<SEC-DOCUMENT>0001193125-23-060039.txt : 20230406
<SEC-HEADER>0001193125-23-060039.hdr.sgml : 20230406
<ACCEPTANCE-DATETIME>20230303161311
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ACCESSION NUMBER:		0001193125-23-060039
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20230303

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Elastic N.V.
		CENTRAL INDEX KEY:			0001707753
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PREPACKAGED SOFTWARE [7372]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			P7
		FISCAL YEAR END:			0430

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		KEIZERSGRACHT 281
		CITY:			AMSTERDAM
		STATE:			P7
		ZIP:			1016 ED
		BUSINESS PHONE:		(650) 458-2620

	MAIL ADDRESS:	
		STREET 1:		800 WEST EL CAMINO REAL SUITE 350
		CITY:			MOUNTAIN VIEW
		STATE:			CA
		ZIP:			94040

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Elastic B.V.
		DATE OF NAME CHANGE:	20180612

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Elasticsearch Global BV
		DATE OF NAME CHANGE:	20170605

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ELasticsearch Global BV
		DATE OF NAME CHANGE:	20170526
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Hogan Lovells US LLP</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Columbia Square</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">555 Thirteenth Street, NW</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, DC 20004</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">T +1 202 637 5600</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">F +1 202 637 5910</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman">www.hoganlovells.com</P></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">March&nbsp;3, 2023 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Via
EDGAR </U></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporation Finance </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Securities
and Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">100 F Street, N.E. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, D.C.
20549 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top">Attention:</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Yong Kim</TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Gus Rodriguez</TD></TR>
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<TD WIDTH="5%" VALIGN="top" ALIGN="left"><B>Re:</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>Elastic N.V. </B></P></TD></TR></TABLE>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman"><B>Form <FONT STYLE="white-space:nowrap">10-K</FONT> for the Fiscal Year ended April&nbsp;30, 2022</B> </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman"><B>Filed June&nbsp;21, 2022</B> </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman"><B>File <FONT STYLE="white-space:nowrap">No.&nbsp;001-38675</FONT></B> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Yong Kim and Gus Rodriguez: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On behalf of
our client, Elastic N.V. (the &#147;<B>Company</B>&#148; or &#147;<B>Elastic</B>&#148;), we submit this letter in response to the comment received by the Company from the staff (the &#147;<B>Staff</B>&#148;) of the Securities and Exchange Commission
contained in its letter dated February&nbsp;23, 2023, relating to the above-referenced Form <FONT STYLE="white-space:nowrap">10-K.</FONT> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">In this letter, we have set forth the Staff&#146;s comment in italicized, bold type and have followed the comment with the Company&#146;s
response. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I><U>Form <FONT STYLE="white-space:nowrap">10-K</FONT> for the Fiscal Year ended April&nbsp;30, 2022 </U></I></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I><U>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations </U></I></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I><U>Critical Accounting Policies and Estimates </U></I></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I><U>Revenue Recognition, page 66 </U></I></B></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><B><I>1.</I></B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B><I>We note the second risk factor disclosure on page 35 explaining that you are dependent upon lead
generation strategies, including offering free use of some of your product features and free trials of some of your paid features. </I></B></P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman"><B><I>You also have disclosures under Our Growth Strategies on page 6, indicating that you plan to expand your customer base by acquiring new
customers, and that one of the easiest ways to acquire customers is by offering free trials; also under Key Factors Affecting Our Performance on page 55, stating that your financial performance depends on growing your paid customer base by
converting free users of your software into paid subscribers. </I></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman"><B><I>Please expand your disclosure on page 66 to describe the
accounting policy applied in determining when free product features or trials would be sales incentives and when free product features or trials would be part of a contract with a customer, if the customer becomes a paid subscriber before the free
service or free trial period ends. </I></B></P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporation Finance </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">March 3, 2023 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"> Page
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman"><B><I>Also discuss any assumptions and uncertainties involved in the application of that
