Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Elastic files for an IPO

sec.gov

Post reply on HN
Print view View original

61–70 of 143 posts

Re: Elastic files for an IPO

#61

Post by scarface74 »

calcsam wrote: post #37

This is an extremely solid financial statement. $150M in revenue, growing ~100% per year; I'd project a valuation between $3B and $4B. Twilio, Mulesoft, and MongoDB are probably the best comparables here -- open-source and dev-tools based SaaS IPOs. All of these were very successful at IPO and afterwards, and even compared to these, Elastic looks great. * They're growing at almost 100% per year which is incredible. T…

Losing $50M on $150M of revenue. (Net margins of -33%). This is pretty reasonable and in line with Twilio and Mulesoft. MongoDB was significantly worse at -60% net margins.

Why is a -33% net margin “reasonable” instead of just being “less unreasonable”?

Re: Elastic files for an IPO

#63

Post by scarface74 »

nodesocket wrote: post #50
hendzen wrote: post #13

Earlier quoted context omitted.

There are key differences between MongoDB and Elastic. MongoDB (the company), has been very strategic about defending themselves from Amazon. Likely due to the AGPL licensing on MongoDB (the database), Amazon doesn't offer a hosted MongoDB - you have to buy MongoDB Atlas which runs on multiple cloud providers, including AWS, GCP and Azure. Coincidentally, Atlas subscriptions are the fastest growing part of MongoDB In…

I setup a 3 billion plus document ES cluster using AWS Elasticsearch Service. As a whole it works really well, and it's nice not to have to manage individual EC2 instances. With that said, there are some very annoying things. Previously if you modified the access policy of the ES cluster, it would completely rebuild the entire cluster (create all new nodes and copy all data), which can take many hours. Recently I tur…

With that said, there are some very annoying things. Previously if you modified the access policy of the ES cluster, it would completely rebuild the entire cluster (create all new nodes and copy all data), which can take many hours.

From what I can tell, it still does. I can’t comment on the length of time though. I did it before I had many documents and it was a very small Dev instance.

Re: Elastic files for an IPO

#64

Post by bogomipz »

mathattack wrote: post #58
whalesalad wrote: post #12

> We have incurred losses in all years since our incorporation. We incurred a net loss of $52.7 million in fiscal 2018, $52.0 million in fiscal 2017 and $18.6 million in the three months ended July 31, 2018. As a result, we had an accumulated deficit of $233.4 million as of July 31, 2018. Woah.

The formula for SaaS companies is generally growth + net margin should equal 40%. If they’re growing 100%, even a negative 50% margin leaves them in the clear by 10%.

>"The formula for SaaS companies is generally growth + net margin should equal 40%."

Can you say exactly what formula this is and what is a formula for?

Also what is the significance of the number 40 as a target?

Re: Elastic files for an IPO

#65

Post by nodesocket »

scarface74 wrote: post #63
nodesocket wrote: post #50

Earlier quoted context omitted.

I setup a 3 billion plus document ES cluster using AWS Elasticsearch Service. As a whole it works really well, and it's nice not to have to manage individual EC2 instances. With that said, there are some very annoying things. Previously if you modified the access policy of the ES cluster, it would completely rebuild the entire cluster (create all new nodes and copy all data), which can take many hours. Recently I tur…

With that said, there are some very annoying things. Previously if you modified the access policy of the ES cluster, it would completely rebuild the entire cluster (create all new nodes and copy all data), which can take many hours. From what I can tell, it still does. I can’t comment on the length of time though. I did it before I had many documents and it was a very small Dev instance.

I think in March[1] they announced this improvement.

[1] https://aws.amazon.com/about-aws/whats-new/2018/03/amazon-el...

Re: Elastic files for an IPO

#66

Post by burnmaster »

calcsam wrote: post #37

This is an extremely solid financial statement. $150M in revenue, growing ~100% per year; I'd project a valuation between $3B and $4B. Twilio, Mulesoft, and MongoDB are probably the best comparables here -- open-source and dev-tools based SaaS IPOs. All of these were very successful at IPO and afterwards, and even compared to these, Elastic looks great. * They're growing at almost 100% per year which is incredible. T…

I see several responses that mention MongoDB for purposes of comparison and seem to conclude Elasticsearch fares favorably.

