Shares of Elastic N.V. (ESTC) experienced a sharp 12.09% decline in after-hours trading on Thursday, following the release of its fourth-quarter fiscal year 2025 earnings report. The plunge comes as a surprise, given that the company actually surpassed analyst expectations for both earnings and revenue in the quarter ended April 30.

Elastic reported non-GAAP earnings of $0.47 per diluted share, significantly beating the FactSet analyst consensus of $0.37. Revenue for the quarter rose to $388.4 million from $335 million a year earlier, also topping the Street's estimate of $380.4 million. Despite this strong performance, investors seemed to focus on the company's disappointing full-year revenue guidance.

For the upcoming fiscal year, Elastic projects revenue between $1.655 billion and $1.67 billion, falling short of the $1.678 billion analysts were expecting. This softer-than-anticipated revenue outlook appears to be the primary factor behind the stock's after-hours plunge, overshadowing the Q4 earnings beat and the company's positive short-term guidance. Elastic's CEO, Ash Kulkarni, emphasized the company's leadership in search AI and its role in generative AI applications, but the market reaction suggests investors are more concerned about long-term growth prospects. As the company navigates this challenging period, all eyes will be on how Elastic addresses these concerns and works to realign with market expectations.