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,
2022.
Financial Highlights:
Revenue Fourth Quarter 2022:
- Total revenue was $469.7 million, up 27% compared to Q4'21.
- Subscription revenue was $458.2 million, up 28% compared to
Q4'21.
- Professional services and other revenue was $11.5 million, up
8% compared to Q4'21.
Full Year 2022:
- Total revenue was $1.731 billion, up 33% compared to 2021.
- Subscription revenue was $1.691 billion, up 34% compared to
2021.
- Professional services and other revenue was $40.4 million, down
5% compared to 2021.
Operating Income (Loss) Fourth Quarter 2022:
- GAAP operating margin was (2.9%), compared to (2.2%) in
Q4'21.
- Non-GAAP operating margin was 13.6%, compared to 10.3% in
Q4'21.
- GAAP operating loss was ($13.5) million, compared to ($8.2)
million in Q4'21.
- Non-GAAP operating income was $64.0 million, compared to $38.2
million in Q4'21.
Full Year 2022:
- GAAP operating margin was (6.3%), compared to (4.2%) in
2021.
- Non-GAAP operating margin was 9.8%, compared to 9.0% in
2021.
- GAAP operating loss was ($109.1) million, compared to ($54.8)
million in 2021.
- Non-GAAP operating income was $169.1 million, compared to
$117.6 million in 2021.
Net Income (Loss) Fourth Quarter 2022:
- GAAP net loss was ($15.6) million, or ($0.32) per basic and
diluted share, compared to ($16.4) million, or ($0.35) per basic
and diluted share in Q4'21.
- Non-GAAP net income was $56.8 million, or $1.17 per basic and
$1.11 per diluted share, compared to $29.6 million, or $0.63 per
basic and $0.58 per diluted share in Q4'21.
- Weighted average basic and diluted shares outstanding for GAAP
net loss per share was 48.8 million, compared to 47.3 million basic
and diluted shares in Q4'21.
- Weighted average basic and diluted shares outstanding for
non-GAAP net income per share was 48.8 million and 51.1 million
respectively, compared to 47.3 million and 50.9 million,
respectively in Q4'21.
Full Year 2022:
- GAAP net loss was ($112.7) million, or ($2.35) per basic and
diluted share, compared to ($77.8) million, or ($1.66) per basic
and diluted share in 2021.
- Non-GAAP net income was $141.8 million, or $2.95 per basic and
$2.78 per diluted share, compared to $92.5 million, or $1.97 per
basic and $1.82 per diluted share in 2021.
- Weighted average basic and diluted shares outstanding for GAAP
net loss per share was 48.1 million, compared to 46.9 million basic
and diluted shares in 2021.
- Weighted average basic and diluted shares outstanding for
non-GAAP net income per share was 48.1 million and 51.1 million
respectively, compared to 46.9 million and 50.7 million,
respectively in 2021.
Balance Sheet and Cash Flow
- The company’s cash, cash equivalents, and short-term and
long-term investments balance was $1.5 billion as of December 31,
2022.
- During the fourth quarter, the company generated $90.0 million
of cash from operating activities and operating cash flow, compared
to $95.2 million of cash from operating activities and $97.2
million of operating cash flow, which excluded the $2.0 million
used for the repayment of its convertible notes, during Q4'21.
- During the fourth quarter, the company generated $70.9 million
of free cash flow, compared to $78.3 million during Q4'21.
- During 2022, the company generated $273.2 million of cash from
operating activities and operating cash flow, compared to $238.7
million of cash from operating activities and $265.2 million of
operating cash flow, which excluded the $26.4 million used for the
repayment of its convertible notes, during 2021.
- The company generated $191.4 million of free cash flow during
2022, compared to $203.3 million during 2021.
Additional Recent Business Highlights
- Grew Customers to 167,386 at December 31, 2022, up 24% from
December 31, 2021.
- Average Subscription Revenue Per Customer was $11,231 during
the fourth quarter of 2022, up 3% compared to the fourth quarter of
2021.
