- Earnings call transcript Q3 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to HashiCorp's Fiscal 2023 Third 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 first speaker today, Alex Kurtz, VP of Investor Relations and Corporate Development. you. Thank ahead. go Please

Alex Kurtz

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

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

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

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

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

Dave McJannet

$XXX Alex, XX% to earnings We're exceeded we guidance you excited our everyone, quarter revenue and representing as you, Thank HashiCorp growth Dollar along welcome, with quarter with trailing a four the that share reach or call. rate to with of a million, reached with and Current representing was XX% growth of XXX. of quarter third revenue obligations added XXX%. of Net year-over-year to XX QX we year-over-year $XXX.X for solid our remaining recurring in annual average equal million, Retention total customers $XXX,XXX to performance non-GAAP a than greater

next and and last week spent few a also few Amazon and North have year. to meeting buyers are pressure wanted more core and subscription in increasing million $XX.X location, in continue rollout continue We're reached Armon annual products, we a offerings and global through to Platform Europe, the had think theme and of scrutiny has made prospects with XX.X% Pacific, representing third Cloud discuss three do more across the with in-person insights. new investments financial HashiCorp that reached in as all Regardless of significant I we about institution I revenue. Asia and QX during million excited $XX quarter. last Our minutes. will some under new revenue weeks to This revenue, pleased announce customer We're in also capabilities. I share journey America, customers at our adoption recurring customer's features re:Invent trends to I'll less, across this our

investment strategic to be a pressures, a organizations ongoing to pressures a these over the continued of prioritization products our large of strategic because despite transition for economic even the worldwide cloud, HashiCorp infrastructure And with for long-term. investment However, key customers. cloud the remains

Our cost products are to fundamental to running a estate and modern infrastructure control. conducive

are before, in As cloud very organizations still adoption. worldwide early I've said

their standard, valuable our stack. layer the with record the model their As a to become cloud each system offer a and teams transitions they networking multicloud continue because consistent security provides they that becomes increasingly across and of operating operations, products infrastructure of

help describe products travels quarter, these invest tactical adoption of move from successful most their use teams operations, networking. how to of Teams. cloud many companies During Platform unique us. foundation from continue common this centralized they value tightening enabling programs, and their strategic their I hear cloud for the to cloud teams my capabilities these Platform of them extract and a infrastructure I to adoption prioritize with offer budgets more the security that continue heard examples investments, help organizations to

product Many which centers secure skills model. of briefly Before help a our workforces. to some made immense which on different automation. like customers it turning to I'd over infrastructure also component cloud the less, releases which shortages the enhancements pressure to is teams our at services and security offerings teams new and more announcements these the Each and utilize of to threaten data massive important as with talent private October, and most do Platform critical highlight remote Navam, significant attack across focused helps security, operating is bottleneck of of cloud HashiCorp programs. clouds, challenge, in of with enhancements new the under we automation

to a concept we And for Security digital we're another cloud. the of differentiated Just the the as approach concept on approach the pioneered to building delivering Zero security Security. Trust the are secrets help Trust improve world's HashiCorp of Zero management, infrastructure, posture

Security week, that Conference. the HashiCorp for Partner note HCP secure several at Terraform. to of and for just provide named us vision new availability capabilities Year cloud re:Invent to manage of applications, challenges, infrastructure User America's Consul our Security, better proud to Security North we're AWS Zero announced deliver fact, To and platform platform Zero HCP the teams the solution, Annual cloud first In Vault networks we Boundary help the last joins Trust the organizations for at people. general we cloud HashiConf their Boundary announced HCP and also with Global. purpose-built on provisioning To Trust

these features provide high-value into to Terraform, enhancements build and With are security, enterprise their consistency for automation which we standardize infrastructure compliance greater continuing customers operational as multicloud.

Expand, Now, notable to Renew highlight to our in your I'd Adopt, that like attention quarter turn Extend, third action. motion transactions Land,

APJ-based corporation oil a First, its enterprise order deal, Vault files. an to configuration gas standardized on in and secure land

systems to Additionally, Vault will move to and reliability monolithic across initiative the backend expedite its passwordless improved applications. customer's

general major deal. deals Consul. to September. And to banking plane its by connected remote for service multicloud availability announcing our provision simplify, a Vault and and next-generation and across third, single With Boundary an company streamline international rollout deployments domestic control provides of both workflows manufacturing by HashiConf for of approach in providers, Consul cloud for services. control and at management. and its service developer plans is secrets for A automate use support tasks accessing HCP expanded by a extend enterprise secured has top a This a enabled Next, Boundary common an first since extended expand one Vault, all to deal. development systems Terraform, applications, for and An strategy its HashiCorp deploy consistent building company networking teams to the smart and

an conversation the estate. this infrastructure led in At to as projects. Consul migration the early made with to Platform to AWS. and of same another single for it companies are Terraform center of conduit count became the Then, mentioned of how this cloud main working team. global products early committed investment And a expanded I'd customers to as Terraform time. in a on example resiliency around proud hybrid starting scale going Vault organization. given data platform their are adopt Open began earn reality for they and value their continue of and and add teams to enterprise HashiCorp's massive deeply of institution XXXX, became is each like spend these through to journey their investment This with part finally, financial like product They growth future application extended in behind as code This into calendar a customer the engineering using in independence, saw teams starting company's a that units organization them XXXX cloud were a and with projects, XXXX, working us Consul its $XX and million case. then This with earlier. Source around I and its around our an with who days began XXXX, the time, Terraform to customer the Terraform with operations they customer as started was over cloud ARR their trust. in initial then its minute standard our its philosophical multiple XXXX, across The us public customer We global that in

