HubSpot, Inc. (NYSE: HUBS), the customer platform for scaling
companies, today announced financial results for the fourth quarter
and full year ended December 31, 2024.
Financial Highlights:
Revenue Fourth Quarter 2024:
- Total revenue was $703.2 million, up 21% on an as-reported
basis and 20% in constant currency compared to Q4'23.
- Subscription revenue was $687.3 million, up 21% on an
as-reported basis compared to Q4'23.
- Professional services and other revenue was $15.9 million, up
36% on an as-reported basis compared to Q4'23.
Full Year 2024:
- Total revenue was $2.63 billion, up 21% on an as-reported basis
and in constant currency compared to 2023.
- Subscription revenue was $2.57 billion, up 21% on an
as-reported basis compared to 2023.
- Professional services and other revenue was $58.0 million, up
24% on an as-reported basis compared to 2023.
Operating Income (Loss) Fourth Quarter 2024:
- GAAP operating margin was (1.5%), compared to (4.0%) in
Q4'23.
- Non-GAAP operating margin was 18.9%, compared to 17.1% in
Q4'23.
- GAAP operating loss was ($10.8) million, compared to ($23.2)
million in Q4'23.
- Non-GAAP operating income was $133.1 million, compared to $99.3
million in Q4'23.
Full Year 2024:
- GAAP operating margin was (2.6%), compared to (9.3%) in
2023.
- Non-GAAP operating margin was 17.5%, compared to 15.5% in
2023.
- GAAP operating loss was ($67.6) million, compared to ($200.9)
million in 2023.
- Non-GAAP operating income was $460.2 million, compared to
$337.4 million in 2023.
Net Income (Loss) Fourth Quarter 2024:
- GAAP net income was $4.9 million, or $0.10 per basic and $0.09
per diluted share, compared to net loss of ($12.4) million, or
($0.25) per basic and diluted share in Q4'23.
- Non-GAAP net income was $124.9 million, or $2.42 per basic and
$2.32 per diluted share, compared to $93.3 million, or $1.85 per
basic and $1.77 per diluted share in Q4'23.
- Weighted average basic and diluted shares outstanding for GAAP
net income (loss) per share was 51.7 million and 52.2 million
respectively, compared to 50.3 million basic and diluted shares in
Q4'23.
- Weighted average basic and diluted shares outstanding for
non-GAAP net income per share was 51.7 million and 53.9 million
respectively, compared to 50.3 million and 52.6 million,
respectively in Q4'23.
Full Year 2024:
- GAAP net income was $4.6 million, or $0.09 per basic and
diluted share, compared to net loss of ($164.5) million, or ($3.30)
per basic and diluted share in 2023.
- Non-GAAP net income was $434.1 million, or $8.48 per basic and
$8.12 per diluted share, compared to $313.1 million, or $6.28 per
basic and $6.00 per diluted share in 2023.
- Weighted average basic and diluted shares outstanding for GAAP
net income (loss) per share was 51.2 million and 51.8 million
respectively, compared to 49.9 million basic and diluted shares in
2023.
- Weighted average basic and diluted shares outstanding for
non-GAAP net income per share was 51.2 million and 53.4 million
respectively, compared to 49.9 million and 52.2 million,
respectively in 2023.
Balance Sheet and Cash Flow
- The company’s cash, cash equivalents, and short-term and
long-term investments balance was $2.2 billion as of December 31,
2024.
- During the fourth quarter, the company generated $194.1 million
of cash from operating cash flow, compared to $104.3 million during
Q4'23.
- During the fourth quarter, the company generated $198.6 million
of cash from non-GAAP operating cash flow and $163.0 million of
non-GAAP free cash flow, compared to $108.7 million of cash from
non-GAAP operating cash flow and $83.0 million of non-GAAP free
cash flow during Q4'23.
- During 2024, the company generated $598.6 million of cash from
operating cash flow, compared to $351.0 million during 2023.
- During 2024, the company generated $615.6 million of cash from
non-GAAP operating cash flow and $488.1 million of non-GAAP free
cash flow, compared to $392.5 million of cash from non-GAAP
operating cash flow and $292.5 million of non-GAAP free cash flow
during 2023.
Additional Recent Business Highlights
- Grew Customers to 247,939 at December 31, 2024, up 21% from
December 31, 2023.
- Average Subscription Revenue Per Customer was $11,312 during
the fourth quarter of 2024, down 0.5% on an as-reported basis
compared to the fourth quarter of 2023.
- Calculated billings were $767.6 million in the fourth quarter
of 2024, up 16% on an as-reported basis and 21% in constant
currency compared to Q4'23.
