HCP - Earnings call transcript Q4 2024

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the HashiCorp Fiscal 2024 Fourth Quarter and Full year 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 Fourth Quarter Earnings Call. be press fourth market release will announced financial closed we our in issued afternoon, discussing quarter our results today. This after the Welihinda; Armon are CTO me HashiCorp's Dave CFO, With CEO, and Dadgar. Navam Co-Founder, McJannet; and

In quarter. an additional presentation published we earnings of you encourage our to conjunction about presentation that our our in earnings advance with information release, have press financial We provides review that call.

our investor website ir.hashicorp.com. access can it on You at

harbor safe of which XXXX. are Today's Securities made Reform the call will forward-looking Litigation the Private contain statements, under provisions Act of

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

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

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

Dave? With call to me that, turn the Dave. over let

David McJannet

exceeded of and our are welcome, revenues million, for reported guidance, line fourth top call that with and year-over-year fiscal our and $XXX the year-over-year pleased fourth to of fiscal thanking want call you, solid XX%, remaining fourth the Thank growth current year. for team obligations quarter quarter performance everyone, XX% today's to We XXXX. representing results by close bottom Alex, which start reached our our to $XXX HashiCorp quarter growth. I solid earnings representing non-GAAP everyone with performance, on million,

our their hard enterprise important important quarter, us logo most the that exceeded and customers their trust growth we in cRPO for expectations new For products work, with wins demonstrated continued with as projects. cloud demand

that last we signs early optimizations on are conversations that broadly, the and we over past cloud new enterprises reengagement of the believe of we on More showing based seeing undertook quarter, are months had signs abating, initiatives. XX

from better comes renewal proof conversion. tangible specifically here confidence and pipeline points the Our quarter, improving overall rates during

ahead of line is we've cloud of in entitlements is consumption of there enterprises efforts. they mature the clear and a This as start their need to the expected with a among move cycle. runway with since self-managed largest historical, And is a business for the our while there what base, still the trend ongoing long customer cloud secular is portions some global

cycle, behind this Today, point fiscal company do. work new I be to our year. and the And want on accelerated path have the as we direct, be at we growth focus we to to to our are to we enter in where growth wanted

even out our products. on and resources more to level, company in to at and acceleration. quarterly a outline XX% to are back taking At path turning a high quickly want to top cloud sales improve rolling X differentiation we QX, R&D reallocate to execution, are place XXXX, during the initiatives to revenue very this plan drive We dial a FY moving more on the commercial growth I the

began and first sales our are go-to-market increased 'XX week Susan rollout initiatives more half of the completing rigor Ledger. is the go-to-market our the kickoff. The at prescriptive FY We with this field -- back of strategy, President, these simplifying driven teams St. a by and which process implementing consists approach back initiative in our

On shifting best-in-class and sales lifecycle security the traction stand-alone infrastructure is management. management products first customers. to front, and with are we our lifecycle early messaging That teams from finding potential

will like efforts, extended manage of to discuss QX. fourth customer to one our onetime renewals. access developer efficiency software and On Vault, you company used include emphasizing the and I'd initially our quarter conjunction to offerings, to Susan for solution security a cloud give evidence a sales example of the front, to early product discipline, second in concentrating on speed, with execution in a Vault To from field, technical saw issue field that improved while these some field additional a Boundary with to of simplification improved single and infrastructure. results homegrown credentials in resources. sales drive second our in process investments continue We also positive an This

facing replace After customer access self-service to homegrown their quickly challenges their this in cloud a infrastructure privileged realized solution. management team their enabling they access manner, R&D needed to

expect like us lifecycle existing simplified Given multiproduct able value. This with grow over adding management these X,XXX. started more just reducing running on provide We boundary of strongly teams our engineers 'XX. would the win show now help deals comprehensive and customer's to FY believe deployment were to Vault, customer time Boundary messaging in will to field that XXX security to the

The greater our between second offerings. initiative free and separation differentiation, commercial community is commercial about

value to issue ecosystem products, the need drive on customers. our While has clearly commercial community more for our standardized we

towards efforts capabilities over offerings. been enterprise years our have commercial oriented X increasingly past the in development product Our

will and turning have dial commercial towards further impact win believe a differentiation, We we which the are renewals. rates positive on on

We estates. through to will our in multiple exclusively commercial and with major environments. now HashiCorp in with is commercial will made which our functionality major manage commercial available gave this One year, later to is infrastructure Cloud significant differentiation, estates customers drive span our that stacks. large a the new be of This of will to This complex preview private feature beta Terraform example year. last differentiation Terraform bring for customers stacks Terraform and especially customers ability

provisioning the pricing more During A the for their cloud Cloud rollout aligned because They closely with a our upcoming larger paying products features, pricing model of Terraform customer fourth pharmaceutical QX, stacks of time our became code as built the which Terraform no well addition company for opted run provisioning with including as of in Cloud-specific and global on customers. land update budgeting deals differentiated process. first replace on homegrown commercial the demonstrates our process our one quarter, community infrastructure power Terraform Cloud. to their

software stay a customers. But to release they customers or capabilities, to in for commercial customers deploy preference the enterprise a customers long-term for and time upgrades a production version a has fixes, security strong critical hardened for to releases to with we enabled on Earlier have with differentiation addition focusing support, version supported. LTS, upgrade to our supported expectations X lifecycle promise to regular major changes. today, patches introduced announcement, through remain of elevated years The the minimize new we LTS LTS do paths. that to backport know on needed at up to Prior

to manage for releases and land significant versions strengthen significant available to be to another operational customers current. new The driver Nomad. LTS provides additions users will Vault, and risk opportunities to we will with who want renewals. stay perform will efficiency, value contrast, to access latest In updates the upcoming community of This be of updates in their frequent believe will Consul have the and the have and critical version and