“I’m proud of the way our team stepped up to the challenging
macroeconomic conditions that emerged in 2022. We executed well and
helped our customers navigate choppy waters,” said Yamini Rangan,
Chief Executive Officer at HubSpot. “We focused on product
innovation and showing the value HubSpot can deliver. As a result,
we increasingly see HubSpot becoming the platform of choice for
SMBs. Looking ahead, we have a tremendous opportunity in 2023 to
help our customers grow and make progress on our vision of becoming
the #1 CRM platform for scaling companies. We’ve taken the hard but
necessary steps to restructure our business so we’re better
positioned to navigate the current environment and emerge stronger
long-term. Our mission of helping millions of organizations grow
better is as exciting as ever.”
Business Outlook
Based on information available as of February 16, 2023, HubSpot
is issuing guidance for the first quarter of 2023 and full year
2023 as indicated below.
First Quarter 2023:
- Total revenue is expected to be in the range of $473.0 million
to $475.0 million.
- Unfavorable foreign exchange rates are expected to be a 4 point
headwind to first quarter 2023 revenue growth(1).
- Non-GAAP operating income is expected to be in the range of
$45.0 million to $47.0 million(2).
- Non-GAAP net income per common share is expected to be in the
range of $0.82 to $0.84(2). This assumes approximately 51.5 million
weighted average diluted shares outstanding.
Full Year 2023:
- Total revenue is expected to be in the range of $2.050 billion
to $2.060 billion.
- Unfavorable foreign exchange rates are expected to be a one
point headwind to full year 2023 revenue growth(1).
- Non-GAAP operating income is expected to be in the range of
$248.0 million to $252.0 million(2).
- Non-GAAP net income per common share is expected to be in the
range of $4.24 to $4.32(2). This assumes approximately 52.2 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.
(2)The impact of restructuring charges, which include employee
severance and lease consolidation costs, are excluded from our
non-GAAP operating income and non-GAAP net income per common share
business outlook.
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 16,
2023 at 4:30 p.m. Eastern Time (ET) to discuss the company’s fourth
quarter and full year 2022 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 434716. 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, over 167,000 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, foreign currency movement, and
business outlook, including our financial guidance for the first
fiscal quarter of and full year 2023; 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 recent
reduction in force, including risks that the related costs and
charges may be greater than anticipated and that the restructuring
efforts may not generate their intended benefits, may adversely
affect the Company’s internal programs and the Company’s ability to
recruit and retain skilled and motivated personnel, and may be
distracting to employees and management; 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 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, macroeconomic instability, and the
COVID-19 pandemic 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; 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,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
331,022
$
377,013
Short-term investments
1,081,662
820,962
Accounts receivable
226,849
157,362
Deferred commission expense
70,992
59,849
Prepaid expenses and other current
assets
44,074
38,388
Total current assets
1,754,599
1,453,574
Long-term investments
112,791
174,895
Property and equipment, net
105,227
96,134
Capitalized software development costs,
net
63,790
39,858
Right-of-use assets
319,304
280,828
Deferred commission expense, net of
