Sometimes beating expectations isn't enough, and Elastic N.V. (ESTC) is learning that lesson the hard way. The search and data analytics company crushed its second-quarter earnings after Thursday's close, but the market isn't celebrating.

Elastic reported adjusted earnings of 64 cents per share, comfortably ahead of the 58-cent analyst estimate. Revenue came in at $423.48 million, topping the Street's call for $418.16 million. By any traditional measure, this was a solid quarter.

CEO Ash Kulkarni was certainly upbeat about the results. "Q2 was an outstanding quarter for Elastic. We beat the high end of our guidance across all metrics. Our strength was driven by robust growth across the company with AI positively impacting all areas of our business," he said.

The company even sweetened the pot by raising its full-year outlook. Elastic lifted its fiscal 2026 adjusted EPS guidance to a range of $2.40 to $2.46, above the previous $2.36 estimate. Revenue guidance also got a boost, moving to a range of $1.715 billion to $1.721 billion versus the prior $1.7 billion estimate.

Yet despite all this good news, Elastic shares plunged 12.2% to $72.10 in pre-market trading. What gives?

Wall Street analysts wasted no time adjusting their outlook after the earnings announcement. Stifel analyst Brad Reback maintained a Buy rating but slashed his price target from $134 to $108—a significant haircut. Meanwhile, Bank of America Securities analyst Koji Ikeda kept his Neutral rating and lowered his target from $111 to $90.

The disconnect between strong results and falling share prices suggests investors and analysts may be worried about something lurking beneath the surface—whether it's future growth prospects, valuation concerns, or guidance that didn't quite match sky-high expectations. In markets, sometimes even good news needs to be really, really good news.