HCP - Earnings call 3 2024 | HashiCorp, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to HashiCorp's Fiscal 2024 Third Quarter Earnings Call. [Operator Instructions] 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, Vice President of Investor Relations and Corporate Development. Thank you. Please go ahead.

Alexander Kurtz

Good afternoon, and welcome to HashiCorp's fiscal 2024 third quarter earnings call. HashiCorp's be in third after and our closed me will financial fiscal Armon quarter, earnings release, we the we CFO in to that published with encourage we additional today. With financial advance announced our McJannet; results that presentation press call. are earnings you afternoon, presentation provides conjunction of discussing and information quarter Dadgar. In have Co-Founder, our XXXX market Navam This Welihinda; Dave CTO press CEO, release an about our our issued review

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

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

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

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

David McJannet

$XXX for revenue everyone, Thank our representing of reported you, welcome, with Alex, third solid and added Current customers year-over-year obligations top XX% with annual call reached greater remaining XX results performance exceeded and equal to line in to third we representing than growth, quarter of million, of recurring total and reach guidance bottom to $XXX million, XX%. quarter million. $XXX fiscal growth or non-GAAP $XXX,XXX a year-over-year XXXX. We revenue earnings our that

cloud continued offerings we largest sustained XX% annual of under enabler cloud October platform that that's had remain October, cloud ahead what term both HCP environment. variety HashiCorp of we're reached and HashiConf hosted enterprises and world's as A long well year. makes X,XXX cloud revenue also revenue, is quarter. announced infrastructure. this HashiConf display which macroeconomic subscription more cycle positioned in opportunity. investment the as our conference about user opportunity of size life keynotes Depot HashiConf, of difficult Our a circumstances in of such and expanding is new an of on community fully HCP is with cases the at facets The performed talk in I customer we customer of in-person XX,XXX multiple we broader product At unveiled in attendees our convinced Volt earlier that million large startup a realize a opportunity have that workflow long-term to large want aimed virtual and capabilities teams the at and as Coming of doing touches to enabling to quarter, and Home Games. we acquired Secrets. our We unique. short Vault advancements At preview wins this continued and how based this we secret both HashiCorp radar, us out underscore with than cloud. With developers the for the of representing example portfolio Unity capabilities new platform backdrop, with as good the our The the multiple move team us use today result despite have on long-term scanning scrutiny management. in the a about $XX.X customers automation deal term and

infrastructure made to as several industry also code. We related the TerraForm, for announcements standard

users and I to stacks, excited about a major most the enhancement were and execution TerraForm think investment TerraForm attendees engine.

generate within to module We feature TerraForm, test which our also uses AI users. first for LLM announced generative

for announced portal. the from developer AI, of developer guidance architectural materials, HashiCorp Additionally, finding private and we the HashiCorp companion beta reference examples an AI-powered product

continue and are also proceeding deliberately. into to incorporating use about We're see AI You'll about targeted what customers being valuable thoughtful time. our AI are being us products over to cases capabilities our

However, infrastructure and you cycle with will continue to capabilities on management across see security. our investments a life across portfolio focus

conditions it's market difficult. As that remain earlier, mentioned secret I no

While there there are are others we we can. many control, many things cannot

we've So steps ahead meeting us long-term us. performance near-term opportunity the both and help to taken of with

solutions security HashiCorp focused be putting to additional and field our our Susan XXXX. offerings. having new is products the will new Worldwide with teams to help, go-to-market aligned Field is simplifying Day, of our on investment them Ledger, to This apply win I of new strategy within our teams. focus position easily we portfolio both and while continue is helps our will to she an which the go-to-market already on hires us expand with and problems St. the as messaging efforts cloud in together. they to leadership centered also this enablement investments this impact execute This key our common introduced earlier, management, better are Global mentioned President positioned together, offerings. go-to-market our field and our on and to Analyst messaging in approach, help package we With more teams comprehensive Operations, sales to our on product life we Financial parts key First, At our and infrastructure our cycle strategy. and

as Second, offering products cloud go-to-market around integrated efforts are building it's are These HashiCorp of a a cloud-managed that worth noting wholly part our fast-growing our crucial to the ongoing on these also business, focus you results. platform. more in products opportunities be Through with and needs. extensions, HCP, and changing product simplified can our consumed and can expansions respond for can easily customer these sold to see we better

