Slides
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Corporate Overview and Q1FY27 Financial Results August 27, 2026
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Forward Looking Statements; Use of Non-GAAP Measures This presentation and the accompanying oral presentation contain forward-looking statements that involve substantial risks and uncertainties, which include, but are not limited to, statements regarding our expected financial results for the fiscal quarter ending October 31, 2026 and fiscal year ending April 30, 2027, our strategic areas of focus, expectations and plans regarding our future growth, our go-to-market and growth strategies and the effectiveness of such strategies, estimates of the impact of AI, assessments of our strategic partnerships, the expected performance or benefits of our offerings, our assessments of our competitive advantages, the strength of and demand for our solutions and products, and our expectations regarding the markets in which we operate and growth opportunities as well as our ability to address those opportunities. Actual outcomes and results may differ materially from those contemplated by these forward-looking statements due to uncertainties, risks, and changes in circumstances, including but not limited to those related to: our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses (which include changes in sales and marketing, research and development and general and administrative expenses), and our ability to achieve and maintain profitability; the success of our AI initiatives; competition we face in the AI landscape; market understanding and valuation of AI technologies; the use of AI by our workforce; the impact of the evolving macroeconomic and geopolitical environments, on our business, operations, hiring and financial results, and on businesses and spending priorities of our customers and partners; the impact of our pricing model strategies on our business; the impact of foreign currency exchange rate fluctuations, the uncertain inflation and interest rate environment, and tariffs and other international trade policies on our results; our ability to continue to deliver and improve our offerings and develop new offerings; customer acceptance and purchase of our new and existing offerings; the expansion and adoption of our offerings; our ability to realize value from investments in the business; our ability to maintain and expand our user and customer base; our international expansion strategy; our operating results and cash flows; the sufficiency of our capital resources; our ability to successfully execute our go-to-market strategy, our forecasts regarding our business; our ability to repurchase our ordinary shares at favorable prices, or at all; our plan to align our investments more closely with our strategic priorities that we announced earlier this year, and general market, political, economic and business conditions. Any additional or unforeseen effect from the evolving macroeconomic and geopolitical environments may exacerbate these risks. Additional risks and uncertainties that could cause actual outcomes and resu lts to differ materially are included in our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2026 and subsequent quarterly and current reports filed with the SEC. SEC filings are available on the Investor Relations section of Elastic’s website at ir.elastic.co and the SEC’s website at www.sec.gov. Elastic assumes no obligation to, and does not currently intend to, update any such forward-looking statements, except as required by law. In addition to GAAP financial information, this presentation and the accompanying oral presentation include certain non-GAAP financial measures. See the Appendix for a reconciliation of all historical non-GAAP financial measures to the most directly comparable GAAP financial measures. 2
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Q1FY27 Results TOTAL REVENUE $478M +15% Y/Y · +15% Y/Y in CC KEY METRICS Sales-led Subscription Revenue* $399M +18% Y/Y · +17% Y/Y in CC Current Remaining Performance Obligations (cRPO) $1.153B +21% Y/Y · +20% Y/Y in CC Non-GAAP Operating Margin* 16.2% Customers with ACV >$100K 1,800+ ACV = annual contract value, CC = constant currency Sales-led subscription revenue is a non-GAAP financial measure that is calculated as total subscription revenue excluding Monthly Elastic Cloud. *See appendix for reconciliation to the most directly comparable GAAP financial measures. 3
