Full Year 2022 HashiCorp Inc Earnings Call

Ladies and gentlemen, please stand by. Your conference call will begin momentarily. Once again, ladies and gentlemen, thank you for calling. Please remain on your lines. Your conference call will begin momentarily. Thank you for your patience.

Ladies and gentlemen, please standby your conference call will begin momentarily once again, ladies and gentlemen, thank you for calling please remain on your line you conference call will begin momentarily. Thank you for your patience.

Goodbye!

[music].

?

?

Thank you.

Thank you for watching.

.

Good day, ladies and gentlemen, and thank you for standing by. And welcome to HashiCorp's Fiscal 2022 Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentations, 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 first speaker today, Alex Kurtz, Head of Investor Relations. Thank you. Please go ahead.

Good day, ladies and gentlemen, thank you for standing by and welcome to Hashi Corp fiscal 2022 fourth 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'd now like to turn the conference over to your first speaker today, Alex Kurtz head of Investor Relations. Thank you. Please go ahead Sir.

Okay.

Alex Kurtz: Good afternoon and welcome to HashiCorp's fiscal 2022 fourth quarter earnings call. This afternoon, we will be discussing our financial results for the fourth quarter announced in our press release issued after the market closed today.

Good afternoon, and welcome to <unk> Corp's fiscal 2022 fourth quarter earnings call.

This afternoon, we will be discussing our financial results for the fourth quarter announced in our press release issued after the market close today.

Alex Kurtz: with me are HashiCorp's CEO , Dave McJanet.

With me are Hashi Corp, CEO , David Janet.

Alex Kurtz: CTO and co-founder Arman Daggar.

CFO the bomb will hinder our CTO and co founder Armand Doug Arthur.

Alex Kurtz: At the close of the market today, and in conjunction with our earnings press release, we have published an earnings stack that contains additional financial information pertaining to our quarter.

Close to the market today and in conjunction with our earnings press release, we have published an earnings deck that contains additional financial information pertaining to our quarter.

Alex Kurtz: We plan to do this each quarter before our earnings call and encourage you to review the deck in advance of our calls. You can access the deck on our investor website at IR.HashCorp.com.

We plan to do this each quarter before our earnings call and encourage you to review the DAC in advance of our calls you can access the deck on our investor website at IR Dot dot.

Dot com.

Alex Kurtz: 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.

Today's call will contain forward looking statements, which are made under the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.

Alex Kurtz: Forward-looking statements include statements concerning financial and business trends, our expected future business and financial performance and financial condition, and our guidance for the first quarter of fiscal 2023 and the full fiscal year 2023. These statements may be identified by.

Forward looking statements include statements concerning financial and business trends, our expected future business and financial performance and financial condition and our guidance for the first quarter of fiscal 2023, and the full fiscal year 2023.

These statements may be identified by words, such as expect.

Alex Kurtz: anticipate, intend, plan, believe, seek, or will, or similar statements.

We anticipate intend.

Land believe seek or will or similar statements.

Alex Kurtz: The statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date. And we do not undertake any duty to update the statement.

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 do not undertake any duty to update these statements.

Alex Kurtz: 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.

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.

Alex Kurtz: During the call, we will also discuss certain non-GAAP financial measures which are not prepared in accordance with generally accepted accounting principles.

During the call we will also discuss certain non-GAAP financial measures.

You are not prepared in accordance with generally accepted accounting principles.

Alex Kurtz: 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 good afternoon, everyone.

The financial measures presented on this call are prepared in accordance with GAAP.

Otherwise noted.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures as.

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 Dot Hashi Corp Dot com.

With that let me turn the call over to Dave Dave.

Thank you Alex and good afternoon, everyone welcome to our first earnings call as a public company. We're excited to share with you that Q4 was a strong quarter for Usher Corpus we continued to execute on our vision of unlocking the value of the cloud for our customers through our automation offerings.

Dave McJanet: We're excited to share with you that Q4 was a strong quarter for HashiCorp as we continue to execute on our vision of unlocking the value of the cloud for our customers through our automation.

Dave McJanet: We strongly believe that the move to a cloud operating model is the foundation for how enterprises everywhere will manage their infrastructure and application environments going forward.

We strongly believe that the move to a cloud operating model is the foundation for how enterprises everywhere, well manage their infrastructure and application environments going forward.

Dave McJanet: We reported revenue of $97 million, representing year-over-year growth of 56%, along with a trailing four-quarter average net dollar retention rate of 131.

We reported revenue of $97 million, representing a year over year growth of 56% along with the trailing four quarter average net dollar retention rate of 131%.

Speaker Change: But before diving deeper into Q4 results, I'd like to quickly reflect on our initial public offering we completed in early December .

But before diving deeper into Q4 results.

To quickly reflect on our initial public offering we completed in early December .

Speaker Change: The IPO was a tremendous milestone for the company and reflects the hard work our team members have put in to build an incredible product portfolio for what we believe is a once-in-a-generation software business.

The IPO was a tremendous milestone for the company and reflects the hard work our team members have put into building an incredible product portfolio for what we believe is a once in a generation software business.

Speaker Change: We're very proud to have some of the largest enterprises running their most critical applications on our products and view the IPO is the next step to support these customers with continued investment in our products and in our ongoing vision for enabling their move to cloud and multi cloud providing them cost savings risk mitigation and revenue generation options.

We're very proud to have some of the largest enterprises running their most critical applications on our products and viewed the IPO is the next step to support these customers with continued investments in our products and in our ongoing vision for enabling their move to cloud and multi cloud, providing a cost savings rich communication and revenue generation opportunities.

Speaker Change: Organizations right now are undergoing a digital transformation across every business function driven by competition and ever increasing consumer expectations.

Organizations right now are undergoing a digital transformation across every business function driven by competition and ever increasing consumer expectations.

Speaker Change: Key to this digital transformation is a replatforming from static on-premises infrastructure, dynamic and distributed cloud.

This digital transformation is a re platforming from static on premises infrastructure dynamic and distributed cloud infrastructure.

Speaker Change: We realized early on that everything about the cloud requires new thinking. The existing procedures are too inefficient to scale with the distributed multi-cloud infrastructure reality that these organizations are adopting.

We realized early on that everything about the cloud requires new thinking.

Listing procedures are too inefficient at scale with a distributed multi cloud infrastructure reality that these organizations are adopting.

Speaker Change: What's needed are consistent workflows, a new cloud operating model for enterprise IT to provision secure connect and run infrastructure and applications across multiple public and private cloud environments.

What's needed are consistent workflows, a new cloud operating model for enterprise it to provision secure connected run infrastructure and applications across multiple public and private cloud environments.

Speaker Change: Enterprises want a system of record for these workflows and for managing their significant investments in cloud programs.

Enterprises want a system of record for these workflows and for managing our significant investments in cloud programs.

Speaker Change: This system of record is what the HashCorp product portfolio provides.

System of record is what the actual product portfolio provides.

Speaker Change: To make the most of this opportunity, we take a long-term view on making our market.

Can make the most of this opportunity we take a long term view on making our market function.

Speaker Change: We build our products using an open core software development model with large communities of users, contributors, and partners collaborating on their development.

We build our products using an open core software development model with large communities of users contributors and partners collaborating on your development.

Speaker Change: Our commercial software builds on our open source products with additional enterprise capability.

Our commercial software builds on our open source products with additional enterprise capabilities.

Our sales efforts build on our broad open source reach and are driven by an enterprise sales force that focuses on being a strategic partner some of the boats.

Speaker Change: Our sales efforts build on our broad open source reach and are driven by an enterprise salesforce. The focus is about being a strategic partner. Some of the most significant organizations in the world as they.

Significant organizations in the world as they move to the cloud.

Speaker Change: In addition, our cloud offerings supplement our direct sales motion with a self-serve offering for small and medium-sized businesses.

In addition, our cloud offerings supplement our direct sales motion with the self serve offering for small and medium sized businesses.

Speaker Change: And to support all of these efforts, we have an ecosystem of partners, including cloud service providers, independent software vendors, and system integrators that standardize around our offerings and help to support our customers.

And to support all of these efforts, we have an ecosystem of partners, including cloud service providers independent software vendors and system integrators that standardize around their offerings and helped to support our customers' needs.

Speaker Change: These elements are the foundation of our durable growth opportunity and are the critical components of our adopt, land, expand, extend business.

These elements are the foundation of our durable growth opportunity I know the critical components of our adopt land expand extend business motion.

Speaker Change: One more thing before I discuss the results for the quarter, I'd like to talk about the steps that we see enterprises taking and adopting this cloud operating model for infrastructure that I discussed earlier.

One more thing before I discuss our results for the quarter I'd like to talk about the steps that we see enterprises, taking in adopting this cloud operating model for infrastructure that I discussed earlier.

Speaker Change: Organizations typically move through multiple predictable stages of cloud maturity.

Organizations typically move through multiple predictable stages of cloud maturity.

Speaker Change: Their initial forays into cloud are usually driven by teams looking to build new applications.

Their initial forays into cloud are usually driven by teams looking to build net new applications.

Speaker Change: Over time, the best practices and expertise learned from these silent efforts.

Over time, the best practices and expertise learned from these siloed efforts can become a common consistent foundation to achieve cloud infrastructure automation.

Speaker Change: can become a common consistent foundation to achieve cloud infrastructure automation.

Speaker Change: This common operating model is often centralized through a cloud program office or a cloud platform team, which is often the second step in a.

This common operating model is often centralized cloud program office for our cloud platform team, which is often the second step in our company's journey to a multiple on the state.

Speaker Change: This centralized model ultimately becomes the basis for how enterprises interface to cloud.

The centralized model ultimately becomes the basis for how enterprises interface to cloud infrastructure.

Speaker Change: As organizations mature, we see this model being applied to increasing amounts of their infrastructure, including private cloud and data centers, providing similar gains and consumers.

As organizations mature, we see this model being applied to increasing amounts of their infrastructure, including private cloud and data centers, providing similar gains in consistency and automation.

Our foundational technologies solve these challenges of cloud adoption by enabling this model and providing a system of record that unlocks the full potential of modern public and private clouds.

Speaker Change: Our foundational technologies solve these challenges of cloud adoption by enabling this model and providing a system of record that unlocks the full potential of modern public and private cloud.

