Elastic shares drop after co-founder of Banon steps down as CEO of software company


Shay Banon, co-founder and chief executive officer of Elastic N.V., center, rings the opening bell during the company’s initial public offering at the New York Stock Exchange on Oct. 5, 2018.

Michael Nagle | Bloomberg | Getty Images

Search software maker Elastic said Wednesday that Ashutosh Kulkarni, who joined the company as chief product officer last year, will replace co-founder Shay Banon as CEO.

Elastic shares fell as much as 8% in extended trading after the announcement.

Banon is assuming the role of technology chief at the company effective immediately, Elastic said in a statement. That’s a position he held from 2012 to 2017.¬†

Banon took Elastic public in 2018. The stock has risen about 59% from the $70 closing price on its first day of trading. It fell 15% in December after the company reported a wider-than-expected quarterly loss. Last week it was among the stocks that got caught up in a larger software sell-off, falling 12%.

In an interview with CNBC, Banon, who moved back to Israel two years ago from Silicon Valley, said he told the board he wanted to make the change.

“I’ve been thinking about what would be a world where I would potentially not be the CEO, balancing family and everything else,” he said. “A few months ago, I came to the realization that I would like to take the role of CTO and not be CEO.”

Banon said he recommended Kulkarni for the top job.

Kulkarni came to Elastic from security software company McAfee, where he was executive vice president and chief product officer of its enterprise business group. He held executive roles earlier in his career at content-distribution network operator Akamai and data integration software company Informatica.

Kulkarni said he’s focused on accelerating Elastic’s move toward delivering cloud services. About one-third of total revenue came from the Elastic Cloud offering in the fiscal second quarter, with cloud revenue growing 84% from a year earlier.

Competitors include Amazon Web Services, which in 2015 introduced the Amazon Elasticsearch Service, drawing on the Elasticsearch open-source software that Elastic popularized. A change to the open-source software license for Elasticsearch last year “created the kind of clarity in the broad market that has been exactly what we wanted,” Kulkarni said.

AWS changed the name of its product to the Amazon OpenSearch Service in September.

“Now there’s only one Elasticsearch, and it’s from Elastic,” Kulkarni said. “Yes, there’s this thing called OpenSearch, but that’s a different name and a different platform. The platform is fundamentally different.” An Elastic lawsuit against AWS over trademark infringement and false advertising is pending in federal district court.

Elastic said Paul Appleby, the company’s president of worldwide field operations, will leave the company. Sales teams report to Michael Cremen, who joined as chief sales officer from Cohesity in October.

WATCH: We are the leader in providing search experiences through data, says Elastic CEO


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