HashiCorp, Inc.

Ladies and gentlemen, thank you for standing by and welcome to HashiCorp's Fiscal 2023 First Quarter Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Alex Kurtz, Head of Investor Relations. Thank you. Please go ahead.

Good afternoon, everyone, and welcome to HashiCorp's fiscal 2023 first quarter earnings call. This afternoon, we will be discussing our financial results for the first quarter announced in our press release issued after the market closed today. With me are HashiCorp's CEO, Dave McJanet, CFO, Navam Williinda, and CTO and co-founder, Armand Dagar. At the close of the market today, in conjunction with our earnings press release, we have published an earnings deck that contains additional financial information pertaining to our quarter. We plan to do this each quarter before earnings call and encourage you to review the deck in advance of our calls. You can access the decks on our investor website at ir.hashicorp.com. Today's call will contain forward-looking statements which are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including statements concerning financial and business trends, our expected future business and financial performance and financial condition, and our guidance for the second quarter of fiscal 2023 and the full fiscal year 2023. These statements may be identified by words such as expect, anticipate, intend, plan, believe, seek, or will, or similar statements. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date and we did not undertake any duty to update these statements. Forward-looking statements by their nature address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations. During the call, we will also discuss certain non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. The financial measures presented on this call are prepared in accordance with GAAP unless otherwise noted. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as how we define these metrics and other metrics, is included in our earnings press release, which has been furnished to the SEC and is also available on our website at ir.hashicorp.com. With that, let me turn the call over to Dave. Dave?

