CAMBRIDGE, Mass., Feb. 11, 2021 /PRNewswire/ -- HubSpot, Inc.
(NYSE: HUBS), the customer relationship management (CRM) platform
for scaling companies, today announced financial results for the
fourth quarter and full year ended December
31, 2020.
Financial Highlights:
Revenue
Fourth Quarter 2020:
- Total revenue was $252.1 million,
up 35% compared to Q4'19.
-
- Subscription revenue was $244.3
million, up 36% compared to Q4'19.
- Professional services and other revenue was $7.7 million, up 9% compared to Q4'19.
Full Year 2020:
- Total revenue was $883.0 million,
up 31% compared to 2019.
-
- Subscription revenue was $853.0
million, up 32% compared to 2019.
- Professional services and other revenue was $30.0 million, up 5% compared to 2019.
Operating Income (Loss)
Fourth Quarter 2020:
- GAAP operating margin was (3.0%), compared to (4.4%) in
Q4'19.
- Non-GAAP operating margin was 9.8%, compared to 9.5% in
Q4'19.
- GAAP operating loss was ($7.6)
million, compared to ($8.2)
million in Q4'19.
- Non-GAAP operating income was $24.6
million, compared to $17.7
million in Q4'19.
Full Year 2020:
- GAAP operating margin was (5.8%), compared to (7.0%) in
2019.
- Non-GAAP operating margin was 8.5%, compared to 8.1% in
2019.
- GAAP operating loss was ($50.8)
million, compared to ($47.0)
million in 2019.
- Non-GAAP operating income was $74.9
million, compared to $54.9
million in 2019.
Net Income (Loss)
Fourth Quarter 2020:
- GAAP net loss was ($15.4)
million, or ($0.34) per basic
and diluted share, compared to ($10.3)
million, or ($0.24) per basic
and diluted share in Q4'19.
- Non-GAAP net income was $20.1
million, or $0.44 per basic
and $0.40 per diluted share, compared
to $17.9 million, or $0.42 per basic and $0.38 per diluted share in Q4'19.
- Weighted average basic and diluted shares outstanding for GAAP
net loss per share was 46.0 million, compared to 42.8 million basic
and diluted shares in Q4'19.
- Weighted average basic and diluted shares outstanding for
non-GAAP net income per share was 46.0 million and 49.9 million
respectively, compared to 42.8 million and 46.9 million,
respectively in Q4'19.
Full Year 2020:
- GAAP net loss was ($85.0)
million, or ($1.90) per basic
and diluted share, compared to ($53.7)
million, or ($1.28) per basic
and diluted share in 2019.
- Non-GAAP net income was $64.5
million, or $1.44 per basic
and $1.32 per diluted share, compared
to $58.4 million, or $1.39 per basic and $1.26 per diluted share in 2019.
- Weighted average basic and diluted shares outstanding for GAAP
net loss per share was 44.8 million, compared to 42.0 million basic
and diluted shares in 2019.
- Weighted average basic and diluted shares outstanding for
non-GAAP net income per share was 44.8 and 48.7 million
respectively, compared to 42.0 million and 46.5 million,
respectively in 2019.
Balance Sheet and Cash Flow
- The company's cash, cash equivalents and investments balance
was $1,282 million as of December 31, 2020.
- During the fourth quarter, the company generated $61.3 million of operating cash flow, excluding
the $0.4 million used for the
repayment of our convertible notes, compared to $47.9 million during Q4'19.
- During the fourth quarter, the company generated $45.8 million of free cash flow, compared to
$24.4 million during Q4'19.
- The company generated $138.0
million of operating cash flow in 2020, excluding the
$49.0 million used for the repayment
of our convertible notes, compared to $119.0
million in 2019.
- The company generated $79.1
million of free cash flow in 2020 compared to $65.1 million in 2019.
Additional Recent Business Highlights
- Grew total customers to 103,994 at December 31, 2020, up 42% from December 31, 2019.
- Total average subscription revenue per customer was
$9,758 during the fourth quarter of
2020 down 3% compared to the fourth quarter of 2019.
"I am exceptionally proud of how the HubSpot team closed out the
year in 2020," said Brian Halligan,
CEO of HubSpot. "During the quarter we surpassed 100,000 total
customers, and in December we crossed $1
billion in annual recurring revenue -- two great milestones
that reflect the determination of our team and the strength of our
customer relationships."
