HCP - Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, thank you for standing by and welcome to HashiCorp’s Fiscal 2023 First Quarter Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Alex Kurtz, Head of Investor Relations. you. Thank ahead. go Please

Alex Kurtz

press and McJannet; This HashiCorp's discussing afternoon, the & are Dadgar. in results everyone close Armon the quarter With Co-Founder, Navam today. our XXXX Welihinda; earnings for me our announced quarter call. we CEO, first issued welcome afternoon, after Fiscal an release, earnings and today that At market our the David to each to we HashiCorp's first conjunction financial deck advance you release CFO, our information Good have earnings the will CTO quarter review encourage be published quarter. to in financial close additional of in press our We deck with contains market before to calls. do our call, the of pertaining earnings plan and this

decks XXXX. You made which statements our the Private Reform can contain at Securities Harbor of Investor are will call ir.hashicorp.com. Provisions the Litigation on of access Today's forward-looking under Safe the website Act

subsequent concerning trends quarter these of Forward-looking financial statements full to guidance or such be second the including and identified financial or duty seek, any statements are for believe, These only condition XXXX expect, plan, and by intend, and and and XXXX. and we business anticipate, statements views as any similar reflect fiscal statements. do fiscal undertake the performance statements update may as future our expected, financial should be date will, our year relied words at representing business views These not our not and today of statements. upon as

from uncertainties that are that to Forward-looking and could risks differ address statements results by matters nature, to their cause expectations. actual materially subject

prepared define are and the of these measures that, at is over which metrics with discuss earnings as financial Dave? in on which to website measures, reconciliation how in most available in Accepted call let financial accordance also our release, to as Principles. this GAAP, measures, we measures press turn presented SEC, these included will certain we Accounting noted. metrics is Dave. prepared non-GAAP also and otherwise With me A the to are furnished the call, financial directly the The call GAAP accordance with comparable unless well ir.hashicorp.com. During on Generally our non-GAAP other not been financial has

David McJannet

We're Thank with you, Alex, quarter with to share first $XXX.X average was growth We're you a guidance four annual our to Retention console Net global financial of also revenue revenue. that our year-over-year one during largest and solid our quarter, during rate that the $XX QX of welcome ever. XXX%. institution QX, new pleased HashiCorp recurring trailing million for earnings reach quarter million, customer commitment everyone quarter in we representing transaction XX%, Dollar recent by along excited exceeded had most our the console to of a The with transactions of announce to this as with second we call.

XX strategic non-GAAP will reached customers QX, growth, and $XXX,XXX in XXX. with moments. revenue, Obligations annual customer in representing in a $XXX.X added XX% few than the total of a to discuss Remaining current we Also We equal greater reaching or million, year-over-year recurring Performance

applications is cloud. see briefly architectural to rest shift pleased marketplace out we as look it to capabilities. unique X% features in roll as what we helpful be offerings are we about Platform as revenue excited to the and of the approach performance decade this adoption representing we the Cloud our $X.X year, thought QX million with enterprise in recasting as of We're once quarter. revenue, the help trends HCP customers subscription reached in reiterate HashiCorp of very and out Our would the continue new that to I navigate the to a

cloud to transition their suite with enterprises operating help products multi-cloud cloud provide and we by consistent model. delivering of a a inevitably reminder, that a As

enterprises infrastructures of to do layer first they organizations as of provisioning, are and Well, for agnostic first, basis cloud with identity and need service choose Each approach, security, networking. model. represent HashiCorp? basis that of a the cloud of Why each a cloud infrastructure the these our record our of system approach, standardize the is service their what products provides. look code core using for and name as the portfolio designed of As stack paradigms the and

provisioning, practitioners managing increasingly Second, cloud using service networking tools makes of cloud our the the still de the our as market. marketplace for standards our products in open of and in offerings code, secrets the facto source global our and developing infrastructure footprint for free-tier the cloud, cloud

companies for which they convinced most else. are that on approach practitioner experience the how above will practitioner focus is all the decide why We we cloud,

of Finally, we products, our standardization. rich of accelerate each which and have partners developed around integrations a ecosystem technology and adoption further

to products. and created to a broad their other Terraform software into services shared the we're we the as important seeing last to of stand background, that year. adoption minutes Our and of around quarter take alone X,XXX for and now Terraform, With products XXXX business. our barrier over of like our to we integrate in enable our a partners our I’d end providers easily last is our today using multi-cloud that cloud XXX as Consul Vault, that third-parties fueling few trends differentiators our believe customers, total are highlight XX-K, And significant at all today, products for demand With in offerings. ecosystem we over these paying designed three to our entry and have in

that the touched quarter. enterprises central like platform large of continued highlight I'd on emergence we within last briefly teams to Specifically,

often cloud our centralized more of In the a consistent freely growth of are the we've of fairly and what the of and of teams the is to teams meetings environments quarter, point. Armon Global the What in-person this teams to known The with able the travel spent this having transformation. meetings, field XXXX. well understood to with managing at they importance And is multi-cloud or around quarter less the offices accounts. were the that customers. meet been transition During called that those well much these I cloud within is theme underpins platform members program emergence hearing technology

This little transformation, various all. underlies usually teams find but pieces or undertake As a sifting and themselves cost migrations companies they also or deployed delays security, various When cloud from disparate have at their CIOs difficult constraints to with who infrastructure efficiency in no digital the their applications, of often teams with cloud governance. strategy the with and their infrastructure and developers and want implications, and helping position in Ops, resources of is often encounter that through siloed to little them develop siloed coordination. networking, has past, to provisioning, security would application and some like product teams customers, them help immediate sold place ship a infrastructure silo years, these with of new cloud issues HashiCorp to level delivery. serve networking for to teams

this and being team being establishes costs organizations wireless as company. platform place, It and now deploy help enforce center, control instances, an compliance allowing infrastructure. standardizes for as in With team across into cloud a The brought now policies are Platform of is be companies teams cost early consistent cloud products companies to single infrastructure central their standardize fact, applications are infrastructure consolidate for the teams. applications controls our processes, adopters assigned their for we group However, protocols great can security developers cloud infrastructure with to in those entire whole. the and to and In many a friction. standard