While we offer innovative technology continue customers. is outside paying value to the focus providing community, to on to our

commercial versions, we driving approach a clear now prior are Our and the differentiation. lifecycle provided same and community for

is lifecycle that infrastructure management the initiative our enterprise-ready platform HashiCorp note, to Cloud On third management. security major lifecycle and deliver across

expedite for this seeing delivery. are We and our to are interest strong taking steps customer

Product new at Chief Weingartner, is drive innovation to development Officer, teams focused quickly moving pace. Our to and on faster cloud cloud a enterprise delivery our product is organize Michael

shift resources cloud an reallocated already to have offerings. this central to our with is lead it We as overall initiative company-wide to

As are last cloud, enterprise Cloud land in with QX. defaulting mentioned we to Terraform quarter, we beginning

are self-managed than shift, part field of teams cloud As towards the incentives rather weighted software. our for

lifecycle We management on lifecycle to our HCP across infrastructure enables cloud enterprise and will customers first them with security HCP. Landing with land realize prioritize value faster.

to we ability more experiences, our land drive motion As extend from products it our core and enhances deliver cross-product well. as

in As will drive enables new product Combined, cloud improved our new innovations, long self-managed planned use capabilities R&D to the over continue software, those net contrast deliver having teams which the retention to assets immediately customers rates term. these on upgrades. customers to platform requires

their of both Vault this works on initial a in with subsidiaries travel customer difficult of they This resource made doubling practice, at how deal. Cloud dealing applications significant here's that the show constraints needed. an as experienced bare in Terraform fast size QX, metal and expanded it To land agency example had deploy cloud also They as of were to maturity. levels different that operating

enables products. keep and result, faster, products on Terraform expand managed not deploy just business infrastructure a are complexity. but year Cloud to focus much simplify heavily goals and their differentiation commercial As to with our competitive only summarize, could improving of on shift Cloud new customer HashiCorp pace Terraform cloud portability standardize go-to-market, because To that Terraform this our them for its positioning. applications cloud this their our They costs, the also realized lower for to our our operating

to Now details through be then our happy forward-looking to full QX guidance questions. Navam? we take of I'll and to the it over any and turn performance, walk Navam will year

Navam Welihinda

joining the thanks which that put our for have a and Thank and on quarter. us XX% want full helped they year-over-year, and focus positive continued fiscal team Dave, our comments, to positive by flow us free you, to revenue all year-over-year grew cash for We today. Dave's close also XX% everyone revenue fourth thank by in, ended with Echoing effort note. another quarter year 'XX I our

a More and of importantly, lot team in put work up HashiCorp to last set future success our momentum. with year

well continues customers. pockets for from a than QX fiscal perspective, of in 'XX. to optimization fiscal mentioned As the XXXX there the his appears be to outlook Dave But be macro in environment better among remarks, as as

our the our improved mentioned, solid We out our as combination as simplification, more renewal working GTM As rates woods, in enterprise-ready due initiatives to in headwinds position achieve as entitlements, puts consumption compared to and sales-driven conversion how in are through QX market product us and compared differentiation to operational as commercial the a we of increased offering of activity X QX. bookings 'XX. while to fiscal optimization completely well improved Dave well cloud also in historical believe abating HCP are customers of also on customer QX not QX pipeline improved the

accelerating and our growth Given revenue as momentum entitlement we a before, discussed there between have lag model and rates. is bookings

a year, Our expectation rates with see being revenue revenue growth growth rates, the QX by better in trough this this growth and in is revenue to our U-shaped QX rates QX year. progressively of followed our recovery in

expect follow being recovery rates, growth We growth cRPO year-over-year rates by ending followed by the lowest approximately cRPO pattern, with end point cRPO and the of in the of 'XX. in XX% QX, cRPO growth improved growth to fiscal trough

path the growth in we Dave As also cRPO revenue during momentum quarterly reach to XXXX. put mentioned, to a expect fiscal us XX% on

Let's guidance to fiscal our move on notes. 'XX

loss and For million. range expect non-GAAP million total of $XXX $XX $XX of the million operating a the fiscal currently million 'XX, quarter and $XXX range revenue we the first to of in in

flush QX These business QX to is create upfront revenue seasonal between and highest multiyear QX. where larger a we large contracts quarter reminder, our see multiyear compared QX. of As budget contracts. bookings showed a the a in strong patterns number component QX

into guidance Our regular pattern. seasonality take this account QX

currently operating total we $XXX of million and range in the 'XX For the 'XX, loss million. and in range full expect $XXX of million, and $XX non-GAAP year the revenue fiscal million fiscal $XX expect

rates prior half growth my the year in be back year remarks, As rate. revenue growth the to of mentioned are in the the expected full higher than quarterly

also expect in remain strong range. low We currently our the to year, mid-XX% to gross throughout the margins

achieve We growth. with expenses posture investment we've this the expect growing continue to in will QX non-GAAP year. slower by XXXX, of than operating We demonstrated breakeven income currently revenue measured fiscal