We year. earlier to frameworks are seeing responses introduced pricing positive new we already the this cloud

creating remain and focused further more to build new see we our are efficiency on our committed business. to Finally, leverage products, the good Navam already making These we efforts in operating path underway, increasing we discuss profitability. you broad can those as are progress to alter detail. HashiConf. will Those do of our in at on and from announcements efforts set not ability are made

Now over through take any questions. walk to to it of Navam I'll details our QX the happy turn I'm performance then to and

Navam Welihinda

employees make also all Echoing at those you community, created quarter. and joining us to this thank employees or us to today. this and a our to person the joined I extend hard HashiConf who big to on to host user wanted and everyone, customers thanks, to conference, it who worked you, wanted Thank It energy event. of for was reflect amazing virtually in last event Dave, great see Dave, how to I also everyone success. was at our

fundamental Financial financially. about X Day, focus areas talked a where hosted also we Analyst us for HashiConf, key During we

and count the focus on efficiency. First customer was focus the was momentum; cost second on

net in XX On team our go-to-market new simplify to resulting added on ARR. in over new customers focus, our XXX,XXX count the net customer or in our XXX,XXX We our continues momentum at above approach, year-to-date. continued at ARR customers

track well customers goal adding year. remain over in Given to XX on this of against ARR we progress, our XXX,XXX per XXX

Customer have growth very a and and as quarter 'XX. and portion we well smaller of Despite the group unchanged led potential during know, with the may being buying our was first XXX,XXX out high contracts number and significant contracts. our in you experienced expansion a growth behavior foundational to buying largely customers. engaged our to of we behavior quarter in our a smaller customers extension played most we we to of As with what as customers, revenue saw our similar contracts bookings land in expected. seasonal are smaller, provide third revenue as ARR future the It current a half as macro model, potential. FY The the from they contracts

announce flow goal important half step next corporate for On significant by both the milestone per to want earnings The operating a profit year. is of positive of this company. back We free milestone reached I a quarter and our share focus, an this quarter. towards efficiency the the positive non-GAAP non-GAAP a cash

seasonality. free We cash to is other forward from period a for due booking us positive free flow point to than which QX, in low be this flow cash seasonal expect

I financial guidance, briefly to outlook. to on moving Before to approach our revisit the wanted

market. larger after the HashiConf company's confident positive during we the In with the our impacts how customer customers. sales of innovation especially our are conversations cycles We judicious with demand we given our approach our guidance contract shorter remain new and had about and that customers bringing the the we are to larger in term, environment and in after the positioning long-term size many

next demand year the the our for do provide next environment earnings assessment call. continue guidance as will We customarily and of in

and non-GAAP non-GAAP financial million to our of for read million GAAP website our of fiscal for in guidance, 'XX, revenue you million. expect $XX on numbers $XXX through metric in I full we million to summarize in and quarterly ir.hashicorp.com financial's guidance available reconciliations. To $XXX operating Our loss can to of quarter share dock results. the under fourth range the count the presentation $XX disclosures, our range found to total full disclosures be earnings encourage the a

fiscal FY I million total year available the your of $XX and for your $XXX range expect $XX questions. million Alex? million and in are revenue to $XXX of take attention. and operating and Dave, non-GAAP Armon of the any For full expect the we million. Thanks in range 'XX loss 'XX,

Alexander Kurtz

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

Operator

from come [Operator Stanley. Instructions] line will from question Our Morgan Sanjit of the first Singh

Sanjit Singh

you is accelerate? and was go-to-market Is to I start through a bottom sort have to how the EPS. about wanting it'll have growth or go-to-market. the of of to look balance that results, in think the I something making and don't investments do sort period on get yet see the take sense see this returns on you and going buying at And of broader the session, to next feel, the year, or free at year clear been motion, clear guys improvement as pretty very investor which and cash think you Congrats to guys backdrop. really behavior are guys the macro look the simplify sales though, how any I changes you you're could next positive of potentially a where about this we When that's I of to long to positive seen play haven't non-GAAP flow out you some these