current portion
66,559
42,681
Other assets
58,795
29,244
Intangible assets, net
17,446
10,565
Goodwill
46,227
47,075
Total assets
$
2,544,738
$
2,174,854
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
20,883
$
2,773
Accrued compensation costs
62,846
63,836
Accrued expenses and other current
liabilities
102,122
74,457
Convertible senior notes
—
19,630
Operating lease liabilities
35,928
26,364
Deferred revenue
539,874
430,414
Total current liabilities
761,653
617,474
Operating lease liabilities, net of
current portion
316,184
283,873
Deferred revenue, net of current
portion
5,904
4,473
Other long-term liabilities
14,546
12,134
Convertible senior notes, net of current
portion
454,227
383,101
Total liabilities
1,552,514
1,301,055
Stockholders’ equity:
Common stock
49
47
Additional paid-in capital
1,647,446
1,436,089
Accumulated other comprehensive loss
(12,890
)
(1,339
)
Accumulated deficit
(642,381
)
(560,998
)
Total stockholders’ equity
992,224
873,799
Total liabilities and stockholders’
equity
$
2,544,738
$
2,174,854
Consolidated Statements of
Operations
(in thousands, except per share data)
For the Three Months Ended
December 31,
For the Year Ended December
31,
2022
2021
2022
2021
Revenues:
Subscription
$
458,152
$
358,657
$
1,690,538
$
1,258,319
Professional services and other
11,506
10,652
40,431
42,339
Total revenue
469,658
369,309
1,730,969
1,300,658
Cost of revenues:
Subscription
66,051
58,599
257,513
211,132
Professional services and other
14,214
13,040
56,746
47,725
Total cost of revenues
80,265
71,639
314,259
258,857
Gross profit
389,393
297,670
1,416,710
1,041,801
Operating expenses:
Research and development
116,334
82,997
442,022
301,970
Sales and marketing
235,132
180,845
886,069
649,681
General and administrative
51,413
42,065
197,720
144,949
Total operating expenses
402,879
305,907
1,525,811
1,096,600
Loss from operations
(13,486
)
(8,237
)
(109,101
)
(54,799
)
Other expense:
Interest income
7,777
126
15,000
1,173
Interest expense
(941
)
(5,905
)
(3,762
)
(30,282
)
Other (expense) income
(6,244
)
(974
)
(6,829
)
10,090
Total other income (expense)
592
(6,753
)
4,409
(19,019
)
Loss before income tax expense
(12,894
)
(14,990
)
(104,692
)
(73,818
)
Income tax expense
(2,744
)
(1,380
)
(8,057
)
(4,019
)
Net loss
$
(15,638
)
$
(16,370
)
$
(112,749
)
$
(77,837
)
Net loss per share, basic and diluted
$
(0.32
)
$
(0.35
)
$
(2.35
)
$
(1.66
)
Weighted average common shares used in
computing basic and diluted net loss per share:
48,787
47,304
48,065
46,891
Consolidated Statements of Cash
Flows
(in thousands)
For the Three Months Ended
December 31,
For the Year Ended December
31,
2022
2021
2022
2021
Operating Activities:
Net loss
$
(15,638
)
$
(16,370
)
$
(112,749
)
$
(77,837
)
Adjustments to reconcile net loss to net
cash and cash equivalents provided by operating activities
Depreciation and amortization
15,525
11,970
58,150
45,159
Stock-based compensation
76,768
45,914
275,849
166,761
Loss on early extinguishment of 2022
Convertible Notes
—
68
—
4,892
Repayment of 2022 Convertible Notes
attributable to the debt discount
—
(1,971
)
—
(26,428
)
Gain on strategic investments
—
(2
)
(4,201
)
(11,741
)
Impairment of strategic investments
5,863
—
5,863
—
Gain on termination of operating
leases
—
—
—
(4,276
)
Loss on disposal of fixed assets
—
—
—
6,468
Benefit from deferred income taxes
(1,533
)
(1,548
)
(2,122
)
(2,869
)
Amortization of debt discount and issuance
costs
504
5,393
2,013
23,507
(Accretion) amortization of bond
discount
(5,851
)
1,332
(9,118
)
4,275
Unrealized currency translation
530
701
1,010
1,304
Changes in assets and liabilities
Accounts receivable
(53,850
)
(31,859
)
(73,985
)
(34,107
)
Prepaid expenses and other assets
2,878
6,072
(5,987
)
(1,077
)
Deferred commission expense
(15,373
)
(8,189
)
(37,583
)
(32,560
)
Right-of-use assets