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Elastic, the Search AI Company, combines the precision of search with the intelligence of AI to help everyone find answers that matter from all data. In real time. At scale. 4
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Today’s business priorities all connect to data Improving Operational Resilience Mitigating Security Risk Elevating Customer Experiences 5
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We face an unprecedented explosion of unstructured data Unstructured data Structured data Mainframe Era 175 Of data was generated in 2025 PC / Client Era Internet Era Virtual Era AI Era 90% Of enterprise data is unstructured ZB Worldwide IDC Global DataSphere Forecast, 2024–2028: AI Everywhere, But Upsurge in Data Will Take Time IDC White Paper: The Untapped Value of Unstructured Data 6
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AI is reshaping the software stack LLMs are the new operating system Data of all shapes and types are the fuel Relevance is the key to production-ready AI 7
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Elasticsearch was built for this moment Any data AI experiences Build Your Own SecurityObservability Search & AI Ingestion Processing Visualization AI Agents & Workflows Storage AI & ML Search Elasticsearch Platform 8
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The Elasticsearch Platform provides everything developers need to do context engineering right Hybrid Search Engine Elasticsearch Platform Ingestion Processing Visualization AI Agents & Workflows Storage AI & ML Search VectorDB Inference Service Embedding Models MCP Tools Agents LLM Observability 9
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One platform, with the freedom to build anything Build Your Own SecurityObservability Search & AI Ingestion Processing Visualization AI Agents & Workflows Storage AI & ML Search Elasticsearch Platform 10
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Build Your Own SecurityObservability Search & AI Ingestion Processing Visualization AI Agents & Workflows Storage AI & ML Search Elasticsearch Platform A comprehensive and open platform that delivers relevant results in real-time Storage Search AI analysis Self-Managed Elastic Cloud Hosted Elastic Cloud Serverless Any data, any source Outcomes that matter Public Cloud On-Premises Databases Legacy Systems Applications SaaS Apps Web Services Files 69% Improvement in customer and employee satisfaction 60% Reduction in risk 62% Reduction in revenue disruption 11
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Adopting Elasticsearch has never been easier Self-Managed Elastic Cloud Hosted Elastic Cloud Serverless Spin up Elastic Self-Managed with one simple command. Run Elastic in a cloud-hosted manner with full control over your Elasticsearch environment. Deploy and use Elastic via Elastic Cloud Serverless without managing the underlying Elastic cluster, such as nodes, data tiers, and scaling. 12
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Elastic has built a strong foundation for AI, 15 years in the making Approximate Nearest Neighbor (ANN) HNSW Lucene 9 optimizations 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Native vector search KNN search + vector distance functions Memory breakthroughs (up to 32x reduction) Hybrid search (vectors + keywords) Pre-trained models (ELSER, E5) Inference API AI Playground Advanced parallelism (CPU, I/O, storage) Sparse indexing optimizations ACORN DISK BBQ and other performance optimizations Elastic Inference Service MCP Tools Agent Builder NVIDIA Hardware Acceleration Jina AI Models Elastic Workflows Auto-calibration for DiskBBQ Simplified Vector Search (semantic_text, semantic field) VectorDB Index Mode Columnar Mode More… Native Vector Search AI Workloads Agentic AI v9.xv8.xv7.xv0.x - v6.x Founded Elasticsearch Lexical Search Filters & Facets Relevance & Ranking 2026 13
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Elastic provides everything you need to build AI applications ●Vector search ●Lexical search ●Hybrid search ●Geospatial search ●Graph traversal ●Filtering & faceting ●Reranking models ●Query rules & rescoring ●Query understanding models ●RAG Workflows ●LLM integration Retrieval ●Sparse & dense vector encoding models ●Multi-lingual embedding models ●Multi-modal embedding models ●GPU-based inference service ●Automatic chunking ●200+ connectors ●Web crawlers ●Automated parsing ●Quantization Data Prep & Inference Vector DB Context Engineering ●Relevance benchmarking ●A/B testing ●Behavioral analytics ●Cost & token tracking ●Query logging, metrics, tracing Evaluation & Monitoring ●Tool building ●Agentic workflows ●Tool selection ●Memory systems ●Prompt management ●MCP/Agent interfaces Agentic AI 14
