Core Insights - HashiCorp is enhancing its collaboration with IBM to develop a unified automated hybrid cloud platform, integrating with IBM's software automation portfolio and supporting IBM Z Mainframe [1][16] - Despite 94% of enterprises utilizing cloud services, only 20% are achieving full ROI, indicating a significant gap in cloud maturity [1] - The emergence of one billion new AI applications by 2028 is expected to increase cloud complexity, necessitating strategic decisions for enterprises regarding their hybrid cloud strategies [1] Infrastructure Lifecycle Management (ILM) - ILM is a foundational priority for organizations scaling their hybrid strategies with IBM and HashiCorp, focusing on faster delivery and infrastructure resilience [4] - New features across Terraform, Packer, Nomad, and Waypoint have been introduced to automate critical workflows, enhancing team productivity and infrastructure resilience throughout the lifecycle [6][16] - Terraform's capabilities allow for standardized and scalable infrastructure provisioning, reducing configuration drift and manual rework [7] Security Lifecycle Management (SLM) - SLM integrates identity-based security, secrets management, and access governance into hybrid workflows, addressing the growing security surface area as organizations modernize their infrastructure [9][10] - HashiCorp's SLM tools provide proactive visibility, access control, and cryptographic assurance across hybrid environments, enabling teams to move faster without compromising control [10][16] - The introduction of features like HCP Vault Radar helps detect and remediate unmanaged secrets and credential sprawl, enhancing security posture [15] Customer Use Cases - Helvetia Insurance successfully migrated 200 applications to AWS and Azure within a year using HashiCorp Terraform, demonstrating the effectiveness of the platform in achieving ambitious cloud migration goals [5] - IG Group leveraged HashiCorp's products to strengthen security while accelerating delivery, onboarding 63 teams to HCP Vault with a centralized GitOps workflow [10] Product Announcements - New integrations with Red Hat Ansible Automation Platform and Red Hat OpenShift have been announced, enabling orchestration of complex infrastructure workflows [13] - Terraform provider for IBM Z allows organizations to integrate mainframe platforms into modern workflows and hybrid cloud strategies [14]

Group 1 - HashiCorp, Inc. will release its financial results for Q4 of the 2025 fiscal year on March 6, 2025, after U.S. markets close [1] - The fiscal year ended on January 31, 2025 [1] - Due to a pending transaction with IBM, HashiCorp will not host an earnings conference call or provide a financial outlook [1] Group 2 - HashiCorp is known as The Infrastructure Cloud™ company, focusing on automating multi-cloud and hybrid environments [2] - The company offers Infrastructure Lifecycle Management and Security Lifecycle Management services [2] - HashiCorp provides managed cloud services on the HashiCorp Cloud Platform (HCP), along with self-hosted enterprise offerings and community source-available products [2]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market in the short term [2] Zacks Style Scores Overview - Stocks are rated A, B, C, D, or F based on value, growth, and momentum characteristics, with higher scores indicating better performance potential [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5][6] Value Score - Focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - Evaluates stocks based on projected and historical earnings, sales, and cash flow to identify sustainable growth opportunities [4] Momentum Score - Assesses stocks based on price trends and earnings estimate changes to identify favorable buying opportunities [5] VGM Score - Combines all three Style Scores to provide a comprehensive rating, highlighting stocks with attractive value, growth forecasts, and momentum [6] Zacks Rank Integration - The Zacks Rank utilizes earnings estimate revisions to assist investors in building successful portfolios [7] - Stocks rated 1 (Strong Buy) have historically outperformed the S&P 500, achieving an average annual return of +25.41% since 1988 [8] Stock Selection Strategy - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal success [10] - The direction of earnings estimate revisions is crucial; stocks with lower ranks but high Style Scores may still face downward price pressure [11] Company Spotlight: HashiCorp, Inc. (HCP) - HCP is a real estate investment trust (REIT) focused on healthcare-related properties, with a diverse portfolio of 745 properties as of June 30, 2019 [12] - HCP holds a Zacks Rank of 2 (Buy) and a VGM Score of B, with a Momentum Style Score of B, indicating positive performance trends [13] - Recent upward revisions in earnings estimates suggest strong future performance potential, with an average earnings surprise of 386.7% [13][14]

