In the new AI mania, few toolmakers seem as well disposed as Elastic and its peers. The group's flagship product, Elasticsearch, offers, as its name suggests, large-scale data search capabilities for large enterprises.

Elastic initially launched its product as an open-source version via AWS. Following an excellent reception, and once this bootstrapping phase had been completed, it set about moving to a more traditional licensing model.

Not without success, even if monetization has proved less meteoric than expected. Sales for fiscal year 2023 reached $1.069 billion, up 24% on 2022. This marks a clear slowdown compared with the previous period, when sales grew by 42% between 2021 and 2022.

The operating loss widens a little further: -$182 million in 2023, compared with -$166 million in 2022 and -$120 million in 2021. Of course, we'd be in the black if it weren't for the gargantuan stock option remunerations, which financial communications drawn up on a "non-GAAP" basis try hard to emphasize.

Anyone can be convinced. Fortunately, the group's two founders, Steven Schuurman and Shay Banon, jointly own 18.7% of the capital. Since they don't want to be overly diluted, it's a good thing that the average exercise price of their stock options is higher than the current share price.

That said, the group's four main executives pocketed a total of $40 million in remuneration last year, equivalent to roughly 5% of sales - sales, not profit!

Elastic estimates that its addressable market has doubled in size in five years, and is now flirting with the $90 billion mark. This gives it 1.11% market share. You'd expect more from a product that's supposed to be a blockbuster.

Even more annoying: the quarterly growth rate has slowed to a halt. After the IPO, the group was delivering a dazzling 40% growth per quarter; but this performance, as we can see, has halved over the last eighteen months.

The company's customer retention rate, a fundamental metric in a SaaS business, is also a mystery. Management maintains an astonishing lack of clarity in this area. Under these conditions, it's difficult to sketch out a remotely reliable financial model.

The market is taking note, as evidenced by a valuation divided by four in the space of a few months, from x20 to x5 sales.