Twilio, Mulesoft, and MongoDB are probably the best comparables here -- open-source and dev-tools based SaaS IPOs. All of these were very successful at IPO and afterwards, and even compared to these, Elastic looks great.
* They're growing at almost 100% per year which is incredible. Twilio filed for IPO growing at 70% per year. Mulesoft was growing at 60%. Mongo was growing at 50%
* Losing $50M on $150M of revenue. (Net margins of -33%). This is pretty reasonable and in line with Twilio and Mulesoft. MongoDB was significantly worse at -60% net margins.
With that kind of growth I'd imagine something like a 220M ARR when they actually IPO, and valuation of 15-20x that.
"It's really just a wrapper around Solr and a management layer bolted on top I don't understand all the rage!"
…I completely understand all the rage?
It should be noted:
 Unlike MongoDB (which is a ground-up build), Elasticsearch is basically an API layer on top of Apache Lucene. This is relevant because they haven't built and don't maintain, control, or own the source of their primary IP.
 Unlike MongoDB (General Purpose) Elasticsearch is a single purpose database and good at/used for one thing and one thing only. It searches text fields for text.
So its potential use cases and thus marketshare is far more limited.
 Posts on stackoverflow with the tag:
elasticsearch × 34,253
mongodb x 103,478
Lots of people use it for analytics (checkout their aggregation/time series queries) as well as analyzing huge logs. Some people are starting to use it for machine learning use cases too.
MongoDB aggregation feels like writing code in assembler.
Elastic is used for search, log analysis and analytics.
MongoDB owns their code - Elastic does not own Lucene.
 You don't understand their IP if you think it's Lucene. It really, really isn't.
 It's not single purpose anything. I've used it for search engines, event buses and as document stores. It's multi-purpose and more dependable at scale and under duress than Mongo thanks to sitting on top of the JVM.
 Stackoverflow stats don't mean anything. What are you trying to imply?
Wall Street smoke 'n' mirrors strikes again.
And distributed SQL of any complexity doesn't really scale. As soon as data that a join depends on is on other machines/nodes, you need quorums and dependent network I/O. Granted with high-speed networks that is getting to be less of a burden speed-wise, but the reliability problems still exist.
WeWork and Uber can justify it by pointing out unit costs in stable markets, and say 'look we are profitable there, so all of our losses are due to growth'.
Elastic cannot say the same.
In fact Twilio and Mongo have also been hemorhaging money since the start, and it's going to take a hell of a lot of growth, then massive profitability for them to break even.
Venture Captial is now back to the dot-com bubble game of 'who's going to be the fool holding the bag' - basically, raise a pile of money, give away that money for free by selling at a massive loss, and then get naive retail investors to buy into the myth.
What if I raised $100M, bought some lumber, and sold it at a 50% discount to builders, gosh, I'd have a lot of customers! and then did an IPO -> look at the growth!
Twitter is what, 10 years old now?
They just reported their first profitable quarter ever! And guess what, userbase is shrinking!
They're billions in the hole, i.e. billions away from breaking even - they are a massive net financial loss for investors overall; the trick is of course to be an early investor (make money) and not a later investor (dupe).
This game is not designed, it's just a natural dynamic of a market with bad information and or dupes.
Just like the financial crash of 2008 could not happened if dumb German and Japanese banks were not buying up crap bundles thereby enabling local American banks to re-capitalize and go out again and make more bad loans (i.e. the system would have stopped because banks would have quickly run out of capital unable to sell their first batch of crap mortgages) ... in the same way, this VC game would not happen without rube investors somewhere who will actually pay a fortune for a stock like Twitter. There are many more reasons for this obviously.
Unfortunately, when there is shadiness, low-interest rates, not market interventions etc. - the name of the game is 'leverage' - not 'innovation' really. So it makes much more sense to buy your way into a market, than build yourself into it.
And by the way, this is not to take anything away from Twilio or Mongo as products - that's entirely separate issue. Maybe they are great, maybe they are crap, but we don't know because they are being given away at massive discounts so it's very hard to tell.
Sadly, in shady game of leverage, often 'it's the only way' because if you don't - someone else will. WeWork for example is leverage to the max with 0 wiggle room for risk. If there is a market correction and tenancy drops in any major market, they are wiped. Same for any company that's dependent on crazy valuations.
Companies going IPO while losing tons of money, without clear path to profitability ... is not necessarily a good sign.
Why is a -33% net margin “reasonable” instead of just being “less unreasonable”?
The rule states that a "sane" target for annual growth rate + profit margin is 40%. At a 100% YoY growth rate and -33% profit margins, Elastic is sitting at 70% -- making it pretty solid!
If customer acquisition costs are really high, then they're throwing good money after bad.
All of this talk of 'solid financials' while a company is losing money every quarter and whereupon there's no evidence of profit at the unit level ... is scary, it feels like one of those reddit ico pump-it-up chats.
It's all very highly speculative, is what it is. So let's hope it's a great company, with a solid offer and they manage the growth effectively.
You could also say that they are losing money today, and expecting to lose twice as much money next year.
As they mature, CFO grows, CFI normalizes and CFF grows to profitability.