On flow-generating know, in quarters QX a you final strong note, we posted and as QX X in cash 'XX. fiscal

results QX flow other year, free QX, in during seasonal has fiscal expect collection seasonality to We than which the bookings. related cash positive

other cash generate in quarters. to all expect We

potential in flow their a they operating HashiCorp of us Positive a mature that lot the growth ahead a cloud of runway of still enterprises excess as expected cash and We cash combined relative position a any generation to believe ahead having of free us cash puts largest cash with our there global has balance and efforts. is M&A strong needs midterm for lot needs.

allocation excess use In our to the believe is capital best responsible via repurchase shareholders return of addition, share always it program. capital our to we're our and in

authorized be in earnings today, $XXX a program This continuing as XXXX. So the executed is of of repurchase our authorized outlined program be in Board to commencing has expected million release the fiscal the program to share repurchases. first

guidance encourage the full can under be through count you earnings in our reconciliations. available non-GAAP to I ir.hashicorp.com Our numbers GAAP full share on for our website and Results. dot disclosures Financials, metric Quarterly read presentation disclosures, to found

Alex? Thanks I for your attention. are take your Dave, any Armon questions. and to available of

Alexander Kurtz

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

Operator

[Operator TD will Cowen. of Instructions] Derrick today Wood Our be question first from coming

James Wood

reception to sense cloud. think that higher trying start Can has a give if early to push just you we to an just the whether too of get as really to cloud the mix touch embracement Just it's and big in been? year? greater to update at of level, Wanted you Great. start on the through what hold drive a expect us to the kind to enterprises drive cloud to as could the take or GXK maybe some move

Armon Dadgar

Yes. Derrick, the for much thanks so question.

cloud sort talked I and by it predominantly, of before, product think as that I both on driven appetite sold before calls was readiness. and segment that customer the about think think our So well we've I platform corporate as we historically, through

pretty we the platform We're I those shift significantly, last over this off pretty is in year, seeing changed want just for made both right feel right? there. matured kick we've now significantly adopt The of like large of fact, has think Cloud. the the us have to customers investments big that and Terraform year, sales course given

a land to to cloud shifting that's compensation sales self-managed. actually Terraform. over we're a posture that, segment we've for And so for our cloud And with default enterprise changed incentivize a first

as a good things willingness readiness. feeling both we're sort as of the mature, from yes, customer very that well of those So are both product

James Wood

I If follow-up. great. a could, Armon, just That's

-- question Just Boundary, a with security competitive between and Vault had side. on Microsoft competitive the the entered got Entra. you've has on market landscape the and got different Definitely, dynamics you've

-- feeling you about Just generally are competitively rates? how Microsoft you curious how guys win see whether

Armon Dadgar

is Yes. I close we're Alliance joined mean We say actually with Microsoft a the what well I'd Security partner recently. as Microsoft. pretty

pretty between a HCP competitive see We our offering. with well. closely integration products around and as don't we deep as partner the them platform So Entra Entra and

play So certainly it than feel partner much more our one. positioning. a of We is about competitive a good

of those. I think we we organic in haven't we we're like seen lifecycle a security any changes really story product in the Boundary, complete fact, management. with more complete competitive dynamics sort well And acquisition, is much feel as Vault build, offering around which around more through tell Radar an a building around can as our

Operator

be will Our next question Stanley. Singh of from coming Sanjit Morgan

Sanjit Singh

did on in QX of execution? kind of saw the see Or you what growth in environment a through the to stronger on that point that versus performance. better Dave, was come you Congrats function spend bookings the accelerated earlier on year? improved QX. just stay And bookings a

David McJannet

thanks. Sanjit,

-- I for talking think that to I optimization the quite think time. all I cycle think tied especially it's been some we about some

been better I doing on of QX rates. doing. of relative St. is had that better we Susan what certainly and the to think also Ledger than that has that translated previously, part process execution pipeline we're felt in work conversion drive it the to into Part

doing, them, motion. it's helping we to has speak think for and And enjoyed working and we're would the is that certainly I Susan with both pleased team of work So say of that particularly our really with go-to-market actually say the I those, honest. I be combination the been

Sanjit Singh

laid how you outline in out on plan to XX% And very fiscal year a reassert 'XX. specific growth and revenue Awesome.

sort quarters side On and year? go give of that the kickoff of of does And sort this into magnitude and like? you this for the of go-to-market now, sense a been the have as what of can about talking being sales are equation, you us that implemented you sales look guys a process of couple changes

David McJannet

our Yes. And One second around maybe approach. couple prescription I'll of our overall in motions. one a around the put is categories. coverage of it is

On and organizations that's is. the, largest focus it, topic, in call where we the we serve our world, the who are prioritized and first X,XXX that's the

cover our we be of top I as would perhaps so of those I think to believe reallocated And where to yield revenue fair specifically certainly we've resources and say the more improve And those investment were they from. preciously, dispersed will expect teams concentration X,XXX. to to come more we that

way. tell simple Point simplification narrative the is a and the consistent in go-to-market number two that very very, we of

We have large product portfolio. a

in challenge lifecycle. you've field a prosecuting lifecycle aspects large that reps there's really all certainly seen of service,,- and the And And core around tell in organization be security the we to constructs scaled, prestructured exercise and on the to the to through enabling anchor us really phase. we've As X able onboarding stories is so that our

it's discipline is in really lifecycle. that's stage the for the second this And and those So through coverage normal just X the process. It's company one. things. really One candidly, of a