Speaker Change: We are excited by what we see our customers doing so far, and even more so about the road ahead.

We are excited by what we see our customers doing so far and even more so about the road ahead.

Speaker Change: Now, taking a closer look at our results, a few highlights stood out in the fourth quarter.

Now taking a closer look at our results a few highlights stood out in the fourth quarter.

Speaker Change: We had a $10 million or greater ARR cut.

We added 10, new million dollar or greater are our customers and 60, new $100000 or greater or a or our customers in the quarter for the company a strong signal of our adoption within the largest IC organization.

Speaker Change: and 60 new $100,000 or greater ARR customers in the quarter for the company. A strong signal of our adoption within the largest IT organization.

Speaker Change: And we're excited to share with you that we crossed a corporate milestone during the fourth quarter with our first customer reaching more than $10 million in annual recurring.

And we're excited to share with you that we crossed a corporate milestone during the fourth quarter with our first customer reaching more than $10 million in annual recurring revenue a fortune 10 company that after starting their journey with us as an open source customer all the way back in 2015.

Speaker Change: A fortune 10 company that after starting their journey with us as an open source customer all the way back in 2015 has made repeated investments in both terraform involved, along with the major renewal and expansion of vault in the fourth.

Made repeated investments in both terraform involved along with the major renewal and expansion of vault in the fourth quarter.

Speaker Change: Another key theme from the quarter was a momentum with customers purchasing multiple products.

Another key theme from the quarter was your momentum with customers purchasing multiple products.

Speaker Change: We continue to win the position of trust within the platform teams. Now as an example from Q4, we saw a solid number of console deals as we remained highly focused on driving our cloud-based networking framework into the marketplace.

We continue to win the position of trust within the platform teams as an example from Q4, we saw a solid number of console deal since we remain highly focused on driving our cloud based networking framework into the marketplace.

Speaker Change: And to frame the progress we've made with the penetration of our core products of Terraform Vault and Consul, the absolute number of $100,000 or greater annual recurring revenue customers that have purchased multiple products increased 42% year over year. This represents 45% of our $100,000 or greater ARR customers who are now using multiple products.

And to frame the progress we've made with the penetration of our core products with tariff from Bolton Council. The absolute number of 100000 dollar a greater annual recurring revenue customers that have purchased multiple products increased 42% year over year. This represents 45% of our $100000 or greater are our customers who are now using multiple products.

Fourth quarter.

Speaker Change: We believe that the three layers we're focused on infrastructure, security and networking represent extremely large total addressable market.

We believe that the three layers, we were focused on infrastructure security and networking represent extremely large total addressable markets.

Speaker Change: each of which are moving through generational changes, and we are investing against all of these opportunities.

Each of which are moving through generational changes and we are investing against all of these opportunities.

Speaker Change: Finally, we made steady progress in the adoption of our HCP cloud product offering in the quarter, growing nearly 350% in the fourth quarter from the prior period.

Finally, we made steady progress in the adoption of our HCP cloud product offering in the quarter growing nearly 350% in the fourth quarter from the prior period.

Speaker Change: As we previously discussed, FY23 will be a year of ongoing R&D investment into HCP capabilities as we increase the number of cloud services and enterprise features, as well as additional cloud regions.

As we've previously discussed FY 'twenty three will be a year of ongoing R&D investment to HCP capabilities as we increase the number of cloud services and enterprise features as well as additional cloud regions.

Speaker Change: Now turning your attention to notable fourth quarter transactions, I'd like to highlight a few examples of strategic deals that were completed and that demonstrate our execution in the marketplace and showing our adopt, land, expand motion and action.

Now turning your attention to notable fourth quarter transactions I'd like to highlight a few examples of strategic deals that were completed and they demonstrate our execution in the marketplace and showing our adopt land expand motion in action.

Speaker Change: As an example of a land transaction, a European-based consumer goods company standardized on Vault Enterprise after starting out as an open-source company in the early 2000s,

As an example of a land transaction a European based consumer goods company standardized on vault enterprise after starting out as an open source users.

Speaker Change: Vault will now provide a common workflow across clouds and enable a standardized approach to authentication.

Vault will now provide a common workflow across clouds and enable a standardized approach authentication.

Speaker Change: Vault also enabled this customer to save budget dollars through the consolidation of engineering resources and tools.

Vault also enabled this customer to save budget dollars to the consolidation of engineering resources and tools.

Speaker Change: I'll note that Amazon Marketplace was a central part of the sales process, demonstrating the go-to-market alignment we've built with the top cloud platforms. An example of an Expand transaction.

You'll note that Amazon marketplace with a central part of the sales process demonstrating the go to market alignment, we built with the top cloud platforms.

An example of an expand transaction.

The deal with one of the top consumer brands in Asia.

Speaker Change: This customer expanded the secrets management that was already in place on Amazon into their Azure environment with Vault, expanded Terraform license to support that Azure cloud deployments, and further expanded console into additional business units in the quarter.

This customer expanded the secrets management, there was already in place on Amazon into their Azure environment with vault expanded terraform license to support that Azure cloud deployments and further expanded console into additional business units in the quarter.

Speaker Change: At the core of this opportunity, our products accelerate this customer's time to market with new consumer services and simplify

At the core of this opportunity our products accelerated this customer's time to market with new consumer services and simplified their compliance regime.

Speaker Change: Finally, an example of an extend transaction, we had a global energy services company that extended into vault during the quarter after starting out as a terraform.

Finally, an example of an extend transaction we had a global energy services company that extended into vault during the quarter after starting out as a telephone customer.

Speaker Change: This customer is using Vault to help centralize and protect its Azure and Google secrets as the company expands its multi-cloud.

This customer is using both to help centralize and protect its azure and Google secrets as the company expands its multi cloud state.

Speaker Change: This customer chose Vault as it will enable faster development cycles and at the same time reduce.

This customer chose vault as it will enable faster development cycles at the same time reduce costs.

Speaker Change: I'd like to thank our entire team for the continued focus on delivering on our product roadmaps, as well as engaging and delivering for our customers in the field.

I'd like to thank our entire team for their continued focus on delivering on our product roadmaps as well as engaging and delivering for our customers in the field.

Speaker Change: In addition, we wouldn't be where we are without our open source community and the ecosystem of partners that work with us. And I'd like to also thank them with that. Let me turn the call over to the bomb. Thanks, Dave.

In addition, we wouldn't be where we are without or open source community and the ecosystem of partners that work with us and I'd like to also thank them.

With that let me turn the call over to Bob.

Thanks, Dave and thanks to everyone for joining us today.

Bomb: Turning your attention to our financial results, we produced strong fourth quarter results with total revenue of 96.5 million, which was up 56% year over year. And we maintained a trailing four quarter average net dollar retention rate of 131%.

Turning your attention to our financial results, we produced strong fourth quarter results with total revenue of $96 5 million, which was up 56% year over year, and we maintained a trailing four quarter average net dollar retention rate of 131%.

Bomb: we came in ahead of our non-GAAP gross margin, non-GAAP operating income, as well as our GAAP and non-GAAP net income.

We came in ahead of our non-GAAP gross margin non-GAAP operating income as well as our GAAP and non-GAAP net income plants, we incurred a net loss of $1 70 per share on a GAAP basis, and 24 cents per share on a non-GAAP basis.

Bomb: We incurred a net loss of $1.70 per share on a gap basis and $0.24 per share on a non-gap.

Bomb: We would note that due to the structure of our stock-based compensation, we recognized all of our historical RSU expenses in the fourth quarter, resulting in $196 million in total SBC recognized.

We would note that due to the structure of our stock based compensation, we recognized all of our historical <unk> expenses in the fourth quarter, resulting in 196 million in total SBC recognized.

Bomb: SBC will revert to a more normalized amount starting in the first quarter of 23, which we expect to be in the $50 million range.

<unk> will revert to a more normalized amount starting in the first quarter of 'twenty three.

Which we expect to be in the $50 million range.

Yeah.

Bomb: We track several key business metrics which we believe help in understanding our business and financial performance in our journey to deliver durable growth.

We track several key business metrics, which we believe help in understanding our business and financial performance in our journey to deliver durable growth.

Bomb: we focus on one, our revenue growth rate, two, the growth in the number of total customers we serve, three, the growth in the number of total customers that represent greater or equal to 100K in ARR, as well as their aggregate contribution to revenue, four, the revenue we derive from customers on the HashiCorp cloud platform.

We focus on one our revenue growth rate to the growth in a number of total customers we serve.

Three the growth in the number of total customers that represent greater or equal to 100 gain here are as well as their aggregate contribution to revenue.

For the revenue we derived from customers on the harsh equipped cloud platform.

Bomb: Five are trailing 12-month free cash flow margins, and six are non-GAAP RPOs.

Five our trailing 12 month free cash flow margins and six our non-GAAP rpms.

Bomb: Our earnings deck contains detailed information on all these.

Our earnings deck contains detailed information on all of these metrics.

Bomb: Focusing on one of these core metrics, the greater or equal to 100k customer cohort, we made solid progress during the fourth quarter. We continue to execute or adopt, land, expand and extend model as outlined by the customer activity in the quarter, which Dave spoke.

Focusing on one of these core metrics, the greater or equal to 100, K customer cohort, we made solid progress during the fourth quarter, we continued to execute our adopt land expand and extend model as outlined by the customer activity in the quarter, which Dave spoke about.

Bomb: On a trailing 12-month basis, we added 155 of these customers and grew their revenue from $123,000 per customer to $147,000 per customer in the quarter, a 20% year-over-year increase.

On a trailing 12 month basis, we added 155 of these customers and grew their revenue from 123000 per customer to 147000 per customer in the quarter and 20% year over year increase.

Bomb: We are also encouraged by our HCP views of business during the quarter because we saw strong demand.

We are also encouraged by our <unk> business during the quarter because we saw strong demand signals are cloud revenue number showed solid growth in our cloud bookings more than doubled compared to a year ago period.

Bomb: Our cloud revenue number showed solid growth, and our cloud bookings more than doubled compared to a year ago period, setting the stage for continued strong performance.

Setting the stage for continued strong performance.

Yeah.

Two final thoughts before providing forward guidance.