Finally, Vault part deployed replication performance across initiatives disaster XXXX blockchain public that was are company's that in global now of namespace, deployed to clouds, this and allowed provide and as recovery.

as look proud turn been our collaboration. the has let Navam. the us call customer our with and are forward products, three And extremely continuing to We partnership to of this on with journey we this me enhance side-by-side core to over that,

Navam Welihinda

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

by FY third solid Turning year-over-year. XX% results. top of We attention to revenue produced the XXXX. grew your our line total We financial results our in quarter

to XXX%. Retention see average expansions Dollar customer strong base, our shown Net as which continue trailing remained We rate, our in four extensions and quarter in at

us incurred in focus achieved a non-GAAP of this non-GAAP a non-GAAP as loss ahead business net efficiency share basis non-GAAP income on We and operating On to side, allowed GAAP basis. quarter, margin, the $X.XX we of the GAAP and so non-GAAP expense plans. share in operating per well in come XX% as income, margins on allocation net negative on per $X.XX to continue a our and our during Doing gross QX. resource

vendor with In been with QX for a customers conditions looking long-term teams, is top and reviewing customer is from clearly saw us recommitted outcome us volatile with some when to the quarter. a helps high of we After internal quarter, deals for guidance, provide cycles. base, we long-term. this first business outperformance we saw some see continued customers larger a during macro better our critical I stronger gain teams well seeing. also procurement low the expected us a multiyear was our the of and high-end for of solid background multiyear customer by our to to new expectations spend our our clearly to causing exceeded historically guidance, customers. as our discussing The sales from pricing lock-in wanted activity customer our than around the to well. of our QX This QX, against as contracts own revenue contract last existing performance inflationary as we spend in environment. to scrutiny may scrutiny it Before Similar believe some as visibility are seasonally which what particularly sales the finance in have to QX, high related elongation good time We

macro the quarter. always, And incorporating our are our fourth approach guidance. measured are for a to quarter are We we seeing next uncertainty revenue as guidance taking we into the

uncertainty, optimize also we XX macro cost plans over head our count our the in and Given extremely structure the to being continuing next investment considered are months.

pleased the macro guidance. uncertainty our we discussed, raise year I are to our on full very guidance. Despite have Now to

we $XXX For XXXX, the fiscal the in million. expect revenue to million of fourth range total of $XXX quarter

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

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

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

operating our million of in non-GAAP FY $XXX $XXX loss negative the expect and We 'XX negative million. range

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

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

Alex Kurtz

first to Navam. With let's that, go our question. Thanks, operator,

Operator

comes question with Kidron Thank Oppenheimer. [Operator first from Instructions] Our you. Ittai

You may proceed.

Ittai Kidron

think like right I'd heading guys, into Hi nice quarter. results, as to try time about preliminary Navam, you're take 'XX Are I you. into need the account modeling and quarter, perhaps Thank think you kind thoughts fiscal in execution. to of now? to fourth look there ahead any points great we 'XX we great guess,

Navam Welihinda

raise turned very Thanks. being we quarter the third Ittai. we're Hi, very to pleased how with mentioned, pleased as as the well. we're - queue with out. And able year Yes,

QX. give on think guide all a our you So last things the considered, the year. year in practice, the I which was rest to solid path execution we're year We're of we for followed normal -

forward strong looking we're execute in for QX, in you we're QX happy very QX to year. performance give overall, the So with. which update next and But we'll

Ittai Kidron

Very good. Okay.

dig is try multiple into kind I'll of portfolio go-to-market approach. much to Clearly, maybe is broad-based adoption now So on the and bigger your products.

incentivize all, to environment, either to So force? make the base? tweaks there either like change given feel think give next on how given comp any year way color And you to you is sign you tweaking reason, or as first us for people preference? is going like more second, have to multiyear seems to Do do multiproduct It plan deals can much you you adoption-wise material comp your need any your of think need do into customers sales to you you do to any move other plans? you customer

Dave McJannet

them. that. Dave. answer I'll Thanks the of two is this Hey, Ittai, maybe for

on I about what very percentage million that the we the is underscore, one how just $XX customers our be of indicative continue probably motion would works. to talked multiproduct. The customer of first

have I to you owners see pretty product the And they being of know, that center customers. along buying essentially use-case think along. large the common as cloud think and cohorts out next played in consistently next you a degree we a I adopt program

and we in say which disclosed would will relatively very large material multiproduct But haven't it seen tremendous By but we feels continue, I subjectively, change of there's consistent. So product. a motion this interest people where I and haven't are specifics Boundary, that. And Vault say, in start. expect I that. to newer Terraform is

what is - sort next year? goes which organization - challenges think that engages a for portfolio on we're way. programs. those I of with overall And address have good the a thinking model we about feel the very truthfully, consistent multiproduct and our buyers cloud we sales On in multiple

terms pleased to the continue are really do. relationships we'll long-term are we're be what portion long-term motion from in into But we and with aspect. pleased But next very what continues want it follow have feels consistent they Again, of year. we're trends, certainly our that I with with multiproduct think these we arc to similar and already these customers, that very, multiyear doing. I lead buy the so with the We're to us. expect their

Operator

Thank questions. you. One moment for

next Jason with comes Blair. Our William question from Ader

You may proceed.

