Elastic NV

13. Income Taxes

The Company is incorporated in the Netherlands but operates in various countries with differing tax laws and rates. The Company recorded a provision for income taxes of $21.1 million and $64.9 million for the three and nine months ended January 31, 2025, respectively, and a benefit from income taxes of $200.3 million and $181.9 million for the three and nine months ended January 31, 2024, respectively. The calculation of income taxes is based upon the estimated annual effective tax rates for the year applied to the current period income before tax plus the tax effect of any significant unusual items, discrete events, or changes in tax law. The Company’s effective tax rate is affected by recurring items, such as tax rates in jurisdictions outside the Netherlands and the relative amounts of income that is earned in those jurisdictions, non-deductible stock-based compensation, and one-time tax benefits or charges as well as Base Erosion and Anti-abuse Tax (the “BEAT”) legislation in the U.S. For the nine months ended January 31, 2025, the provision for income taxes includes a one-time charge of $2.2 million associated with acquisition-related integration. The income tax benefit for the three and nine months ended January 31, 2024 was primarily due to the release of the valuation allowance against U.S. federal and certain states’ deferred tax assets of $250.7 million during the three and nine months ended January 31, 2024.

The Company assesses uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainties in Tax. The Company anticipates that the amount of reasonably possible unrecognized tax benefits that could decrease over the next twelve months due to the expiration of certain statutes of limitations and settlement of tax audits is not material to the Company’s condensed consolidated financial statements.

In 2021, the Organization for Economic Cooperation and Development (“OECD”) published Pillar Two Model Rules defining a global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. The OECD has since issued administrative guidance providing transition and safe harbor rules concerning the implementation of the Pillar Two global minimum tax. A number of countries have proposed or enacted legislation to implement core elements of the Pillar Two proposal. Pillar Two did not have a significant impact on the Company’s condensed consolidated financial statements for the three and nine months ended January 31, 2025. Although the Company is monitoring developments and evaluating the potential impact on future periods, the Company does not expect Pillar Two to have a significant impact on its consolidated financial statements for the fiscal year ending April 30, 2025. The Company continues to monitor the impact of proposed and enacted global tax legislation.