Terraform, including operating enable others model of to Consul cloud Our with integrated products, platform to Vault, teams stack these an succeed. and

are seeing being quarter each success by deals these We larger in dynamics. our driven

at its happens a coupled accounts approach larger that is lead organization. and to call driven business long-term we are the as our this innovation created to product expand, with methodology initially durable teams scale in what single platform group are across a extend ALEER, the growth. drive seeing a and to believe adopt, believe that also mimicked selling, by programmatic larger of standardization can This We We renew. ultimately land, we success part our motion

I'd We Group out across to their to adopt, action. enterprises in execution TAM like now uniquely these to I'd we deals like a billion saw a $XX as of highlight the move in largest transactions. extend, to And motion quarter XXX as our our long in turn We multi-cloud in to enable examples renew QX. attention concepts notable play first and few strategic ourselves that show estimated land, continue XXXX. positioned see expand, has demonstrate through of what your to the completed decade marketplace

a deal. First land

centralizing credentials. exposure combined address this source a security with after global in as aligned automating is Vault services global an enterprise enabling small audit and risk secure Vault use the case. residential findings significant mandate departmental customer By worldwide company, and to our Vault Vault financial of and to the Our of address management architecture, creation sensitive jointly architect providing developed globally address user adopting solution landed while will for a credentials. this XXXX open multi-cloud efficiencies for by end-to-end to services insurance the our in cost QX organizations management process

to Consul customer manner. deal with provisioning approach agnostic customer. quickly. customer operational new enterprise also data chose self-supported consistent after Consul and of applications company which migrated their extend applications a service business This being a world. and consistent market deal expanded more clouds. to state third, accelerate organizations Terraform in to it the to AWS. that The Next, for An enable them standardize provisioning becoming costs new to deploy source that over resources. customer secure a platforms The are customer of global multiple an its networking extended approach enables bring an reduce one will groups the centers from Terraform Terraform QX, because private recognize involved largest the recently a cloud infrastructure to in became enabling energy to to the And open market home-grown the platform by solutions expand preventing Consul multiple an with time to to the across them customer's during was financial provides replacing of This and example. applications,

extended customer second I Vault, is allows As time journey enterprise source one the and that. expanded finally, benefit Consul. after Consul I'd an to that the its a of HashiCorp’s and Terraform, of It mentioned in a working million a to around the using institution began financial Consul-Terraform-Sync global XXXX. product open hardware Vault who with on example This minute then single ARR added This products over started and via And customer capability. existing also our networking to include us extend and of organization expanded Terraform life Packer earlier. an customer spend $XX like their

control platforms networking link quarter. disparate journey cloud the variety provides These allows the and Consul plans. faced its networking As matured, across a enterprise to heightened to it service the from a Consul add of approach to agnostic infrastructure customer this to data challenges scrutiny to private center, cloud, enterprise led complexity that organization edge. cloud

or All me resiliency call new companies to of and this platforms without our embrace agility. their deeply to to these And security, teams continuing We're let compromising as earn customers proud application to that, over are committed Navam. turn these the enabled to trust. like with count

Navam Welihinda

you, thanks for joining today. to Dave, Thank everyone and again us

our the which top to quarter. the first exceeded we results, in last produced results attention your ‘XX, from quarter FY line of guidance solid Turning financial

rate. was Net over our which increased revenue reaching year-over-year our total average rate four trailing quarter Our Dollar XX% target XXX%, and XXX% Retention

at revenue Looking rest to regions. XX% we from of The increasing geographic are from came the segments, the region Americas from world. our APAC revenue, is Americas, of from XX% and sequentially contributor our EMEA, our but the X% the percentage of revenue largest the the

a on you As its into due high-level average, revenue we nature. recurring visibility our know, have to of

approximately our subscription saw as revenue our revenue was revenue, This quarter, in recurring. we subscription come more of recurring of XX%

well margin, our to HashiCorp to expense on $X.XX operating resource key We our non-GAAP allowed metrics, as allocation share deliver GAAP per efficiency per continues journey track in $X.XX so non-GAAP to our business. growth. to basis, share side, of the come on and financial several a loss net our income GAAP as business understanding basis. income, durable incurred Moving non-GAAP a in believe We us gross we Doing non-GAAP plans. and and in in net the a performance help prioritize which business of ahead

to lot review a detail the site. detail. in our find you I ir.hashicorp.com accompanying deck our on in You'll encourage of KPI that

metrics, greater of XXXK the on Focusing equal to made or quarter. solid cohort, one the customer core the progress we business first during

quarter, as from trailing highlighted we activity expand, these in XX-month per increase. year-over-year to XXX XXX,XXX customers per renew model to customer which On grew We continue and and a the the in our execute Dave XX% their quarter, just in extend, revenue XXX,XXX the adopt, of about. add basis, customer customer a and land, spoke

momentum. as we in business We the XXX% launched Our HCP We by several year-over-year. features and HCP continues to HCP past show quarter, new our products strong continue grew platform. this invest to revenue

We products. about the see adoption are we with cloud excited trends our

Now second ’XX. year quarter for I the want of provide guidance the FY to our full and

second of the quarter ‘XX, of to total the For revenue expect FY $XXX million. million we range $XXX in