9,909
4,470
29,531
31,418
Accounts payable
7,617
1,343
18,277
(10,608
)
Accrued expenses and other liabilities
15,920
20,025
32,375
58,209
Operating lease liabilities
(6,529
)
(3,056
)
(21,118
)
(29,478
)
Deferred revenue
53,226
60,891
116,969
127,716
Net cash and cash equivalents provided by
operating activities
89,966
95,184
273,174
238,728
Investing Activities:
Purchases of investments
(248,951
)
(447,431
)
(1,507,870
)
(1,484,762
)
Maturities of investments
167,200
446,722
1,184,506
1,387,498
Sale of investments
—
—
124,998
—
Purchases of property and equipment
(6,042
)
(11,327
)
(37,426
)
(28,726
)
Purchases of intangible assets
—
—
(10,000
)
—
Acquisition of a business, net of cash
acquired
—
—
—
(16,810
)
Purchases of strategic investments
(6,499
)
(2,887
)
(26,371
)
(13,089
)
Proceeds from sale of strategic
investments
—
12,620
—
12,620
Payments for equity method investments
(1,250
)
—
(3,150
)
(3,100
)
Capitalization of software development
costs
(12,995
)
(7,501
)
(44,345
)
(33,139
)
Net cash and cash equivalents used in
investing activities
(108,537
)
(9,804
)
(319,658
)
(179,508
)
Financing Activities:
Proceeds from settlement of Convertible
Note Hedges related to the 2022 Convertible Notes
—
8,256
60,483
8,985
Payments for settlement of Warrants
related to the 2022 Convertible Notes
(34
)
—
(34
)
—
Payment for settlement of 2022 Convertible
Notes
—
(9,097
)
(79,807
)
(89,525
)
Repayment of 2025 Convertible Notes
attributable to the principal
—
—
(1,619
)
—
Employee taxes paid related to the net
share settlement of stock-based awards
(1,572
)
(5,711
)
(11,526
)
(17,439
)
Proceeds related to the issuance of common
stock under stock plans
10,213
12,386
39,931
46,510
Net cash and cash equivalents provided by
(used in) financing activities
8,607
5,834
7,428
(51,469
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
9,451
(2,535
)
(6,811
)
(8,861
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(513
)
88,679
(45,867
)
(1,110
)
Cash, cash equivalents and restricted
cash, beginning of period
334,688
291,363
380,042
381,152
Cash, cash equivalents and restricted
cash, end of period
$
334,175
$
380,042
$
334,175
$
380,042
Reconciliation of non-GAAP operating
income and operating margin
(in thousands, except percentages)
Three Months Ended December
31,
For the Year Ended December
31,
2022
2021
2022
2021
GAAP operating loss
$
(13,486
)
$
(8,237
)
$
(109,101
)
$
(54,799
)
Stock-based compensation
76,768
45,914
275,849
166,761
Amortization of acquired intangible
assets
729
318
2,629
1,326
Acquisition/disposition related expenses
(income)
—
170
(305
)
2,087
Gain on termination of operating
leases
—
—
—
(4,276
)
Loss on disposal of fixed assets
—
—
—
6,468
Non-GAAP operating income
$
64,011
$
38,165
$
169,072
$
117,567
GAAP operating margin
(2.9
%)
(2.2
%)
(6.3
%)
(4.2
%)
Non-GAAP operating margin
13.6
%
10.3
%
9.8
%
9.0
%
Reconciliation of non-GAAP net
income
(in thousands, except per share
amounts)
Three Months Ended December
31,
For the Year Ended December
31,
2022
2021
2022
2021
GAAP net loss
$
(15,638
)
(16,370
)
$
(112,749
)
$
(77,837
)
Stock-based compensation
76,768
45,914
275,849
166,761
Amortization of acquired intangibles
assets
729
318
2,629
1,326
Acquisition/disposition related expenses
(income)
—
170
(305
)
2,087
Gain on termination of operating
leases
—
—
—
(4,276
)
Loss on disposal of fixed assets
—
—
—
6,468
Non-cash interest expense for amortization
of debt discount and debt issuance costs
504
5,393
2,013
23,507
Impairment of (gain on) strategic
investments
5,863
(2
)
1,662
(11,741
)
Loss on early extinguishment of 2022
Convertible Notes
—
68
—
4,892
Loss on equity method investment
87
150
125
371
Income tax effects of non-GAAP items
(11,467
)
(6,024
)
(27,399
)
(19,096
)
Non-GAAP net income
$
56,846
29,617
$
141,825
$
92,462