Operator

be And from Altmann the Scotiabank. will next coming Nick question of

Nicholas Altmann

of overall I But the end think or circle just talk wanted and you as be when sort then the how changes of the around just tweaks sort the improving? the go-to-market meaningful will about be And maybe simplification go-to-market. market to overall back will do complete? you here macro a question last versus go-to-market follow-up, just can on

David McJannet

completeness the kick we're so off in out, it Obviously, sales I team. through about think the those of with things. tweaks, of that. and tons as Nick, what materially doing we're terms right there's The it's here where both turns our that. always go-to-market now, thanks Yes, of our excitement -- for of

in setting work and ourselves that this. terms year of of in up lot of QX was done a for think last QX I

is moment of kickoff the execution, comes sort that, sales set. the improvement from from then been in here, of overall, terms obviously, it's groundwork the about Our has where ultimately and obviously. but final And both,

spend, around good the of certainly the still I signs there's abating into a we'll generating think from in optimization we're in as their for while of focus all world overall big yields in half. year the the of pipeline last half we optimistic we're be the second a that position largest And quarter saw second the that year. of now fourth the OpEx customers software

Nicholas Altmann

guidance maybe little and Great. And the a more talked the excluding large changes guys then being around speaking, bit conservative deal about to Navam, have any you historically I from philosophy? those maybe know activity guidance.

just So philosophy? XXXX guidance any to updates the

Navam Welihinda

to similar into in factored deal guidance factored in from saw have Relatively of That's prepared growth philosophy on we the we're that curve with the terms to the acceleration, large recovery we've cycle sales the to And second will the the we rate, and which that leads about it, the talked remarks, it back as the perspective XX% exclusion. us as our QX and half QX guide. relates for. gets generation of pipeline what which an which optimization effects and and mentioned, we've Dave aiming in what shape also quarter that, associated of in

Operator

from will Our coming Ittai Oppenheimer. next be question of Kidron

Ittai Kidron

more you're than of differentiation reflection cloud, than changes talking that rather these year. listened fiscal making XX about? more your really much the wondering abating to competitors improving, you're of 'XX just and optimization guide how on go-to-market put I'm 'XX? your to all pipeline the a improvement fiscal months better the and to the driver I are finger these core commercial a clearly for if following conversion pillars 'XX the rates of around fiscal and trying and a really improving is I'm next commentary X of Navam, when versus that environment rather

Armon Dadgar

been question. we've way Ittai, this some for, of I about progress good right? in I the some this Yes, about, The years, as for is in Dave that them about of these work for we've started mentioning, mean, sense, SCO obviously, some I with is think would that a we think So started think we QX, and initiatives things of that's talked sort just When quarters, And joining foundational are, it was was a we of talked them that is [ upon Armon. have a when a X simplification, commercial QX, go-to-market us. little dial finalized. turning while. and lot about work on differentiation, as talk that Susan a been ] the for that out rolling about of lot getting

things year. feel I last think place license continuing out turn we the other with further ability to the in we're to BSL that changes put and late

And to introduction mentioned dial capability. the shift so sort like today that obviously stacks new changes change things of And major with a as backdoor new that investments, well, around policy. and Terraform to we're with continuing LTS Dave of net the then policy our

changes we're that good building last made. that So motion again, things for top then continuing a focus about year. again, around Cloud. already were cloud, with And some year. of feeling these big That's on momentum to And was this enterprise-ready of enterprise why us default Terraform invest then heavily in the changing

from starting So of these, We're not a lot necessarily put behind building are cold start momentum. to been continuing sort arrow. on the wood of we've these initiatives. again, A these

going and I part clearly a 'XX. So that's year what's to into then going drive this of think fiscal big

Ittai Kidron

year. additions, the provide, your growth. expansion with through When additions, net of I the pattern And the some $XXX,XXX Okay. of to important at then customer HCP and customer recovery that revenue rate look you dollar U-shape even regards KPIs

the expansion continued accelerate, total accelerate of U-shape those additions to we meaning to comment the been the not fourth second metrics, expect to $XXX,XXX have customer All to accelerate? dollar also the to cloud Would show in quarter, those HCP to impressive half, accelerate, revenue deceleration. apply in should additions

Navam Welihinda

Yes. Thanks, Ittai.

with obviously that to right? is the a in recovery sales bookings baked perspective, what's rates QX, is bookings, results And a $XXX,XXX in. renewals will customers. performance metrics follow a recovery we associated in we've from what the which and revenue think from That's what saw given look and all growth what we expected commented in bookings strong on was saw like I the perspective

customer point or to -- total I the count and see customers, A you a that impact the -- are which count. count delta customer sorry, very to amount revenue. self-managed of make material small have the want customer total are of customers don't customer pay-as-you-go fair a or QX lot total a to on QX

our variations $XXX,XXX quarter-over-quarter. there's the we be of ended $XXX,XXX overall, quarter-over-quarter those top aren't for year. count, So customer customer counts revenue. The variability at But sales-driven where to the on we'd again, count in customer we've material -- we're QX. count, customer on thought really the the end And on we up pretty strong

questions yes, into as the to underlying and So shape of out your path on recovery XX% how to well. the plays KPIs the the

Operator

Our next question comes Wolfe from of Alex Research. Zukin

Aleksandr Zukin

$XXX,XXX maybe adds customer it for bookings on call kind accelerating So I quarter, look but me. like headquarter adds. it just question first the a net weaker the of felt the If about you Ittai's $XXX,XXX in new one customer had

that? you've was driven about seen? So then what deals or bookings deals Or that by outperformance kind think some to large drove that? on the there of the of some deals -- X-figure largest how very And that