We loss expect QX in of to non-GAAP million. $XX operating range the $XX million

non-GAAP a average between weighted fully basic and $XXX.X million be $X.XX shares $X.XX to loss share based expect on net per We outstanding. diluted and a

expect the we For and total the revenue year fiscal of range million $XXX million. in $XXX full XXXX,

of million range the in $XXX loss operating non-GAAP XXXX FY million. $XXX and expect We

share a computing per $X.XX average shares and used net non-GAAP weighted -- net to between million basic net share. loss based expect We $XXX.X $X.XX be loss per in on and diluted non-GAAP

are Armon happy take QX that, I We any pleased to results. And our Alex? and with with your Dave, questions. are of

Alex Kurtz

Thanks, Navam.

a will our Blair William the first be that, Annual the question. With Growth note the Conference operator, of we go quarter, America Technology As let's Global Bank and to attending quick Conference. during

Operator

Ader Thank with first you. Instructions] Jason question [Operator Our Blair. from comes William

You may proceed.

Jason Ader

you. do of Did Hey, downturn? macro then, pick enter if business do how Thank think And some we resilient into recession pressures you your Yeah. any guidance? you a might your guys. or be, type

David McJannet

Dave. Jason, question. So, for thanks This the is

well. then Armon in and me and Let weigh first -- as answer Navam let the ask

saw in comment on generally we Navam quarters let we the speaking, the – -- of pipeline think side. guidance what that the consistent Then year of QX pretty front-end have with terms is in what prior demand specifically maybe question. build seen I’ll I of

Navam Welihinda

Yeah. Thanks, Jason.

of and we pretty demand macro the Europe. QX are we're that realities and So provided. signals, global ‘XX rising guidance our interest inflation, marketplace, seeing comfortable with aware in out solid the conflict there we're in QX, with so some the that rates FY We're in

So cycle as all But intact and and that digital markets, back towards very the the of these very cloud adoption that always, fundamentals are view are year. we're right. taking the measured a long of half being said, transformation much --

So we're encouraged by the year.

Armon Dadgar

think it's regardless customers just they’re I'll cloud, trend customers few we've what Europe add And their pretty spent seen continuing I've journeys consistent on to visiting Yeah. the Then on maybe anecdotally, their and to America, across and is, last North weeks continuing a Asia-Pacific region digital regions. across journey transformation. I of

their that there they've think macro think long-term realizing I almost already a commitments secular them, as of of all of to way. for be to of some as that sort them, And those are committed for customers the factors deeply customers most these I partners made journey. might see along multi-year cloud well. transition But many

David McJannet

mitigation And market, question right. example. reduction, Think go risk as -- our the Jason, about implicit cost simple time and to I’ll value just products proposition Terraforms the durability part, try an may to second around a very is market of around to

of rotating value you and Terraform core of you automation overprovision people cost XX,XXX it. lots propositions machine state certificates it is not save a compute Vault could allowing average to than allowing the of be to is The rather than cost around script resources, a of savings. do One it, by

think, we're and very clearly pretty I to And that. market. the So, actually on is aligned cost to time proposition risk value fine-tuned

well the net I actually that So really is, despite think plays environment.

unlike we which a role The tied second is our think database, bit, products to application. the a when specific that about play, say

utility can your more the do in deployed, all underpins once are Vault state. a products right. Our applications to

bit, of our NDE to And numbers you that tends tend see as result naturally. in so to a

business existing ability of as kind for on the compelling customer their in are well new relationships So, side generally spot. as a both

Jason Ader

Thank you.

Alex Kurtz

Thanks, Jason.

Next question.

Operator

you. Thank

comes question next Our Murphy from Mark with JPMorgan.

You proceed. may

Mark Murphy

going you good afternoon. amazing cloud Yes. is platform. feels Hey, year very Thank be pretty for It much. this like the a to

one I from going You're six. five or to product think

help maybe that's reasonable some if pretty maybe think customer And start to going or incremental self-managed You're to just Is have extending it out? Azure. even could follow-up. sketch a those quick cloud, some that, then, propel just the from migrations us to to I you robustly that to of influence adds

David McJannet

It's Hey, Yeah. Mark. Dave.

is a very targeting. audience think as observation I for yeah, us, correct. effort that we're a So your new this new is net Like,

be longer users of, as its who big are with terms that of base hosted In that our of customer tends tech the tail of to aspect sort of to offering. attract the the offering the tend

is, and HCP a to is, in see will to early have just the we underscore products The out an rollout second ended you short-term, output this point, that the on running your think point year end. couple more we to I'll really thing to with few a your I and of just

So it. new channel. a it But I think us, a net we're pretty really new bullish business is it's net on for

I we what free-tier people is it's do of mean continued less as to yes, So those reasonably you'll friction. think customers see adoption -- convert I platforms, paid slightly on they the

that So compelling in certainly respect. it's

are So say, thing. I is really looking, this I we're optimistic. we net think would new a

not We onto net really it's a are begun yet to position are be flipping and renew where that's existing new. not we so customers HCP motion just just into clear, to we've

Armon Dadgar

Okay.

would once [Multiple think I got you Speakers].

David McJannet

different. be will it Maybe

Mark Murphy

sorry I'm follow We didn’t to Speakers] I interrupt. [Multiple up. mean Yeah.

David McJannet

ahead. Go

Mark Murphy

Yeah. Okay.

scale connect revenue it quarter. of customer the of kind larger the or some And So the didn't kind the (ph) on, just in wondering, on RPO see is more, or little the that longer-term of interpret less metrics other I'm as to we it'll and revenue the growth. license or explosion how is it guidance great dots the -- or connect an maybe maybe a much I'm I'm it's should dots translate increase of the smaller do as kind large just, overall at kind of tremendously of cloud to we just that drives more trying sequential It's some this later, deals Navam, traction. growth this of of customers the to was volume that debate that?