Business Outlook
Based on information available as of February 11, 2021, HubSpot is issuing guidance
for the first quarter of 2021 and full year 2021 as indicated
below.
First Quarter 2021:
- Total revenue is expected to be in the range of $260 million to $265
million.
- Non-GAAP operating income is expected to be in the range of
$17 million to $19 million.
- Non-GAAP net income per common share is expected to be in the
range of $0.28 to $0.30. This assumes approximately 50.3 million
weighted average diluted shares outstanding.
Full Year 2021:
- Total revenue is expected to be in the range of $1,160 million to $1,170
million.
- Non-GAAP operating income is expected to be in the range of
$98 million to $102 million.
- Non-GAAP net income per common share is expected to be in the
range of $1.51 to $1.59. This assumes approximately 50.7 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 Thursday February 11,
2021 at 4:30 p.m. Eastern Time
(ET) to discuss the company's fourth quarter 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
(800) 585-8367 (domestic) or (416) 621-4642 (international). The
replay passcode is 8694405. 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 a leading CRM platform that provides software and
support to help companies grow better. The platform includes
marketing, sales, service, and website management products that
start free and scale to meet our customers' needs at any stage of
growth. Today, more than 100,000 customers across more than 120
countries use HubSpot's powerful and easy-to-use tools and
integrations to attract, engage, and delight customers. 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, and business outlook, including our
financial guidance for the first fiscal quarter of and full year
2021; and statements regarding our positioning for future
growth and market leadership. 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 the impact of COVID-19 on our
business, the broader economy, our workforce and operations, and
our ability to forecast our future financial performance as a
result of COVID-19; our history of losses; our ability to retain
existing customers and add new customers; the continued growth of
the market for a CRM platform; our ability to differentiate our
platform from competing products and technologies; our ability to
manage our growth effectively to maintain our high level of
service; our ability to maintain and expand relationships with our
solutions partners; our ability to successfully recruit and retain
highly-qualified personnel; the price volatility of our common
stock; 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,
|
|
|
|
2020
|
|
|
2019
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
378,123
|
|
|
$
|
269,670
|
|
Short-term
investments
|
|
|
873,073
|
|
|
|
691,834
|
|
Accounts
receivable
|
|
|
126,433
|
|
|
|
92,517
|
|
Deferred commission
expense
|
|
|
44,576
|
|
|
|
32,078
|
|
Prepaid expenses and
other current assets
|
|
|
34,716
|
|
|
|
23,625
|
|
Total current
assets
|
|
|
1,456,921
|
|
|
|
1,109,724
|
|
Long-term
investments
|
|
|
30,697
|
|
|
|
53,776
|
|
Property and
equipment, net
|
|
|
101,123
|
|
|
|
83,649
|
|
Capitalized software
development costs, net
|
|
|
24,943
|
|
|
|
16,793
|
|
Right-of-use
assets
|
|
|
275,893
|
|
|
|
234,390
|
|
Deferred commission
expense, net of current portion
|
|
|
28,296
|
|
|
|
19,110
|
|
Other
assets
|
|
|
13,893
|
|
|
|
9,824
|
|
Intangible assets,