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Delivers the most relevant content Before GenAI composes a response, Elasticsearch delivers the most relevant content to best answer the query Reduces costs By providing the information most relevant to the query, less compute and storage resources are required Maintains security and confidentiality Recognizes and implements the appropriate access to the user and data, removes private information Complete platform for AI apps End to end platform to build and deliver AI search applications AI applications lead to better outcomes 15
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Observability Leader in the Gartner® Magic Quadrant™ for Observability Platforms, Jul. 2026 Leader in IDC MarketScape: Worldwide Observability Platforms 2025 Vendor Security Leader in IDC MarketScape for Worldwide SIEM 2026, Jul. 2026 Strong Performer in The Forrester Wave™: Extended Detection And Response Platforms, Q2 2026 Leader in The Forrester Wave™: Security Analytics Platforms, Jul. 2025 Leader in IDC MarketScape for Worldwide XDR 2025 Visionary in Gartner® Magic Quadrant™ for SIEM, Oct. 2025 Leader in IDC Marketscape for SIEM 2024 Elasticsearch Leader in The Forrester Wave™: Cognitive Search, Oct. 2025 Leader in the IDC Marketscape: Worldwide General-Purpose Knowledge Discovery Software 2025 Leader in the IDC Marketscape: Knowledge Discovery for External-Facing Use Cases 2024 Recognized leadership in search, log analytics, and security analytics 16
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Trusted by organizations around the world FINANCE TECHNOLOGY TELCO / MEDIA CONSUMER HEALTHCARE PUBLIC SECTOR AUTOMOTIVE / TRANSPORTATION RETAIL 17
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Why Elastic wins Power of Partnerships ●Strategic partnerships with hyperscalers, including co-investments ●Powerful technology integrations ●Preferential access and relationships ●Joint sales pursuits Power of the Commercial Model ●Compelling TCO advantages and greater business value ●Uniform resource-based pricing model ●Consumption-based model for Cloud Power of the Community ●Millions of developers with billions of downloads ●Facilitates bottom up adoption within enterprises ●Generates an entry point into new markets ●Engaging with open communities across solutions (Open Security, OpenTelemetry) Power of Elasticsearch ●Solving problems from a search and AI lens: speed, scale, relevance ●Strong foundation in AI/ML, with support for AI across solutions ●Unstructured data from any source ●All solutions on a single stack ●Deploy anywhere - cloud, hybrid, on-prem 18
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Community 17% of all professional developers use Elasticsearch 1 19% of all AI developers use Elasticsearch 1 Millions of developers world wide use Elasticsearch 1 5.9B Total Downloads (12 Dlds. per Sec. / 15 Years) #1 Search Engine & Vector Database in the World 2 125K+ Total GitHub Stars Open Source Massive adoption world wide 1. Stack Overflow Developer Survey 2. DB Engines Ranking of Vector DBMS 19
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We land via self-service cloud (SMB) and sales-led motion (enterprise & commercial) We grow awareness through open source Customer usage grows Customers add more workloads Customers adopt higher subscription tiers We land and expand with multiple paths to growth 20
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Segmentation optimized for performance SMB Enterprise Commercial Expand Commercial General Business Largest opportunities, highest density coverage Expansion and new logo Expansion New logo Product-led growth Strategic Commercial Hunter Low-cost inside sales coverage Direct Sales Services Partner Ecosystem (Cloud, OEM/MSP, GSI, Resellers) High automation, self- serve product-led motion Coverage ModelFocus 21
