Checking back on Hashicorp $HCP

A lot of what I’d normally mention is already at jonwayne’s excellent post ( ) I’ll try not to repeat too much. I haven’t used their products so please correct any inaccuracies.,

They have a lot of products but I’ll focus only on terraform because it’s the one that drives adoption of their products.

Terraform reduces the time, complexity and risk involved with managing virtual machines deployed not only to external Cloud providers but also to your internal datacenter/network.

It does so by

  • Abstracting the multiple and differing behind-the-scenes steps one must take to manage virtual machines on all the different platforms, into a single standardized set of parameters
  • Providing “plugins,” to most of the providers that end-users are likely to deploy virtual machines to, that enable interaction with all of the providers using the single set of parameters
  • Providing an interface that enables the end-users to specify what they want, using the single set of parameters.

Let’s imagine you are on a team responsible for deploying virtual machines for a large corporation. First thing that hits your desk on Monday is a ticket to spin up 4 machines across 2 regions in AWS for a total of 8 machines for an application called ABC. And another ticket to do the same for another application called XYZ. So you go into some AWS console and start pointing/clicking/configuring things.

Then on Tuesday you get a change to the ABC ticket; it needs to be moved to Azure. And XYZ needs 8 more machines. So you now have to get into a AWS console and a Azure console.

Then on Wednesday you get a change to ABC and XYZ because somebody forgot to mention these applications also need to be available internally. They want you to take 2 servers away from each of ABC and XYZ and deploy then on VMWare in your internal network. Unfortunately VMWare is a separate team, and you have to co-ordinate with the VMWare team and open a sub-ticket with them and someone has to now login to a VMWare console.

The promise of terraform is that instead of having to deal with logging into the management console of all these different environments, you can utilize a single interface that makes this stuff easy. You don’t have to login to and point/click on a million things; just tell terraform what you want, at a high level and terraform takes care of the details.

An ROI argument can be made because terraform and other Hashicorp products make efficient use of the time of highly-paid technical people. Other benefits include better configuration control, auditability etc.


year q1 q2 q3 q4 total
2020 22 26 33 39 121
2021 44 51 55 62 212
2022 67 75 82 97 321
2023 101 114 124 136 475
2024 138

100,000 or greater ARR customers
Last 6 quarters: 655, 704, 734, 760, 798, 830
NOTE: They do have tens of customers with $1 million or greater ARR, though I think they’ve been inconsistent with reporting it. They have three customers with more than $10 million ARR.

Last 6 quarters: 127, 131, 133, 134, 134, 131, 127


year q1 q2 q3 q4
2020 101 110 133 171
2021 175 198 225 286
2022 308 336 368 451
2023 458 498 553 674
2024 660

Gross Margin: 81%

My commentary:
Since IPO they have (mostly) reported increased revenus and RPO each quarter. Notably, they reported a decrease in RPO in the most recent quarter.

They are not yet profitable but they are still dominant in their niche and still growing revenue. Numbers like operating losses are moving in the right direction.

Meanwhile the stock’s price has consistently come down, and the value compression arguably makes for a good entry point at current prices.

…which is part of Bert’s investment thesis:

I’m surprised that revenue from its cloud-deployed products are still at 11% of revenues and I think some scrutiny of that is warranted.


I’m sorry, but I don’t see this as a real-world example. And, it’s not just the day-after timing of the change it’s that orgs don’t willy-nilly move apps between cloud providers. That’s the kind of thing that’s done once every couple/few years at most, and only because of cost negotiations or problems with performance - and even then if the application is using services unique to a platform (think AWS’a DocumentDB or RedShift or Azure RP or MS SQL Server) then you won’t be able to migrate completely within Hashicorp.

I admit I haven’t looked at Hashicorp in depth, but the company has an Open Source model, and hopes you grow enough to eventually need their pay-for versions. So, quoting numbers of downloaded products isn’t impressive as they are almost all Open Source versions.

Cruise is a case in point. Hashicorp actually cites Cruise (autonomous driving taxis) as a Case Study:

What we see at Cruise is that one person started using the Open Source version of Terraform to “provision cloud resources using the HashiCorp Configuration Language (HCL). In order to facilitate code sharing, all configuration code was kept in a single repository and a small number of engineers had access to deploy configuration changes.

and then: “With success comes growth - after adopting Terraform OSS, Cruise’s infrastructure team expanded to more than 40 SREs [Site Reliability Engineers], while the development organization grew to more than 800 software engineers. At this point, the infrastructure team realized they had outgrown the workflow they had put in place with Terraform OSS.

Cruise needed this because, as a software development organization themselves, they had several hundreds of engineers writing new code, all in support of a single goal, and so needed a way to manage that. Makes sense for Hashicorp. Than again, if an organization is content to group similar applications within a single cloud provider (some orgs are all MS Azure for instance), then the cloud provider combined with existing point products (VMWare, RedHat, etc.) may be all that’s needed, particularly if the org is not itself a software development org.

I missed the window on Bert’s Seeking Alpha article, so perhaps there’s something else there that I’m not getting.

I’m always wary of investing in Open Source based companies. MongoDB is the star there, as their business model enabled them to both control use of the Open Source code as well as provide a resulting unique multi-cloud service based on that code. I don’t see Hashicorp having the same business model opportunities.