HubSpot Reports Q2 2024 Results
HubSpot, Inc. (NYSE: HUBS), the customer platform for scaling companies, today announced financial results for the second quarter ended June 30, 2024. Financial Highlights: Revenue Total revenue was ...
CAMBRIDGE, Mass.: HubSpot, Inc. (NYSE: HUBS), the customer platform for scaling companies, today announced financial results for the second quarter ended June 30, 2024.
Financial Highlights:
Revenue
- Total revenue was $637.2 million, up 20% compared to Q2'23.
- Subscription revenue was $623.8 million, up 20% compared to Q2'23.
- Professional services and other revenue was $13.5 million, up 18% compared to Q2'23.
Operating Income (Loss)
- GAAP operating margin was (3.8%), compared to (22.0%) in Q2'23.
- Non-GAAP operating margin was 17.2%, compared to 14.5% in Q2'23.
- GAAP operating loss was ($23.9) million, compared to ($116.2) million in Q2'23.
- Non-GAAP operating income was $109.3 million, compared to $76.6 million in Q2'23.
Net Income (Loss)
- GAAP net loss was ($14.4) million, or ($0.28) per basic and diluted share, compared to net loss of ($111.8) million, or ($2.25) per basic and diluted share in Q2'23.
- Non-GAAP net income was $103.5 million, or $2.03 per basic and $1.94 per diluted share, compared to $71.8 million, or $1.45 per basic and $1.38 per diluted share in Q2'23.
- Weighted average basic and diluted shares outstanding for GAAP net loss per share was 51.0 million, compared to 49.7 million basic and diluted shares in Q2'23.
- Weighted average basic and diluted shares outstanding for non-GAAP net income per share was 51.0 million and 53.4 million, respectively, compared to 49.7 million and 52.1 million, respectively in Q2'23.
Balance Sheet and Cash Flow
- The company’s cash, cash equivalents, and short-term and long-term investments balance was $1.9 billion as of June 30, 2024.
- During the second quarter, the company generated $117.8 million of cash from operating cash flow, compared to $76.5 million during Q2'23.
- During the second quarter, the company generated $121.7 million of cash from non-GAAP operating cash flow and $92.1 million of non-GAAP free cash flow, compared to $87.0 million of cash from non-GAAP operating cash flow and $59.6 million of non-GAAP free cash flow during Q2'23.
Additional Recent Business Highlights
- Grew Customers to 228,054 at June 30, 2024, up 23% from June 30, 2023.
- Average Subscription Revenue Per Customer was $11,215 during the second quarter of 2024, down 2% compared to the second quarter of 2023.
“Q2 was another solid quarter of revenue growth and profitability driven by our rapid pace of innovation and consistent execution,” said Yamini Rangan, Chief Executive Officer at HubSpot. “I am thrilled to see customers consolidating on HubSpot and the momentum we have in becoming the customer platform of choice for scaling companies. We run our business for the long-term and are focused on solving for our customers, innovating our platform, and prioritizing strong execution. That has been and will continue to be our priority. And it will continue to set us apart to drive durable growth and create long term shareholder value.”
Business Outlook
Based on information available as of August 7, 2024, HubSpot is issuing guidance for the third quarter of 2024 and full year 2024 as indicated below.
Third Quarter 2024:
- Total revenue is expected to be in the range of $646.0 million to $647.0 million.
- Foreign exchange rates are expected to have a neutral impact to third quarter 2024 revenue growth(1).
- Non-GAAP operating income is expected to be in the range of $107.0 million to $108.0 million.
- Non-GAAP net income per common share is expected to be in the range of $1.89 to $1.91. This assumes approximately 53.5 million weighted average diluted shares outstanding.
Full Year 2024:
- Total revenue is expected to be in the range of $2.567 billion to $2.573 billion.
- Foreign exchange rates are expected to have a neutral impact to full year 2024 revenue growth(1).
- Non-GAAP operating income is expected to be in the range of $437.0 million to $441.0 million.
- Non-GAAP net income per common share is expected to be in the range of $7.64 to $7.70. This assumes approximately 53.4 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 Wednesday, August 7, 2024 at 4:30 p.m. Eastern Time (ET) to discuss the company’s second quarter 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.