David McJannet

is this one. Sanjit, that Dave. I'll answer

you coming in I that years. aggressive about of period a dollar is of think we're the in of And demand have in and we XXXX that couple Global think way that's they others our the the I cohort the of for is we're think And the entitlement out numbers the the of environment that purchased. clear is group. clearly that last digesting what's about. us retention investment of And see peer companies aspect software it speaking net that in significant

flow entitlement consumption consumption-based entire of indicating to that's obviously vendors who have next ecosystem, and quarters. the cloud and and side, positive the expect the the the stabilization vendors through course the several the you over for are that vendors would positive to models On

volumes, what for see, demand highlighted, bringing do excited indicated, to simplification our already products And Navam about the are certainly, Deal as as as see, we're remains we're we high we ever. as I consistent. Navam think bear.

as from win activity any and and field. We're behavior our land we're just in consistent rates discounting Our seeing to are customers. as seeing not ever, smaller the our changes expand

super arc about that and longer we're help. do bear the simplification optimistic So bringing will to think

Sanjit Singh

And the funnel and you that building an Armon, demand how appreciate offering. then, on I Dave. for just thoughts, the update boundary, see love get to

Armon Dadgar

be ManTech, seeing folks we're Bank healthy our was the over boundary so X product. there's we're and partner, pipeline, and major introduction what One about of talking of we seen that the which And significant with, at Sanjity, have of self-managed major is then I pipeline recording Yes. building pretty of since we've to the in the talked excited few fairly the session introduction FSI adopted HashiConf, boundary enterprise their as they've second I was and well how like think a engaged enterprises EQ about think environments construction summer, continue boundary. around opportunity announcements. as a that

Operator

Our will Jason come Blair. Ader the next question from from William line of

Jason Ader

in occurred of just for what last I gives optimism wanted ask days XXXX. the to XX most level, you that has the sort high

Navam Welihinda

want Armon? You to that answere

Armon Dadgar

Jason, Yes, happy Armon. is Sure. to. This

few a things. think I

that today. And last And to think we're weighted I think cloud we're self-managed. us, exciting I self-managed. we think particularly think sign in surprised -- was have commercial pleasantly terms of increased customers now their we're products larger But for towards than customers happen the to see demand really versus towards the willingness obviously, cloud. one contracts where officially this I where of seeing sort starting that we are move like in demand equally, the cloud for as for management move. were to those TerraForm, quarter, And that's shift platform more enterprise that's have to signaling we shift I of the seeing the just a

that's and can heavily customer cloud on we feel for by pushing us, we and default appetite as where historically as are so form, year than just a next TerraForm into to shift land which think more has like we rather interest. And driven self-managed for been about motion really cloud optimistic towards going start our

Jason Ader

few Anything was things. there said else you a

Armon Dadgar

contracts the I on of we have -- think cloud more the being we to tip right? few, cloud it's It's self-managed. than have those on

enterprise it's as move cloud well. the think willingness I to to

Operator

the line Ittai Oppenheimer. from comes question next Kidron Our from of

Ittai Kidron

couple A for questions of me.

stay. needless right, First math my relationship you, row for the Navam. now revenue if to about for quarters that say, can than faster in grown a now RPO, that X is has

didn't did expect the your So is why you year beginning in slowdown has the the your And the that budgets the you progress help of That's the slowdown in reverse? for hence, business Dave, see understand of at And reason existed previous really you've number past of why a time? when year, a for a was ago. set this long to disconnect for converge a reflection would couple activity or late talked how years such you, the about me one. in

about about this are have conversations spend in you for and now you about is 'XX 'XX, kind As and up directionally a is way. shape 'XX? 'XX? with different it of a What question they standpoint What budgets here that from hearing customers a to how asking telling Jason's maybe can you're relative

David McJannet

It's first. question Dave. second your answer I'll Maybe

and through I on just buses the number that on our existing unabated. gives going customers, just working at attention then very, that's that QX really record us That's put are add we're just product be And think to understand, focused have can downloads would being previously, based Armon short is. say of budgeting continue inside particularly. digestion a volumes trends version positive, changes cycle. very, the as I we notwithstanding But I to two, is what -- certainly to back contract on indicated the is very will now. the high, that for where ASP very our our you the the healthy, add I to What our confidence

see but works ample certainly longer what the out, And the comes optimism how arc. QX about over so we'll

Navam Welihinda

your Yes, Ittai, signifies We're basically It RPO through that vendor the are our consolidation RPO very pleased period. customers I'll cover with question. this growth.

