HubSpot, Inc. (NYSE: HUBS), the customer platform for scaling
companies, today announced financial results for the first quarter
ended March 31, 2024.
Financial Highlights:
Revenue
- Total revenue was $617.4 million, up 23% compared to Q1'23.
- Subscription revenue was $603.8 million, up 23% compared to
Q1'23.
- Professional services and other revenue was $13.6 million, up
15% compared to Q1'23.
Operating Income (Loss)
- GAAP operating margin was (3.8%), compared to (8.6%) in
Q1'23.
- Non-GAAP operating margin was 15.0%, compared to 13.8% in
Q1'23.
- GAAP operating loss was ($23.2) million, compared to ($43.1)
million in Q1'23.
- Non-GAAP operating income was $92.6 million, compared to $69.4
million in Q1'23.
Net Income (Loss)
- GAAP net income was $5.9 million, or $0.12 per basic and
diluted share, compared to net loss of ($36.6) million, or ($0.74)
per basic and diluted share in Q1'23.
- Non-GAAP net income was $89.1 million, or $1.76 per basic and
$1.68 per diluted share, compared to $63.0 million, or $1.28 per
basic and $1.22 per diluted share in Q1'23.
- Weighted average basic and diluted shares outstanding for GAAP
net loss per share was 50.7 million, compared to 49.4 million basic
and diluted shares in Q1'23.
- Weighted average basic and diluted shares outstanding for
non-GAAP net income per share was 50.7 million and 53.1 million
respectively, compared to 49.4 million and 51.5 million,
respectively in Q1'23.
Balance Sheet and Cash Flow
- The company’s cash, cash equivalents, and short-term and
long-term investments balance was $1.8 billion as of March 31,
2024.
- During the first quarter, the company generated $127.1 million
of cash from operating cash flow, compared to $81.1 million during
Q1'23.
- During the first quarter, the company generated $131.3 million
of cash from non-GAAP operating cash flow and $103.8 million of
non-GAAP free cash flow, compared to $103.6 million of cash from
non-GAAP operating cash flow and $85.2 million of non-GAAP free
cash flow during Q1'23.
Additional Recent Business Highlights
- Grew Customers to 216,840 at March 31, 2024, up 22% from March
31, 2023.
- Average Subscription Revenue Per Customer was $11,447 during
the first quarter of 2024, up 1% compared to the first quarter of
2023.
“We kicked off the year with solid revenue growth and another
good quarter of operating margin expansion. Customers across all
segments are consolidating on HubSpot because it is easy to use,
easy to scale and delivers fast time to value,” said Yamini Rangan,
Chief Executive Officer at HubSpot. “While the macro environment
remains challenging, the pace of innovation has accelerated in our
industry with AI. We are setting that pace for scaling companies
and are becoming the de facto standard which gives me confidence in
our ability to drive long-term durable growth.”
Business Outlook
Based on information available as of May 8, 2024, HubSpot is
issuing guidance for the second quarter of 2024 and full year 2024
as indicated below.
Second Quarter 2024:
- Total revenue is expected to be in the range of $617.0 million
to $619.0 million.
- Foreign exchange rates are expected to be a 1 point headwind to
second quarter 2024 revenue growth(1).
- Non-GAAP operating income is expected to be in the range of
$92.0 million to $93.0 million.
- Non-GAAP net income per common share is expected to be in the
range of $1.62 to $1.64. This assumes approximately 53.3 million
weighted average diluted shares outstanding.
Full Year 2024:
- Total revenue is expected to be in the range of $2.55 billion
to $2.56 billion.
- Foreign exchange rates are expected to be a 1 point headwind to
full year 2024 revenue growth(1).
- Non-GAAP operating income is expected to be in the range of
$426.0 million to $430.0 million.
- Non-GAAP net income per common share is expected to be in the
range of $7.30 to $7.38. This assumes approximately 53.5 million
weighted average diluted shares outstanding.
(1) Foreign exchange rates impact on revenue is calculated by
comparing current period rates with prior period average rates.
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, May 8, 2024 at
4:30 p.m. Eastern Time (ET) to discuss the company’s first quarter
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.