Bomb: First, we are very pleased with the pace of demand in the quarter driven by our 100K or greater ARR customer activity. And we remain on track, executing on our long-term plan of delivering durable and high revenue K-grids.

First we are very pleased with the pace of demand in the quarter driven by a 100 K or greater are our customer activity and we remain on track executing on our long term plan of delivering durable and high revenue CAGR.

Bomb: Second, similar to most other enterprise software businesses, we benefit from buying patterns where large enterprises tend to make sizable end-of-year purchasing decisions, leading to some.

Second similar to most other enterprise software businesses, we benefit from buying patterns, where large enterprises tend to make sizable end of your purchasing decisions leading to some seasonality in our business.

Bomb: We continue to see strong demand signals coming from the G2K and our 100K or greater ARR customers.

We continue to see strong demand signals coming from the <unk> and a 100 K or greater are our customers.

Bomb: These signals give us confidence in the long-term secular shift that is happening in the cloud and our place as a critical part of the technology stack underpinning cloud consumption.

These signals give us confidence in the long term secular shift that is happening in the cloud and our place as a critical part of the technology stack underpinning cloud consumption.

Bomb: We intend to invest in our product and go to market teams to position the company to capture this large TAM transit.

We intend to invest in our product.

And go to market teams to position the company to capture this large tam transmission.

Bomb: Further, we continue to expect leverage in our annual model, beginning in the fourth quarter of fiscal 2020.

Whether we continue to expect leverage in our annual model beginning in the fourth quarter of fiscal 2023.

Bomb: Now I want to provide our guidance for the first quarter and the full year FY 2022.

Now I want to provide our guidance for the first quarter and the full year FY 2023.

Bomb: For the first quarter of fiscal 23, we expect total revenue in the range of 92 million to 96.

For the first quarter of fiscal 'twenty three we expect total revenue in the range of 92 million to 96 million.

Bomb: We expect a Q1 non-gap operating loss in the range of $52 million to $55 million.

We expect our Q1 non-GAAP operating loss in the range of 52 million to $55 million.

Bomb: We expect non-GAAP net loss per share to be between $0.30 and $0.28 based on 182 million weighted average basic and fully diluted shares outstanding.

We expect non-GAAP net loss per share to be between 30.

And 28 cents based on 182 million weighted average basic and fully diluted shares outstanding.

Bomb: For the full fiscal year 23, we expect total revenue to be in the range of $413 million and $423 million.

For the full fiscal year 'twenty three we expect total revenue to be in the range of $413 million and $423 million.

Bomb: We expect FY23 non-gap operating loss in the range of $231 million and $239 million.

We expect FY 'twenty three non-GAAP operating loss in the range of $231 million and 239 million.

Bomb: We expect non-GAAP net loss per share to be between $1.30 and $1.26 based on 184 million weighted average basic and diluted shares used for computing non-GAAP net loss per share.

We expect non-GAAP net loss per share to be between $1 30, and $1.26 based on 184 million weighted average basic and diluted shares.

For computing non-GAAP net loss per share.

Bomb: In closing, we are very pleased with what we accomplished in our first quarter as a public company and in fiscal 2022.

In closing we are very pleased with what we accomplished in our first quarter as a public company.

In fiscal 2022.

We're looking forward to the year ahead.

Speaker Change: And with that, Dave Armand and I are happy to take any of your questions. Alex? Thanks, Navan. Operator.

And with that Dave <unk>, and I are happy to take any of your questions Alex.

Thanks, <unk> operator, let's start with the first question.

Speaker Change: Ladies and gentlemen, if you have a question or comment at this time, please press star then one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press the pound key.

Ladies and gentlemen, if you have a question or comment at this time. Please press Star then one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue simply press the pound key.

Speaker Change: Again, if you have a question or comment at this time, please press star then 1 on your telephone keypad.

Again, if you have a question or comment at this time. Please press Star then one on your telephone keypad.

Speaker Change: Our first question or comment comes from the line of Bob Wong from Morgan Stanley .

Our first question or comment comes from the line of Bob Wong from Morgan Stanley .

Your line is open.

Bob Wong: Hi all. Thanks for the question. Congratulations for a great quarter. I'm filling in for Sanjay Singh here at Morgan Stanley . Just the first question on your 100k customer ads. Obviously the 100k customer ads for the quarter was very strong. Can you maybe help us think about potential

Hi, all thanks for the question.

Congratulations for a great quarter I'm filling in for Sanjay.

Just the first question on your 100 K customer adds obviously, the 100 K customer adds for the quarter was very strong can you maybe help us think about a potential 100, K customer growth trend going forward or are there factors that.

Bob Wong: 100k customer growth trend going forward. Are there factors that maybe we should consider when looking at this customer base that would lead us to believe that it would trend down a little bit or would it sustain?

Maybe we should consider when looking at the customer base that that would lead us to believe that our you.

You would trend down a little bit or would it sustained at the current level.

Bob Wong: And so, thanks, Bob. Let me answer that question. This is Dave, just to underscore our model, you know, we obviously, these are huge spend categories that are transitioning and and they're all going to cloud and multi cloud inevitability are our model.

So thanks, Rob Let me answer that question. This is Dave just to underscore our model.

Obviously these are huge spend categories that are transitioning in the.

And they're all gone to cloud and multi cloud inevitability arm. Our model is actually starts with the open source part of our approach, which is the proliferation of open source to drive.

Dave: is actually starts with the open source part of our approach, which is the proliferation of open source to drive our products in the hands of practitioners. And then, you know, some point down the road, that is when they become a commercial customer, as the customer we indicated earlier in the prepared remarks. So really, you got to think about the open source community as a starting point, which has been a huge investment of ours for a very, very long period of time.

Our products in the hands of practitioners and then at some point down the road that is when they become a commercial customer as the customer we indicated earlier in the prepared remarks. So really you got to think about the open source community as a starting point, which has been a huge investment of ours for a very very long period of time. We then saw $600000 customers 10 million dollar customers and $110 million.

Dave: We then saw $60,000, $100,000 customers, $10 million customers, and one $10 million customer and accompanied by another stat of the 131% net dollar expansion rate of that portfolio. Fundamentally, that is that model running, right? They adopt one open source project that becomes one product as a multi-product company. They then add another.

Customer.

And a company by the other side of the 131% net dollar expansion rate of of Oh that of that portfolio fundamentally that is that model running right adopt one open source project that becomes one product that's a multi product company. They then have to add another product and over the course of time.

Dave: And over the course of time, they walk up that relationship with us to the scale of the opportunity that they were inferring.

They walk up that that relationship with us.

To the scale of the opportunity that the we're inferring fundamentally we are tied to the consumption of the cloud to state right as for cloud programs grow.

Dave: Fundamentally, we are tied to the consumption of the cloud estate, right? As the cloud programs grow, generally speaking, our product portfolio grows with it. So I don't think there's anything unique to that 100K base. I think that's just an indication that once they are on that treadmill, they tend to grow as their cloud estate grows.

Generally speaking our our product portfolio grows with it so that there's anything unique to about 100 K base I think that's just an indication that you know once they're on that treadmill, they tend to grow as their cloud state rose.

Speaker Change: Yeah, Bob, and I'll add that this isn't a bomb, you know, you got it exactly right. The way we think about the growth of our business is the 100K customer group growth. And the momentum in the fourth quarter was was really strong. So we added, as you know, 16 new 100K customers and 155 for the year. And as Dave mentioned during during his comments.

Yes, Bob.

<unk> this is noel.

You got it exactly right the way, we think about the growth of our business is the 100 K customer group growth and the momentum in the fourth quarter was really strong. So we added as you know 16, net new 100, K customers and $1 55 for the year and as Dave mentioned during during his comments each of those customers continue to grow with us as evidenced by.

Speaker Change: Each of those customers continue to grow with us as evidenced by our strong net retention rate of 131%. So that 131% was also driven by the growth in 100k customers and momentum remains very strong among them.

Our strong net retention rate of 131%. So that 131% was also driven by the growth at 100, K customers and momentum remains very strong among that group.

Speaker Change: Okay, thank you. That's very helpful for my second question.

Okay. Thank you that's very helpful for my second question.

Speaker Change: Can you maybe comment on just the adoption trends for some of your key products, right? Terraform, Vault, and Console at this point. I'm just curious if you can provide some type of revenue split out in terms of what percentage of the revenue came from Console and Vault specifically, or if not, it's just like maybe just compare the last quarter, how has that trend?

Can you maybe comment on just the adoption trends for some of your key products or of Terraform Walton Caso in this at this point just curious if you can provide some type of.

Our revenue split out in terms of what percentage of the revenue came from counsel at volt, specifically or if not it's just like maybe just compare to last quarter how has that trended.

Speaker Change: Yeah, Bob, let me take that one. So, you know, I don't think there were any significant shifts in the way our products were adopted by our customers. The lands are across our two core products, Terraform and Vault, and then we have also our emerging product console. So those three products.

Oh it environments without question, Yeah, Bob Let me take that one so I don't think there were any significant shifts in the way our products are adopted by our customers.

The lands are across our two core products terraform in vault and band we have also our emerging product console. Those so those three products or what what the what the lands where in any given quarter. You know the point to note is I think our base of multi product reserves also continued to grow and we saw some strong growth.

Speaker Change: were what the lands were in any given quarter. You know, the point to note is I think our base of multi-product users also continued to grow. And we saw some strong growth of customers over 100K adopting multiple products. So, you know, 42% growth year over year in that 100K group.

Of customers over 100, K adopting multiple products, so 42% growth year over year in that 100 K group, adding.

Speaker Change: adding their second and third product, which is obviously fantastic momentum, but in terms of product mix shifts and strong multi-product usage.

Adding their second and third product, which is obviously fantastic momentum, but that in terms of in terms of product mix shifts.

And and strong about the product usage.

Alright, Thanks, Bob next question.

Thank you. Our next question or comment comes from the line of Alex Buncombe from Wolfe Research. Your line is open.

Speaker Change: Thank you. Our next question or comment comes from the line of Alex Bunken from Wolfe Research. Your line is open.

Alex Bunken: Hey, guys, thanks for taking the question. I guess.

Hey, guys. Thanks for taking the question.

