Section 1: S-1/A (AMENDMENT NO. 1 TO FORM S-1)

398 Pages·2002·2.44 MB·English

Section 1: S-1/A (AMENDMENT NO. 1 TO FORM S-1)
Table of Contents
As filed with the Securities and Exchange Commission on September 24, 2018.
Registration No. 333-227191

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 1
To
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

ELASTIC N.V.1
(Exact name of Registrant as specified in its charter)

The Netherlands 7372 Not Applicable
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
800 West El Camino Real, Suite 350
Mountain View, California 94040
[phone]
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Shay Banon
Chief Executive Officer and Chairman
Elastic N.V.
800 West El Camino Real, Suite 350
Mountain View, California 94040
[phone]
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Steven E. Bochner, Esq. W.H. Baird Garrett, Esq. Alan F. Denenberg, Esq.
Steven V. Bernard, Esq. Elastic N.V. Stephen Salmon, Esq.
Andrew D. Hoffman, Esq. 800 West El Camino Real, Suite 350 Davis Polk & Wardwell LLP
Wilson Sonsini Goodrich & Rosati, P.C. Mountain View, California 94040 1600 El Camino Real
650 Page Mill Road [phone] Menlo Park, California 94025
Palo Alto, California 94304 [phone]
[phone]
Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the
following box: ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☐
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☒

CALCULATION OF REGISTRATION FEE

Proposed
Maximum Proposed
Aggregate Maximum Amount of
Title of Each Class of Shares to be Offering Price Aggregate Registration
Securities to be Registered Registered(1) Per Share(2) Offering Price(1)(2) Fee(3)
Ordinary shares, par value € 0.01 per share 8,050,000 $29 $233,450,000 $29,065
(1) Includes an additional 1,050,000 shares that the underwriters have the option to purchase.
(2) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended.
(3) The registrant previously paid $12,450 of this amount in connection with a prior filing of this registration statement.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.

1 Immediately prior to the completion of this offering, we intend to change our corporate form from a Dutch private company with limited liability (besloten vennootschap
met beperkte aansprakelijkheid) into a Dutch public limited company (naamloze vennootschap) and change our corporate name from Elastic B.V. to Elastic N.V.
Table of Contents
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated September 24, 2018.
7,000,000 Shares

Elastic N.V.
Ordinary Shares

This is an initial public offering of ordinary shares of Elastic N.V. All of the 7,000,000 ordinary shares are being sold by Elastic.
Prior to this offering, there has been no public market for the ordinary shares. It is currently estimated that the initial public offering
price per share will be between $26.00 and $29.00. Our ordinary shares have been approved for listing on the New York Stock Exchange
under the symbol “ESTC”.

We are an “emerging growth company” as defined under the federal securities laws. Investing in our ordinary shares involves
risks. See “Risk Factors” beginning on page 18.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these
securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

Per Share Total
Initial public offering price $ $
Underwriting discount(1) $ $
Proceeds, before expenses, to Elastic $ $

(1) See “Underwriting” for a description of the compensation payable to the underwriters.
To the extent that the underwriters sell more than 7,000,000 ordinary shares, the underwriters have an option to purchase up to an
additional 1,050,000 shares from Elastic at the initial public offering price, less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on , 2018.

Goldman Sachs & Co. LLC J.P. Morgan Barclays RBC Capital Markets
BofA Merrill Lynch Citigroup Jefferies Canaccord Genuity

Prospectus dated , 2018.
Table of Contents

Table of Contents
TABLE OF CONTENTS

Page
Prospectus Summary 1
Risk Factors 18
Special Note Regarding Forward-Looking Statements 52
Market and Industry Data 54
Use of Proceeds 55
Dividend Policy 56
Capitalization 57
Dilution 60
Selected Consolidated Financial Data 63
Management’s Discussion and Analysis of Financial Condition and Results of Operations 69
Business 106
Management 130
Executive Compensation 139
Certain Relationships and Related Party Transactions 149
Principal Shareholders 151
Description of Share Capital 155
Shares Eligible for Future Sale 177
Taxation 180
Underwriting 191
Legal Matters 199
Experts 199
Enforceability of Civil Liabilities 199
Where You Can Find Additional Information 200
Index to Consolidated Financial Statements F-1