Following the conference call, a replay will be available at
(866) 813-9403 (domestic) or +44 204-525-0658 (international). The
replay passcode is 545107. 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 1,500 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 second
fiscal quarter of and full year 2024 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)
March 31,
December 31,
2024
2023 (1)
Assets
Current assets:
Cash and cash equivalents
$
447,793
$
387,987
Short-term investments
1,070,872
1,000,245
Accounts receivable
266,862
295,303
Deferred commission expense
107,424
99,326
Prepaid expenses and other current
assets
92,301
88,679
Total current assets
1,985,252
1,871,540
Long-term investments
311,526
325,703
Property and equipment, net
103,362
103,331
Capitalized software development costs,
net
119,554
106,229
Right-of-use assets
243,279
251,071
Deferred commission expense, net of
current portion
128,580
122,194
Other assets
88,058
75,247
Intangible assets, net
39,825
42,316
Goodwill
173,667
173,761
Total assets
$
3,193,103
$
3,071,392
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
7,928
$
9,106
Accrued compensation costs
68,752
53,462
Accrued commissions
67,355
78,169
Accrued expenses and other current
liabilities
85,852
94,074
Operating lease liabilities
32,869
35,047
Deferred revenue
696,878
672,150
Total current liabilities
959,634
942,008
Operating lease liabilities, net of
current portion
284,489
296,561
Deferred revenue, net of current
portion
4,916
5,810
Other long-term liabilities
38,243
36,459
Convertible senior notes, net of current
portion
456,704
456,206
Total liabilities
1,743,986
1,737,044
Stockholders’ equity:
Common stock
51
50
Additional paid-in capital
2,250,549
2,136,908
Accumulated other comprehensive income
(loss)
(2,980
)
1,827
Accumulated deficit
(798,503
)
(804,437
)
Total stockholders’ equity
1,449,117
1,334,348
Total liabilities and stockholders’
equity
$
3,193,103
$
3,071,392
(1) In connection with the quarter close,
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 for the
period ending March 31, 2023 by reducing Cost of Revenues-
Subscription by $1.7 million 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
period ending March 31, 2023 but note no net impact to cash flows
provided by operating activities. In conjunction with the
revisions, we plan to also correct for certain other previously
identified immaterial errors. All amounts are preliminary. We plan
to revise our financial statements to correct this matter in our
Form 10-Q for the three months ended March 31, 2024 (“Form 10-Q”),
which we expect to file on May 10, 2024. Refer to our Form 10-Q for
additional information.
Consolidated Statements of
Operations
(in thousands, except per share
data)
For the Three Months Ended
March 31,
2024
2023 (1)
Revenues:
Subscription
$
603,798
$
489,743
Professional services and other
13,616
11,877
Total revenue
617,414
501,620
Cost of revenues:
Subscription
80,725
66,622
Professional services and other
14,363
13,707
Total cost of revenues
95,088
80,329
Gross profit
522,326
421,291
Operating expenses:
Research and development
175,637
127,683
Sales and marketing
300,282
250,683
General and administrative
68,858
57,405
Restructuring
782
28,570
Total operating expenses
545,559
464,341
Loss from operations
(23,233
)
(43,050
)
Other expense:
Interest income
18,727
10,472
Interest expense
(935
)
(930
)
Other expense
13,161
(794
)
Total other income
30,953
8,748
Income (loss) before income tax
expense
7,720
(34,302
)
Income tax expense
(1,786
)
(2,263
)
Net income (loss)
$
5,934
$
(36,565
)
Net income (loss) per share, basic
$
0.12
$
(0.74
)
Net income (loss) per share, diluted
$
0.12
$
(0.74
)
Weighted average common shares used in
computing basic net income (loss) per share:
50,689
49,395
Weighted average common shares used in
computing diluted net income (loss) per share:
51,498
49,395
(1) In connection with the quarter close,
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 for the
period ending March 31, 2023 by reducing Cost of Revenues-
Subscription by $1.7 million 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
period ending March 31, 2023 but note no net impact to cash flows
provided by operating activities. In conjunction with the
revisions, we plan to also correct for certain other previously
identified immaterial errors. All amounts are preliminary. We plan
to revise our financial statements to correct this matter in our
Form 10-Q for the three months ended March 31, 2024 (“Form 10-Q”),
which we expect to file on May 10, 2024. Refer to our Form 10-Q for
additional information.