Jason Ader

Armon. you. one Thank Navam, I got one for for

clarify of you was lock-in, there that Navam, you - Or giving on demand just that? message were QX? what the into by the On price that is you are saying a mean pull-in maybe

Navam Welihinda

there's certainly, the on and Yes, in price and question. of a the happening thanks certainty The customers lot for scrutiny right now, lock-in is more want market - spend pricing.

So are choice vendor long-term. of critical is they reaffirming as the doing a us what for

next a in they're factoring and for structured years is that in and on and existing three our commitments So of over mostly deals by the coming asking lot being customers. long-term pricing larger customers

happening So from that's what's side. essentially the long-term

with saw quarter. the in QX third quarter. pleased very QX. being a to seasonal On said, the from growth was pull-in revenue no, a pull-in despite normal it's There QX no - All on side, we

Jason Ader

can And there? the your for And you differentiation relative to then what's main talk about the Armon, competitor Okay. Boundary, technical playbook? sales Great. especially

Armon Dadgar

Sure. Yes, happy to.

the in management some So has it's market. long around market I time. well access - been sense, a very established think a It's privileged

I running infrastructure at the is built the they're in in. what types that think of shift applications cloud environments happening the are being really

applications micro them. have architecture, of moved the a backdrop service lot more there's that So I the think is to a

more You're in ephemeral. workloads a are more cloud dynamic. much environment. It's much The

relatively think many have for being environment applications relatively versus application And ground opportunity static infrastructure. that workload, think there's Boundary more built tools slow-moving monolithic, opportunity highly teams up created these in to that traditional biggest manage the really cloud has that gap cloud I kind solve it - assumed of And that's that's I by architecturally where way an to so a I different a native. think, as you was the built dynamic very

solutions maybe more market. that that's the So approach and Boundary differentiator the between legacy in the are the core

and As enterprise, what of organizations needs a more Boundary commercial of security our well the on will at source of scale open be open practitioners. there really and we're commercially differentiation versus going kind between as it, focus into are compliance using the source side

Jason Ader

some product? you Boundary When think do the monetize will of you start to

Armon Dadgar

So the availability we announcements HashiConf at of event October Boundary. of one the that in our was made HCP general

we've is our So is available, around year. HCP Boundary late this transactions in said, first and now done generally of set commercial it. kind That of our

be So on cycles around product. our enable early of of really able next to field HCP into enterprise the sales year, we'll kick-off. are We'll expect, then And as Boundary. the sales go these you'd kind sort

the little take market. engine now So is op spinning, I in get it a available it while to will commercially think but

Operator

Thank moment for One questions. you.

Our next with Alex from Henderson Needham. question comes

may You proceed.

Alex Anderson

reported Great. results. hoping making pipeline some the what what their have mix. to a divergence are assumptions of in customers the There's was of rates I around in upsell you your outstanding budget relative of Thank in the the seeing about fourth been you you you're I versus space flush And in security Thanks. us in closure very hoping here? could could in in much the your give new other you're that customers into bit was seemingly companies of fourth going relative quarter a some quarter. little mix assumptions what pipeline your and sense the and talk and to terms pipeline mix

Navam Welihinda

that Navam. This remarks. Yes. don't a one? I mentioned is We prepared bit the little Thanks, take this Why Alex. during

those, We than the the Land rather of elongation about doing market. more happening what's the macro of And contracts customer. new which in is when a impacts it's of impact with that where us. are loss business, customers new side the you And the out most, think an seeing play even with is it

win on rate a incorporates QX that guidance win in extend occur of our that the rate quarter's to we that and expand, in lower expect given QX. seeing pipeline, a Land. Land QX, sort side any in on well. there on So And we're higher as and in is And occur elongation

our So we've that's factored what guidance. fourth quarter into

Dave McJannet

nuance. bit Dave. just on this Yes. just a pile of Alex, add Maybe is -

pointed procurement I I for way both signals time what's is consistent. days. What I progress existing progresses think clear guidance. of as in over last it departments I and as Navam tells are customers the indicated, environments particular, a and reflected is through is the what in facing how demand and lot relatively customers And in XX customer our that Armon spent that's us new less have its really out think

what think is, or year I very, So foundational procurement arc. for our but profound existing role very cloud is clear. conviction department is estates the what we our whether I for think it new customers The see, the is the wildcard, for why guidance is pretty that's for our in customers, their longer

Alex Anderson

Great. same the And last one along question lines.

something result that that will as not where is availability the see macro the kind of Or acceleration macro that by HCP is budgets? conditions? the of impacted it's With orthogonal tighter cloud, consideration a directly of

Armon Dadgar

a good it's question. Yes,

the audience and I our the commercial SMB kind customers. segments of large think today, at if look by or it's we tail HCP long of

I little enterprise larger probably think a customers. sensitive more the macro they're than bit

But and us of So I HCP little going more to there's on large, the bit of by seeing I be that impact. always line. variability are quarter-to-quarter a think macro for customers think I smaller think, the

a of near-term. impact, I more into think, translates that So cloud

Operator

moment questions. One for you. Thank

from Fish Our next Jim Piper with Sandler. comes question

You may proceed.

