EDGAR 10-K Filing

Company CIK: 1720671
Filing Year: 2024
Filename: 1720671_10-K_2024_0001628280-24-012350.json

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ITEM 1. BUSINESS
Item 1.
Business

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ITEM 1A. RISK FACTORS
Item 1A.
Risk Factors

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
None

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ITEM 2. PROPERTIES
Item 2. Properties
Our principal executive office and world headquarters is located in San Francisco, California and consists of approximately 37,000 square feet of space under a lease that expires in May 2027. We are a hybrid remote company with a global distributed workforce.
We lease all of our facilities and do not own any real property. We believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate our operations.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
The information called for by this Item is incorporated herein by reference to Item 8, "Financial Statements and Supplementary Data," and Note 11, "Commitments and Contingencies" each included elsewhere in this Annual Report on Form 10-K.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information for Common Stock
Our Class A common stock shares began trading on the Nasdaq Global Select Market, or Nasdaq, under the symbol “HCP” on December 9, 2021. Prior to that date, there was no public trading market for our Class A common stock.
Holders of Record
As of March 14, 2024, there were 85 stockholders of record of our common stock, and the closing price of our common stock was $25.74 per share as reported on the Nasdaq Global Select Market. Because many shares of our Class A common stock are held by brokers and other institutions as record holders and on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Dividend Policy
We have never declared or paid any dividends on our Class A common stock, and we do not anticipate declaring or paying dividends in the foreseeable future.
Use of Proceeds
On December 13, 2021, we closed our IPO of 15,300,000 shares of Class A common stock at a public offering price of $80.00 per share, and of an additional 1,230,000 shares of Class A common stock pursuant to the exercise of the underwriters' option to purchase additional shares of our Class A common stock, resulting in gross proceeds to us of $1.2 billion, net of the underwriting discounts, commissions and offering expenses. All of the shares issued and sold in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-260757), which was declared effective by the SEC on December 8, 2021. Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC acted as representatives of the underwriters. There has been no material change in the planned use of proceeds from our IPO as described in our prospectus relating to our IPO, dated as of December 8, 2021 and filed with the SEC pursuant to Rule 424(b)(4) on December 9, 2021.
Recent Sales of Unregistered Securities
None.
Stock Performance Graph
The performance graph below shall not be deemed “soliciting material” or “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, or incorporated by reference into any of our filings under the Securities Act or the Exchange Act.
The performance graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the NASDAQ Composite Index and the NASDAQ Computer Index. The graph assumes $100 was invested at the market close on December 9, 2021, which was our initial trading day, in our Class A common stock through January 31, 2024. Data for the NASDAQ Composite Index and the NASDAQ Computer Index assume reinvestment of dividends. Our offering price of our Class A common stock in our IPO, which had a closing stock price of $85.19 on December 9, 2021, was $80.00 per share.
The comparisons in the graph above are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock.
Comparison of Cumulative Total Returns
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved].

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such difference include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K. Our fiscal year end is January 31, and our fiscal quarters end on April 30, July 31, October 31, and January 31. Our fiscal year ended January 31, 2023 is referred to as fiscal 2023, and our fiscal year ending January 31, 2024 is referred to as fiscal 2024.
Overview
Our foundational technologies solve the core infrastructure challenges of cloud adoption by enabling an operating model that unlocks the full potential of modern public and private clouds. Our cloud operating model provides consistent workflows and a standardized approach to automating the critical processes involved in delivering applications in the cloud: infrastructure provisioning, security, networking, and application deployment. With our solutions, companies of all
sizes and in all industries can accelerate their time to market, reduce their cost of operations, and improve their security and governance of complex infrastructure deployments.
Organizations today are undergoing a digital transformation across every business function, driven by competition and ever-increasing consumer expectations. Underlying this digital transformation is a re-platforming of static on-premises infrastructure to dynamic and distributed cloud infrastructure. In this dynamic world, existing procedures are too inefficient to scale with distributed, multi-cloud infrastructure. Inconsistent, fragmented technologies and processes are time consuming and resource intensive to manage, exacerbated by inefficient, linear ticket-driven workflows that cannot facilitate scaled, real-time operations. This digital transformation demands a new cloud operating model for enterprise IT requiring automation to provision, secure, connect, and run infrastructure at scale and in real time. At HashiCorp, we build industry-leading products that enable this cloud operating model and accelerate cloud adoption. Our primary commercial products are Terraform, Vault, Consul, and Nomad.
Our products can be adopted individually and are also designed to work together as a stack in order to solve larger, more complex challenges. For instance, deploying Vault and Consul is the basis for a complete Zero Trust security architecture with identity-driven controls, offering a full range of authentication, authorization, and access management for human users or machines, like servers or applications. We continue to innovate and deliver additional emerging products to supplement these core capabilities and provide adjacent solutions.
Our Business Model
Our primary products are based on a combination of our free, source available community products and our proprietary software. We are committed to a model in which we maintain free community offerings while developing proprietary features for paid tiers of our software. These proprietary features include collaboration modules, governance and policy modules, enterprise use cases, and premium support and services. We provide our software under a licensing model that protects our intellectual property, grows our adoption, and supports our business.
We generate revenue primarily from sales of subscriptions to our software. We offer an enterprise-ready, self-managed software offering that can be deployed in our customers’ public cloud, private cloud, and on-premises environments. HashiCorp Cloud Platform, or HCP, is our fully-managed cloud platform. These two core offerings can be leveraged independently or together, spanning the various public cloud, private cloud, and on-premises environments in which our customers operate.
For our self-managed offerings, we offer various tiers that provide different levels of access to our proprietary products, modules, and support. Our licenses for self-managed deployments typically have terms of one to three years. We bill for one-year licenses upfront, and we primarily bill for multi-year term licenses annually in advance, with a multi-year payment schedule. The substantial majority of our revenue is recognized ratably over the subscription term. Each product is sold as a base module, with additional optional modules available that address needs like governance and policy, and a tiered pricing system that scales pricing with increased product usage. The unit of value for product usage varies by product, and generally scales with customer cloud adoption as workloads managed by our products move to cloud-based infrastructure.
HCP customers use our offering on a consumption-based model, or purchase annual subscription contracts. Customers who are on consumption-based contracts are predominantly billed in advance for committed consumption and revenue from them is recognized based on actual consumption of resources. Customers with annual subscriptions are typically billed annually in advance for their subscriptions and we typically recognize revenue from such subscriptions ratably over the subscription term. Our pricing schedule lists the hourly rate when deploying HCP for our various products, and actual usage is metered and calculated on a per-hour basis for increased accuracy.
We sell to organizations of all sizes across a broad range of industries, with a particular focus on enterprises that are managing and moving an increasing number of business-critical processes, applications, and large volumes of data to the cloud. Ultimately, we believe all enterprises will need to transition to the cloud to reduce operational burden, improve scalability and elasticity, and increase agility. We plan to continue to invest in our direct sales force to grow our large enterprise base domestically and internationally.
Our sales and marketing strategy combines the best of customer self-service with our direct sales approach. Our source available model allows developers and individuals focused on operations, IT, and security, or practitioners, to engage with and evaluate our software in a frictionless manner, which we believe has contributed to our software’s popularity. This leadership and the wider ecosystem around us, compels practitioners to adopt and implement our software in the enterprise. As organizations recognize the value of our products, our inside and field sales teams can nurture leads and develop direct relationships with key stakeholders across all segments. HCP has accelerated our self-service approach, as practitioners can now quickly deploy and experiment with our paid offering with a fully-managed cloud solution and no minimum commitments.
As adoption grows, our marketing organization is focused on building our brand reputation and awareness, and engages with prospective customers through our user conferences, email marketing, digital advertising, and other public relations activities. This sales and marketing strategy allows us to not only acquire new customers, but also drive increased usage within existing customers.
We operate an adopt, land, expand, and extend motion. Our source available engagement and self-serve cloud motion help us identify and accelerate initial product adoption and use cases in an account. Our enterprise sales teams land these customers with subscription contracts for our software. Our expansion motion focuses on up-selling additional modules and increasing the footprint of usage of a given product, including across multiple buying centers within our customers’ organizations. The multiple capabilities of our deep product portfolio allow us to extend by cross-selling additional integrated products to our customers. For example, a company may initially adopt a free community version use case of Terraform. After initial use of the source available product, we frequently land their first paid use of Terraform to add enterprise functionality and support mission-critical cloud workloads. As customers grow their cloud presence to support additional cloud-based workloads, they frequently expand the amount of Terraform they consume. In addition to this increased Terraform usage, customers also frequently extend into additional products such as Vault or Consul. This combination of adopt, land, expand, and extend affords us considerable growth opportunities within our customer base, and we focus our go-to-market strategy on developing and cultivating long-term customer relationships. The increased use of our platform by our customers is evidenced by our high net dollar retention rate. As of January 31, 2024, 2023 and 2022, our last four-quarter average net dollar retention rate was 115%, 131% and 131%, respectively.
Factors Affecting Our Performance
We believe that the growth and future success of our business depends on a number of key factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations.
Adoption of Our Products and Landing New Customers
We believe there is substantial opportunity to continue to grow our product adoption and our customer base. We intend to drive product adoption through our open-source distribution model and by continuing to cultivate our open-source community.
We intend to drive paid customer growth by continuing to invest significantly in sales and marketing and to increase brand awareness. HCP has also improved our self-service model, and we expect HCP to continue to support our sales model and drive paid adoption. As of January 31, 2024, we served over 4,400 customers spanning organizations of a broad range of sizes and industries, compared to over 3,800 and 2,700 customers as of January 31, 2023 and 2022, respectively. We also intend to continue to grow our base of large enterprises around the world.
Our ability to attract new customers will depend on a number of factors, including the effectiveness and pricing of our products, development of new products and features, offerings of our competitors, engagement with the developer community, and effectiveness of our marketing and community-building efforts. As of January 31, 2024, 483 of the Forbes Global 2000 were our customers. We believe this demonstrates our products have been adopted by many of the largest enterprises, and that there is a substantial opportunity to further cultivate these large customers.
Expanding and Extending Within Existing Customer Base
Our large base of customers represents a significant opportunity for further sales growth. Our customers often expand the deployment of our products across larger teams and more broadly within the enterprise as they do more with existing use cases and realize new use cases. At the same time, we often see customers extend to multiple products across our wider product portfolio as they realize the potential of integrating more of our products to better solve use cases. We intend to continue to invest in enhancing awareness of our brand and developing more products, features, and functionality, which we believe are important factors in achieving widespread adoption of our offerings. Our ability to increase sales to existing customers will depend on a number of factors, including our customers’ satisfaction with our products, the technical capabilities and security of our products, our customers’ progress on their cloud journey, competition, pricing, and overall changes in our customers’ spending levels.
Historically, we have experienced significant expansion after initial deployment of our products by our customers, with customers expanding usage as well as extending to additional products. We define ARR as the annualized value of all recurring subscription contracts with active entitlements as of the end of the applicable period, and in the case of our consumption-based customers the annualized value of their last three month’s spend. For our monthly customers, we calculate ARR according to the annualized value of their last month's spend. In the fourth quarter of fiscal 2024 we changed the definition of ARR for consumption-based customers from the annualized value of their last month's spend to the annualized value of their last three month's spend to better reflect longer term usage patterns. A further indication of the propensity of customer relationships to expand over time is our dollar-based net retention rate, which compares ARR from the same set of customers in one period relative to the prior year period. We define dollar-based net retention rate as the ARR at the end of a period for a base set of customers from which we generated ARR in the year prior to the date of calculation, divided by the ARR one year prior to the date of the calculation for that same set of customers. As of January 31, 2024, 2023 and 2022, our last four-quarter average net dollar retention rate was 115%, 131%, and 131%, respectively.
Increasing Adoption of HashiCorp Cloud Platform
We believe HCP represents a significant growth opportunity for our business. Since launching HCP in fiscal 2021, usage and sales of HCP have grown rapidly and have allowed us to better address the needs of potential customers looking for a fully-managed offering. We believe that as organizations increasingly look for a fully-managed cloud infrastructure platform, they will continue to adopt HCP. We expect HCP to continue to grow and represent an increasing percentage of our total revenue over time. For the fiscal year ended January 31, 2024, HCP subscription revenue was $76.1 million.
Accelerating Technology Leadership and Product Expansion
Our success depends on our ability to sustain innovation and technology leadership and maintain our competitive advantage. We have built highly differentiated products that we believe can adapt and evolve with the support of our engineering expertise, our approach to innovation, our developer community, and our ecosystem of partners. HashiCorp is a critical part of the daily operations of practitioners and our free products make HashiCorp frictionless to adopt. We have proven initial success of our modular approach with multiple innovations and product launches, including the launch of HCP in fiscal 2021, launch of Boundary and Waypoint in September 2020, launch of HCP Boundary in June 2022, launch of HCP Consul in October 2022, and launch of HCP Vault in June 2023. We see continued adoption from our customers in our new products and innovations and as of January 31, 2024, 45% of our customers with $100,000 or greater ARR were licensing more than one product.
We intend to continue to invest in building additional products, features, and functionality to expand our products to new use cases. Our future success is dependent on our ability to successfully develop, market, and sell existing and new products to new and existing customers.
Expanding Internationally
We believe there is a significant opportunity to expand usage of our products outside of the United States as enterprises globally look to take advantage of cloud computing and look to adopt a cloud operating model across multiple clouds. For fiscal 2024, fiscal 2023, and fiscal 2022, 30%, 27%, and 27% of our revenue, respectively, was generated by
customers outside of the United States. In addition, we have made and plan to continue to make investments in geographic expansion in Europe, the Middle East, Africa, and the Asia-Pacific region.
Key Business Metrics
We review a number of operating and financial metrics, including the following key metrics, to measure our performance, identify trends, formulate business plans, and make strategic decisions. The calculation of the key metrics discussed below may differ from other similarly titled metrics used by other companies, securities analysts, or investors.
As of January 31,
2024 2023 2022
(dollars in millions)
Total customers 4,423 3,870 (3) 2,715
Total customers with $100,000 or greater ARR 897 798 655
Subscription revenue from HCP (and its predecessor cloud offerings) $ 76.1 (1)
$ 46.9 (1)
$ 18.5 (1)
GAAP Remaining Performance Obligations (RPOs) $ 775.8 $ 647.1 $ 428.8
Non-GAAP RPOs(2)
$ 801.4 $ 673.8 $ 452.2
(1)Represents subscription revenue for the year ended January 31, 2024, January 31, 2023, and January 31, 2022
(2)Non-GAAP RPOs is a non-GAAP financial measure. For more information regarding our use of this measure and a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP, see the subsection titled “Non-GAAP Remaining Performance Obligations” elsewhere in this section
(3)Subsequent to the issuance of our Form 10-K for the fiscal year ended January 31, 2023, we identified an immaterial error in the calculation of our total customers count related to our self-service, or "pay as you use," customers, which we have corrected accordingly.
Total Customers
We define total customers as the number of customers we have at the end of each fiscal quarter. We define the number of customers we have at the end of each fiscal quarter as the number of accounts with a unique account identifier for which we have an active contract at the end of the period indicated. Users of our free products are not included in the total customers. A single organization with multiple divisions, segments, or subsidiaries is generally counted as a single customer, however, in some cases we may count separate divisions, segments, or subsidiaries as multiple customers in cases where they have separate billing terms. Our customer count may also fluctuate due to acquisitions, consolidations, spin-offs, and other market activity.
