CAMBRIDGE, Mass., May 5, 2021 /PRNewswire/ -- HubSpot, Inc.
(NYSE: HUBS), the customer relationship management (CRM) platform
for scaling companies, today announced financial results for the
first quarter ended March 31,
2021.
Financial Highlights:
Revenue
- Total revenue was $281.4 million,
up 41% compared to Q1'20.
-
- Subscription revenue was $270.3
million, up 41% compared to Q1'20.
- Professional services and other revenue was $11.1 million, up 43% compared to Q1'20.
Operating Income (Loss)
- GAAP operating margin was (5.3%), compared to (7.1%) in
Q1'20.
- Non-GAAP operating margin was 6.7%, compared to 7.3% in
Q1'20.
- GAAP operating loss was ($15.0)
million, compared to ($14.1)
million in Q1'20.
- Non-GAAP operating income was $18.9
million, compared to $14.6
million in Q1'20.
Net Income (Loss)
- GAAP net loss was ($23.2)
million, or ($0.50) per basic
and diluted share, compared to ($17.7)
million, or ($0.41) per basic
and diluted share in Q1'20.
- Non-GAAP net income was $15.7
million, or $0.34 per basic
and $0.31 per diluted share, compared
to $14.1 million, or $0.33 per basic and $0.30 per diluted share in Q1'20.
- Weighted average basic and diluted shares outstanding for GAAP
net loss per share was 46.4 million, compared to 43.3 million basic
and diluted shares in Q1'20.
- Weighted average basic and diluted shares outstanding for
non-GAAP net income per share was 46.4 million and 50.4 million
respectively, compared to 43.3 million and 47.7 million,
respectively in Q1'20.
Balance Sheet and Cash Flow
- The company's cash, cash equivalents, and short-term and
long-term investments balance was $1,286
million as of March 31,
2021.
- During the first quarter, the company generated $72.5 million of operating cash flow, excluding
the $9.8 million used for the
repayment of our convertible notes, compared to $23.0 million during Q1'20.
- During the first quarter, the company generated $61.2 million of free cash flow, compared to
$7.1 million during Q1'20.
Additional Recent Business Highlights
- Grew total customers to 113,925 at March
31, 2021, up 45% from March 31,
2020.
- Total average subscription revenue per customer was
$9,886 during the first quarter of
2021, down 1% compared to the first quarter of 2020.
"We entered 2021 strong with the launch of Operations Hub and
another quarter of tremendous growth across the business," said
Yamini Rangan, Chief Customer
Officer at HubSpot. "We believe there's still a massive opportunity
ahead as companies continue to adapt to doing business in a
digital-first world. With our powerful and easy-to-use CRM
platform, we are well positioned to help our customers through that
transition."
Business Outlook
Based on information available as of May 5,
2021, HubSpot is issuing guidance for the second quarter of
2021 and full year 2021 as indicated below.
Second Quarter 2021:
- Total revenue is expected to be in the range of $293 million to $297
million.
- Non-GAAP operating income is expected to be in the range of
$19 million to $21 million.
- Non-GAAP net income per common share is expected to be in the
range of $0.30 to $0.32. This assumes approximately 50.9 million
weighted average diluted shares outstanding.
Full Year 2021:
- Total revenue is expected to be in the range of $1,237 million to $1,247
million.
- Non-GAAP operating income is expected to be in the range of
$104 million to $106 million.