customers longer-term their in contracts us, in Our spanning and into are meaning multiple entering our with us placing products. years faith

it as and the obviously relevant for us, momentum XX is a big in next the connects that's one more So over revenue we're seeing positive continued to months.

revenue. reasonably for obviously, and growth And on well. the on close proxy that, side closer as a rates that's So CRPO a we're keep good we eye seeing

buying mentioned view about And convergence, of behavior view see and macro a of forecast we a as very change. think different prepared as want that quarter view taken terms how measured and the we take we is I during to to the time next haven't the how our future. until the the remarks revenue, In the -- we we

So been prior consistent it's forecast. with period's the

Operator

Our the Needham. Alex next comes from of from question line Henderson

Alex Henderson

One be bit with investment. X enterprises their a around alternative to uses adopting It it was me us and versus integrate or I AI issue the could solutions it that app hoping there's talk would little a the -- of here. internet mechanics to seems would app understand through possible are into you how that would you of development as the it demand as use content infrastructure's and it result, value development programs. to code as it slow they spend their how time and me, excuse could ascertaining drive how to

So can you views? about talk world bit a those X alternative little

Armon Dadgar

conversations share the I having. mean can in Yes. customer we're we're seeing Sure. I what that certainly

general Our that being access leveraging people could a sort toes these businesses. among and being dip see able their start able is to nothing people's if of to they else, at sense them, able -- lot about models, in apply being of there's least to certainly to excitement how

and cloud customers has accelerate with, either They And cloud they they a most tailwind if so We've workload these had towards specialization realize won't them on-prem, begin as customers leverage or going that a they're stuck of capabilities seen might been to have to a to CSP so been actually or have right? on-prem. percentage best-of-breed of can to a and this go because the that might the different this large because models, certainly, I in driver of the certain many strategy, single multi-cloud to for access providers. for going multi-cloud actually think

pulling an that I in of think that it strategy. some of terms accelerator So customers in sense, has forward been

portfolio, thousands Financial work a We do a financial in in playing console cost-effective of large-scale doing workload networking driving multi-cloud these talk invested really seen opportunities a side, at portfolio. also build out Nomad the we did at [Indiscernible] large On across the across And and interesting on compute to looking TerraForm company flip a way. we've for enabling seeing our the about Analyst for orchestration grid and that general scale interest GPUs provisioning across with, leverage very estate. I a certainly think the we're based they techniques at large-scale Day how

it's So been a certainly useful I tailwind think us. for

Alex Henderson

you slowdown app see So development any the in cycle. don't

it actually how seems we've got which brings now thought infrastructure. year up how that of months. than I extent, are to that that produce future. to obviously key to that the fix how we it one to tools a be standardized manage second changeover again used likely and I would wasteful from happening to on do those XX months? will that me it of XX keep is question, process of Is that cleaned in that teams year cloud. efficiency the could is think be gone the Where very And it waste the to a would prove that lot now. model that more or slope think resources And in of recovery? growth cloud the shifting the do a So TerraForm last we the something I next It the that a to the over part away I've over are from Is through longer that do reaccelerate the play of process, outlook? a shallow would out

Armon Dadgar

go Multiple is And their right? for build standardized what in of happening really organization's to a are with it workflow, everything It's think up cetera, approach, Phase almost of rolling. is no X, would I as an catalysts. right? call up different lit different we center sort Yes. share is adoption applications observation I ends heard all teams is, et phases, cloud. it's talk application we you've of tend this at sort a hoc think ad of us the there's about multiple but to characterize few free probably process, of question. through an tooling, cloud And going almost great sort and events,

tooling, to to for to be across might scale, For the is basically of what, some a scale, those know the to others, compliance tends cost it's a have there's pull organizations I think centralized compliance right? catalyst where need get issue great a II others, that swath forward your some organizations, put that look of an your We say, our at right. actually now for cloud a standards customers we is tailwind this set a guardrails then perspective." construction I I issue, organization to where it platform some it, have it's organizational set a is cost with, perspective, has adoption we So that Phase II a ultimately, standard team is controls What But point, really a And right? Because X process, mature "You point, where a security unsustainable. team Phase be a Phase platform creates this for of issue. unlock a security that from in for we around optimization they at observation both platform of and more I'd think at that because in we've to place exactly really year broad say so think of interact us certainly teams are customers. the done approach,

