HashiCorp, Inc. (NASDAQ: NASDAQ:HCP) announced in its fiscal 2024 third-quarter earnings call that it achieved significant financial and operational milestones, including a 17% year-over-year growth in revenue, which reached $146 million. The company's focus on expanding its customer base and product offerings, as well as its strategic partnerships, have contributed to its positive performance. Notably, HashiCorp achieved positive non-GAAP earnings per share and free cash flow for the first time, marking progress toward sustainable profitability. Looking ahead, the company provided guidance for Q4 FY24, projecting total revenue between $148 million and $150 million, with a non-GAAP operating loss anticipated to be between $16 million and $13 million.
Key Takeaways
- HashiCorp's Q3 revenue hit $146 million, a 17% increase year-over-year.
- The company added 26 customers with over $100,000 in annual recurring revenue.
- HashiCorp Cloud Platform (HCP) offerings generated $19.9 million, 14% of subscription revenue.
- Positive non-GAAP earnings per share and free cash flow were achieved.
- Q4 FY24 revenue is projected between $148 million and $150 million, with a non-GAAP operating loss of $16 million to $13 million.
- Full fiscal year revenue is expected to be in the range of $576 million to $578 million, with a non-GAAP operating loss between $89 million and $86 million.
Company Outlook
HashiCorp anticipates continued growth, projecting Q4 FY24 revenue to be between $148 million and $150 million. The full fiscal year revenue expectation is set between $576 million and $578 million. The company's strategic advancements and product launches, such as HCP Vault Secrets and Terraform Stacks, aim to further strengthen its market position. The company's transition to a more mature cloud infrastructure management approach, termed Phase 2, is expected to contribute to long-term growth as more customers move towards standardized processes and tooling.
Bearish Highlights
Despite the positive outlook, HashiCorp has noted smaller contract sizes with enterprise customers, leading to relatively flat quarter-over-quarter growth. The company is also navigating a non-GAAP operating loss, projected to be between $16 million and $13 million for Q4 FY24 and between $89 million and $86 million for the full fiscal year.
Bullish Highlights
HashiCorp's solid customer growth, with 26 new customers contributing over $100,000 each in annual recurring revenue, reflects strong market demand. The company's successful bundle approach and strategic partnerships, including being named collaboration partner of the year by Amazon (NASDAQ:AMZN), underscore its robust position in the cloud infrastructure sector. The expectation of accelerating cloud revenue growth, as enterprise sales behavior shifts towards HashiCorp's cloud platform, is another positive indicator.
Misses
The company acknowledged a period of digestion following an aggressive investment cycle, indicating that while software integration continues, it occurs in smaller quantities. This suggests a potential slowing in the rate of expansion as customers adjust to previous investments.
Q&A Highlights
During the Q&A session, executives addressed the timeline for returns on go-to-market investments, with Dave McJannet, an executive at the company, stating that the demand environment is stabilizing and that the simplification efforts will aid in this process. Armon Dadgar, co-founder and CTO, discussed the demand funnel for the boundary offering, noting a healthy pipeline construction and engagement with major enterprises. Dadgar also differentiated HashiCorp's infrastructure solutions from database solutions like MongoDB (NASDAQ:MDB), emphasizing the critical and complex nature of their offerings.
The earnings call concluded with a note of appreciation from the CEO for participants' engagement and an anticipation for future communication, reflecting the company's commitment to transparency and ongoing dialogue with investors and stakeholders.
InvestingPro Insights
In the context of HashiCorp's recent earnings call and the company's financial performance, the InvestingPro data presents a detailed picture of the company's market position. With a market capitalization of $4.83 billion and a significant revenue growth of 37.83% in the last twelve months as of Q2 2024, HashiCorp is demonstrating strong market traction. The gross profit margin stands at an impressive 81.26%, underscoring the company's ability to maintain profitability in its operations.
InvestingPro Tips for HashiCorp reveal that while the company holds more cash than debt, indicating a healthy balance sheet, it is not expected to be profitable this year. This aligns with the company's own projections of a non-GAAP operating loss. Additionally, the strong return over the last month of 22.72% reflects investor confidence, which may be buoyed by the company's strategic advancements and the recent achievement of positive non-GAAP earnings per share and free cash flow for the first time.
For investors looking to delve deeper into HashiCorp's financial health and future prospects, InvestingPro offers a suite of additional tips. Currently, there are 8 more InvestingPro Tips available that provide critical insights into the company's performance and potential, which users can access through the InvestingPro platform.
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