- Non-GAAP net income per common share is expected to be in the
range of $1.61 to $1.65. This assumes approximately 50.8 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, May 5,
2021 at 4:30 p.m. Eastern Time
(ET) to discuss the company's first 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 7299990. 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, operations, and website management
products that start free and scale to meet our customers' needs at
any stage of growth. Today, nearly 114,000 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 second fiscal quarter of and full year
2021; and statements regarding our positioning for future growth
and market leadership; statements regarding the management team;
statements regarding expected market trends, future investments,
and 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 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)
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
397,498
|
|
|
$
|
378,123
|
|
Short-term
investments
|
|
|
782,335
|
|
|
|
873,073
|
|
Accounts
receivable
|
|
|
109,602
|
|
|
|
126,433
|
|
Deferred commission
expense
|
|
|
47,279
|
|
|
|
44,576
|
|
Prepaid expenses and
other current assets
|
|
|
31,459
|
|
|
|
34,716
|
|
Total current
assets
|
|
|
1,368,173
|
|
|
|
1,456,921
|
|
Long-term
investments
|
|
|
105,990
|
|
|
|
30,697
|
|
Property and
equipment, net
|
|
|
96,845
|
|
|
|
101,123
|
|
Capitalized software
development costs, net
|
|
|
28,340
|
|
|
|
24,943
|
|
Right-of-use
assets
|
|
|
261,601
|
|
|
|
275,893
|
|
Deferred commission
expense, net of current portion
|
|
|
30,607
|
|
|
|
28,296
|
|
Other
assets
|
|
|
18,795
|
|
|
|
13,893
|
|
Intangible assets,
net
|
|
|
11,878
|
|
|
|
10,282
|
|
Goodwill
|
|
|
47,588
|
|
|
|
31,318
|
|
Total
assets
|
|
$
|
1,969,817
|
|
|
$
|
1,973,366
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
17,907
|
|
|
$
|
13,540
|
|
Accrued compensation
costs
|
|
|
44,856
|
|
|
|
44,054
|
|
Accrued expenses and
other current liabilities
|
|
|
40,868
|
|
|
|
37,184
|
|
Convertible senior
notes
|
|
|
11,810
|
|
|
|
7,837
|
|
Operating lease
liabilities
|
|
|
30,563
|
|
|
|
30,020
|
|
Deferred
revenue
|
|
|
336,183
|
|
|
|
312,866
|
|
Total current
liabilities
|
|
|
482,187
|
|
|
|
445,501
|
|
Operating lease
liabilities, net of current portion
|
|
|
265,664
|
|
|
|
279,664
|
|
Deferred revenue, net
of current portion
|
|
|
3,227
|
|
|
|
3,636
|
|
Other long-term
liabilities
|
|
|
11,399
|
|
|
|
10,811
|
|
Convertible senior
notes, net of current portion
|
|
|
432,626
|
|
|
|
471,099
|
|
Total
liabilities
|
|
|
1,195,103
|
|
|
|
1,210,711
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
47
|
|
|
|
46
|
|
Additional paid-in
capital
|
|
|
1,279,113
|
|
|
|
1,241,167
|
|
Accumulated other
comprehensive income
|
|
|
1,874
|
|
|
|
4,603
|
|
Accumulated
deficit
|
|
|
(506,320)
|
|
|
|
(483,161)
|
|
Total
stockholders' equity
|
|
|
774,714
|
|
|
|
762,655
|
|
Total liabilities
and stockholders' equity
|
|
$
|
1,969,817
|
|
|
$
|
1,973,366
|
|
Consolidated
Statements of Operations
(in thousands, except
per share data)
|
|
|
For the Three
Months Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Subscription
|
$
|
270,263
|
|
|
$
|
191,229
|
|
|
Professional services
and other
|
|
11,102
|
|
|
|
7,739
|
|
|
Total
revenue
|
|
281,365
|
|
|
|
198,968
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Subscription
|
|
43,853
|
|
|
|
29,734
|
|
|
Professional services
and other
|
|
10,881
|
|
|
|
8,551
|
|
|
Total cost of
revenues
|
|
54,734
|
|
|
|
38,285
|
|
|
Gross
