Cloud infrastructure startup HashiCorp has set terms for the latest initial public offering to test investor enthusiasm for high-growth software companies.
In an updated prospectus, HashiCorp said Monday that it would sell 15.3 million shares at $68 to $72 each, giving it a valuation of up to $13 billion. The company’s last private funding round valued it at $5 billion.
HashiCorp “is poised to capitalize on a booming IPO market that’s putting a premium on high-growth software companies, even if they’re racking up losses,” CNBC reported.
In other recent tech IPOs, Gitlab went public last month and is now valued at about $14 billion.
HashiCorp offers a suite of open-source software tools that help enterprises build, deploy, and manage applications across multiple operating environments. It had 2,392 customers as of Oct. 31, including Roblox, Bank of America, Progressive, and Stripe, according to the prospectus.
“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,” it said.
Revenue in the year ended Jan. 31, 2021, surged 75% to $211.9 million from a year earlier and, in the most recent quarter, it climbed 49% to $82.2 million. Subscription contracts for customer support services are HashiCorp’s most lucrative business, providing $166 million in revenue in the last fiscal year, a 71% increase.
“Like most enterprise tech companies at this stage, HashiCorp is not profitable, but it narrowed its loss during the first six months of 2021 [from $67.3 million to $40.5 million] compared [with] the same period last year,” Protocol said. “One of its biggest challenges will be holding onto customers as nearly everyone in enterprise infrastructure tech chases the same goal.”
HashiCorp’s customer retention rate “compares favorably to other recent enterprise IPOs,” according to Protocol. As of July 31, the rate over the last four quarters was 124%, compared with 128% at the end of July 2020.
“We are still in the early stages of our expansion and extension journey with our customers,” the company stated in its prospectus.