I’ve loved using Hashicorp products for many years but I have (despite often being in a position to do so) failed miserably to engage in any kind of commercial relationship with them.
Their pricing has always been opaque. Despite trying my hardest, even multiple phone calls with their sales teams, I never got even a sniff of how much it would cost for enterprise deployments of Hashicorp products at any of my clients.
I’m a shareholder in HCP and lost money on them after the IPO, so maybe I’m a bit sore, but I’m dumping my holdings soon. I’ve got no confidence this company actually knows how to sell into the bulk of the addressable market that they outlined in their S1.
I think the growth they are currently generating will top out pretty soon when the shock of paying about the same for the management tools as the actual cloud services they are running hits home with their customers.
I can give an insight! We tried buying into Vault Enterprise and let me tell you, it was incredibly expensive. We're talking Splunk levels of prohibitive cost here, maybe even worse.
Their pricing models are actually insane. For Vault Enterprise, you buy into a fixed limited number of clients with a pricing ladder that would make Apple blush. You start at 100 “service tokens” with the next level being 1000, 2500, and 50000 tokens. Any “service” that needs to connect to vault is a client, and the definition of a service is pretty loose. For Kubernetes / compose stacks, any one pod / running container is a service.
It gets worse: Once a token has been claimed, it can no longer be used by a different client for the entire billing period (meaning: a year). This means that you can run out of valid client tokens, even if you're only actively using half if you spent the other half for testing purposes or no longer run the architecture that used up those tokens. Oh, and users are clients, too.
All in all, the ballpark moved somewhere in the low six figures for their 100-token agreement, if I remember correctly. We had to decline because Vault alone would've cost a large part of our infrastructure budget.
* Gross margin: 80% (hey this one is pretty good)
* Operating margin: -62%
* Net margin: -57%
* Return on Equity: -22%
* Return on Invested Capital: -21%
Their sales and marketing is pretty bloated and is destroying all of their gross profit alone.
Their stock seems to be priced on the hopes and dreams that they'll grow revenue out of their current problems before they run out of cash. But the headline and the reactions here show how they're trying to do that.
That is not too unusual for software companies on IPO, lots of them paying $5 to acquire $1 in revenue. I think the common justification is that new customers will stick around for years.
Their pricing has always been opaque. Despite trying my hardest, even multiple phone calls with their sales teams, I never got even a sniff of how much it would cost for enterprise deployments of Hashicorp products at any of my clients.
I’m a shareholder in HCP and lost money on them after the IPO, so maybe I’m a bit sore, but I’m dumping my holdings soon. I’ve got no confidence this company actually knows how to sell into the bulk of the addressable market that they outlined in their S1.
I think the growth they are currently generating will top out pretty soon when the shock of paying about the same for the management tools as the actual cloud services they are running hits home with their customers.