profit
|
|
226,631
|
|
|
|
160,683
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
|
68,396
|
|
|
|
46,202
|
|
|
Sales and
marketing
|
|
141,017
|
|
|
|
102,328
|
|
|
General and
administrative
|
|
32,250
|
|
|
|
26,255
|
|
|
Total operating
expenses
|
|
241,663
|
|
|
|
174,785
|
|
|
Loss from
operations
|
|
(15,032)
|
|
|
|
(14,102)
|
|
|
Other
expense:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
475
|
|
|
|
4,057
|
|
|
Interest
expense
|
|
(9,399)
|
|
|
|
(5,953)
|
|
|
Other income
(expense)
|
|
660
|
|
|
|
(1,052)
|
|
|
Total other
expense
|
|
(8,264)
|
|
|
|
(2,948)
|
|
|
Loss before income
tax expense
|
|
(23,296)
|
|
|
|
(17,050)
|
|
|
Income tax benefit
(expense)
|
|
137
|
|
|
|
(666)
|
|
|
Net loss
|
$
|
(23,159)
|
|
|
$
|
(17,716)
|
|
|
Net loss per share,
basic and diluted
|
$
|
(0.50)
|
|
|
$
|
(0.41)
|
|
|
Weighted average
common shares used in computing basic and diluted net loss per
share:
|
|
46,428
|
|
|
|
43,275
|
|
|
Consolidated
Statements of Cash Flows
(in
thousands)
|
|
|
For the Three
Months Ended
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
(23,159)
|
|
|
$
|
(17,716)
|
|
|
Adjustments to
reconcile net loss to net cash and cash equivalents
provided by
operating activities
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
11,208
|
|
|
|
8,711
|
|
|
Stock-based
compensation
|
|
32,423
|
|
|
|
27,463
|
|
|
Loss on early
extinguishment of 2022 Convertible Notes
|
|
2,406
|
|
|
—
|
|
|
Repayment of 2022
Convertible Notes attributable to the debt discount
|
|
(9,805)
|
|
|
—
|
|
|
Benefit from deferred
income taxes
|
|
(1,006)
|
|
|
|
(257)
|
|
|
Amortization of debt
discount and issuance costs
|
|
6,493
|
|
|
|
5,703
|
|
|
Amortization
(accretion) of bond discount
|
|
515
|
|
|
|
(2,154)
|
|
|
Unrealized currency
translation
|
|
(49)
|
|
|
|
781
|
|
|
Changes in assets and
liabilities
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
16,475
|
|
|
|
9,780
|
|
|
Prepaid expenses and
other assets
|
|
2,715
|
|
|
|
(15,107)
|
|
|
Deferred commission
expense
|
|
(6,305)
|
|
|
|
(1,523)
|
|
|
Right-of-use
assets
|
|
10,354
|
|
|
|
5,723
|
|
|
Accounts
payable
|
|
4,598
|
|
|
|
1,495
|
|
|
Accrued expenses and
other liabilities
|
|
(2,429)
|
|
|
|
(5,439)
|
|
|
Operating lease
liabilities
|
|
(9,272)
|
|
|
|
(5,281)
|
|
|
Deferred
revenue
|
|
27,538
|
|
|
|
10,832
|
|
|
Net cash and cash
equivalents provided by operating activities
|
|
62,700
|
|
|
|
23,011
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
(362,288)
|
|
|
|
(439,889)
|
|
|
Maturities of
investments
|
|
376,918
|
|
|
|
382,875
|
|
|
Equity method
investment
|
|
(2,308)
|
|
|
—
|
|
|
Purchases of property
and equipment
|
|
(3,967)
|
|
|
|
(11,098)
|
|
|
Capitalization of
software development costs
|
|
(7,341)
|
|
|
|
(4,769)
|
|
|
Purchases of strategic
investments
|
|
(1,850)
|
|
|
—
|
|
|
Acquisition of a
business, net of cash acquired
|
|
(16,810)
|
|
|
—
|
|
|
Net cash and cash
equivalents used in investing activities
|
|
(17,646)
|
|
|
|
(72,881)
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
Proceeds from
settlement of Convertible Note Hedges related to the 2022
Convertible Notes
|
|
723
|
|
|
—
|
|
|
Repayment of 2022
Convertible Notes attributable to the principal
|
|
(35,900)
|
|
|
—
|
|
|
Employee taxes paid
related to the net share settlement of stock-based
awards
|
|
(2,964)
|
|
|
|
(941)
|
|
|
Proceeds related to
the issuance of common stock under stock plans
|
|
16,339
|
|
|
|
6,854
|
|
|
Repayments of finance
lease obligations
|
—
|
|
|
|
(30)
|
|
|
Net cash and cash
