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, 2023.
Financial Highlights:
Revenue
Fourth Quarter 2023:
Total revenue was $581.9 million, up 24% compared to Q4’22.
Subscription revenue was $570.2 million, up 24% compared to Q4’22.
Professional services and other revenue was $11.7 million, up 2% compared to Q4’22.
Full Year 2023:
Total revenue was $2.17 billion, up 25% compared to 2022.
Subscription revenue was $2.12 billion, up 26% compared to 2022.
Professional services and other revenue was $46.8 million, down 16% compared to 2022.
Operating Income (Loss)
Fourth Quarter 2023:
GAAP operating margin was (4.2%), compared to (2.9%) in Q4’22.
Non-GAAP operating margin was 16.9%, compared to 13.6% in Q4’22.
GAAP operating loss was ($24.3) million, compared to ($13.5) million in Q4’22.
Non-GAAP operating income was $98.1 million, compared to $64.0 million in Q4’22.
Full Year 2023:
GAAP operating margin was (9.6%), compared to (6.3%) in 2022.
Non-GAAP operating margin was 15.2%, compared to 9.8% in 2022.
GAAP operating loss was ($208.1) million, compared to ($109.1) million in 2022.
Non-GAAP operating income was $330.3 million, compared to $169.1 million in 2022.
Net Income (Loss)
Fourth Quarter 2023:
GAAP net loss was ($13.6) million, or ($0.27) per basic and diluted share, compared to ($15.6) million, or ($0.32) per basic and diluted share in Q4’22.
Non-GAAP net income was $92.4 million, or $1.83 per basic and $1.76 per diluted share, compared to $56.8 million, or $1.17 per basic and $1.11 per diluted share in Q4’22.
Weighted average basic and diluted shares outstanding for GAAP net loss per share was 50.3 million, compared to 48.8 million basic and diluted shares in Q4’22.
Weighted average basic and diluted shares outstanding for non-GAAP net income per share was 50.3 million and 52.6 million respectively, compared to 48.8 million and 51.1 million, respectively in Q4’22.
Full Year 2023:
GAAP net loss was ($176.3) million, or ($3.53) per basic and diluted share, compared to ($112.7) million, or ($2.35) per basic and diluted share in 2022.
Non-GAAP net income was $307.4 million, or $6.16 per basic and $5.89 per diluted share, compared to $141.8 million, or $2.95 per basic and $2.78 per diluted share in 2022.
Weighted average basic and diluted shares outstanding for GAAP net loss per share was 49.9 million, compared to 48.1 million basic and diluted shares in 2022.
Weighted average basic and diluted shares outstanding for non-GAAP net income per share was 49.9 million and 52.2 million respectively, compared to 48.1 million and 51.1 million, respectively in 2022.
Balance Sheet and Cash Flow
The company’s cash, cash equivalents, and short-term and long-term investments balance was $1.7 billion as of December 31, 2023.
During the fourth quarter, the company generated $104.3 million of cash from operating cash flow, compared to $90.0 million during Q4’22.
During the fourth quarter, the company generated $108.7 million of cash from non-GAAP operating cash flow and $83.0 million of non-GAAP free cash flow, compared to $90.0 million of cash from non-GAAP operating cash flow and $70.9 million of non-GAAP free cash flow during Q4’22.
During 2023, the company generated $351.0 million of cash from operating cash flow, compared to $273.2 million during 2022.
During 2023, the company generated $392.5 million of cash from non-GAAP operating cash flow and $292.5 million of non-GAAP free cash flow, compared to $273.2 million of cash from non-GAAP operating cash flow and $191.4 million of non-GAAP free cash flow during 2022.
Additional Recent Business Highlights
Grew Customers to 205,091 at December 31, 2023, up 23% from December 31, 2022.
Average Subscription Revenue Per Customer was $11,365 during the fourth quarter of 2023, up 1% compared to the fourth quarter of 2022.
“We saw a strong finish to a good year despite the challenging macro environment,” said Yamini Rangan, Chief Executive Officer at HubSpot. “Our customers have high confidence in our ability to help them grow in any environment and we are becoming the clear platform of choice for scaling companies. 2023 was a banner year for product innovation with over 800 enhancements across our platform. At the same time, we drove go-to-market execution across digital, sales, and partner channels while staying focused on our bi-modal strategy. As we look to 2024, we are doubling down on making HubSpot even easier to buy with a new seats-based pricing model. We have clear momentum in a large market, our pricing evolution will allow us to acquire and serve more customers, and the pace of product innovation will help us achieve our goal of becoming the #1 AI powered customer platform for scaling companies.”
