HashiCorp Inc., the maker of popular open-source tools used by organizations to automate their information technology infrastructure, today filed for an initial public offering.

Like other enterprise tech firms that have moved to list their shares in recent quarters, HashiCorp is unprofitable but boasts fast revenue growth. HashiCorp boosted sales from $121.3 million in the 12 months ended Jan. 31, 2020 to $211.9 million through Jan. 31 of this year.

The increase represents a 75% jump. The company’s losses, meanwhile, rose from $53.4 million to $83.5 million.

HashiCorp’s financials improved in the six months ended July 31. The company narrowed its losses from $67.3 million a year ago to $40.5 million while at the same time maintaining steady revenue growth, increasing sales during the first two quarters of the fiscal year to $142 million.

“We expect we will incur net losses for the foreseeable future as we continue to invest into the market opportunity ahead of us,” HashiCorp told investors in its IPO filing. This opportunity, the startup estimates, consists of a total addressable market that is worth $41.7 billion this year and is projected nearly to double to $72.5 billion by 2026.

HashiCorp provides a set of popular open-source tools designed to reduce much of the manual work historically involved in maintaining a company’s infrastructure and applications. The startup estimates that its software has been downloaded about 100 million times since the beginning of the year alone. Worldwide, HashiCorp estimates that at least 11,000 organizations have downloaded one of its products at one point.

HashiCorp’s flagship tool is Terraform, an infrastructure-as-a-code product. Terraform enables administrators to define the configuration of cloud and on-premises IT infrastructure by writing scripts instead of navigating management consoles. The tool automatically implements the configuration details defined in a script, removing the need for administrators to manually set up every setting.

Terraform and competing infrastructure automation tools have become popular in recent years because modern enterprise technology environments contain too many components for manual configuration to be practical. HashiCorp claims that Terraform can save weeks of work for administrators in some cases.

Reduced risk of human error is another key component of the startup’s value proposition. The fewer configuration settings have to be defined manually, the less chance there is of human error occurring.

HashiCorp’s other open-source tools likewise focus on automating key aspects of running enterprise IT environments. One tool, called Vault, helps organizations store sensitive application data such as the encryption keys a workload uses to protect business records. Consul is HashiCorp’s product for automating network management, while an application scheduler called Nomad is provided by the startup to reduce the amount of work required to deploy and manage workloads. 

HashiCorp also offers products for more specialized tasks, such as setting up the development environments in which a company’s programmers create new software.

The startup makes money from its tools, which are all delivered under an open-source license, by selling commercial editions that offer additional features. HashiCorp also offers a subset of its tools through a managed cloud service called the HashiCorp Cloud Platform.

In the six months through July 31, 2021, customers with contracts worth at least $100,000 a year accounted for 87% of HashiCorp’s revenue. The large number of high-value contracts reflects the fact that the startup’s tools are increasingly popular among enterprises. HashiCorp told investors in the IPO filing that its existing enterprise installed base is believed to hold significant growth opportunities. 

“Our customer base represents a significant growth opportunity as we enable their cloud adoption journeys,” HashiCorp explained. “As cloud adoption continues and our customers look to build more scalable and dynamic cloud architectures, they will likely move from adopting bare-necessities use cases to more complex deployments, expanding their usage of a given product.”

HashiCorp also argues that many more organizations could join its installed base in the future. “We believe that nearly all organizations will adopt a cloud strategy, resulting in a substantial opportunity to continue growing our customer base,” the startup stated. “We intend to continue making significant investments in research and development and hiring top technical talent to enable new use cases and increase our product differentiation.”

HashiCorp will list on the New York Stock Exchange under ticker symbol “HCP.” The startup’s filing sets the fundraising target for the offering at $100 million, a figure that is often used by tech firms until they finalize their IPO plans.

Image: HashiCorp