Total Customers with $100,000 or Greater ARR
We define ARR as the annualized value of all recurring subscription contracts with active entitlements as of the end of the applicable period, and in the case of our consumption-based customers, the annualized value of their last three month’s spend. For our monthly customers, we calculate ARR according to the annualized value of their last month's spend. In the fourth quarter of fiscal 2024 we changed the definition of ARR for consumption-based customers from the annualized value of their last month's spend to the annualized value of their last three month's spend to better reflect longer term usage patterns. This change in definition had no material effect on the amount of total customers with $100,000 or greater ARR. Relationships with large enterprise customers lead to scale and operating leverage in our business model, as large enterprise customers present a greater opportunity for us to sell additional usage and modules because they have larger budgets, a wider range of potential use cases, and greater potential for expanding to other products in our offering. As such, we count the number of customers contributing $100,000 or greater ARR as a measure of our ability to scale with our customers and attract large enterprise customers to our product offerings. For each applicable financial reporting period, we calculate revenue from customers with $100,000 or greater ARR by aggregating the quarterly revenue attributable to such customers within such period. Customers with $100,000 or greater ARR represented 89%, 88% and 88% of revenue for fiscal 2024, fiscal 2023, and fiscal 2022, respectively.
Quarterly Revenue from HCP
We believe that HCP represents an important growth opportunity for our business. As organizations continue their transition to the cloud, many will begin seeking fully-managed platforms and will begin to adopt HCP. We will continue to track the revenue generated by HCP (and its predecessor cloud offerings) as a way of measuring the adoption of our platform.
Non-GAAP Remaining Performance Obligations
Remaining performance obligations ("RPOs") represent the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods. RPOs exclude customer deposits, which are refundable amounts that are expected to be recognized as revenue in future periods. As of January 31, 2024 and 2023, our RPOs were $775.8 million and $647.1 million, respectively. As of January 31, 2024, we expect to recognize approximately 59% of RPOs as revenue over the next 12 months, and the remainder thereafter. The portion of RPOs that is expected to be recognized as revenue over the next 12 months represents an estimated minimum level of revenue for the applicable period and is not necessarily indicative of future product revenue growth because it does not account for revenue from customer renewals or new customer contracts. Moreover, RPOs are influenced by a number of factors, including the timing of renewals, average contract terms, seasonality and dollar amounts of customer contracts. Due to these factors, it is important to review RPOs in conjunction with revenue and other financial metrics disclosed elsewhere herein. For a further discussion of RPOs, see Note 5 to our consolidated financial statements included elsewhere in Annual Report on Form 10-K.
We calculate non-GAAP RPOs as RPOs plus customer deposits, which are refundable pre-paid amounts, based on the timing of when these customer deposits are expected to be recognized as revenue in future periods. As of January 31, 2024 and 2023, non-GAAP RPOs were $801.4 million and $673.8 million, respectively. As of January 31, 2024, we expect to recognize 60% of our non-GAAP RPOs as revenue over the next 12 months, and the remainder thereafter.
We use non-GAAP RPOs in conjunction with RPOs as part of our overall assessment of our performance, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our business and financial performance. Our management believes that presenting non-GAAP RPOs is useful to investors because the portion of non-GAAP RPOs that is expected to be recognized as revenue over the next 12 months represents an estimated minimum level of revenue for the applicable period, including customer deposits that are expected to be recognized as revenue in future periods but are not included in GAAP RPOs. Our definitions of non-GAAP RPOs may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Non-GAAP RPOs should be considered in addition to, not as substitutes for, or in isolation from, RPOs prepared in accordance with GAAP. We compensate for the limitations in the use of non-GAAP RPOs by providing a reconciliation of non-GAAP RPOs to RPOs. We encourage investors and others to review our results of operations and financial information in its entirety, not to rely on any single financial measure, and to view non-GAAP RPOs with RPOs and revenue.
The following table presents a reconciliation of our GAAP RPOs to our Non-GAAP RPOs for the periods presented (in thousands):
As of
January 31, 2024 January 31, 2023
GAAP RPOs
GAAP short-term RPOs $ 460,170 $ 375,072
GAAP long-term RPOs 315,580 271,992
Total GAAP RPOs $ 775,750 $ 647,064
Add:
Customer deposits
Customer deposits expected to be recognized within the next 12 months $ 22,882 $ 22,657
Customer deposits expected to be recognized after the next 12 months 2,745 4,042
Total customer deposits $ 25,627 $ 26,699
Non-GAAP RPOs
Non-GAAP short-term RPOs $ 483,052 $ 397,729
Non-GAAP long-term RPOs 318,325 276,034
Total Non-GAAP RPOs $ 801,377 $ 673,763
Free Cash Flow and Free Cash Flow Margin
Free cash flow is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities less purchases of property and equipment and capitalized internal-use software costs. Free cash flow margin is calculated as free cash flow divided by total revenue. We believe that free cash flow and free cash flow margin are useful indicators of liquidity that provide information to management and investors about the amount of cash generated from our core operations that, after the purchases of property and equipment, can be used for strategic initiatives, including investing in our business and selectively pursuing acquisitions and strategic investments. We further believe that historical and future trends in free cash flow and free cash flow margin, even if negative, provide useful information about the amount of net cash provided by (used in) operating activities that is available (or not available) to be used for strategic initiatives. For example, if free cash flow is negative, we may need to access cash reserves or other sources of capital to invest in strategic initiatives. One limitation of free cash flow and free cash flow margin is that they do not reflect our future contractual commitments. Additionally, free cash flow does not represent the total increase or decrease in our cash balance for a given period.
The following table presents our cash flow for the periods presented and a reconciliation of free cash flow and free cash flow margin to net cash provided by (used in) operating activities, the most directly comparable financial measure calculated in accordance with GAAP:
Year Ended January 31,
2024 2023 2022
(in thousands)
GAAP net cash used in operating activities $ (10,851) $ (84,462) $ (56,215)
Add: purchases of property and equipment (697) (252) (214)
Add: capitalized internal-use software (11,333) (8,746) (6,382)
Free cash outflow $ (22,881) $ (93,460) $ (62,811)
GAAP net cash used in operating activities as a percentage of revenue (2) % (18) % (18) %
Free cash flow as a % of revenue (4) % (20) % (20) %
Key Components of Results of Operations
Revenue
We generate revenue primarily from software subscriptions and, to a lesser extent, professional services and other revenue. Our software subscriptions are currently predominantly self-managed by users and customers who deploy it across public, private, and hybrid cloud environments. We also offer the HCP, our fully-managed cloud platform for multiple products.
Subscription revenue. We generate revenue primarily from subscriptions which include licenses of proprietary features, support and maintenance revenue, and cloud-hosted services.
Our contracts for self-managed software consist of term licenses that provide the customer with a right to use the software for a fixed term commencing upon delivery to the customer, bundled with support and maintenance for the term of the license period. Support and maintenance (collectively referred to as Support Revenue in the consolidated statements of operations) are not sold on a stand-alone basis. Our self-managed Subscription Revenue is disaggregated into License Revenue and Support Revenue in the consolidated statement of operations. The Company does not have observable standalone sales to determine the Standalone Selling Price, or SSP, for its licenses or its support as they are not sold separately. HashiCorp developed a model to estimate relative SSP for each performance obligation using an “expected cost-plus margin” approach. This model uses observable data points to develop the main assumptions including the estimated useful life of the intellectual property and appropriate margins.
Cloud-hosted services are provided on a subscription basis and give customers access to our cloud solutions, which include related customer support.
Subscription revenue on self-managed software includes both upfront revenue recognized when the license is delivered as well as revenue recognized ratably over the contract period for support and maintenance. The substantial majority of our revenue is recognized ratably over the subscription term. Revenue on committed cloud-hosted services is recognized ratably when we satisfy the performance obligation over the contract period, whereas revenue from non-committed, pay-as-you-go cloud-hosted services are recognized when usage occurs.
We generate subscription revenue from contracts with typical durations ranging from one to three years. We typically invoice our customers annually in advance and, to a lesser extent, multi-year in advance. Amounts that have been invoiced and are nonrefundable are recorded in deferred revenue, or they are recorded in revenue if the revenue recognition criteria have been met. Our current and non-current deferred revenue represents contracts that are invoiced annually in advance or multi-year in advance. Customer payments that are contractually refundable are recorded as customer deposits.
Professional services and other revenue. Professional services and other revenue consist of revenue from professional services, training services, which are predominantly sold on a fixed-fee basis and any other services provided to our customers. Revenue for professional services, training services, and other is recognized as these services are delivered. Professional services are services utilized by some of our self-managed customers to accelerate the deployment of our products.
Support and maintenance revenue and cloud-hosted services make up the majority of our revenue and are typically recognized ratably over the terms of our subscription contracts. Therefore, a substantial portion of the revenue that we report in each period is attributable to the recognition of deferred revenue relating to agreements that we entered into during previous periods. Consequently, increases or decreases in new sales or renewals in any one period may not be immediately reflected as revenue for that period. Any downturn in sales, however, may negatively affect our revenue in future periods. Accordingly, the effect of downturns in sales and market acceptance of our products, and potential changes in our rate of renewals, may not be fully reflected in our results of operations until future periods.
Cost of Revenue
Cost of Subscription Revenue. Cost of subscription revenue primarily includes personnel-related costs, such as salaries, bonuses and benefits, and stock-based compensation for employees associated with customer support and maintenance, third-party cloud infrastructure costs, amortization of internal-use software, amortization of acquired developed technology, and allocated overhead. We expect our cost of subscription revenue to increase as our subscription revenue increases.
Cost of Professional Services and other. Cost of professional services and other revenue primarily includes personnel-related costs, such as salaries, bonuses and benefits, and stock-based compensation for employees associated with our professional services, costs of third-party contractors, and allocated overhead. We expect our cost of professional services and other revenue to increase as our professional services and other revenue increases.
Gross Profit and Margin
Gross profit is revenue less cost of revenue.
Gross margin is gross profit expressed as a percentage of revenue. Our gross margin has been, and will continue to be affected by, a number of factors, including the average sales price of our subscriptions and professional services and other, changes in our revenue mix, the timing and extent of our investments in our global customer support personnel, hosting-related costs, and the amortization of internal-use software. We expect our gross margin to fluctuate over time depending on the factors described above. We expect our revenue from cloud-hosted services to increase as a percentage of total revenue, which we expect to lead to an increase in associated hosting and managing costs, which, in turn, would be expected to adversely impact our gross margin.
Operating Expenses
Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs, which consist of salaries, bonuses, benefits, stock-based compensation and, with regard to sales and marketing expenses, sales commissions, are the most significant component of our operating expenses. We also incur other non-personnel costs such as software and subscription services and an allocation of our general overhead costs for facilities, IT, and depreciation expenses.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel-related costs, such as salaries, sales commissions that are recognized as expenses over the period of benefit, bonuses, benefits, stock-based compensation, costs related to marketing programs, travel-related costs, software and subscription services, and allocated overhead. Marketing programs consist of advertising, events, corporate communications, brand-building, and developer-community activities. We expect our sales and marketing expenses will increase over time and continue to be our largest operating expense for the foreseeable future as we expand our sales force, increase our marketing efforts, and expand into new markets. While we expect our sales and marketing expenses to decrease as a percentage of revenue over the long term due to business growth, our sales and marketing expenses may fluctuate as a percentage of revenue from period to period due to the timing and extent of these expenses.
Research and Development
Research and development expenses consist primarily of personnel-related costs, such as salaries, bonuses, benefits, and stock-based compensation, net of capitalized amounts, contractor and professional services fees, software and subscription services dedicated for use by our research and development organization and allocated overhead. We continue to focus our research and development efforts on the addition of new features and products and enhancing the functionality and ease of use of our existing products. We expect our research and development expenses will continue to increase as our business grows and we continue to invest in our offering. While we expect our research and development expenses to decrease as a percentage of revenue over the long term due to this business growth, our research and development expenses may fluctuate as a percentage of revenue from period to period due to the timing and extent of these expenses.
General and Administrative
General and administrative expenses for administrative functions including finance, legal, and human resources, consist primarily of personnel-related costs, such as salaries, bonuses, benefits, and stock-based compensation, as well as software and subscription services, and legal and other professional fees. We incur additional general and administrative expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for investor relations and professional services. We expect that our general and administrative expenses will increase as our business grows. However, we expect our general and administrative expenses to decrease as a percentage of revenue over the long term due to this business growth, our general and administrative expenses may fluctuate as a percentage of revenue from period to period due to the timing and extent of these expenses.
Interest Income
Interest income consists of interest earned on our cash, cash equivalents, and short-term investments, and amortization of premiums and accretion of discounts on short-term investments.
Other Expenses, Net
Other expense, net consists primarily of gains and losses from foreign currency transactions, and realized gains and losses on short-term investments.
Provision for Income Taxes
Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business, as well as state income taxes in the United States. We have recorded deferred tax assets and we provide a full valuation allowance on our U.S., Canada, and United Kingdom deferred tax assets. We expect to maintain this full valuation allowance on our U.S. deferred tax assets for the foreseeable future as it is more likely than not that some or all of those deferred tax assets may not be realized based on our history of losses.
Results of Operations
The following tables summarize our consolidated statements of operations data for the periods presented. The period-to-period comparison of results is not necessarily indicative of results for future periods.
Year Ended January 31,
2024 2023 2022
(in thousands)
Consolidated Statements of Operations:
Revenue:
License $ 67,612 $ 64,273 $ 47,504
Support 420,948 349,855 247,566
Cloud-hosted services 76,086 46,860 18,613
Total subscription revenue 564,646 460,988 313,683
Professional services and other 18,491 14,901 7,086
Total revenue 583,137 475,889 320,769
Cost of revenue:
Cost of license
1,968 1,753 221
Cost of support(1)
58,208 48,112 38,080
Cost of cloud-hosted services(1)
30,447 22,589 14,031
Total cost of subscription revenue(1)
90,623 72,454 52,332
Cost of professional services and other(1)
18,076 14,515 11,108
Total cost of revenue(1)
108,699 86,969 63,440
Gross profit 474,438 388,920 257,329
Operating expenses:
Sales and marketing(1)
369,164 355,826 269,504
Research and development(1)
222,553 195,384 165,031
General and administrative(1)
136,999 134,997 112,108
Total operating expenses 728,716 686,207 546,643
Loss from operations (254,278) (297,287) (289,314)
Interest Income 65,159 26,367 319
Other expenses, net (510) (2,365) (157)
Loss before income taxes (189,629) (273,285) (289,152)
Provision for income taxes 1,039 1,013 986
Net loss $ (190,668) $ (274,298) $ (290,138)
(1)Includes stock-based compensation expense as follows:
Year Ended January 31,
2024 2023 2022
(in thousands)
Cost of revenue:
Cost of support $ 9,819 $ 8,485 $ 8,073
Cost of cloud-hosted services 2,195 2,761 2,482
Total cost of subscription revenue 12,014 11,246 10,555
Cost of professional services and other 2,654 2,555 3,367
Total cost of revenue 14,668 13,801 13,922
Sales and marketing 54,861 58,205 64,991
Research and development 49,401 46,255 67,865
General and administrative 51,687 52,900 53,790
Total stock-based compensation expense, net of amounts capitalized $ 170,617 $ 171,161 $ 200,568 *
* Fiscal 2022 stock-based compensation expense includes the initial expense related to RSUs subject to service-based and performance-based vesting conditions, which conditions were satisfied in connection with our IPO, and stock-based compensation expense related to the 2021 Employee Stock Purchase Plan, or ESPP, which commenced in the quarter ended January 31, 2022. See Note 12 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
The following table sets forth our consolidated statements of operations expressed as a percentage of revenue for the periods indicated:
Year Ended January 31,
2024 2023 2022
Revenue:
License 12 % 14 % 15 %
Support 72 % 73 % 77 %
Cloud-hosted services 13 % 10 % 6 %
Total subscription revenue 97 % 97 % 98 %
Professional services and other 3 % 3 % 2 %
Total revenue 100 % 100 % 100 %
Cost of revenue:
Cost of license - % - % - %
Cost of support 10 % 10 % 12 %
Cost of cloud-hosted services 5 % 5 % 4 %
Total cost of subscription revenue 16 % 15 % 16 %
Cost of professional services and other 3 % 3 % 4 %
Total cost of revenue 19 % 18 % 20 %
Gross profit 81 % 82 % 80 %
Operating expenses:
Sales and marketing 63 % 75 % 84 %
Research and development 38 % 41 % 51 %
General and administrative 23 % 28 % 35 %
Total operating expenses 125 % 144 % 170 %
Loss from operations (44) % (62) % (90) %
Interest income 11 % 6 % - %
Other expenses, net - % (1) % - %
Loss before income taxes (33) % (57) % (90) %
Provision for income taxes - % 1 % - %
Net loss (33) % (58) % (90) %
Comparison of Fiscal 2024 and Fiscal 2023
Revenue
Year Ended January 31, Change
2024 2023 $ %
(in thousands, except percentages)
Revenue:
License $ 67,612 $ 64,273 $ 3,339 5 %
Support 420,948 349,855 71,093 20 %
Cloud-hosted services 76,086 46,860 29,226 62 %
Total subscription revenue 564,646 460,988 103,658 22 %
Professional services and other 18,491 14,901 3,590 24 %
Total revenue $ 583,137 $ 475,889 $ 107,248 23 %
Subscription revenue increased by $103.7 million, or 22%, for fiscal 2024 compared to fiscal 2023. This increase is attributable to the addition of new customers, which contributed $47.0 million for fiscal 2024, as we increased our customer base by 14% from January 31, 2023 to January 31, 2024. The remaining $56.7 million of this increase in revenue is attributable to expanded product adoption among existing customers, as reflected by our average net dollar retention rate of 115% for the trailing four quarters ended January 31, 2024.