Jim Fish

back Navam customers signed for Thanks on you this they're understanding customers, just with may come some they pricing compared they especially actually were on have gauge that to around for around can own your Jason's but up of those Or of for On actually more caused anticipated quantify question. multiyear, kind refresh you are to, refresh? multiyear question. a license a raise end up sensitive of volatility? are pricing considering Thank that? touching why their for your term activity when And of you. many here stronger that sensitive More cloud how costs, for trying solution, actually to the sort existing question

Navam Welihinda

Yes, sure thing.

we that of given and the new renew on there's typically multiyear, on in So work a any range contracts quarter.

converting and things aren't that aren't We going up for out renewals.

with that because of customer for for that base the we're into the and us, group good renewal good that's very the So as for mentioned, I contracts of very us long-term working good base. visibility converted which a into and is,

multiyear So the saw the we're have and renewals revenue of retention does well. our saw came strength of and - impact pleased rate on that we most our where as as that expansions with the that, we net expansions of most that in

of to a uncertainty on per number there's are the terms on dollar there, In FX a why, variability how uncertainty on there's But who by many the of total. It and the driven international side existing and and se. and wasn't increase factors. budgets a price the, there's locking customers budget in seeing utilize

play. So a those quarter were of for choice strong of being long-term. of factors the as I think the in one few selected terms a Overall, very at customers

Jim Fish

self-management? Makes sense. But all a for guys. to see for drive about as it's instead? you we HCP, thinking what trying sales here. adoption nicely. continued are think force preference guys that grow next Thanks, to Appreciate we And to by surprised that. cloud you more License about the year, the expecting of differently was bit incentivize And cloud all nice kind of piece to were continues that. at the are the main upside But

Armon Dadgar

No, a good Yes. it's question.

So momentum to of drive a new customer interest continue we're I cloud. a and the announcements by of to excited it. to think we're new seeing Certainly, of continuing lot the users be inflow

of the To at of we're we what Tier the less And largest is often and field preference given see question think have think the continue preference being our a private they tail nature and right? public the can the opportunity. that of to foundation I I talk this the I customers the X So a of the cloud software, self-manage not them. sort and point, Tier your think of of wag have of it is cloud core of it, And sensitivity fact it's that's is the the infrastructure view both dog. we're about of how - I think a sits team, Many to way excited compensation this software the is preference a for for we infrastructures. sales there that cloud our customer question it's ultimately a X or incentive - about

the continue So to that continue green the to very to to adopting quarter about right? - shoots switch bank said, choice on making portfolio, We cloud we see Vault. over is of enterprises see Terraform a large We Cloud. large to HCP that moving enterprises global talked last see

So starting there's with larger a certainly that there's we cohort think of it, But still move it, cloud. a I of the comfort opportunity these them and customers lot comfortable to said, of that with are think them but majority see we're to much ahead. building are

Operator

you. Thank questions. moment One for

next comes with from Research. question Alex Zukin Wolfe Our

may proceed. You

Unidentified Analyst

This for the question. is Thanks for taking Alex. Ryan on

that had the deals on I just in So of are signing advance. here one customers another cohort multiyear

was cohorts, a customers the two On side. I from specific or on if flip headwinds perspective also if seeing the wondering to the unique have in? that those based side to you land any those macro verticals are there's of that trends like vertical are the of if any nuance you're that, kind there's that

Dave McJannet

Ryan. Thanks, Yes.

Let me sure clear. super make it's just

relationships. renewal, multiyear a have are we is up which done we is that of saw communicated done the instead multiyear our commitments They year one from renewal. are These they've could a customers. renewals, really strong what think numerous deals I endorsement but for

for have Navam's I increase about lock-in the to that exchange a would not was from not desire against more a foreign want don't it on US us. And se, early would commitments customers like vertical, se. what to They that price customers in our what it per know related multiyear because I per be say, they lock-in because were a honestly. be. may bill internationally, particular to we there's think they might certainly, the could year were you dollars. they longer-term So price some not comments variability imply clarity would in relationship

of growing larger endorsement how their part an of more level and that's certainly, it. think generally, I our it's estates. these criticality infrastructure of for So they But customers run

Unidentified Analyst

one here. Okay. And just a second

I As we op was left think Day, the expansion 'XX. thinking year would fiscal XX% in margin Analyst see we the

necessarily has is thought, I think next the initial that kind guidance. changed? But for that Or - expansion not think to of of how kind we should was of of kind thought year? continue that

Navam Welihinda

No.

that leverage Financial think exactly during We continued and laid and year-after-year. out we'll on on right. be you're plan, delivering Analyst Day, we're track I our plan

Operator

Thank moment you. for One questions.

question Michael Turits KeyBanc. Our with next comes from

You proceed. may

Michael Turits

Very high level We and the continuation a saw by we vendors this question. what deceleration cloud quarter. of that's last hyperscale saw quarter,

to investing their consumption parse there in that happening - expense of may utilization, customers versus their watching be Just trying you. in their there and terms deployment infrastructure cloud still possibly and what's cloud of development benefiting new app

tailwind it that the even So watching out? to are customers OpEx a that still is their it do be In how cloud? in why do, you How out? other spend separate still cloud so positive is that if we falling words, it's development which is tied seems what that to

