HashiCorp, Inc. (NASDAQ:HCP) Q2 2024 Earnings Call Transcript

Navam Welihinda: Hey Gary, it’s Navam here. Thanks for the question. So yes, we’re very happy with the solid CRPO and bookings performance this quarter. So that was a solid quarter of performance. The thing you’ve got to remember is as an enterprise software company, you have seasonality in the back half compared to the first half, right? So, you have a seasonally larger second quarter, which has a different compared to last year’s second half. And what we’re factoring into Q3 and Q4 is basically the demand environment that Dave talked about, which is a challenging purchasing environment, but at the same time, digital transformation and cloud efforts continuing. So, that’s factored into our Q3 and Q4 forecast guidance. So, that’s the impact you’re seeing on revenue versus the cRPO growth line. So overall, I think we’re very pleased with the cRPO results forward.

Operator: Our next question comes from the line of Mark Murphy from JP Morgan. Please go ahead.

Mark Murphy: Navam, similar question to Gray’s. I noticed that nice sequential growth in the cRPO, that’s great to see. That occurred with a low volume of customer adds. And so, I’m wondering if you could just explain the mechanics. For instance, did you have a few pretty chunky deals in the mix, anything different in terms of composition? And then for Armon, I wanted to ask you, we noticed at Google Next that your announcement that the Google provider for Terraform had been downloaded 350 million times. And I just looked at, it’s climbed to 370 million. So it looks like it’s kind of shockingly active. And I’m wondering if — should we look at that as confirming what you’re mentioning there just in terms of multi-cloud movement? Is it — is that somehow moving faster while the — amidst this kind of slowdown where more companies are optimizing? Do you actually see them kind of spreading their footprints over into Azure and Google a little more actively?

Armon Dadgar: Sure. Thanks, Mark. Let me take the second question, and then I can hand it back over to Navam. Yes. No, I think — certainly, I think we continue to be impressed as those download counts cross new thresholds, to your point, I think Google had an impressive milestone. I think AWS recently crossed the 2 billion download mark as well. So, we’re continuing to see a lot of download activity. I think going back to my comment earlier, I do think we’re seeing the investments in generative AI driving more multi-cloud interest. And I think certainly, customers that were maybe focused on one primary CSP are now looking at, hey, how do I access some of these best-of-breed capabilities that Google is announcing, Azure is announcing, AWS certainly has quite a bit of offering. So, I think all the clouds are investing in focused offerings, and I think that is driving sort of a look to how do you get access to best of breed. So I think that’s certainly fair.

Navam Welihinda: Yes, Mark. And hey, it’s Navam. On the customer mix question, just a note on the customers, there are a wide range of customers in our total customer group, right? There’s the G2K on the high end; and then there’s the smaller self-serve customers on the low end, and these are customers generally spending somewhere around $2,500 a year. So what you’re seeing on sort of the total customer count perspective is the movement of that self-serve small customer count, we saw some impact this quarter. But in terms of revenue impact, there’s almost an immaterial impact of that customer group since they’re so small. So in terms of sort of the gross customer additions from our sales team and the 100,000 customer additions, they’re remaining consistent. We’re still taking ground there, and there wasn’t any outsized impact on any single deal that we saw in the second quarter for our revenue.