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Elastic & Hyperscalers: Powering AI innovation at scale Elastic partners with the world’s leading cloud providers to deliver our Search AI Platform that powers search, observability, and security in 50+ cloud regions globally 5x Partner of The Year ● Ground LLMs with real-time enterprise data using Elastic’s vector search in Vertex AI ● Accelerate AI and data-driven outcomes leveraging observability and security insights with GCP- native integrations ● Available through Monthly Subscription, Private Offer and through your preferred reseller GenAI Partner of The Year ● Rapidly build and scale generative AI apps with Elastic integrated into Amazon Bedrock ● High performance and reliability with Elastic co-innovating to run natively on AWS ● Available through Monthly Subscription (PAYG), Private Offer and through your preferred reseller 2x Partner of The Year ● Build Agentic AI Apps using Elasticsearch AI integrated with Azure AI Services and Semantic Kernel ● Natively monitor, and secure Azure workloads using Elastic Observability and Security as an Azure Native ISV Service ● Available through Monthly Subscription (PAYG) and Annual Agreements Simplified procurement through marketplace 22
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Amazon Web Services Google Cloud Microsoft Azure 60+ cloud regions globally Public cloud Hybrid On-premises The Elasticsearch Platform is available wherever your data lives 23
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Customer Stories
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GitHub brings semantic search to billions of documents with Elastic ● Traditional keyword search struggled with natural-language and AI-driven queries. ● Billions of documents required fast, scalable semantic retrieval. ● Zero-result searches and poor discoverability impacted user experience. The fact that we can run a search platform used by hundreds of millions of users with a team of about five or six engineers is mind-blowing. GitHub is the world’s largest software development platform, supporting more than 180M developers and 4M organizations with over 395M repositories and billions of searchable documents. GitHub uses Elasticsearch and semantic search to help developers and AI systems quickly discover code, APIs, discussions, and documentation at massive scale. Software & Technology | United States David Tippett Senior Search Engineer GitHub Challenges ● Elasticsearch ● Elastic Cloud ● Kibana ● Semantic Search ● Vector Search ● BBQ (Better Binary Quantization) Solution ● Supports semantic search across 395M+ repositories and billions of documents. ● Reduced zero-hit searches and improved click-through rates for natural-language queries. ● Operates a global-scale search platform with a lean team of 5–6 engineers. Outcomes READ THE STORY Repositories and billions of documents searchable with semantic search395M+ Overview 25
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Q§ Cutting operational noise by 30%: How Cathay Pacific unified observability on Elastic Cloud ● Disconnected monitoring tools made it impossible to see a customer journey end to end. ● Every incident began with a debate: infrastructure or security? ● Monitoring tracked infrastructure symptoms, not business outcomes. When an incident happens, there is no longer a debate about whether it is a security incident or a platform issue. Both teams are looking at the same data points and the same triggers. Security can focus on threat hunting, and the platform team can focus on availability. Cathay Pacific, the premium airline of the 80-year-old Cathay group, runs 300+ mission-critical applications across 100+ stations worldwide. As part of a decade-long modernization, it consolidated observability and security telemetry onto Elastic Cloud, giving teams one shared platform and cutting operational IT noise by ~30%. Aviation and transport | Singapore Rajeev Nair General Manager, IT Infrastructure & Security, Cathay Pacific Group Challenges Cathay unified observability and security telemetry into a single Elastic Cloud deployment built on Elasticsearch, with one schema and one query language for every team. On this shared layer, it now monitors business functions like booking, payment, and inventory as complete end-to-end transactions rather than isolated infrastructure metrics. Solution ● Eliminated the ownership debate, giving both teams one source of truth and faster resolution ● Cut operational IT noise ~30% by shedding patching and hardware work ● Shifted from reactive firefighting to proactively fixing issues before they reach customers Outcomes Reduction in operational noise, with 98% apps migrated off legacy system30% Overview READ THE STORY WATCH VIDEO 26