“We had a solid finish to 2024, highlighting our leadership as a
platform company”, said Yamini Rangan, Chief Executive Officer at
HubSpot. “2024 was a transformative year for HubSpot as we
reimagined our product, our platform, and company with AI. I’m
excited by the progress we’ve made in embedding AI across our hubs
and the value it’s driving for customers. Heading into 2025, we're
focused on cementing our position as the leading AI-first customer
platform for scaling companies. We are entering the year with more
clarity on strategy, more alignment on outcomes and more urgency in
execution than ever before.”
Business Outlook
Based on information available as of February 12, 2025, HubSpot
is issuing guidance for the full year 2025 and first quarter of
2025 as indicated below.
Full Year 2025:
- Total revenue is expected to be in the range of $2.985 billion
to $2.995 billion, up 14% year over year on an as-reported basis
and 16% in constant currency.
- Non-GAAP operating income is expected to be in the range of
$543.0 million to $547.0 million, representing an 18% operating
profit margin.
- Non-GAAP net income per common share is expected to be in the
range of $9.11 to $9.19. This assumes approximately 53.9 million
weighted average diluted shares outstanding.
First Quarter 2025:
- Total revenue is expected to be in the range of $697.0 million
to $699.0 million, up 13% year over year on an as-reported basis
and 15% in constant currency.
- Non-GAAP operating income is expected to be in the range of
$98.0 million to $99.0 million, representing a 14% operating profit
margin.
- Non-GAAP net income per common share is expected to be in the
range of $1.74 to $1.76. This assumes approximately 54.1 million
weighted average diluted shares outstanding.
Use of Non-GAAP Financial Measures
In our earnings press releases, conference calls, slide
presentations, and webcasts, we may use or discuss non-GAAP
financial measures, as defined by Regulation G. The GAAP financial
measure most directly comparable to each non-GAAP financial measure
used or discussed, and a reconciliation of the differences between
each non-GAAP financial measure and the comparable GAAP financial
measure, are included in this press release after the consolidated
financial statements. Our earnings press releases containing such
non-GAAP reconciliations can be found in the Investors section of
our website ir.hubspot.com.
Conference Call Information
HubSpot will host a conference call on Wednesday, February 12,
2025 at 4:30 p.m. Eastern Time (ET) to discuss the company’s fourth
quarter and full year 2024 financial results and its business
outlook. To register for this conference call, please use this dial
in registration link or visit HubSpot's Investor Relations website
at ir.hubspot.com. After registering, a confirmation email will be
sent, including dial-in details and a unique code for entry.
Participants who wish to register for the conference call webcast
please use this link.
An archived webcast of this conference call will also be
available on HubSpot's Investor Relations website at
ir.hubspot.com.
The company has used, and intends to continue to use, the
investor relations portion of its website as a means of disclosing
material non-public information and for complying with disclosure
obligations under Regulation FD.
About HubSpot
HubSpot is the customer platform that helps businesses connect
and grow better. HubSpot delivers seamless connection for
customer-facing teams with a unified platform that includes
AI-powered engagement hubs, a Smart CRM, and a connected ecosystem
with over 1,700 App Marketplace integrations, a community network,
and educational content. Learn more at www.hubspot.com.
Cautionary Language Concerning Forward-Looking
Statements
This press release includes certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements regarding management’s expectations
of future financial and operational performance and operational
expenditures, expected growth, foreign currency movement, and
business outlook, including our financial guidance for the first
fiscal quarter of and full year 2025 and our long-term financial
framework; statements regarding our positioning for future growth
and market leadership; statements regarding the economic
environment; and statements regarding expected market trends,
future priorities and related investments, and market
opportunities. These forward-looking statements include, but are
not limited to, plans, objectives, expectations and intentions and
other statements contained in this press release that are not
historical facts and statements identified by words such as
“expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates” or words of similar meaning. These forward-looking
statements reflect our current views about our plans, intentions,
expectations, strategies and prospects, which are based on the
information currently available to us and on assumptions we have
made. Although we believe that our plans, intentions, expectations,
strategies and prospects as reflected in or suggested by those
forward-looking statements are reasonable, we can give no assurance
that the plans, intentions, expectations or strategies will be
attained or achieved. Furthermore, actual results may differ
materially from those described in the forward-looking statements
and will be affected by a variety of risks and factors that are
beyond our control including, without limitation, risks associated
with our history of losses; our ability to retain existing
customers and add new customers; the continued growth of the market
for a customer platform; our ability to develop new products and
technologies and differentiate our platform from competing products
and technologies, including artificial intelligence and machine
learning technologies; our ability to manage our growth effectively
over the long-term to maintain our high level of service; our
ability to maintain and expand relationships with our solutions
partners; the price volatility of our common stock; the impact of
geopolitical conflicts, inflation, foreign currency movement, and
macroeconomic instability on our business, the broader economy, our
workforce and operations, the markets in which we and our partners
and customers operate, and our ability to forecast our future
financial performance; regulatory and legislative developments on
the use of artificial intelligence and machine learning; and other
risks set forth under the caption “Risk Factors” in our SEC
filings. We assume no obligation to update any forward-looking
statements contained in this document as a result of new
information, future events or otherwise.