Navam Welihinda

Thanks, Yeah. Mark.

So, and we're encouraged a strong comment I your your and very customer net earlier about to there. HCP customer think point momentum first by seeing that that net, to additions

So point great customer was which volume Specific encouraged revenue signed quarters is and QX. additions this recurring into that that, seeing. forward revenue, by the visibility gives we high we're subscription momentum is the of one we're very we're that that to by to a because note QX in quarter, encouraged us

side, you So obviously business High which QX. is in revenue your subscription that that's on in of high RPO recurring saw growth quarters. there that for (ph) our XX% saw coming earlier sort in CRPO than came quarter. what To are the the the the in point growth which out of shows QX, side, in growth of future we high RPO the great XX% plus CRPO volume plus, contracts

Alex Kurtz

Thanks, Mark.

question. Next

Operator

you. Thank

with Oppenheimer. Our comes Ittai next Kidron question from

You proceed. may

Ittai Kidron

their lower it the see you've coming more guys. perhaps a track that HCP? you of much did adoption is HCP, really patterns still record customer and go a to mid-tier perhaps ago low in just know HCP use Thanks, that there. the customers how of three two, talk what could given they changing market way the way don't was deployments want deploying hybrid there I are large about on quarters different about talk up And than you in the a today the you or and considering and and have customers also it focus more are can that this? as I maybe is you are about the But customers talked and past, on end, really those open to

Armon Dadgar

Yeah. Great question, Ittai.

of opening of us. one it On it as for -- what Dave blend we're a think is side, I reiterating sort is of is a up channel a it just new seeing. sort mentioned,

mentioned. So he it and new long kind that is is of a audience tail that

a lower our So At seeing in, are more these motion being are level than outside project organizations would ASP built of a of that some a with to are engaging great, we are trying business. it that departmental native to directly not we or historically transactional going more have enterprise through themselves, customers rather these same of time, the operate at now obviously, with I engaged sort coming of where cloud larger driving have that HCP. in they're project HCP that's field

managed idea tail. we're of enterprise comfort I think large the of to infrastructure most is of is migrate question logos, sort of net going that those continue is just managed those comfort they be of, to is more kind I customers as a a expect to Tier-X being sort is of by us, biggest for where we And of they see And of gain the customers new seeing to as the mark as and core infrastructure probably that this think and the sort critical they long provided the provided the notion the with service. hey, service.

Ittai Kidron

Got the target a on talked about good. Navam, maybe And it. gross margins. you've year, quarter gross for about the for Good as XX% year. Very follow-up, start last think margin I

the With start strong to up revise have, you perhaps? that you that care would

Navam Welihinda

me making Ittai. revise Always up. Thank, Thanks.

So obviously of margin beating gross constituents The There the margin, margin professional we're that is margin. the margin. pleased margin. services self-managed is plan. cloud impacts the to mix the with and the There three gross

it's what is, our on that expectations cloud coming were. margins seeing of plan the news beat our and good ahead So we in we are

very So and gross takes as should bigger pleased a the margin XX% time, mark, high that. share. should we're comfortable we're being All over said, company at with we land where the are see we We targets. a long-term and we're towards that cloud with landing

Ittai Kidron

guys. Very good. Thanks,

Alex Kurtz

Next question.

Operator

you. Thank

with question Sills Securities. Bank Our next comes America of from Brad

You may proceed question. your with

Brad Sills

opting for wanted customer? about there there Is cohorts that different might Great. infrastructure more different other if over committing trajectory they're think Thanks In expand. a have a propensity those customers profile and with you of a to higher to HashiCorp? a that that it here of cloud the question. words, I my you time profile to guys the add option do HashiCorp different, customer is ask about please. question well for Cloud think as these something are Is taking cloud

David McJannet

degree. This is a is would Yeah. it to Dave. Thanks. say, I yes, Yes.

think of, I of two kind kind categories. it's it's

I perhaps it, customers indicated. sense user running team tail that two them. be at implication though on of think departmental the some to the expertise organizations, need that they one of faster. running larger they they of have stuff, is is which know these even inside respect in they the the a departmental number longer sort lack But platform up a level their and almost for so those The board, that us really is for in the it enables people get they're may far

HashiCorp So to on yes, would those design single that then principle our and extension as the chassis encourage why you a can rather one our faster get all that products I just infer us cloud expansion and motion. their that cross expect but that's products version customers we've to cloud drop as towards to board of product and not of allows of common created certainly a

would for as that I realize quarter, certainly need we're so So, us reality we comes and at expected, maybe also also I surprised consume have than to yes, that faster. super running I I'm appetite it certainly start the and think they is them believe two growing last stuff thing the I we're more optimistic. think last that they harmonized think at I saw how it the you adopt and -- And least so for in makes critical people larger often HCP slower hey, operational adoption the travel market are, would can infrastructure you think the that audiences. Yes, once to customers. of to optimistic themselves certainly I products, generally expressed people run but optimistic I

Brad Sills

on Great. Is it expansion would product I quarters, Thanks, is or just from? several it's on within Consul? The more if extend more more customers Dave. to or last it say category? acceleration may category running NRR as they're the that coming incremental side the Terraform you side from Vault And whether whatever here then expansion where go one expand or please. Or is the more

David McJannet

recall our just that our is of both. products as is, model short Yeah. to sort usage of more I'll to pricing cloud results. The go it's more answer of applications aligned more, sort

it. each has natural for that our part So of motion products to

sense that cloud makes extend the So we is can grow, marketplaces then portion seeing and the friction some of the and product category through certainly people's what that in less. that those opportunity. relatively are number cross a you're estates that there fact procure two, we spend cloud (ph) is And providers

before, journey. we is there's just a think as problem sort extend people or realize and I of have They Terraform and of maturity journey sort other the start that naturally with then on. and that go they the just they the problem said Vault problem they the

that So it's this almost inevitable happening, an that it's one and what's go, just as becomes what really you're cohorts both. customer seeing extend customer I so think is

Brad Sills

here. adding Thanks. Thanks for Thanks.