Professional services and other revenue increased by $3.6 million, or 24%, for fiscal 2024 compared to fiscal 2023. This increase is mainly attributable to a $7.0 million increase due to increased delivery of professional services and the completion of certain professional projects. The increase is offset by a $3.5 million decrease related to revenue recognized from a resale contract commitment in fiscal 2023.
Cost of Revenue and Gross Margin
Year Ended January 31, Change
2024 2023 $ %
(in thousands, except percentages)
Cost of revenue:
Cost of license $ 1,968 $ 1,753 $ 215 12 %
Cost of support 58,208 48,112 10,096 21 %
Cost of cloud-hosted services 30,447 22,589 7,858 35 %
Total cost of subscription revenue 90,623 72,454 18,169 25 %
Cost of professional services and other 18,076 14,515 3,561 25 %
Total cost of revenue $ 108,699 $ 86,969 $ 21,730 25 %
Year Ended January 31,
2024 2023
Gross margin
License 97 % 97 %
Support 86 % 86 %
Cloud-hosted services 60 % 52 %
Total subscription margin 84 % 84 %
Professional services and other 2 % 3 %
Total gross margin 81 % 82 %
Cost of subscription revenue increased by $18.2 million, or 25%, for fiscal 2024 compared to fiscal 2023. The increase in cost of subscription revenue was driven by an increase in employee-related expenses of $12.5 million due to increases in headcount in our customer support organization. These employee-related expenses included a $0.8 million increase related to stock-based compensation expense. The increase was also attributable to a $0.7 million increase in cloud hosting fees, and a $5.0 million increase in amortization of internal-use software and acquired technology. As cloud becomes a larger portion of our revenue, our gross margin profile will change because we have a lower gross margin on cloud-hosted services due to headcount related to our cloud offering operations and cloud hosting fees.
Cost of professional services and other revenue increased by $3.6 million, or 25%, for fiscal 2024 compared to fiscal 2023. The increase in cost of professional services and other was driven by a $2.7 million increase in employee-related expenses and $0.9 million increased in spending on professional service.
Gross margin decreased to 81% for fiscal 2024 from 82% for fiscal 2023, primarily due to decreases in our professional services and other margin.
Operating Expenses
Sales and Marketing
Year Ended January 31, Change
2024 2023 $ %
(in thousands, except percentages)
Sales and marketing $ 369,164 $ 355,826 $ 13,338 4 %
Sales and marketing expenses increased by $13.3 million, or 4%, for fiscal 2024 compared to fiscal 2023. The increase was primarily driven by a $6.9 million increase in employee-related costs. The increase in employee-related costs includes a $12.1 million net increase in amortization of deferred contract acquisition costs driven by our increase in revenue offset by a $3.3 million decrease in stock-based compensation expense and $3.0 million decrease in payroll due to decreases in sales and marketing headcount from the reduction in workforce in the quarter ended July 31, 2023. The remainder of the increase in sales and marketing expenses was attributable to increase in marketing expenses and professional services by $3.9 million and $2.0 million, respectively.
Research and Development
Year Ended January 31, Change
2024 2023 $ %
(in thousands, except percentages)
Research and development $ 222,553 $ 195,384 $ 27,169 14 %
Research and development expenses increased by $27.2 million, or 14%, for fiscal 2024 compared to fiscal 2023 as we continued to develop and enhance the functionality of our existing products and release new products. This increase was primarily driven by a $23.3 million increase in employee-related costs. The increase in these employee-related costs includes a $16.1 million increase in payroll and benefit, a $5.0 million increase in stock-based compensation expense, and a $0.9 million increase in severance. The remainder of the increase in research and development expenses was attributable to increased software and subscription expenses of $0.6 million, and increased spending on employee development of $0.8 million.
General and Administrative
Year Ended January 31, Change
2024 2023 $ %
(in thousands, except percentages)
General and administrative $ 136,999 $ 134,997 $ 2,002 1 %
General and administrative expenses increased by $2.0 million, or 1%, for fiscal 2024 compared to fiscal 2023. The increase was primarily driven by a $0.3 million increase in employee-related costs, including a $0.9 million increase in payroll expense, a $0.6 million increase in severance, and a $0.2 million increase in payroll taxes. The increase in these employee-related costs was reduced by $1.3 million decrease in stock-based compensation expense. The remaining increase was attributable to increase in expenses related to facility allocation, software and subscription, employee development, and professional service by $2.6 million, $1.1 million, $0.5 million, and $0.2 million, respectively, and offset by a $2.5 million decrease in insurance costs.
Interest Income
Year Ended January 31, Change
2024 2023 $ %
(in thousands, except percentages)
Interest income $ 65,159 $ 26,367 $ 38,792 147 %
Interest income, increased by $38.8 million, or 147%, in fiscal 2024 compared to fiscal 2023. The increase was attributable to the interest income earned from cash equivalents and available-for-sale investments, and increases in the yields resulting from the Federal Reserve's interest rate increases.
Other Expenses, Net
Year Ended January 31, Change
2024 2023 $ %
(in thousands, except percentages)
Other expenses, net $ (510) $ (2,365) $ 1,855 (78) %
Other expenses, net decreased by $1.9 million, or (78)%, in fiscal 2024 compared to fiscal 2023. The changes were primarily due to changes in foreign currency gains and losses on our cash balances in foreign jurisdictions due to changes in the US dollar against other currencies.
Provision for Income Taxes
Year Ended January 31, Change
2024 2023 $ %
(in thousands, except percentages)
Provision for income taxes $ 1,039 $ 1,013 $ 26 3 %
Provision for income taxes increased by de minimis, or 3%, in fiscal 2024 compared to fiscal 2023. The changes were primarily due to a partial release of valuation allowance, of which $0.4 million tax benefit was directly related to the acquisition of BluBracket, Inc. In connection with the BluBracket acquisition, we recorded a net deferred tax liability which provides an additional source of taxable income to support the realization of the pre-existing deferred tax assets and, accordingly, during fiscal 2024, we released a total of $0.4 million of our U.S. valuation allowance. We continue to maintain a full valuation allowance on our U.S. deferred tax assets, and the significant components of the tax expense recorded are current cash tax expenses in various jurisdictions. Current cash tax expenses are impacted by each jurisdiction’s individual tax rates, laws on the timing of recognition of income and deductions, and availability of net operating losses and tax credits. Our effective tax rate may fluctuate significantly on a quarterly basis and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.
Liquidity and Capital Resources
As of January 31, 2024, we had cash, cash equivalents, and short-term investments of $1,278.6 million. Our cash and cash equivalents primarily consist of cash on hand, highly liquid investments in money market funds, and available-for-sale investments with an original maturity date of three months or less. Our short-term investments consist of U.S. treasury securities, corporate notes and bonds, U.S. agency obligations, commercial paper, and certificates of deposit. We have generated significant operating losses from our operations as reflected in our accumulated deficit of $971.1 million as of January 31, 2024, and negative cash flows from operations in fiscal 2024, fiscal 2023, and fiscal 2022. While we expect to continue to incur operating losses in the foreseeable future, we have generated positive cash flows from operations in recent quarters. We may continue to have positive cash flows in the future, or we may require additional capital resources to execute strategic initiatives to grow our business.
We believe our existing cash and cash equivalents will be sufficient to fund our operating and capital needs for at least the next 12 months, including our repurchases of common stock pursuant to our stock repurchase program. Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties. Our future capital requirements, both near-term and long-term, will depend on many factors, including our growth rate, the timing and extent of spending to support our research and development efforts, the expansion of sales and marketing and international operating activities, the timing of new introductions of solutions or features, and the continuing market acceptance of our services. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, operating results and financial condition would be adversely affected.
The following table summarizes our cash flows for the periods presented:
Year Ended January 31,
2024 2023 2022
Net cash used in operating activities $ (10,851) $ (84,462) $ (56,215)
Net cash used in investing activities $ (535,171) $ (8,998) $ (6,596)
Net cash provided by financing activities $ 23,302 $ 21,983 $ 1,147,846
Operating Activities
We typically invoice our customers annually in advance and to a lesser extent, multi-years in advance. Therefore, a substantial source of our cash is from such prepayments, which are included on our consolidated balance sheets in deferred revenue and customer deposits. We generally experience seasonality in terms of when we enter into agreements with our customers, particularly in our fourth fiscal quarter due to increased buying patterns of our enterprise customers and in our second fiscal quarter due to the summer vacation slowdown that impacts many of our customers. Given the seasonality in our business as discussed above, the operating cash flow benefit from increased collections from our customers generally occurs in the subsequent one to two quarters after billing. We expect seasonality, timing of billings, and collections from our customers to have a material impact on our cash flow from operating activities from period to period. Our primary uses of cash from operating activities are for personnel-related expenses, software and subscription expenses, sales and marketing expenses, third-party cloud infrastructure costs, professional services expenses, and overhead expenses.
Net cash used in operating activities during fiscal 2024 was $10.9 million, which resulted from a net loss of $190.7 million, adjusted for non-cash charges of $170.2 million and net cash inflow of $9.7 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $170.6 million for stock-based compensation expense, $9.5 million for depreciation and amortization expense, and $3.1 million for non-cash operating lease costs, offset by $12.7 million for accretion of discounts on investments and $0.4 million for deferred income taxes. The net cash inflow from
changes in operating assets and liabilities was primarily the result of a $59.3 million increase in deferred revenue due to increased billings and a $0.4 million increase in accrued expenses and other liabilities. These cash inflows were partially offset by a $20.4 million increase in account receivable due to higher billings and timing of collections from our customers, a $12.7 million increase in prepaid expenses and other assets, a $6.2 million increase in deferred contract acquisition costs as our sales commission payments increased due to addition of new customers and expansion of our existing customer subscriptions, a $3.7 million decrease in account payable due to timing of payments to our vendors, a $3.4 million decrease in lease liabilities due to payments to our landlords, a $2.6 million decrease in accrued compensation and benefits primarily due to accrued sales commissions and accrued payroll taxes, and a $1.1 million decrease in customer deposits from advance invoicing in accordance with our subscription contracts.
Net cash used in operating activities during fiscal 2023 was $84.5 million, which resulted from a net loss of $274.3 million, adjusted for non-cash charges of $178.6 million and net cash inflow of $11.2 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $171.2 million for stock-based compensation expense, $4.6 million for depreciation and amortization expense, and $2.9 million for non-cash operating lease costs. The net cash outflow from changes in operating assets and liabilities was primarily the result of a $35.6 million increase in account receivable due to higher billings and timing of collections from our customers, a $34.8 million increase in deferred contract acquisition costs as our sales commission payments increased due to addition of new customers and expansion of our existing customer subscriptions, a $3.1 million decrease in lease liabilities due to payments to our landlords, and a $1.8 million decrease in account payable due to timing of payments to our vendors. These cash outflows were partially offset by a $79.0 million increase in deferred revenue due to increased billings, a $3.3 million increase in customer deposits from advance invoicing in accordance with our subscription contracts, a $2.6 million increase in accrued expenses and other liabilities, a $1.7 million increase in accrued compensation and benefits primarily due to accrued sales commissions and accrued payroll taxes, and a $0.1 million decrease in prepaid expenses and other assets.
Investing Activities
Net cash used in investing activities during fiscal 2024 of $535.2 million was due to a $811.8 million cash outflow in purchases of short-term investments, a $20.9 million cash outflow in a business combination, and a $11.3 million outflow in capitalized internal-use software for our cloud platform, offset by a $283.2 million and $26.4 million of cash inflows from maturities and sales of investments, respectively.
Net cash used in investing activities during fiscal 2023 of $9.0 million was primarily comprised of $8.7 million capitalized internal-use software for our cloud platform and $0.3 million in purchases of property and equipment.
Financing Activities
Net cash provided by financing activities of $23.3 million during fiscal 2024 was due to $17.6 million proceeds from stock purchased by employees under the 2021 Employee Stock Purchase Plan ("ESPP"), and $6.0 million net proceeds from the exercise of stock options, offset by $0.3 million outflow for payment of taxes related to net share settlement.
Net cash provided by financing activities of $22.0 million during fiscal 2023 was due to $17.2 million proceeds from stock purchased by employees under the ESPP, and $5.0 million net proceeds from the exercise of stock options, offset by $0.2 million outflow for payment of taxes related to net share settlement.
Contractual Obligations and Commitments
Our commitments consist of obligations under non-cancellable real estate arrangements on an undiscounted basis, of which $4.6 million is due in the next 12 months and $10.8 million is due thereafter. As of January 31, 2024, we have non-cancellable hosting infrastructure commitments of $7.1 million due in the next 12 months and $2.9 million due thereafter. Also, as of January 31, 2024, we have non-cancelable purchase commitments with various parties to purchase products and services entered in the normal course of business payments of $10.5 million due in the next 12 months and $1.6 million due thereafter. We expect to fund these obligations with cash flows from operations and cash on our balance sheet.
The contractual commitment amounts described above are associated with agreements that are enforceable and legally binding. Obligations under contracts that we can cancel without a significant penalty are not included above.
Purchase orders issued in the ordinary course of business are not included above, as our purchase orders represent authorizations to purchase rather than binding agreements.
Critical Accounting Estimates
Critical accounting estimates are those estimates that are both most important to the portrayal of our net assets and results of operations and require the most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. These estimates are developed based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Critical accounting estimates are accounting estimates where the nature of the estimates is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and the impact of the estimates on financial condition or operating performance is material.
We believe that the accounting policies described below involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.