Alex Bunken: Maybe, Dave, first, you're signing some truly unbelievable customers and customer sizes. As we think about just the level for these largest customers, how do you think about for every dollar they spend on their cloud infrastructure and architecture, what percentage of their dollars or budgets ultimately do you think go to a solution like HashiCorp? And where is this relationship going forward? And then I've got a quick follow-up. Yeah, I think they're great.

Yes, maybe they first you're signing some some truly unbelievable customers and customer sizes as we think about just the level.

These largest customers how do you think about for every dollar they spend on.

On their cloud infrastructure and architecture, what percentage of their dollars are budgets. Ultimately do you think go to a solution like how should Gordon and where is this relationship going forward and then I've got a quick follow up.

Yeah, that's right that's right.

That's.

Speaker Change: The appropriate question, I think it's it's so early truthfully that it's hard for us to know what percentage that normalizes and I think.

The appropriate question I think it's so early <unk> blade that it's hard for us to know what percentage that normalizes I think job one.

Speaker Change: We have to keep in mind how early we are in our, in our evolution, right? Do you think, you know, we, all the company began in sort of 2013, our first commercial products in which reduced really were not until late 2016. So it was really 2017 was our second product. 2018 was our third product. So we're super early. And I would, I would echo your view, which is.

You have to keep in mind, how early we are in are in our evolution right now.

We own the company began its for 2013, our first commercial product. So much reduced really were not until late 2016. So it's really a 2017 was our second product when you're 18 or with a third party. We're super early and I would I would echo your view, which is I think the scale of the million dollar customers in German daughter customers just underscores the size of the markets infrastructure Mark.

Speaker Change: I think the scale of the million dollar customers and $10 million customers just underscores the size of the market. These are infrastructure markets that are large spend categories for customers.

That's that our large spend categories for customers.

Speaker Change: You know, they spend billions of dollars inside the global 2000 on these categories. So, so, you know, it's tough to put a number on on the math, other than sort of highlight that we're very early truthfully in that in that evolution.

We spend billions of dollars inside the global 2000 on these categories. So so it's.

It's tough to put a number on the on the mad other than sort of highlight that we're very early truthfully.

That evolution, but I think.

Speaker Change: People are making strategic relationship bets in our view on who their partner for this multi cloud infrastructure states going to be. And that's really where we why we were investing where we are. I think we.

People are making.

Strategic relationship hubs in our view on who their partner for this multi cloud infrastructure state is going to be and that's really why are we why are we we're investing where we are I think we don't know the exact number of where that stabilizes, but it's very clear that it's correlated and I think that conviction comes from seeing.

Speaker Change: We don't know the exact number of where that stabilizes, but it's very clear that it's correlated. And I think that conviction comes from seeing really the size of the commitments, both but also on the NDE that we're seeing from as people both, you know, expand the existing use of the products and extend to adjacent products. I mean, I can't, not the answer you're looking for exactly, but hopefully gives you a sense for how we think about it.

Really the size of the commitment both but also on the NDA either we're seeing a problem as people both.

Expand the existing users of the products and the extent of adjacent products or I can't not the answer you want for exactly but hopefully gives you a sense for how we think about it.

Speaker Change: And this is Armand. The additional color I would add here is, you know, like we shared, we have our first customer who crossed the $10 million.

And that was the hormone the the additional color I would add here as you know like we shared we have our first customer who cross the $10 million.

Armand: Mark this quarter, which we're super excited about. But when we look at even that singular customer, that is a single product driving most of that. This is not a wall-to-wall deploy. And this is within the context of a larger multi-billion dollar IT budget. So as we think about kind of what that spend ceiling looks like within any one of these accounts, we feel like there's a ton of headroom there. And I think that's representative of the broader global 2000.

Mark this quarter, which we're super excited about but when we look at even though singular customer that has a single product driving most of that this is not a wall to wall deploy and this is within the context of a larger multibillion dollar. It budget. So as we think about kind of what that spend ceiling looks like within any one of these accounts and we feel like there's.

A ton of headroom, there and I think that's representative of the broader football too.

Armand: If you look at the mix of booking split between one-year and multi-year deals, as you continue to become more strategic with your customers, but also sell more of the cloud platform product, how should we think about that split trending in the future?

Perfect and then nobody maybe one for you if you look at the mix of bookings split between one year and multiyear deals as you continue to become more strategic with your customers, but also sell more of the cloud platform product how should we think about that split trending and in the future.

Speaker Change: Yeah, thanks Alex. Good question. You know, as you know, most of our revenue is ratable, so more than 90% of our revenue is ratable. So regardless of the mix, I think we are holding good ratability and forward visibility into our revenue.

Yes, Thanks, Alex good question.

As you know most of our revenue is ratable and more than 90% of our revenue was ratable. So regardless of the mix I think we are holding good variability and forward visibility into our revenue now that being said you know strategic customers do want to have a longer engagements with us. So we're seeing a good.

Speaker Change: Now, that being said, you know, strategic customers do want to have a longer engagements with us. So we're seeing a good.

Speaker Change: good mix of duration of multi-year deals. I don't think we are expecting anything different in the next year compared to what just happened this year in terms of a mixed shift. As you saw, we saw a stabilization of duration this quarter and the prior few quarters. And that's pretty much how it's going to continue the next few quarters. Overall strong and very proud to be supporting these large customers in their journey in the cloud.

Good mix of duration of multiyear deals I don't think we are we are expecting anything different in the next year compared to what just happened. This year in terms of a mix shift as you saw we saw establish nation of duration this quarter in the prior few quarters and that that's that's pretty much how it's going to continue next few quarters overall strong and very proud.

Supporting these these large customers in their journey to cloud.

Okay. Thanks, So my question.

Speaker Change: Thank you. Our next question or comment comes from the line of Cash Rangan from Goldman Sachs. Your line is open.

Thank you. Our next question or comment comes from the line of Kash Rangan from Goldman Sachs. Your line is open.

Cash Rangan: Hey, congratulations, Dave, Armand, and Nawab. Good to be able to talk to you guys. So in the quarter, it looks like there are some breakaway trends. The number of 100K customers you added, the number of customers in total that you added.

Hey, Congratulations Dave Armando.

To be able to talk to you guys. So in the quarter. It looks like Theres, a breakaway trends in a number of 100 K customers you added a number of our customers in total that you added I mean, it's the highest we've seen not across the board in several quarters, even relative to your strong Q4 seasonality.

Cash Rangan: I mean, it's the highest we've seen across the board in several quarters, even relative to your strong Q4 seasonality.

Cash Rangan: Can you just talk about what might have changed? So is there an acceleration of the broader trends that you've seen at all? And maybe, do you foresee any positive implications from the political landscape that's going? Obviously, that's got implications for security and your evolved product. Maybe it's a little bit too far-fetched of a conclusion, but I'm just curious, what are some of the broader trends that seem to have accelerated?

Can you just talk about what might have changed so is there an acceleration of the broader trends that you've seen.

At all and maybe.

Do you foresee any positive implications from the political landscape, that's flowing obviously thats got implications for security.

And you know your vault product, maybe it's a little bit too farfetched the conclusion, but im just curious what are some of the broader trends that seem to have accelerated and you're in yoga and something I have a quick follow up question. Yeah. Okay. Thanks, guys. Yeah. This is Dave I think.

Speaker Change: in your Q&A results, and I have a quick follow-up question. Yeah, thanks, Kesh. Yeah, this is Dave. I think, honestly, it's pretty consistent for the inexorable shift to cloud. And as we see the results from the hyperscalers, you can see multi-cloud is the reality. So I think, to a large degree, it's that continued shift coupled with our growing scale. Again, obviously.

Especially it's pretty consistent with an extra both shift to cloud and as we see the results from the Hyperscale as you can see multi cloud is the reality so I think.

To a large degree its that continued shift coupled with our growing scale again now I wish I always have to remind myself are early we are you know when I joined here six years ago, we were only 20 people.

Dave: I always have to remind myself how early we are. When I joined here six years ago, we were only 20 people. So the scale of our organization has grown really, really rapidly. In fact, we just had our sales kickoff event that just reminds us how big our organization is becoming. And I think that's the second part of it, is our ability to engage with the market certainly improving as we scale. And with the progress there. In terms of infrastructure as a category, yes, we are, we are.

So the scale of our organization has grown really really rapidly in fact et cetera sales kick off event that just reminds us how bigger our organization is becoming.

That's the second part of it is our ability to engage with the market certainly improving as we as we scale.

And with.

With the progress there in terms of infrastructure as a category, yes, we are we.

We are supporting many of the most strategic and important initiatives of our customers in the realm of not just infrastructure and network, but also in security and that's not lost on us.

Dave: many of the most strategic and important initiatives of our customers in the realm of not just infrastructure and network, but also in security. And that's not lost on us.

Dave: I also would just underscore the infrastructure is a deeply considered decision right these these, you know, the the the velocity of conversations, probably upticks as a result of what's happening in the world but, you know,

So we're just underscore the infrastructure of the deeply considered decision right. These these are you know.

The velocity of conversations probably uptick as a result of what's happening in the world but.

Dave: These are still deeply considered decisions. So I would expect that to be measured, drive that cadence of open source proliferation coupled with land expand and extend. And we're pretty excited about that, but probably those are the three kind of tablets if that answers your question. Yep.

These are still deeply considered decision. So I would expect us to continue to be measured drive that that cadence of open source proliferation, coupled with no land expand and extend.

And we're pretty excited about that there's probably those are the kind.

Alex if that answers your question.

Cash and let me add to it.

Sure Yeah. So yeah, let me add too on the point about Q4, I think we started the quarter with very strong pipeline for Q4, and we ended the quarter with a good conversion of that pipeline. The Q4 in Q4, so very very positive about how that quarter turned out just a reminder, we are just like any other enterprise software.

Speaker Change: Yes, let me add to it, you know, on the point about Q4, I think we started the quarter with very strong pipeline for Q4 and we ended the quarter with a good conversion of that.

Speaker Change: pipeline in Q4. So very, very positive about how that quarter turned out. Just a reminder, we are just like any other enterprise software company and the buying patterns there. We experience seasonality towards the end of the year as buyers tend to purchase more of our products. So we were a recipient of that in Q4. That being said, strong demand signals for the rest of the year and Q1 as well. So we're comfortable with the guide that we had, but wanted to remind you of the seasonality.

