Elastic N.V. (ESTC) and Its Financial Efficiency Compared to Competitors

• Elastic N.V. (NYSE:ESTC) has a Return on Invested Capital (ROIC) of 4.43%, which is lower than its Weighted Average Cost of Capital (WACC) of 8.61%, indicating inefficiencies in capital utilization.
• Competitors like MongoDB, Smartsheet, and Alteryx also show negative ROICs, suggesting broader industry challenges in achieving capital efficiency.
• HubSpot demonstrates relatively better capital efficiency with a ROIC closer to its WACC, indicating a more balanced approach to capital utilization compared to its peers.

Elastic N.V. (NYSE:ESTC) is a company known for its search-powered solutions, which include Elasticsearch, a popular search engine used by businesses to analyze and visualize data. The company operates in the competitive field of data analytics and search technology, with notable competitors like MongoDB, Smartsheet, Alteryx, Datadog, and HubSpot. These companies also focus on data management and analytics, making the comparison of their financial metrics relevant.

Elastic's Return on Invested Capital (ROIC) is 4.43%, which is lower than its Weighted Average Cost of Capital (WACC) of 8.61%. This indicates that Elastic is not generating returns that exceed its cost of capital, suggesting inefficiencies in how it utilizes its capital. The ROIC to WACC ratio of 0.51 further highlights this inefficiency, as it is below 1, meaning the returns do not cover the capital costs.

In comparison, MongoDB has a negative ROIC of -17.84% against a WACC of 9.54%, resulting in a ROIC to WACC ratio of -1.87. This suggests MongoDB is facing even greater challenges in capital efficiency. Similarly, Smartsheet and Alteryx also have negative ROICs of -5.88% and -8.11%, respectively, with their WACC figures being higher than their ROICs, indicating inefficiencies in capital utilization.

Datadog, with a ROIC of 1.86% and a WACC of 9.52%, has a ROIC to WACC ratio of 0.20, which is lower than Elastic's. This suggests that Datadog is also struggling to generate returns that exceed its cost of capital. On the other hand, HubSpot, with a ROIC of 8.17% and a WACC of 11.98%, has a ROIC to WACC ratio of 0.68. Although HubSpot's ROIC is still below its WACC, it is closer to achieving a balance, indicating relatively better capital efficiency compared to its peers.