HubSpot Reports Q4 and Full Year 2024 Results

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

HubSpot Reports Q4 and Full Year 2024 Results

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