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HashiCorp, Inc. (HCP)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 topline grew 19% year-over-year to $173.4M and 5% sequentially, with GAAP gross margin improving to 83% and non-GAAP operating margin turning positive at 6% .
  • HashiCorp Cloud Platform (HCP) momentum continued: cloud subscription revenue reached $29.0M and exceeded 17% of total subscription revenue; $100K+ ARR customers rose to 946 (+8% YoY) .
  • Net Dollar Retention decelerated to 109% (TTM average) from 119% a year ago; total GAAP RPO increased 14% to $775.4M, with current GAAP RPO up 20% YoY to $481.4M .
  • Company did not hold an earnings call or provide guidance due to the pending IBM acquisition (expected close in calendar Q1 2025), shifting the stock’s catalyst toward deal closure rather than near-term fundamentals .

What Went Well and What Went Wrong

What Went Well

  • HCP adoption and mix: “cloud revenues exceeding 17% of total subscription revenue this quarter,” with HCP subscription revenue advancing to $29.0M (+9% QoQ, +46% YoY) .
  • Profitability inflection: non-GAAP operating income of $11.0M (vs. a loss of $10.5M last year) and non-GAAP diluted EPS of $0.13 (vs. $0.03 last year) reflecting opex discipline and scale benefits .
  • Customer expansion: $100K+ ARR customers up to 946 (+12 QoQ, +69 YoY) and total customers up to 4,856 (+147 QoQ, +502 YoY), supporting medium-term growth durability .

Management quotes:

  • CEO: “revenue growth of 19% year-over-year, and 8% growth in $100,000 customers year-over-year… announced critical updates across Infrastructure and Security Lifecycle Management” .
  • Interim CFO: “cloud revenues exceeding 17% of total subscription revenue… new HCP features… support our Infrastructure Cloud vision” .

What Went Wrong

  • Retention deceleration: TTM average Net Dollar Retention fell to 109% vs. 119% a year ago, continuing a multi-quarter downtrend (113% in Q1, 110% in Q2) .
  • GAAP profitability remains negative: GAAP operating loss of $29.9M and GAAP net loss of $13.0M, albeit improved versus last year (losses of $55.6M and $39.5M) .
  • Lack of guidance and call: Management did not provide financial guidance or host a call, limiting visibility and leaving estimate alignment to external models amid the pending IBM deal .

Financial Results

MetricQ3 FY2024Q1 FY2025Q2 FY2025Q3 FY2025
Revenue ($USD Millions)$146.1 $160.6 $165.1 $173.4
GAAP Gross Margin (%)82% 81% 82% 83%
Non-GAAP Gross Margin (%)86% 85% 85% 86%
GAAP Operating Margin (%)-38% -42% -26% -17%
Non-GAAP Operating Margin (%)-7% -3% ~0% 6%
GAAP EPS ($)$(0.20) $(0.26) $(0.13) $(0.06)
Non-GAAP Diluted EPS ($)$0.03 $0.05 $0.08 $0.13

Segment Revenue Detail ($USD Millions)

SegmentQ3 FY2024Q1 FY2025Q2 FY2025Q3 FY2025
License$16.0 $16.3 $16.5 $21.2
Support$106.1 $113.6 $116.2 $117.7
Cloud-hosted Services$19.9 $24.6 $26.5 $29.0
Professional Services & Other$4.2 $6.0 $6.0 $5.6
Total Revenue$146.1 $160.6 $165.1 $173.4

KPIs and Cash Metrics

KPIQ3 FY2024Q1 FY2025Q2 FY2025Q3 FY2025
Total Customers4,354 4,558 4,709 4,856
Customers ≥$100K ARR877 918 934 946
HCP Subscription Revenue ($M)$19.9 $24.6 $26.5 $29.0
TTM Avg Net Dollar Retention (%)119% 113% 110% 109%
GAAP RPO – Total ($M)$678.2 $748.5 $771.5 $775.4
GAAP RPO – Current ($M)$402.1 $454.0 $473.4 $481.4
Non-GAAP RPO – Total ($M)$700.4 $770.9 $793.3 $795.6
Non-GAAP RPO – Current ($M)$420.8 $473.6 $492.4 $499.4
Cash from Operations ($M)$8.7 $28.1 $(8.6) $38.2
Non-GAAP Free Cash Flow ($M)$5.7 $25.4 $(11.2) $35.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 FY2025Not provided Not provided Maintained: No guidance
Non-GAAP Operating Income/MarginQ3 FY2025Not provided Not provided Maintained: No guidance
EPS (GAAP/Non-GAAP)Q3 FY2025Not provided Not provided Maintained: No guidance
RPO/BookingsQ3 FY2025Not provided Not provided Maintained: No guidance
OpEx/Tax/OI&EQ3 FY2025Not provided Not provided Maintained: No guidance

