Moody's assigns Elastic, notes B1

Moody's Investors Service said it assigned to Elastic NV a B1 corporate family rating, B1-PD probability of default rating and a speculative grade liquidity rating of SGL-1.

Concurrently, Moody's assigned a B1 rating to Elastic's planned $500 million of senior unsecured notes due 2029.

“Elastic's B1 CFR reflects the company's leading enterprise search platform and its growing presence in the observability and security markets; the company's exceptional revenue growth (56% CAGR in fiscal 2018-2021), supported by expansion with existing customer base and new customer wins; highly recurring revenue consisting of subscription and SaaS and high renewal rates; very good liquidity; and a very strong equity cushion relative to debt levels,” Moody’s said in a press release.

Elastic plans to use proceeds for general corporate purposes, including acquisitions and strategic investments.

The outlook is stable. “The stable outlook reflects Moody's expectation that Elastic's organic revenue will grow in the high 20s, cash adjusted leverage will decline below 4x and free cash flow to debt will improve to mid-single digits in fiscal 2023,” the agency said.

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