policy consistent with the guidance in Section V of SEC Release <FONT STYLE="white-space:nowrap">No.&nbsp;33-8350.</FONT> </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman">In response to the Staff&#146;s comment, the Company respectfully advises the Staff that to facilitate adoption of its
commercial software, Elastic offers a free version (Basic tier) of its products and features that are available to users to download without any support. The Company does not enter into any commercial agreement for the download of the Basic tier of
the Company&#146;s software and therefore there is no associated revenue related to the free version of products and features that is recognized by the Company. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman">In addition, Elastic also offers a time-limited trial of its self-managed subscriptions including paid features (without any
support) for 30 days and a capacity-limited trial of its cloud-based SaaS subscriptions for 14 days. These limited trials may be accessed for free from Elastic&#146;s website under a trial agreement which, while it provides access to a full range of
paid product features, is more restrictive than a paid commercial subscription in that the product license and cloud services are limited solely for internal evaluation use in a <FONT STYLE="white-space:nowrap">non-production</FONT> capacity. In
addition, the Company&#146;s cloud-based trial is limited such that a trial user is unable to scale above certain set prescribed capacity limits. No payment information is required to start a trial. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman">Further, the Company respectfully advises the Staff that the free trial user is not obligated to enter into a paid
subscription contract at the end of the free trial period and the trial user can opt out at any time during the free trial period. No enforceable right to consideration exists for the Company, and no contract exists between the Company and the user,
prior to the execution of a paid subscription contract, for which revenue should be recorded. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman">In the circumstance of a
free trial user entering into a paid subscription contract before the end of the free trial period, the Company evaluates if any remaining performance obligations under the free trial need to be combined with the performance obligations under the
newly entered paid subscription contract. The Company respectfully notes that for its self-managed subscriptions, since a new license is issued to the customer under the paid subscription contract that is separate from the free trial license, and
because there is no support for the free trial, there are no remaining performance obligations under the free trial, and therefore, the remaining free trial period is not part of or accounted for as part of the paid subscription contract. Similarly,
a cloud-based SaaS free trial user is required to provide payment information or enter into a commercial cloud services agreement to start a paid subscription. Entering into a commercial cloud services agreement, or providing payment information to
start a paid subscription prior to the expiry of the free trial period, terminates any remaining cloud-based free trial period and the Company has no remaining performance obligation under the free trial. Since the remaining free trial period is not
part of the commercial contract with the customer, there is no impact to the timing and pattern of revenue recognition for the commercial subscription. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman">As neither the free download of the Basic tier of the Company&#146;s products and features nor the free trials have any impact
on the Company&#146;s revenue recognition, Elastic believes that no specific disclosure related to the free products and features or the free trial subscriptions is required in the discussion in Form <FONT STYLE="white-space:nowrap">10-K</FONT> of
the Company&#146;s revenue recognition policy or critical accounting policies and estimates. Further, the Company respectfully advises the Staff that the costs associated with the free trials are not material to the Company&#146;s financial
statements. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company does not currently expect that its free trial subscriptions will change meaningfully in the near
future. If such a change should occur, the Company will consider the guidance recited in the Staff&#146;s comment and other applicable guidance in its disclosure analysis. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporation Finance </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">March 3, 2023 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"> Page
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman">If the Staff should have any questions or require additional information with
respect to the foregoing, please contact the undersigned at (202) <FONT STYLE="white-space:nowrap">637-5530</FONT> or my colleague Kevin Greenslade at (703) <FONT STYLE="white-space:nowrap">610-6189.</FONT> </P>
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<TD VALIGN="top">Very truly yours,</TD></TR>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">/s/ Richard J. Parrino</TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Richard J. Parrino</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman">Hogan Lovells US
LLP</P></TD></TR>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">cc:</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Ashutosh Kulkarni, Elastic N.V. </P></TD></TR></TABLE>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">Janesh Moorjani, Elastic N.V. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">Jane Bone, Elastic N.V. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">Carolyn
Herzog, Elastic N.V. </P>
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