Note: Management did not provide guidance in Q1, Q2, or Q3 due to the pending IBM acquisition .

Earnings Call Themes & Trends

No earnings call was held in Q3 FY2025 due to the IBM transaction . Themes reflect management’s releases and reported metrics.

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Infrastructure Cloud / HCP strategyQ1: Infrastructure Cloud launch; HCP revenue $24.6M . Q2: HashiDays events; new product capabilities; HCP $26.5M .HCP revenue $29.0M; cloud >17% of subscription revenue .Positive: steady HCP adoption and mix rise .
Customer scale ($100K+ ARR)Q1: 918 customers ; Q2: 934 .946 (+8% YoY) .Positive albeit moderating adds .
Net Dollar RetentionQ1: 113% ; Q2: 110% .109% .Negative: gradual deceleration .
Profitability (non-GAAP)Q1: non-GAAP op loss (3% margin) . Q2: ~breakeven non-GAAP op margin .Non-GAAP op margin +6%, EPS $0.13 .Positive inflection .
IBM acquisition/regulatoryQ1: definitive agreement; no guidance/call . Q2: expected close by YE 2024 .Expected close in calendar Q1 2025; no call/guidance .Ongoing; timeline updated .

Management Commentary

  • CEO Dave McJannet: “revenue growth of 19% year-over-year, and 8% growth in $100,000 customers year-over-year… announced critical updates across Infrastructure and Security Lifecycle Management… continued work towards closing the company's transaction with IBM” .
  • Interim CFO & CAO Werner Schwock: “promising growth in adoption of the HashiCorp Cloud Platform, with cloud revenues exceeding 17% of total subscription revenue this quarter” .
  • Transaction update: IBM to acquire HCP for $35/share; stockholders approved; expected completion in calendar Q1 2025 (subject to closing conditions) .

Non-GAAP adjustments impacting results:

  • Add-backs include stock-based compensation, amortization of acquired intangibles, and merger/acquisition-related expenses; tax adjustments applied to non-GAAP net income .

Q&A Highlights

No Q&A—HashiCorp did not hold a conference call for Q3 FY2025 due to the pending IBM acquisition .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 FY2025 revenue and EPS was unavailable via our SPGI integration at this time; therefore, we cannot quantify beats/misses versus consensus. If needed, we can revisit once the data mapping is restored. Values retrieved from S&P Global were unavailable via the tool.

Key Takeaways for Investors

  • Sequential and YoY growth with margin expansion: revenue up to $173.4M and non-GAAP operating margin to 6%—evidence of scaling and cost control .
  • HCP mix rising (>17% of subscription revenue) supports medium-term ARR durability and recurring revenue quality; continued feature launches reinforce the Infrastructure Cloud narrative .
  • Retention deceleration (109% TTM) is the primary fundamental headwind; watch for stabilization post-IBM close and GTM changes .
  • RPO strength (GAAP current +20% YoY) points to near-term revenue visibility despite macro normalization in expansion rates .
  • Cash generation improved (CFO $38.2M; FCF $35.7M), signaling operational discipline ahead of integration with IBM .
  • No guidance and no call concentrate the stock’s near-term catalyst on deal closure (calendar Q1 2025) rather than quarterly beats/misses .
  • For trading: spread to deal terms and regulatory milestones likely dominate; for the medium-term thesis, HCP adoption and IBM distribution synergies are key watch items post-close .

Appendix: Additional Data Cross-References

  • Consolidated statements detail revenue mix, margins, and EPS for Q3 FY2025 and comps .
  • Prior quarter releases for trend analysis (Q1 and Q2 FY2025) .