Consolidated Balance Sheets
(in thousands)
December 31,
December 31,
2024
2023(1)
Assets
Current assets:
Cash and cash equivalents
$
512,667
$
387,987
Short-term investments
1,556,828
1,000,245
Accounts receivable
334,829
295,303
Deferred commission expense
148,693
99,326
Prepaid expenses and other current
assets
80,586
88,679
Total current assets
2,633,603
1,871,540
Long-term investments
154,212
325,703
Property and equipment, net
114,165
103,331
Capitalized software development costs,
net
154,484
106,229
Right-of-use assets
216,230
251,071
Deferred commission expense, net of
current portion
160,814
122,194
Other assets
115,254
75,247
Intangible assets, net
37,563
42,316
Goodwill
209,508
173,761
Total assets
$
3,795,833
$
3,071,392
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
3,649
$
9,106
Accrued compensation costs
67,442
53,462
Accrued commissions
102,043
78,169
Accrued expenses and other current
liabilities
125,135
94,074
Operating lease liabilities
32,693
35,047
Convertible senior notes
458,184
—
Deferred revenue
784,253
672,150
Total current liabilities
1,573,399
942,008
Operating lease liabilities, net of
current portion
254,539
296,561
Deferred revenue, net of current
portion
3,969
5,810
Other long-term liabilities
55,640
36,459
Convertible senior notes, net of current
portion
—
456,206
Total liabilities
1,887,547
1,737,044
Stockholders’ equity:
Common stock
52
50
Additional paid-in capital
2,713,697
2,136,908
Accumulated other comprehensive (loss)
income
(5,654
)
1,827
Accumulated deficit
(799,809
)
(804,437
)
Total stockholders’ equity
1,908,286
1,334,348
Total liabilities and stockholders’
equity
$
3,795,833
$
3,071,392
(1) In the three months ended March 31, 2024, we discovered an
immaterial error in our calculation of Cost of
Revenues—Subscription related to how we calculate contractual
credits in one of our third-party vendor agreements. As a result,
we have revised the Consolidated Statement of Operations by
reducing Cost of Revenues- Subscription by $1.2 million for the
three months ended December 31, 2023 and $7.1 million for the year
ended December 31, 2023 to reflect the revised impact of the
credits on that period. We have also revised the balance sheet as
of December 31, 2023 to reflect the cumulative impact of the error
on prior periods, resulting in a decrease to accrued expenses and
other current liabilities and a decrease to accumulated deficit
totaling $14.2 million. Lastly, we have updated certain line items
within the operating section of the statement of cash flows for the
three months and year ended December 31, 2023 but note no net
impact to cash flows provided by operating activities. Refer to our
Form 10-K for additional information.
