Sign in

You're signed outSign in or to get full access.

HI

HashiCorp, Inc. (HCP)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 revenue was $165.1M (+15% YoY), GAAP gross margin 82% and non-GAAP gross margin 85%; non-GAAP operating income turned positive ($0.7M) and non-GAAP diluted EPS was $0.08, while GAAP EPS was -$0.13 .
  • Management did not host an earnings call or provide guidance due to the pending IBM acquisition; the merger is expected to close by year-end 2024 subject to regulatory approvals and customary conditions, making deal progress the primary stock catalyst near term .
  • KPIs showed continued customer growth and HashiCorp Cloud Platform (HCP) momentum (customers ≥$100k ARR +10% YoY to 934; HCP subscription revenue $26.5M vs $18.4M YoY), but net dollar retention decelerated to 110% from 124% a year ago .
  • Operating discipline improved: total operating expenses fell to $178.2M from $196.5M YoY, materially narrowing GAAP operating loss (-$43.3M vs -$82.6M YoY) and improving GAAP net loss (-$26.5M vs -$66.3M YoY) .
  • Q1 FY2025 revenue of $160.6M exceeded prior company guidance ($152–$154M), underscoring execution, but consensus estimates for Q2 were unavailable via S&P Global; analysts will likely recalibrate modestly for sustained margin progress and HCP growth (S&P Global consensus unavailable due to mapping) .

What Went Well and What Went Wrong

What Went Well

  • Non-GAAP profitability: Q2 non-GAAP operating income ($0.7M) vs non-GAAP operating loss (-$35.1M) YoY; non-GAAP net income $16.8M vs -$18.8M YoY, driven by improved gross margin and reduced operating expenses .
  • HCP momentum and enterprise mix: Quarterly HCP subscription revenue reached $26.5M (vs $18.4M YoY), and customers ≥$100k ARR increased to 934 (+10% YoY), reflecting traction with larger accounts .
  • Management execution and product cadence: “delivered another solid performance… with revenue growth of 15% YoY, and 10% growth in $100K customers… launched new product capabilities…and continued work towards closing the transaction with IBM,” said CEO Dave McJannet .

What Went Wrong

  • Net dollar retention rate deceleration: Trailing four-quarter NDRR fell to 110% from 124% YoY and 113% in Q1, indicating slower expansion within existing accounts .
  • Operating cash flow dipped for the quarter: GAAP net cash used in operating activities was -$8.6M (non-GAAP free cash flow -$11.2M), a reversal vs +$28.1M in Q1; TTM cash from ops improved to 6% of revenue but quarterly cadence softened .
  • No guidance and no call: With the IBM acquisition pending, the company did not provide financial guidance or host a call in Q2, limiting near-term visibility for investors .

Financial Results

MetricQ2 FY2024Q4 FY2024Q1 FY2025Q2 FY2025
Revenue ($USD Millions)$143.2 $155.8 $160.6 $165.1
GAAP Gross Margin %80% 83% 81% 82%
Non-GAAP Gross Margin %83% 86% 85% 85%
GAAP Operating Income (Loss) ($M)-$82.6 -$48.3 -$67.7 -$43.3
Non-GAAP Operating Income (Loss) ($M)-$35.1 -$6.5 -$4.8 $0.7
GAAP Net Income (Loss) ($M)-$66.3 -$31.6 -$51.1 -$26.5
Non-GAAP Net Income ($M)-$18.8 $10.2 $11.2 $16.8
GAAP EPS ($)-$0.34 -$0.16 -$0.26 -$0.13
Non-GAAP Diluted EPS ($)-$0.10 $0.05 $0.05 $0.08

Segment breakdown (Revenue):

Segment ($USD Millions)Q2 FY2024Q1 FY2025Q2 FY2025
License$16.7 $16.3 $16.5
Support$104.0 $113.6 $116.2
Cloud-hosted services$18.4 $24.6 $26.5
Subscription revenue (sum)$139.1 $154.6 $159.2
Professional services & other$4.2 $6.0 $6.0
Total Revenue$143.2 $160.6 $165.1

Key KPIs:

