Highlights:

  • HashiCorp, headquartered in San Francisco, offers a suite of open-source tools enterprises utilize to manage their cloud infrastructure. Terraform is at the forefront of its software portfolio, a tool designed to automate configuring cloud instances and other hardware resources.
  • The company generates revenue by offering paid, cloud-hosted versions of its open-source tools. These versions are accessible through the HashiCorp Cloud Platform, or HCP.

The Wall Street Journal recently reported that IBM Corp. is in advanced discussions to acquire infrastructure management provider HashiCorp Inc.

Sources familiar with the matter informed the paper that the deal could be finalized within days. According to the report, the HashiCorp acquisition by IBM would likely be valued at a figure exceeding the USD 4.9 billion worth of its shares before the acquisition reports. Following the news of the sale talks, the company’s market capitalization has surged by over 18%, reaching USD 5.86 billion.

HashiCorp, headquartered in San Francisco, offers a suite of open-source tools enterprises utilize to manage their cloud infrastructure. Terraform is at the forefront of its software portfolio, a tool designed to automate configuring cloud instances and other hardware resources. It simplifies various related tasks, particularly the identification of incorrect changes to configuration settings for hardware resources.

HashiCorp provides Terraform along with over half a dozen other open-source tools. Some tools focus similarly on automating infrastructure-related tasks for software teams, while others target adjacent use cases. Two of HashiCorp’s tools, Vault and Boundary, are specifically crafted to enhance the security of cloud environments.

The company generates revenue by offering paid, cloud-hosted versions of its open-source tools. These versions are accessible through the HashiCorp Cloud Platform, or HCP. The report of the acquisition talks with IBM comes just a day after HashiCorp’s Chief Executive Officer, Dave McJannet, rang the Nasdaq opening bell to commemorate the release of a significant update to HCP.

The company expanded the platform by introducing a managed version of its Terraform infrastructure automation tool earlier. According to HashiCorp, HCP allows customers to deploy Terraform and its other open-source tools within minutes by eliminating the need to configure the underlying hardware. The platform incorporates high-availability features to ensure the tools remain accessible despite infrastructure malfunctions.

The premium IBM could potentially pay for HashiCorp reflects the robust revenue growth experienced by the latter company. The open-source software maker’s revenue surged 15% year-over-year in the last quarter, reaching USD 155.8 million, exceeding analyst expectations. HashiCorp revealed in its earnings report that the paid cloud versions of its products are utilized by over 4,423 companies, with the majority spending more than USD 100,000 per year on the software.

Before the HashiCorp acquisition by IBM, IBM acquired software maker Apptio Inc. last June in a deal valued at USD 4.6 billion. Apptio offers analytics tools capable of visualizing a company’s technology spending in dashboards, thereby highlighting opportunities for cost reduction. Organizations leverage the software to lower cloud expenses, forecast future purchases, and benchmark their technology budgets against industry peers.