Company and buying patterns there.

We experienced seasonality towards the end of the year as the as as buyers tend to tend to purchase more of our products. So we were a recipient of that in Q4 that being said strong demand signals for the rest of the year in Q1 as well. So we're comfortable with the guide that we had but I wanted to remind you of the seasonality. Thanks got.

Speaker Change: The final one was, so if you start to see any breakaway trends in sales productivity, of course, Terraform, the standard of industries are getting a little bit easier to sell Terraform and maybe

Got it.

Final one way so you're starting to see any breakaway trends in sales productivity of course, terraform and the standard in the industry that getting a little bit easier to sell terraform and maybe a couple of other products like Boston consolo, not too far behind in terms of maturity curve customer adoption overcoming hesitation, making this an easier etcetera any thoughts there now so there are a couple of them.

Speaker Change: couple of the other products like walking console are not too far behind in terms of maturity curve, customer adoption, overcoming hesitation, making the sale easier, etc. Any thoughts there? Now, so there are a couple of dynamics to that. I think the short answer is I think it's it's it's so relatively similar, I would argue, I think.

Amish are that I think the.

The short answer is I think it's it's it's still relatively similar I would argue I think.

Speaker Change: I think for the reasons that you outlined, the broad standardization, the open source community on our tech.

For the reasons that you outlined with his broad generalization the open source community on our tech.

Speaker Change: But I think I think what we're seeing is generally pretty consistent. You know, a lot of this is about market security. And I think as we've highlighted, the infrastructure and security markets are are sort of increasingly mature and we're able to meet the market where they are in a way that is productive for both of us. I think the networking market, as you know, we're seeing great signs of it, of the transitioning, but that was still early. The cloud native ecosystem.

But I think I think what we're seeing is generally pretty consistent you know a lot of this is about market charity and I think as we've highlighted the infrastructure and security markets, where are sort of increasingly mature and we're able to meet the market where they are in a way that is productive for both of US I think the networking market.

Great signs of it I'll be transitioning but that we're still early but cloud native ecosystem there.

Speaker Change: They're, you know, they're all bought into the notion of service-based networking, I would say, in the global 2000s, a little bit earlier. So, yeah, certainly for Terp we're involved in about the same console, I think we're probably seeing signs of market moving a little bit, you know, faster than it was. Thanks, Cash.

They're all bought into the notion of services networking outside in the global 2000, there's a little bit earlier, so that's sort of a pretreatment of all about the same console I think probably seeing signs of market moving a little bit.

Thanks.

Cash.

Question.

Speaker Change: Thank you. Our next question or comment comes from the line of Mark Murphy from J.P. Morgan. Your line is open.

Thank you. Our next question or comment comes from the line of Mark Murphy from J P. Morgan Your line is open.

Mark Murphy: Thank you, and I'll add my congrats. So several software companies saw kind of a lull in consumption patterns in recent months. I'm curious, did you see any effect with HCP consumption to speak of, or has that been more resilient? And then can you just remind us, what is it that can cause some of the sequential fluctuations in that cloud revenue trend?

Thank you and I'll add my congrats so several software companies saw kind of a lull in consumption patterns in recent months I'm curious did you see any effect with our H C. P consumption to speak of or has that been.

More resilient and then can you just remind us what is it that can cause some of the sequential fluctuations in that cloud revenue trend.

Speaker Change: I'll answer the first one. The predominant model for our cloud is in fact entitlement-based today still, so we don't see the shifts in the consumption that other folks have.

Yes, so I'll answer the first one the answer is we actually are.

The predominant model for our cloud is in fact entitlement based today still so we don't see the shifts in the consumption of the other folks have.

Speaker Change: You're going to answer the question. Yeah, I mean, I think the important part to note about HCP is that we saw we continue to see broad based on demand signals and also it's a new line of revenue for us. Right. And it's opening up this new segment of customers below the G2K, the emerging, the emerging enterprises.

The one perhaps you can answer the question, yes, I mean, I think the important part to note about HCP is that we saw we continued to see broad based on.

Demand signals and also it's a new line of revenue for US right and it's opening up this new segment of customers below the GTK the emerging the emerging enterprises and today's point the consumption is strong within that group, which is reflecting our revenue, but it's more entitlement based over time as the conversion moves too.

Speaker Change: And, you know, to today's point the consumption is strong within that group which is reflecting our revenue but it's more entitlement based over time as, as the conversion moves to consumption based pricing you, you do

<unk> based pricing.

Speaker Change: you'd see more of our SKUs trend that way. But overall.

You'd you'd see more of our skus trend that way, but overall, we're very pleased with the way HCP turned out and positive about the forward momentum that line that you just mentioned I apologize for apologize for jumping in but also underscore that the first version of our cloud offerings really only five quarters old grid, one product on it.

Speaker Change: We're very pleased with the way HCP turned out and positive about the forward momentum of that line. I apologize for jumping in, but also underscore that the first version of our cloud offering is really only.

Speaker Change: five quarters old. We had one product on it. Last year, we added Vault for the first time, and continue to roll out new products towards the end of the year, new regions. So it's really, really early for us in the cloud, but we actually had our best cloud bookings quarter ever, which is a milestone for us, but super, super early. And we're happy to talk a little bit about what's coming down the pipe, if you're interested. Otherwise, thank you.

Last year, we added vault for the first time and continue to rollout new.

Products towards the end of the year New region. So it's really really early for us in the cloud, but we actually had our best cloud bookings quarter ever which is a milestone for us been Super Super early and we're happy to talk a little bit about whats coming down the pipe if you're interested otherwise I can answer a different question.

Speaker Change: Indirectly, Dave, yes, I do want to ask you and Armand about that. What was on my mind is, one of your customers had said that Hashi's sweeter products is like the Apple ecosystem for IT, and was kind of just describing how everything just works harmoniously together, and I love that vision.

Yes.

Indirectly, Dave Yes, I do want to ask you you Andrew I'm on about that.

What was on my mind is one of your customers had said that <unk> suite of products is like the Apple ecosystem for I T.

Kind of just describing now everything just works harmoniously, together and I love that vision.

Dave: Can you speak to how many customers today have reached this point of maturity where they're realizing a synergy across the products? What I mean is multi-product but also kind of woven together.

Can you speak to how many customers today have reached this point of maturity, where they're realizing our synergy across the products and what I mean is.

Multi product, but also kind of woven together.

Now I'll, let Armando answer that question.

Speaker Change: Yeah, no, that's a great question. I think, I think there's a few different aspects to it. One is, you know, as Navam shared, if we look at sort of the math of growth in terms of customers in the 100k segment going to multi product.

No. It's a great question I think I think there's a few different aspects to it one is as.

Nevada shared if we look at sort of the math of growth in terms of customers in the hundred case segment going to multi product, it's a 42% growth year over year from from where we are so certainly you can kind of see from a math perspective.

Speaker Change: 42% growth year over year from where we are. So certainly you can kind of see, from a math perspective, the customers are seeing that value of leaning into that kind of integrated.

Customers are seeing that value is leaning into that kind of integrated our platform.

Speaker Change: platform experience. And I think going back to the story of your previous question as well, I think one of the things we're seeing shift is customers are increasingly seeing, uh, you know, terraform as a standard and infrastructure. There's things all as a standard and zero trust security. I think even with console, they're appreciating. Hey, if we're part of this platform investment, we know HashiCorp is going to be a strategic partner trust for many, many years to come.

Platform experience and I think going back to the sort of your previous question as well I think one of the things we're seeing shift as customers are increasingly seeing.

You know terraform as a standard and infrastructure thing Paul as a standard in zero Trust security, adding even with console Theyre appreciating Hey, if we're a part of this platform investment we know how she probably is going to be a strategic partner to us for many many years to come.

Speaker Change: You know, now that we're actually under sort of the public governance, I think that was actually a huge aspect for us in terms of giving customers that comfort and we're seeing that acceleration, as Dave mentioned around the networking market as well where people are really acknowledging that hey if I was going to be a strategic partner.

Now that we're actually under sort of the public governance I think that was actually a huge aspects for us in terms of giving customers that comfort and we're seeing that acceleration as Dave mentioned around the networking market as well where people are really acknowledging that hey, if I'm sure it's going to be a strategic partner.

Speaker Change: components are well integrated and it makes sense for us to sort of invest in the broader HashiCorp platform vision as opposed to necessarily just coming in through a single product. I just wanted to add one comment, I apologize, is these problems are fundamentally connected and I think it's important for people to understand that if you have a provisioning problem, there's also a security aspect, there's also a networking aspect.

<unk> are well integrated and it makes sense for us to sort of invest in the broader harsh about platform vision as opposed to necessarily just coming in through a single product.

At one time and I apologize if these problems are fundamentally connected and I think it's important for people to understand that if you have a provisioning problem. There's also a security aspect. There is also a networking aspect.

Since.

Speaker Change: We sort of come from the future a little bit from the cloud world and we know that our thousand customers eventually have all those problems. The product portfolio is designed that way, but we let people adopt it piecemeal. But if you talk to all of our scale customers, all of our more mature customers, and certainly those in the cloud-native ecosystem, like some of the folks you see on the news, they are all using most of the products, not one. Thanks, Mark. Let's go to the next question.

We sort of come from the future a little bit from a cloud world and we know that our customers. Eventually all of those problems. The product portfolio is designed that way, but we let people adopted piecemeal, but if you talk to all of our scale customers all of our more mature customer that's when we have those in the.

And the cloud native ecosystem like some of the books gentlemen, there is they are all using most of the products not one.

Thanks, Mark let's go to the next question.

Speaker Change: Thank you. Our next question or comment comes from the line of Jason Ader from William Blair. Your line is open.

Thank you. Our next question or comment comes from the line of Jason Ader from William Blair. Your line is open.

Jason Ader: Yeah, thanks. Hey, guys. Dave, I guess when you think about 2023, what are your top two or three priorities? And what is the biggest constraint on your growth right now?

Yeah, Thanks, Hey, guys.

What I guess when you think about 'twenty 'twenty three what are your top two or three priorities and what is the biggest constraint on your growth right now.

Yeah.

Speaker Change: Yeah, it's really more of the same truthfully. I think it's, you know, point number one is, let's continue to scale our engagement with the Global 2000. I think, I think

Yeah, it's really more of the same truthfully I think that's point number one is let's continue to scale our engagement with a global 2000, I think I think.