Company Performance - HashiCorp, Inc. (HCP) shares have increased by 1.8% over the past month, reaching a new 52-week high of $34.4 [1] - The company has reported a positive earnings surprise in the last four quarters, with the latest EPS of $0.13 exceeding the consensus estimate of $0.05 [2] - For the current fiscal year, HashiCorp is projected to achieve earnings of $0.36 per share on revenues of $674.73 million, reflecting a 550% increase in EPS and a 15.71% increase in revenues [3] Valuation Metrics - HashiCorp has a Value Score of F, while its Growth and Momentum Scores are A and B, respectively, resulting in a VGM Score of B [6] - The stock trades at 96.1X current fiscal year EPS estimates, significantly higher than the peer industry average of 29.7X [6] - On a trailing cash flow basis, HashiCorp trades at 5X compared to the peer group's average of 29.4X [6] Zacks Rank - HashiCorp holds a Zacks Rank of 2 (Buy), supported by favorable earnings estimate revisions from analysts [7] - The company meets the criteria for investors looking for stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, indicating potential for further growth [8] Industry Context - The Internet - Software industry is performing well, ranking in the top 8% of all industries, providing a favorable environment for both HashiCorp and its peers [11] - Magnite, Inc. (MGNI), a competitor, also shows strong performance with a Zacks Rank of 2 (Buy) and positive earnings expectations [9][10]

Core Viewpoint - HashiCorp has demonstrated strong earnings performance, consistently beating earnings estimates and showing significant stock price appreciation, but its valuation metrics suggest it may be overvalued compared to industry peers [1][4][11]. Company Performance - HashiCorp reported an EPS of $0.13 in its last earnings report, exceeding the consensus estimate of $0.05, and beat revenue estimates by 6.09% [1]. - The stock has gained 44.8% since the beginning of the year, outperforming the Zacks Computer and Technology sector's 31.3% and the Zacks Internet - Software industry's 32% [11]. - For the current fiscal year, HashiCorp is expected to post earnings of $0.34 per share on revenues of $674.73 million, reflecting a 525% increase in EPS and a 15.71% increase in revenues [12]. Valuation Metrics - HashiCorp has a Value Score of F, while its Growth and Momentum Scores are both A, resulting in a combined VGM Score of B [4]. - The stock trades at 101.4X current fiscal year EPS estimates, significantly higher than the peer industry average of 32.8X, indicating a premium valuation [4]. - On a trailing cash flow basis, HashiCorp trades at 5X compared to the peer group's average of 26X, suggesting it does not rank highly from a value perspective [4]. Zacks Rank and Style Scores - HashiCorp holds a Zacks Rank of 2 (Buy), supported by favorable earnings estimate revisions from analysts [5]. - The combination of a Zacks Rank of 2 and Style Scores of A or B indicates potential for the stock in the near future [5]. Industry Context - The Internet - Software industry is performing well, ranking in the top 14% of all industries, providing a favorable backdrop for both HashiCorp and its peers [8].

Core Viewpoint - HashiCorp, Inc. (HCP) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - HashiCorp is expected to earn $0.34 per share for the fiscal year ending January 2025, reflecting a year-over-year increase of 525% [8]. - Over the past three months, the Zacks Consensus Estimate for HashiCorp has risen by 33.9% [8]. Institutional Investor Influence - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4][5]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [7][9]. - The upgrade of HashiCorp to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10][11].