Dave McJannet

slight Maybe be process hypervisors continues interesting, This think but Armon I comment. the It's let is unabated. that I'll one. largely is Dave, slowdown, a deployment maybe application the seeing I'll Sure, that remaining unabated. deployment its start might and application cloud

and those there's running some what control over process I by We upon. to better maturity level of costs control gets think would the their cloud around probably is estates a companies reflect in constraints spend certainly their cloud provisioning cloud using provisioned. growing and I see Terraform putting

cloud a that So estate. to of a products as access controlling our get in basis used sense,

bit its our applications more be clearly, of cloud a of budget may your real larger as And going that's your to getting amongst might customers. you're operationally. cases propositions be better value one use And going, not growing cloud overall but are applications because so the of little as Terraform much and

Armon Dadgar

Yes.

think of travel lag there's infrastructure build think and and about to journey takes how and I and that on would that one as their customers, this additional start a at is, long of these to over speak the we is the Maybe we little I maturity them trends color to a a see - right? inertia add between it it and continue Armon. think start is is customers as we other with operating I effect over transitions. when truly cloud scale, lot there

I are down as of once those pretty Dave think think are that even near-term. robust, so clouds underway, And though sort said, the I slowing

still I build lot be customers infrastructure And or that, few to in a data cloud a more tend core maturity. up journey. consumption start lot to to bit that I environments think it's programs are of that think or spend, other time bursty when test their of a these there's things versus dev years applications behind whether like a and take core

Michael Turits

Armon very you. Thanks Dave. then Navam and much question And for

longer-term these know, have about arrangement, But Because the there's - basis. license invoicing annual whatever deals, up-line an invoicing contract structure? upfront but - is What this about ratable. if it's it's talked multiyear payments you that's then then - it's the payment, we standard, multiyear where licensed on rev You a upfront. the as rec

did invoicing So rev quarter? which other And words, rec this impact on that of sway? way the in was so what structures the

Navam Welihinda

thing. sure Yes,

year. you pay one invoicing the just or of annually regardless so if you multiyear which know, standard we contract have side, one On is, it's

that. and annually vast contracts were So annually multiyear the paid one majority like year paid our of or

plus remains the of XX% So at this quarter. ratability our revenue

Michael Turits

Okay.

would of So was force that nothing be contracts those rev multiyear clear, or drive amount larger rec? to just in say there a upfront

Navam Welihinda

being obviously, our XX% But more revenue about multiyear said, plus. way was the ratability that unusual nothing recognized. all strong contracts, the drove is There revenue multiyear which There's performance. still were of

Operator

One you. for questions. moment Thank

from Wood Cowen. comes next with Our question Derrick

may proceed. You

Derrick Wood

and Thanks nice quarter.

as involves Consul around focus will into year, a a a big how of of to and platform, and It your of Zero question seems at gate product-by-product? really motion solution have complete tackle next go-to-market kind of full guys are look versus guess, that Trust playbook First of the like kind selling a on build I a more suite you going starting market kind Boundary together. Vault, multiproduct this of up of you go-to-market. to kind out continuing the selling

Dave McJannet

a question. Thanks product. do would for general, This in is Derrick. Dave, with to tend we land I the single say,

and Expand motion. conversation I think really Zero what the broader of Trust part is Extend our

the Expand, single is really next addresses, rather is we that a Trust good to example. product generally we problem is than we that next clarity, have a the land know absolute trying problem multiple why for portfolio that and and along with up with conversation So Extend our something products. which land along Zero But

will I the allows the working. consistent If to continue back a you to I you infrastructure It having and way cloud describe to have a approach or rate step it allows is approach Zero this consistent of certainly Trust. think program just provisioning. a that motion So because of have requirements platform

a a can have having is are single actually program Amazon So Expand, Trust there part on good really this predicated example. we all But certainly, cloud conversations one the year key Extend from that Zero office. of is year multiple of partner it,

Derrick Wood

Understood. one Thanks. Navam, for you.

getting you that's a six KPI. and more it to figure to thoughts are new sales longer where investment net a or to down bounce six, on because a of to net the expand around kind - this that cycle figure. year, sorry, this hoping there's from little it seven new bit. Or GXK kind of I'm as also number has Just this more figure on little XXXk the bit deals five - visibility? trending metric But Just customers, bit of customers upmarket been it's could sure your go-to-market get show pushing

Navam Welihinda

for So where also it's as this that and be on variability it's is important us. macro KPI there's quarter quarter-over-quarter, right? there's Yes, in an But as number, some movement. impact an general, know, a a to quarter certainly. going And you just plays And well. seasonal

framework, a we're TTM is the Global on customers. the set well XXXX, prime we to on quarter. macro terms within focuses be basis was There sales on guidance XX So and growth that. XXXk of of land, headwinds due those things XXX those cycle to of extension being which The expect per customer in team strong. quarter. to the in revenue this XX% obviously, this The continue But exceeded very all expansion, customers said, the

of cohort their that So growing of our we're with is usage products. customers pleased how very

Operator

moment Thank for you. One questions.

question comes JPMorgan. Mark next from Murphy Our with

You may proceed.