Alex Henderson

causing the reaccelerate that's to case, the a it is the pull-in conclusion. mean If that's then in time

Armon Dadgar

them land and is doing ultimately, So build to teams then makes to, to what groups usage the it's portfolio. easier sell over it's with motion, of extend -- term the of we a creating these it and are the the a long the and us these ultimately it for sell relationship rest ultimately, drive product expand think our right? grow platform central yes, I

Alexander Kurtz

question Yes, have please now, we're get X along bunch going a answers limit to of to and questions to we'll go, for move just so and to bit just try left we later. little more a

question. Next

Operator

will Our Mark come JPMorgan. Murphy next line from of question from the

Mark Murphy

that we're Congrats rate difference to movements. GDP on if the or detect softer favorable December strong been There's I'm of very the you cash free Dave, on in heels inflation, wondering, in or nice environment any growth. generation. the invest November demand being willingness flow interest

dashboard point. that moving optimization seen companies kind moderation market software and is and higher. into being at by As breaking any translating stock out of just if I'm this kind you of consumption your noted, there's of wondering

David McJannet

the the you're right of on out the as models I you models, past. and pointed in exactly for the entitlement think lag I correlation think, the consumption yes, Mark,

the commentary about saw And so generally models of improvement. speaking, some you from consumption

for think quarter have I until wait the a make to able commentary. much us, be of we a more bit little of progressed to to sort

tremendous always what say getting do, ever. even I is procurement I think wildcard. were that too think early in based would or get for the I the volumes -- there's to interest we last on we as deal becomes higher question. than is departments month ever, indicated, as the through tell the our QX And

rates were win Our consistent.

Our discounted practices are no different.

So we're certainly optimistic that that continues.

Mark Murphy

lingering And a then of I quick sequentially, might I down on not I the there all it's pricing you anything RPO, were look concessions, it there in falling unusual off impacted the moving Was any good year-over-year. there I that? terms food have a, some the just the Is it follow-up notable Or as cancellations, there at they mean, see were still sort were that When just see stuff. behavior? kind see I I I trend. of some -- just buying sells? there. but model mean of mean there anything quite X considerations. said open of it of kind tougher of softness is pieces with

Navam Welihinda

Yes.

I behavior. buying the think mostly it's

volume your what's about NDR to markets. sizes, deal but impacting causes smaller And rate. RPO up, down. talked being that's deal You which It's at go

deal and amounts volume growth a deals from with year-to-year, from larger it's feeling combined the strong still smaller So And but we're good our still about happening. customers. long commitments mostly of RPO, perspective

Operator

Research. Zukin line Wolfe from question next the of come Alex from will Our

Aleksandr Zukin

hard push going little for bit on because a numbers to us. reconcile X more to it's this I'm

hand, one at have guide next XX%. for quarter the On we the

bit of consensus XX%. much but completely smaller a sizes bookings does bottom the you off have this are an can upselling NRR attributes, good smaller maybe growth your us can larger as we the there volume volume into about on are we We both is much year and like CRPO for point is next how the model help about kind little at at How next XX% -- when of deal on curve understand next some commentary a for because quarter, X% that of you out. would to an so us a sizes, be this larger I of those around we a deal based deals, think estimate and just this acceleration dimensionalize volume more jumping year these conviction year, seeing? understand, of right lands, color have give level baked of this time

Navam Welihinda

see. software operating that believe and behavior us in, which it, buying still Dave's questions means sort Yes, is we in our a of are we can What say lot And around see think which designing thing forecasting at this earlier, of we of I is right? assumption out changes, we're -- that I the contract means the the only I what point seeing your seen, to activity we view people haven't came our that sizes, smaller point and think good we're 'XX. until under aren't anything at beyond

first, execute you we in got give we'll when view our QX we normally So do. 'XX to and QX

Aleksandr Zukin

this here this either Okay. how we or the larger those realizing new faster it strategies, sales Understood. or the how deal tailwind should -- Like slower? of or is much that the And pushing guess, conversations few next -- some of I a and maybe, getting execution Dave, some to go to making about making headwind to of quarters? think dynamics a over actually back

David McJannet

it. Got

doing. to just sort that you back what model. the implication the St. sales infrastructure of we're what's of just operations, brought President asking -- At modification of same I for as brought now I'd we a that and as on new Ledger and time, of cycles. a come go-to-market efficiency Susan fact would I think And in field has to know, of bunch these are rigor of simplification approach the sort the you're some

and of about so over to future excited felt would the impact felt as to brought on the and great that in next. coming quarter folks the strong the expect just her opposed Super And some I quarters, expect I would modifications been she's to not be She be quarters immediately. really there. But this impact a the partner.