It should be noted:

[1] Unlike MongoDB (which is a ground-up build), Elasticsearch is basically an API layer on top of Apache Lucene. This is relevant because they haven't built and don't maintain, control, or own the source of their primary IP.

[2] Unlike MongoDB (General Purpose) Elasticsearch is a single purpose database and good at/used for one thing and one thing only. It searches text fields for text.

So its potential use cases and thus marketshare is far more limited.

[3] Posts on stackoverflow with the tag:

elasticsearch × 34,253 mongodb x 103,478

Re: Elastic files for an IPO

#67

Post by ncmncm »

fh973 wrote: post #31
whalesalad wrote: post #12

> We have incurred losses in all years since our incorporation. We incurred a net loss of $52.7 million in fiscal 2018, $52.0 million in fiscal 2017 and $18.6 million in the three months ended July 31, 2018. As a result, we had an accumulated deficit of $233.4 million as of July 31, 2018. Woah.

Is this a data point for how well the open source business model works? Or are they just unnecessarily bloated?

If you aren't incurring losses, it means you are throwing away potential income by growing too slowly, and inviting competitors to take up the slack.

In case of a market or tech hiccup, you might find yourself without "sufficient cash flow", and collapse, but that would be the investors' problem. The investors are assumed to be able to absorb the loss and disappointment without undue discomfort, and so they are. Risk to your dreams takes last place.

Re: Elastic files for an IPO

#68

Post by beambot »

scarface74 wrote: post #61
calcsam wrote: post #37

This is an extremely solid financial statement. $150M in revenue, growing ~100% per year; I'd project a valuation between $3B and $4B. Twilio, Mulesoft, and MongoDB are probably the best comparables here -- open-source and dev-tools based SaaS IPOs. All of these were very successful at IPO and afterwards, and even compared to these, Elastic looks great. * They're growing at almost 100% per year which is incredible. T…

Losing $50M on $150M of revenue. (Net margins of -33%). This is pretty reasonable and in line with Twilio and Mulesoft. MongoDB was significantly worse at -60% net margins. Why is a -33% net margin “reasonable” instead of just being “less unreasonable”?

Worth looking at the 40% rule for SaaS: https://www.feld.com/archives/2015/02/rule-40-healthy-saas-c...

The rule states that a "sane" target for annual growth rate + profit margin is 40%. At a 100% YoY growth rate and -33% profit margins, Elastic is sitting at 70% -- making it pretty solid!

Re: Elastic files for an IPO

#69

Post by rpedela »

burnmaster wrote: post #66
calcsam wrote: post #37

This is an extremely solid financial statement. $150M in revenue, growing ~100% per year; I'd project a valuation between $3B and $4B. Twilio, Mulesoft, and MongoDB are probably the best comparables here -- open-source and dev-tools based SaaS IPOs. All of these were very successful at IPO and afterwards, and even compared to these, Elastic looks great. * They're growing at almost 100% per year which is incredible. T…

I see several responses that mention MongoDB for purposes of comparison and seem to conclude Elasticsearch fares favorably. It should be noted: [1] Unlike MongoDB (which is a ground-up build), Elasticsearch is basically an API layer on top of Apache Lucene. This is relevant because they haven't built and don't maintain, control, or own the source of their primary IP. [2] Unlike MongoDB (General Purpose) Elasticsearch…

No one owns Lucene. If everyone stopped developing Lucene, Elastic could devote resources to it which they already do. I don't think that is a potential risk at all.

Re: Elastic files for an IPO

#70

Post by airstrike »

scarface74 wrote: post #61
calcsam wrote: post #37

This is an extremely solid financial statement. $150M in revenue, growing ~100% per year; I'd project a valuation between $3B and $4B. Twilio, Mulesoft, and MongoDB are probably the best comparables here -- open-source and dev-tools based SaaS IPOs. All of these were very successful at IPO and afterwards, and even compared to these, Elastic looks great. * They're growing at almost 100% per year which is incredible. T…

Losing $50M on $150M of revenue. (Net margins of -33%). This is pretty reasonable and in line with Twilio and Mulesoft. MongoDB was significantly worse at -60% net margins. Why is a -33% net margin “reasonable” instead of just being “less unreasonable”?

Because it's expected for early stage companies: low CFO, high CFI, low CFF.

As they mature, CFO grows, CFI normalizes and CFF grows to profitability.

Post reply on HN