Consolidated Statements of
Cash Flows
(in thousands)
For the Three Months Ended
March 31,
2024
2023 (1)
Operating Activities:
Net income (loss)
$
5,934
$
(36,565
)
Adjustments to reconcile net loss to net
cash and cash equivalents provided by operating activities
Depreciation and amortization
21,234
16,570
Stock-based compensation
111,122
83,037
Restructuring charges
—
2,281
Gain on strategic investments
(16,353
)
—
Impairment of strategic investments
3,615
—
(Benefit from) provision for deferred
income taxes
(167
)
47
Amortization of debt discount and issuance
costs
500
484
Accretion of bond discount
(12,563
)
(8,008
)
Unrealized currency translation
538
(358
)
Changes in assets and liabilities
Accounts receivable
25,423
30,615
Prepaid expenses and other assets
(5,473
)
(20,417
)
Deferred commission expense
(17,001
)
(18,539
)
Right-of-use assets
6,390
8,483
Accounts payable
(1,300
)
(17,873
)
Accrued expenses and other liabilities
(13,281
)
22,504
Operating lease liabilities
(12,743
)
(9,829
)
Deferred revenue
31,213
28,638
Net cash and cash equivalents provided by
operating activities
127,088
81,070
Investing Activities:
Purchases of investments
(399,378
)
(362,246
)
Maturities of investments
352,790
287,967
Purchases of property and equipment
(5,882
)
(3,310
)
Purchases of strategic investments
(27
)
(6,000
)
Capitalization of software development
costs
(21,634
)
(15,122
)
Net cash and cash equivalents used in
investing activities
(74,131
)
(98,711
)
Financing Activities:
Employee taxes paid related to the net
share settlement of stock-based awards
(8,788
)
(1,198
)
Proceeds related to the issuance of common
stock under stock plans
19,943
11,254
Net cash and cash equivalents provided by
financing activities
11,155
10,056
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(4,306
)
1,722
Net increase (decrease) in cash, cash
equivalents and restricted cash
59,806
(5,863
)
Cash, cash equivalents and restricted
cash, beginning of period
392,040
334,175
Cash, cash equivalents and restricted
cash, end of period
$
451,846
$
328,312
(1) In connection with the quarter close, 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 for the
period ending March 31, 2023 by reducing Cost of Revenues-
Subscription by $1.7 million 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
period ending March 31, 2023 but note no net impact to cash flows
provided by operating activities. In conjunction with the
revisions, we plan to also correct for certain other previously
identified immaterial errors. All amounts are preliminary. We plan
to revise our financial statements to correct this matter in our
Form 10-Q for the three months ended March 31, 2024 (“Form 10-Q”),
which we expect to file on May 10, 2024. Refer to our Form 10-Q for
additional information.
Reconciliation of non-GAAP operating
income and operating margin
(in thousands, except percentages)
Three Months Ended March
31,
2024
2023
GAAP operating loss
$
(23,233
)
$
(43,050
)
Stock-based compensation
111,122
83,037
Amortization of acquired intangible
assets
2,344
845
Acquisition related expense
1,552
—
Restructuring charges
782
28,570
Non-GAAP operating income
$
92,567
$
69,402
GAAP operating margin
(3.8
%)
(8.6
%)
Non-GAAP operating margin
15.0
%
13.8
%
Reconciliation of non-GAAP net
income
(in thousands, except per share
amounts)
Three Months Ended March
31,
2024
2023
GAAP net income (loss)
$
5,934
$
(36,565
)
Stock-based compensation
111,122
83,037
Acquisition related expense
1,552
—
Amortization of acquired intangibles
assets
2,344
845
Restructuring charges
782
28,570
Non-cash interest expense for amortization
of debt issuance costs
500
484
Gain on strategic investments
(12,738
)
—
Loss on equity method investment
65
122
Income tax effects of non-GAAP items
(20,483
)
(13,488
)
Non-GAAP net income
$
89,078
$
63,005
Non-GAAP net income per share:
Basic
$
1.76
$
1.28
Diluted
$
1.68
$
1.22
Shares used in non-GAAP per share
calculations
Basic
50,689
49,395
Diluted
53,123
(1)
51,497
(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)
Three Months Ended March
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
$
80,725
$
14,363
$
175,637
$
300,282
$
68,858
$
66,622
$
13,707
$
127,683
$
250,683
$
57,405
Stock -based compensation
(4,960
)
(1,086
)
(50,627
)
(35,157
)
(19,292
)
(2,745
)
(1,087
)
(33,324
)
(30,169
)
(15,712
)
Amortization of acquired intangible
assets
(1,882
)
—
—
(357
)
(105
)
(399
)
—
—
(446
)
—
Acquisition/disposition related
expense
—
—
(1,046
)
—
(506
)
—
—
—
—
—
Non-GAAP expense
$
73,883
$
13,277
$
123,964
$
264,768
$
48,955
$
63,478
$
12,620
$
94,359
$
220,068
$
41,693
GAAP expense as a percentage of
revenue
13.1
%
2.3
%
28.4
%
48.6
%
11.2
%
13.3
%
2.7
%
25.5
%
50.0
%
11.4
%
Non-GAAP expense as a percentage of
revenue
12.0
%
2.2
%
20.1
%
42.9
%
7.9
%
12.7
%
2.5
%
18.8
%
43.9
%
8.3
%
Reconciliation of non-GAAP subscription
margin
(in thousands, except percentages)
Three Months Ended March
31,
2024
2023
GAAP subscription margin
$
523,073
$
423,121
Stock-based compensation
4,960
2,745
Amortization of acquired intangible
assets
1,882