Through and including , 2018 (the 25th day after the date of this prospectus), all dealers effecting transactions
in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a
dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or
subscription.
Neither we nor the underwriters have authorized anyone to provide you with information or make any representations other than those
contained in this prospectus or in any free writing prospectus we have prepared. We take no responsibility for, and can provide no assurance
as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but
only under the circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our ordinary shares.
For investors outside of the United States: Neither we nor the underwriters have done anything that would permit this offering or
possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You
are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of
the United States.

i
Table of Contents
PROSPECTUS SUMMARY
This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does
not contain all of the information you should consider before investing in our ordinary shares. You should read this entire prospectus
carefully, including the sections titled “Risk Factors,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and “Business” and our consolidated financial statements and the related notes
included elsewhere in this prospectus, before making an investment decision. Immediately prior to the completion of this offering,
Elastic B.V. will change its corporate form from a Dutch private company with limited liability (besloten vennootschap met beperkte
aansprakelijkheid) into a Dutch public limited company (naamloze vennootschap) and change its corporate name from Elastic B.V. to
Elastic N.V. Unless otherwise indicated or the context otherwise requires, the terms “Elastic,” “Elastic B.V.,” “Elastic N.V.,” “the
company,” “we,” “us” and “our” in this prospectus refers (i) prior to the corporate conversion, to Elastic B.V. and its consolidated
subsidiaries and (ii) after the corporate conversion, to Elastic N.V. and its consolidated subsidiaries. Our fiscal year end is April 30, and
our fiscal quarters end on July 31, October 31, January 31, and April 30. Our fiscal years ended April 30, 2017 and 2018 are referred to
herein as fiscal 2017 and fiscal 2018, respectively.
ELASTIC
Overview
Elastic is a search company.
Search is foundational to a wide variety of experiences. Elastic makes the power of search—the ability to instantly find relevant
information and insights from large amounts of data—available for a diverse set of applications and use cases.
When you hail a ride home from work with Uber, Elastic helps power the systems that locate nearby riders and drivers. When you
shop online at Walgreens, Elastic helps power finding the right products to add to your cart. When you look for a partner on Tinder,
Elastic helps power the algorithms that guide you to a match. When you search across Adobe’s millions of assets, Elastic helps power
finding the right photo, font, or color palette to complete your project. As Sprint operates its nationwide network of mobile subscribers,
Elastic helps power the logging of billions of events per day to track and manage website performance issues and network outages. As
SoftBank monitors the usage of thousands of servers across its entire IT environment, Elastic helps power the processing of terabytes of
daily data in real time. When Indiana University welcomes a new student class, Elastic helps power the cybersecurity operations
protecting thousands of devices and critical data across collaborating universities in the BigTen Security Operations Center. All of this is
search.
Why we search remains constant: we’re looking for insight, information, and answers. But how and what we search changes over
time, from the Dewey Decimal System for libraries to Google for the World Wide Web to conversations with virtual assistants for
everyday inquiries. Today, what we search has grown to include a rapidly increasing amount of structured and unstructured data from a
multitude of sources such as databases, websites, applications, and mobile and connected devices. While search experiences often
begin with search boxes, they are not confined to them. Dragging your finger across a map on a smartphone screen is search. Zooming
into a specific time frame in a histogram is search. Mining log files for errors is search. Forecasting storage capacity two weeks into the
future is search. Using natural language processing to analyze user sentiment is search.

