According to a recent report, the global Infrastructure as code (IaC) market is estimated to grow at 24% CAGR to $2.3 billion by 2027 from $0.8 billion this year. IaC technologies assist system administrators in manual procedures and allow application developers to concentrate on what they do effectively by optimizing and refactoring infrastructure builds. San Francisco-based Hashicorp (Nasdaq: HCP) is a leading player in the market that recently announced its quarterly results that outpaced market expectations.

HashiCorp’s Financials

For the second quarter, its revenues grew 52% to $113.9 million. Loss was $0.17 per share compared with a loss of $0.35 per share a year ago. The market was looking for revenues of $102.29 million and a loss of $0.31 per share.

Among key metrics, it ended the second quarter with 3,612 customers, compared with 2,101 customers a year ago. Customers with ARR of more than $100,000 grew from 558 a year ago to 734 and accounted for 88% of total revenue in the second quarter compared to 87% a year ago. The trailing four quarter average Net Dollar Retention rate was 134%, up from 133% a year ago.

Quarterly subscription revenues for its HashiCorp Cloud Platform (HCP) reached $10.6 million, growing from $3.7 million a year ago. License revenues grew 30% to $15.3 million and support services revenues increased 45% to $84.3 million.

For the third quarter, HashiCorp forecast revenues of $110-$112 million and a loss per share of $0.32-$0.30. The market forecast revenues of $111.05 million and a loss of $0.31 per share. For the fiscal year, HashiCorp forecast revenues of $442-$448 million and a loss per share of $0.97-$0.95. The market forecast revenues of $445.61 million and a loss per share of $0.96 for the year.

HashiCorp’s Growth Focus

During the quarter, HashiCorp continued to release several product upgrades. It recently announced the private beta of HCP Boundary, its secure remote access offering, which has seen strong reviews. It also announced and delivered HCP Consul on Microsoft Azure. With this release, HashiCorp now has cloud-based offerings of Consul, its service networking product, for both AWS and Azure environments.

It also introduced the Drift Detection capability for Terraform Cloud, which continually checks the state of infrastructure, looking for errors or drifts in configuration. By standardizing provisioning throughout the lifecycle of infrastructure, the solution will help increase operational efficiency and compliance, while reducing downtime and security risks. Organizations have adopted IaC to maintain efficiency and minimize risk for their cloud infrastructures. They are now tasked with creating new features to aid security, compliance, and operational consistency.

Until infrastructure is provisioned, IT teams struggle to test the code that might result in misconfigurations or failures. Once infrastructure is provisioned, IT teams are tasked with ensuring that the actual state of infrastructure reflects the known and recorded infrastructure state on an ongoing basis. Terraform Cloud and Terraform Enterprise provide a consistent approach for teams to compose, collaborate, publish, and reuse IaC to provision any infrastructure. To address additional Day 2 operational challenges, HashiCorp is delivering features such as continuous checks to bolster the ability of organizations to confidently standardize their Terraform usage.

Finally, Vault was evaluated as conforming with the Federal Information Processing Standard 140-2, also known as FIPS 140-2, which will help it attract public sector customers.

The recent stock market turbulence has not been kind to HashiCorp with its market capitalization falling by nearly 35% since it went public in December 2021. HashiCorp had listed its stock at $80 apiece at a valuation of $16.2 billion. Its stock is currently trading at $29.62 with a market capitalization of $5.6 billion. It had fallen to a low of $29.52 earlier this month and hit a high of $102.95 soon after listing. Prior to going public, it had raised $349.2 million in five rounds of funding from investors including Geodesic Capital, Franklin Templeton Investments, GGV Capital, T. Rowe Price, Redpoint, Mayfield Fund, Institutional Venture Partners, and True Ventures.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

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