David McJannet

those Alex, to Dave. it graduate next number Navam To of smaller saw and out below over the just of the we year one. adds. up as that fully very, we amount end this $XXX,XXX expect for the move is adds, guidance progresses. ended on answer going a actually Quarter-over-quarter, but than customers the $XXX,XXX what reiterate our $XXX,XXX, slightly that of good to year in actually pointed high the landing is around is threshold, and terms quarter-to-quarter, quarter customer we I'd at be customer very clear, $XXX,XXX Sure, customer I can

the So actually, I think feel good pretty number. customer $XXX,XXX about we

large your there question the were for of that on quarter. No, To unusual was the significant deal no note large contract. fourth deals

year, a as customer We of made QX anticipated. just a approach. in had some pricing customers. able of free the year, the a end more comment couple of pay-as-you-go thousand change underscore year to our was super, our we overall paying good of on once the tier Those it, it be Navam's of last clear. call be super maybe which, dollars QX Also use a to think I general count customers

vast version count those change paying just And fully free time product. customers of majority credit the well. they expect of customers, the we become a to customers graduate from card so vast, customer the as that pay-as-you-go will of older matriculation into over back comes And

So I it. good we because customer don't of actually terms pretty want count the in your to misread feel overall commentary about

Aleksandr Zukin

maybe a pipeline you in second visibility guiding And for because just that fiscal QX out guiding you're question. bookings to, level laid double you this the What XX% from of you're based to QX of do on fiscal have effectively of kind Okay. trajectory the guiding 'XX you're to, growth Understood. of by 'XX. U-shape reaching

have? So quite like is revenue to the ramp have already growth improving what the it X there that really stabilizing, are over of a takes? opportunity of still because that of And years. that's course is Is versus of much the you something that and you -- like get kind how go macro next leveraging some the puts

Navam Welihinda

Yes.

this the -- Navam, question. me for is Let and thanks

sure me things. that a Let I of make couple clarify

view, that recovery, in QX operations, the reaches of XXXX are is growth progressive of right? X just because right? in back on the into the the also which fiscal shape rate rate improvement until to end XX% what the higher to dip activity fiscal informs not meant the we then it first is is year full that basically all, tailwinds mentioned, is will just what the of year's And period, U-shape And follows the be than there the XX%, 'XX growth total the clear. growth shallow imply year. to that Dave initiatives combined So look are with you full into the which And should take a consideration recovery, our rates be as

the of great out is and So signs that a growth year. feel what of work optimization terms outlined. the woods. that like we not and lot in starting of of activity. positive That's abating. initiatives are operations, doing in to X the positive we're We're with the cycle have fourth we our in is going the quarter, that's was to of we are back There rates to result And momentum the half going a positive signaling quarter impacts

Operator

from will question coming Murphy next our of Mark And JPMorgan. be

Mark Murphy

wondering clarify, for see should to mid- you revenue just Navam, out? that's And say phase? cRPO forward out you have we what teens? For the should the instance, quick trough that you QX then for also I commented case cRPO high to at roughly be of And follow-up. that growth. Did at that are Or bottoming those a slightly just growth project growth? then levels

Navam Welihinda

Thanks, Yes. Mark.

rate growth related have growth back perspective half recovery versus booking yes, a cRPO to cRPO rate of similar So the from front the shapes. seasonality the rate and recovery There's half. revenue growth seasonality because

a little should exit cRPO of we mentioned XX%-plus think is from the is. -- cRPO, bit which revenue XX%, XXXX rate We growth on play of a velocity So basis think the in has be. rates approximately the what sorry, a about quarterly perspective on you into which to is QX, the leading that growth what basically how indicator will

So that's how we're shape year. thinking about into going this the cRPO

Mark Murphy

Okay.

will guesswork would guess, our us our And fair? for where out own I QX. kind that the bottom so of own, trough on you leave of you to that Is

Navam Welihinda

U-shape to the expect second trough as Yes, quarter and I and mentioned, see, is relatively we the recovery. I the shallow think trough,

Mark Murphy

topic into landscape follow-up, for Google. as of with I'm the value wondering be maybe Okay. number in that OpenAI maps the might on insertion more signify point? at might adoption your Azure of where or a be customers road by extension to Anything experimentation do or of Armon the stand Dave, and multi-cloud then a amplifying proposition? that any would multi-cloud And if HashiCorp LLMs more dedication customer more the this causing and

Armon Dadgar

thanks yes, the Mark, question. for

of maybe what the call I'll you behavior predominantly secondary in outlined see, when I the or exactly for strategy cloud at is it, single looked clouds starting which a made is primary type lot had them. we're tertiary customers a of a, of sort sort question type to sense other even it think of potentially of of sort and

much around into looking technology. is tertiary a I think your they're think more do bunch forward of road I what's from leveraging AI secondary a cloud map to a at pulling changed, cloud treating And this primary point, of that's how go we really gen environment. best-of-breed

So best-of-breed of to those we have capabilities. access sort

at who at leveraging Google customers well. customers maybe are particular, primarily are Azure, maybe as primarily looking in Azure, and who Google looking AWS, So leveraging

for think in that at helpful true I multi-cloud bunch of And a driving in it's looking obviously, of in do we terms how So pull of sort of this environment. operating model. forward it's us, a have a of sort more as tools interest is customers cloud-agnostic creating terms the

