Individual products and services typically have more than one SSP due to the stratification of such products and services by quantity, subscription term, sales channel, and other circumstances.

If one of the performance obligations is outside of the SSP range, we allocate the transaction price considering the midpoint of the SSP range.

We also consider if there are any additional material rights inherent in a contract, and if so, we allocate a portion of the transaction price to such rights based on a relative SSP.

We also consider whether there are any additional material rights inherent in a contract and, if so, we allocate a portion of the transaction price to such rights based on the relative SSP.

Deferred Contract Acquisition Costs

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To the extent sufficient positive evidence becomes available, we may release all or a portion of our valuation allowance in one or more future periods.

During the year ended April 30, 2024, we evaluated the realizability of our deferred tax assets, which resulted in releasing part of our valuation allowance for our U.S.

federal and certain U.S.

state deferred tax assets.

Future releases of the remaining valuation allowance, if any, would result in the recognition of certain deferred tax assets which may include a material income tax benefit for the period in which such release is recorded.

See Note 13, “Income Taxes” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional discussion.

Future valuation allowance releases, if any, would result in the recognition of certain deferred tax assets which may include a material income tax benefit for the period in which such release is recorded.

See Note 13, “Income Taxes” of our accompanying Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

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.

What changed 10-K

Item 7. Management’s Discussion and Analysis