1
Table of Contents
Elastic created the Elastic Stack (previously known as the ELK Stack), a powerful set of software products that ingest and store
data from any source, and in any format, and perform search, analysis, and visualization in milliseconds or less. Developers build on top
of the Elastic Stack to apply the power of search to their data and solve business problems. We have also built software solutions on the
Elastic Stack that address a wide variety of use cases including app search, site search, enterprise search, logging, metrics, application
performance monitoring (APM), business analytics, and security analytics. The Elastic Stack and our solutions are designed to run on
premises, in public or private clouds, or in hybrid environments. As the technology landscape shifts, our products grow and adapt. In that
sense, we believe that our company is truly elastic.
Our origins are rooted in open source, which facilitates rapid adoption of our software and enables efficient distribution of our
technology. Developers can download our software directly from our website for use in development and production environments. Since
January 1, 2013, our products have been downloaded over 350 million times. These downloads include both free and paid products. Open
source also fosters our vibrant community of developers who help improve our products and build on top of them. As of July 31, 2018, our
community included over 100,000 Meetup members across 194 Meetup groups in 46 countries. Meetup members are individuals who opt
into an Elasticsearch Meetup group on meetup.com, an independent third-party website.
Our business model is based on a combination of open source and proprietary software. Many features of our software can be
used free of charge. Some are only available through paid subscriptions, which include access to specific proprietary features and also
include support. Unlike some open source companies, we do not build a separate enterprise version of an original open source project.
Instead, we develop and test one robust codebase, over which we maintain control. We believe that maintaining full control over the
source code enables us to develop better products for our users and customers. Our sales and marketing efforts start with developers
who have already adopted our software and then evolve to departmental decision-makers and senior executives who have broad
purchasing power in their organizations. All of these actions help us build a powerful commercial business model on top of open source.
Our customers often significantly expand their usage of our products over time. Expansion includes increasing the number of
developers using our products, increasing the utilization of our products for a particular use case, and applying our products to new use
cases. We focus some of our direct sales efforts on encouraging these types of expansion within our customer base. We believe that a
useful indicator of our customers’ tendency to expand their usage of our products is our Net Expansion Rate, which measures expansion
in existing customers’ annual subscriptions over a twelve month period. Our Net Expansion Rate was 142% as of July 31, 2018 and over
130% at the end of each of our last seven fiscal quarters. See “Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Key Factors Affecting Our Performance—Expanding within our current customer base” for more information on
our Net Expansion Rate.
Our business has experienced rapid growth around the world. As of July 31, 2018, we had over 5,500 customers across over 80
countries and in a wide range of industries, compared to over 5,000 and 2,800 customers as of April 30, 2018 and 2017, respectively.
Our revenue was $159.9 million and $88.2 million in fiscal 2018 and 2017, respectively, representing year-over-year growth of 81% for
fiscal 2018. Our revenue was $56.6 million and $31.6 million in the three months ended July 31, 2018 and 2017, respectively,
representing period-over-period growth of 79%. Subscriptions accounted for 93% and 90% of our total revenue in fiscal 2018 and 2017,
respectively. Subscriptions accounted for 91% of our total revenue in the three months ended July 31, 2018. In fiscal 2018, revenue from
outside the United States accounted for 39% of our total revenue.

2
Table of Contents
In fiscal 2018 and 2017, we incurred net losses of $52.7 million and $52.0 million, respectively, and our operating cash flow was
$(20.8) million and $(16.1) million, respectively. In the three months ended July 31, 2018 and 2017, we incurred net losses of $18.6
million and $10.0 million, respectively, and our operating cash flow was $5.1 million and $0.9 million, respectively.
Industry Background
Search refers to rapidly obtaining relevant information and insights from large amounts of data. It is foundational to a wide variety
of endeavors. Search is characterized by requirements relating to:

• the speed at which relevant information must be identified;

• the scale of input data that must be examined; and

• the relevance of results and the ability to analyze and summarize the data.
Multiple trends are driving increased demand for search technology across an expanding array of applications, as well as
improving the capabilities of search technology and the value that it is able to generate.

• Users demanding more of applications. Over the last two decades, technology trends such as social networking, local
interest directories, geospatial data, and mobile computing have revolutionized experiences on the Internet. Business users
and consumers have grown accustomed to on-demand functionality and the ability to transact within seconds. Search enables
application providers to tailor content and functionality to individuals quickly and deliver superior user experiences, even as data
volumes have skyrocketed and the pace of change has accelerated.