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Q§ How Visa used Elastic Workflows to cut alert triage from 10–20 minutes to seconds with a controlled, human-on-the-loop AI step ● Manual follow-up searches added 10– 20 minutes to every alert investigation. ● Mainframe logs and legacy query languages created inconsistent analyst experiences. ● Analysts had to switch between multiple tools before beginning incident response. What used to require 10 to 20 minutes of analyst effort per fire now completes in seconds. The IR team is no longer receiving a raw signal that requires investigation to begin. They are receiving a fully contextualized alert that is ready for decision-making. Visa is a world leader in digital payments, facilitating transactions between consumers, merchants, financial institutions and government entities across more than 200 countries and territories. Financial Services | United States Visa cybersecurity engineering team Challenges ● Elastic Security ● Elastic Workflows ● ES|QL (Elasticsearch Query Language) ● AI-powered validation workflows ● Webhook integrations ● IR ticketing systems Solution ● 10–20 minutes → seconds for per-fire triage on the mainframe default- account detection. ● 4 automated pipeline stages: detection, enrichment, AI validation, and webhook delivery. ● 5-minute execution cadence with a 10-minute lookback window for continuous monitoring. Outcomes Min → sec Overview READ THE STORY 27
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Medium-term Financial Framework
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Target Growth Sales-led Subscription Revenue Growth Adj. FCF Margin Total Revenue + Adj. FCF Margin Opex flexibility to invest in profitable growth and enable Rule of 40%+ + Rule of 40 GenAI TailwindsBase Growth Rule of 40 is calculated at total revenue growth plus adjusted free cash flow margin. = Medium-term financial framework 15%+ Continued execution via core solution set 5%+ Growing penetration of GenAI use cases 20%+ Base growth + GenAI tailwinds Non-GAAP Operating Margin ~25% (up from >20% at 2025 Financial Analyst Day) 29
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Q1 FY27 Results
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Sales-led subscription growth drives our model Total Revenue Sales-led Subscription Revenue* $ millions $ millions $415 $423 $450 $451 $478 As Reported Y/Y Growth Constant Currency Y/Y Growth * See appendix for reconciliation to the most directly comparable GAAP financial measure. 31
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Top-line results powered by our >$100K ACV customers >$100K ACV Customers >$1M ACV Customers >165 >210 >240 FY24 FY25 FY26 32
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Customer commitments remain strong Current Remaining Performance Obligations (cRPO) Remaining Performance Obligations (RPO) $ billions $ billions As Reported Y/Y Growth Constant Currency Y/Y Growth 33
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Driving ongoing leverage in our model Quarterly Non-GAAP Operating Margin* *See appendix for reconciliation to the most directly comparable GAAP financial measure. Annual Non-GAAP Operating Margin* 34
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Solid history of adjusted free cash flow growth TTM Adj. FCF* Annual Adj. FCF* $ millions $ millions Adjusted FCF Margin *See appendix for reconciliation to the most directly comparable GAAP financial measure. 35
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Revenue Highlights $ millions Q1 FY27 Y/Y Y/Y CC Total Revenue $478 15% 15% Total Subscription Revenue $449 15% 15% Total Sales-led Subscription Revenue* $399 18% 17% Monthly Elastic Cloud $50 1% 1% Subscription % of Total Revenue 94% Sales-led Subscription Revenue % of Total Revenue* 83% Professional Services Revenue $29 10% 10% *Sales-led subscription revenue is a non-GAAP financial measure we calculate as total subscription revenue excluding Monthly Elastic Cloud. See appendix for reconciliation to the most directly comparable GAAP financial measure. CC = Constant Currency 36
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GAAP Statement Highlights $ millions, except per share amounts Q1 FY27 % of Revenue GAAP Revenue $478 100% Gross Profit/Margin $356 74% Research & Development Expense $112 23% Sales & Marketing Expense $199 42% General & Administrative Expense $48 10% Restructuring and other related charges $20 4% Operating Loss/Margin ($24) (5)% Net loss per share - basic and diluted ($0.16) Basic and diluted share count 105M Sums may not add to totals due to rounding. 37
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Non-GAAP Statement Highlights* $ millions, except per share amounts Q1 FY27 % of Revenue Total GAAP Revenue $478 100% Gross Profit/Margin $366 77% Research & Development Expense $87 18% Sales & Marketing Expense $173 36% General & Administrative Expense $29 6% Operating Income/Margin $77 16% Earnings per share - Diluted $0.70 Diluted share count 106M *See appendix for reconciliation to the most directly comparable GAAP financial measures. 38