net
|
|
|
10,282
|
|
|
|
11,752
|
|
Goodwill
|
|
|
31,318
|
|
|
|
30,250
|
|
Total
assets
|
|
$
|
1,973,366
|
|
|
$
|
1,569,268
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
13,540
|
|
|
$
|
12,842
|
|
Accrued compensation
costs
|
|
|
44,054
|
|
|
|
26,318
|
|
Accrued expenses and
other current liabilities
|
|
|
37,184
|
|
|
|
28,686
|
|
Convertible senior
notes
|
|
|
7,837
|
|
|
—
|
|
Operating lease
liabilities
|
|
|
30,020
|
|
|
|
23,613
|
|
Deferred
revenue
|
|
|
312,866
|
|
|
|
231,030
|
|
Total current
liabilities
|
|
|
445,501
|
|
|
|
322,489
|
|
Operating lease
liabilities, net of current portion
|
|
|
279,664
|
|
|
|
244,216
|
|
Deferred revenue, net
of current portion
|
|
|
3,636
|
|
|
|
3,058
|
|
Other long-term
liabilities
|
|
|
10,811
|
|
|
|
8,983
|
|
Convertible senior
notes, net of current portion
|
|
|
471,099
|
|
|
|
340,564
|
|
Total
liabilities
|
|
|
1,210,711
|
|
|
|
919,310
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
46
|
|
|
|
44
|
|
Additional paid-in
capital
|
|
|
1,241,167
|
|
|
|
1,048,380
|
|
Accumulated other
comprehensive income (loss)
|
|
|
4,603
|
|
|
|
(336)
|
|
Accumulated
deficit
|
|
|
(483,161)
|
|
|
|
(398,130)
|
|
Total
stockholders' equity
|
|
|
762,655
|
|
|
|
649,958
|
|
Total liabilities
and stockholders' equity
|
|
$
|
1,973,366
|
|
|
$
|
1,569,268
|
|
Consolidated
Statements of Operations
(in thousands, except
per share data)
|
|
|
|
|
For the Three
Months Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription
|
$
|
244,323
|
|
|
$
|
179,086
|
|
|
$
|
853,025
|
|
|
$
|
646,266
|
|
Professional services
and other
|
|
7,742
|
|
|
|
7,100
|
|
|
|
30,001
|
|
|
|
28,594
|
|
Total
revenue
|
|
252,065
|
|
|
|
186,186
|
|
|
|
883,026
|
|
|
|
674,860
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription
|
|
37,369
|
|
|
|
27,960
|
|
|
|
130,685
|
|
|
|
98,510
|
|
Professional services
and other
|
|
9,925
|
|
|
|
8,015
|
|
|
|
36,274
|
|
|
|
31,448
|
|
Total cost of
revenues
|
|
47,294
|
|
|
|
35,975
|
|
|
|
166,959
|
|
|
|
129,958
|
|
Gross
profit
|
|
204,771
|
|
|
|
150,211
|
|
|
|
716,067
|
|
|
|
544,902
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
55,564
|
|
|
|
42,757
|
|
|
|
205,589
|
|
|
|
158,237
|
|
Sales and
marketing
|
|
127,851
|
|
|
|
90,418
|
|
|
|
452,081
|
|
|
|
340,685
|
|
General and
administrative
|
|
28,997
|
|
|
|
25,194
|
|
|
|
109,225
|
|
|
|
92,971
|
|
Total operating
expenses
|
|
212,412
|
|
|
|
158,369
|
|
|
|
766,895
|
|
|
|
591,893
|
|
Loss from
operations
|
|
(7,641)
|
|
|
|
(8,158)
|
|
|
|
(50,828)
|
|
|
|
(46,991)
|
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
623
|
|
|
|
4,646
|
|
|
|
7,773
|
|
|
|
19,429
|
|
Interest
expense
|
|
(7,226)
|
|
|
|
(5,872)
|
|
|
|
(37,049)
|
|
|
|
(22,818)
|
|
Other
expense
|
|
441
|
|
|
|
380
|
|
|
|
(711)
|
|
|
|
(393)
|
|
Total other
expense
|
|
(6,162)
|
|
|
|
(846)
|
|
|
|
(29,987)
|
|
|
|
(3,782)
|
|
Loss before income
tax expense
|
|
(13,803)
|
|
|
|
(9,004)
|
|
|
|
(80,815)
|
|
|
|
(50,773)
|
|
Income tax
expense
|
|
(1,613)
|
|
|
|
(1,298)
|
|
|
|
(4,216)
|
|
|
|
(2,973)
|
|
Net loss
|
$
|
(15,416)
|
|
|
$
|
(10,302)
|
|
|
$
|
(85,031)
|
|
|
$
|
(53,746)
|
|
Net loss per share,
basic and diluted
|
$
|
(0.34)
|
|
|
$
|
(0.24)
|
|
|
$
|
(1.90)
|
|
|
$
|
(1.28)
|
|
Weighted average
common shares used in
computing basic and diluted net loss per share:
|
|
45,983
|
|
|
|
42,844
|
|
|
|
44,757
|
|
|
|
42,025
|
|
Consolidated
Statements of Cash Flows