Following the conference call, a replay will be available at (866) 813-9403 (domestic) or +44 204-525-0658 (international). The replay passcode is 614825. 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 third 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) | ||||||||
|
| June 30, |
|
| December 31, |
| ||
|
| 2024 |
|
| 2023(1) |
| ||
Assets |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 797,875 |
|
| $ | 387,987 |
|
Short-term investments |
|
| 937,830 |
|
|
| 1,000,245 |
|
Accounts receivable |
|
| 269,908 |
|
|
| 295,303 |
|
Deferred commission expense |
|
| 119,558 |
|
|
| 99,326 |
|
Prepaid expenses and other current assets |
|
| 111,033 |
|
|
| 88,679 |
|
Total current assets |
|
| 2,236,204 |
|
|
| 1,871,540 |
|
Long-term investments |
|
| 209,992 |
|
|
| 325,703 |
|
Property and equipment, net |
|
| 105,886 |
|
|
| 103,331 |
|
Capitalized software development costs, net |
|
| 132,026 |
|
|
| 106,229 |
|
Right-of-use assets |
|
| 228,406 |
|
|
| 251,071 |
|
Deferred commission expense, net of current portion |
|
| 138,636 |
|
|
| 122,194 |
|
Other assets |
|
| 93,866 |
|
|
| 75,247 |
|
Intangible assets, net |
|
| 37,421 |
|
|
| 42,316 |
|
Goodwill |
|
| 173,565 |
|
|
| 173,761 |
|
Total assets |
| $ | 3,356,002 |
|
| $ | 3,071,392 |
|
Liabilities and stockholders’ equity |
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
| ||
Accounts payable |
| $ | 4,115 |
|
| $ | 9,106 |
|
Accrued compensation costs |
|
| 61,206 |
|
|
| 53,462 |
|
Accrued commissions |
|
| 78,657 |
|
|
| 78,169 |
|
Accrued expenses and other current liabilities |
|
| 95,078 |
|
|
| 94,074 |
|
Operating lease liabilities |
|
| 32,886 |
|
|
| 35,047 |
|
Convertible senior notes |
|
| 457,196 |
|
| — |
| |
Deferred revenue |
|
| 708,113 |
|
|
| 672,150 |
|
Total current liabilities |
|
| 1,437,251 |
|
|
| 942,008 |
|
Operating lease liabilities, net of current portion |
|
| 273,137 |
|
|
| 296,561 |
|
Deferred revenue, net of current portion |
|
| 4,606 |
|
|
| 5,810 |
|
Other long-term liabilities |
|
| 40,109 |
|
|
| 36,459 |
|
Convertible senior notes, net of current portion |
| — |
|
|
| 456,206 |
| |
Total liabilities |
|
| 1,755,103 |
|
|
| 1,737,044 |
|
Stockholders’ equity: |
|
|
|
|
|
| ||
Common stock |
|
| 51 |
|
|
| 50 |
|
Additional paid-in capital |
|
| 2,418,608 |
|
|
| 2,136,908 |
|
Accumulated other comprehensive income (loss) |
|
| (4,822 | ) |
|
| 1,827 |
|
Accumulated deficit |
|
| (812,938 | ) |
|
| (804,437 | ) |
Total stockholders’ equity |
|
| 1,600,899 |
|
|
| 1,334,348 |
|
Total liabilities and stockholders’ equity |
| $ | 3,356,002 |
|
| $ | 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 $2.3 million for the three months ended June 30, 2023 and $4.0 million for the six months ended June 30, 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 and six months ended June 30, 2023 but note no net impact to cash flows provided by operating activities. Refer to our Form 10-Q for additional information. | ||||||||
Consolidated Statements of Operations (in thousands, except per share data) | |||||||||||||||
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
| ||||||||||
| 2024 |
|
| 2023(1) |
|
| 2024 |
|
| 2023(1) |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
| ||||
Subscription | $ | 623,763 |
|
| $ | 517,678 |
|
| $ | 1,227,559 |
|
| $ | 1,007,421 |
|
Professional services and other |
| 13,467 |
|
|
| 11,460 |
|
|
| 27,085 |
|
|
| 23,337 |
|
Total revenue |
| 637,230 |
|
|
| 529,138 |
|
|
| 1,254,644 |
|
|
| 1,030,758 |
|
Cost of revenues: |
|
|
|
|
|
|
|
|
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