The growth of the open-core model and HashiCorp acquisition

Mitchell Hashimoto and Armon Dadgar founded HashiCorp in 2012. The company builds tools like Terraform, Vault, Consul, and Nomad. I see Terraform as a tool for infrastructure provisioning. In 2020, the company reached a $5.1 billion valuation after a $175 million investment from Franklin Templeton. The business follows an open-core model. Developers use free open-source versions, then buy proprietary features for enterprise needs. The company generates revenue through subscriptions and professional services. Subscription revenue includes licenses for proprietary features, support, and cloud-hosted services. In the third quarter of fiscal year 2024, HashiCorp reported $146.1 million in total revenue, which was a 17% increase from the previous year. The company’s customer base reached 4,354, and 877 of those customers have over $100,000 in annual recurring revenue. Net dollar retention for the trailing four quarters averaged 119%. While the company reported a GAAP net loss of $39.5 million, it reached a non-GAAP net income of $5.6 million. Remaining performance obligations for GAAP reached $678.2 million, while non-GAAP obligations were $700.4 million. The company manages several revenue streams. Subscription revenue comes from licenses for proprietary features, support, and cloud-hosted services. Professional services provide another source of income. HashiCorp uses an adopt, land, expand, and extend sales motion. This strategy targets users of open-source products and converts them to paid subscribers. Customers have asked for managed versions of tools like Consul to reduce the challenge of running shared services. HashiCorp provides managed Consul on Amazon. Consul Enterprise includes features like Admin Partitions, Namespaces, Sameness Groups, and Read Replicas. Users also use Consul-Terraform-Sync Enterprise. Standard Enterprise licenses do not support service mesh features, but Premium Enterprise licenses do. Consul Enterprise also provides Automated Upgrades, Audit Logging, and OIDC Auth Method. The company also has a large customer list that contains more than 4,400 clients, such as Starbucks and Vodafone.

Licensing shifts and the OpenTofu fork

In August 2023, HashiCorp changed the Terraform license from MPL 2.0 to the Business Source License (BSL). This change prevents users from building competing commercial services with Terraform. I find this decision creates unnecessary legal friction for platform teams. The community created OpenTofu under the Linux Foundation to provide an open baseline. You should evaluate if your team needs a tool with a roadmap tied to a single vendor. Terraform and Ansible serve different purposes. Terraform is an Infrastructure as Code tool for provisioning resources like VPCs, load balancers, or Kubernetes clusters. It uses a declarative language called HCL and tracks state in a .tfstate file. The workflow uses a plan and apply process to reduce risk. Terraform also supports AWS, Azure, and GCP through a provider ecosystem. Ansible is a configuration management tool for managing software and updates. It is agentless and uses YAML. Ansible uses SSH to communicate with managed servers and has over 3,000 modules. I think of Terraform as the tool that builds the house and Ansible as the tool that decorates it. Terraform is better when you want predictable, repeatable infrastructure provisioning. It excels at creating, modifying, and versioning resources. Ansible is better when you want flexibility and fine-grained control over configuration. It thrives in post-provisioning configuration and day-2 operations. Both tools have enterprise versions. Terraform has Terraform Cloud, which has role-based access control and private module registries. Ansible has the Ansible Automation Platform, which has a web-based UI and enterprise-grade analytics. I find that many teams use both tools to cover the full lifecycle.

The IBM acquisition and automation synergy

IBM announced it would acquire HashiCorp in April 2024 for $6.4 billion. The deal sets a price of $35 per share in cash. The UK Competition and Markets Authority and the US Federal Trade Commission investigated the acquisition to see if it would reduce market competition. IBM completed the acquisition on February 27, 2025. When IBM finalized its $6.4 billion acquisition of HashiCorp in early 2025, the deal brought together Red Hat’s Ansible configuration management and Terraform’s infrastructure provisioning capabilities to address the increasing complexity of hybrid cloud environments. This merger combines Terraform with Red Hat’s Ansible Automation Platform. Terraform provisions foundational infrastructure, while Ansible handles application configurations and middleware. I believe this synergy helps manage hybrid cloud environments. Does the consolidation of these tools under IBM change the competitive nature of the market? IBM aims to use HashiCorp to expand its presence in the cloud opportunity, which IDC estimated had a $1.1 trillion TAM in 2023. The combination of Terraform and Red Hat’s Ansible Automation Platform allows for automation of foundational infrastructure and application configurations. This synergy helps clients manage infrastructure and security across public and private clouds. The combination of Vault and Red Hat OpenShift provides strong security capabilities for hybrid cloud environments. This acquisition also creates synergies for Red Hat, watsonx, and IBM Consulting.