(in
thousands)
|
|
|
|
|
|
For the Three
Months
Ended December 31,
|
|
|
Year Ended
December 31,
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(15,416)
|
|
|
$
|
(10,302)
|
|
|
$
|
(85,031)
|
|
|
$
|
(53,746)
|
|
Adjustments to
reconcile net loss to net cash and cash equivalents
provided by operating
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
9,993
|
|
|
|
7,545
|
|
|
|
37,060
|
|
|
|
28,793
|
|
Stock-based
compensation
|
|
31,466
|
|
|
|
24,095
|
|
|
|
121,488
|
|
|
|
97,754
|
|
Loss on early
extinguishment of 2022 Convertible Notes
|
|
14
|
|
|
—
|
|
|
|
10,507
|
|
|
—
|
|
Repayment of 2022
Convertible Notes attributable to the debt discount
|
|
(373)
|
|
|
—
|
|
|
|
(49,048)
|
|
|
—
|
|
(Benefit) provision
for deferred income taxes
|
|
(1,449)
|
|
|
|
(848)
|
|
|
|
(2,185)
|
|
|
|
(799)
|
|
Amortization of debt
discount and issuance costs
|
|
6,702
|
|
|
|
5,606
|
|
|
|
24,890
|
|
|
|
21,790
|
|
Accretion of bond
discount
|
|
59
|
|
|
|
(3,271)
|
|
|
|
(3,657)
|
|
|
|
(14,160)
|
|
Unrealized currency
translation
|
|
(831)
|
|
|
|
37
|
|
|
|
(952)
|
|
|
|
(156)
|
|
Changes in assets and
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(29,592)
|
|
|
|
(14,082)
|
|
|
|
(29,971)
|
|
|
|
(15,428)
|
|
Prepaid expenses and
other assets
|
|
5,570
|
|
|
|
2,921
|
|
|
|
(17,026)
|
|
|
|
(3,296)
|
|
Deferred commission
expense
|
|
(7,937)
|
|
|
|
(4,115)
|
|
|
|
(19,288)
|
|
|
|
(9,666)
|
|
Right-of-use
assets
|
|
8,824
|
|
|
|
8,347
|
|
|
|
31,406
|
|
|
|
22,657
|
|
Accounts
payable
|
|
627
|
|
|
|
(1,724)
|
|
|
|
3,697
|
|
|
|
3,927
|
|
Accrued expenses and
other liabilities
|
|
12,240
|
|
|
|
6,320
|
|
|
|
26,020
|
|
|
|
7,819
|
|
Operating lease
liabilities
|
|
(10,105)
|
|
|
|
(993)
|
|
|
|
(31,621)
|
|
|
|
(15,781)
|
|
Deferred
revenue
|
|
51,133
|
|
|
|
28,355
|
|
|
|
72,624
|
|
|
|
49,265
|
|
Net cash and cash
equivalents provided by operating activities
|
|
60,925
|
|
|
|
47,891
|
|
|
|
88,913
|
|
|
|
118,973
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
(139,915)
|
|
|
|
(336,853)
|
|
|
|
(1,517,357)
|
|
|
|
(1,304,847)
|
|
Maturities of
investments
|
|
338,961
|
|
|
|
376,752
|
|
|
|
1,352,231
|
|
|
|
1,066,366
|
|
Sale of
investments
|
—
|
|
|
—
|
|
|
|
10,932
|
|
|
—
|
|
Purchases of property
and equipment
|
|
(9,521)
|
|
|
|
(19,175)
|
|
|
|
(37,274)
|
|
|
|
(40,372)
|
|
Capitalization of
software development costs
|
|
(5,955)
|
|
|
|
(4,335)
|
|
|
|
(21,599)
|
|
|
|
(13,474)
|
|
Purchases of strategic
investments
|
|
(500)
|
|
|
—
|
|
|
|
(2,500)
|
|
|
|
(553)
|
|
Acquisition of a
business, net of cash acquired
|
—
|
|
|
|
(23,314)
|
|
|
—
|
|
|
|
(23,314)
|
|
Net cash and cash
equivalents provided by (used in) investing
activities
|
|
183,070
|
|
|
|
(6,925)
|
|
|
|
(215,567)
|
|
|
|
(316,194)
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of 2025 Convertible Notes, net of issuance costs
paid of $9.9 million
|
—
|
|
|
—
|
|
|
|
450,123
|
|
|
—
|
|
Proceeds from
settlement of Convertible Note Hedges related to the 2022
Convertible Notes
|
|
1,062
|
|
|
—
|
|
|
|
363,554
|
|
|
—
|
|
Payments for
settlement of Warrants related to the 2022 Convertible
Notes
|
—
|
|
|
—
|
|
|
|
(327,543)
|
|
|
—
|
|
Repayment of 2022
Convertible Notes attributable to the principal
|
|
(1,627)
|
|
|
—
|
|
|
|
(235,993)
|
|
|
—
|
|
Payments for Capped
Call Options related to the 2025 Convertible Notes
|
—
|
|
|
—
|
|
|
|
(50,600)
|
|
|
—
|
|
Proceeds from common