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Select Financial Measures $ millions, except NER, and employees Q1 FY27 Adjusted Free Cash Flow* $143 Total Deferred Revenue $884 Remaining Performance Obligations $1,854 Current Remaining Performance Obligations $1,153 Cash, Cash Equivalents, and Marketable Securities $1,461 Total Debt $575 Employees 3,834 Net Expansion Rate** 111% *See appendix for reconciliation to the most directly comparable GAAP financial measure. **NER is a trailing twelve month measure and includes only consumption, not commitments, for customers on Cloud consumption con tracts. 39
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Guidance
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Updated FY27 Guidance Total Revenue Constant currency Y/Y growth midpoint $1.985B $2.000B 14.5% $11.5M (at midpoint) 80bps raise to CC midpoint $1.998B $2,010B 15.3% Sales-Led Subscription Constant currency Y/Y growth midpoint $1.673B $1.688B 16.8% $7 .5M (at midpoint) 70bps raise to CC midpoint $1.682B $1.694B 17.5% Metric Prior Guidance Guidance Change Updated Guidance Non-GAAP Operating Margin 19.0% 0.4% 19.4% Non-GAAP Diluted EPS $3.21 $3.29 $0.08 (at midpoint) $3.29 $3.37 Prior guidance represents forecasts issued on May 27, 2026. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures for sales-led subscription revenue, non-GAAP operating margin, and non-GAAP diluted earnings per share is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of the costs and expenses that may be incurred in the future. These items necessary to reconcile such non-GAAP measures could be material and have a significant impact on the Companyʼs results computed in accordance with GAAP. 41
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Q2 & FY27 Guidance A reconciliation of non-GAAP guidance measures to corresponding GAAP measures for sales-led subscription revenue, non-GAAP operating margin, non-GAAP diluted earnings per share, and adjusted free cash flow is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of the costs and expenses that may be incurred in the future. These items necessary to reconcile such non -GAAP measures could be material and have a significant impact on the Company’s results computed in accordance with GAAP. Q2 FY27 FY27 Total Revenue $486.5 $2,004.0 Year-over-year growth % 14.9% 15.2% Constant currency year-over-year growth % 15.0% 15.3% Sales-led Subscription Revenue $408.0 $1,688.0 Year-over-year growth % 16.9% 17.4% Constant currency year-over-year growth % 17.1% 17.5% Non-GAAP Operating Margin ~19.0% ~19.4% Non-GAAP Diluted Earnings Per Share $0.81 $3.33 Diluted Weighted Average Shares Outstanding 108.5 109.0 Adjusted Free Cash Flow Margin - ~21.5% 42
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Appendix
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GAAP to Non-GAAP Reconciliations Gross Profit and Gross Margin $ in millions except percentages Q1 FY27 GAAP gross profit $356 Stock-based compensation expense and related employer taxes 8 Amortization of acquired intangibles 3 Non-GAAP gross profit $366 GAAP gross margin % 74% Stock-based compensation expense and related employer taxes 2% Amortization of acquired intangibles 1% Non-GAAP gross margin % 77% Sums may not add to totals due to rounding. 44
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GAAP to Non-GAAP Reconciliations Operating Expenses Sums may not add to totals due to rounding. $ in millions except percentages Q1 FY27 GAAP sales & marketing expenses $199 Stock-based compensation expense and related employer taxes (26) Non-GAAP sales & marketing expenses $173 Y/Y 15% GAAP research & development expenses $112 Stock-based compensation expense and related employer taxes (26) Acquisition-related expenses — Non-GAAP research & development expenses $87 Y/Y 7% GAAP general & administrative expenses $48 Stock-based compensation expense and related employer taxes (18) Acquisition-related expenses (1) Non-GAAP general & administrative expenses $29 Y/Y (4)% 45
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GAAP to Non-GAAP Reconciliations (Loss) / Earnings per Share Q1 FY27 GAAP net loss per share - basic & diluted ($0.16) Stock-based compensation expense and related employer taxes 0.74 Amortization of acquired intangibles 0.02 Acquisition-related expenses 0.01 Restructuring and other related charges 0.19 Tax adjustment (0.10) Non-GAAP earnings per share - basic & diluted $0.70 46 Sums may not add to totals due to rounding.