equivalents (used in) provided by financing activities
|
|
(21,802)
|
|
|
|
5,883
|
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
(3,877)
|
|
|
|
(1,814)
|
|
|
Net increase in cash,
cash equivalents and restricted cash
|
|
19,375
|
|
|
|
(45,801)
|
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
381,152
|
|
|
|
278,515
|
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
400,527
|
|
|
$
|
232,714
|
|
|
Reconciliation of
non-GAAP operating income and operating margin
(in thousands, except
percentages)
|
|
|
Three Months Ended
March 31,
|
|
|
|
2021
|
|
2020
|
|
|
GAAP operating
loss
|
$
|
(15,032)
|
|
$
|
(14,102)
|
|
|
Stock-based
compensation
|
|
32,423
|
|
|
27,463
|
|
|
Amortization of
acquired intangible assets
|
|
345
|
|
|
900
|
|
|
Acquisition related
expenses
|
|
1,195
|
|
|
333
|
|
|
Non-GAAP operating
income
|
$
|
18,931
|
|
$
|
14,594
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
|
(5.3)
|
%
|
|
(7.1)
|
%
|
|
Non-GAAP operating
margin
|
|
6.7
|
%
|
|
7.3
|
%
|
|
|
|
|
|
|
|
|
|
Reconciliation of
non-GAAP net income
(in thousands, except
per share amounts)
|
|
|
Three Months Ended
March 31,
|
|
|
|
2021
|
|
2020
|
|
|
GAAP net
loss
|
$
|
(23,159)
|
|
|
(17,716)
|
|
|
Stock-based
compensation
|
|
32,423
|
|
|
27,463
|
|
|
Amortization of
acquired intangibles assets
|
|
345
|
|
|
900
|
|
|
Acquisition related
expenses
|
|
1,195
|
|
|
333
|
|
|
Non-cash interest
expense for amortization of debt discount and debt issuance
costs
|
|
6,493
|
|
|
5,703
|
|
|
Loss on early
extinguishment of 2022 Convertible Notes
|
|
2,406
|
|
|
—
|
|
|
Impairment of
strategic investment
|
|
—
|
|
|
250
|
|
|
Income tax effects of
non-GAAP items
|
|
(4,050)
|
|
|
(2,854)
|
|
|
Non-GAAP net
income
|
$
|
15,653
|
|
|
14,079
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.34
|
|
$
|
0.33
|
|
|
Diluted
|
$
|
0.31
|
|
$
|
0.30
|
|
|
Shares used in
non-GAAP per share calculations
|
|
|
|
|
|
|
|
Basic
|
|
46,428
|
|
|
43,275
|
|
|
Diluted
|
|
50,436
|
|
|
47,715
|
|
|
Reconciliation of
non-GAAP expense and expense as a percentage of
revenue
|
(in thousands, except
percentages)
|
|
|
Three Months Ended
March 31,
|
|
|
2021
|
|
|
2020
|
|
|
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
|
$
|
43,853
|
|
$
|
10,881
|
|
$
|
68,396
|
|
$
|
141,017
|
|
$
|
32,250
|
|
|
$
|
29,734
|
|
$
|
8,551
|
|
$
|
46,202
|
|
$
|
102,328
|
|
$
|
26,255
|
|
Stock -based
compensation
|
|
(1,310)
|
|
|
(697)
|
|
|
(11,484)
|
|
|
(13,629)
|
|
|
(5,303)
|
|
|
|
(898)
|
|
|
(607)
|
|
|
(8,708)
|
|
|
(10,816)
|
|
|
(6,434)
|
|
Amortization of
acquired intangible assets
|
|
(239)
|
|
|
—
|
|
|
—
|
|
|
(106)
|
|
|
—
|
|
|
|
(880)
|
|
|
—
|
|
|
—
|
|
|
(20)
|
|
|
—
|
|
Acquisition related
expenses
|
|
—
|
|
|
—
|
|
|
(344)
|
|
|
(367)
|
|
|
(484)
|
|
|
|
—
|
|
|
—
|
|
|
(330)
|
|
|
—
|
|
|
(3)
|
|
Non-GAAP
expense
|
$
|
42,304
|
|
$
|
10,184
|
|
$
|
56,568
|
|
$
|
126,915
|
|
$
|
26,463
|
|
|
$
|
27,956
|
|
$
|
7,944
|
|
$
|
37,164
|
|
$
|
91,492
|
|
$
|
19,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP expense as a
percentage of revenue
|
|
15.6
|
%
|
|
3.9
|
%
|
|
24.3
|
%
|
|
50.1
|
%
|
|
11.5
|
%
|
|
|
14.9
|
%
|
|
4.3
|
%
|
|
23.2
|
%
|
|
51.4
|
%
|
|
13.2
|
%
|
Non-GAAP expense as a
percentage of revenue
|
|
15.0
|
%
|
|
3.6
|
%
|
|
20.1
|
%
|
|
45.1
|
%
|
|
9.4
|
%
|
|
|
14.1
|
%
|
|
4.0
|
%
|
|
18.7
|
%
|
|
46.0
|
%
|
|
10.0
|
%
|
Reconciliation of
non-GAAP subscription margin
(in thousands, except
percentages)
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2021
|
|
2020
|
|
|
GAAP subscription