Consolidated Statements of
Operations
(in thousands, except per share data)
Three Months Ended December
31,
For the Year Ended December
31,
2024
2023(1)
2024
2023(1)
Revenues:
Subscription
$
687,316
$
570,225
$
2,569,546
$
2,123,479
Professional services and other
15,856
11,689
57,997
46,751
Total revenue
703,172
581,914
2,627,543
2,170,230
Cost of revenues:
Subscription
89,505
73,664
336,878
283,675
Professional services and other
13,867
13,777
56,387
54,687
Total cost of revenues
103,372
87,441
393,265
338,362
Gross profit
599,800
494,473
2,234,278
1,831,868
Operating expenses:
Research and development
213,711
163,234
778,714
617,745
Sales and marketing
314,864
281,136
1,218,844
1,068,560
General and administrative
80,931
69,708
300,332
249,649
Restructuring
1,143
3,547
3,990
96,843
Total operating expenses
610,649
517,625
2,301,880
2,032,797
Loss from operations
(10,849
)
(23,152
)
(67,602
)
(200,929
)
Other income (expense):
Interest income
21,829
18,633
82,706
58,828
Interest expense
(949
)
(984
)
(3,721
)
(3,801
)
Other income (expense)
2,913
(2,551
)
17,294
(4,673
)
Total other income
23,793
15,098
96,279
50,354
Income (loss) before income tax
expense
12,944
(8,054
)
28,677
(150,575
)
Income tax expense
(8,009
)
(4,360
)
(24,049
)
(13,935
)
Net income (loss)
$
4,935
$
(12,414
)
$
4,628
$
(164,510
)
Net income (loss) per share, basic
$
0.10
$
(0.25
)
$
0.09
$
(3.30
)
Net income (loss) per share, diluted
$
0.09
$
(0.25
)
$
0.09
$
(3.30
)
Weighted average common shares used in
computing basic net income (loss) per share:
51,657
50,347
51,178
49,877
Weighted average common shares used in
computing diluted net income (loss) per share:
52,242
50,347
51,819
49,877
(1) In the three months ended March 31, 2024, we discovered an
immaterial error in our calculation of Cost of
Revenues—Subscription related to how we calculate contractual
credits in one of our third-party vendor agreements. As a result,
we have revised the Consolidated Statement of Operations by
reducing Cost of Revenues- Subscription by $1.2 million for the
three months ended December 31, 2023 and $7.1 million for the year
ended December 31, 2023 to reflect the revised impact of the
credits on that period. We have also revised the balance sheet as
of December 31, 2023 to reflect the cumulative impact of the error
on prior periods, resulting in a decrease to accrued expenses and
other current liabilities and a decrease to accumulated deficit
totaling $14.2 million. Lastly, we have updated certain line items
within the operating section of the statement of cash flows for the
three months and year ended December 31, 2023 but note no net
impact to cash flows provided by operating activities. Refer to our
Form 10-K for additional information.
Consolidated Statements of Cash
Flows
(in thousands)
For the Three Months Ended
December 31,
For the Year Ended December
31,
2024
2023(1)
2024
2023(1)
Operating Activities:
Net income (loss)
$
4,935
$
(12,414
)
$
4,628
$
(164,510
)
Adjustments to reconcile net income (loss)
to net cash and cash equivalents provided by operating
activities
Depreciation and amortization
28,381
19,165
96,828
72,673
Stock-based compensation
134,388
113,726
504,770
432,271
Restructuring charges
—
2,325
—
67,263
Gain on strategic investments
(2,690
)
—
(21,245
)
—
Impairment of strategic investments
1,212
1,704
5,306
1,704
Provision for (benefit from) deferred
income taxes
3,301
265
2,690
550
Amortization of debt discount and issuance
costs
511
509
2,012
1,986
Accretion of bond discount
(14,982
)
(12,694
)
(51,676
)
(42,907
)
Unrealized currency translation
1,827
1,039
(1,550
)
(341
)
Changes in assets and liabilities
Accounts receivable
(62,241
)
(70,791
)
(48,428
)
(57,618
)
Prepaid expenses and other assets
4,191
(11,025
)
(4,415
)
(47,048
)
Deferred commission expense
(35,262
)
(26,843
)
(96,687
)
(81,178
)
Right-of-use assets
5,836
5,929
32,297
29,173
Accounts payable
(6,026
)
(8,866
)
(4,577
)
(14,031
)
Accrued expenses and other liabilities
49,807
41,013
89,129
79,947
Operating lease liabilities
(8,966
)
(7,956
)
(41,521
)
(36,889
)
Deferred revenue
89,919
69,227
131,038
109,926
Net cash and cash equivalents provided by
operating activities
194,141
104,313
598,599
350,971
Investing Activities:
Purchases of investments
(507,272
)
(443,221
)
(1,993,610
)
(1,580,504
)
Maturities of investments
503,046