KPIQ2 FY2024Q1 FY2025Q2 FY2025
Number of customers4,217 4,558 4,709
Customers ≥$100k ARR851 918 934
HCP subscription revenue ($M)$18.4 $24.6 $26.5
GAAP RPO total ($M)$682.5 $748.5 $771.5
GAAP current RPO ($M)$398.9 $454.0 $473.4
Non-GAAP RPO total ($M)$708.0 $770.9 $793.3
Non-GAAP current RPO ($M)$420.3 $473.6 $492.4
Trailing four-quarter NDRR (%)124% 113% 110%
TTM cash from ops as % of revenue-8% 3% 6%
TTM non-GAAP FCF as % of revenue-10% —% (less than 1%) 4%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent (Q2 FY2025)Change
Total RevenueQ1 FY2025$152–$154M Actual: $160.6M Beat vs guidance (above by $6.6–$8.6M)
Total RevenueFY2025$643–$647M Not provided (IBM transaction) Withdrawn/Not provided
Non-GAAP Operating LossFY2025-$46 to -$43M Not provided (IBM transaction) Withdrawn/Not provided
Non-GAAP EPSFY2025$0.05–$0.07 Not provided (IBM transaction) Withdrawn/Not provided

Note: Management did not provide Q2 guidance or host an earnings call in light of the pending IBM acquisition .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2024 + Q1 FY2025)Current Period (Q2 FY2025)Trend
AI/technology initiativesExtended partnership with Google Cloud to advance offerings with Generative AI; multiple product updates across Terraform, Vault, Consul, Nomad Continued product launches and sold-out HashiDays events in London, Munich, Sydney Ongoing cadence; customer engagement increasing
HCP platform momentumHCP subscription revenue $21.3M in Q4; launch of “Infrastructure Cloud” at Nasdaq in April; HCP $24.6M in Q1 HCP $26.5M in Q2; continued expansion of managed services Positive acceleration
Customer scale (≥$100k ARR)897 in Q4; 918 in Q1 934 in Q2 Uptrend with enterprise focus
Net dollar retention (NDRR)115% in Q4; 113% in Q1 110% in Q2 Gradual deceleration
Regulatory/legalIBM acquisition announced Apr 24; shareholder vote in July; no call/guidance thereafter Third-party shareholder litigation PRs continued (e.g., Ademi LLP Aug 30) Deal process ongoing; legal noise around transaction
Financial disciplineQ4 Opex down vs PY; non-GAAP profitability emerged (Q4 non-GAAP EPS $0.05); Q1 non-GAAP EPS $0.05 Non-GAAP EPS $0.08; Opex down YoY Improving margins

Management Commentary

  • “The HashiCorp team delivered another solid performance in Q2 of FY25, with revenue growth of 15% year-over-year, and 10% growth in $100K customers… launched new product capabilities for our customers, and continued work towards closing the transaction with IBM.” — Dave McJannet, CEO .
  • Proposed merger: IBM to acquire HashiCorp for $35 per share in cash (EV ~$6.4B); expected close by end of 2024, subject to regulatory approvals and customary conditions; no call or guidance provided due to the pending transaction .
  • Prior context: “We enter fiscal 2025 with an operating plan to accelerate revenue growth…” — CFO Navam Welihinda (Q4 FY2024) .

Q&A Highlights

  • The company did not host an earnings call this quarter due to the pending IBM transaction; therefore, there was no Q&A session or guidance clarification in Q2 FY2025 .

Estimates Context

  • S&P Global consensus estimates for Q2 FY2025 were unavailable via the tool (missing CIQ mapping for HCP). As a result, we cannot present formal Wall Street consensus comparisons for revenue or EPS this quarter (S&P Global consensus unavailable due to mapping).
  • Alternative benchmark: Versus prior company guidance from Q4, Q1 FY2025 revenue of $160.6M exceeded the $152–$154M guided range, indicating positive execution heading into Q2 .

Key Takeaways for Investors

  • Margin progress and cost control: Non-GAAP gross margin held at 85% and Opex fell YoY, driving non-GAAP operating income into positive territory; improved profitability is a supportive trend even as NDRR moderates .
  • Enterprise expansion continues: Customers ≥$100k ARR rose to 934 and HCP revenue reached $26.5M, reinforcing the strategic pivot toward larger accounts and managed services .
  • Watch NDRR trajectory: The deceleration to 110% suggests slower expansion rates within existing accounts; sustained product adoption and HCP upsell are key to re-accelerate cohort growth .
  • Visibility constrained: No Q2 guidance and no call due to IBM transaction; near-term stock narrative is dominated by closing conditions and regulatory approvals rather than standalone fundamentals .
  • Cash flow cadence: TTM cash from operations improved to 6% of revenue, though quarterly OCF was negative in Q2; monitoring collections and deferred revenue dynamics remains important .
  • Prior beat vs guidance: Q1 revenue exceeded company guidance, indicating operational execution ahead of Q2, but external consensus for Q2 could not be retrieved (S&P Global consensus unavailable) .
  • Legal backdrop: Third-party shareholder litigation PRs around the IBM deal exist; the company’s stated plan remains focused on closing the transaction by year-end 2024 .