Non-GAAP net income per share:
Basic
$
1.17
$
0.63
$
2.95
$
1.97
Diluted
$
1.11
$
0.58
$
2.78
$
1.82
Shares used in non-GAAP per share
calculations
Basic
48,787
47,304
48,065
46,891
Diluted
51,094
50,888
51,099
50,694
Reconciliation of non-GAAP expense and
expense as a percentage of revenue
(in thousands, except percentages)
Three Months Ended December
31,
2022
2021
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
$
66,051
$
14,214
$
116,334
$
235,132
$
51,413
$
58,599
$
13,040
$
82,997
$
180,845
$
42,065
Stock -based compensation
(2,560
)
(1,113
)
(30,248
)
(30,557
)
(12,290
)
(1,742
)
(821
)
(16,600
)
(17,511
)
(9,240
)
Amortization of acquired intangible
assets
(283
)
—
—
(446
)
—
(228
)
—
—
(90
)
—
Acquisition/disposition related
expense
—
—
—
—
—
—
—
(131
)
—
(39
)
Non-GAAP expense
$
63,208
$
13,101
$
86,086
$
204,129
$
39,123
$
56,629
$
12,219
$
66,266
$
163,244
$
32,786
GAAP expense as a percentage of
revenue
14.1
%
3.0
%
24.8
%
50.1
%
10.9
%
15.9
%
3.5
%
22.5
%
49.0
%
11.4
%
Non-GAAP expense as a percentage of
revenue
13.5
%
2.8
%
18.3
%
43.5
%
8.3
%
15.3
%
3.3
%
17.9
%
44.2
%
8.9
%
For the Year Ended December
31,
2022
2021
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
$
257,513
$
56,746
$
442,022
$
886,069
$
197,720
$
211,132
$
47,725
$
301,970
$
649,681
$
144,949
Stock -based compensation
(9,076
)
(4,393
)
(107,517
)
(107,640
)
(47,223
)
(6,297
)
(3,092
)
(61,614
)
(67,413
)
(28,345
)
Amortization of acquired intangible
assets
(1,203
)
—
—
(1,426
)
—
(937
)
—
—
(389
)
—
Acquisition/disposition related income
(expenses)
—
—
300
—
5
—
—
(1,152
)
(367
)
(568
)
Gain on termination of operating
leases
—
—
—
—
—
395
275
1,346
1,839
421
Loss on disposal of fixed assets
—
—
—
—
—
(600
)
(415
)
(2,036
)
(2,781
)
(636
)
Non-GAAP expense
$
247,234
$
52,353
$
334,805
$
777,003
$
150,502
$
203,693
$
44,493
$
238,514
$
580,570
$
115,821
GAAP expense as a percentage of
revenue
14.9
%
3.3
%
25.5
%
51.2
%
11.4
%
16.2
%
3.7
%
23.2
%
50.0
%
11.1
%
Non-GAAP expense as a percentage of
revenue
14.3
%
3.0
%
19.3
%
44.9
%
8.7
%
15.7
%
3.4
%
18.3
%
44.6
%
8.9
%
Reconciliation of non-GAAP subscription
margin
(in thousands, except percentages)
Three Months Ended December
31,
For the Year Ended December
31,
2022
2021
2022
2021
GAAP subscription margin
$
392,101
$
300,058
$
1,433,025
$
1,047,187
Stock -based compensation
2,560
1,742
9,076
6,297
Amortization of acquired intangible
assets
283
228
1,203
937
Gain on termination of operating
leases
—
—
—
(395
)
Loss on disposal of fixed assets
—
—
—
600
Non-GAAP subscription margin
$
394,944
$
302,028
$
1,443,304
$
1,054,626
GAAP subscription margin percentage
85.6
%
83.7
%
84.8
%
83.2
%
Non-GAAP subscription margin
percentage
86.2
%
84.2
%
85.4
%
83.8
%
Reconciliation of free cash
flow
(in thousands)
Three Months Ended December
31,
For the Year Ended December
31,
2022
2021
2022
2021
GAAP net cash and cash equivalents
provided by operating activities
$
89,966
$
95,184
$
273,174
$
238,728
Purchases of property and equipment
(6,042
)
(11,327
)
(37,426
)
(28,726
)
Capitalization of software development
costs
(12,995
)
(7,501
)
(44,345
)
(33,139
)
Repayment of 2022 Convertible Notes
attributable to the debt discount
—
1,971
—
26,428
Free cash flow
$
70,929
$
78,327
$
191,403
$
203,291
Reconciliation of operating cash
flow
(in thousands)
Three Months Ended December
31,
For the Year Ended December
31,
2022
2021
2022
2021
GAAP net cash and cash equivalents
provided by operating activities
$
89,966
$
95,184
$
273,174
$
238,728
Repayment of 2022 Convertible Notes
attributable to the debt discount
—
1,971
—
26,428
Operating cash flow, excluding repayment
of convertible debt
$
89,966
$
97,155
$
273,174
$
265,156
Reconciliation of forecasted non-GAAP
operating income
(in thousands, except percentages)
Three Months Ended March 31,
2023