Operator

from next Fish Sandler. question Jim coming will Our Piper of be

James Fish

budgets to when pipeline pipeline protection. security available order strength you or seeing toe Maybe it Any relaying given in be budgets as in we're Boards on on XXX-pound Is And focus for the security for space? seeing go large the first, that approval of expect as to essentially and Windows Armon, strong Dave is give you. overall to us? the do that that remote you're identity is sort to the reason and and toe security side, functionalities gorilla with in benefit the a why

Armon Dadgar

question. the for thanks yes, Jim,

are that's better budgets life security the helpful going case is is a in even of we more space. thing most in than around the probably Dave cyber stand-alone Boundary think up cycle. And really as think think filling sort was a with seeing mind I other to just I Radar mentioned, compelling I portfolio on the we're from that sort security security the lifecycle, other it of how portfolio organizations. held year, of us maybe that more offering of as sort been And a and to top position sort given and of last allowing robustness for of full relative true is pipeline

this more second the going think and to that's realistically, back Boundary. to half that's to out for make flesh within around big Windows year to us the be As weighted focus sure We RDP, mature. it's a fully question capability

James Fish

this Makes recovery here sense. just usage? Can growth seeing the just between balance the guide. thinking of the RPO it seeing and Navam, new shorter with base are business your Is the help about continued long-term just or And frame you're existing how on quarter? deals the you in you're lower for us duration rate? you expansion you on And difference versus cRPO

Navam Welihinda

our the quarter. in point don't been in at of a meaningful this bunch the change terms average I contracts weighted there's duration Yes. fourth think of

saw of year, absolute seeing We are declines land we the value as the And over land land deals. smaller mentioned, in to in land an last combined the more year-over-year we leading sizes. elongation with cycle

customers, So more size. but with landing contracts smaller a more at

expand over time. those and extend So

XXXX guide are So But the big both. land expand/extend is basically versus we in improvements a predicated on change a perspective. from expecting revenue

Operator

of Our William question be Jason Blair. will next Ader from coming

Jason Ader

on? for made on XX us their on And actually Are under or true there pretty if any the seeing remind they Anything ask on want then can can the as expand if someone penalty just time entitlements cautious last on I would -- overconsumes just somebody you commit renewals of work underconsumed still being just months comments some because kind you renewals. to how relative so? customers then incentive things they you over Is that. details there? and I the know to a goes what's up to a additional entitlements? that renewal on

David McJannet

for Thanks the question. Dave. it's Jason,

yes, point. mean several first keep their and optimization we're it's to entitlements now this to had the rightsized got in one, a that On already on the that renewals. of some quarters mind good I in anniversary is cycle people starting you've

little renewal time the view, plays degree, cycle a down I think abating. that one consumed that's to is the that point out but their So certainly, probably entitlements, a optimization of of that NDE in of this bit signs there's of haven't showing yes, aspects is our people and pure to of which over go extent ways still. to And

and starts lapping we're where it's now I think but look more our to previous favorable. better certainly implicit in period it that's much guidance,

an immediate we In the true they generally not on second is was -- to up terms the people incentive expand. your at for of the contract. done question, moment That don't there of renewal

to mind that just work got enterprise in with the of behavior. the organizations keep is typical we You is buying scale the

given we until Again, that nature not the consumption unlike of expansion things. do see models, contract entitlement of the necessarily you So the that renewal sell entitlement.

And the starts market so there is just this recover. natural as to lag

Armon Dadgar

that thing, your a by would sort they would dollar be would on in there will threshold add the to incentive what's higher BDP the amount. right? the the is under It's discounts for a So lower Maybe customers one committing lower, question to pricing get sense. I of committing their that realize committing Jason, better --

So that's incentive. the

Jason Ader

So let's customers sort to be renewal, element a as there's cautious a is more kind I'm bump renewals, of going this, come to saying? were we be possibility in that going there to because say, on see true-up you be a FY -- going because 'XX, on prior out of of do of there's there's all the their what

David McJannet

people on this point, Yes, period I been we far have out. we've some been I seen -- don't obviously, in rates that view we've NDE think revert. do of renewals And a without will point as expanding substantially. the is that think implicit in of and sort it real happening at the a previously

Operator

next our will Rangan from question Sachs. Kash be of And coming Goldman

Kasthuri Rangan

strength is upon And go-to-market doing bent the as we've versus the is what exactly the always the curious the time, for little been it in if quickly. to past? be company. key bunch to Can important spend being Susan be measures going how the product out a adopting, think the is a the read to same that what asset you very approaches through -- Dave, to time, this? appreciated Susan substantive, you of organization. came you I'm at remedy And to are the of that bit the went mind, is of go-to-market? meant going to don't expand also across It's I very It new product HashiCorp. they Because things

are shape they motivated incrementally recovery. this to market so to can addressed? the go trying they we the Just by And of really what understand to what tweaks are really all understand