347,750
1,658,601
1,502,534
Sale of investments
—
—
1,997
—
Purchases of property and equipment
(12,726
)
(8,687
)
(37,939
)
(33,718
)
Purchases of strategic investments
(3,972
)
(2,913
)
(15,538
)
(14,413
)
Purchases of intangible assets
(1,231
)
(164
)
(1,231
)
(164
)
Capitalization of software development
costs
(22,915
)
(17,084
)
(89,636
)
(66,372
)
Acquisition of a business, net of cash
acquired
(40,438
)
(142,129
)
(40,438
)
(142,129
)
Proceeds from net working capital
settlement
—
—
1,933
—
Net cash and cash equivalents used in
investing activities
(85,508
)
(266,448
)
(515,861
)
(334,766
)
Financing Activities:
Repayment of 2025 Convertible Notes
attributable to the principal
(57
)
(13
)
(57
)
(13
)
Employee taxes paid related to the net
share settlement of stock-based awards
(4,172
)
(3,143
)
(21,949
)
(10,714
)
Proceeds related to the issuance of common
stock under stock plans
14,290
9,804
75,501
47,738
Net cash and cash equivalents provided by
financing activities
10,061
6,648
53,495
37,011
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(16,087
)
8,829
(11,553
)
4,649
Net increase (decrease) in cash, cash
equivalents and restricted cash
102,607
(146,658
)
124,680
57,865
Cash, cash equivalents and restricted
cash, beginning of period
414,113
538,698
392,040
334,175
Cash, cash equivalents and restricted
cash, end of period
$
516,720
$
392,040
$
516,720
$
392,040
(1) In the three months ended March 31, 2024, we discovered an
immaterial error in our calculation of Cost of
Revenues—Subscription related to how we calculate contractual
credits in one of our third-party vendor agreements. As a result,
we have revised the Consolidated Statement of Operations by
reducing Cost of Revenues- Subscription by $1.2 million for the
three months ended December 31, 2023 and $7.1 million for the year
ended December 31, 2023 to reflect the revised impact of the
credits on that period. We have also revised the balance sheet as
of December 31, 2023 to reflect the cumulative impact of the error
on prior periods, resulting in a decrease to accrued expenses and
other current liabilities and a decrease to accumulated deficit
totaling $14.2 million. Lastly, we have updated certain line items
within the operating section of the statement of cash flows for the
three months and year ended December 31, 2023 but note no net
impact to cash flows provided by operating activities. Refer to our
Form 10-K for additional information.
Reconciliation of non-GAAP operating
income and operating margin
(in thousands, except percentages)
For the Three Months Ended
December 31,
For the Year Ended December
31,
2024
2023
2024
2023
GAAP operating loss
$
(10,849
)
$
(23,152
)
$
(67,602
)
$
(200,929
)
Stock-based compensation
134,388
113,726
504,770
432,271
Amortization of acquired intangible
assets
2,527
1,304
9,557
5,311
Acquisition related expense
5,863
3,906
9,496
3,906
Restructuring charges
1,143
3,547
3,990
96,843
Non-GAAP operating income
$
133,072
$
99,331
$
460,211
$
337,402
GAAP operating margin
(1.5
%)
(4.0
%)
(2.6
%)
(9.3
%)
Non-GAAP operating margin
18.9
%
17.1
%
17.5
%
15.5
%
Reconciliation of non-GAAP net
income
(in thousands, except per share
amounts)
For the Three Months Ended
December 31,
For the Year Ended December
31,
2024
2023
2024
2023
GAAP net income (loss)
$
4,935
$
(12,414
)
$
4,628
$
(164,510
)
Stock-based compensation
134,388
113,726
504,770
432,271
Acquisition related expense
5,863
3,906
9,496
3,906
Amortization of acquired intangibles
assets
2,527
1,304
9,557
5,311
Restructuring charges
1,143
3,547
3,990
96,843
Non-cash interest expense for amortization
of debt issuance costs
511
509
2,012
1,986
(Gain)/loss on strategic investments
(1,307
)
1,723
(15,854
)
1,627
Income tax effects of non-GAAP items
(23,205
)
(18,972
)
(84,481
)
(64,339
)
Non-GAAP net income
$
124,855
$
93,329
$
434,118
$
313,095
Non-GAAP net income per share:
Basic
$
2.42
$
1.85
$
8.48
$
6.28
Diluted
$
2.32
$
1.77
$
8.12
$
6.00
Shares used in non-GAAP per share
calculations
Basic
51,657
50,347
51,178
49,877
Diluted (1)
53,867
52,621
53,444
52,188
(1) The non-GAAP diluted share count includes shares related to
our 2025 notes using the if converted method. The GAAP diluted
share count excludes shares related to our 2025 notes using the if
converted method because inclusion of those shares would be
anti-dilutive.