Year Ended December 31,
2023
GAAP operating income range
($64,045)-($110,045)
($287,972)-($316,972)
Stock-based compensation
84,199
460,589
Amortization of acquired intangible
assets
846
3,383
Restructuring charges
24,000-72,000
72,000-105,000
Non-GAAP operating income range
$45,000-$47,000
$248,000-$252,000
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,
2023
Year Ended December 31,
2023
GAAP net loss range
($61,846)-($108,596)
($275,688)-($303,688)
Stock-based compensation
84,199
460,589
Amortization of acquired intangible
assets
846
3,383
Restructuring charges
24,000-72,000
72,000-105,000
Non-cash interest expense for amortization
of debt issuance costs
484
1,985
Income tax effects of non-GAAP items
(5,383)-(5,633)
(40,869)-(41,869)
Non-GAAP net income range
$42,300-$43,300
$221,400-$225,400
GAAP net income per basic and diluted
share
($1.25)-($2.20)
($5.68)-($6.29)
Non-GAAP net income per diluted share
$0.82-$0.84
$4.24-$4.32
Weighted average common shares used in
computing GAAP basic and diluted net loss per share:
49,403
50,000
Weighted average common shares used in
computing non-GAAP diluted net loss per share:
51,507
52,199
HubSpot’s estimates of stock-based compensation, amortization of
acquired intangible assets, restructuring charges, non-cash
interest expense for amortization of debt issuance costs, 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. 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 from operating cash flow 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, disposition related income, non-cash interest expense for
the amortization of debt issuance costs, gain on termination of
operating leases, loss on disposal of fixed assets, loss on early
extinguishment of 2022 Convertible Notes, gain or impairment losses
on strategic investments, gain or loss on equity method 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, 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.
- In June 2020, the Company issued $460 million of convertible
notes due in 2025 with a coupon interest rate of 0.375%. In August
2020, the FASB published ASU 2020-06, which was adopted on January
1, 2022. ASU 2020-06 simplifies the accounting for convertible debt
and other equity-linked instruments and eliminates requirements to
separately account for liability and equity components of such
convertible debt instruments. Consequently, our convertible notes
are accounted for as a single liability and the discount created by
the recognition of a component of the convertible debt in equity is
eliminated. 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. Prior to January 1, 2022, the difference between
the fair value and carrying value of debt conversion settlements
was recorded as a loss on early extinguishment of debt within
interest expense. Upon the adoption of ASU 2020-06, no loss is
recognized.
- 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.
- 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.
- Gain on termination of operating leases results from early
lease terminations and related improvement reimbursements from
landlords being recorded as income. Loss on fixed assets result
from the disposal of property and equipment associated with early
lease terminations. As we generally fulfill our obligations for the
full lease term and use these assets for their full useful lives,
we believe these activities are not considered reflective of our
recurring core business operating results. As such, we believe the
exclusion of these transactions 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230216005523/en/
Investor Relations Contact: Charles MacGlashing
investors@hubspot.com
Media Contact: media@hubspot.com
HubSpot (NYSE:HUBS)
Historical Stock Chart
Von Apr 2023 bis Mai 2023
HubSpot (NYSE:HUBS)
Historical Stock Chart
Von Mai 2022 bis Mai 2023