Alex Kurtz

Next question.

Operator

Thank you.

question next KeyBanc. Michael from Our comes with Turits

You may proceed.

Michael Turits

Hey, guys. Nice quarter.

Any et people's projects? deals see cloud clearly although two, deals, First big to a, wouldn't of macro migration result willingness big in change extension and is in change inflation attitude for towards sort it as you for fears, did Any but recession numbers cetera. of do their your an macro question good. in and a see larger -- to for

David McJannet

of point that on view you do a have probably? Armon,

Armon Dadgar

Yeah. question. great think a No, I

of enterprises in on their I XX back what look in a we've large on decade cloud journey is customers several there's think long lot be complete. take to general, years think ago years most these really them to as seen they embarked that's and to have a going see transition I five, we like that of think and transition macro the I decade ways, long of hypervisor bumps those was going things period. the lot many a and In for a it transition

drive sort realize the that to of these inevitably I they their customers. the of They They transitions. transformation attitude have of to So have of of estate. sort that's the digital think kind innovate do and

we've of environment. around yeah the customers impact obviously of macro So the significant very plans our I European just seen world aware ground much extent. think their are there, although, aware don't adoption conflicts of customers to around their cloud

Michael Turits

XX look are And deal million. deal signed sizes, up again projects and obviously chunking another are people smaller big numbers great, you're large doing on the you

involved of numbers you but any type longer larger reluctance and the get anecdotally implementation So think time say wouldn't projects? to so in

David McJannet

think I it's pretty consistent. say, I'll Now,

I around particular platform there a as think platform. the of new their more that with like any region occurs, transition is constraint is that truthfully expertise in that around challenge people's understanding skills

when world some the world the skills time from merge. it took the mainframe Just to marketplace we went to in server like client for the

anything I the think else. that's than constraint bigger

Michael Turits

Okay. Fine. much. very Thank you

Armon Dadgar

And would maybe is, peers just second add million sort talking of the about $XX customer. I here that

sort be they our we clear will customers I to a to think to realize as of us they critical strategic as them. with get what's partner a scale

We a of problem, point going a to problems offer solutions are not sort of solve one solving vendor we them. for multiple we're suite

think guys generational And deep partner plan transition going are over comfort through the to me I natural horizon a is because strategy a so idea multiyear I'm relationship and a over a going they with this multiyear you have to to want of be impact we their a there horizon. as and that sort

David McJannet

again. is hear just right. that over over we I'm Yeah. because going Armon to and is exactly That point because, echo what

to consolidate significant over very from of we certainly as it again have problems opportunity many like If of over you of fact partner now is portion expand a is single center I that from And customer, actually of XXXX many these that generally and one about they buying them. relationships inside compelling The the in that's material basis think strategic think in organization, the their their large products seat. a term that gets over environments is of is growth that the team the here. bias of not kinds address platform we're used single -- Global a and that our vendor and

Alex Kurtz

Thanks, Michael.

question. Next

Operator

you. Thank

with Zukin from comes question Wolfe next Research. Alex Our

You may proceed.

Alex Zukin

Thanks guys. the question. taking Hey, for

to then way, the how in on but asked into -- that the this of follow-up. maybe conservatism length an not level the of or got beat you we cycles, quick any macro, a added and them. different looked have conversion about as kind velocity make you dead the a change of And you your the So the horse evaluated should think there elements of I sales pipeline guidance. pipelines Any at

Navam Welihinda

and consistent in terms that. with is. we're of solid what pipeline what we're and Alex. number Yeah, Look, in seeing the looking for QX at guidance we're Thanks comfortable QX,

macro, For wait and on taken additive the the where guide. a what we've there half, of is back we're see so

demand remains looking. we're strong the is at with and point, this encouraged So pretty year how

Alex Zukin

is there revenue. of I really either this in they sequentially, duration year. look lighter time bit But anything different total last nuance looks I a to and going this strong. or if I dollars subscription guess there, for bridge look terms Perfect. were was topline was and quarter. And current starts total actually for than revenue, two for the then change And I it's a question subscription RPO on the, in RPO implies then number. is to the then growth maybe that just RPO of current guidance like the QX, kind logical was believe little added then the at get at with it we're the XX% over It

just So how we bridge do that?

Navam Welihinda

Yeah. Good Alex. observation

could be, revenue what to is So proxy one-year the remaining a the renewals. the not including CRPO good number as

number at on the what total you the that down for that's -- duration looked at growth and an you're slightly on that's line. seeing RPO The year-over-year. come did basis apples-to-apples look So

line, seeing reflected So on the subject Also it RPO which duration. to the you're total revenue. of is is more revenue ratability in growth

So things all are those connected.

Alex Zukin

Understood.