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GAAP to Non-GAAP Reconciliations Sales-led Subscription Revenue Sales-led subscription revenue is calculated as total subscription revenue excluding Monthly Elastic Cloud. $ in millions Q1 FY26 Q2 FY26 Q3 FY26 Q4 FY26 Q1 FY27 Annual Elastic Cloud $146 $157 $169 $170 $185 Monthly Elastic Cloud 50 49 50 48 50 Total Elastic Cloud 196 206 218 217 235 Other subscription 193 192 207 205 214 Total subscription $389 $398 $426 $422 $449 Total revenue $415 $423 $450 $451 $478 Total sales-led subscription revenue $339 $349 $376 $375 $399 47
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GAAP to Non-GAAP Reconciliations Operating (Loss) / Income, Operating Margin $ in millions except percentages Q1 FY25 Q2 FY25 Q3 FY25 Q4 FY25 Q1 FY26 Q2 FY26 Q3 FY26 Q4 FY26 Q1 FY27 FY24 FY25 FY26 Q1 FY27 TTM GAAP operating (loss) / income ($34) ($4) ($5) ($12) ($9) ($8) $1 ($16) ($24) ($130) ($55) ($33) ($48) Stock-based compensation expense and related employer taxes 68 66 67 70 73 75 80 80 78 250 270 308 313 Amortization of acquired intangibles 3 3 2 2 2 2 3 2 3 14 9 9 10 Acquisition-related expenses - - - 1 - 1 - 1 1 2 1 2 2 Restructuring and other related charges - - - - - - - - 20 5 - - 20 Non-GAAP operating income $37 $64 $64 $60 $65 $70 $83 $67 $77 $142 $225 $285 $297 GAAP operating margin % (9.7)% (1.2)% (1.2)% (3.1)% (2.3)% (1.9)% 0.1% (3.6)% (4.9)% (10.3)% (3.7)% (1.9)% (2.6)% Stock-based compensation expense and related employer taxes 19.4% 18.0% 17.5% 17.9% 17.5% 17.8% 17.7% 17.8% 16.2% 19.8% 18.2% 17.7% 17.4% Amortization of acquired intangibles 0.9% 0.8% 0.4% 0.4% 0.4% 0.5% 0.6% 0.5% 0.5% 1.1% 0.6% 0.5% 0.5% Acquisition-related expenses -% -% -% 0.1% -% 0.1% 0.1% 0.1% 0.2% 0.2% -% 0.1% 0.1% Restructuring and other related charges -% -% -% -% -% -% -% -% 4.2% 0.4% -% -% 1.1% Non-GAAP operating margin % 10.7% 17.6% 16.8% 15.3% 15.7% 16.5% 18.6% 14.8% 16.2% 11.2% 15.2% 16.4% 16.5% 48
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GAAP to Non-GAAP Reconciliations Adjusted Free Cash Flow* Sums may not add to totals due to rounding. *Adjusted free cash flow is a non-GAAP financial measure that we define as net cash provided by operating activities adjusted for cash paid for long-term debt interest less cash used for investing activities for purchases of property and equipment. Adjusted free cash flow margin is calculated as adjusted free c ash flow divided by total revenue. Adjusted free cash flow does not represent residual cash flow available for discretionary expenditures since, among other things, we have mandatory debt service requirements. Trailing Twelve Months (TTM) FY24 FY25 FY26$ in millions except percentages Q1 FY25 Q2 FY25 Q3 FY25 Q4 FY25 Q1 FY26 Q2 FY26 Q3 FY26 Q4 FY26 Q1 FY27 Q1 FY27 Net cash provided by operating activities $164 $204 $240 $266 $318 $306 $261 $327 $354 $149 $266 $327 $132 Less: Purchases of property and equipment (4) (3) (3) (4) (4) (4) (4) (5) (5) (3) (4) (5) (1) Add: Interest paid on long-term debt 24 24 24 24 24 24 24 24 24 24 24 24 12 Adjusted free cash flow* $184 $225 $261 $286 $338 $326 $281 $346 $373 $169 $286 $346 $143 Net cash provided by operating activities (as a percentage of total revenue) 12.4% 14.9% 16.8% 17.9% 20.5% 19.0% 15.6% 18.8% 19.6% 11.7% 17.9% 18.8% 27.6% Less: Purchases of property and equipment (as a percentage of total revenue) (0.3)% (0.2)% (0.2)% (0.3)% (0.3)% (0.3)% (0.3)% (0.3)% (0.3)% (0.3)% (0.3)% (0.3)% -% Add: Interest paid on long-term debt (as a percentage of total revenue) 1.8% 1.7% 1.7% 1.6% 1.5% 1.5% 1.4% 1.4% 1.3% 1.9% 1.6% 1.4% 2.5% Adjusted free cash flow margin 13.9% 16.3% 18.2% 19.3% 21.8% 20.3% 16.7% 19.9% 20.7% 13.3% 19.3% 19.9% 30.0% 49