Operator

Nick [Operator from will Instructions] from Scotiabank. the of question Our line come next Altmann

Nicholas Altmann

revenue about between can Can of mix are side just about on bookings the rates bit guys little you getting And are TerraForm talk you the shift dynamics give and an between the just of road or mix maybe And a then XXXX. Vault the directional on you strategy, thinking update the into color of playing some near-term NAV just map, us growth that, sort how there. XXXX. product's of those Vault? some and how go-to-market just provide around maybe other the and TerraForm through

David McJannet

Maybe with I'll Dave. that is start one. This

in I'd really have put time, And But consistently a common organizations been just together. X So cycle would Vault X concerns the decompose interest more One cycle. around function, and platform is those infrastructure get into cycle, in around just and security And our other very, of pieces obviously, the operations, both. would the life and combined similar. mature I say, [Indiscernible] person equivalent fundamental to is one When I cycle aligned aligned there's solutions. I cycle. say over person. boundary with very portfolio business consumers the life into their in engineering think those the our life life infrastructure get security and a TerraForm's is basic security

you So And comment way is think security life aspect. I the of is dynamic is and it Navam that financial unchanged. cycle about think the maybe

Navam Welihinda

Yes.

our the other give at products the security are way are combine XXX,XXX so that a roughly on grow slightly larger from perspective, new make X. they the think net I or infrastructure a qual -- a the take, products but think majority life ACV smaller base, or revenue. of I one faster cycle up there slightly The

Operator

Our Oliver Cokenden from line next from Securities. question the JMP will come of

Patrick Walravens

I one, Walravens. back model. Pat Armon, and XX% my was is you, old $XXX growing MongoDB total And think revenue, were when revenue Actually, -- roughly I it's which this just in was total for looking million it's the they in of XX%. cloud at

You the is in guys million $XXX have $XX revenue, million. cloud quarterly

the we a solutions. us and X to points infrastructure Hashi's between to the walk cloud what about of the X just through or that's need are moving key sort So difference database understand

Armon Dadgar

span what database think of Mongo it's like if is, solutions building it's I a point that about to if entire you great horizontally the in a hundreds app, so hundreds, spend something scope versus obviously, the that. yes, like of what for And level being single stack is sit Pat, not our sort critical, right? is a I connected application, Vault, that is have needs And we by if they a the they into the think data, estate, of might across typically, their think about infrastructure, but you think you applications by of virtue to of thousands, have, that where app database I'd mean And up it. something [Indiscernible] right? usually about some criticality. and store new bound solution database major Mongo the to like difference I When

software, right? X this data I is, guys, down, consistently my that, goes I let that operational -- you to bar. just what run trust then higher vendors the the get a these And the effectively the to third-party that from And folks a a when cloud get for so different. criticality as feedback or is think about very a think something that it is these many wrong is it's It's And years where our have their the when So Tier direct are willingness think Amazon, outside the to to the trust, took much Google enterprise lose that's Azure that have result And if within really console, potentially position necessarily And don't they willingness of control. right? even customer's was vendors. center of goes different. I customers control of we

difference right? the so think seeing don't customers I shift, we're realize good that the our enterprise increasingly is And do. think the they I news way I The seeing that's have we operational we're operate point to. to would So expertise this

see go And of the so path we largest customers even our HCP. starting down are enterprise to

Particularly, of And so time see we time. in between sort and we're non-run behavior excited a difference about run that. our products

willingness. tools, Terraform, there's non-runtime for So example, more like for

point next year, looking at TerraForm like defaulting is platform at willingness why that's because we think we're really is capability their there. we're I Cloud where to motion a so And that customer land feel

Operator

And will line Boolani Citi. come our next the Fatima from of from question

Fatima Boolani

and with as what the enterprise especially the that sort that Navam the Dave, your you consumption-oriented on that landing inflation more cloud, does more with heads I'm of just around and in driving together your line of leading Armon, wondering self-managed might put have in strategy partially complexity might with breath to managing but and pricing for enterprise partially re-architect same how for the adoption, have also you come discussion offering.