Business Outlook
Based on information available as of February 14, 2024, HubSpot is issuing guidance for the first quarter of 2024 and full year 2024 as indicated below.
First Quarter 2024:
Total revenue is expected to be in the range of $596.0 million to $598.0 million.
Foreign exchange rates are expected to have a neutral impact on first quarter 2024 revenue growth(1).
Non-GAAP operating income is expected to be in the range of $83.0 million to $84.0 million.
Non-GAAP net income per common share is expected to be in the range of $1.48 to $1.50. This assumes approximately 53.1 million weighted average diluted shares outstanding.
Full Year 2024:
Total revenue is expected to be in the range of $2.55 billion to $2.56 billion.
Foreign exchange rates are expected to have a neutral impact on full year 2024 revenue growth(1).
Non-GAAP operating income is expected to be in the range of $408.0 million to $412.0 million.
Non-GAAP net income per common share is expected to be in the range of $6.86 to $6.94. This assumes approximately 53.6 million weighted average diluted shares outstanding.
(1) Foreign exchange rates impact on revenue is calculated by comparing current period rates with prior period average rates.
Use of Non-GAAP Financial Measures
In our earnings press releases, conference calls, slide presentations, and webcasts, we may use or discuss non-GAAP financial measures, as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the consolidated financial statements. Our earnings press releases containing such non-GAAP reconciliations can be found in the Investors section of our website ir.hubspot.com.
Conference Call Information
HubSpot will host a conference call on Thursday, February 14, 2024 at 4:30 p.m. Eastern Time (ET) to discuss the company’s fourth quarter and full year 2023 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 729837. An archived webcast of this conference call will also be available on HubSpot’s Investor Relations website at ir.hubspot.com.
The company has used, and intends to continue to use, the investor relations portion of its website as a means of disclosing material non-public information and for complying with disclosure obligations under Regulation FD.
About HubSpot
HubSpot is the customer platform that helps businesses connect and grow better. HubSpot delivers seamless connection for customer-facing teams with a unified platform that includes AI-powered engagement hubs, a Smart CRM, and a connected ecosystem with over 1,500 App Marketplace integrations, a community network, and educational content. Learn more at www.hubspot.com.
Cautionary Language Concerning Forward-Looking Statements
This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding management’s expectations of future financial and operational performance and operational expenditures, expected growth, foreign currency movement, and business outlook, including our financial guidance for the first fiscal quarter of and full year 2024 and our long-term financial framework; statements regarding our positioning for future growth and market leadership; statements regarding the economic environment; and statements regarding expected market trends, future priorities and related investments, and market opportunities. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, risks associated with our history of losses; our ability to retain existing customers and add new customers; the continued growth of the market for a customer platform; our ability to develop new products and technologies and differentiate our platform from competing products and technologies, including artificial intelligence and machine learning technologies; our ability to manage our growth effectively over the long-term to maintain our high level of service; our ability to maintain and expand relationships with our solutions partners; the price volatility of our common stock; the impact of geopolitical conflicts, inflation, foreign currency movement, and macroeconomic instability on our business, the broader economy, our workforce and operations, the markets in which we and our partners and customers operate, and our ability to forecast our future financial performance; regulatory and legislative developments on the use of artificial intelligence and machine learning; and other risks set forth under the caption “Risk Factors” in our SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
Consolidated Balance Sheets
(in thousands)
December 31,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
387,987
$
331,022
Short-term investments
1,000,245
1,081,662
Accounts receivable
295,303
226,849
Deferred commission expense
99,326
70,992
Prepaid expenses and other current assets
88,679
44,074
Total current assets
1,871,540
1,754,599
Long-term investments
325,703
112,791
Property and equipment, net
103,331
105,227
Capitalized software development costs, net
106,229
63,790
Right-of-use assets
251,071
319,304
Deferred commission expense, net of current portion
122,194
66,559
Other assets
75,247
58,795
Intangible assets, net
42,316
17,446
Goodwill
173,761
46,227
Total assets
$
3,071,392
$
2,544,738
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
9,106
$
20,883
Accrued compensation costs
53,462
10,224
Accrued commissions
78,169
52,622
Accrued expenses and other current liabilities
108,265
102,122
Operating lease liabilities
35,095
35,928
Deferred revenue
672,150
539,874
Total current liabilities
956,247
761,653
Operating lease liabilities, net of current portion
296,561
316,184
Deferred revenue, net of current portion
5,810
5,904
Other long-term liabilities
36,459
14,546
Convertible senior notes, net of current portion
456,206
454,227
Total liabilities
1,751,283
1,552,514
Stockholders’ equity:
Common stock
50
49
Additional paid-in capital
2,136,908
1,647,446
Accumulated other comprehensive income (loss)
1,827
(12,890
)
Accumulated deficit
(818,676
)
(642,381
)
Total stockholders’ equity
1,320,109
992,224
Total liabilities and stockholders’ equity
$
3,071,392
$
2,544,738
Consolidated Statements of Operations
(in thousands, except per share data)
For the Three Months Ended December 31,
For the Year Ended December 31,
2023
2022
2023
2022
Revenues:
Subscription
$
570,225
$
458,152
$
2,123,479
$
1,690,538
Professional services and other
11,689
11,506
46,751
40,431
Total revenue
581,914
469,658
2,170,230
1,730,969
Cost of revenues:
Subscription
74,858
66,051
290,802
257,513
Professional services and other
13,777
14,214
54,687
56,746
Total cost of revenues
88,635
80,265
345,489
314,259
Gross profit
493,279
389,393
1,824,741
1,416,710
Operating expenses:
Research and development
163,234
116,334
617,745
442,022
Sales and marketing
281,136
235,132
1,068,560
886,069
General and administrative
69,708
51,413
249,649
197,720
Restructuring
3,547
—
96,843
—
Total operating expenses
517,625
402,879
2,032,797
1,525,811
Loss from operations
(24,346
)
(13,486
)
(208,056
)
(109,101
)
Other expense:
Interest income
18,633
7,777
58,828
15,000
Interest expense
(984
)
(941
)
(3,801
)
(3,762
)
Other expense
(2,551
)
(6,244
)
(4,673
)
(6,829
)
Total other income
15,098
592
50,354
4,409
Loss before income tax expense
(9,248
)
(12,894
)
(157,702
)
(104,692
)
Income tax expense
(4,360
)
(2,744
)
(18,593
)
(8,057
)
Net loss
$
(13,608
)
$
(15,638
)
$
(176,295
)
$
(112,749
)
Net loss per share, basic and diluted
$
(0.27
)
$
(0.32
)
$
(3.53
)
$
(2.35
)
Weighted average common shares used in
computing basic and diluted net loss per share:
50,347
48,787
49,877
48,065
Consolidated Statements of Cash Flows
(in thousands)
For the Three Months Ended
December 31,
For the Year Ended
December 31,
2023
2022
2023
2022