stock offering, net of offering costs paid of $365
|
—
|
|
|
—
|
|
|
—
|
|
|
|
342,628
|
|
Employee taxes paid
related to the net share settlement of stock-based
awards
|
|
(2,787)
|
|
|
|
(1,480)
|
|
|
|
(7,424)
|
|
|
|
(6,247)
|
|
Proceeds related to
the issuance of common stock under stock plans
|
|
8,115
|
|
|
|
4,652
|
|
|
|
30,371
|
|
|
|
23,578
|
|
Repayment of
debt
|
—
|
|
|
|
(333)
|
|
|
—
|
|
|
|
(333)
|
|
Repayments of finance
lease obligations
|
—
|
|
|
|
(35)
|
|
|
|
(28)
|
|
|
|
(284)
|
|
Net cash and cash
equivalents provided by financing activities
|
|
4,763
|
|
|
|
2,804
|
|
|
|
222,460
|
|
|
|
359,342
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
4,470
|
|
|
|
1,451
|
|
|
|
6,831
|
|
|
|
(720)
|
|
Net increase in cash,
cash equivalents and restricted cash
|
|
253,228
|
|
|
|
45,221
|
|
|
|
102,637
|
|
|
|
161,401
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
127,924
|
|
|
|
233,294
|
|
|
|
278,515
|
|
|
|
117,114
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
381,152
|
|
|
$
|
278,515
|
|
|
$
|
381,152
|
|
|
$
|
278,515
|
|
Reconciliation of
non-GAAP operating income and operating margin
(in thousands, except
percentages)
|
|
Three Months
Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
GAAP operating
loss
|
$
|
(7,641)
|
|
$
|
(8,158)
|
|
|
$
|
(50,828)
|
|
$
|
(46,991)
|
|
Stock-based
compensation
|
|
31,466
|
|
|
24,095
|
|
|
|
121,488
|
|
|
97,754
|
|
Amortization of
acquired intangible assets
|
|
159
|
|
|
839
|
|
|
|
2,419
|
|
|
3,201
|
|
Acquisition related
expenses
|
|
640
|
|
|
876
|
|
|
|
1,832
|
|
|
971
|
|
Non-GAAP operating
income
|
|
24,624
|
|
$
|
17,652
|
|
|
$
|
74,911
|
|
$
|
54,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
|
(3.0)
|
%
|
|
(4.4)
|
%
|
|
|
(5.8)
|
%
|
|
(7.0)
|
%
|
Non-GAAP operating
margin
|
|
9.8
|
%
|
|
9.5
|
%
|
|
|
8.5
|
%
|
|
8.1
|
%
|
Reconciliation of
non-GAAP net income
(in thousands, except
per share amounts)
|
|
|
|
|
Three Months
Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
GAAP net
loss
|
$
|
(15,416)
|
|
$
|
(10,302)
|
|
|
$
|
(85,031)
|
|
$
|
(53,746)
|
|
Stock-based
compensation
|
|
31,466
|
|
|
24,095
|
|
|
|
121,488
|
|
|
97,754
|
|
Amortization of
acquired intangibles assets
|
|
159
|
|
|
839
|
|
|
|
2,419
|
|
|
3,201
|
|
Acquisition related
expenses
|
|
640
|
|
|
876
|
|
|
|
1,832
|
|
|
971
|
|
Non-cash interest
expense for amortization of debt discount and debt
issuance costs
|
|
6,702
|
|
|
5,606
|
|
|
|
24,890
|
|
|
21,790
|
|
Loss on early
extinguishment of 2022 Convertible Notes
|
|
14
|
|
|
—
|
|
|
|
10,507
|
|
|
—
|
|
Impairment of
strategic investment
|
|
—
|
|
|
—
|
|
|
|
250
|
|
|
—
|
|
Income tax effects of
non-GAAP items
|
|
(3,423)
|
|
|
(3,184)
|
|
|
|
(11,898)
|
|
|
(11,616)
|
|
Non-GAAP net
income
|
$
|
20,142
|
|
$
|
17,930
|
|
|
$
|
64,457
|
|
$
|
58,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.44
|
|
$
|
0.42
|
|
|
$
|
1.44
|
|
$
|
1.39
|
|
Diluted
|
$
|
0.40
|
|
$
|
0.38
|
|
|
$
|
1.32
|
|
$
|
1.26
|
|
Shares used in
non-GAAP per share calculations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
45,983
|
|
|
42,844
|
|
|
|
44,757
|
|
|
42,025
|
|
Diluted
|
|
49,922
|
|
|
46,912
|
|
|
|
48,739
|
|
|
46,492
|
|
Reconciliation of
non-GAAP expense and expense as a percentage of
revenue
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except
percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
2020
|
|
|
2019
|
|
|
COS,
Subscription
|
|
COS,
Prof.