Alex Kurtz

Thanks, Alex.

question. Next

Operator

Thanks.

comes Reback question from next with Brad Our Stifel.

proceed. may You

Brad Reback

fairly up flat. basically Navam, Thanks OpEx after step of guide on two Great. very significant much. quarters the for XQ

the impacting figure conservatism to versus trying of Just aspects be seasonal might out it? Thanks. that degree

Navam Welihinda

the on step we about Yeah. well. talk back The of last consistent. relatively a Thanks. as is the year plan little loss touched And maybe a bit the to which OpEx, call

high very a gross rate, dollar a margin solid have balance and sheet. high We very net retention

QX on annual So in beyond starting forward move leverage the an And basis show as in to we business we to invest a QX. made company. the decision

the of that the of sort that's line in So shape the guidance. income operating seeing you're

Now line delivering operating efficiency. with encouraged top better-than-expected by company on just that in DNA that's a very being focused income. of part QX, our very being performance said at we're the And that's

that of being future to our So in sticking efficient company. looking more we're and delivering to the DNA an of forward more,

David McJannet

point our principle Navam’s of scale a through efficient We've historically, to If around life point. relative at a today to cash design you all perhaps consumption our a echo just I been because make just could look matter -- efficiency. our very if to company

also cost aggressively we around this us with saw Ocean margin you have NDE. in sheet strong business on that certainly efficacy investing We market not that looking to -- is there Blue think said, investment balance with. being high work opportunities of that an a opportunity at in but the given and gross That the top buttress and have we constantly QX, we're to

a our of hopefully, So sense. that's gives philosophy, it sort underpins

Brad Reback

very great. much. That's Thanks

Alex Kurtz

All right. Brad. Thanks,

question. Next

Operator

you. Thank

Our from Cowen. Wood with next comes question Derrick

You may proceed.

Carson Sippel

our Thanks Carson is Derrick. for on This taking Hi. questions here. for

spending security around seems trends What a software, and of in deal you kind the be sizes to now. how is on performing Can of So give broader relative seeing to initial you're us right expansion? portfolio? the Vault sense strongest priorities one

David McJannet

the we've is very, I I'll question. seen Yeah. the comments. before. Dave. Yeah, very with honestly, make what Appreciate This it's think consistent

remains our portfolio. balanced the Our different of relatively business across aspects

In sizes, again, consistent. terms deal very very, of

velocity what push team. at sales think from instruction lands to I that's our for you've cost certainly concerted higher and seen is, lower us the a

smaller is let's one. So holds that larger across true to land And portfolio. our the transaction think I faster about

you've an in which in seen the customer a slight corresponding what So drop increase purpose. on to count actually ASP that is is and the

people entire what say infrastructure know, tend that's to more to we're you're when point and the that to hold you As trying prices starting talk tends from let's down. okay, to a things grow state on constrain to can that The do. slow we across

the products, yes, is investments. So in real one involved machine but security the of deal dynamics across truthfully, change as fundamental net, broker estate identity your or the across across no of sizes

making. companies most think are I

Armon Dadgar

would customer having portfolio Consul, customers And and primitives our of piece that add billion very us Yeah. and zero a do and about extend mind. trust zero certainly at looking really And our security then perspective from bring for approach extend management. And that think that tailwind into you we think really can security sort are how beyond I $XX the with just great, trust to Vault cyber trust really is service that top I think where access a and those looking is very, and I saw with of narrative a of to customers. just we a just around, I the networking than Vault, is story segmentation our a sort extending tell beyond to then able application they're a to play great, around being Vault we compelling right privileged identity there, think tend story second into of where clearly embrace products and as that land in But portfolio sort anchor of we rather zero network foundry networking aspect. with further into do how

present customers compelling customers. has for that of architecture top end and to for our think certainly I that mind we can zero of been because end very trust kind very

Carson Sippel

Got it. Thanks.

Alex Kurtz

you. All right. Thank

Next question.

Operator

you. Thank

Our next with Piper Fish comes Sandler. from question James

You may proceed.

James Fish

for Thanks guys. Hi, the questions.

put timeframe heard the of over to weeks model. few behind to particular One the free is offerings longer last version few makes the paid the for items limited a and Terraform, put or it strategy the premium you we've in of core term sense versions are How some does better offering? monetize a looking in around the a just

David McJannet

Armon. ahead, Go Yeah.

Armon Dadgar

the Great. Thanks question. Yeah. for

monetize how I we've around open a had the approach and a premise whole standardization we very source think of around idea to its our market. consistent

genuinely whether we and users, practitioners in focus be will for technical open cetera. that's invest solve whether really And success that provisioning on might all, think with do problem et the the so source we I Terraform how of management individual secret our the

to that's plus using organizational So sense unallocated a that those open bottom now then scale. all products challenges ultimately drive product to commercialization And be driven practitioner that is in drive XXXX source and market up the I standardization, of Terraform with is having adoption, the at think commercial integrations. the you really differentiated really meant by see of

So trying team loan you is individual sort to second-class move where as monetize end. broader the lower great, maybe that's we're move a the scale multi-tenancy, team, so create than to at you commercial level you governance, where or focused. do to our as single-user from we products to source. level around rather that's as from how level It's security, then trying are entry focus users. department upper a end a really of go from the not on And a it operations at a And really the policy, around experience collaboration open at platform

James Fish

what you sounds consistent back Dave, fruit, and large And that were it. contributors about of Got kind low-hanging of focus circle as OpEx the lower terms pipe of front of the like being you seeing on the the as talking at plus you in mentioned, end could customers the here? the this are in pipeline, pretty $XX deals here more the some specifically, part pipeline the the on just just it terms smaller of as that you part your become point million save on pipeline

David McJannet

the to we unchanged. really that's would No. that that was pipeline segment No that's the I say, segments lower to really natural the I be is segment affinity was think unit has The What a at its manage build own all, to other to the certainly is economics view that a market and of no, separately. the offerings business, influence continues referring and restaurant on in I cloud we cover have referred have would end I previously what say, we how strong.

will guidance which that close we the towards end the of have is just of positive been it, in think a or lot and reflective more I the awareness the Navam the to today, really clear of that's we year become which the see visibility pipeline. shared of signs macro is that

Alex Kurtz

All right, Thanks, James.