Revenue Recognition
See Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding our significant accounting policies over revenue recognition.
Our contracts with customers often contain multiple performance obligations. For these contracts, we allocate the transaction price to each performance obligation on a relative standalone selling price (“SSP”) basis. We consider our determination of SSP to be a critical accounting estimate. SSP is established based on multiple factors, including prices at which we separately sell standalone subscriptions and services. For license and support performance obligations, we developed a model to estimate relative SSP for each performance obligation using an expected cost-plus margin approach. This model uses observable data points to develop the main assumptions including the estimated useful life of the intellectual property and appropriate margins by allocating costs between enterprise and open-source features. There may be more than one SSP for individual subscriptions and services due to the stratification of subscription support tiers and services. We also consider if there are any additional material rights inherent in a contract, and if so, we allocate revenue to the material right as a performance obligation.
Deferred Contract Acquisition Costs
See Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding our significant accounting policies over deferred contract acquisition costs.
Deferred contract acquisition costs include sales commissions earned by our sales force which are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized commensurate with the pattern of revenue recognition over a period of benefit, determined to be five years. Significant judgment is required in arriving at this period of benefit. We determined the period of benefit by taking into consideration our customer contracts, technology, and other factors. Amounts anticipated to be recognized within one year of the balance sheet date are recorded as deferred contract acquisition costs, with the remaining portion recorded as deferred contract acquisition costs, non-current, on the consolidated balance sheets. Amortization expense of deferred contract costs is recorded as sales and marketing expense in the consolidated statements of operations.
Recent Accounting Pronouncements
Refer to Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information regarding recent accounting pronouncements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We have operations in the United States and internationally, and we are exposed to market risk in the ordinary course of our business. There have been no material changes in our market risk exposures during fiscal 2024.
Interest Rate Risk
Our cash and cash equivalents primarily consist of cash on hand and highly liquid investments in money market funds. As of January 31, 2024, we had cash, cash equivalents, and short-term investments of $1,278.6 million. The carrying amount of our cash equivalents reasonably approximates fair value due to the short maturities of these instruments. The primary objectives of our investment activities are the preservation of capital, the fulfillment of liquidity needs, and the fiduciary control of cash and investments. As of fiscal 2024, we have not entered into investments for trading or speculative purposes, but we may do so in the future. Due to the short-term nature of our investment portfolio and type of investments included in our portfolio, we do not believe an immediate 10% increase or decrease in interest rates would have a material effect on the fair market value of our portfolio. We, therefore, do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates. Declines in interest rates, however, would reduce our future interest income.
Foreign Currency Risk
All of our sales contracts are denominated in U.S. dollars. A portion of our operating expenses are incurred outside of the United States, denominated in foreign currencies, and subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the British Pound, Euro, Canadian Dollar, and Australian Dollar. Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our consolidated statements of operations. If the U.S. dollar weakened by 10%, our operating expense could increase by approximately 2%.
During the second quarter of fiscal 2024, we implemented a foreign currency risk management program and entered into foreign currency forward contracts to hedge a portion of our forecasted foreign currency-denominated expenses. These foreign currency derivative contracts have a maturity up to 12 months or less and are designated as cash flow hedges to protect our earnings subjected to foreign currency risk. We expect that the effect of a hypothetical 10% relative change in foreign exchange rates, after considering our hedging program, would not have a material impact on our financial condition, results of operations, or cash flows for the periods presented. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in foreign exchange rates.
Inflation Risk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
HASHICORP, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Loss
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of HashiCorp, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of HashiCorp, Inc. and subsidiaries (the "Company") as of January 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended January 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 20, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition - Refer to Notes 2 and 5 to the financial statements
Critical Audit Matter Description
The Company generates revenue primarily from self-managed software subscriptions which consist of term licenses bundled with support and maintenance for the term of the license period. Certain contracts with customers contain non-standard terms and conditions which require significant judgement by management to identify the distinct performance obligations in the contract. The determination of standalone selling prices for licenses and support, which are not sold separately, also required significant judgement by management and were developed using an expected cost-plus margin model based on multiple assumptions including the estimated useful life of the intellectual property and appropriate margins.
Given the complexity of certain self-managed contracts, including those with non-standard terms and conditions, and the significance of management’s judgments involved in identifying performance obligations and determining standalone selling prices, performing audit procedures to evaluate whether management properly identified performance obligations and determined standalone selling prices required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s revenue recognition for its customer contracts included the following, among others:
•We tested the effectiveness of management’s controls over the review of customer contracts, including the identification of performance obligations, and the estimate of standalone selling prices for self-managed licenses and support.
•We selected a sample of recorded revenue transactions, obtained and read the customer contracts, including master agreements and related amendments, and independently assessed the terms of the contract, the identified performance obligations and compared to the performance obligations identified by management.
•We evaluated the reasonableness of management’s estimate of the standalone selling prices for self-managed licenses and support, which are not sold separately, by performing the following:
-With the assistance of our fair value specialists, we evaluated the reasonableness of the cost-plus margin valuation methodology used based on generally accepted valuation practices observed in the industry.
-Evaluated selected margins used by management for cost markups by comparing to margins of selected guideline public companies (“GPCs”), evaluating the appropriateness of selected GPCs, and obtaining the underlying market data and recalculating the margins of the respective GPCs.
-Evaluated the estimated useful life of the intellectual property by (i) discussing the Company’s product with members of the development team to understand expected changes in product development and the corresponding impact on the estimated life and (ii) comparison to industry peers.
-Evaluated the allocation of the engineering and support costs between the proprietary features and open-source features by (i) discussing with members of the development team to understand the relevant effort and considering published information regarding software releases, (ii) testing the completeness and accuracy of source data, and (iii) recalculating the allocation.
/s/ DELOITTE & TOUCHE LLP
San Jose, California
March 20, 2024
We have served as the Company’s auditor since 2019.
HASHICORP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
January 31,
2024 2023
Assets
Current assets
Cash and cash equivalents $ 763,414 $ 1,286,134
Short-term investments 515,163 -
Accounts receivable, net of allowance 182,614 162,369
Deferred contract acquisition costs 50,285 42,812
Prepaid expenses and other current assets 30,075 17,683
Total current assets 1,541,551 1,508,998
Property and equipment, net 33,933 24,594
Operating lease right-of-use assets 11,508 12,560
Deferred contract acquisition costs, non-current 80,055 81,286
Acquisition-related intangible assets, net 11,611 -
Goodwill 12,197 -
Other assets, non-current 1,092 902
Total assets $ 1,691,947 $ 1,628,340
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 9,081 $ 12,450
Accrued expenses and other current liabilities 11,118 6,783
Accrued compensation and benefits 56,007 58,628
Operating lease liabilities 4,025 3,380
Deferred revenue 334,894 272,909
Customer deposits 25,627 26,699
Total current liabilities 440,752 380,849
Deferred revenue, non-current 26,659 29,335
Operating lease liabilities, non-current 10,008 12,093
Other liabilities, non-current 1,535 713
Total liabilities 478,954 422,990
Commitments and contingencies (Note 11)
Stockholders’ equity:
Class A common stock, par value of $0.000015 per share; 1,000,000 and 1,000,000 shares authorized as of January 31, 2024 and January 31, 2023, respectively; 125,333 and 88,823 shares issued and outstanding as of January 31, 2024 and January 31, 2023, respectively
1 1
Class B common stock, par value of $0.000015 per share; 200,000 and 200,000 shares authorized as of January 31, 2024 and January 31, 2023, respectively; 73,921 and 101,145 shares issued and outstanding as of January 31, 2024 and January 31, 2023, respectively
2 2
Additional paid-in capital 2,184,451 1,985,747
Accumulated other comprehensive loss (393) -
Accumulated deficit (971,068) (780,400)
Total stockholders’ equity 1,212,993 1,205,350
Total liabilities and stockholders’ equity $ 1,691,947 $ 1,628,340
The accompanying notes are an integral part of these consolidated financial statements.
HASHICORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Year Ended January 31,
2024 2023 2022
Revenue:
License $ 67,612 $ 64,273 $ 47,504
Support 420,948 349,855 247,566
Cloud-hosted services 76,086 46,860 18,613
Total subscription revenue 564,646 460,988 313,683
Professional services and other 18,491 14,901 7,086
Total revenue 583,137 475,889 320,769
Cost of revenue:
Cost of license 1,968 1,753 221
Cost of support 58,208 48,112 38,080
Cost of cloud-hosted services 30,447 22,589 14,031
Total cost of subscription revenue 90,623 72,454 52,332
Cost of professional services and other 18,076 14,515 11,108
Total cost of revenue 108,699 86,969 63,440
Gross profit 474,438 388,920 257,329
Operating expenses:
Sales and marketing 369,164 355,826 269,504
Research and development 222,553 195,384 165,031
General and administrative 136,999 134,997 112,108
Total operating expenses 728,716 686,207 546,643
Loss from operations (254,278) (297,287) (289,314)
Interest income 65,159 26,367 319
Other expenses, net (510) (2,365) (157)
Loss before income taxes (189,629) (273,285) (289,152)
Provision for income taxes 1,039 1,013 986
Net loss $ (190,668) $ (274,298) $ (290,138)
Net loss per share attributable to common stockholders, basic and diluted $ (0.98) $ (1.47) $ (3.48)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted 193,825 186,029 83,277
The accompanying notes are an integral part of these consolidated financial statements.
HASHICORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
Year Ended January 31,
2024 2023 2022
Net loss $ (190,668) $ (274,298) $ (290,138)
Other comprehensive loss, net of tax:
Available-for-sale investments:
Unrealized gains on available-for-sale investments 107 - -
Foreign currency forward contracts:
Unrealized losses on foreign currency forward contracts (500) - -
Other comprehensive loss, net of tax (393) - -
Total comprehensive loss $ (191,061) $ (274,298) $ (290,138)
The accompanying notes are an integral part of these consolidated financial statements.
HASHICORP, INC.
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands)
Redeemable Convertible Preferred Stock Class A and Class B
Common Stock Additional Paid-in Capital
Accumulated Other Comprehensive Loss Accumulated Deficit
Total Stockholders'
Equity (Deficit)
Shares Amount
Shares Amount
Balance as of January 31, 2021 94,128 $ 349,113 65,578 $ 1 $ 94,159 $ - $ (215,964) $ (121,804)
Conversion of redeemable convertible preferred stock to common stock upon initial public offering (94,128) (349,113) 94,128 1 349,112 - - 349,113
Issuance of common stock upon initial public offering, net of underwriting discounts and issuance costs - - 16,530 1 1,246,924 - - 1,246,925
Issuance of common stock for restricted stock awards - - 11 - - - - -
Issuance of common stock upon exercise of stock options - - 2,962 - 5,036 - - 5,036
Vesting of early exercised stock options - - - - 18 - - 18
Issuance of common stock upon settlement of restricted stock units - - 4,355 - - - - -
Tax withholdings on settlement of restricted stock units - - (1,397) - (110,989) - - (110,989)
Stock-based compensation - - - - 204,130 - - 204,130
Net loss - - - - - - (290,138) (290,138)
Balance as of January 31, 2022 - $ - 182,167 $ 3 $ 1,788,390 $ - $ (506,102) $ 1,282,291
Issuance of common stock upon exercise of stock options - - 2,856 - 5,034 - - 5,034
Vesting of early exercised stock options - - - - 6 - - 6
Issuance of common stock upon settlement of restricted stock units - - 4,244 - - - - -
Tax withholdings on settlement of restricted stock units - - (13) - (248) - - (248)
Issuance of common stock under employee stock purchase plan - - 714 - 17,197 - - 17,197
Stock-based compensation - - - - 175,368 - - 175,368
Net loss - - - - - - (274,298) (274,298)
Balance as of January 31, 2023 - $ - 189,968 $ 3 $ 1,985,747 $ - $ (780,400) $ 1,205,350
Issuance of common stock upon exercise of stock options - - 2,934 - 6,003 - - 6,003
Issuance of common stock upon settlement of restricted stock units - - 5,556 - - - - -
Tax withholdings on settlement of restricted stock units - - (9) - (269) - - (269)
Issuance of common stock under employee stock purchase plan - - 805 - 17,568 - - 17,568
Stock-based compensation - - - - 175,402 - - 175,402
Other comprehensive loss - - - - - (393) - (393)
Net loss - - - - - - (190,668) (190,668)
Balance as of January 31, 2024 - $ - 199,254 $ 3 $ 2,184,451 $ (393) $ (971,068) $ 1,212,993
The accompanying notes are an integral part of these consolidated financial statements.
HASHICORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended January 31,
2024 2023 2022
Cash flows from operating activities
Net loss $ (190,668) $ (274,298) $ (290,138)
Adjustments to reconcile net loss to cash from operating activities:
Stock-based compensation expense, net of amounts capitalized 170,617 171,161 200,568
Depreciation and amortization expense 9,506 4,588 2,498
Non-cash operating lease cost 3,054 2,860 2,382
Accretion of discounts on marketable securities (12,738) - -
Deferred income taxes (414) - -
Other 138 (1) 14
Changes in operating assets and liabilities:
Accounts receivable (20,392) (35,556) (33,364)
Deferred contract acquisition costs (6,242) (34,767) (39,086)
Prepaid expenses and other assets (12,656) (61) (13,626)
Accounts payable (3,668) (1,817) 8,464
Accrued expenses and other liabilities 438 2,609 (895)
Accrued compensation and benefits (2,621) 1,689 32,379
Operating lease liabilities (3,442) (3,140) (2,567)
Deferred revenue 59,309 78,955 75,992
Customer deposits (1,072) 3,316 1,164
Net cash used in operating activities (10,851) (84,462) (56,215)
Cash flows from investing activities
Business combination, net of cash acquired (20,860) - -
Purchases of property and equipment (697) (252) (214)
Capitalized internal-use software (11,333) (8,746) (6,382)
Purchases of short-term investments (811,838) - -
Proceeds from sales of short-term investments 26,372 - -
Proceeds from maturities of short-term investments 283,185 - -
Net cash used in investing activities (535,171) (8,998) (6,596)
Cash flows from financing activities
Proceeds from initial public offering, net of underwriting discounts and commissions - - 1,252,974
Taxes paid related to net share settlement of equity awards (269) (248) (105,642)
Proceeds from issuance of common stock upon exercise of stock options 6,003 5,034 5,036
Proceeds from issuance of common stock under employee stock purchase plan 17,568 17,197 -
Payments of deferred offering costs - - (4,522)
Net cash provided by financing activities 23,302 21,983 1,147,846
Net increase (decrease) in cash, cash equivalents, and restricted cash (522,720) (71,477) 1,085,035
Cash, cash equivalents, and restricted cash beginning of period 1,286,134 1,357,611 272,576
Cash, cash equivalents, and restricted cash end of period $ 763,414 $ 1,286,134 $ 1,357,611
Supplemental disclosure of cash flow information
Cash paid for income taxes, net of refund received $ 1,430 $ 999 $ 739
Cash paid for operating lease liabilities $ 4,047 $ 3,781 $ 3,291
Supplemental disclosure of noncash investing and financing activities
Operating lease right-of-use assets obtained in exchange for new lease obligations $ 2,002 $ - $ 2,036
Unpaid deferred offering costs - - 1,527
Unpaid taxes related to net share settlement of equity awards - - 5,347
Conversion of convertible preferred stock to common stock upon initial public offering - - 349,113
Unpaid acquisition holdback $ 4,100 $ - $ -
Capitalized stock-based compensation expense $ 4,784 $ 4,207 $ 3,562
The accompanying notes are an integral part of these consolidated financial statements.
HASHICORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Description of Business
Description of Business
HashiCorp, Inc. ("HashiCorp" or the "Company") was incorporated in Delaware in May 2013. The Company is headquartered in San Francisco, California and has wholly owned subsidiaries around the world. The Company’s foundational technologies solve the core infrastructure challenges of cloud adoption by enabling an operating model that unlocks the full potential of modern public and private clouds. The Company’s cloud operating model provides consistent workflows and a standardized approach to automating the critical processes involved in delivering applications in the cloud: infrastructure provisioning, security, networking, and application deployment. The Company’s primary commercial products are HashiCorp Terraform, Vault, Consul, and Nomad. The Company’s software is predominantly self-managed by users and customers who deploy it across public, private, and hybrid cloud environments. The Company also offers a fully-managed cloud platform for multiple products that further accelerates enterprise cloud migration by addressing resource and skills gaps, improving operational efficiency, and speeding up deployment time for customers. Additionally, the Company provides premium support and services.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America ("U.S. GAAP" or "GAAP").
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Fiscal Year
The Company’s fiscal year ends on January 31. References to fiscal 2024, for example, refer to the fiscal year ended January 31, 2024.
Foreign Currency Transactions
The functional currency of the Company’s foreign subsidiaries is the U.S. dollar. Transactions denominated in currencies other than the functional currency are remeasured at the average exchange rate in effect during the reporting period. At the end of each reporting period all monetary assets and liabilities of the Company’s subsidiaries are remeasured at the current U.S. dollar exchange rate at the end of the reporting period. Non monetary assets and liabilities denominated in foreign currencies have been remeasured into U.S. dollar using historical exchange rates. Remeasurement gains and losses are included within other income, net in the accompanying consolidated statements of operations. Remeasurement gains and losses were not material to the consolidated financial statements for fiscal 2024, fiscal 2023, and fiscal 2022.
Use of Estimates
The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of income and expense during the reporting period. Such management estimates include, but are not limited to, the determination of standalone selling prices of the Company’s performance obligations, the estimated period of benefit of deferred contract acquisition costs, the fair value of share-based awards, capitalization of software development costs, discount rates used to measure operating leases, valuation of acquired intangible assets and goodwill, and the valuation allowance on deferred tax assets
and uncertain tax positions. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Accounts Receivable and Allowance for Doubtful Accounts
Trade Accounts receivable primarily consists of amounts billed currently due from customers. The Company’s accounts receivable are subject to collection risk. Gross accounts receivable are reduced for this risk by an allowance for doubtful accounts. This allowance is for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company determines the need for an allowance for doubtful accounts based upon various factors, including past collection experience, credit quality of the customer, age of the receivable balance, and current economic conditions, as well as specific circumstances arising with individual customers.
The allowance for credit losses reflects the Company’s best estimate of probable losses inherent in the Company’s receivables portfolio. Activity related to the Company’s allowance for doubtful accounts was as follows (in thousands):
Year Ended January 31,
2024 2023 2022
Beginning balance $ 13 $ 20 $ 36
Bad debt expense - - 14
Write-offs, net of recoveries (13) (7) (30)
Ending balance $ - $ 13 $ 20
When management determines a balance is uncollectible and the Company no longer actively pursues collection of the receivable, both the gross accounts receivable and the full allowance on that receivable are written off.
Concentrations of Credit Risk and Significant Customers
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, and trade accounts receivable. Although the Company deposits its cash with multiple financial institutions, the deposits, at times, may exceed federally insured limits. The Company invests its excess cash in highly-rated money market funds. The Company extends credit to customers in the normal course of business. The Company monitors for uncollectible accounts on an ongoing basis. There were no customers that individually exceeded 10% of the Company’s revenue for fiscal 2024, fiscal 2023, and fiscal 2022.
As of January 31, 2024 and 2023, one cloud service provider marketplace represented 20% and 11%, respectively, of accounts receivable, net. As of January 31, 2023, one customer represented 11%, of accounts receivable, net and no customer represented 10% or more of accounts receivable, net as of January 31, 2024.
Property and Equipment, net
Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, generally ranging from three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the respective assets or the lease term. Expenditures for maintenance and repairs are expensed as incurred and significant improvements and betterment that substantially enhance the life of an asset are capitalized.
Revenue Recognition
The Company generates revenue primarily from software subscriptions and, to a lesser extent, professional services and other revenue. The software subscriptions are currently predominantly self-managed by users and customers who deploy it across public, private, and hybrid cloud environments. The Company also offers the HashiCorp Cloud Platform, or HCP, our fully-managed cloud platform for multiple products.
Subscription revenue. The Company generates revenue primarily from subscriptions which include licenses of proprietary features, support and maintenance revenue, and cloud-hosted services.
Our contracts for self-managed software consist of term licenses that provide the customer with a right to use the software for a fixed term commencing upon delivery to the customer, bundled with support and maintenance for the term of the license period. Support and maintenance (collectively referred to as Support Revenue in the consolidated statements of operations) are not sold on a stand-alone basis. Our self-managed Subscription Revenue is disaggregated into License Revenue and Support Revenue in the consolidated statement of operations. The Company does not have observable standalone sales to determine the Standalone Selling Price, or SSP, for its licenses or its support as they are not sold separately. The Company developed a model to estimate relative SSP for each performance obligation using an “expected cost-plus margin” approach. This model uses observable data points to develop the main assumptions including the estimated useful life of the intellectual property and appropriate margins.
Cloud-hosted services are provided on a subscription basis and give customers access to our cloud solutions, which include related customer support.
Subscription revenue on self-managed software includes both upfront revenue recognized when the license is delivered as well as revenue recognized ratably over the contract period for support and maintenance. The substantial majority of our revenue is recognized ratably over the subscription term. Revenue on committed cloud-hosted services is recognized ratably when we satisfy the performance obligation over the contract period, whereas revenue from non-committed, pay-as-you-go cloud-hosted services are recognized when usage occurs.
The Company generates subscription revenue from contracts with typical durations ranging from one to three years. We typically invoice our customers annually in advance and, to a lesser extent, multi-year in advance. Amounts that have been invoiced and are nonrefundable are recorded in deferred revenue, or they are recorded in revenue if the revenue recognition criteria have been met. Our current and non-current deferred revenue represents contracts that are invoiced annually in advance or multi-year in advance. Customer payments that are contractually refundable are recorded as customer deposits.
Professional services and other revenue. Professional services and other revenue consists of revenue from professional services, training services, which are predominantly sold on a fixed-fee basis and any other services provided to our customers. Revenue for professional services, training services and other is recognized as these services are delivered. Professional services are services utilized by some of our self-managed customers to accelerate the deployment of our products.
Support and maintenance revenue and cloud-hosted services make up the majority of our revenue and are typically recognized ratably over the terms of our subscription contracts. Therefore, a substantial portion of the revenue that we report in each period is attributable to the recognition of deferred revenue relating to agreements that we entered into during previous periods. Consequently, increases or decreases in new sales or renewals in any one period may not be immediately reflected as revenue for that period. Any downturn in sales, however, may negatively affect our revenue in future periods. Accordingly, the effect of downturns in sales and market acceptance of our products, and potential changes in our rate of renewals, may not be fully reflected in our results of operations until future periods.
The Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the following steps:
(i)identification of the contract with a customer;
The Company contracts with its customers typically through order forms or purchase orders which in most cases are governed by master sales agreements. At contract inception the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and identifies the different performance obligations accordingly.
(ii)determination of whether the promised goods or services are performance obligations;
Performance obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are both capable of being distinct and distinct in the context of the contract.
The Company’s self-managed subscriptions include both an obligation to provide the customer with the right to use its proprietary software, as well as an obligation to provide support (on both open-source and proprietary software) and maintenance. Support is contractually mandatory in order for the customer to legally use the proprietary software. Certain arrangements with customers include a renewal option that is separately evaluated for a material right.
The Company’s cloud-hosted services products provide access to hosted software as well as support, which the Company considers to be a single performance obligation. Professional services and other are not integral to the functionality of the subscription services and are generally distinct from the other performance obligations.
The Company has concluded that its contracts with customers do not contain warranties that give rise to a separate performance obligation.
(iii)measurement of the transaction price;
The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring services and products to the customer. The Company records revenue net of any value added or sales tax.
Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts contain a significant financing component.
(iv)allocation of the transaction price to the performance obligations; and
The Company measures the transaction price with reference to the standalone selling price, or SSP, of the various performance obligations inherent within a contract. Management determines the SSP based on an observable standalone selling price when it is available, as well as other factors, including the price charged to customers, discounting practices, and overall pricing objectives, while maximizing observable inputs.
The Company does not have observable SSP for its licenses or its support as they are not sold separately. The Company developed a model to estimate relative SSP for each performance obligation using an “expected cost-plus margin” approach. This model uses observable data points to develop the main assumptions including the estimated useful life of the intellectual property and appropriate margins.
If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on their relative SSP. The Company also considers if there are any additional material rights inherent in a contract, and if so, the Company allocates a portion of the transaction price to such rights based on its relative SSP.
For the Company’s contracts with customers which include a material right of renewal each month, the Company uses the practical alternative to allocate value to the future optional renewal of software and related mandatory support services. As the Company expects renewals over the full contractually stated term, the entire transaction price is allocated evenly to each monthly renewal option.
(v)recognition of revenue when the Company satisfies each performance obligation.
Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised product or service to the customer. The Company’s self-managed subscriptions include both upfront revenue recognition when the license is delivered as well as revenue recognized ratably over the contract period for support and maintenance based on the stand-ready nature of these elements. When arrangements include material rights associated with monthly renewal options, the Company recognizes revenue each month equal to the allocated value of a one-month term license and one-month support and maintenance services.
In the event that the customer cancels support, the customer receives a refund for the remaining contractual balance of support while any remaining nonrefundable software balance is immediately recognized as revenue. The amount of potentially refundable contractual balance is included in customer deposits within the consolidated balance sheets.
Revenue on committed cloud-hosted services is recognized ratably when performance obligations are satisfied over the contract period, whereas revenue from non-committed, pay-as-you-go cloud-hosted services are recognized when usage occurs.
Revenue for professional services and other is recognized as these services are delivered. Professional services and other are services utilized by some self-managed customers to accelerate the deployment of the Company’s products.
The Company sells directly through its sales team and through its channel partners. Sales to channel partners are made at a discount and revenues are recorded at this discounted price once all the revenue recognition criteria above are met.
Contract Balances
The Company generates subscription revenue from contracts with typical stated durations ranging from one to three years. Customers are typically invoiced annually in advance and, to a lesser extent, multiple years in advance.
The Company receives payments from customers based upon contractual billing schedules; accounts receivable is recorded when the right to consideration becomes unconditional. Payment terms on invoiced amounts are typically 30 to 60 days. Contract assets include amounts related to the Company’s contractual right to consideration for both completed and partially completed performance obligations that may not have been invoiced. Contract assets were $3.8 million and $4.9 million as of January 31, 2024 and January 31, 2023, respectively, and are included in accounts receivable, net in the consolidated balance sheets.
Contract liabilities include payments received in advance of performance under the contract and are recorded to deferred revenue and deferred revenue, non-current in the consolidated balance sheets. Customer refundable prepayments are recorded as customer deposits in the consolidated balance sheets.
Deferred Contract Acquisition Costs
Deferred contract acquisition costs represent costs that are incremental to the acquisition of customer contracts, which consist mainly of sales commissions and associated payroll taxes. The Company determines whether costs should be deferred based on sales compensation plans, by determining if the commissions are in fact incremental and would not have occurred absent the customer contract.
Sales commissions for the renewal of a contract are not considered commensurate with the commissions paid for the acquisition of the initial contract given the substantive difference in commission rates in proportion to their respective contract values. Commissions paid upon the initial acquisition of a contract are amortized over an estimated period of benefit of five years while commissions paid for renewal contracts are amortized over the contractual term of the renewals. Amortization of deferred contract acquisition costs is recognized commensurate with the same pattern of revenue recognition and included in sales and marketing expense in the consolidated statements of operations.
The Company determines the period of benefit for commissions paid for the acquisition of the initial contract by taking into consideration the expected contract term and expected renewals of customer contracts, the duration of relationships with the Company’s customers, customer retention data, the Company’s technology development lifecycle
and other factors. Management periodically reviews the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs.
Leases
Leases consist of the Company’s contractual obligations that convey the right to use office spaces for a period of time in exchange for consideration. The Company determines whether a contract contains a lease at inception. Operating leases are included in operating lease right-of-use assets, operating lease liabilities and operating lease liabilities, non-current on the Company’s consolidated balance sheets. The Company currently does not have any financing leases. A right-of-use asset represents the Company’s right to use an underlying asset and a lease liability represents the Company’s obligation to make payments during the lease term. The operating lease right-of-use asset also includes any advance lease payments made and excludes lease incentives. Lease payments include fixed payments and variable payments based on an index or rate, if any, and are recognized as lease expense on a straight-line basis over the term of the lease. The lease term includes options to extend or terminate the lease when it is reasonably certain they will be exercised. Variable lease payments not based on a rate or index are expensed as incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company accounts for lease components and non-lease components as a single lease component. The Company applies the practical expedient to not recognize lease assets and lease liabilities for leases with an original term of 12 months or less.
The lease liability is measured as the present value of the remaining lease payments over the lease term upon the lease commencement date. The right-of-use asset is initially measured as the present value of the lease payments, adjusted for initial direct costs, prepaid lease payments and lease incentives. The discount rate used to determine the present value is the Company’s incremental borrowing rate unless the interest rate implicit in the lease is readily determinable. The Company estimates its incremental borrowing rate based on the information available at lease commencement date for collateralized borrowings in the currency in which the arrangement is denominated over a similar term.
Cost of Revenue
Cost of subscription revenue primarily includes personnel-related costs, such as salaries, bonuses and benefits, and stock-based compensation for employees associated with customer support and maintenance, third-party cloud infrastructure costs, amortization of internal-use software, amortization of acquired developed technology, and allocated overhead.
Cost of professional services and other primarily includes personnel-related costs, such as salaries, bonuses and benefits, and stock-based compensation for employees associated with our professional services, costs of third-party contractors, and allocated overhead.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel-related costs, such as salaries, sales commissions that are recognized as expenses over the period of benefit, bonuses, benefits, stock-based compensation, costs related to marketing programs, travel-related costs, software and subscription services dedicated for use by our sales and marketing organization and allocated overhead.
Research and Development
Research and development expenses consist primarily of personnel-related costs, such as salaries, bonuses, benefits, and stock-based compensation, net of capitalized amounts, contractor and professional services fees, software and subscription services dedicated for use by our research and development organization and allocated overhead.
General and Administrative
General and administrative expenses for administrative functions including finance, legal, and human resources, consist primarily of personnel-related costs, such as salaries, bonuses, benefits, and stock-based compensation, as well as software and subscription services, and legal and other professional fees.
Capitalized Software Development Costs
Capitalization of software development costs for products to be sold to third parties begins upon the establishment of technological feasibility and ceases when the product is available for general release. There is generally no significant passage of time between achievement of technological feasibility and the availability of the Company’s enterprise software for general release, and the majority of the Company’s software is open-source. Therefore, the Company has not capitalized any software costs through fiscal 2024, fiscal 2023 and fiscal 2022. All software development costs have been charged to research and development expense in the consolidated statements of operations as incurred.
