HubSpot(HUBS) - 2025 Q2 - Quarterly Results

HubSpot Reports Q2 2025 Results HubSpot released its Q2 2025 financial results, detailing performance, outlook, and non-GAAP reconciliations Introduction HubSpot, Inc. announced its financial results for the second quarter ended June 30, 2025, highlighting key financial and operational achievements - HubSpot, Inc. (NYSE: HUBS) announced financial results for Q2 2025, ended June 30, 2025[2] Q2 2025 Financial and Business Highlights This section details HubSpot's strong Q2 2025 financial performance, including revenue growth, improved profitability, robust cash flow, customer expansion, and strategic AI initiatives Key Financial Performance Indicators HubSpot reported strong revenue growth in Q2 2025, with total revenue up 19% year-over-year. GAAP operating margin improved, while non-GAAP operating income and net income saw significant increases Q2 2025 Key Financial Performance (YoY Growth) | Metric | Q2 2025 Value | Q2 2024 Value | YoY Change (as-reported) | | :-------------------------------- | :---------------- | :---------------- | :----------------------- | | Total Revenue | $760.9 million | $637.23 million | +19% (+18% CC) | | Subscription Revenue | $744.5 million | $623.763 million | +19% | | Professional Services Revenue | $16.3 million | $13.467 million | +21% | | GAAP Operating Margin | (3.2%) | (3.8%) | +0.6 ppts | | Non-GAAP Operating Margin | 17.0% | 17.2% | -0.2 ppts | | GAAP Operating Loss | ($24.6) million | ($23.9) million | -3% (larger loss) | | Non-GAAP Operating Income | $129.1 million | $109.3 million | +18% | | GAAP Net Loss | ($3.3) million | ($14.4) million | +77% (smaller loss) | | Non-GAAP Net Income | $117.3 million | $103.5 million | +13% | | GAAP Net Loss Per Share (Basic & Diluted) | ($0.06) | ($0.28) | +79% (smaller loss) | | Non-GAAP Net Income Per Share (Basic) | $2.23 | $2.03 | +10% | | Non-GAAP Net Income Per Share (Diluted) | $2.19 | $1.94 | +13% | Balance Sheet and Cash Flow Highlights The company maintained a strong cash position and significantly increased cash flow from operations in Q2 2025, while also repurchasing common stock Q2 2025 Balance Sheet & Cash Flow Metrics | Metric | Q2 2025 Value | Q2 2024 Value | YoY Change | | :-------------------------------- | :---------------- | :---------------- | :--------- | | Cash, Cash Equivalents, & Investments | $1.9 billion | N/A | N/A | | Cash from Operating Activities | $164.4 million | $117.8 million | +39.6% | | Non-GAAP Operating Cash Flow | $167.7 million | $121.7 million | +37.8% | | Non-GAAP Free Cash Flow | $116.2 million | $92.1 million | +26.2% | | Stock Repurchases (Q2) | $125.0 million | N/A | N/A | | Remaining Stock Repurchase Authorization | $375.0 million | N/A | N/A | Operational Metrics HubSpot continued to expand its customer base, growing customers by 18% year-over-year, and saw a notable increase in calculated billings Q2 2025 Operational Metrics | Metric | Q2 2025 Value | Q2 2024 Value | YoY Change | | :-------------------------------- | :---------------- | :---------------- | :--------- | | Total Customers (as of June 30, 2025) | 267,982 | N/A | +18% | | Average Subscription Revenue Per Customer (Q2) | $11,310 | N/A | +1% | | Calculated Billings (Q2) | $814.3 million | N/A | +26% (+20% CC) | CEO Commentary and Strategic Vision CEO Yamini Rangan highlighted Q2 as a solid quarter for revenue growth and customer expansion, emphasizing HubSpot's strategy to be the leading AI-first customer platform and its rapid innovation in AI features like Customer Agent and Prospecting Agent - CEO Yamini Rangan stated Q2 was a "solid quarter of continued revenue growth and customer expansion"[7] - HubSpot's strategy is to be the "leading AI-first customer platform for scaling companies"[7] - Customer Agent and Prospecting Agent are delivering results, and embedded AI features are helping go-to-market teams work smarter and faster[7] Business Outlook and Guidance This section provides HubSpot's financial guidance for the third quarter and full year 2025, including projected revenue, operating income, and earnings per share Third Quarter 2025 Guidance For Q3 2025, HubSpot projects total revenue between $785.0 million and $787.0 million, with non-GAAP operating income of $156.0 million to $157.0 million, and non-GAAP net income per share of $2.56 to $2.58 Q3 2025 Financial Guidance | Metric | Guidance Range | YoY Growth (as-reported) | | :-------------------------------- | :--------------------- | :----------------------- | | Total Revenue | $785.0M - $787.0M | +17% (+16% CC) | | Non-GAAP Operating Income | $156.0M - $157.0M | N/A | | Non-GAAP Operating Profit Margin | 20% | N/A | | Non-GAAP Net Income Per Common Share | $2.56 - $2.58 | N/A | | Weighted Average Diluted Shares Outstanding | ~53.0 million | N/A | Full Year 2025 Guidance HubSpot forecasts full-year 2025 total revenue to be between $3.080 billion and $3.088 billion, with non-GAAP operating income ranging from $568.0 million to $572.0 million, and non-GAAP net income per share of $9.47 to $9.53 Full Year 2025 Financial Guidance | Metric | Guidance Range | YoY Growth (as-reported) | | :-------------------------------- | :--------------------- | :----------------------- | | Total Revenue | $3.080B - $3.088B | +17% (+17% CC) | | Non-GAAP Operating Income | $568.0M - $572.0M | N/A | | Non-GAAP Operating Profit Margin | 18% | N/A | | Non-GAAP Net Income Per Common Share | $9.47 - $9.53 | N/A | | Weighted Average Diluted Shares Outstanding | ~53.4 million | N/A | Conference Call Information HubSpot hosted a conference call on August 6, 2025, to discuss Q2 2025 results and business outlook, with registration and webcast details provided for investors - HubSpot hosted a conference call on August 6, 2025, at 4:30 p.m. ET to discuss Q2 2025 financial results and business outlook[10] - An archived webcast of the conference call is available on HubSpot's Investor Relations website[11] About HubSpot HubSpot is a customer platform for scaling companies, offering AI-powered engagement hubs, a Smart CRM, and an ecosystem of over 1,700 App Marketplace integrations, a community network, and educational content - HubSpot is the customer platform that helps businesses connect and grow better[12] - The platform 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[13] Cautionary Statements This section outlines important cautionary statements regarding forward-looking information and potential risk factors that could materially affect actual financial and operational results Forward-Looking Statements and Risk Factors This section outlines forward-looking statements regarding future financial and operational performance, growth, and market trends, cautioning that actual results may differ materially due to various risks including history of losses, customer retention, market growth, product development, macroeconomic instability, and regulatory developments in AI - The press release includes "forward-looking statements" regarding management's expectations of future financial and operational performance, growth, and business outlook[14] - Actual results may differ materially due to risks such as history of losses, ability to retain existing and add new customers, market growth, ability to develop new products and technologies (including AI/ML), macroeconomic instability, and regulatory and legislative developments on the use of artificial intelligence and machine learning[14] - The company assumes no obligation to update any forward-looking statements contained in this document[14] Consolidated Financial Statements This section provides HubSpot's consolidated financial statements, including balance sheets, statements of operations, and cash flows for the reported periods Consolidated Balance Sheets As of June 30, 2025, HubSpot reported total assets of $3.68 billion, a decrease from $3.79 billion at December 31, 2024, primarily due to a reduction in short-term investments. Total liabilities also decreased, while stockholders' equity increased Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :-------------- | :---------------- | :------- | | Total Assets | $3,683,964 | $3,795,833 | ($111,869) | | Total Current Assets | $2,309,508 | $2,633,603 | ($324,095) | | Cash and Cash Equivalents | $601,196 | $512,667 | $88,529 | | Short-term Investments | $1,068,335 | $1,556,828 | ($488,493) | | Total Liabilities | $1,618,908 | $1,887,547 | ($268,639) | | Total Stockholders' Equity | $2,065,056 | $1,908,286 | $156,770 | Consolidated Statements of Operations For Q2 2025, total revenue grew to $760.9 million, up 19% YoY. The company reported a GAAP operating loss of ($24.6) million and a GAAP net loss of ($3.3) million, both showing improvement compared to Q2 2024 Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Total Revenue | $760,866 | $637,230 | +19.4% | | Gross Profit | $638,705 | $541,713 | +17.9% | | Loss from Operations | ($24,614) | ($23,935) | -2.8% (larger loss) | | Net Loss | ($3,258) | ($14,435) | +77.4% (smaller loss) | | Net Loss Per Share (Basic & Diluted) | ($0.06) | ($0.28) | +78.6% (smaller loss) | Consolidated Statements of Cash Flows HubSpot generated $164.4 million in net cash from operating activities in Q2 2025, a significant increase from $117.8 million in Q2 2024. Investing activities provided $268.6 million, while financing activities used ($479.6) million, primarily due to repayment of convertible notes and common stock repurchases Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Net Cash from Operating Activities | $164,362 | $117,828 | +39.5% | | Net Cash from Investing Activities | $268,602 | $213,158 | +26.0% | | Net Cash from Financing Activities | ($479,633) | $20,605 | N/A (shift from inflow to outflow) | | Net Increase (Decrease) in Cash | ($25,183) | $350,082 | N/A | Non-GAAP Reconciliations This section presents detailed reconciliations of HubSpot's GAAP financial measures to their corresponding non-GAAP counterparts, including operating income, net income, expenses, margins, and cash flows Non-GAAP Operating Income and Margin Reconciliation For Q2 2025, non-GAAP operating income was $129.1 million, up 18% YoY, with a non-GAAP operating margin of 17.0%, slightly down from 17.2% in Q2 2024 Non-GAAP Operating Income and Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | | GAAP Operating Loss | ($24,614) | ($23,935) | -2.8% | | Non-GAAP Operating Income | $129,142 | $109,315 | +18.1% | | GAAP Operating Margin | (3.2%) | (3.8%) | +0.6 ppts | | Non-GAAP Operating Margin | 17.0% | 17.2% | -0.2 ppts | Non-GAAP Net Income Reconciliation Non-GAAP net income for Q2 2025 was $117.3 million, an increase of 13% YoY, resulting in diluted non-GAAP net income per share of $2.19 Non-GAAP Net Income (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | | GAAP Net Loss | ($3,258) | ($14,435) | +77.4% | | Non-GAAP Net Income | $117,298 | $103,548 | +13.3% | | Non-GAAP Net Income Per Share (Diluted) | $2.19 | $1.94 | +12.9% | Non-GAAP Expense and Expense as Percentage of Revenue Reconciliation Non-GAAP expenses across various categories (COS, R&D, S&M, G&A) were lower than GAAP expenses due to adjustments, leading to improved non-GAAP expense percentages relative to revenue compared to GAAP Non-GAAP Expense as a Percentage of Revenue (Q2 2025) | Expense Category | GAAP % of Revenue | Non-GAAP % of Revenue | | :----------------------- | :------------------ | :-------------------- | | COS, Subscription | 14.0% | 12.6% | | COS, Professional services & other | 2.0% | 1.9% | | R&D | 31.2% | 20.9% | | S&M | 44.7% | 39.8% | | G&A | 11.2% | 7.8% | Non-GAAP Subscription Margin Reconciliation Non-GAAP subscription margin for Q2 2025 was $648.3 million, with a percentage of 87.1%, slightly lower than 88.1% in Q2 2024 Non-GAAP Subscription Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | | GAAP Subscription Margin | $637,862 | $542,145 | +17.6% | | Non-GAAP Subscription Margin | $648,310 | $549,468 | +18.0% | | GAAP Subscription Margin Percentage | 85.7% | 86.9% | -1.2 ppts | | Non-GAAP Subscription Margin Percentage | 87.1% | 88.1% | -1.0 ppts | Non-GAAP Free Cash Flow Reconciliation Non-GAAP free cash flow for Q2 2025 increased by 26.2% YoY to $116.2 million Non-GAAP Free Cash Flow (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | | GAAP Net Cash from Operating Activities | $164,362 | $117,828 | +39.5% | | Non-GAAP Free Cash Flow | $116,249 | $92,068 | +26.2% | Non-GAAP Operating Cash Flow Reconciliation Non-GAAP operating cash flow for Q2 2025 was $167.7 million, representing a 37.8% increase from Q2 2024 Non-GAAP Operating Cash Flow (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | | GAAP Net Cash from Operating Activities | $164,362 | $117,828 | +39.5% | | Non-GAAP Operating Cash Flow | $167,710 | $121,709 | +37.8% | Forecasted Non-GAAP Operating Income Reconciliation HubSpot forecasts non-GAAP operating income for Q3 2025 to be between $156.0 million and $157.0 million, and for the full year 2025, between $568.0 million and $572.0 million Forecasted Non-GAAP Operating Income (in thousands) | Metric | Q3 2025 Range | Full Year 2025 Range | | :-------------------------------- | :-------------------- | :------------------- | | GAAP Operating Income (Loss) Range | $7,660 - $8,660 | ($8,238) - ($4,238) | | Non-GAAP