Next question.

Operator

you. Thank

Sanjit Stanley. question next comes with Our from Singh Morgan

proceed. may You

Sanjit Singh

side was on spend and I the wanted right. your an customer TCO propositions can by the the base the see. on hone pick as congrats value about And guess go the on of All really lowering as balancers opportunity as of you the used sales how effective to your be maybe efficiency, the can during up of the Is question that playbook in periods quarter, the around -- in a message metrics Consul on tougher into ability to or the total in on a and hardware Dave, consolidating this say, base touch XQ to been think that dramatically degree spend multiple and we load environment. a the of really firewalls to prior platform interface is the that nice on on Vault Thank at part It's for sources has and me you multiple on potentially comment I what aspect but combination as as uncertainty? cost certain well you in And my -- in earlier made that the savings, a spirit to cost question here playbook. the customer there the provides. the that squeezing past

David McJannet

there I a being view is the Yeah. at to running are private I'd stay to center that going by there. and and And core my orchestrated think firewall that a are generally yes. apps balancer infrastructure heterogeneity is data Thanks, say, Sanjit. say load

new So providing our that world applications. the proposition value for is about new bridge to your really

networking legacy you think of was benefits update real one the of about the part prepared I allows deployment. remarks your new to actually capability, as the application the I talked which basically configuration in Consul-Terraform-Sync of gear

maybe So the around the because view replace these I legacy investments three the extending the having to not value we that view, existing are your very, to of world. five-year life that sense, comes are to year think the very the easy proposition year providing -- in cost new savings for bridge

of closer a running you, say, actually don't to to approach, but We how you not really, firewalls would because all for firewalls, probably hey, the applications save generally we your to and rebuild the the new conversation But to but that's cost you think firewall it's provide It's proposition strong one certainly replace that your to more, something doing, don't require even bridge in a really go having products and relevant stronger. is talk it play, now so help old newer. combination you the I goes. is it's applications. and in So vehicle probably cost leave need you across hey, you're honestly upgrade What value in keep those firewalls it. our described to to of the

Sanjit Singh

often respect to and respect also of another sort triggers, all wanted of revisit again, with it's of is wins. product think Understood. think is to part your which and what I we around get of get Vault, to monetization of think And topic your but a I’ll with topic, but sort the Terraform, I then strategic customer you mentioned sort we quite earlier a question I

landed enterprise Vault You in that XXXX. an customers started win, open source an

Both customer. if customer the enterprise sort is they're I evolve on ago, wondering, between help open years on ultimately, you X and So going source time. or there sort triggered paying landing through was that on, source journey starting to any is the narratives of, could a us draw understand or becoming and sort over that Vault X.X, with Terraform open of X, what how the of side, modernization these with

David McJannet

Yeah.

I using simple and strategic not how at application. think just central particular of a it's source second, a a on It's minute it I'll what but Tier a service but off on applications hold it to that to shared thing, as the power is is a Vault now turned that to speak have was authenticate very run just immediate to sort for single -- this company. begins, down, be underpinning being the basically was, is and The it's the sort made is running like zero goes realization might to shared your thing okay, one previously, redundancy, the a that service and central that the is trigger. It's conversion Right, that as you Tier if a that idea, for of one first. sort that's machine once that, all this an zero identity So application actually open it the happening that talk about this Vault there's there. one of gets apps it is replication established

Armon’s very market very, that built we using Terraform point, Terraform that by provision to maturation priority provide making possible people first It natural was an use as different infrastructure. it's around a greatest a then is the organization transition. that through our this ubiquitous. to slightly to workflow consistent. example So And around that's standardization and cloud degree On Terraform, someone broader

adopted just products. and establishes to Terraform that service value notion initially that you it of on may where we provisioning So ultimately, maybe commercial down clear, zero tool cannot zero when underpinning run audit gets easier are organization's way no the team Tier provisioning as that need proposition, single and as that be because platform and an Tier now value someone a to And for a underpins entire that laptop, need go application proposition overall applications the the process, their of something it's that to the policy sort a of is governance. the organization, trails envision have as these

Alex Kurtz

Thanks. right. All All Sanjit. right.

Next question, please.

Operator

Thank you.

from JMP comes question next with Our Walravens Securities. Pat

You may proceed.

Pat Walravens

you. Thank Great.

Here the is perspective stuff. different all on a

venture competitors Armon, from that? you is will else seeing from we'd private financing seeking or you, which cash Hashi. there way like a getting or or companies less help market, David emails or you tougher So know, to talk to conserve interesting pricing anything Are tighter environment like, in there selling like a you about capital crazy behavior some

David McJannet

version, say that, maybe two markets it’s I to the on taken think private separately, react. while things I short Yeah. a would I early, think still the it's

truthfully. we'll necessarily. in with I of two, not environment happening terms is companies dynamics the and a private So we but be disciplined that market truth it's Number of what's think lot the of early. not There in aware compete in certainly are smaller markets, the competitive

open generally engagement common source think of I more much it's the is standardization round and for more us. market the commercially

in driving drive a enter opportunity start-ups commercially are the competitively. feels and gotten more of really it's But, markets. yeah, modeled to is difficult. So, trying It be more our to other choice, certainly that long-term partner there an to of standardization order goal if these like

Armon Dadgar

IPO, a relative have the certainly, of different back around looking are sheet. Yeah. stratospheric that We that, and definitely balance and down went some a one would fortress the recruiting of we we had through just earth. maybe way to stage that hey, the these are the I I in valuations folks a on thing I bit on how add organizations think Maybe, just side because tailwind people felt should a is, see

Pat Walravens

you. Thank Great.

Alex Kurtz

Thanks, All Pat. right.

please. question, Next

Operator

Thank you.