• Increasing complexity in enterprise IT. While the volume of different types of data within and outside the enterprise is
increasing exponentially, the complexity of enterprise IT environments is also increasing dramatically. At the same time, IT
departments have to respond faster than ever before to issues such as security breaches, application performance degradation,
and system outages. Search makes it possible to derive insight for many use cases across large and disparate IT
environments.

• Growing need for data-driven insights across a broadening set of business functions. Leaders across all industries
are focused on how they can use data to improve their businesses. Early business intelligence tools focused on ad hoc
analyses and reporting on relatively small datasets. In recent years, demands for more intelligence and analytics have elevated
to require real-time, actionable insights from various data sources to benefit multiple functions across an organization. Search
is what makes that possible.

• Increasing supply of data. The volume, velocity, variety, and value of information in today’s digital world are rapidly
increasing. Enterprises are digitizing an increasing number of business activities and expanding their technology
infrastructures. At the same time, consumers are engaging in an increasing variety of digital experiences using a broader array
of devices. This flood of data represents an expanding opportunity for search to identify relevant and valuable information across
an expanding variety of domains.

• Advances in analytical techniques. Search is based on algorithms and computing power. In the past decade, advances in
computer engineering have resulted in increased availability of powerful analytical techniques such as machine learning and
natural language processing. Search technologies can harness these analytical techniques, in addition to advanced data
structure and storage approaches, to enhance the relevance of the results they identify and expand the size and types of the
datasets they are able to process.

3
Table of Contents
Our Opportunity
Developers and organizations apply our technology to a wide variety of use cases representing what we estimate to be a total
addressable market of $45 billion in 2018 according to information from IDC. Our total addressable market is driven by expansion in the
use cases to which our technology is applied, as well as the following market drivers defined by IDC: digital transformation, availability of
data, demand for predictive and prescriptive analytics, cloud infrastructure adoption, and increases in software and security-related
spending.
When we were founded, users initially applied our offerings predominantly for search, content analytics, and cognitive/AI use
cases. Based on IDC’s sizing of the market for search systems, content analytics, and cognitive/AI software platforms, this represented
a total addressable market of $3 billion in 2012. Since then, we estimate that our total addressable market has grown to $45 billion in
2018 based on the sum of four market segments:

• Search, content analytics, and cognitive/AI software. We estimate our opportunity in this market segment to be $8

billion in 2018 based on IDC’s sizing of the market for search systems, content analytics, and cognitive/AI software platforms.

• IT operations management. We estimate our opportunity in this market segment to be $9 billion in 2018 based on IDC’s

sizing of the market for IT Operations Management.

• Big data and analytics software. We estimate our opportunity in this market segment to be $23 billion in 2018 based on
IDC’s sizing of the markets for End-User Query, Reporting, and Analysis; Advanced and Predictive Analytics; Spatial and
Location Analytics; Nonrelational Analytic Data Stores; and Analytic Data Integration and Integrity.

• Security analytics. We estimate our opportunity in this market segment to be $5 billion in 2018 based on IDC’s sizing on
the markets for Security Information and Event Management (SIEM), Policy and Compliance, and Forensics and Incident
Investigation.
In the future, we expect our users to continue to apply our technology in new ways, helping us create more innovative products,
features, and solutions. As a result, we expect our total addressable market to continue to expand.
Our Products
We founded Elastic to bring the power of search to a broad range of business and consumer use cases. Our products enable our
users and customers to instantly find relevant information and insights in large amounts of data.
We offer the Elastic Stack (previously known as the ELK Stack), a powerful set of software products that ingest and store data
from any source, and in any format, and perform search, analysis, and visualization in milliseconds or less. The Elastic Stack is
designed for direct use by developers to power a variety of use cases. We also offer software solutions built on the Elastic Stack that
address a wide variety of use cases. The Elastic Stack and our solutions are designed to run on premises, in public or private clouds, or
in hybrid environments.
The Elastic Stack
The Elastic Stack is comprised of four primary products:

• Elasticsearch. Elasticsearch is the heart of the Elastic Stack. It is a distributed, real-time search and analytics engine and

datastore for all types of data, including textual, numerical, geospatial, structured, and unstructured.

4