Mark Murphy

my efforts and might to congrats of the what on help monetization very much solid be line Interested profile. margin you that the top accelerating add Thank performance. would extent I'll the in any you

as is you've the think that with though time And doing For enough feel what monetization? you drift of where detection. with Terraform on saturated instance, been that you've see right I you to markets usage accelerating kind do and source work it the open

Armon Dadgar

Yes. Mark. Thanks,

our and commercialization with standards, much one both feel Vault, leaders them the open category. sort general, of With product. their how we're in products of the think of both Terraform I focused how in are about our of think they're it dial way the kind of, like we invested established every call market are we have core in on we source a products, we it, versus between a

focus differentiation our so And and enabling the over really this is our commercial dial much teams commercialization the adding we've customer commercial at point, that and to to value field side. further And turned base. building

an So Vault, of example Terraform, capabilities. of we're that focused side. key you gave on those a couple in similarly,

are earlier Consul, probably our we then open source, our the between commercial is so think and have I Boundary for sort more emerging of in that balanced products community-focused category development us, a projects. of and

Mark Murphy

Okay. see as And can XX%? reaccelerate a support what the quick us for either driving do that upfront or this catalyst revenue, that - grows it while support you revenue next QX of perhaps bulk the that. grows license revenue is XX% to the into And into the is you Thank year? recurring the which for quarter, that's a where remind Navam, follow-up, spread revenue you

Navam Welihinda

per buy license just and And embedded contract accounting product with reminder where question, values to happening, Mark. you basically everyone, XXX a for support. as a disaggregation individual per XXX the internally, license our is Thanks between and the software a view of distinction Yes. centric contracts assigning a there The and what's very support. is single to are

of which those the impacted. product, things So contract to on a variability line all depending has it, the the license lot of term on and depending

So and expansions expect continue and product. and grow land extensions see of license continue signal that to sort to license We self-managed the line. it's we from to support as line do hard to really see our customers in

Operator

Thank questions. you. for One moment

Our with Stanley. Sanjit Singh question Morgan from next comes

may You proceed.

Sanjit Singh

cost the efficiently, of out an QX run customer tailored displacing get Just wanted concerns? With argument the more respect tougher extent being message And their environment, my down wanted speak consolidation, into is Dave, sales you're team environment. a sort spend tool congrats platform? cloud simply well. more to to so of a the is message what your consolidation, view across budget those to sales the that budget Or solid extent is to incumbent on solutions tougher results to customer to budget may total as to on get this there with a to to making? I consolidating the going ROI to going operations getting changing very sense by customers the come vendor HashiCorp message the what broader is about

Dave McJannet

I three for Thanks Sure. ways. that. about maybe think in that

decades. be be are spend first for to inside the where to to think just partners that just program a are and cloud foremost, their what this several by net our office and category, going vendors is next that I trying really actually And large these companies. clear is customer they right, new determine

like products it model see and is That's And that down. before rare go provision we why cloud Terraform's for usage and security two, example, - private something now in set. and will are value risk policy estate, data unique is into our you Datadog, relatively you well, much So efficacy is the that cost reducing new always cost, us, to you would the model. things do different it's around reducing I vendor apply and cloud. your displacing of very have and opportunity Terraform, when a is governance you market things, constrained time overspending but that that say accelerating Yes, so on I take for that the proposition unpopulated. guardrail of two, construct. a you Number I is that because had bring new a our for a Number center, your net this we're

growing to or companies number our accrue with consolidation in think single $XX cloud benefit it's we consolidate problems have I And a look across of incumbency is that helps So think I one, the in, our to I as message three And an those and they for sense, a categories demonstrates in spend participate the has important programs us the million benefit that that year. be of which environment we're it's multiple we continue of the message a clearly in some to customer vendor. probably very to economic certainly Point a two next actually which cycles. three, think will the conducive one, message. equally always sales been

that rather in an of us us. And So it position gets it's overt back to forward. it's less certainly not reality going good but the think it's puts message, - just played I a

Sanjit Singh

makes the clear color. And the to And of Appreciate that this margin progress targeting sense. really nice then Navam, was quarter. and That are a see of year. heard ton the for guys next on upside sort loud you

some X,XXX of derive to points that of going to remind the how materialize of I how year? basis going sort us Can in that, expansion to the In that to margin to next think, of is levers terms terms of pull you're XXX - you team improvement? looking you're that

Navam Welihinda

revenue margin line. of to bottom had Sanjit. pleased thing, income lot with very the quarter. yes, margin Sure flows in the performance Yes. operating gross And down we're and we the A overall directly

from So see we mix high line several cloud. and number that in one. company, shift And our expect we past happening and margin also the gross high the productivity remain we've that company that as and we see exceeds from gross margin remain expectations, to quarters, emerge line, to margin gross a a a to despite bottom we if the hired drop employees our over the expect

economies scale the line. fall of considered get leverage team, from So expect and from into as see of or we from bottom we things - down both to that our team existing scale those most that

Operator

questions. for moment One you. Thank

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

proceed. may You

Brad Sills

more taking wanted the Expand a will, I cross-sell platform in skids, of kind making for $XXX color in a kind million retention, driving the you Any here. shift customers net versus nicely with other say you're place, of to of for that Are grease versus question that Expand? if question, my revenue towards Thanks the categories? Extend on with ask guys. Great. kind establishing into you teams, Extend of the just does with holding the you that's centralized that? Would progress that the seeing about

Dave McJannet

Dave. is Thanks. Brad. Hi, This

cohorts best it. comes way is it think about down I probably to the to think

they year I product, think in product the second to one would one adopt we people year two add generally look renew find and that in product.