Boolani question from next Citi. Our with comes Fatima

You may proceed.

Unidentified Participant

Mesh given you And see as on Joe is cyber This we Are Fatima. Consul. with This budgetary vendors become opportunity? dynamics how about just one and for share particularly is Service the vocal here, also then on able us larger evolving Hi. more to recent quick competitive are where that, announcement have that wondering engineering you related the then your I as if R&D a follow-up. roadmap us for as well and just networking. on design, of I product SVP to stands was And update the roadmap? you. sales could Thank

Navam Welihinda

question. Sure. Yeah. Great

maturity I Service around think in the awareness Mesh think general we that what significantly, optimistic right. market is evolved I feel about has and

it I project. I I the just ago of it and we're really think moving out relatively about early we're early an XX edge prioritize think think XX to of bleeding awareness months, the think majority infrastructure and seeing into limited certainly that now, months starting adopters as

as join lead we quarter that in through conversation. R&D like our a deeply From go API Consul very the area of are very our updates Consul Singh Service our had So Mesh. networking for to of perspective, broader that We for some him Gurpreet then service. HCP sort gateway encouraging group joined an SVP and both our certainly the as an invested, there's we that's managed yeah, offerings to now market well. investment where and obviously running with us that sort as we new and aware feel to starting a certainly announced excited And capability as

these to And to, and pointing across invest fronts. only bring are think to think continuing speaks So really I platform of to and all deeply the Vault now Consul Terraform those vendor. to we're customers I of that chance strategic again some our extending a be opportunity really and from

David McJannet

it can problem, based security dynamics, a point on provisioning question that I the add to have to the bit. identity, move the service because to your little we to think generally I'll around right, one the problem, have to notion learned before orchestration just you double-click it's you Just of to hard move because tackle service-based the Mesh and Service solve

are Armon’s incumbent the Service platform Vault the the our underscores identity of of focus Vault a then building and broker. sort is us Mesh point point Terraform, because the in sense, teams that, that's for makes trust that the at is So opportunity as and

Unidentified Participant

then And models. on quick a just here Great. Okay. follow-up consumption

markets more a these what Thank you have similar Are across not, many certain pricing customer from alluding So cohorts seeing if usage to outlook develop that's keeping model or of end dynamic you. your peers and moderating is insulated? or been And or consumption patterns. me. adoption all

Navam Welihinda

base. From really don't Thanks. subscription a Why I quickly. on Yeah. on no that consumption our results is mostly take impact revenue. perspective It's there entitlement

So time, time, has mostly see that more subscription this over at revenue we're but entitlements. of you'll that

Alex Kurtz

Great. Okay. Thank you.

question. Next

Operator

Thank you.

Our next question comes Sachs. from with Goldman Rangan Kash

You proceed. may

Kash Rangan

much. not at if inflect? but to point we vis-à-vis Difficulty] front a or a one. migrations Are involved maybe you farther ask to for get is phase very help along At you. are the two that that Hashi at impact in, And at The that migration with to net-working does HCP what is even I'm stop getting your mature front. product Thank perspective standpoint, from certain stage the bit the pause process [Technical migration the quarter. cloud you that the get curious how down Hashi invest primetime cloud the economic process all at people enable to a little Hey. about wanted of looking or to where a point could little this migration One get sure it there really typically quality is poised that's you later think the Congrats slow a involved do on you. exactly is HCP, end that things the Thank on cloud and that you're due respect provisioning thoughts? to where that things. I'm involved question to get perspective in much number uncertainty enterprises. reason to security at the are of we your inflections? things in And could service two, it at fairly expanding that

David McJannet

question, Yes. Great Yeah. Kash.

consistent terms we of question, the first let perspective. I cloud, that think strong So the R&D of good take me sort from delivery in there an feel momentum on is

one I provider. more do accelerate we continue we we single of lot a last will exited cloud at look think can a effectively with with year, cloud that, right. to that the three year we on last if beginning products is Again, entered there

products two are cloud We providers. now of across five at

more here, four you'll in additional adding going next support momentum net see think I as So you're what in our to and three, for the user to from new conference continue upcoming products. have weeks see of terms us we

You'll of little expand I and the regions see additional one a each cloud opportunity providers, additional those easier cloud think us. to and bit so continues ahead that make of

inflection So just to so I a don't be there's to as moment, continue continuously will deliver, it think particular improve. going much we

Armon Dadgar

And our begin when need this X on our two of and if and because use. source, the about focus phases, creation. on step in hold which a what your think they open Phase open the they we much around I the products think usage in on second programs back when team in people you systematize platform then source the use one second, practitioner very to question, -- or our that's And step is products is adoption that's their practitioners cloud

that's to products is of source go are two our these commercial going the in that, open the customers. And you're are second then from. first journey and you that's you motion your those instance So numbers think the in where where they our using phase become come And processes. through in I when irrespective

commercial certainly open I early around secular the other. stage, one later just usage stage usage leads tailwinds adoption about cloud it's the So or source to whether optimistic and

a durable, us. not not for it's it's So, one, is one-time opportunity very certainly a thing a, the

Kash Rangan

Appreciate much. you Thank Super. very it.

Alex Kurtz

Kash. Thanks,

Operator

turn any closing to remarks. like David for would McJannet I you. to now back call Thank Mr. the over

David McJannet

for my express to and and the everybody appreciate for look the everyone dialing to like We here. Thank would you. soon. participation all with thanks you I in for questions speaking forward

Operator

gentlemen. ladies today's you conference. the Thank concludes and This for you, Thank program. participating in

wonderful You have may now disconnect. Everyone a day.

HashiCorp (HCP) 3 Jun 222023 Q1 Earnings call transcript