services
& other
|
|
R&D
|
|
S&M
|
|
G&A
|
|
|
COS,
Subscription
|
|
COS,
Prof.
services
& other
|
|
R&D
|
|
S&M
|
|
G&A
|
|
GAAP
expense
|
$
|
37,369
|
|
$
|
9,925
|
|
$
|
55,564
|
|
$
|
127,851
|
|
$
|
28,997
|
|
|
$
|
27,960
|
|
$
|
8,015
|
|
$
|
42,757
|
|
$
|
90,418
|
|
$
|
25,194
|
|
Stock -based
compensation
|
|
(1,294)
|
|
|
(651)
|
|
|
(10,303)
|
|
|
(13,568)
|
|
|
(5,650)
|
|
|
|
(836)
|
|
|
(531)
|
|
|
(8,085)
|
|
|
(9,324)
|
|
|
(5,319)
|
|
Amortization of
acquired intangible
assets
|
|
(139)
|
|
|
—
|
|
|
—
|
|
|
(20)
|
|
|
—
|
|
|
|
(839)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Acquisition related
expenses
|
|
—
|
|
|
—
|
|
|
(285)
|
|
|
—
|
|
|
(355)
|
|
|
|
—
|
|
|
—
|
|
|
(262)
|
|
|
—
|
|
|
(614)
|
|
Non-GAAP
expense
|
$
|
35,936
|
|
$
|
9,274
|
|
$
|
44,976
|
|
$
|
114,263
|
|
$
|
22,992
|
|
|
$
|
26,285
|
|
$
|
7,484
|
|
$
|
34,410
|
|
$
|
81,094
|
|
$
|
19,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP expense as a
percentage of
revenue
|
|
14.8
|
%
|
|
3.9
|
%
|
|
22.0
|
%
|
|
50.7
|
%
|
|
11.5
|
%
|
|
|
15.0
|
%
|
|
4.3
|
%
|
|
23.0
|
%
|
|
48.6
|
%
|
|
13.5
|
%
|
Non-GAAP expense as a
percentage of
revenue
|
|
14.3
|
%
|
|
3.7
|
%
|
|
17.8
|
%
|
|
45.3
|
%
|
|
9.1
|
%
|
|
|
14.1
|
%
|
|
4.0
|
%
|
|
18.5
|
%
|
|
43.6
|
%
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
2020
|
|
|
2019
|
|
|
COS,
Subscription
|
|
COS,
Prof.
services
& other
|
|
R&D
|
|
S&M
|
|
G&A
|
|
|
COS,
Subscription
|
|
COS,
Prof.