Speaker Change: History has taught us that when markets go through transitions, there's a time period where those decisions are made in terms of the new software stack, and we're deeply convicted about that, and we're committed to going after it aggressively.

History has taught us that when markets go through transitions.

There's a time period, where those decisions were made in terms of the new software stack and we're deeply convicted about that and we're committed to going after it aggressively.

Speaker Change: And you see that in the growth of our sales organization. And that is our priority number one. Priority number one, you saw us add 36 to the global 2000 last quarter. We're gonna keep doing that. That's the first step that we wanna partner with.

And you see that in the growth of our sales organization and that is our priority number one priority number one you saw 36 of the global 2000 last quarter, we're going to keep doing that.

We want to partner with.

Speaker Change: The second priority is our continued evolution of our products on HCP. That's an important new distribution channel for us, and perhaps Armand can just talk about some of the things that are happening.

The second priority is our continued evolution of our products on HCP, that's an important new distribution channel for us and perhaps our market to talk about some of the things that are happening there.

Armand: Yeah, as Dave mentioned, cloud is a major investment for us from an R&D perspective. You know, last year, we went from just a single cloud product available at the start of the year, which is Terraform to bringing Vault and Console. That was, you know, initial

Yeah as Dave mentioned, our cloud is a major investment for us from an R&D perspective.

Last year, we went from just a single cloud product available at the start of the year, which is terraform to bringing vault and console that was initial skus on a few cloud regions and so since then through the year, we expanded the number of regions that.

Armand: SKUs on a few cloud regions. And so since then, through the year, we expanded the number of regions that we were in, the number of SKUs that were available, so adding kind of richer capability. And as we think about carrying that into this year, at today's point, it is more of the same, but it is bringing additional products online, bringing additional cloud regions online, bringing additional cloud providers online.

We were in the number of Skus that were available so adding kind of Richard capability and as we think about carrying that into this year at today's point. It is more of the same but it is bringing additional products online, bringing additional cloud regions online, bringing additional cloud providers online. So really a heavy R&D investment in terms of enabling all of the the hydraulic tools to be.

Armand: So really a heavy R&D investment in terms of enabling all of the tools to be consumed as a cloud service wherever the customer wants to consume it.

<unk> as.

As a cloud service wherever the customer wants to consume it.

Speaker Change: Gotcha. And so that basically you're saying that the biggest constraint right now sounds like it's

Got you and so basically you're saying that the biggest constraint right now it sounds like it's.

Speaker Change: adding as many salespeople and support people that you can to kind of capture that G2K opportunity, as well as getting the HCP offering kind of fully ramped up across all major cloud regions. Is that fair?

Adding so many salespeople and support people that you can do kind of capture that GTK opportunity as well as getting the HCP offering kind of fully ramped up across all major cloud regions suffer.

Speaker Change: Yeah, I think that's a good on the first one. Again, I make this point often, you know, these are these are considered decisions for a reason, because they are they're durable. And so, you know, we can we can address it with the sales organization. But there's also an aspect of the market, right? Like, you know, certain regions are more mature than other regions, for example, North America, you know, the global 2000 shift, the cloud is actually pretty mature in other regions, it's less mature. And I think that's an important aspect that we keep an eye on. So, you know, I

That's very good I think on the first one again I make this point often you know these are.

<unk> decisions for a reason because they are they are durable and so we can you can address it with the sales organization, but there's also an aspect of the market right.

Certain regions are more mature than other regions. For example in North America. The global 3000 shift to cloud is actually a pretty mature in other regions is less mature and I think that's an important aspect that we keep an eye on so you know.

Speaker Change: Infrastructure markets, as we like to say, move inexorably like the Mississippi. And that's a concern. Thanks, Jason. And just in the interest of time, we're gonna stick to one question on how to get through all the remaining queue here. So, operator.

Infrastructure markets as we like to say move inexorably like the Mississippi.

And that's a that's a constraint.

Jason and just the interest of time, we're going to stick to one question to get through all the remaining Q here so operator.

Speaker Change: Thank you. Our next question or comment comes from the line of Derek Wood from Cowan and Company. Your line is open.

Thank you. Our next question or comment comes from the line of Derrick Wood from Cowen <unk> Company. Your line is open.

Derek Wood: Great. Thanks. And great quarter out of the gate, guys. I wanted to go back to the console topic. I mean, it sounded like you had a strong quarter. I think console tends to generate bigger deals.

Great, Thanks, and great quarter out of the gate guys I wanted to go back to the the console topic I mean, it sounded like you had a strong quarter I think console tends to generate bigger deals.

Derek Wood: I know it's still more of an emerging product. Just curious if there's anything you can do to proactively help kind of tilt the curve of adoption a little bit more in fiscal 23. And I know you guys announced an API gateway offering in tech preview recently. Just wondering how you're feeling about entering that market and what kind of opportunity lies there.

I know, it's still more of an emerging product just curious if theres anything you can do to proactively help.

<unk> kind of tilt the curve of adoption a little bit more in fiscal 'twenty three.

And I know you guys announced an API gateway offering and tech preview recently, just wondering how youre feeling about entering that market and what kind of opportunity lies there.

Speaker Change: I'm going to answer the first one. I'll let Arman answer the second one. The first one is.

I'm going to answer the first one I'll, let armani answer the second one the first one is again if you look at the cloud native ecosystem in terms of either digital native community.

Arman Daggar: Again, if you look at the cloud-native ecosystem, in terms of the digital-native community, the console is super broadly used. I just think the global 2000s transition to cloud is actually really early, and they tend to run into the provisioning and security problem first. That's the simple truth.

The console Super broadly used I, just think the global two thousands transition to cloud is actually really early and they tend to run into the provisioning and security problem first that's the simple truth. So.

Arman Daggar: So I think it's continued evangelism, it's continued demonstration within the Lighthouse accounts of which we have many, obviously, that are adopting this at scale and continue to push that message forward because the technology is very well proven in the digital native ecosystem. Honestly, I think that's the constraint. It's a market constraint more than a product constraint. You'll see us leaning in really heavily with the cloud providers themselves. We run a managed service with Microsoft and Azure. We do a lot of work.

I think it's continued evangelism, it's continue demonstration within the lighthouse accounts of which we have many obviously that are that are adopting this at scale and continue to push that message forward because the technology is very well proven and the digital digital native ecosystem I honestly I think that's the constraint, it's a market constrained more than a product constraints.

You'll see us leaning really heavily with the cloud providers themselves. If you run a managed service.

Microsoft on Azure, we do a lot of work to better link the runtime platforms on Amazon to console and I think that's the second lever that we can do and you've seen us investing deep was there more to talk about.

Arman Daggar: to better link the runtime platforms on Amazon to console.

Arman Daggar: And I think that's the second lever that we can do. And you've seen us investing deeply there. I want to talk about the.

Speaker Change: Yeah, I think there's a few fold there. So, you know, I think when we talk about accelerating

The other question Yeah, I think there is a few fold. There. So you know I think when we talk about accelerating kind of console overall.

Speaker Change: Kind of console overall, you know, first piece of Dave mentioned is really the cloud delivery component. So, as I mentioned, really only became available for middle of last year as a cloud service and the initial version.

First piece as Dave mentioned is really the cloud delivery component. So as I mentioned really only became available sort of middle of last year as a cloud service and the initial version. So this year continuing to sort of expand the skus around console the region availability in the cloud availability. So I think all of that will make it easier to kind of trial counsel as well as sort of.

Speaker Change: So this year, continuing to sort of expand the SKUs around console, the region availability, the cloud availability. So I think all of that will make it easier to kind of trial console as well as sort of go through the whole purchase experience with us.

I will go through the whole purchase experience with us.

Speaker Change: as we add that as an option beyond just self-managed. I think the second piece is continuing to be deeply invested in the capabilities that it will enable global 2,000 customers.

We add that as an option beyond just self managed I'm. The second piece is continuing to be deeply invested in the capabilities that will enable our global 2000 customers.

Speaker Change: As they're going through that transition of understanding, hey, what is our future of our zero trust networking approach or how do we do, you know, cloud to ground networking or multi cloud networking. There's a set of capabilities they continue to need to manage it at a very large scale.

As they're going through that transition of understanding hey, what is our future of our zero trust networking approach or how do we do you know cloud to ground networking or multi cloud networking, there's a set of capabilities. They continue to need to manage it at very large scale and then the API gateway is really about the completeness of vision right and I think what we're seeing.

Speaker Change: And then the API gateway is really about the completeness of vision. Right. And I think what we're seeing is sort of an intersection of, you know, what was historically a separate north south approach networking versus an east west.

Is sort of an intersection of what was historically a separate north south.

Approached networking versus an east west.

Speaker Change: So I think historically, customers thought about those as sort of two different markets, different approaches, different vendors. I think as we're seeing the architectural patterns shift to being very microservice driven.

Historically customers thought about those as sort of two different markets different approaches different vendors I think as we're seeing the architectural pattern shifts to being very micro service driven services being deployed globally and kind of a multi region way that line is blurring increasingly so I think east west versus north South.

Speaker Change: services being deployed globally in kind of a multi-region way, that line is blurring increasingly. So I think East-West versus North-South, you know, it's part of one logical networking story, and I think the API gateway rounds that out with console. Thanks.

As part of one logical networking story and I think the API gateway rounds that out with counsel.

Eric next question.

Speaker Change: Our next question or comment comes from the line of Brad Seals from Bank of America Securities. Your line is open.

Our next question or comment comes from the line of Brad fields from Bank of America Securities. Your line is open.

Brad Seals: Oh, great. Hey, guys. Congratulations on a nice quarter here. Thanks for the question. I just wanted to ask one on kind of that tipping point that you see in the customer base. For customers to kind of get to the scale, you talked about that kind of $10 million contract. Obviously, at this point, those are kind of the exception. But is there a certain footprint or number of applications that you see after which you really start to see customers really hit their stride in that expansion in their usage of HashiCorp?

Oh, Great Hey, guys. Congratulations on a nice quarter here. Thanks for the question I just wanted to ask one on kind of that tipping point that you see in the customer base for customers to kind of get to the scale you talked about that kind of $10 million contract. Obviously at this point those are kind of the exception, but is there a certain footprint or number of application.