you impact behavior financial of how your guess model pricing that would reported to your have drive in that the metrics? And enterprise? the blow kind I So up kind to of

Armon Dadgar

of it's spent want Fatima, about to a be for lot we Obviously, to reasons a up time outlined, don't obviously we position you great yes, thinking about something the in no, model. blow pricing question. a having

to be there is a on them we we change to reality doing self-managed to doing at on for their to for them be it costs, them is is really what platform their so so effectively have have We to fundamentally support we into much don't licensing we And as be customers don't don't minus want no visibility cloud. skills they're as issues the gives HCP bunch What should them in the or cloud. the going because plus usage, have us adopt things navigate want the looked from we We want create to do tax want more the customers want cloud. who we do. customers a for operational to to

for them don't want we So tax that. doing to

lot pricing them a consistent making help result, through of is that. spend the time So we as navigate and packaging a to sure

that that And sure good for feel about point TerraForm. their signaling adopt now we have the that we're meet So enterprise certainly at are cloud to a willingness customers are making customers willingness where that there requirements. it's more to capabilities and

David McJannet

trying our I is your to At a the model, only clear, I'm at self-management point to our cloud be pricing think eat question, it. model like just title just based

us, a contractually, that So transition if huge makes sense? not it's really for

Operator

from line And Wood will of our from question the come next Cowen. Derrick

James Wood

average revenue and if pressure number. all that's paid presume your would renewals, seen through expansion to net contract if I all. ask X been This about wondering the once any like? customers source seeing cycle you've And any of the cadence that is is get if I'm move side? Because what And churn. Curious is on open Or you're for then retention the lifted. what that pressure wanted probably from I at Navam, get you on just to expansion the

David McJannet

Jack, it's Dave. I'll answer the first one.

from pattern a pressure, offerings As one. is anti scale temporarily, let but But might open hear do given about mention an we sort certainly someone budget are But the rule, commercial Navam under instances of it customers people is that a general most to number move you have it's of of extreme anecdotally. our certainly that There they bit the of scale source. the of where financial the side. users, if and not the don't common

Navam Welihinda

on side, Derek, most the expansion comes smaller retention retention quarter-over-quarter from and and of the net Yes, the extensions. expansions extension side net impact meaning

Now some gross there's retention impact.

this example, there most on caused acquisition the for deal the smaller quarter, the But which was the For net sizes expand impacted is an churn. by part, retention extended.

Operator

from Gary the from of BTIG. our question line come Powell And is next

Gray Powell

earlier on up to I it was I just -- question. follow Alex's want think

and if asking the year talk factors, improved of fiscal end So implies guide the at growth. initiatives, growth the just I'm but that product about drive of could exit be you the revenue you things it with 'XX not XX%, guidance, I QX could top go-to-market, like maybe high the for look whether directionally guidance, that

Navam Welihinda

is this Navam. Yes,

the then like. demand want view going like new to forecast the going year. to go of half 'XX, year by get into profitability or of that said, grow on the holding and our So -- environment back view into profitability year next I looks is free measured cost revenue and to our to than the a cash very go next really opting are and profitability towards We're move by faster see QX end we're in we we the execute maintain the what flow the and --

trends be are for wait good, macro the see while So will the drive. we trends for which opening of improvement, and signs going to or

Operator

Reback next Our Brad from Stifel. question comes from

Brad Reback

the they're to to absolute Maybe dollar on back row small Pat's happen What needs It's Great. been adds. bit accelerating? little sequentially. the X have a cloud. going in get I down come quarters that to absolute question that spend understand a

Armon Dadgar

Brad, Yes.

of the sequential see I think team, enterprise cloud product mostly ultimately, the about commercial commercial. motion. into about the an we've a more think you sold it's with We smaller which cloud on that's sales where the growth. the I think macro And Historically, about customers, we've sales pressure enterprise I before. sort motion sales think impacts of talked really this behavior versus right? flipping

the sort I dynamics. enterprise. dramatic really to behavior looking sales changing the for of think really at core see shift us It's in the about the the that's of a team

product is to default at behavior. we have we're where and feel enterprise that's that feel customer we we're now think we the seeing there. feel are demand customers that signals that And cloud certainly, tell on where the that I like there. expect least we we're that that, going cloud signaling appetite is TerraForm impact us motion, that from a there, quarter-over-quarter the would flip a significant that to the capabilities appetite