Reconciliation of non-GAAP expense and
expense as a percentage of revenue
(in thousands, except percentages)
For the Three Months Ended
December 31,
2024
2023
COS, Subs- cription
COS, Prof. services &
other
R&D
S&M
G&A
COS, Subs- cription
COS, Prof. services &
other
R&D
S&M
G&A
GAAP expense
$
89,505
$
13,867
$
213,711
$
314,864
$
80,931
$
73,664
$
13,777
$
163,234
$
281,136
$
69,708
Stock -based compensation
(6,802
)
(1,011
)
(65,250
)
(38,235
)
(23,090
)
(3,542
)
(1,210
)
(37,129
)
(52,108
)
(19,737
)
Amortization of acquired intangible
assets
(1,882
)
(133
)
—
(407
)
(105
)
(911
)
—
—
(358
)
(35
)
Acquisition related expense
—
—
(3,908
)
(83
)
(1,872
)
—
—
(255
)
—
(3,651
)
Non-GAAP expense
$
80,821
$
12,723
$
144,553
$
276,139
$
55,864
$
69,211
$
12,567
$
125,850
$
228,670
$
46,285
GAAP expense as a percentage of
revenue
12.7
%
2.0
%
30.4
%
44.8
%
11.5
%
12.7
%
2.4
%
28.1
%
48.3
%
12.0
%
Non-GAAP expense as a percentage of
revenue
11.5
%
1.8
%
20.6
%
39.3
%
7.9
%
11.9
%
2.2
%
21.6
%
39.3
%
8.0
%
For the Year Ended December
31,
2024
2023
COS, Subs- cription
COS, Prof. services &
other
R&D
S&M
G&A
COS, Subs- cription
COS, Prof. services &
other
R&D
S&M
G&A
GAAP expense
$
336,878
$
56,387
$
778,714
$
1,218,844
$
300,332
$
283,675
$
54,687
$
617,745
$
1,068,560
$
249,649
Stock -based compensation
(23,613
)
(4,339
)
(243,164
)
(145,778
)
(87,876
)
(12,652
)
(4,958
)
(198,953
)
(140,362
)
(75,346
)
Amortization of acquired intangible
assets
(7,525
)
(133
)
—
(1,479
)
(420
)
(2,123
)
—
—
(3,153
)
(35
)
Acquisition related expense
—
—
(6,427
)
(83
)
(2,986
)
—
—
(255
)
—
(3,651
)
Non-GAAP expense
$
305,740
$
51,915
$
529,123
$
1,071,504
$
209,050
$
268,900
$
49,729
$
418,537
$
925,045
$
170,617
GAAP expense as a percentage of
revenue
12.8
%
2.1
%
29.6
%
46.4
%
11.4
%
13.1
%
2.5
%
28.5
%
49.2
%
11.5
%
Non-GAAP expense as a percentage of
revenue
11.6
%
2.0
%
20.1
%
40.8
%
8.0
%
12.4
%
2.3
%
19.3
%
42.6
%
7.9
%
Reconciliation of non-GAAP subscription
margin
(in thousands, except percentages)
For the Three Months Ended
December 31,
For the Year Ended December
31,
2024
2023
2024
2023
GAAP subscription margin
$
597,811
$
496,561
$
2,232,668
$
1,839,804
Stock-based compensation
6,802
3,542
23,613
12,652
Amortization of acquired intangible
assets
1,882
911
7,525
2,123
Non-GAAP subscription margin
$
606,495
$
501,014
$
2,263,806
$
1,854,579
GAAP subscription margin percentage
87.0
%
87.1
%
86.9
%
86.6
%
Non-GAAP subscription margin
percentage
88.2
%
87.9
%
88.1
%
87.3
%
Reconciliation of free cash
flow
(in thousands)
For the Three Months Ended
December 31,
For the Year Ended December
31,
2024
2023
2024
2023
GAAP net cash and cash equivalents
provided by operating activities
$
194,141
$
104,313
$
598,599
$
350,971
Purchases of property and equipment
(12,726
)
(8,687
)
(37,939
)
(33,718
)
Capitalization of software development
costs
(22,915
)
(17,084
)
(89,636
)
(66,372
)
Payment of restructuring charges
4,490
4,409
17,027
41,573
Non-GAAP free cash flow
$
162,990
$
82,951
$
488,051
$
292,454
Reconciliation of operating cash
flow
(in thousands)
For the Three Months Ended
December 31,
For the Year Ended December
31,
2024
2023
2024
2023
GAAP net cash and cash equivalents
provided by operating activities
$
194,141
$
104,313
$
598,599
$
350,971
Payment of restructuring charges
4,490
4,409
17,027
41,573
Non-GAAP operating cash flow
$
198,631
$
108,722
$
615,626
$
392,544
Reconciliation of forecasted non-GAAP
operating income (in thousands, except percentages)
Three Months Ended March 31,
2025
Year Ended December 31,
2025
GAAP operating loss range
($34,027)-($33,027)
($38,392)-($34,392)
Stock-based compensation
121,662
544,072
Amortization of acquired intangible
assets
2,600
10,400
Acquisition related expense
6,615
22,320
Restructuring charges
1,150
4,600
Non-GAAP operating income range
$98,000-$99,000
$543,000-$547,000
Reconciliation of forecasted non-GAAP
net income and non-GAAP net income per share (in thousands,
except per share amounts)
Three Months Ended March 31,
2025
Year Ended December 31,
2025
GAAP net (loss) income range
($15,018)-($13,768)
$10,304-$15,304
Stock-based compensation
121,662
544,072
Amortization of acquired intangible
assets
2,600
10,400
Acquisition related expense
6,615
22,320
Non-cash interest expense for amortization
of debt issuance costs
491
837
Restructuring charges
1,150
4,600
Income tax effects of non-GAAP items
(23,500)-(23,750)
(101,533)-(102,533)
Non-GAAP net income range
$94,000-$95,000
$491,000-$495,000
GAAP net income per basic and diluted
share
($0.29)-($0.26)
$0.19-$0.29
Non-GAAP net income per diluted share
$1.74-$1.76
$9.11-$9.19
Weighted average common shares used in
computing GAAP basic and diluted net loss per share:
52,140
52,952
Weighted average common shares used in
computing non-GAAP diluted net loss per share:
54,084
53,873
HubSpot’s estimates of stock-based compensation, amortization of
acquired intangible assets, non-cash interest expense for
amortization of debt issuance costs, restructuring charges, and
income tax effects of non-GAAP items assume, among other things,
the occurrence of no additional acquisitions, changes in value of
strategic investments, and no further revisions to stock-based
compensation and related expenses.