But have crop think So there you're to expanding year deeply I and decisions delay are one products, is of maturing And between them. what extending considered natural growing are seeing fairly there's is probably enterprise these cycles, a that think a I enterprise consistently. a it. customers that of sort cycle again, now -

think So is you it, playing I and I is the as out we it about probably view cohort way expect. of think that think would sort

Brad Sills

Understood. Great. for Thanks. And then Armon. a you, question

dial on learnings of kind up there of there? added apply turned what you are for going that might in are And the are Vault to of more those focus value where the map? alluded commercialization You more for that that some other could adds products road and customers see with what that we on some on offerings Could to mature elaborate so some kind value Terraform you there.

Armon Dadgar

Sure. Yes.

of if and of because philosophical the share all set the it, two the can practitioner-oriented we call talk those general, capabilities. zoom of is, our sides the One there's generalize across workflow is it think maybe much. out products specific In about way then to about kind just I'll won't think kind we I it. and capabilities view I of products, as almost

end cetera. what do security, who's open of about in estate and how Then capabilities record of about where way. I is have features thinking large manage side, et visibility, a source a large system on workflow use really So they more an and the the kind we I organization need to tool the about really elegant their which user, of consider the other developer compliance, care the pulling governance, a adopting sort you are problem solve for what the in

of kind of record system that's So capability. more type

on the side things type those to of So more fall download into see for of kind those features camps. because source that large, it, it our capabilities. products, a of set it's system of and value the use open the it, about focused enabling quickly, the where kind kind record on kind tends of workflow-oriented is of one commercial of to either be of user any more By focused the there's of

Those I specific one care So application you're all a how that So about that where when need different example type I about I'm my do of at kind two drift those already good that's large capability type care the features, the in running was out apply system perfect do talk record of talk about if day that things when to developer, I if Terraform, of necessarily don't about of the of thousands applications if have CIO workspaces, in a concerns across detection where of scale we to day sits mentioned right? and of you managing you on patches. are really call. that we function. environment, example understand the drift in two a I of That's need do where date, infrastructure office, you're that is are the

We as policy engine. also code to improvements announced our

That's policy kind low-code much kind our that less at-scale governance in that's simplify for or very applying right? security a be framework reasons, for case. to an third a maybe And might you're of category. example, codes So skilled compliance use either perfect if or sits second example that applications teams, of

So general some there may philosophy. specific the be

the record open turn the source of and moves workflow. to the of dial system the we so as less development So kind on more of

Operator

Boolani Fatima comes [Operator Instructions] next with Citi. question Our from

You proceed. may

Fatima Boolani

engine layer Thanks was to with mature upon new for more on into commentary to the Navam's hoping were the of questions. Dave, a your just taking logos some and the I my products. good asked with afternoon. of in some for Hi, building respect elongation deeper of you questions go commercialization slowdown some

maybe bluntly. ask So to you more

tipping gotten then that is most most a please. factor the happy to over? most point And just solutions where just specific pervasive your Navam, you portfolio. them Is follow-up it biggest either open posing understand hurdle? better the who it want is the what and because customers, for I convert that haven't mature and extremely in Terraform just that new users, the source can is to With widely used

Dave McJannet

central When Thanks, they so a - company, set to provision we for a X to The adopting I very opting it described, it answer access Phase basically Fatima. difference whatever of but they they like that's all started Phase centralized share capabilities. I XXX in I cloud overspend X the don't start tactical. and think cloud they And term to no cloud, Sure, that require my between people all versus with happy cloud might think to back one. through program, from where environment Terraform of developers my use more different what of the of Armon accounts. control can cloud. it's goes a

of of So or is that on version matured approach their their moment has to our a commercial the established largely predicated adoption product that within whether in have business group. the either they to time company where within company this, formal doing

is So an the this. reality largely, markets to organizational infrastructure move because do why they at there's that pace

what using Terraform think is Terraform. needs seen I So a team of we've real using acknowledgment different is from that the consistent actually

people our to with market as at work a you're are buying really conversion our of to on or customer time we've infrastructure base actually either I the having how products, gotten have there basically larger, really, commercial has that some that accelerate base is we're commercial scaffolding is way markets think that larger, to move. you're organizational in customer just build kind reality gotten as it around constraints So And we're of progressing, it. bullish our seeing but product

Fatima Boolani

out XQ. transactions guide, now? terms XQ you. me. duration renewals and in expect activity? XQ should of seeing some it certainly of the up expectations perhaps that's around larger your you're engagements customer from multiyear Thank seasonal called what a in you are embedded that the what XQ? renewal in of in transaction impacts a renewal type wondering we I'm within and sort Navam, behavior standpoint of of body and performance is And but So And And Understood. for if there is there multiyear into basically, persist from the

Navam Welihinda

Thanks, Got Fatima. it.

pleased of what in the with customers doing. the third are and our very activity terms So quarter there

and may inherently guidance be exclude and philosophy execution is large quarter range path the is transactions same, it timing which those always solid sometimes a fourth unpredictable Our has there's been from any outcomes we of take a where multiyear deals. we and

our guidance So that scrutiny, deal turn QX of with lead is going high seeing pleased the being seasonality which headwinds from QX pleased behavior or But out levels able on of in don't with we're the think to muting. QX basically guidance. and we're QX ranges sort our how to normal expecting incorporates the I to in may raise macro we're any multiyear guidance. here change

Operator

One Rangan you. for [Operator Sachs. from Goldman Thank Next questions. Kash comes Instructions] question with moment

You may proceed.