Core Insights - HashiCorp, Inc. reported revenue of $173.39 million for the quarter ended October 2024, reflecting an 18.7% increase year-over-year [1] - The earnings per share (EPS) for the quarter was $0.13, a significant rise from $0.03 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $163.43 million by 6.09%, while the EPS surpassed the consensus estimate of $0.05 by 160% [1] Revenue Breakdown - Subscription revenue was reported at $167.82 million, exceeding the average analyst estimate of $158.52 million [3] - Revenue from Professional Services and other was $5.57 million, surpassing the three-analyst average estimate of $4.91 million, marking a year-over-year increase of 32.9% [3][3] Stock Performance - Over the past month, HashiCorp's shares have returned -1.4%, in contrast to the Zacks S&P 500 composite's increase of 6.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Merger and Acquisition - The proposed Merger with IBM is expected to be completed in the first calendar quarter of 2025, with each share of Class A and Class B common stock converting to $35.00 in cash[84][85]. - As of October 31, 2024, transaction-related costs incurred amount to approximately $22.1 million[90]. - The Merger Agreement includes customary termination rights, with a termination fee of $264.2 million applicable under certain conditions[88]. - The company expects to incur an additional liability of approximately $92 million related to the proposed merger with IBM, primarily for transaction fees contingent upon the merger's consummation[196]. Financial Performance - The last four-quarter average net dollar retention rate was 109% for 2024 and 119% for 2023, indicating strong customer engagement and expansion opportunities[99]. - HCP subscription revenue for the three months ended October 31, 2024, was $29.0 million, up from $19.9 million for the same period in 2023, representing a growth of approximately 46.7%[108]. - For the nine months ended October 31, 2024, HCP subscription revenue was $80.1 million, compared to $54.8 million for the same period in 2023, indicating a growth of approximately 46.1%[108]. - Total revenue for the three months ended October 31, 2024, was $173.4 million, an increase of $27.3 million or 19% compared to $146.1 million for the same period in 2023[154]. - Total revenue for the nine months ended October 31, 2024, was $499.1 million, an increase of $71.8 million or 17% compared to $427.4 million for the same period in 2023[167]. - Subscription revenue for the nine months ended October 31, 2024, increased by $66.9 million, or 16%, driven by new customer additions and expanded product adoption[167]. Customer Metrics - As of October 31, 2024, the company served over 4,800 customers, an increase from over 4,300 customers as of October 31, 2023[102]. - Customers with $100,000 or greater ARR represented 89% of total revenue for the three months ended October 31, 2024, consistent with the same period in 2023[116]. - Total customers with $100,000 or greater ARR increased to 946 as of October 31, 2024, compared to 897 as of January 31, 2024[114]. Revenue Recognition and Models - The company generates revenue primarily from subscription sales, with a significant portion recognized ratably over the subscription term[92]. - HashiCorp Cloud Platform (HCP) operates on a consumption-based model, with revenue recognized based on actual resource consumption[93]. - The company expects to recognize approximately 62% of its GAAP Remaining Performance Obligations (RPOs) of $775.4 million as revenue over the next 12 months[119]. - Non-GAAP RPOs were $795.6 million as of October 31, 2024, down from $801.4 million as of January 31, 2024[120]. Operating Expenses and Profitability - The gross profit margin for the three months ended October 31, 2023, was 83%, up from 82% in the same period last year[151]. - Operating expenses for the three months ended October 31, 2023, totaled $173,483,000, a slight decrease from $176,093,000 in the same period last year[151]. - The company reported a net loss of $(13,006,000) for the three months ended October 31, 2023, compared to a net loss of $(39,473,000) for the same period last year, reflecting an improvement[151]. - The cost of subscription revenue for the three months ended October 31, 2023, was $24,456,000, which is 14% of total revenue, compared to 15% in the same period last year[151]. - Gross margin improved to 82% for the nine months ended October 31, 2024, compared to 81% in the prior year[170]. Cash Flow and Investments - Net cash provided by operating activities was $57.7 million for the nine months ended October 31, 2024, compared to a net cash used of $21.1 million in the prior year[185]. - Net cash provided by investing activities for the nine months ended October 31, 2024, was $95.6 million, with cash inflows from maturities and sales of investments totaling $715.8 million, offset by $619.9 million in cash outflows for purchases of short-term investments and capitalized software[191]. - The company has minimum spend commitments of $18.5 million for the 12 months ending February 2025, increasing to $25.0 million for the 12 months ending February 2029, under a new agreement with a cloud service provider[195]. Expenses and Future Outlook - The company expects its research and development expenses to continue increasing as it invests in new features and products[142]. - The company anticipates that sales and marketing expenses will increase over time as it expands its sales force and marketing efforts[141]. - General and administrative expenses increased by $11.2 million, or 11%, primarily due to a rise in professional services related to the pending acquisition by IBM[175]. Economic Factors - The company does not believe a hypothetical 10% relative increase or decrease in interest rates would materially impact its operating results as of October 31, 2024[202]. - If the U.S. dollar weakened by 10%, the company's operating expenses could increase by approximately 2% due to foreign currency fluctuations[204]. - The company implemented a foreign currency risk management program during the second quarter of fiscal 2024 to hedge forecasted foreign currency-denominated expenses[205]. - The company does not believe that inflation has had a material effect on its business or financial condition[206].