Non-GAAP Financial Measures
We report our financial results in accordance with accounting
principles generally accepted in the United States of America, or
GAAP. However, management believes that, in order to properly
understand our short-term and long-term financial and operational
trends, investors may wish to consider the impact of certain
non-cash or non-recurring items when used as a supplement to
financial performance measures in accordance with GAAP. These items
result from facts and circumstances that vary in frequency and
impact on continuing operations. In this release, HubSpot’s
non-GAAP operating income, operating margin, subscription margin,
expense, expense as a percentage of revenue, net income, operating
and free cash flow are not presented in accordance with GAAP and
are not intended to be used in lieu of GAAP presentations of
results of operations.
Calculated billings is defined as total revenue recognized in a
period plus the sequential change in total deferred revenue in the
corresponding period. Non-GAAP operating cash flow is defined as
cash and cash equivalents provided by or used in operating
activities plus payment of restructuring charges. Non-GAAP free
cash flow is defined as cash and cash equivalents provided by or
used in operating activities less purchases of property and
equipment and capitalization of software development costs, plus
payment of restructuring charges. Although non-GAAP operating cash
flow and non-GAAP free cash flow are not residual cash flow
available for our discretionary expenditures, we believe
information regarding non-GAAP operating cash flow and non-GAAP
free cash flow provide useful information to investors in
understanding and evaluating the strength of our liquidity and
provides a comparable framework for assessing how our business
performed when compared to prior periods which were not impacted by
restructuring charges paid from operating cash flow.
Constant currency amounts are presented to provide a framework
for assessing our operating performance excluding the effect of
foreign exchange rate fluctuations. To exclude the effect of
foreign currency rate fluctuations, current period results for
entities reporting in currencies other than U.S. Dollars (“USD”)
are converted into USD at the average exchange rates for the
comparative period rather than the actual average exchange rates in
effect during the respective periods.
Management believes that these non-GAAP financial measures
provide additional means of evaluating period-over-period operating
performance. Specifically, these non-GAAP financial measures
provide management with additional means to understand and evaluate
the operating results and trends in our ongoing business by
eliminating certain non-cash expenses and other items that
management believes might otherwise make comparisons of our ongoing
business with prior periods more difficult, obscure trends in
ongoing operations, or reduce management’s ability to make useful
forecasts. In addition, management understands that some investors
and financial analysts find this information helpful in analyzing
our financial and operational performance and comparing this
performance to our peers and competitors. However, these non-GAAP
financial measures have limitations as an analytical tool and are
not intended to be an alternative to financial measures prepared in
accordance with GAAP. In addition, it should be noted that these
non-GAAP financial measures may be different from non-GAAP measures
used by other companies. We intend to provide these non-GAAP
financial measures as part of our future earnings discussions and,
therefore, the inclusion of these non-GAAP financial measures will
provide consistency in our financial reporting. Management may,
however, utilize other measures to illustrate performance in the
future. Investors are encouraged to review the reconciliation of
these non-GAAP measures to their most directly comparable GAAP
financial measures. A reconciliation of our non-GAAP financial
measures to their most directly comparable GAAP measures has been
provided in the financial statement tables included above in this
press release.