That you see in which after which you really start to see customers.

It really hit their stride and that expansion in there.

Usage of Hershey Corp.

Thank you Alan.

Speaker Change: very appropriate question given how we spend our days. I think there's a transition that happens. I think there's a difference between a business group that's sort of building an application on cloud and that often ends up being an early adopter of our products.

Very appropriate question given you know.

How we spend our days.

There's a there's a transition that happens I think there is.

There is a different business groups that sort of building an application on cloud and that often ends up being an early adopter of our products, maybe there's a couple of business groups, maybe the three business groups and then at some point.

Speaker Change: Maybe there's a couple of business groups, maybe there's three business groups. And then at some point, it gets established more as a standard by a platform team. And I think that's, some of these companies are really big, right? So, and these categories are so big that we can certainly have million dollar customers inside a single business without issue. There are plenty of those. But I think it is when you sort of reach that monocular standardization in a platform team concept, which is probably the tipping point that we see being the sort of the moment where it goes. Great, thanks.

It gets established more of a standard by our platform team and I think that's.

Some of these companies are really big right. So.

And these categories are so big that now we can certainly a million dollar customers inside a single business without issue. There are plenty of those but I think it is it is when you sort of reached that monitor standardization and a platform team concept.

Which is probably the tipping point that we see being there for the moment the moment, where it goes.

Okay. Thanks, Brad Let's go to next question operator.

Speaker Change: Our next question or comment comes from the line of Michael Turrets from KeyBank. Your line is open.

Our next question or comment comes from the line of Michael tourists from Keybanc. Your line is open.

Speaker Change: Hey, great. This is Steve Enderson for Michael. I appreciate taking the question here. I just want to touch on the comment you had around seeing really strong conversion of a pipeline in 4Q. I guess, was there kind of any deals that you felt like got kind of pulled forward that maybe you were expecting to hit in 1Q? And kind of how are you feeling about the general pipeline into fiscal 23 at this point?

Hey, Greg This is Steve Enders on for Michael I. Appreciate you taking the question here I just want to touch on the comment you had around seen really Sean conversion of a pipeline in core kao.

I guess is there kind of any any deals that you felt like that kind of pulled forward that maybe we're expecting to hit in <unk>.

And then kind of how are you feeling about the general pipeline into a into fiscal 'twenty three at this point.

Speaker Change: Yeah, good question, Steve. This is Navam. So, you know, I think the fourth quarter pipeline was high, was very strong, and we saw a good conversion of that pipeline. It wasn't unusual compared to what we expect in a fourth quarter. And I think we are comfortable with the signals we're seeing in the first quarter, and we have strong pipeline in the first quarter that give us comfort in the guidance we have. So, you know, I think we're happy with where we landed, and we're optimistic about the full year.

Yeah. Good question, Steve This is Noah.

The fourth quarter pipeline was high was very strong and we saw good conversion of that pipeline. It wasn't unusual compared to what we expect in the fourth quarter.

And I think we are comfortable with the signals, we're seeing in the first quarter and we have strong pipeline into first quarter that give us comfort in the guidance we have so.

I think where we're at.

We're happy with where we landed and were optimistic about the full year.

Alright. Thanks.

Thanks, Steve next question question.

Speaker Change: Thank you. Our next question comes from Itay Kidron from Oppenheimer. Your line is open.

Thank you. Our next question comes from <unk> Kidron from Oppenheimer. Your line is open.

Itay Kidron: Thanks, and congrats, Guy. Great quarter. Navam, a couple for you. Just want to make sure I understand the correlation between the CRPO and your guidance for the year. If my math is right, you've got it at a midpoint at about 30% year-over-year growth. The CRPO growing much faster than. Maybe you can help us kind of reconcile the two. And also on the gross margin, the same way HCP is growing as a mix, your gross margin moving higher. How should we think about gross margins through the year?

Thanks, and congrats guys great great quarter.

Now if I'm a couple for you would just want to make sure I understand the.

Correlation between <unk> and your guidance for the year. If my math is right you got it at the midpoint at about 30% year over year growth in Europe , you are growing much faster than maybe you can help us kind of reconcile the two and also on the gross margin in the same way.

C. P is growing as it makes your gross margin moving higher how should we think about gross margins through the year.

Speaker Change: Yeah, thanks and two good, very good questions on on our metrics. So, so the CRPO growth, you know, we're very optimistic about it. We saw.

Yeah, Thanks, it tie in and.

Two good very good questions on our metrics. So the CRP AUM growth, we're very optimistic about we saw good momentum in the quarter as I mentioned strong bookings growth and the result of that was the very high <unk> growth that you saw.

Speaker Change: Good momentum in the quarter, as I mentioned, strong bookings growth, and the result of that was the very high CRPO growth that you saw. The point to note is that we are seeing normalizing durations, and that's part of what's driving the CRPO growth normalization to what you're seeing. And that's basically the movement in CRPO that, sorry, the movement in CRPO, which is driven by duration.

<unk> is that we are seeing normalizing durations and that's that's part of what's driving the CRP of growth normalization to what youre seeing in that that's basically that the movement in CRP Oh, sorry.

The movement in <unk>, which is driven by duration on your gross margins were very pleased to being a high gross margin company. Our strong gross margin company I think the main driver for that is we're ahead of our plan in terms of in terms of cloud gross margins. So we reach 50% and we're confident we'll be able to scale that up to that that the high Seventy's overall, we expect next.

Speaker Change: On your gross margins, we're very pleased with being a high gross margin company or strong gross margin company. I think the main drive for that.

Speaker Change: is we're ahead of our plan in terms of cloud gross margins. So we reached 50% and we're confident we're able to scale that up to the high 70s.

Speaker Change: Overall, we expect next year to be at about an 80% margin. And as the cloud grows over time, we'd expect to normalize at the high 70s margin. But us as a company, we believe we will remain a strong gross margin business. Thank you.

Year to be at about an 80% margin and as the cloud grows over time, we'd expect to normalize at the high Sevens margin, but.

US as a company we believe we will remain in a strong gross margin business.

Thank you.

Alright next question thanks for that.

Speaker Change: Thank you. Our next question comes from the line of Pat Walravens from JMP. Your line is open.

Our next question comes from the line of Pat Walraven from JMP. Your line is open.

Pat Walravens: Oh, great. Thank you. And let me add my congratulations on a great quarter. So Dave, lots of great information on this call. Maybe to help boil it all down for us, what are the sort of two or three most important things for you to get done in this next year?

Oh, great. Thank you and let me add my congratulations on them.

Great quarter, so lots of great information on this call maybe to help boil it all down for US what are what are the sort of two or three most important things.

For you to get done in this next year.

Yeah, I think it's it's it's number one trying to engage more of a global 2000 and win the right to be their partner.

Dave: number one, trying to engage more of the Global 2000s and win the right to be their partner. That position of trust is the one we covet. That is what we're doing. And we're continuing to invest aggressively against that opportunity.

The position of trusted is the one we covered.

That was what we're doing and we'll continue to invest aggressively against that opportunity.

Dave: Number two is, as Armand highlighted, it's continuing to invest deeply in this new distribution channel of HCP, which is going to be important as.

Number two is as <unk> highlighted is continuing to invest deeply in this new distribution channel of HCP, which is we're just going to be important to us.

Dave: not just for adding the longer tail of our customer base onto the commercial side of our business, but also there's clearly appetite from some of the larger organizations in the world to consume as a service despite being infrastructure. Those are really the two things we're focused on.

Not just for adding.

The longer tail of our customer base onto the commercial side of our business, but also theres clearly appetite from some of our larger organizations in the world to consume as a service despite being infrastructure those are really the two things.

We're focused on that.

Speaker Change: Yes, I can just make one comment about the first point around our continued investment in our field organization. What we have is a fundamentally strong unit economics in our business, high gross margin business, a well-capitalized company with an opportunity to pursue this massive market opportunity in front of us, and that's driving our investment in field, that's driving our investment in the company to aggressively pursue it. That's the first of our two priorities.

If I could sneak one comment about the first point around our continued investment in our field organization no. We have a fundamentally strong unit economics in our business high gross margin business, a well capitalized company with an opportunity to pursue this massive market opportunity in front of us and that's driving our investment in field, that's driving our investment in the company to aggressively.

That's the first of our three priorities.

Speaker Change: process. Thanks, Pat. Next. Thanks, Pat. Next question.

Alright, Thanks, Pat next.

Thanks, Pat next question.

Speaker Change: Thank you. Our next question comes from the line of Satina Bulani from Citi. Your line is open.

Our next question comes from the line of subpoena Bolani from Citi. Your line is open.

Satina Bulani: Good afternoon and thank you for taking my questions and nice to be able to talk to you all of you again about my questions for you with respect to the non gap operating loss guidance.

Good afternoon, and thank you for taking my questions and nice to be able to talk to you all of you again.

I know one of my questions for you are with respect to the non-GAAP operating loss guidance I wanted to ask you to help us unpack some of the primary assumptions.

Satina Bulani: I wanted to ask you to help us sort of unpack some of the primary assumptions that are baked into that expense profile next year, and if you can sort of walk us through how you're thinking about expenses, tracking back to pre-COVID levels, and specifically tying it back to some of your comments.

That are baked into that.

<unk> profile next year, and if you can sort of walk us through how you're thinking about expense expenses tracking back to pre COVID-19 levels.

And specifically tying it back to some of your comments in your prepared remarks in the deck around a challenging recruiting environment I'd be curious to get your opinion on where you might be or if you're behind plan on certain areas of the business and where you might be understaffed or under indexed and at this point.

Satina Bulani: in your prepared remarks in the deck around a challenging recruiting environment. I'd be curious to get your opinion on where you might be or if you're behind plan on certain areas of the business and where you might be understaffed or under indexed at the same time.

Yes.

Speaker Change: Yeah, I'll just make it appreciate the question. It's good to talk in this in this firm for the first time. It's kind of fun. I'll just, I'll just underscore my point about sort of strong unit economics.

I appreciate the question that's good it's good to talk to this in this firm for the first time, it's kind of fun.

I'll just I'll just underscore my point about sort of strong unit economics.