Costs related to software acquired, developed, or modified solely to meet the Company’s internal requirements, with no substantive plans to market such software at the time of development, or costs related to development of web-based products are capitalized. Costs incurred during the preliminary planning and evaluation stage of the project and during the post implementation operational stage are expensed as incurred. Costs incurred during the application development stage of the project are capitalized. Capitalized costs are recorded as part of property and equipment, net. Maintenance and training costs are expensed as incurred. Capitalized internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally five years, and is recorded as cost of cloud-hosted services in the consolidated statements of operations.
Advertising Costs
Advertising costs, which are expensed when incurred, are included in sales and marketing expense in the consolidated statements of operations, and were $15.4 million, $11.1 million, and $6.3 million for fiscal 2024, fiscal 2023, and fiscal 2022, respectively.
Impairment of Long-Lived Assets
Long-lived assets, such as property and equipment, acquired intangible assets, and capitalized software development costs subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If circumstances require a long-lived asset be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by the asset to its carrying value. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. For the fiscal years presented, there were no impairment losses recognized for any long-lived assets.
Business Combinations
The Company recognizes identifiable assets acquired and liabilities assumed at their acquisition date fair value. Goodwill as of the acquisition date is measured as the excess of purchase consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent that the Company identifies adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s consolidated statements of operations. There has been no such adjustment as of January 31, 2024.
Goodwill
Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net identifiable tangible and intangible assets acquired and liabilities assumed. Goodwill is evaluated for impairment annually in the fourth quarter of the Company’s fiscal year, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of goodwill, or a significant decrease in expected cash flows.
As of January 31, 2024, the Company has not had any goodwill impairment.
Short-term Investments
The Company’s short-term investments consist of U.S. treasury securities, corporate notes and bonds, U.S. agency obligations, commercial paper, and certificates of deposit. The Company determines the appropriate classification of its short-term investments at the time of purchase and reevaluates such determination at each balance sheet date. The Company has classified and accounted for its short-term investments as available-for-sale securities. The Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. As a result, the Company classifies its short-term investments, including those with maturities beyond twelve months, as current assets in the consolidated balance sheets.
Available-for-sale securities are recorded at fair value each reporting period, and are adjusted for amortization of premiums and accretion of discounts to maturity and such amortization and accretion are included in interest income in the consolidated statements of operations. Realized gains and losses are determined based on the specific identification method and are reported in other expense, net in the consolidated statements of operations. Unrealized gains and losses are reported as a separate component of accumulated other comprehensive income (loss) (“AOCI”) on the consolidated balance sheets until realized.
For available-for-sale securities in an unrealized loss position, the Company first assesses whether it intends to sell the security or it is more likely than not that the Company will be required to sell the security before the recovery of its entire amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through other expense, net in the consolidated statements of operations. If neither of these criteria is met, the Company evaluates whether the decline in fair value below amortized cost is due to credit or non-credit related factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and any adverse conditions specifically related to the security, among other factors. Credit related unrealized losses are recognized as an allowance for expected credit losses of available-for-sale debt securities on the consolidated balance sheets with a corresponding charge in other expense, net, net in the consolidated statements of operations. Non-credit related unrealized losses are included in accumulated other comprehensive loss.
As of January 31, 2024, the Company did not identify any credit losses on short-term investments. Realized gains and losses on the sale of short-term investments are determined on a specific identification method and are recorded in other expenses, net in the consolidated statements of operations. As of January 31, 2024, the realized gains and losses on the sale of short-term investments were not material.
Derivative Instruments and Hedging
The Company enters into foreign currency forward contracts with certain financial institutions to mitigate the impact of foreign currency fluctuations on future cash flows and earnings. All of the Company’s foreign currency forward contracts are designated as cash flow hedges. The foreign currency forward contracts generally have maturities of 12 months or less.
The Company recognizes all forward contracts as either assets or liabilities on the consolidated balance sheets at fair value. Gains and losses on each forward contract are initially reported as a component of AOCI, and subsequently reclassified into cost of revenue or operating expense in the same period, or periods, during which the hedged transaction
affects earnings. The Company evaluates the effectiveness of its cash flow hedges on a quarterly basis and does not exclude any component of the changes in fair value of the derivative instruments for effectiveness testing purposes. The Company classifies cash flows related to its cash flow hedges as operating activities in its consolidated statements of cash flows.
The Company has master netting agreements with each of its counterparties, which permit net settlement of multiple, separate derivative contracts with a single payment. The Company does not have collateral requirements with any of its counterparties. Although the Company is allowed to present the fair value of derivative instruments on a net basis according to master netting arrangements, the Company has elected to present its derivative instruments on a gross basis in the consolidated financial statements.
Stock-Based Compensation
The Company estimates the fair value of stock-based awards on the date of grant (including stock options, restricted stock units ("RSU") and ESPP participation). For awards with a service-based vesting condition, the related stock-based compensation expense is recognized over the vesting period of the entire award using the straight-line attribution method. For awards that include both a performance and service condition, the Company amortizes stock-based compensation expense on a graded vesting basis over the vesting period, after assessing the probability of achieving requisite performance. The Company recognizes forfeitures as they occur.
The fair value of each RSU award is based on the fair value of the underlying common stock as of the grant date.
The fair value of stock purchase right granted under the ESPP is estimated on the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the fair value of the underlying common stock, the expected term of the award, the expected volatility of the price of our common stock, risk-free interest rates, and the expected dividend yield of our common stock.
The assumptions used to determine the fair value of the stock awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment.
Net Loss per Share Attributable to Common Stockholders
The Company calculates basic net loss per share by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding. As the Company has net losses for the periods presented, all potentially dilutive common stock, which are comprised of stock options, RSUs, early exercised options, and ESPP rights, are anti-dilutive. Diluted net loss per share is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method or the if-converted method based on the nature of such securities. Diluted net loss per share is the same as basic net loss per share in periods when the effects of potentially dilutive shares of common stock are anti-dilutive.
Accumulated Other Comprehensive Gain (Loss)
Accumulated other comprehensive loss was comprised of unrealized gain (losses) from available-for-sale investments and unrealized losses related to the effective portion of changes in the fair value of foreign currency forward contracts designated as cash flow hedges.
Segments
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker, or CODM. The Company’s Chief Executive Officer is its CODM. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates in one operating and one reportable segment. Substantially all of the Company’s long-lived assets were held in the United States as of January 31, 2024 and 2023. The Company presents revenue by region in Note 5 to the consolidated financial statements.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of January 31, 2024 and 2023, the Company has recorded a full valuation allowance against its net U.S. federal and state deferred tax assets.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
The Company’s policy is to recognize interest and penalties associated with uncertain tax benefits as part of the income tax provision and include accrued interest and penalties with the related income tax liability on the Company’s consolidated balance sheets. To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has it accrued for or made payments for interest and penalties.
Fair Value Measurements
The Company’s financial instruments consist of cash equivalents, accounts receivable, short-term investments, derivative instruments, accounts payable, and accrued liabilities. Cash equivalents and short-term investments are stated at fair value. Accounts receivable, accounts payable and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. See "Note 7. Fair Value Measurements" for additional information.
Employee Benefit Plan
The Company sponsors a qualified 401(k) defined contribution plan covering eligible employees. Participants may contribute a portion of their annual compensation limited to a maximum annual amount set by the Internal Revenue Service. There have been no employer contributions under this plan to date.
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The amendments are effective for the Company's annual periods beginning January 31, 2024, and interim periods beginning April 30, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning January 31, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.
3. Business Combinations
On June 2, 2023 (the "Closing"), the Company acquired all outstanding share capital of BluBracket, Inc. (the “BluBracket acquisition”). BluBracket was a Palo Alto-based security startup that developed a code security solution that identifies, prevents, and resolves potential risks in source code, development environments, and pipelines. The Company expects that the BluBracket technology will enable our customers to have full visibility into their entire secrets inventory, complementing our Vault product offering. The aggregate purchase price was $25.1 million settled in cash (the "Purchase Price") of which $4.2 million was held back at Closing to satisfy indemnification obligations of BluBracket (the "Holdback"). As of January 31, 2024, $0.1 million of the Holdback has been paid, $3.6 million is accrued as a current liability, and $0.5 million is accrued as a non-current liability in the consolidated balance sheet. The Purchase Price excludes retention agreements entered into with certain employees of BluBracket, pursuant to which the Company will pay up to an aggregate of $5.0 million in cash (the “Retention Payments”). The vesting and payout of the Retention Payments is subject to continued employment and achievement of certain semi-annual milestones over two years following the Closing. The Retention Payment is recorded as post-combination compensation expense within research and development in the consolidated statements of operations over the requisite service period. In fiscal year 2024, the Company recognized compensation expense of $1.7 million related to the Retention Payment agreements.
The acquisition was accounted for as a business combination. A portion of the Purchase Price was allocated to the fair value of the developed technology and customer relationship acquired, net liabilities assumed and a deferred tax liability related to developed technology, as set forth below. The useful lives for these acquired developed technology and the customer relationship were estimated to be five and three years, respectively. The remainder of the Purchase Price was recorded as goodwill, as set forth below. Goodwill generated from the acquisition was attributable to expected synergies from future growth and was not deductible for tax purposes. See “Note 4. Goodwill and Acquisition-related Intangible Assets, Net” for additional information.
The following table presents the purchase price allocation related to the acquisition (in thousands):
Net liabilities $ (224)
Developed technology 12,500
Customer relationship 1,000
Deferred tax liabilities (482)
Goodwill 12,265
Total purchase consideration $ 25,059
The estimated fair value of developed technology and customer relationship acquired of $12.5 million and $1.0 million were determined using a replacement cost approach methodology, which is based on the cost that a market participant would incur to reconstruct a substitute asset of comparable utility and generate the acquired portfolio of customers, respectively. The financial results of BluBracket are included in the Company's consolidated financial statements from the date of acquisition. The business combination did not have a material impact on the consolidated financial statements and therefore historical and pro forma disclosures have not been presented.
The direct transaction costs of the acquisition were accounted for separately from the business combination and expensed as incurred. The Company incurred $0.5 million in acquisition-related costs which were recorded in general and administrative expense in the consolidated statements of operations during the twelve months ended January 31, 2024.
4. Goodwill and Acquisition-related Intangible Assets, Net
Goodwill
Goodwill as of January 31, 2024 was $12.2 million. No goodwill was recorded as of January 31, 2023. The changes in the carrying amount of goodwill for the periods presented were as follows (in thousands):
Balance as of January 31, 2023 $ -
BluBracket, Inc. (Note 3) 12,265
Less: Measurement period adjustment (68)
Balance as of January 31, 2024 $ 12,197
Acquisition-related Intangible Assets, Net
Acquisition-related intangible assets, net consisted of the following as of January 31, 2024 (in thousands except for useful life):
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Useful Life
(in years)
Developed technology $ 12,500 $ 1,668 $ 10,832 4.3
Customer relationship $ 1,000 $ 221 $ 779 2.3
Acquired intangible assets are recorded at cost, net of accumulated amortization, and are amortized on a straight-line basis over their estimated useful lives. Amortization expense of acquired developed technology is included in cost of cloud-hosted services in the consolidated statements of operations and was $1.7 million during the year ended January 31, 2024. Amortization expense of customer relationship is included in sales and marketing in the consolidated statements of operations, and was $0.2 million during the year ended January 31, 2024.
Estimated future amortization expense as of January 31, 2024 is as follows (in thousands):
Year ending January 31, Amount
2025 $ 2,833
2026 2,833
2027 2,612
2028 2,500
2029 and thereafter 833
Total $ 11,611
5. Revenue and Performance Obligations
Disaggregation of Revenue
The following table presents revenue by category (dollars in thousands):
Year Ended January 31,
2024 2023 2022
Amount % of Total
Revenue Amount % of Total
Revenue Amount % of Total
Revenue
License $ 67,612 12 % $ 64,273 14 % $ 47,504 15 %
Support 420,948 72 349,855 73 247,566 77
Cloud-hosted services 76,086 13 46,860 10 18,613 6
Total subscription revenue 564,646 97 460,988 97 313,683 98
Professional services and other 18,491 3 14,901 3 7,086 2
Total revenue $ 583,137 100 % $ 475,889 100 % $ 320,769 100 %
The following table summarizes the revenue by region based on the billing address of customers who have contracted to use the Company's products and services (in thousands, except percentages):
Year Ended January 31,
2024 2023 2022
Amount % of Total Revenue Amount % of Total Revenue Amount % of Total Revenue
United States $ 408,211 70 % $ 345,973 73 % $ 235,428 73 %
Rest of the world 174,926 30 129,916 27 85,341 27
Total $ 583,137 100 % $ 475,889 100 % $ 320,769 100 %
No other country, outside of the United States, exceeded 10% of total revenue during the periods presented.
Contract Balances
Changes in deferred revenue and unbilled accounts receivable were as follows (in thousands):
Year Ended January 31,
2024 2023 2022
Balance, beginning of period $ 302,244 $ 223,289 $ 147,297
Deferred revenue billings including reclassification to deferred revenue from customer deposits 643,541 552,799 395,153
Recognition of revenue, net of change in unbilled accounts receivable* (584,232) (473,844) (319,161)
Balance, end of period $ 361,553 $ 302,244 $ 223,289
* Reconciliation to Revenue Reported per Consolidated Statements of Operations:
Revenue billed as of the end of the period $ 584,232 $ 473,844 $ 319,161
Increase in total unbilled accounts receivable (1,095) 2,045 1,608
Revenue reported per Consolidated Statements of Operations $ 583,137 $ 475,889 $ 320,769
Unbilled accounts receivable represent revenue recognized on contracts for which billings have not yet been presented to customers because the amounts were earned but not contractually billable as of the balance sheet date. The unbilled accounts receivable balance is due within one year. As of January 31, 2024 and 2023, unbilled accounts receivable of approximately $3.8 million and $4.9 million, respectively, were included in accounts receivable on the Company’s consolidated balance sheets.
Remaining Performance Obligations (RPOs)
The typical stated customer contract term is one year but can range up to three years. RPOs include both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods. As of January 31, 2024 and 2023, the Company had $775.8 million, and $647.1 million, respectively, of remaining performance
obligations, which is comprised of product and services revenue not yet delivered. As of January 31, 2024 and January 31, 2023, the Company expected to recognize approximately 59% and 58%, respectively, of its remaining performance obligations as revenue over the next 12 months and the remainder thereafter.
RPOs exclude customer deposits, which are refundable pre-paid amounts that are expected to be recognized as revenue in future periods. These balances are included in customer deposits in the consolidated balance sheets and are classified as current because contractually customers can cancel these obligations with 30 days' written notice. The customer deposit balance is amortized to revenue over the term of the underlying contract as the customer’s right to cancel expires. If no contracts with customers are cancelled, the existing customer deposit balance will be recognized to revenue over the remaining stated term of the underlying contract which may be over the next 12 months or longer as follows (in thousands):
As of January 31,
2024 2023
Within the next 12 months $ 22,882 $ 22,657
After the next 12 months 2,745 4,042
Total $ 25,627 $ 26,699
6. Short-term Investments
The following tables summarize the fair values of the Company’s short-term investments (in thousands):
As of January 31, 2024
Amortized Cost Unrealized Gains Unrealized Losses Fair Value
U.S. treasury securities $ 244,778 $ 150 $ (141) $ 244,787
U.S. agency obligations 79,693 50 (23) 79,720
Corporate notes and bonds 103,552 141 (70) 103,623
Commercial paper 46,523 - - 46,523
Certificates of deposit 40,510 - - 40,510
Total short-term investments $ 515,056 $ 341 $ (234) $ 515,163
The Company does not hold any marketable securities that have been in a continuous unrealized loss position for over 12 months. For short-term investments with an unrealized loss at January 31, 2024, the unrealized losses were not due to credit-related factors, the Company does not intend to sell these short-term investments, and it is more likely than not that the Company will hold these short-term investments until maturity or a recovery of the cost basis. Therefore, no allowance for expected credit losses was recorded as of January 31, 2024. Realized gains (losses) were not material during the year ended January 31, 2024.
