Elastic: Dramatically Lowered Valuation Justifies Billings Slowdown

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About: Elastic N.V. (ESTC)
by: Gary Alexander
This article is exclusive for subscribers.
Gary Alexander
Software, internet, media, IPOs
Summary

Shares of search company Elastic have peeled back ~20% ever since reporting Q2 results.

Most notably, investors hammered the company on its deceleration down to 45% y/y billings growth (on a constant currency basis), down eight points from the year-ago quarter.

The company attributed the billings slowdown to an elongation in deal cycles with the U.S. government, which may self-correct over future quarters.

Against FY21 revenues, Elastic now trades at a single-digit valuation multiple - a blessing for a company that has consistently traded at double-digit multiples since its IPO.

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