services
& other
|
|
R&D
|
|
S&M
|
|
G&A
|
|
GAAP
expense
|
$
|
130,685
|
|
$
|
36,274
|
|
$
|
205,589
|
|
$
|
452,081
|
|
$
|
109,225
|
|
|
$
|
98,510
|
|
$
|
31,448
|
|
$
|
158,237
|
|
$
|
340,685
|
|
$
|
92,971
|
|
Stock -based
compensation
|
|
(4,408)
|
|
|
(2,536)
|
|
|
(39,366)
|
|
|
(50,552)
|
|
|
(24,626)
|
|
|
|
(3,127)
|
|
|
(2,829)
|
|
|
(33,748)
|
|
|
(36,599)
|
|
|
(21,451)
|
|
Amortization of
acquired intangible
assets
|
|
(2,340)
|
|
|
—
|
|
|
—
|
|
|
(79)
|
|
|
—
|
|
|
|
(3,201)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Acquisition related
expenses
|
|
—
|
|
|
—
|
|
|
(1,287)
|
|
|
—
|
|
|
(545)
|
|
|
|
—
|
|
|
—
|
|
|
(357)
|
|
|
—
|
|
|
(614)
|
|
Non-GAAP
expense
|
$
|
123,937
|
|
$
|
33,738
|
|
$
|
164,936
|
|
$
|
401,450
|
|
$
|
84,054
|
|
|
$
|
92,182
|
|
$
|
28,619
|
|
$
|
124,132
|
|
$
|
304,086
|
|
$
|
70,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP expense as a
percentage of
revenue
|
|
14.8
|
%
|
|
4.1
|
%
|
|
23.3
|
%
|
|
51.2
|
%
|
|
12.4
|
%
|
|
|
14.6
|
%
|
|
4.7
|
%
|
|
23.4
|
%
|
|
50.5
|
%
|
|
13.8
|
%
|
Non-GAAP expense as a
percentage of
revenue
|
|
14.0
|
%
|
|
3.8
|
%
|
|
18.7
|
%
|
|
45.5
|
%
|
|
9.5
|
%
|
|
|
13.7
|
%
|
|
4.2
|
%
|
|
18.4
|
%
|
|
45.1
|
%
|
|
10.5
|
%
|
Reconciliation of
non-GAAP subscription margin
(in thousands, except
percentages)
|
|
|
|
|
|
|
|
Three Months Ended
December
31,
|
|
|
Year Ended
December 31,
|
|
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
GAAP subscription
margin
|
|
$
|
206,954
|
|
$
|
151,126
|
|
|
$
|
722,340
|
|
$
|
547,756
|
|
Stock -based
compensation
|
|
|
1,294
|
|
|
836
|
|
|
|
4,408
|
|
|
3,127
|
|
Amortization of
acquired intangible assets
|
|
|
139
|
|
|
839
|
|
|
|
2,340
|
|
|
3,201
|
|
Non-GAAP subscription
margin
|
|
$
|
208,387
|
|
$
|
152,801
|
|
|
$
|
729,088
|
|
$
|
554,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP subscription
margin percentage
|
|
|
84.7
|
%
|
|
84.4
|
%
|
|
|
84.7
|
%
|
|
84.8
|
%
|
Non-GAAP subscription
margin percentage
|
|
|
85.3
|
%
|
|
85.3
|
%
|
|
|
85.5
|
%
|
|
85.7
|
%
|
Reconciliation of
free cash flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
GAAP net cash and
cash equivalents provided by
operating activities
|
|
$
|
60,925
|
|
$
|
47,891
|
|
|
$
|
88,913
|
|
$
|
118,973
|
|
Purchases of property
and equipment
|
|
|
(9,521)
|
|
|
(19,175)
|
|
|
|
(37,274)
|
|
|
(40,372)
|
|
Capitalization of
software development costs
|
|
|
(5,955)
|
|
|
(4,335)
|
|
|
|
(21,599)
|
|
|
(13,474)
|
|
Repayment of 2022
Convertible Notes attributable to
the debt discount
|
|
|
373
|
|
|
—
|
|
|
|
49,048
|
|
|
—
|
|
Free cash
flow
|
|
$
|
45,822
|
|
$
|
24,381
|
|
|
$
|
79,088
|
|
$
|
65,127
|
|
Reconciliation of
operating cash flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
GAAP net cash and
cash equivalents provided by
operating activities
|
|
$
|
60,925
|
|
$
|
47,891
|
|
|
$
|
88,913
|
|
$
|
118,973
|
|
Repayment of 2022
Convertible Notes attributable to
the debt discount
|
|
|
373
|
|
|
—
|
|
|
|
49,048
|
|
|
—
|
|
Operating cash flow,
excluding repayment of
convertible debt
|
|
$
|
61,298
|
|
$
|
47,891
|
|
|
$
|
137,961
|
|
$
|
118,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
forecasted non-GAAP operating income
(in thousands, except
percentages)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31, 2021
|
|
|
|
|
Year
Ended
December 31,
2021
|
|
GAAP operating income
range
|
($17,096)-($15,096)
|
|
|
|
|
($73,212)-($69,212)
|
|
Stock-based
compensation
|
|
33,500
|
|
|
|
|
|
169,065
|
|
Amortization of
acquired intangible assets
|
|
248
|
|
|
|
|
|
988
|
|
Acquisition related
expenses
|
|
348
|
|
|
|
|
|
1,159
|
|
Non-GAAP operating
income range
|
$17,000
-$19,000
|
|
|
|
|
$98,000-$102,000
|
|
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, 2021
|
|
|
Year
Ended
December 31,
2021
|
|
GAAP net loss
range
|
($23,892)-($22,642)
|
|
|
($107,263)-(102,263)
|
|
Stock-based
compensation
|
|
33,500
|
|
|
|
169,065
|
|
Amortization of
acquired intangible assets
|
|
248
|
|
|
|
988
|
|
Acquisition related
expenses
|
|
348
|
|
|
|
1,159
|
|
Non-cash interest
expense for amortization of debt discount and
debt issuance costs
|
|
6,610
|
|
|
|
27,363
|
|
Income tax effects of
non-GAAP items
|
(2,814)-(3,064)
|
|
|
(14,812)-(15,812)
|
|
Non-GAAP net income
range
|
$14,000-$15,000
|
|
|
$76,500-$80,500
|
|
|
|
|
|
|
|
|
|
GAAP net income per
basic and diluted share
|
($0.51)-($0.49)
|
|
|
($2.27)-($2.16)
|
|
Non-GAAP net
income per diluted share
|
$0.28-$0.30
|
|
|
