HashiCorp (HCP) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 revenue was $165.1 million, up 15% year-over-year, driven by new customer additions and product innovation.

• Net loss for the quarter was $26.5 million, a significant improvement from $66.3 million in the prior year quarter; non-GAAP net income was $16.8 million versus a loss last year.

• The company entered into a definitive merger agreement with IBM at $35.00 per share ($6.4 billion enterprise value), with shareholder approval and expected closing by year-end 2024.

Financial highlights

• Subscription revenue grew 14% year-over-year to $159.2 million, with cloud-hosted services up 44% to $26.5 million.

• GAAP gross margin improved to 82% from 80% year-over-year; non-GAAP gross margin was 85%.

• GAAP operating loss narrowed to $43.3 million from $82.6 million; non-GAAP operating income was $0.7 million versus a $35.1 million loss.

• Cash, cash equivalents, and short-term investments totaled $1.31 billion as of July 31, 2024.

• Free cash flow for the six months ended July 31, 2024 was $14.2 million, compared to an outflow of $35.9 million in the prior year period; non-GAAP free cash flow was $(11.2) million, improved from $(36.6) million.

Outlook and guidance

• The IBM merger is expected to close by the end of 2024, subject to regulatory approvals and customary conditions.

• The company expects to incur an additional $90 million in transaction-related liabilities contingent on merger completion.

• No forward-looking financial guidance was provided due to the pending merger.