The following table summarizes the contractual maturities of the Company’s short-term investments (in thousands):
As of January 31, 2024
Amortized Cost Fair Value
Due within one year $ 447,001 $ 446,902
Due after one year through five years 68,055 68,261
Total $ 515,056 $ 515,163
7. Fair Value Measurements
The Company reports all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
•Level 1-Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
•Level 2-Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
•Level 3-Inputs are unobservable inputs for the asset or liability.
The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety.
The following table sets forth the financial assets, measured at fair value, by level within the fair value hierarchy on a recurring basis and indicates the fair value hierarchy of the valuation inputs used to determine such fair value (in thousands):
Fair Value Measurement As of January 31, 2024
Fair Value Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
Assets:
Cash and cash equivalents:
Money market funds Level 1 $ 63,137 $ - $ - $ 63,137
U.S. treasury securities Level 2 9,495 - - 9,495
Commercial paper Level 2 10,981 - - 10,981
Total assets measured at fair value included in cash and cash equivalents $ 83,613 $ - $ - $ 83,613
Short-term Investments:
U.S. treasury securities Level 2 $ 244,778 150 (141) $ 244,787
U.S. agency obligations Level 2 79,693 50 (23) 79,720
Corporate notes and bonds Level 2 103,552 141 (70) 103,623
Commercial paper Level 2 46,523 - - 46,523
Certificates of deposit Level 2 40,510 - - 40,510
Total short-term investments $ 515,056 $ 341 $ (234) $ 515,163
Derivative instruments:
Foreign currency forward contracts Level 2 - - 18 18
Total assets measured at fair value $ 598,669 $ 341 $ (216) $ 598,794
Liabilities:
Derivative instruments:
Foreign currency forward contracts Level 2 $ - $ - $ 518 $ 518
Total derivative instruments - - 518 518
Total liabilities measured at fair value $ - $ - $ 518 $ 518
Fair Value Measurement As of January 31, 2023
Fair Value Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
Assets:
Cash and cash equivalents:
Money market funds Level 1 $ 169,904 $ - $ - $ 169,904
Total cash and cash equivalents 169,904 - - 169,904
Total assets measured at fair value $ 169,904 - - $ 169,904
Money market funds are cash equivalents with remaining maturities of three months or less at the date of purchase. The Company uses quoted prices in active markets for identical assets to determine the fair value of its Level 1 investments in money market funds.
The consolidated financial statements as of January 31, 2024 and January 31, 2023, do not include any nonrecurring fair value measurements relating to assets or liabilities. There were no transfers between fair value measurement levels during the year ended January 31, 2024 and January 31, 2023.
8. Derivative Instruments and Hedging
In June 2023, the Company began entering into foreign currency forward contracts to manage its exposure to certain foreign currency exchange risks.
As of January 31, 2024, the Company’s foreign currency forward contracts had an aggregate notional amount of $49.3 million.
The following table summarizes the fair value of the Company’s derivative instruments on the consolidated balance sheets (in thousands):
Balance Sheet Location As of January 31, 2024
Derivative Assets:
Foreign currency forward contracts designated as hedging instruments Prepaid expenses and other current assets $ 18
Total derivative assets 18
Derivative Liabilities:
Foreign currency forward contracts designated as hedging instruments Accrued expenses and other liabilities $ 518
Total derivative liabilities $ 518
The following table presents the activity of foreign currency forward contracts designated as hedging instruments and the impact of these derivatives on AOCI (in thousands):
Year Ended January 31, 2024
Beginning balance $ -
Net losses recognized in other comprehensive income (754)
Net gains reclassified from AOCI to earnings 254
Ending balance $ (500)
As of January 31, 2024, net unrealized loss included in the balance of accumulated other comprehensive loss related to foreign currency forward contracts designated as hedging instruments was $0.3 million, all of which the Company expects to reclassify from accumulated other comprehensive loss into earnings over the next 12 months. The
effect of foreign currency forward contracts were not material to consolidated statement of operations for the year ended January 31, 2024.
9. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net are comprised of the following (in thousands):
Estimated
Useful life As of January 31,
2024 2023
Furniture and fixtures 5 years $ 1,394 $ 1,292
Computers, equipment and software 3 years 684 581
Capitalized internal-use software development costs 5 years 41,934 25,817
Leasehold improvements Shorter of useful life or lease term 5,725 5,138
Construction in progress(1)
- 47
Total property and equipment 49,737 32,875
Less: accumulated depreciation and amortization (15,804) (8,281)
Property and equipment, net $ 33,933 $ 24,594
(1)This represents internal-use software not yet available for general release.
Total depreciation and amortization expense for fiscal 2024, fiscal 2023, and fiscal 2022 was $7.6 million, $4.5 million, and $2.5 million, respectively.
The Company capitalized $16.1 million and $13.0 million in internal-use software development costs during fiscal 2024 and fiscal 2023, respectively. Amortization expense associated with internal-use software development costs totaled $6.4 million and $3.4 million for fiscal 2024 and fiscal 2023, respectively.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other liabilities are comprised of the following (in thousands):
As of January 31,
2024 2023
Acquisition holdback, current $ 3,554 $ -
Accrued expenses 1,969 3,552
Customer overpayment 2,058 670
Sales tax payable 1,841 1,480
Accrued income taxes payable 1,178 1,081
Derivative liabilities 518 -
Total accrued expenses and other current liabilities $ 11,118 $ 6,783
Accrued Compensation and Benefits
Accrued compensation and benefits are comprised of the following (in thousands):
As of January 31,
2024 2023
Accrued commissions $ 15,366 $ 16,932
Accrued bonus 4,028 3,220
Accrued vacation 21,446 20,614
Accrued payroll and withholding taxes 8,911 11,574
ESPP employee contributions 3,293 4,247
Other 2,963 2,041
Total accrued compensation and benefits $ 56,007 $ 58,628
Deferred Contract Acquisition Costs
The following table summarizes the activity of the deferred contract acquisition costs (in thousands):
Year Ended January 31,
2024 2023 2022
Beginning balance $ 124,098 $ 89,331 $ 50,245
Capitalization of contract acquisition costs 60,754 78,146 64,834
Amortization of deferred contract acquisition costs (54,512) (43,379) (25,748)
Ending balance $ 130,340 $ 124,098 $ 89,331
Deferred contract acquisition costs, current $ 50,285 $ 42,812 $ 32,205
Deferred contract acquisition costs, non-current 80,055 81,286 57,126
Total deferred contract acquisition costs $ 130,340 $ 124,098 $ 89,331
There were no impairment losses recognized for deferred contract acquisition costs during fiscal 2024, fiscal 2023, and fiscal 2022.
10. Leases
The Company leases office spaces under non-cancelable operating lease agreements, which expire at various dates through 2029. The Company is required to pay property taxes, insurance, and normal maintenance costs for certain of these facilities. Operating lease cost for these leases is recognized on a straight-line basis over the lease term, with variable lease costs recognized in the period incurred. These lease agreements do not contain residual value guarantees or restrictive covenants.
Lease costs
Lease costs were as follows (in thousands):
Year Ended January 31,
2024 2023 2022
Short-term lease costs $ 654 $ 320 $ 333
Operating lease costs 3,647 3,512 3,106
Total lease costs $ 4,301 $ 3,832 $ 3,439
Variable lease cost was not material for the years ended January 31, 2024, 2023, and 2022. There were no other lease components for the periods presented.
Lease term and discount rate information are summarized as follows:
As of January 31,
2024 2023 2022
Weighted average remaining lease terms (in years) 3.4 4.2 5.1
Weighted average discount rate 5.0 % 3.8 % 3.8 %
Future lease payments under non-cancelable operating leases on an undiscounted cash flow basis as of January 31, 2024 are as follows (in thousands):
Years Ending January 31, Amount
2025 $ 4,646
2026 4,256
2027 4,285
2028 1,852
2029 447
Total minimum lease payments 15,486
Less imputed interest (1,453)
Present value of future minimum lease payments 14,033
Less current lease liabilities (4,025)
Operating lease liabilities, non-current $ 10,008
There were no operating right-of-use asset impairment losses in fiscal 2024, fiscal 2023 and fiscal 2022.
11. Commitments and Contingencies
Letter of credit
As of January 31, 2024, the Company had one letter of credit outstanding which is not material. As of January 31, 2023 the Company had a total of $1.8 million in letters of credit outstanding as security deposits for the Company’s leased office spaces.
Purchase commitments
In the normal course of business, the Company enters into non-cancelable purchase commitments with various parties to purchase products and services such as software subscriptions and corporate events. As of January 31, 2024, the Company had outstanding hosting infrastructure commitments, and other commitments with a remaining term of 12 months or longer as follows (in thousands):
Years Ending January 31, Hosting Infrastructure Commitments
Other Commitments
Total
2025 $ 7,093 $ 10,496 $ 17,589
2026 2,907 1,329 4,236
2027 - 231 231
Total $ 10,000 $ 12,056 $ 22,056
Litigation
From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims.
In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim.
Although the results of litigation and claims are inherently unpredictable, the Company believes that there was not a reasonable possibility that the Company had incurred a material loss with respect to such loss contingencies, as of January 31, 2024 and 2023.
12. Common Stock and Stockholders' Equity
Common Stock
The Company has two classes of common stock: Class A common stock and Class B common stock. The shares of Class A common stock and Class B common stock are identical, except with respect to voting, converting, and transfer rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes.
Each outstanding share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. Upon exercise, release, or transfer to a broker, equity plan administrator or other nominee, holders of shares of Class B common stock can convert Class B common stock to Class A common stock. Once converted or transferred and converted into Class A common stock, the Class B common stock may not be reissued. For the year ended January 31, 2024, a total of 27,223,638 shares of Class B common stock have been converted into Class A common stock.
All the outstanding shares of our Class B common stock will convert automatically into shares of Class A common stock upon the earlier of the tenth anniversary of the Company's filing and effectiveness of the amended and restated certificate of incorporation in connection with the IPO or the affirmative vote of the holders of 66-2/3% of the voting power of outstanding Class B common stock. Following such conversion, each share of Class A common stock will have one vote per share and the rights of the holders of all outstanding common stock will be identical.
Common Stock Reserved for Future Issuance
The Company reserved shares of common stock for future issuance as follows (in thousands):
As of January 31,
2024 2023
Options outstanding 6,364 9,315
Restricted stock units outstanding 12,067 11,588
Remaining shares available for future issuance under the 2021 Plan 24,956 21,466
2021 Employee Stock Purchase Plan 4,102 3,008
Total 47,489 45,377
A total of 29,058,446 shares of the Company’s Class A common stock shares are available for issuance under the 2021 Equity Incentive Plan ("2021 Plan") and the ESPP as of January 31, 2024.
Stock Options
Stock options must be granted with an exercise price equal to the fair market value of a share of common stock at the date of grant. Stock options generally have a 10-year contractual term and vest over a four-year period starting from the date specified in each agreement.
The following table summarizes stock option activity for the 2021 Plan (number of options outstanding and aggregate intrinsic value are in thousands):
Options Outstanding
Number of Options Outstanding
(in thousands)
Weighted- Average Exercise
Price Weighted- Average Remaining
Contractual Term (in years)
Aggregate Intrinsic Value
(in thousands)
Balance as of January 31, 2023 9,315 $ 1.92 4.6 $ 281,837
Stock options exercised (2,934) $ 2.05 $ 67,598
Stock options cancelled/forfeited/expired (17) $ 23.62
Balance as of January 31, 2024 6,364 $ 1.81 3.6 $ 127,898
Exercisable as of January 31, 2024 6,351 $ 1.75 3.6 $ 127,896
Exercisable shares consist of 6,350,960 shares that are vested as of January 31, 2024. All shares with an early exercise provision have fully vested as of January 31, 2024.
No options were granted during the year end January 31, 2024 and 2023. There were no option grants to nonemployees and stock-based compensation was not material for nonemployees during the years ended January 31, 2024, 2023, and 2022. The weighted-average grant-date fair values of option awards granted during fiscal 2022 were $18.46 per share, respectively.
The total grant-date fair value of stock options vested was $1.1 million, $4.6 million and $6.5 million during fiscal 2024, fiscal 2023 and fiscal 2022, respectively.
The total intrinsic value of options exercised during fiscal 2024, fiscal 2023 and fiscal 2022 were $67.6 million, $94.1 million and $168.3 million, respectively.
Restricted Stock Units
For RSUs, the board of directors determines their vesting conditions, the period over which RSUs will vest, and the settlement. RSUs generally vest over a four-year period starting from the date specified in each agreement. The fair value of RSUs is estimated based on the fair value of the Company’s common stock on the date of grant. RSUs convert into common stock when they vest and settle.
RSUs granted prior to the IPO contained both service and performance conditions. The service-based vesting condition is subject to continuous service with the Company while the performance condition was satisfied in connection with the IPO. The performance-based vesting condition was not deemed probable until consummated, and therefore, stock-based compensation related to these RSUs remained unrecognized prior to the effectiveness of the IPO. Upon the effectiveness of the IPO, the performance-based condition became probable and the Company recognized a cumulative $190.5 million stock-based compensation expense related to the outstanding RSUs through January 31, 2022.
The Company’s summary of RSUs activity under the 2014 Plan and the 2021 Plan is as follows (shares in thousands):
Number of Awards Weighted-Average Grant Date Fair
Value
Outstanding and unvested at January 31, 2023 11,588 $ 42.48
RSUs granted 8,524 $ 28.16
RSUs released (5,556) $ 38.28
RSUs cancelled (2,489) $ 36.70
Outstanding and unvested at January 31, 2024 12,067 $ 35.48
The total grant-date fair value of RSUs vested was $212.7 million, $144.3 million, and $71.1 million during the year ended January 31, 2024, 2023 and 2022.
Employee Stock Purchase Plan
In December 2021, the Company adopted the ESPP, which became effective upon completion of the IPO. A total of 4,102,133 and 3,007,528 shares of Class A common stock are available for sale under the ESPP as of January 31, 2024 and January 31, 2023. For the year ended January 31, 2024, the Company recognized $13.1 million of stock-based compensation expense related to the ESPP. As of January 31, 2024, unrecognized stock-based compensation expense related to the ESPP was approximately $18.9 million, which is expected to be recognized over a weighted-average period of approximately 1.9 years. The Company’s current offering period began December 15, 2023 and is expected to end December 15, 2025.
In June 2023 and December 2023, employees purchased 426,193 and 378,806 shares of our common stock under the ESPP at a purchase price of $23.97 and $19.47 per share, resulting in total cash proceeds of $10.2 million and $7.4 million. ESPP employee payroll contributions accrued as of January 31, 2024 and January 31, 2023 were $3.3 million and $4.2 million, respectively, and are reported within accrued compensation and benefits in the consolidated balance sheets. Payroll contributions accrued as of January 31, 2024 will be used to purchase shares at the end of the current purchase period ending on June 15, 2024. Payroll contributions ultimately used to purchase shares will be reclassified as stockholders’ equity on the purchase date.