Operating Activities:
Net loss
$
(13,608
)
$
(15,638
)
$
(176,295
)
$
(112,749
)
Adjustments to reconcile net loss to net cash and cash equivalents provided
by operating activities
Depreciation and amortization
19,165
15,525
72,673
58,150
Stock-based compensation
113,726
76,768
432,271
275,849
Restructuring charges
2,325
—
67,263
—
Gain on strategic investments
—
—
—
(4,201
)
Impairment of strategic investments
1,704
5,863
1,704
5,863
Provision for (benefit from) deferred income taxes
265
(1,533
)
5,208
(2,122
)
Amortization of debt discount and issuance costs
509
504
1,986
2,013
Accretion of bond discount
(12,694
)
(5,851
)
(42,907
)
(9,118
)
Unrealized currency translation
1,039
530
(341
)
1,010
Changes in assets and liabilities
Accounts receivable
(70,791
)
(53,850
)
(57,618
)
(73,985
)
Prepaid expenses and other assets
(11,025
)
2,878
(47,048
)
(5,987
)
Deferred commission expense
(26,843
)
(15,373
)
(81,178
)
(37,583
)
Right-of-use assets
5,929
9,909
29,173
29,531
Accounts payable
(8,866
)
7,617
(14,031
)
18,277
Accrued expenses and other liabilities
42,207
15,920
87,074
32,375
Operating lease liabilities
(7,956
)
(6,529
)
(36,889
)
(21,118
)
Deferred revenue
69,227
53,226
109,926
116,969
Net cash and cash equivalents provided by operating activities
104,313
89,966
350,971
273,174
Investing Activities:
Purchases of investments
(443,221
)
(248,951
)
(1,580,504
)
(1,507,870
)
Maturities of investments
347,750
167,200
1,502,534
1,184,506
Sale of investments
—
—
—
124,998
Purchases of property and equipment
(8,687
)
(6,042
)
(33,718
)
(37,426
)
Purchases of strategic investments
(3,138
)
(6,499
)
(12,388
)
(26,371
)
Purchases of intangible assets
(164
)
—
(164
)
(10,000
)
Acquisition of a business, net of cash acquired
(142,129
)
—
(142,129
)
—
Payments for equity method investments
225
(1,250
)
(2,025
)
(3,150
)
Capitalization of software development costs
(17,084
)
(12,995
)
(66,372
)
(44,345
)
Net cash and cash equivalents used in investing activities
(266,448
)
(108,537
)
(334,766
)
(319,658
)
Financing Activities:
Proceeds from settlement of Convertible Note Hedges related to the 2022
Convertible Notes
—
—
—
60,483
Payments for settlement of Warrants related to the 2022 Convertible Notes
—
(34
)
—
(34
)
Payment for settlement of 2022 Convertible Notes
—
—
—
(79,807
)
Repayment of 2025 Convertible Notes attributable to the principal
(13
)
—
(13
)
(1,619
)
Employee taxes paid related to the net share settlement of stock-based awards
(3,143
)
(1,572
)
(10,714
)
(11,526
)
Proceeds related to the issuance of common stock under stock plans
9,804
10,213
47,738
39,931
Net cash and cash equivalents provided by financing
activities
6,648
8,607
37,011
7,428
Effect of exchange rate changes on cash, cash equivalents and restricted cash
8,829
9,451
4,649
(6,811
)
Net (decrease) increase in cash, cash equivalents and restricted cash
(146,658
)
(513
)
57,865
(45,867
)
Cash, cash equivalents and restricted cash, beginning of period
538,698
334,688
334,175
380,042
Cash, cash equivalents and restricted cash, end of period
$
392,040
$
334,175
$
392,040
$
334,175
Reconciliation of non-GAAP operating income and operating margin
(in thousands, except percentages)
Three Months Ended December 31,
For the Year Ended December 31,
2023
2022
2023
2022
GAAP operating loss
$
(24,346
)
$
(13,486
)
$
(208,056
)
$
(109,101
)
Stock-based compensation
113,726
76,768
432,271
275,849
Amortization of acquired intangible assets
1,304
729
5,311
2,629
Acquisition/disposition related expense (income)
3,906
—
3,906
(305
)
Restructuring charges
3,547
—
96,843
—
Non-GAAP operating income
$
98,137
$
64,011
$
330,275
$
169,072
GAAP operating margin
(4.2
%)
(2.9
%)
(9.6
%)
(6.3
%)
Non-GAAP operating margin
16.9
%
13.6
%
15.2
%
9.8
%
Reconciliation of non-GAAP net income
(in thousands, except per share amounts)
