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United States securities and exchange commission logo
August 26, 2021
David McJannet
Chief Executive Officer
HashiCorp, Inc.
101 Second Street, Suite 700
San Francisco, CA 94105
Re: HashiCorp, Inc.
Draft Registration
Statement on Form S-1
Submitted July 29,
2021
CIK No. 0001720671
Dear Mr. McJannet:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1 submitted July 29, 2021
Prospectus Summary
Overview, page 1
1. Please disclose here
the percentage of revenue generated from your customers with
$100,000 or greater
annual recurring revenue to add context to the number of customers
disclosed.
Risk Factors
We expect our revenue mix to vary over time, which could harm our gross
margin and operating
results, page 24
2. You state here that
your Terraform and Vault products make up the majority of your
David McJannet
FirstName
HashiCorp,LastNameDavid McJannet
Inc.
Comapany
August 26, NameHashiCorp,
2021 Inc.
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revenue. Please revise to disclose the percentage of revenue generated
from these
products in your most recent financial statement period.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Our Business Model, page 75
3. You disclose here and elsewhere throughout the filing that as of
January 31, 2021, your
last four quarter average net dollar retention rate was 123%. Please
revise to disclose
this rate for each period in which financial statements are provided
and discuss any
significant fluctuations from period to period. Also, we note that net
dollar retention
rate is calculated using annualized recurring revenue, which for your
monthly customers
represents the annualized value of their last month's spend. Please
explain your basis for
annualizing revenue from monthly contracts. In your response, provide
us with
your cancellation/attrition rates or, alternatively, renewal rates for
your monthly
arrangements and tell us the amount of revenue recognized from such
contracts for each
period presented. Also, clarify whether monthly customers includes
contracts that include
a material right of renewal each month.
Results of Operations
Comparison of Fiscal 2020 and Fiscal 2021
Revenue, page 85
4. You state that the increase in revenue in fiscal 2021 was attributed
to expanded product
adoption among new and existing customers. Please revise to quantify
the relative
contribution of each of these factors. Refer to Item 303 of Regulation
S-K and Section
III.D of SEC Release No. 33-6835.
Critical Accounting Policies and Estimates
Common Stock Valuation, page 98
5. Please provide us with a breakdown of all stock-based compensation
awards granted and
secondary sales transactions to date in fiscal 2022, including the
fair value of the
underlying common stock used to value such awards. To the extent there
were significant
fluctuations in the fair values from period-to-period, please describe
for us the factors that
contributed to these fluctuations, including any intervening events
within the company or
changes in your valuation assumptions or methodology. Please continue
to update this
analysis through effectiveness of the registration statement.
Non-GAAP Financial Measures
Non-GAAP RPOs, page 101
6. You state on page 79 that your remaining performance obligations
(RPOs) are not
necessarily indicative of future product revenue growth as it does not
account for the
timing of customers' consumption. You further state that RPOs are
influenced by a
number of factors and should be reviewed in conjunction with revenue
and other financial
David McJannet
HashiCorp, Inc.
August 26, 2021
Page 3
metrics. Given the limitations noted with regards to your GAAP measure
of RPOs, please
tell us and revise to disclose why management believes the measure of
non-GAAP RPOs
is useful to investors. Refer to Item 10(e)(1)(i)(C) of Regulation
S-K.
Business, page 103
7. On page 37, you state that you rely on public cloud operators to
operate your platform and
note that you have agreements with these public cloud operators.
Please revise your
business section to describe your relationships with and dependence on
these public cloud
operators. Additionally, tell us what consideration you have given to
filing any material
agreements you may have with these public cloud operators. See Item
601(b)(10) of
Regulation S-K.
Consolidated Financial Statements
Consolidated Statements of Operations, page F-4
8. It appears that your subscription revenue includes revenue from both
products and
services. Please revise to separately disclose revenue and related
cost of revenue from
products and services pursuant to Rule 5-03(b) of Regulation S-X, or
explain.
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
Revenue Recognition, page F-9
9. You state that "certain arrangements" with customers include a renewal
option that is
separately evaluated for a material right. Please revise to clarify,
if true, that substantially
all your arrangements contain a material right. In this regard, it
appears that your term
license and support services arrangements, which appear to constitute
the majority of your
arrangements, contain a material right.
10. You state that your 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. Please revise to clarify, if true,
that for when such
arrangements include a material right of renewal, you recognize
revenue each month equal
to the allocated value of a one-month term license and one-month
mandatory support
services.
General
11. Please provide us with supplemental copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your
FirstName LastNameDavid McJannet
behalf, have presented or expect to present to potential investors in
reliance on
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Section5(d) Inc. Act, whether or not you retained, or intend
to retain, copies
of the Securities
Augustof26,those
2021communications.
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Inc.
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2021 Inc.
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You may contact David Edgar, Senior Staff Accountant, at (202) 551-3459
or Kathleen
Collins, Accounting Branch Chief, at (202) 551-3499 if you have questions
regarding comments
on the financial statements and related matters. Please contact Mitchell
Austin, Staff
Attorney, at (202) 551-3574 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Technology
cc: Michael Coke, Esq.