Operator

Cleveland Ari Our of Terjanian line Research. next from question from will come

Unknown Analyst

reevaluate call. and AWS and you're CSPs, as to the nice change wanted integrator thinking meet system specifically quick on to role double as well the how Well, you everybody as the the community. of marketplace the go-to-market, partner on the ecosystem partner global about

David McJannet

Yes, I'll take that one.

teams is are of We the with the community. So from et indicator we probably And Amazon, think invent of system-integrated the very go-to-market it's our best cetera. Amazon last X really cloud year presence we the had Azure, I providers, our then partner around big which GCP, a we year, secondarily, is actually won all clouds. huge indicative think this focuses past the think I that together. how a collaboration are working partner And our tight week, relationship which of the

with with for co-sell our of material behavior a for good that's much cloud marketplaces, work very through the closely go it's and So And certainly, us. percentage good and them. opportunities them we their

strong relationship close So for been us the a for that's CSPs, very, time. and very a with very long very

we we majority the the scale, been On with good cloud the a working the our the really, like say, integrator skills partners of the of the efforts deployment is we how I'd are going side, those But to closer system of ever and about hundreds system date to working are many with. vendors with adoption technologies. work large gap we SIs around have that exists really are be with focus we candid. world have And certainly and it we're But and our both global feel they're the in primary that smaller investment have around which for integrators.

Operator

America. question And of our will Bank the next of line from Sills Brad come from

Unknown Analyst

for I spend enterprise last kind kind customers quarter, the the quarter-over-quarter customer want healthy on guess The customer guess -- add is of is I This compared Carlie the to basis. just then but per on to flattish. is Brad. on A number I X.X% net first of question ask growth,

larger You guys like size, like spending. that definitely you like mentioned just additional nuances smaller those share customer bigger any but can on contract

Navam Welihinda

Carlie, it's sizes the it think being No, boils to down the Navam. contract deal and I being volume higher smaller.

This us year designing doing through they smaller but still talked the consuming that aggressive that our You're in, that cycle. still following quantities. digestion go and period investment software about in as Dave

Operator

of question Turtis line from And from Michael our come KeyBanc. will the next

Michael Turits

entitlement, they've perspective, or more where in has adding platform? new from the the on the or and the into expand a other expansion products in been on it as So buying expense more side words, So and people challenge been DR seats side? on number just the expansion, is the of units

David McJannet

It's a real difference totally honest. there's think be David. to I don't

with entitlements think I it's has of digestion problem, road the company they've more And both I pretty towards engage security goes we back the It of think every product side consistent. process infrastructure problem. consumed. that the the

getting the no of base And they're what to is X position through connected the that answer. meta just customer very got. the they as short between our difference so They're real

Operator

line the from come will question next Securities. of from Miller Jump Truist Our

William Miller Jump

talk sizes in the you could how learned into packaging something this the there drive mind? all you've renewal you your what Like could upsell heavy your this maybe impact increased bundle is and opportunity heading side, potentially that about first on that approach year. deal just QX? Maybe introduced Can the

Armon Dadgar

I relatively for been bundle has successful us. think the

a help opportunity within an So way the time leverage typically think those is, who into it's land. we motion, bundle to I It's a think we ultimately, additional well. account, we something estate right? it seed customers helping and growing position you way accelerate to the as don't about usually introducing as a that as point the the of renewal products ultimately made the as then the them extension

introduced I today it has Zero successful. So the security think We bundle. lesson learned it life cycle been the on that is the with Trust

about think continuing going security cycle. we're infrastructure and we our across think look go-to-market approach probably to simplifying leverage I at a that to life next similar and as year having type

Operator

over I'm questions now any back like call works. the turn not to to showing this closing further McJanett, for at time. Dave I CEO, would

David McJannet

thanks I'd forward the here, Yes, Thank for We everybody to all to speaking the just in like participation and my you. soon. express from look questions. you dialing we everyone for to appreciate and certainly

Operator

This does thank conference. you today's in your the participation program. conclude for And

You disconnect. may great day. now have a Everyone,

HashiCorp (HCP) 7 Dec 232024 Q3 Earnings call transcript