The ESPP offers a two-year look-back feature as well as a rollover feature that provides for an offering period to be rolled over to a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period. An ESPP rollover initially occurred when the Company’s closing stock price on June 15, 2022 was below the closing stock price on December 8, 2021, triggering a new 24-month offering period through June 15, 2024. This rollover was accounted for as a modification to the original offering and resulted in incremental compensation cost of $4.9 million. Another ESPP rollover occurred when the Company’s closing stock price on December 15, 2022 was below the closing stock price on June 15, 2022, triggering a new 24-month offering period through December 15, 2024. This rollover was accounted for as a modification to the original offering and resulted in incremental compensation cost of $5.2 million. Subsequently, another ESPP rollover occurred when the Company's closing stock price on December 15, 2023 was below the closing stock price on June 15, 2023, triggering a new 24-month offering period through December 15, 2025 and resulting in incremental compensation cost of $10.9 million. The unrecognized compensation cost from the original offering plus the incremental compensation cost as a result of the modification is recognized over the requisite service period of the new 24-month offering through December 15, 2025.
The fair value of the purchase rights granted under the ESPP was estimated on the date of grant using the Black-Scholes option pricing model. The following table summarizes the assumptions used in the Black-Scholes option-pricing model to determine fair value of the Company’s common shares to be issued under the ESPP for the offering periods beginning in December 2021:
Year Ended January 31,
2024 2023
Expected term (in years) 0.5 - 2.0
0.5 - 2.0
Expected volatility 44.49% - 83.80%
44.49% - 69.11%
Risk-free interest rate 0.16% - 5.26%
0.16% - 4.64%
Dividend yield 0% 0%
Stock-Based Compensation Expense
Total stock-based compensation expense recognized in the Company’s consolidated statements of operations is as follows (in thousands):
Year Ended January 31,
2024 2023 2022
Cost of support $ 9,819 $ 8,485 $ 8,073
Cost of cloud-hosted services 2,195 2,761 2,482
Cost of professional services and other 2,654 2,555 3,367
Sales and marketing 54,861 58,205 64,991
Research and development 49,401 46,255 67,865
General and administrative 51,687 52,900 53,790
Stock-based compensation expenses, net of amounts capitalized $ 170,617 $ 171,161 $ 200,568
Capitalized stock-based compensation 4,785 4,207 3,562
Total stock-based compensation expense $ 175,402 $ 175,368 $ 204,130
As of January 31, 2024 and 2023, total unrecognized stock-based compensation expense related to RSUs was approximately $339.6 million and $352.2 million, respectively. This unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of approximately 2.7 years and 2.6 years, respectively.
As of January 31, 2024, and 2023, total unrecognized stock-based compensation expense related to unvested stock options was approximately $0.2 million and $1.3 million, respectively, which are expected to be recognized over a weighted-average period of approximately 1.0 year and 1.2 years, respectively.
13. Net Loss Per Share Attributable to Common Stockholders
For periods in which there were Class A and Class B shares outstanding, the rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock were identical, except with respect to voting, converting, and transfer rights. As the liquidation and dividend rights were identical for Class A and Class B common stock, the undistributed earnings were allocated on a proportionate basis and the resulting net loss per share would, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share data):
Year Ended January 31,
2024 2023 2022
Numerator:
Net loss $ (190,668) $ (274,298) $ (290,138)
Denominator:
Weighted-average shares used to compute net loss per share attributable to Class A and Class B common stockholders, basic and diluted 193,825 186,029 83,277
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $ (0.98) $ (1.47) $ (3.48)
The following outstanding potentially dilutive shares of common stock were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because the impact of including them would have been antidilutive (in thousands):
Year Ended January 31,
2024 2023 2022
Stock awards 18,431 20,903 22,788
Share purchase rights under the ESPP 1,437 1,761 704
Class A and Class B common stock subject to repurchase - - 5
Total 19,868 22,664 23,497
14. Reduction In Workforce and Related Charges
On June 7, 2023, the Company announced a workforce reduction plan impacting approximately 8% of the Company’s workforce. The workforce reduction plan was intended to increase operational efficiency, decrease costs and increase profitability. As of January 31, 2024, the Company has completed the reduction plan. As of January 31, 2024, the reduction in workforce liability was paid in full.
During the year ended January 31, 2024, the Company incurred $7.3 million of charges related to the plan, consisting of $6.1 million of employee severance, $0.3 million in payroll taxes, and $0.9 million in other plan-related charges. These charges were recorded within the consolidated statements of operations, of which, $4.4 million was recorded in sales and marketing, $1.7 million in research and development, and $0.6 million in general and administrative. The remaining $0.6 million was recorded in cost of revenues. The $7.3 million of cash charges described above were offset by a $2.1 million benefit in stock-based compensation expense, primarily due to reversal of stock-based compensation for amounts that were not vested under the terms and conditions of the original award.
15. Income Taxes
The Company’s loss before income taxes was as follows (in thousands):
Year Ended January 31,
2024 2023 2022
Domestic $ (198,734) $ (279,675) $ (294,299)
International 9,105 6,390 5,147
Loss before income taxes $ (189,629) $ (273,285) $ (289,152)
The components of the provision for income taxes are as follows (in thousands):
Year Ended January 31,
2024 2023 2022
Current provisions for income taxes:
Federal $ 22 $ - $ -
State 163 54 48
Foreign 1,326 1,118 1,125
Total current tax expense 1,511 1,172 1,173
Deferred tax expense:
Federal (415) - -
State - - -
Foreign (57) (159) (187)
Total deferred tax expense (472) (159) (187)
Provision for income taxes $ 1,039 $ 1,013 $ 986
The reconciliation of the statutory federal income tax and the Company's effective income tax is as follows:
Year Ended January 31,
2024 2023 2022
U.S. federal tax benefit at statutory rate 21.0 % 21.0 % 21.0 %
State income taxes, net of federal benefit 5.1 % 4.5 % 8.2 %
Foreign earnings taxed at different rate 0.6 % 0.5 % 0.6 %
Stock-based compensation (9.1) % (4.2) % 13.1 %
Non-deductible expenses and other 1.1 % 1.2 % (0.7) %
Research and development credits 6.6 % 4.6 % 2.9 %
Change in valuation allowance, net (25.9) % (28.0) % (45.4) %
Effective tax rate (0.6) % (0.4) % (0.3) %
The components of the Company’s net deferred tax assets and liabilities were as follows (in thousands):
Year Ended January 31,
2024 2023
Deferred tax assets:
Net operating losses $ 183,614 $ 172,911
Sec 174 Capitalization 86,649 58,099
Deferred revenue 17,595 9,679
Lease liability 3,004 3,909
Other accruals 5,517 5,030
Stock-based compensation 12,490 21,988
Credit carryforwards 58,054 39,697
Total deferred tax assets $ 366,923 $ 311,313
Year Ended January 31,
2024 2023
Deferred tax liabilities:
Fixed assets $ (9,665) $ (5,064)
Right-of-use asset (2,380) (3,171)
Deferred commissions (32,379) (31,332)
Total deferred tax liabilities $ (44,424) $ (39,567)
Net deferred tax assets $ 322,499 $ 271,746
Valuation allowance (321,944) (271,244)
Deferred tax assets, net of valuation allowance $ 555 $ 502
The Company has recorded income tax expense for the year ended January 31, 2024 in the amount of $1.0 million of tax expense for U.S. states as well as its foreign subsidiaries which are profitable as a result of intercompany compensation. The Company also recorded income tax benefits of $0.4 million due to the acquisition of BluBracket for the year ended January 31, 2024. Recognition of deferred tax assets is appropriate when realization of such assets is more likely than not. A valuation allowance has been provided by the Company against federal and state deferred tax assets. Overall, the valuation allowance increased by $50.7 million and $76.4 million for fiscal 2024 and fiscal 2023, respectively.
As of January 31, 2024, the Company has U.S. federal and state net operating loss ("NOL") carryforwards of approximately $690.4 million and $602.2 million, respectively. The federal NOL does not expire since all balances relate to losses incurred after January 1, 2018, whereas the state NOL will start expiring from 2026. The Company also has federal and state research credit carryforwards of $56.4 million and $19.7 million respectively. The federal tax credit carryforwards will begin to expire in 2035, if not utilized. The state credit carryforwards have no expiration date.
A limitation may apply to the use of the net operating loss and credit carryforwards, under provisions of the Internal Revenue Code of 1986, as amended, and similar state tax provisions that are applicable if the Company experiences an “ownership change.” An ownership change may occur, for example, as a result of issuance of new equity. Should these limitations apply, the carryforwards would be subject to an annual limitation, resulting in a potential reduction in the gross deferred tax assets before considering the valuation allowance.
Beginning in 2022, the 2017 Tax Cuts and Jobs Act amended Section 174 to eliminate current-year deductibility of research and experimentation ("R&E") expenditures and software development costs (collectively, R&E expenditures) and instead require taxpayers to charge their R&E expenditures to a capital account amortized over five years (15 years for expenditures attributable R&E activity performed outside the United States). The Company generated a deferred tax asset of $86.6 million for capitalized R&E expenditures for the year ended January 31, 2024 which is fully offset with a valuation allowance.
A deferred tax liability has not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are indefinitely reinvested outside the U.S. Income taxes are generally incurred upon a repatriation of assets, a sale, or a liquidation of the subsidiary. The excess of the amount for financial reporting over the tax basis in the investments in foreign subsidiaries, as well as the unrecognized deferred tax liability, are not material for the periods presented.
Unrecognized Tax Benefits
The Company’s reconciliation of the total amounts of unrecognized tax benefits was as follows (in thousands):
Year Ended January 31,
2024 2023 2022
Unrecognized tax benefits as of the beginning of the year $ 10,402 $ 4,849 $ 1,730
Increases related to prior year tax provisions 868 1,333 475.00
Decrease related to prior year tax provisions - - -
Increase related to current year tax provisions 4,063 4,220 2,644
Unrecognized tax benefits as of the end of the year $ 15,333 $ 10,402 $ 4,849
The Company had unrecognized tax benefits of approximately $15.3 million and $10.4 million, respectively, as of January 31, 2024 and 2023 which are attributable to federal and state research credits. These unrecognized tax benefits, if recognized, would not affect the effective tax rate and would be offset by the reversal of related deferred tax assets which are subject to a full valuation allowance.
The Company does not anticipate any significant change in the Company’s uncertain tax positions within 12 months of this date.
The Company’s policy is to recognize interest and penalties associated with uncertain tax benefits as part of the income tax provision and include accrued interest and penalties with the related income tax liability on the Company’s consolidated balance sheets. To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has it accrued for or made payments for interest and penalties. The Company is subject to income tax in the United States, certain states, and various foreign countries. Due to the history of net operating losses, the Company is subject to United States federal, state, and local examinations by tax authorities for all years since incorporation. As of January 31, 2024 the Company is not currently under any audits.
16. Subsequent Events
The Company evaluated subsequent events through March 20, 2024, which is the date the audited consolidated financial statements were available to be issued.
In February 2024, the Company signed an agreement with a cloud service provider. Under that agreement the Company has minimum spend commitments of $18.5 million in the 12 months ending February 2025, and $20.0 million in the 12 months ending February 2026, $22.5 million in the 12 months ending February 2027, $24.0 million in the 12 months ending February 2028, and $25.0 million in the 12 months ending February 2029.
In February 2024, the Company's Board of Directors approved a share repurchase program for up to $250.0 million of the Company's common stock.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of January 31, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in this Annual Report on Form 10-K was (a) reported within the same periods specified by SEC rules and regulations and (b) communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding any required disclosure.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate “internal control over financial reporting,” as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of January 31, 2024 based on the criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on the results of its evaluation, management concluded that our internal control over financial reporting was effective as of January 31, 2024. The effectiveness of our internal control over financial reporting as of January 31, 2024 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in its report which is included in Part II, Item 8 of this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Annual Report on Form 10-K that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of HashiCorp, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of HashiCorp, Inc. and subsidiaries (the “Company”) as of January 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 31, 2024, of the Company and our report dated March 20, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
San Jose, California,
March 20, 2024

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
Rule 10b5-1 Trading Plans
No other officers or directors, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as defined in Regulation S-K Item 408, during the last fiscal quarter.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item will be included in our definitive proxy statement for our 2024 annual general meeting of stockholders (the "Proxy Statement"), which will be filed with the SEC within 120 days after the end of our year ended January 31, 2024, and is incorporated herein by reference.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
The information required by this item will be set forth in the 2024 Proxy Statement and is incorporated herein by reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item will be set forth in the 2024 Proxy Statement and is incorporated herein by reference.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be set forth in the 2024 Proxy Statement and is incorporated herein by reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services
The information required by this item will be set forth in the 2024 Proxy Statement and is incorporated herein by reference.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits, Financial Statement Schedules.
(a)(1)Financial Statements
See Index to Financial Statements in Item 8 of this Annual Report on Form 10-K.
(a)(2)Financial Statement Schedule
All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable or because the information required is already included in the financial statements or the notes to those financial statements.
(a)(3)Exhibits
We have filed or incorporated by reference the exhibits listed on the accompanying Exhibit Index.
EXHIBIT INDEX
Exhibit
Number Description Form File No. Exhibit Filing Date
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
8-K 001-41121 3.1 12/13/2021
3.2 Amended and Restated Bylaws of the Registrant.
8-K 001-41121 3.1 02/29/2024
4.1 Fifth Amended and Restated Investors’ Rights Agreement among the Registrant and certain of its stockholders, dated March 6, 2020, as amended.
S-1 333-260757 4.1 11/04/2021
4.2 Form of Class A common stock certificate of the Registrant.
S-1/A 333-260757 4.2 11/17/2021
4.3 Description of the Registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.
10-K 001-41121 4.3 03/25/2022
10.1+ Form of Indemnification Agreement between the Registrant and each of its directors and executive officers.
S-1 333-260757 10.1 11/4/2021
10.2+ 2014 Stock Plan, as amended, and forms of agreement thereunder.
S-1 333-260757 10.2 11/4/2021
10.3+ 2021 Equity Incentive Plan and forms of agreement thereunder.
S-1 333-260757 10.3 11/4/2021
10.4+ 2021 Employee Stock Purchase Plan.
S-1 333-260757 10.4 11/4/2021
10.5+ Confirmatory Offer Letter between the Registrant and Armon Dadgar.
S-1 333-260757 10.5 11/4/2021
10.6+ Confirmatory Offer Letter between the Registrant and Marc Holmes.
S-1 333-260757 10.6 11/4/2021
10.7+ Confirmatory Offer Letter between the Registrant and David McJannet.
S-1 333-260757 10.7 11/4/2021
10.8+ Confirmatory Offer Letter between the Registrant and Brandon Sweeney.
S-1 333-260757 10.8 11/4/2021
10.9+ Confirmatory Offer Letter between the Registrant and Navam Welihinda.
S-1 333-260757 10.9 11/4/2021
10.10+ Offer Letter between the Company and Susan St. Ledger.
10-Q 001-41121 10.10 12/7/2023
10.11*+ Offer Letter between the Company and Michael Weingartner.
10.12+ Executive Incentive Compensation Plan.
S-1 333-260757 10.10 11/4/2021
10.13+ Form of Change in Control and Severance Agreement between the Registrant and each of its executive officers.
S-1/A 333-260757 10.10 11/17/2021
10.14+ Outside Director Compensation Policy.
10-K 001-41121 10.12 3/27/2023
21.1* List of Subsidiaries of the Registrant.
23.1* Consent of Deloitte & Touche LLP, independent registered public accounting firm.
31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*† Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*† Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1*+ Executive Compensation Clawback Policy
101 The following financial information from HashiCorp, Inc.'s Annual Report on Form 10-K for the year ended January 31, 2024 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit), (v) the Consolidated Statements of Cash Flows, and (vi) Notes to the Consolidated Financial Statements.
104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).
* Filed herewith
+ Indicates management contract or compensatory plan.
† The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.