Three Months Ended December 31,
For the Year Ended December 31,
2023
2022
2023
2022
GAAP net loss
$
(13,608
)
(15,638
)
$
(176,295
)
$
(112,749
)
Stock-based compensation
113,726
76,768
432,271
275,849
Amortization of acquired intangibles assets
1,304
729
5,311
2,629
Acquisition/disposition related expense (income)
3,906
—
3,906
(305
)
Restructuring charges
3,547
—
96,843
—
Non-cash interest expense for amortization of debt issuance costs
509
504
1,986
2,013
Impairment of strategic investments
1,704
5,863
1,704
1,662
Loss (gain) on equity method investment
19
87
(77
)
125
Income tax effects of non-GAAP items
(18,733
)
(11,467
)
(58,255
)
(27,399
)
Non-GAAP net income
$
92,374
56,846
$
307,394
$
141,825
Non-GAAP net income per share:
Basic
$
1.83
$
1.17
$
6.16
$
2.95
Diluted
$
1.76
$
1.11
$
5.89
$
2.78
Shares used in non-GAAP per share calculations
Basic
50,347
48,787
49,877
48,065
Diluted
52,621
51,094
52,188
51,099
Reconciliation of non-GAAP expense and expense as a percentage of revenue
(in thousands, except percentages)
Three Months Ended December 31,
2023
2022
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
$
74,858
$
13,777
$
163,234
$
281,136
$
69,708
$
66,051
$
14,214
$
116,334
$
235,132
$
51,413
Stock -based compensation
(3,542
)
(1,210
)
(37,129
)
(52,108
)
(19,737
)
(2,560
)
(1,113
)
(30,248
)
(30,557
)
(12,290
)
Amortization of acquired
intangible assets
(911
)
—
—
(358
)
(35
)
(283
)
—
—
(446
)
—
Acquisition/disposition related
expense
—
—
(255
)
—
(3,651
)
—
—
—
—
—
Non-GAAP expense
$
70,405
$
12,567
$
125,850
$
228,670
$
46,285
$
63,208
$
13,101
$
86,086
$
204,129
$
39,123
GAAP expense as a
percentage of revenue
12.9
%
2.4
%
28.1
%
48.3
%
12.0
%
14.1
%
3.0
%
24.8
%
50.1
%
10.9
%
Non-GAAP expense as a
percentage of revenue
12.1
%
2.2
%
21.6
%
39.3
%
8.0
%
13.5
%
2.8
%
18.3
%
43.5
%
8.3
%
For the Year Ended December 31,
2023
2022
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
$
290,802
$
54,687
$
617,745
$
1,068,560
$
249,649
$
257,513
$
56,746
$
442,022
$
886,069
$
197,720
Stock -based compensation
(12,652
)
(4,958
)
(198,953
)
(140,362
)
(75,346
)
(9,076
)
(4,393
)
(107,517
)
(107,640
)
(47,223
)
Amortization of acquired
intangible assets
(2,123
)
—
—
(3,153
)
(35
)
(1,203
)
—
—
(1,426
)
—
Acquisition/disposition related
expense
—
—
(255
)
—
(3,651
)
—
—
300
—
5
Non-GAAP expense
$
276,027
$
49,729
$
418,537
$
925,045
$
170,617
$
247,234
$
52,353
$
334,805
$
777,003
$
150,502
GAAP expense as a
percentage of revenue
13.4
%
2.5
%
28.5
%
49.2
%
11.5
%
14.9
%
3.3
%
25.5
%
51.2
%
11.4
%
Non-GAAP expense as a
percentage of revenue
12.7
%
2.3
%
19.3
%
42.6
%
7.9
%
14.3
%
3.0
%
19.3
%
44.9
%
8.7
%
Reconciliation of non-GAAP subscription margin
(in thousands, except percentages)
Three Months Ended December 31,
For the Year Ended December 31,
2023
2022
2023
2022
GAAP subscription margin
$
495,367
$
392,101
$
1,832,677
$
1,433,025
Stock-based compensation
3,542
2,560
12,652
9,076
Amortization of acquired intangible assets
911
283
2,123
1,203
Non-GAAP subscription margin
$
499,820
$
394,944
$
1,847,452
$
1,443,304
GAAP subscription margin percentage
86.9
%
85.6
%
86.3
%
84.8
%
Non-GAAP subscription margin percentage
87.7
%
86.2
%
87.0
%
85.4
%
Reconciliation of free cash flow
(in thousands)
Three Months Ended December 31,
For the Year Ended December 31,
2023
2022
2023
2022
GAAP net cash and cash equivalents provided by operating activities
$
104,313
$
89,966
$
350,971
$
273,174
Purchases of property and equipment
(8,687
)
(6,042
)
(33,718
)
(37,426
)
Capitalization of software development costs
(17,084
)
(12,995
)
(66,372
)
(44,345
)
Payment of restructuring charges
4,409
—
41,573
—
Non-GAAP free cash flow
$
82,951
$
70,929
$
292,454
$
191,403
Contacts
Investor Relations Contact:
Charles MacGlashing
investors@hubspot.com
Media Contact:
media@hubspot.com