399
Non-GAAP subscription margin
$
529,915
$
426,265
GAAP subscription margin percentage
86.6
%
86.4
%
Non-GAAP subscription margin
percentage
87.8
%
87.0
%
Reconciliation of free cash
flow
(in thousands)
Three Months Ended March
31,
2024
2023
GAAP net cash and cash equivalents
provided by operating activities
$
127,088
$
81,070
Purchases of property and equipment
(5,882
)
(3,310
)
Capitalization of software development
costs
(21,634
)
(15,122
)
Payment of restructuring charges
4,190
22,513
Non-GAAP free cash flow
$
103,762
$
85,151
Reconciliation of operating cash
flow
(in thousands)
Three Months Ended March
31,
2024
2023
GAAP net cash and cash equivalents
provided by operating activities
$
127,088
$
81,070
Payment of restructuring charges
4,190
22,513
Non-GAAP operating cash flow
$
131,278
$
103,583
Reconciliation of forecasted non-GAAP
operating income
(in thousands, except percentages)
Three Months Ended June 30,
2024
Year Ended December 31,
2024
GAAP operating income range
($57,657)-($56,807)
($138,799)-($135,399)
Stock-based compensation
145,357
547,396
Amortization of acquired intangible
assets
2,350
9,403
Acquisition related expense
1,000
4,200
Restructuring charges
950-1,100
3,800-4,400
Non-GAAP operating income range
$92,000-$93,000
$426,000-$430,000
Reconciliation of forecasted non-GAAP
net income and non-GAAP net income per share
(in thousands, except per share
amounts)
Three Months Ended June 30,
2024
Year Ended December 31,
2024
GAAP net loss range
($39,628)-($38,528)
($85,490)-($80,465)
Stock-based compensation
145,357
547,396
Amortization of acquired intangible
assets
2,350
9,403
Acquisition related expense
1,000
4,200
Non-cash interest expense for amortization
of debt issuance costs
500
2,017
Gain on strategic investments
(12,738)
(12,738)
Loss on equity method investment
65
65
Restructuring charges
950-1,100
3,800-4,400
Income tax effects of non-GAAP items
(11,256)-(11,506)
(78,153)-(79,278)
Non-GAAP net income range
$86,600-$87,600
$390,500-$395,000
GAAP net income per basic and diluted
share
($0.78)-($0.76)
($1.67)-($1.57)
Non-GAAP net income per diluted share
$1.62-$1.64
$7.30-$7.38
Weighted average common shares used in
computing GAAP basic and diluted net loss per share:
50,998
51,187
Weighted average common shares used in
computing non-GAAP diluted net loss per share:
53,347
53,505
HubSpot’s estimates of stock-based compensation, amortization of
acquired intangible assets, non-cash interest expense for
amortization of debt issuance costs, gain on or impairment of
strategic investments, loss of equity method investment,
restructuring charges, and income tax effects of non-GAAP items
assume, among other things, the occurrence of no additional
acquisitions, 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. 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.
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, gain or loss on equity method investment,
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 or impairment losses can vary significantly
across periods and we do not view them to be indicative of our
fundamental operating activities and believe the exclusion of gains
or impairment losses provides for a useful comparison of our
operating results to prior periods and to our peer companies.
F.
We made a contribution to the Black
Economic Development Fund (the “investee”) managed by the Local
Initiatives Support Corporation and have committed to make
additional capital contributions. We account for this investment
under the equity method of accounting. The proportionate share of
our equity method investee's net earnings have been excluded in
order to provide a comparable view of our operating results to
prior periods and to our peer companies. We believe this activity
is not reflective of our recurring core business operating
results.
G.
Restructuring charges are related to
severance, employee related benefits, facilities and other costs
associated with the restructuring plan implemented on January 25,
2023. Restructuring charges fluctuate in amount and frequency and
are not reflective of our core business operating results. Over the
next three years (into 2027), we expect to both incur incremental
restructuring charges and make cash payments related to the
facilities that we abandoned in 2023. The abandonment of facilities
is part of the restructuring plan we authorized in January 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 $14-17 million and will be paid
in cash over the next three years. We also expect to make cash
payments of approximately $54.0 million in fixed rent payments for
the abandoned facilities that will be made in monthly installments
over the next three years for which we have taken the full P&L
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.
H.
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/20240508248439/en/
Investor Relations Contact: investors@hubspot.com
Media Contact: media@hubspot.com
Grafico Azioni HubSpot (NYSE:HUBS)
Storico
Da Gen 2025 a Feb 2025
Grafico Azioni HubSpot (NYSE:HUBS)
Storico
Da Feb 2024 a Feb 2025