David McJannet

a bit. Happy that sure. on double-click to Kash, little

really, we first refocusing resources go-to-market X reiterate, introduced on that was to number the last substantive months our of over Just smaller a accounts. slightly a change the of

we now been we IPO. a very that's places fact as we've obviously we point I out of in And a that environment resources relatively through in market perhaps remedy think gone allocated number coming phase had aggressive the have to quickly. one. lot the our had of Obviously, changed, where investment

accounts focus on the those back to hold appropriate certainly we do. is resources most important and thing the and that it's dividends, now So paying to

base, Point of sort I think number just two, contextualizing you arc the to of particular more majority, worth to have customer prescriptive as Again, from how to pattern much of in kind which them evolve the to of early where the early with get any growth actually majority. manner. the you it's the company, that's early world a is adopters consistent engage this of this arc, the

now of engage process which talk more their we we again, is And terms of for of two, much of motions scaling go with organization. to is, it's much the in nature, just go-to-market both then number around how the the in are more Our lifecycle. prescriptive more a this solution-oriented side them, which customers rigor, about conversation nature our

as of say It's one which first the in we think really more as much have extended wouldn't resources, reallocation are -- growth point. gone I this So massively just I about slightly grew. get consistency more that help And to process-oriented changes substantive. we is don't scale hit particular inflection

Kasthuri Rangan

a subscription growth I it. When at one we've mean And Got rate. subscription you in if double-click on seen I to highest if effects because some the growth the sequential was get that QX follow-up could in sequential annualize for you're several look maybe just guiding sequential you better there's I'm wondering revenue quarters. I that in what rate, Navam. growth to, revenue. onetime it total

just good look driving perspective. like some the Can help a little of us I looks if the seen that $XX sluggish QX? side. roughly the the also It in I we've wanted highest look could bit current customer several to might see count leading on is these indicators quarters. attention, so. in don't, Again, more my But you offer what change sequential and some or like understand caught certainly, at you RPO, be million

Navam Welihinda

a revenue absolutely. quarter from the of Yes. I performance numbers saw a a which saw relates $XXX,XXX broad and saw. perspective a up the to perspective, cRPO from some pockets to related that And it Thanks, mean QX perspective. you was Kash. as we great and optimization, But customer numbers we

quarters in Now year to business the and example. back quarter, keep in fourth the QX, that to mind of for larger the specifically compared where it's is the in seasonality particularly in important are there the half fourth these quarter, in

our sometime is QX which But positive rate our and the we which period. XX% to back part, sort most about there how remarks for reflected recovery of also So growth versus path was in a were a the in revenue aspect quarterly for basis and prepared we saw thinking signs, XXXX growth seasonal to we QX. the the

signs So early seeing. we're yes, we're optimistic about the

Operator

And question coming Brad America. Sills be our will of Bank from of next

Bradley Sills

ask to around on emphasis wanted the a security. I question

sight In provisioning you kind customers beyond Terraform case go-to-market our of of differentiation. couple a separate out landing security that? as Are line with unfolds the use Terraform? opportunity How on on focus commercial it both of times a or other do from here, should with there? and for see the core identifying of potentially kind a expansion and as words, called also -- read You we you that customers, then

Armon Dadgar

the for thanks question. Brad,

been we the management talked with lifecycle of there's broader and security lifecycle starts think very the make the products, about lot, up a we've business. have story infrastructure within that. Vault of as right? landing When about think majority the much which point a obviously, you our Terraform, They As talk portfolio sort about of land held, historically as that those around a the provisioning, of we sort have about we beachhead second always revenue. So product, land sort when we've it's the key core really land X

around seeing Dave talked that that a evolution really point story story from into an product telling what think I solution sort you're about. simplifying is of those

So and but the Boundary inventory just for that secret while beachhead, a not secret brings as in human things the a problem we're that brings able field the for solving go security management product like then about access We're really our in isn't we're scanning, to detection management radar well privileged solving and talk lifecycle. for access. our

is land So broader solution, it's moving a not product a been story Vault from sort telling it's that significant shift. always has us into and a revenue a about point but product really for dramatic of contributor.

Bradley Sills

up love into focus, improvement. of Understood. identified more that the pipeline. technical you're about areas is here. pipeline the And play more some ask the details how that bit Velocity also in if speed process could kind putting you're efficiencies I you've detail a some some the Dave, improve just you to a for for of process that on of in discipline? Would resources of back thinking mentioned to to tactical get on things then

David McJannet

bring just sales our this through here is this scale. think We're we as our I sales at back I'll organization. improve operational it I Brad, us for growing just guess -- to opportunities kick the off to again, reiterating

And in the it's I the normal nature. are, of how the things feel geo it's we higher win nature a and do day-to-day in is and so their just same that just, And and operational so rates. world, it. about are that just consistently element. process across certainly is And I process good this again, we're about do way, consistency litany things operational yield this think we in every really faster the There's whole of where

do we're couple quarters, to doing. it million the what have been to a that so, has to companies us fact for bullish think been we're I work part super going Susan I a now remind of certainly St. Ledger in she $X scale has about from billion-plus, different the place the $XXX the that's that of takes of and couple and

Operator

BTIG. Our of Trevor be from Rambo next will coming question

Trevor Rambo

on Powell. is Gray for This Trevor

on think So goes back to how free into when want on to that officially it provide then any statistics GA, just or product? year and And going the accelerating that we next? should about Can pay you insights Terraform I circle like this stacks.