Revenue and Growth - Third quarter revenue totaled $173.4 million, representing a 19% increase year-over-year from $146.1 million[5] - Total revenue for the three months ended October 31, 2023, was $173,389 thousand, a 18.6% increase from $146,125 thousand in the same period last year[22] - Subscription revenue reached $167,820 thousand for the three months ended October 31, 2023, up 18.3% from $141,934 thousand year-over-year[22] - Quarterly subscription revenue from HashiCorp Cloud Platform reached $29.0 million, up from $19.9 million in Q3 FY2024[8] - Quarterly subscription revenue from HCP for the three months ended October 31, 2024, was $29.0 million, up from $26.5 million in the previous quarter[28] Customer Metrics - HashiCorp ended Q3 FY2025 with 4,856 customers, up from 4,354 customers at the end of Q3 FY2024[8] - Customers with equal to or greater than $100,000 in Annual Recurring Revenue (ARR) represented 89% of total revenue in Q3 FY2025[8] - The number of customers with annual recurring revenue (ARR) equal to or greater than $100,000 increased to 4,856 as of October 31, 2024, from 4,354 a year earlier[28] Financial Performance - GAAP net loss was $13.0 million in Q3 FY2025, an improvement from a net loss of $39.5 million in the same period last year[5] - The net loss for the nine months ended October 31, 2023, was $(90,596) thousand, an improvement from $(159,046) thousand in the prior year[24] - GAAP net loss for the three months ended October 31, 2024, was $(13,006), an improvement from $(39,473) in the same quarter last year[26] - Non-GAAP net income for the nine months ended October 31, 2024, was $54,866, compared to a loss of $(25,972) in the previous year[26] Cash and Investments - Cash, cash equivalents, and short-term investments totaled $1,346.4 million at the end of Q3 FY2025, compared to $1,255.7 million at the end of Q3 FY2024[7] - Cash and cash equivalents increased to $923,627 thousand as of October 31, 2024, compared to $763,414 thousand at the beginning of the period[23] - GAAP net cash provided by operating activities for the three months ended October 31, 2024, was $38,168, a significant increase from $(8,573) in the previous quarter[30] - The company reported a net cash provided by operating activities of $57,743 thousand for the nine months ended October 31, 2023, compared to $(21,137) thousand in the prior year[24] - Trailing twelve months cash provided by operating activities as a percentage of revenue was 10% for the period ending October 31, 2024, compared to 6% for the same period last year[28] Performance Obligations - Total Remaining Performance Obligation (RPO) was $775.4 million at the end of Q3 FY2025, up 14% year-over-year from $678.2 million[7] - Current GAAP RPO totaled $481.4 million, representing a 20% increase year-over-year[1] - Total Remaining Performance Obligations (RPOs) as of October 31, 2024, were $775,383, slightly down from $775,750 as of January 31, 2024[27] Expenses - Research and development expenses for the three months ended October 31, 2023, were $53,365 thousand, slightly down from $54,349 thousand year-over-year[22] Stockholder Equity - Total stockholders' equity increased to $1,257,665 thousand as of October 31, 2024, from $1,212,993 thousand at the end of January 2024[23] - The weighted-average shares used to compute net loss per share attributable to Class A and Class B common stockholders increased to 203,526 for the three months ended October 31, 2023, from 194,600 in the prior year[22] Merger and Acquisition - The proposed merger with IBM is valued at $6.4 billion, with an acquisition price of $35.00 per share[4]

Core Insights - HashiCorp reported a strong performance in Q3 of fiscal 2025, with total revenue reaching $173.4 million, marking a 19% increase year-over-year [6][3] - The company is in the process of merging with IBM, with the transaction expected to close in Q1 2025 [4][5] Financial Performance - Total revenue for Q3 fiscal 2025 was $173.4 million, up from $146.1 million in the same period last year [6] - GAAP gross profit was $143.6 million, resulting in an 83% gross margin, compared to 82% in the same period last year [7] - Non-GAAP gross profit was $148.4 million, maintaining an 86% gross margin, consistent with the previous year [7] - GAAP operating loss improved to $29.9 million from a loss of $55.6 million year-over-year [8] - Non-GAAP operating income was $11.0 million, compared to a loss of $10.5 million in the same period last year [8] - GAAP net loss was $13.0 million, significantly reduced from a loss of $39.5 million year-over-year [9] - Non-GAAP net income was $26.9 million, up from $5.6 million in the same period last year [9] Customer Metrics - The number of customers increased to 4,856, up from 4,354 in Q3 fiscal 2024 [15] - Customers with $100,000 or more in Annual Recurring Revenue (ARR) rose to 946, representing 89% of total revenue [15] - Quarterly subscription revenue from the HashiCorp Cloud Platform reached $29.0 million, up from $19.9 million in the same quarter last year [15] Remaining Performance Obligations (RPO) - Total GAAP RPO was $775.4 million, a 14% increase year-over-year [12] - Current GAAP RPO was $481.4 million, up 20% from the previous year [12] - Total non-GAAP RPO was $795.6 million, also a 14% increase year-over-year [12] Cash Flow and Investments - Net cash provided by operating activities was $38.2 million, compared to $8.7 million in the same period last year [13] - Cash, cash equivalents, and short-term investments totaled $1,346.4 million, up from $1,255.7 million year-over-year [13]