Sign in

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

HI

HashiCorp, Inc. (HCP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 FY2024 revenue was $155.8M (+15% YoY) and non-GAAP EPS was $0.05, both above Q3 guidance; management highlighted a U-shaped FY2025 recovery with revenue growth troughing in Q2 and improving in H2 .
  • Current non-GAAP RPO grew 21% YoY to $483.1M; HCP cloud subscription revenue reached $21.3M, continuing sequential growth, while trailing four-quarter average NDR moderated to 115% from 119% in Q3 and 131% a year ago .
  • FY2025 outlook: revenue $643–$647M, non-GAAP operating loss $(46)–$(43)M, and non-GAAP EPS $0.05–$0.07; Q1 FY2025 revenue guide $152–$154M and non-GAAP EPS $(0.02)–$0.00, reflecting seasonal bookings patterns .
  • Board authorized a $250M share repurchase program, with management signaling it as the first tranche of a continuing buyback program—an incremental capital return catalyst .
  • Strategic focus: simplify go-to-market, accelerate commercial differentiation (e.g., LTS releases, Terraform Stacks), and shift enterprise land to HashiCorp Cloud Platform to improve retention and expansion over time .

What Went Well and What Went Wrong

What Went Well

  • “We reported solid fourth quarter results that exceeded our top and bottom line guidance,” with revenue ~$156M (press release: $155.8M) and current non-GAAP RPO up 21% YoY; CEO cited improved renewal rates and pipeline conversion .
  • HCP momentum: Terraform Cloud and Vault both contributing; quarterly HCP subscription revenue rose to $21.3M, supported by enterprise cloud readiness and comp changes incentivizing cloud lands .
  • Operational discipline: second consecutive quarter of positive free cash flow; non-GAAP operating loss narrowed to $(6.5)M, reflecting expense restraint and measured investment posture .

What Went Wrong

  • NDR deceleration: trailing four-quarter average Net Dollar Retention fell to 115% (from 119% in Q3 and 131% in Q4 FY2023), reflecting smaller expand/extend activity amid entitlement digestion .
  • Customer mix and lands: more deals at smaller sizes and elongated land cycles; management expects acceleration to be back-half weighted and cRPO trough in Q2 FY2025, underscoring near-term growth pressure .
  • Cloud growth cadence: absolute dollar adds to cloud have moderated sequentially in recent quarters; plan to default enterprise land to Terraform Cloud aims to reaccelerate, but maturity and adoption curve remain execution points .

Financial Results

Core P&L and Margins

MetricQ4 FY2023Q3 FY2024Q4 FY2024
Total Revenue ($USD Millions)$135.8 $146.1 $155.8
GAAP Gross Margin (%)83% 82% 83%
Non-GAAP Gross Margin (%)85% 86% 86%
GAAP Operating Margin (%)(46%) (38%) (31%)
Non-GAAP Operating Margin (%)(20%) (7%) (4%)
GAAP Net Loss ($USD Millions)$(49.4) $(39.5) $(31.6)
GAAP EPS (Basic & Diluted) ($)$(0.26) $(0.20) $(0.16)
Non-GAAP Net Income ($USD Millions)$(13.2) $5.6 $10.2
Non-GAAP EPS (Diluted) ($)$(0.07) $0.03 $0.05

Note: CEO commentary referenced ~$156M revenue on call; press release reported $155.8M (rounding difference) .

Segment and Revenue Mix

Segment ($USD Thousands)Q4 FY2023Q3 FY2024Q4 FY2024
License$20,768 $15,973 $19,757
Support$96,890 $106,098 $108,940
Cloud-hosted services$14,516 $19,863 $21,307
Total Subscription Revenue$132,174 $141,934 $150,004
Professional Services & Other$3,614 $4,191 $5,779
Total Revenue$135,788 $146,125 $155,783

KPIs and Bookings Proxies

KPIQ4 FY2023Q3 FY2024Q4 FY2024
Customers (Period-end)3,870 4,354 4,423
Customers ≥$100K ARR798 877 897
Trailing 4Q Avg NDR (%)131% 119% 115%
GAAP RPO – Total ($USD Millions)$647.1 $678.2 $775.8
GAAP RPO – Current ($USD Millions)$375.1 $402.1 $460.2
Non-GAAP RPO – Total ($USD Millions)$673.8 $700.4 $801.4
Non-GAAP RPO – Current ($USD Millions)$397.7 $420.8 $483.1
HCP Quarterly Subscription Revenue ($USD Millions)$14.5 $19.9 $21.3