margin
|
|
$
|
226,410
|
|
$
|
161,495
|
|
|
Stock -based
compensation
|
|
|
1,310
|
|
|
898
|
|
|
Amortization of
acquired intangible assets
|
|
|
239
|
|
|
880
|
|
|
Non-GAAP subscription
margin
|
|
$
|
227,959
|
|
$
|
163,273
|
|
|
|
|
|
|
|
|
|
|
|
GAAP subscription
margin percentage
|
|
|
83.8
|
%
|
|
84.5
|
%
|
|
Non-GAAP subscription
margin percentage
|
|
|
84.3
|
%
|
|
85.4
|
%
|
|
Reconciliation of
free cash flow
|
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2021
|
|
2020
|
|
|
GAAP net cash and
cash equivalents provided by operating activities
|
|
$
|
62,700
|
|
$
|
23,011
|
|
|
Purchases of property
and equipment
|
|
|
(3,967)
|
|
|
(11,098)
|
|
|
Capitalization of
software development costs
|
|
|
(7,341)
|
|
|
(4,769)
|
|
|
Repayment of 2022
Convertible Notes attributable to the debt discount
|
|
|
9,805
|
|
|
—
|
|
|
Free cash
flow
|
|
$
|
61,197
|
|
$
|
7,144
|
|
|
Reconciliation of
operating cash flow
|
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2021
|
|
2020
|
|
|
GAAP net cash and
cash equivalents provided by operating activities
|
|
$
|
62,700
|
|
$
|
23,011
|
|
|
Repayment of 2022
Convertible Notes attributable to the debt discount
|
|
|
9,805
|
|
|
—
|
|
|
Operating cash flow,
excluding repayment of convertible debt
|
|
$
|
72,505
|
|
$
|
23,011
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
forecasted non-GAAP operating income
(in thousands, except
percentages)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30, 2021
|
|
|
|
|
Year
Ended
December 31, 2021
|
|
GAAP operating income
range
|
($26,134)-($24,134)
|
|
|
|
|
($61,089)-($59,089)
|
|
Stock-based
compensation
|
|
44,470
|
|
|
|
|
|
161,800
|
|
Amortization of
acquired intangible assets
|
|
332
|
|
|
|
|
|
1,319
|
|
Acquisition related
expenses
|
|
332
|
|
|
|
|
|
1,970
|
|
Non-GAAP operating
income range
|
$19,000
-$21,000
|
|
|
|
|
$104,000-$106,000
|
|
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, 2021
|
|
|
Year
Ended
December 31,
2021
|
|
GAAP net loss
range
|
($33,453)-($32,203)
|
|
|
($91,899)-($89,399)
|
|
Stock-based
compensation
|
|
44,470
|
|
|
|
161,800
|
|
Amortization of
acquired intangible assets
|
|
332
|
|
|
|
1,319
|
|
Acquisition related
expenses
|
|
332
|
|
|
|
1,970
|
|
Non-cash interest
expense for amortization of debt discount and debt issuance
costs
|
|
6,100
|
|
|
|
25,125
|
|
Income tax effects of
non-GAAP items
|
(2,481)-(2,731)
|
|
|
(16,615)-(17,115)
|
|
Non-GAAP net income
range
|
$15,300-$16,300
|
|
|
$81,700-$83,700
|
|
|
|
|
|
|
|
|
|
GAAP net income per
basic and diluted share
|
($0.71)-($0.69)
|
|
|
(1.96)-($1.91)
|
|
Non-GAAP net
income per diluted share
|
$0.30-$0.32
|
|
|
$1.61-$1.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares used in computing GAAP basic and diluted net loss per
share:
|
|
46,793
|
|
|
|
46,879
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares used in computing non-GAAP diluted net loss per
share:
|
|
50,879
|
|
|
|
50,763
|
|
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, 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,
excluding backlog acquired intangible assets amortized as contra
revenue, 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 the first quarter of 2021, the Company settled $44.5 million of the principal balance of the
2022 Notes in cash. In connection with these settlements, the
Company recorded a $2.4M 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 $9.8 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 2021 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