$1.51-$1.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares used in computing GAAP basic
and diluted net loss per share:
|
|
46,477
|
|
|
|
47,303
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares used in computing non-GAAP
diluted net loss per share:
|
|
50,300
|
|
|
|
50,659
|
|
HubSpot's estimates of stock-based compensation, amortization of
acquired intangible assets, acquisition-related expenses, non-cash
interest expense for amortization of debt discount and debt
issuance costs, loss on early extinguishment of 2022 Convertible
Notes, impairment of strategic investment, and income tax effects
of non-GAAP items assume, among other things, the occurrence of no
additional acquisitions, investments or restructurings, 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. 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
repayments of convertible notes attributable to debt discount. We
believe information regarding free cash flow provides useful
information to investors in understanding and evaluating the
strength of liquidity and available cash and the exclusion of
repayments of convertible notes attributable to debt discount
provides a comparable framework for assessing how our business
performed when compared to prior periods and also aligns the
non-GAAP treatment of our debt discount that is amortized as
non-cash interest expense.
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, non-cash interest expense for the amortization of debt
discount debt issuance costs, loss on early extinguishment of 2022
Convertible Notes, impairment of strategic investment, 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:
- 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.
- 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.
- Acquisition related expenses, such as transaction costs and
retention payments, are expenses that are not necessarily
reflective of operational performance during a period. We believe
that the exclusion of these expenses provides for a useful
comparison of our operating results to prior periods and to our
peer companies, which commonly exclude these expenses.
- In May 2017, the Company issued
$400 million of convertible notes due
in 2022 with a coupon interest rate of 0.25%. In June 2020, the Company issued $460 million of convertible notes due in 2025
with a coupon interest rate of 0.375%. The imputed interest rates
of the convertible senior notes were approximately 6.87% and 5.71%,
respectively. This is a result of the debt discount recorded for
the conversion feature that is required to be separately accounted
for as equity, and debt issuance costs, which reduce the carrying
value of the convertible debt instrument. The debt discount is
amortized as interest expense together with the issuance costs of
the debt. The expense for the amortization of debt discount and
debt issuance costs is a non-cash item, and 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.
In June 2020, the Company used a
portion of the proceeds from the issuance of the convertible notes
due in 2025 to repay approximately $272.1
million of its convertible notes that were due in
2022. In connection with the repayment of these notes, the
Company recorded a $10.5 million loss
on early extinguishment of debt, which represents the difference
between the fair value and carrying value of the debt extinguished.
The amount of this charge may be inconsistent in size and varies
depending on the timing of the repurchase of debt. In connection
with the debt extinguishment, approximately $48.7 million of the repayment of convertible
notes that is attributable to debt discount was classified as cash
used in operating activities. Throughout the remainder of 2020 and
until the maturity of the notes that are due in 2022, the Company
has repaid, and will continue to repay early conversions of these
notes. These activities are not considered reflective of our
recurring core business operating results. As such, we believe the
exclusion of these expenses and payments provides for a useful
comparison of our operating results to prior periods and to our
peer companies.
- Strategic investments consist of non-controlling equity
investments in privately held companies. The recognition of gains
or 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 losses provides for a useful
comparison of our operating results to prior periods and to our
peer companies.
- 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.
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SOURCE HubSpot