Kash Rangan

two Hi. AWS very much. you. you Congrats. I people the Armon, but XX,XXX at saw somehow Thank of Dave missed re:Invent, and

So see the good to getting there. flow you're

other thing application managing maybe so more watching active. over, know there Your more and much with as the you. at the upside forward. actually blows more costs I the going layer, here or that how you here. expenses, your its how to and Navam a have customers standpoint, income? just at And whole that's have given that not at helping at it's not I'm bring of you And helps are which that that But foundational booth can trickle through layer, you so can through then business works the given wondering development said the integration, time. upside infrastructure line. forever? you that a world measures level the AWS layer that cloud even expenses, cost. but the watch, in going unit a bunch operating about the database, leads actually - said from cetera. was drop saw only recessionary Thank AWS revenue your Are everything either managing to actively place extremely maybe much. how chip be a influential to lot revenue the you There you're announcements we et you on any true AWS, this to AI, control the wasn't a fundamentally stay partner were bottom layer, a at guys to one potentially data for you network

Dave McJannet

might few working in stage fact think Dave. there. sensational be everyone's take and announcements there where, I'll agree I Yes, is just are massive a reality estate reached Azure I Amazon some think haven't This first I a that is this not many, comfortable maturity having at we've of I that that you, notion of reached the includes were longer other with very still cloud things. indicative that re:Invent, many yes, infrastructure I the would done that is but already state that think adopt one. and not should with, where that but of there's not everybody's we companies any level yet, with the conflate cloud. And the

the our that We good thing across I reflected good in type for all you with think the us. the certainly certainly customers. partner just are of cloud see thing a good market. awards of We co-engagement see year see And a that indicative them. that's It's of all it for providers. really

appreciate and just I steady estate many They've I reality. actually is the to the how accepted. things connect in this expect to that. do all Multicloud the needs we're other instances, wouldn't all state. They So - they be that everybody's

And from to we each think I'm month acknowledgment maturity. encouraged very So - by actually continue that with of of cloud the engagement I sort us. see better actually market providers

Navam Welihinda

We're predict plans And Day economics during the mentioned based are your is intently are spend our it. on then this what the side. and Financial pleased in Kash, envelopes scrutinized question absolutely the unit second the Analyst Navam or Yes. on with happened third we this - or on spend spend of quarter.

the a reduction payback driver on of of very acceleration a is of or focused expenses. level, So and unit periods, CAC revenue on we're that

Kash Rangan

it. the Congrats Thank much. again. quarter Got on very you

Navam Welihinda

Thanks, right. All Kash.

time. of couple questions up we're kind a running have but left, we on of So

remaining we appreciated. question So Thank be just limit the folks to could one if that would it for you.

Operator

Thank you.

comes next Walravens question JMP with Securities. Pat from Our

may You proceed.

Unidentified Analyst

margin? you mix Thank just thinking on the trajectory Jeremy that for metric we Thanks Hi, question. of main the to gross us cloud? it's team, much. should Pat. remind about you given so for And shift then the drivers how just the be Navam, of can of

Navam Welihinda

our revenue, and There revenue at self-managed absolutely. slightly to zero components margins our Yes, held cloud revenue then and and revenue to our negative other. are is margin is business. the a broadly three services Services revenue, high near subscription

on we're high gross products. cloud continued we're margins And margin. gross to And our XXs, us is in amount this the the seeing cloud. time, pleased really what's upticks in line getting over XXs we'd margin we leverage believe get as So of that scales,

But a that margin up, I believe perspective a QX, margin from in was there. perspective. great So walks spot in as good gross we're a outcome it a from

Operator

[Operator Truist. Instructions] comes with next from Jump Our question Miller

proceed. may You

Miller Jump

out me Thank with you here. squeezing you on if the macro. All close you in one guess can I for right. it just

million September course So the was current $X hoping mentioned macro quarter, deal million between had baking and what of last in year? color I And Thanks. the more just to those to impact cycles? headwind, maybe for was change you're on the saw in $X if get that any the you that still then a quarter October there in guidance the you over is

Dave McJannet

Yes.

It's pretty So sentiment in consistent, September. think that of the it's than maybe overall. - a But particular, I in little give overall, news Miller, headlines certainly I bounce I'll a and October, in the sort probably different view. think around bunch October certainly reflected was in felt

Navam Welihinda

and the Yes. and same out $X the as the half impact the for million playing originally expected is had year, it's that to which the range. the add as $X it's to we - I'd same, of back million

Operator

Reback for And Stifel. from comes questions. moment One last you. our Brad with question Thank

proceed. may You

Brad Reback

relates it What here as question broadly? Quick your M&A. much. very Thanks Great. thoughts to are

Dave McJannet

portfolio we think mean that are have the think or that And to focused simple that's product plenty we we eight we have and of have work are in pursuing a - we're really portfolio - I we seven answer. we that I with. on rich of is Yes. the I always process the direction commercializing products

Brad Reback

Thanks very much. Perfect.

Dave McJannet

close here. all for look forward everyone you questions with appreciate and expressing the to dialing We by in for you. Thank So the my like from I'd just certainly soon. to participation thanks everybody speaking

Operator

Thank you. conference you This for concludes Thank today's call. participating.

You may now disconnect.

HashiCorp (HCP) 8 Dec 222023 Q3 Earnings call transcript