These non-GAAP measures exclude stock-based compensation,
amortization of acquired intangible assets, acquisition related
expenses, disposition related income, non-cash interest expense for
the amortization of debt issuance costs, gain or impairment losses
on strategic investments, restructuring charges, and account for
the income tax effects of the exclusion of these non-GAAP items. We
believe investors may want to incorporate the effects of these
items in order to compare our financial performance with that of
other companies and between time periods:
A
Stock-based compensation is a non-cash
expense accounted for in accordance with FASB ASC Topic 718. We
believe that the exclusion of stock-based compensation expense
allows for financial results that are more indicative of our
operational performance and provide for a useful comparison of our
operating results to prior periods and to our peer companies
because stock-based compensation expense varies from period to
period and company to company due to such things as differing
valuation methodologies and changes in stock price.
B
Expense for the amortization of acquired
intangible assets is excluded from non-GAAP expense and income
measures as HubSpot views amortization of these assets as arising
from pre-acquisition activities determined at the time of an
acquisition. While these intangible assets are evaluated for
impairment regularly, amortization of the cost of purchased
intangibles is a non-cash expense that is not typically affected by
operations during any particular period. Valuation and subsequent
amortization of intangible assets can also be inconsistent in
amount and frequency because they can significantly vary based on
the timing and size of acquisitions and the inherently subjective
nature of the degree to which a purchase price is allocated to
intangible assets. We believe that the exclusion of this
amortization expense provides for a useful comparison of our
operating results to prior periods, for which we have historically
excluded amortization expense, and to our peer companies, which
commonly exclude acquired intangible asset amortization. It is
important to note that although we exclude amortization of acquired
intangible assets from our non-GAAP expense and income measures,
revenue generated from such intangibles is included within our
non-GAAP income measures. The use of these intangible assets
contributed to our revenues earned during the periods presented and
will contribute to future periods as well.
C.
Acquisition related expenses, such as
transaction costs, retention payments, and holdback payments, and
disposition related income, such as proceeds from sale of assets,
are transactions that are not necessarily reflective of our
operational performance during a period. We believe that the
exclusion of these expenses and income provides for a useful
comparison of our operating results to prior periods and to our
peer companies, which commonly exclude these expenses and
income.
D.
In June 2020, we issued $460 million of
convertible notes due in 2025 with a coupon interest rate of
0.375%. The issuance cost of the debt is amortized as interest
expense over the remaining term of the debt. We believe the
exclusion of this non-cash interest expense provides for a useful
comparison of our operating results to prior periods and to our
peer companies.
E.
Strategic investments consist of
non-controlling equity investments in privately held companies. The
recognition of gains, impairment losses, or the proportionate share
of net earnings can vary significantly across periods and we do not
view them to be indicative of our fundamental operating activities
and believe the exclusion provides for a useful comparison of our
operating results to prior periods and to our peer companies.
F.
Restructuring charges are related to
severance, employee related benefits, facilities and other costs
associated with the restructuring plan implemented in January 2023.
Restructuring charges fluctuate in amount and frequency and are not
reflective of our core business operating results. In addition to
the restructuring charges related to facilities we abandoned during
the year ended 2023, through 2027, we expect to both incur
incremental restructuring charges and make cash payments related to
such facilities. The abandonment of facilities is part of the
restructuring plan we authorized on January 25, 2023 and is
intended to consolidate our lease space and create higher density
across our workspaces. The incremental charges we expect to incur
relate to continuing costs for the abandoned facilities and are
expected to be in the range of $12-13 million. We also expect to
make cash payments of approximately $43.0 million in fixed rent
payments for the abandoned facilities that will be made in monthly
installments through 2027, for which we have taken the full
restructuring charge during the year ended 2023. We plan on
excluding both the incremental charges and cash payments and the
related restructuring cash rent payments from our non-GAAP
earnings, operating cash flow, and free cash flow metrics. We
believe exclusion of these charges and cash payments provides
useful information to investors in understanding and evaluating the
strength of earnings and liquidity and provides a comparable
framework for assessing how our business performed when compared to
prior periods which were not impacted by excluded restructuring
charges paid from operating cash flow.
G.
The effects of income taxes on non-GAAP
items reflect a fixed long-term projected tax rate of 20% to
provide better consistency across reporting periods. To determine
this long-term non-GAAP tax rate, we exclude the impact of other
non-GAAP adjustments and take into account other factors such as
our current operating structure and existing tax positions in
various jurisdictions. We will periodically reevaluate this tax
rate, as necessary, for significant events such as relevant tax law
changes and material changes in our forecasted geographic earnings
mix.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250212801584/en/
Investor Relations Contact: investors@hubspot.com
Media Contact: media@hubspot.com
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