Armon Dadgar

introduced. prior It's how multiple around ability so the snacks to same is, Terraform's Trevor. at build of can it customers to multiple almost effectively, added So it infrastructure would we've process to we does enhance to layers multiple the the stacks, and Thanks, environments. sort stack And think it the I manually Great. what of right? was Yes, have environments the time, about manage is the way to handle Terraform call effectively, X.X. since Terraform Terraform enhancement biggest

testing, staging For and example, development production.

we manual a manual native environments. with orchestration have understanding native was across there to multiple and now stack, a versus and So ability a process that, around orchestrate those

For very customers about. they've customer those most of to talked have all infrastructure. our is They impactful complex this very base, particular large, biggest X,XXX kind

we set resonance think using private capability And is in in to so for compelling this going this that's seeing folks great And with already. already, fact, them. the be we're a beta

to is customers to with. the we've decision to bring the So really that Cloud commercial Terraform begin only through made

question And on be it available to pure-play part free-to-paid community your your effectively, addition. conversions, the so in won't second of

adding the free leverage to obviously, substantial be very to have that on one tiers limited products scale of tier we on by Cloud. scale our to usage some will have usage the where Terraform commercial commercial have of You end, bottom a stacks, you So at start right? allows

Operator

Citi. Our next of question will be Fatima coming Boolani from

Fatima Boolani

going into follow-up, the broader emphasized zone your existing environment form extension how sales understanding get enterprise to Terraform is much footprint solutions? And the of portfolio wanted really the I I have much enterprise around into expansion to overall customer of more approach And of cloud-first and conversion and cloud please. how Hashi to wanted motion better be and an focused self-managed then this of of in a of this factors? base. I on that will large will emphasize involve into very a a the

Armon Dadgar

it's a Yes, Fatima. question. great Thanks, Yes.

place So on is to effectively, the land sales Cloud. comp emphasize took that really change deals Terraform

on Now to move as Cloud. interest well. customer's the It's It's interest. a in renewal we're basis that also engaged obviously, said, to Terraform customers in them our obviously with

quickly. not think do They're upgrades. have They realize don't I operationally. to hook they features much the more on

benefits But deliver for usage, lower and to quickly. cloud. get the So them innovation of self-managed lot similarly moving customer from to of there's to from cost more to ability a support us, into we better visibility the

chassis. on people the an sort view because already integrated strong the as well. are platform along ones simplifies expansion are really And incentivizing part ability land, product the incentives there's the they're So of cloud process drive obviously, next as on to side our around our changes then of that

Fatima Boolani

just the of one approach on the go-to-market front. more And to relates that. the appreciate it bundles I as storytelling and

the bundle And penetration create that build you since Trust introduce love did extension deals in maybe the and bundles year, there that So date much especially could extent land gotten on the Zero on get you incentivizing last to expansion to are velocity cloud. that enhance transaction the vis-a-vis and I'd other logical you're an to how momentum, that's base. traction

that shortening point? and taker solution other cycle sales So expansion we like into boundary or areas

David McJannet

the Yes, it's Thanks for question. Yes. Dave.

lifecycle. So We X the lifecycle, previously gives which been factor, effectively replaced form on I think Trust the this is multiple which the is simple had products way to describe by SKU access essentially Zero one it you security has we bundle, -- we security conversations have. is have infrastructure to within portfolio. the lifecycle One security

introducing then and management. some the have we that yes, lifecycle infrastructure security institutionalize as degree that motion So success recognized selling management, actually to for default a of lifecycle and also that

to have and teams our that, better bring to really optimistic field we're bear, simplify structure certainly So drive trying will yield. the that of we're to what simplicity

Operator

[Operator Instructions] Dezort be And our Needham. will of question coming from Matt next

Matt Dezort

This and the change XX a revenue fully months managed? still I move on as is generating Alex. fiscal Terraform into composition share on over for that to chassis. of to Vault Is double-click stream is so far that expected to Matt customers Or wanted the lion's 'XX? making cloud And HCP next move? how the is

Armon Dadgar

Thanks, Matt. Yes.

contributors So and actually, the HCP line. cloud both are to Terraform today, significant revenue

shift time increased year this looking that more cloud slight evaluating Terraform around where the there's we a would I we're some at providing for given on I a a make year thing incentive But making of and like there'll the bit little sense landing we differences given back less slightly we versus Terraform then customer differential appetite expect think sales the half of critical towards customer basically look similar is Terraform. this at run think land run time what expect apprehension Vault. be with probably There's whether is nature again, something and Vault.

But bit think little see we'll on term, customers. more of yes, near I to Terraform. So take a a wait-and-see we're going

Operator

next our Stifel. coming question will Brad of be Reback And from

Marc Samuel Bachner

on to your that that 'XX little Want talked provide linearity This is for 'XX? through see Marc could you sustained abatement the, contributed guide and on February, in for and Brad. that's if the of detail the FY and I to confidence you both and quarter how improvement, guess, a about the kind optimization macro how the guys for

Navam Welihinda

Yes.

And the reminder, stronger more playing to towards than mentioned we're means there Just half as front patterns, both quarter. positive the from perspective which optimization earlier, and linearity of that a is is half enterprise back signs expected year subject to from a QX regular perspective. all compared was I the out. macro the cycle a linearities and the how

Operator

And from our of next Ari question will Research. Cleveland be coming Terjanian

Ari Terjanian

cloud, What potential Just any you for this -- of lands real of quick on plan RPO. then in ahead percent comp think pull And HCP Cloud? quarter do is were year? there changes the forward the

Navam Welihinda

the compared Yes. fourth There quarter quarters. the that unusual in was other nothing happened to

So nothing in there. terms of unusual activity

Operator

go And go to over would to call closing for like ahead management time, remarks. the I at Please this back turn ahead. and

David McJannet

look is and to Thank express We thank who the speaking like participation attend. we soon. to questions. everyone appreciate for all just everybody forward my to for I'd And to thanks able the certainly everyone you.

Operator

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

You may disconnect. all

HashiCorp (HCP) 5 Mar 242024 Q4 Earnings call transcript