Cash and Liquidity

MetricFY2023 (Jan 31, 2023)FY2024 (Jan 31, 2024)
Cash, Cash Equivalents & Short-term Investments ($USD Millions)$1,286.1 $1,278.6
Net Cash from Operating Activities – Q4 ($USD Millions)$1.6 $10.3
Non-GAAP Free Cash Flow – Q4 ($USD Millions)$(1.1) $7.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Total Revenue ($USD Millions)Q4 FY2024$148–$150 $155.8 Bold beat
Non-GAAP Operating Loss ($USD Millions)Q4 FY2024$(16)–$(13) $(6.5) Bold better
Non-GAAP EPS ($)Q4 FY2024$0.00–$0.02 $0.05 Bold beat
Weighted Avg Diluted Shares (Millions)Q4 FY2024205.0 205.1 In line
Total Revenue ($USD Millions)Q1 FY2025N/A$152–$154 New
Non-GAAP Operating Loss ($USD Millions)Q1 FY2025N/A$(19)–$(16) New
Non-GAAP EPS ($)Q1 FY2025N/A$(0.02)–$0.00 New
Total Revenue ($USD Millions)FY2025N/A$643–$647 New
Non-GAAP Operating Loss ($USD Millions)FY2025N/A$(46)–$(43) New
Non-GAAP EPS ($)FY2025N/A$0.05–$0.07 New
Gross Margin (%)FY2025N/ALow–mid 80s (management expectation) New
Capital ReturnFY2025N/A$250M buyback authorized New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2024)Current Period (Q4 FY2024)Trend
Go-to-market simplificationIntroduced lifecycle messaging; enablement under President Susan St. Ledger Finalizing rollout; more prescriptive motions; concentration on top ~4,000 accounts Improving execution
Cloud-first enterprise motionMore cloud contracts than self-managed; early enterprise willingness Default enterprise land to Terraform Cloud; comp changes; R&D reallocations to HCP Accelerating
Commercial differentiationPreviewed Terraform Stacks; bundling (Zero Trust) success Stacks private beta; LTS releases for commercial customers only Increasing differentiation
Security portfolio momentumBoundary session recording; Vault/Boundary pipeline building Security budgets robust; Boundary Windows/RDP focus H2 Stable-to-improving
Multi-cloud and Gen AIGen AI features (tests); customer momentum at HashiConf Gen AI driving true multi-cloud adoption; enhances cloud-agnostic ops Tailwind
Macro/optimizationNo clear improvement; smaller lands, expansions Optimization abating; improved renewals; U-shaped recovery (Q2 trough) Gradually improving
Pricing/licensingCloud pricing frameworks introduced Cloud pricing aligned with entitlement model; enterprise parity Neutral
Partner ecosystemTight CSP co-sell; AWS award Continuation of CSP-led co-sell motions Stable

Management Commentary

  • CEO: “We reported solid fourth quarter results that exceeded our top and bottom line guidance,” highlighting ~$156M revenue and 21% YoY growth in current non-GAAP RPO .
  • CEO on strategy: “We are behind where we wanted the company to be... We are on a path back to 20% quarterly revenue growth during FY 2026,” driven by GTM simplification, commercial differentiation, and cloud-centric R&D .
  • CFO: “We expect a U-shaped recovery… with Q2 being the trough,” targeting ~20% cRPO YoY growth exiting FY2025 and non-GAAP operating income breakeven by Q4 FY2025 .
  • CTO: “Terraform Stacks… the biggest enhancement… enables orchestration across multiple environments,” available via Terraform Cloud for commercial customers; LTS releases provide 2-year stability for commercial editions .

Q&A Highlights

  • Enterprise cloud adoption: Large customers now willing to default lands to Terraform Cloud; sales comp aligned to promote cloud; benefits include faster innovation delivery and lower support costs .
  • Security landscape: Robust pipeline; Microsoft Entra seen as partner; Boundary to enhance Windows/RDP capabilities in back half .
  • Bookings and KPI trajectory: More deals at smaller initial sizes; Q2 cRPO and revenue growth expected to trough; back-half acceleration anticipated .
  • Bundles and lifecycle selling: Zero Trust bundle success feeding broader “security lifecycle” and “infrastructure lifecycle” motions to simplify expansions at renewal .
  • Partner motions: Continued tight CSP collaboration and marketplace co-sell; AWS Collaboration Partner of the Year recognition .

Estimates Context

  • We attempted to pull S&P Global Wall Street consensus for HCP but it was unavailable due to a CIQ mapping issue in the SPGI feed (tool error). As a result, estimate comparisons are not provided for Q4 FY2024 or forward periods. Values would normally be retrieved from S&P Global.

Key Takeaways for Investors

  • Beat-and-raise dynamic vs Q3 guidance: Revenue and non-GAAP EPS outperformed, with margin efficiency evident; sequential HCP revenue growth supports cloud-first pivot .
  • Expect near-term growth trough in Q2 FY2025, then acceleration in H2, with cRPO exiting ~20% YoY—set expectations and positioning accordingly; watch renewal cadence and expand/extend normalization .
  • Strategic catalysts: Terraform Stacks (commercial-only via Cloud) and LTS releases deepen differentiation and may lift enterprise conversion, retention, and upsell over the next 12–18 months .
  • Capital return: $250M buyback initiates a continuing repurchase program; view as supportive to share count and investor sentiment during the growth reacceleration phase .
  • Monitor KPIs: NDR stabilization, >$100K customer adds progression, current RPO growth, and HCP subscription revenue trajectory as leading indicators of bookings and future revenue growth .
  • Execution watchpoints: GTM simplification and enterprise cloud lands are critical to reaccelerate; Boundary feature delivery (Windows/RDP) in H2 can enhance security lifecycle monetization .
  • Narrative drivers: Gen AI-induced multi-cloud adoption tailwinds align with HashiCorp’s cloud-agnostic operating model, benefiting Terraform, Vault, and Consul in complex estates .