Speaker Change: uh, expenses, uh, that are showing you that comes in our business and our, and our desire to keep investing against the opportunity. I think that underscores our expense profile that, uh, that, that I'm communicated. I'll hand thing over.

Sure.

In our business and our desire to keep investing against the opportunity I think that underscores our expense profile that the communicated.

I think over to Nevada comment more deeply but I'll just comment on the recruiting environment.

Speaker Change: to comment more deeply, but I'll just comment on the recruiting environment.

Speaker Change: I think we're very fortunate in that we're a net recipient of sort of a lot of the migration.

I think where we are we're very fortunate in that we're a net recipient of a sort of a lot of the migration. So I think we've actually been in a pretty good position, but we're also very aggressive in our hiring goals, we hired almost about when people last year.

Speaker Change: So I think we've actually been in a pretty good position, but we're also very aggressive in our hiring goals. You know, we hired almost a thousand people last year, and so we.

And so we are we are optimistic you're geared to keep investing in those people. If we're not seeing much of an issue. There I think we've got a fortunate position that we just have aggressive goals.

Speaker Change: We are optimistic, we are geared to keep investing in those people if we're not.

Speaker Change: much of an issue there. I think we're in a fortunate position that we just have aggressive goals. Yeah, I mean, I'll comment a little bit about our philosophy of spend as well. The key thing to remember is that our net dollar retention rates, which were at 131%, was best in class, in our opinion.

I mean, I'll comment a little bit about our philosophy of spend as well.

The key thing to remember is that our net dollar retention rates, which were at 131% was was that was best in class in our opinion.

Speaker Change: And what that's telling us is that customers once landed will expand and extend, and that's been consistent across in the past. So the right thing for us to do is to continue to invest in our product group and continue to invest into our go-to-market group. And that's what's right for the long term. So net is the high net retention rates, the good unit economics.

And what that's telling us is that customers once landed will expand and extend and that's been consistent across in the past. So the right thing for us to do is to continue to invest in our product group and continue to invest into our go to market group and Thats whats right for the long term. So net is the high net retention rates the good unit.

Economics, the very strong balance sheet that we see in the high gross margin give us the flexibility to do so and that's what we're doing over the next few quarters, you're going to see leverage I'd say towards the back half of the year in the fourth quarter I wish we're going to start looking at annual leverage after that point, but for now I think we are we are consistent where we're convicted of that.

Speaker Change: the very strong balance sheets that we see and the high gross margin give us the flexibility to do so and that's what we're doing over the next few quarters. You're going to see leverage I'd say towards the back half of the year in the fourth quarter where we're going to start looking at annual leverage.

Speaker Change: after that point. But for now, I think we are, we are consistent, we're convicted of the long-term and are looking to win the market. All right. Thank you. Thanks.

Long term and are keeping the market alright. Thank you. Thanks for taking my next question.

Speaker Change: Thank you. Our next question comes from the line of Alex Henderson from Needham. Your line is open.

Thank you. Our next question comes from the line of hours Henderson from Needham Your line is open.

Alex Henderson: Thank you. I've got two questions for you. One, I wanted to understand a little bit more about how transactions typically start with enterprise customers. Do they generally start off with a deployment, say perhaps Terraform, in their on-premise data center to get experience with the product and then move to the cloud? Or are you increasingly seeing coder-centric

Thank you I've got two questions for you one.

Wanted to understand a little bit more about how tran.

Transactions typically start with enterprise customers do they generally start off within the deployment.

<unk> terraform in their on premise data center to get experience with the product and then move to the cloud or are you increasingly seen a coder.

<unk> centric.

Alex Henderson: adoption, driving application, the workloads to the cloud, and then finding their way back into the enterprise data center, which is the primary.

Adoption.

Driving application.

Workloads to the cloud and then finding their way back into the enterprise data Center, which is the primary.

Alex Henderson: process flow. And the second question I have for you is

Process flow and the second question I have for you is.

Alex Henderson: It would seem to me that the coding community and DevOps community are the primary target customers here in terms of getting adoption. Can you talk at all about what portion or the number or the growth rate of that population that's currently utilizing your technology and writing to it?

You know it would seem to me that the powder coating community and Dev ops community are the primary target customers here in terms of getting adoption can you talk at all about what portion or the number or the growth rate of that.

Population that.

Currently utilizing your technology and right into it.

Speaker Change: Yeah, to be honest, I'm happy to answer that. Yeah, I think the first question is fundamentally one of what's the adoption pattern? I'll try to distill it. We see the pattern of the adoption is by practitioners who are tasked with building new things on cloud. That's where it starts in open source. For example, that $10 million customer we mentioned had started out in 2015. It starts very early. But that is happening in a cloud environment. They're using Terraform, Vault, Consul, Acura, et cetera, as the basis of how they're building new applications. It's a bit tactical in that instance.

Yes.

I'm happy to answer that I think the first question is fundamentally what's the adoption pattern I tried to still it we see the pattern of adoption is by practitioners, who are tasked with building new things on cloud, that's where it starts and open source of for example that $10 million customer. We mentioned had chartered out in 2015. It starts very early but.

That is happening in a cloud environment, they're using terraform bulk console Agra et cetera, as the basis of how they're building their applications, but it is a bit tactical in that instance.

Speaker Change: And that is for the purpose of maybe one or two applications. So it's not in a private data center, per se. It's literally how they're interfacing the cloud for a particular project. What happens, what we call the 2.0 moment, is when they get 12 months into that project and realize they're overspent on their Amazon bill. They've got a bunch of apps that they shouldn't have from a security standpoint that are out there running because they're not secured. And that is when the corporation says, hold on a second.

And that is for the purpose of maybe one or two applications. So it's not in a private data center per se, it's literally how they're interfacing to cloud for particular project what happens what we call. The tutto a moment is when they get 12 months into that contract into that project and realize their overspent on their Amazon Bill. If you got a bunch of absent this shouldn't have from a security standpoint that are out.

They're running because theyre not secured and that is when the corporations is hold on a second we're going to cloud, it's going to be multi cloud and <unk> to standardize in some way and in that instance, they're already using our open source projects and that incidence that becomes sort of some sense of default. Okay. Let's use the commercial version of those products because that's what they are designed for so they are already being used.

Speaker Change: We're going to go cloud. It's going to be multi-cloud. I need to standardize in some way. And in that instance, they're already using our open source projects. In that instance, that becomes, in some sense, a default. OK, let's use the commercial version of those products because that's what they're designed for. So they're already being used by the practitioners. But the conversion to a customer is when the organization makes that decision to say, hold on a second, let's think about how we're going to do cloud in a way that is better responsible. That's really point number one. That's a very, very consistent mechanism. Question number two in terms of the.

By the practitioners, but the conversion to a customer is when the organization makes that decision to say a lot of second let's think about how we're going to do cloud in a way that is a it's not a responsible that's really point number number one that's a very very consistent mechanism.

Number two in terms of the targeted customers.

Speaker Change: customers.

Speaker Change: You know, in a sense, our users are ops people as much as they are dev people. You know, I think there's sort of a parallel, you know, get up.

You're in a sense our users our ops people as much as they are that people you know I think theres derivative parallel.

Speaker Change: We're sort of the analog in the Ops community. I think that's probably the best way to think about it. That community has certainly grown quickly. We disclosed 100 million downloads of our products last year. And that is the basis of that community measurement. Obviously, we also share some data around certifications growing. That's another key measure. A number of people on our Learn platform, but I think what we saw in Q4 was certainly a continued uptick.

What we saw here.

We're through the analog and the ops community I think that's probably the best way to think about it that community has certainly grown quickly we disclosed 100 million downloads of our products last year.

And that is the basis of all of that community measurement, obviously relative share has been around certifications growing that's another key measure of number of people on our learn platform, but I think what we saw in Q4 was certainly continued uptick we're in the early stages of this cloud transition and if anything there is a staffing shortage of people that know how to use it.

Speaker Change: We're in the early stages of this cloud transition, and if anything, there is a staffing shortage of people that know how to use cloud. All right, well, thanks, Alex, for the question, and operator, next question.

This club alright, well thanks, Alex for the question Operator next question.

Speaker Change: Thank you. Our next question comes from the line of Rob Galvin from Stiefel. Your line is open.

Thank you. Our next question comes from the line of Rob Galvin from Stifel. Your line is open.

Rob Galvin: Hi, everyone. This is Rob in for Brad Reback. Thanks for taking the question. I'm just wondering how much of the $100,000 ARR customer cohort is from the is from HCP, either in terms of the number of customers or the HCP portion of the 89% revenue contribution in that customer cohort?

Hi, everyone. This is rob in for Bradbury back. Thanks for taking the question I'm just wondering how much of the 100 K a R. A R. Our customer cohort is from is from HCP either in terms of the number of customers or the HCP portion of the 89% revenue contribution.

That customer cohort.

I'll let environments.

Rob Galvin: Yeah, thanks for the question, Rob. HCP is a very new line of business for us. We essentially moved from a standing start to where we are right around last year to where we are right now. So we're pleased with the progress. It's also a new group of customers, like I mentioned before. So this is mostly for the emerging enterprises, the small and medium-sized businesses. So they are growing in size, and we're optimistic that we'll start adding.

Yeah. Thanks for the question Rob you know HCP is a very new line of business for US we essentially moved from a standing start to where we are right around last year to where we are right. Now. So we're we're pleased with the progress. It's also a new group of customers like I mentioned before so this is mostly for the emerging enterprises, the small and medium sized businesses.

So they are growing in size.

And that we're optimistic that we'll start adding customers of scale and size as expansions and extensions hatch.

Rob Galvin: customers of scaling sizes as expansions and extensions happen.

Yeah.

Great. Thank you.

Speaker Change: Thank you. I'd like to turn the conference back over to Mr. Dave McJanick for any closing remarks.

Thank you I'd like to turn the conference back over to Mr. Dave mechanic for any closing remarks.

Dave McJanick: I'd just like to express my thanks for the participation from all of you and I appreciate you dialing in and for the questions and look forward to speaking to everybody soon. Thank you.

Yes, I'd just like to express my thanks for that.

And from all of you and I appreciate you dialing in.

The questions and look forward to speaking to everybody soon thank you.

Speaker Change: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.

No.

Yeah.

Uh huh.

Yeah.