Thank you, Alex, and welcome, everyone, to our first quarter earnings call. We're excited to share with you that Q1 was a solid quarter for HashiCorp as we exceeded our guidance with revenue of $100.9 million, representing year-over-year growth of 51%, along with a trailing four-quarter average net dollar retention rate of 133%. We're also pleased to announce that during Q1, we had our second customer reach $10 million in annual recurring revenue. The most recent transaction by this global financial institution was a new commitment to console during the quarter, one of our largest console transactions ever. We'll discuss the strategic customer in a few moments. Also in Q1, current non-GAAP remaining performance obligations reached 305.2 million, representing 64% year-over-year growth. And we added 49 customers with greater than or equal to $100,000 in annual recurring revenue, reaching a total of 704. Our HashiCorp Cloud Platform offerings reached 8.8 million revenue, representing 9% of subscription revenue in the quarter. We're very pleased with the performance of HCP in Q1, and as we look out to the rest of the year, are excited about adoption trends as we continue to roll out new features and capabilities. I thought it would be helpful to briefly reiterate what we see as our unique approach to the marketplace as we help customers navigate this once-in-a-decade architectural shift that is recasting enterprise applications to the cloud. As a reminder, we help enterprises with their transition to cloud and inevitably multi-cloud, by delivering a suite of products that provide a consistent cloud operating model. As enterprises look to standardize their approach, they need a system of record for each layer of the infrastructure stack, and that is what our portfolio provides. Why do organizations choose AshaCorp? Well, first, our products are designed with a cloud-first and cloud-agnostic approach, using infrastructure as code for provisioning, identity as the basis of security, and service and service name as the basis of networking. Each of these represent the core paradigms of the cloud model. Second, our global footprint of practitioners using our open source tools and the free tier of our cloud offerings makes our products the de facto standards in the marketplace for cloud provisioning, infrastructure as code, managing secrets in the cloud, and increasingly for the still developing cloud service networking market. We're convinced that for most companies, the practitioner will decide how they approach cloud, which is why we focus on the practitioner experience above all else. Finally, we've developed a rich ecosystem of technology integrations and partners around each of our products, which further accelerates adoption and standardization. Our products are designed to enable third parties to easily integrate their services into Vault, Terraform, Consul, and our other products. And as we shared last quarter in our 10K, we now stand at over 2,050 providers in our Terraform ecosystem alone, and 900 partners in total as of the end of last year. With over 3,000 paying customers, using our software today, we believe all three of these differentiators have created a significant barrier to entry around our offerings. With that background, I'd like to take a few minutes today to highlight important trends that we're seeing for our products and the broad demand for cloud and multi-cloud adoption that is fueling our business. Specifically, I'd like to highlight the continued emergence of central platform teams within larger enterprises that we touched on briefly last quarter. During the quarter, our field teams were able to travel more freely to meet with customers, and Arman and I spent much of the quarter having in-person meetings with members of the Global 2000. In those meetings, we've been hearing a consistent theme around the emergence of centralized cloud program offices, or what they often call platform teams, within these accounts. The technology that underpins the transition to cloud and the growth of multi-cloud environments is fairly well known at this point. What is less well understood is the importance of the teams that are managing this transformation. As companies undertake cloud migrations or digital transformation, CIOs often find themselves in the difficult position of sifting through the disparate pieces of infrastructure and cloud resources that their various teams have deployed in the past, usually with little or no coordination. This has cost implications, but also efficiency implications. siloed teams with siloed infrastructure, and little strategy that underlies it all. And when developers want to develop and ship a new product to serve customers, they often encounter constraints and delays from their ops, security, and networking teams who would like to apply some level of governance. OshCorp has sold to these various siloed teams to help them with their immediate cloud infrastructure issues for years, helping them with provisioning, security, networking, and application delivery. However, we are now being brought in to help companies standardize their cloud infrastructure across teams. In many instances, in fact, those early adopters of our products are now being assigned to be the platform teams for their organizations as a whole. The platform team is the group that consolidates and standardizes cloud infrastructure for an entire company. It controls cloud infrastructure as a single cost center, creates standard processes, and establishes compliance protocols for applications and infrastructure. With this central team in place, companies can control costs and enforce consistent security policies, allowing developers to deploy applications with far less friction. Our cloud operating model, with an integrated stack of products, including Terraform, Vault, Consul, and others, enables these platform teams to succeed. We are seeing success in our larger deals each quarter being driven by these dynamics. We also believe that part of the success we are seeing in larger accounts is driven by our programmatic approach to selling, what we call a LEER, adopt, land, expand, extend, and renew. This motion happened initially in a single business group and is ultimately mimicked at a larger scale as platform teams are created to drive standardization across the organization. We believe that this methodology, coupled with our product innovation, can lead to durable long-term growth. We continue to see ourselves as uniquely positioned to enable the largest of enterprises in their decade-long move to multi-cloud across what 650 Group has estimated as a $73 billion TAM through 2026. We saw these concepts play out in Q1, and now I'd like to turn your attention to notable first quarter transactions. I'd like to highlight a few examples of strategic deals we completed that demonstrate our execution in the marketplace and show our adopt, land, expand, extend, renew motion in action. First, a land deal. A global insurance and financial services organization landed as an Enterprise Vault user in Q1 after adopting Vault open source in 2019 for a small departmental use case. Vault, combined with our residential solution architect services, is enabling this customer to address audit findings and a global security mandate to address the management of sensitive credentials. By centralizing the end-to-end process aligned to our jointly developed multi-cloud architecture, Vault will address significant worldwide risk of exposure for this company while providing cost efficiencies by automating the management and creation of globally secure credentials. Next, an expand deal with one of the largest global financial organizations in the world. This customer expanded with Terraform Enterprise to standardize its infrastructure provisioning approach to bring secure applications to market more quickly. This will also enable them to reduce the operational costs of their estate by preventing the over-provisioning of resources. Terraform and Vault are replacing homegrown and self-supported open source solutions, enabling the customer's business groups to deploy new applications on multiple cloud platforms in a consistent manner. And third, an extend deal example. An energy company extended and became a console customer during Q1 after recently becoming a Terraform customer. The customer recognized that console was an agnostic platform that provides a consistent approach to service networking across multiple clouds. The customer chose console because it enabled them to accelerate the time to market for new applications, which are being migrated from private data centers to AWS. As an added benefit, console allows the customer to extend the life of their existing networking hardware via the console Terraform sync capability. And finally, I'd like to spend a minute on HashiCorp's second $10 million ARR customer that I mentioned earlier. This organization is also an example of a customer who started working with us around a single product and expanded and extended over time to include Terraform Vault and Console. This global financial institution began its journey using Packer, one of our open source products, in 2017. It expanded to Terraform and then Vault Enterprise after that. As its cloud journey matured, it faced heightened scrutiny and complexity across disparate networking control planes. These challenges led the organization to add Consul Enterprise this quarter. Consul Enterprise provides a cloud-agnostic approach to service networking that allows the customer to link a variety of infrastructure platforms, from private data center to cloud to the edge. All of this enables applications teams to embrace these new platforms without compromising security, resiliency, or agility. We're proud to count companies like these as our customers and are deeply committed to continuing to earn their trust. And with that, let me turn the call over to Navon.