Operating Income Range | $156,000 - $157,000 | $568,000 - $572,000 | Forecasted Non-GAAP Net Income Reconciliation The company projects non-GAAP net income for Q3 2025 to be $135.5 million to $136.5 million, with diluted EPS of $2.56 to $2.58. For the full year 2025, non-GAAP net income is expected to be $506.0 million to $509.0 million, with diluted EPS of $9.47 to $9.53 Forecasted Non-GAAP Net Income and EPS (in thousands, except per share amounts) | Metric | Q3 2025 Range | Full Year 2025 Range | | :-------------------------------- | :-------------------- | :------------------- | | GAAP Net Income Range | $16,310 - $17,560 | $30,214 - $33,964 | | Non-GAAP Net Income Range | $135,500 - $136,500 | $506,000 - $509,000 | | Non-GAAP Net Income Per Diluted Share | $2.56 - $2.58 | $9.47 - $9.53 | Explanation of Non-GAAP Financial Measures This section clarifies the purpose and definitions of HubSpot's non-GAAP financial measures, detailing specific adjustments made to GAAP results for a clearer view of operational performance Purpose and Definitions of Non-GAAP Measures HubSpot uses non-GAAP financial measures to supplement GAAP results, believing they provide a clearer understanding of short-term and long-term financial trends by excluding certain non-cash or non-recurring items. These measures are not intended to replace GAAP presentations - Non-GAAP measures are used to supplement GAAP results, providing insight into short-term and long-term financial and operational trends by excluding certain non-cash or non-recurring items[26][29] - Calculated billings are defined as total revenue recognized in a period plus the sequential change in total deferred revenue[27] - Non-GAAP operating cash flow is defined as cash and cash equivalents provided by or used in operating activities plus payment of restructuring charges[27] - 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[27] - Constant currency amounts are presented to provide a framework for assessing operating performance excluding the effect of foreign exchange rate fluctuations[28] Specific Non-GAAP Adjustments HubSpot's non-GAAP adjustments primarily exclude stock-based compensation, amortization of acquired intangible assets, acquisition-related expenses, non-cash interest expense, gains/losses on strategic investments, restructuring charges, and account for income tax effects, to provide a more consistent view of operational performance - Non-GAAP measures exclude stock-based compensation, amortization of acquired intangible assets, acquisition related expenses, 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[30] Stock-based Compensation Stock-based compensation is excluded as a non-cash expense to provide financial results more indicative of operational performance and facilitate comparisons across periods and peer companies - Stock-based compensation is a non-cash expense excluded to allow for financial results more indicative of operational performance and provide for a useful comparison of operating results to prior periods and peer companies[30] Amortization of Acquired Intangible Assets Amortization of acquired intangible assets is excluded as a non-cash expense arising from pre-acquisition activities, which is not typically affected by current operations and can vary inconsistently - Amortization of acquired intangible assets is excluded from non-GAAP measures as it arises from pre-acquisition activities, is a non-cash expense not typically affected by operations, and can be inconsistent in amount and frequency[30] Acquisition Related Expenses Acquisition-related expenses (e.g., transaction costs, retention payments) and disposition-related income are excluded as they are not necessarily reflective of operational performance during a period - Acquisition related expenses (transaction costs, retention payments, holdback payments) and disposition related income are excluded as they are not necessarily reflective of operational performance during a period[30] Non-Cash Interest Expense for Debt Issuance Costs Non-cash interest expense from the amortization of debt issuance costs for convertible notes is excluded for better comparability, noting that the 2025 Convertible Notes matured in June 2025, so no further expense is expected - Non-cash interest expense from the amortization of debt issuance costs for convertible notes is excluded for useful comparison; the 2025 Convertible Notes matured in June 2025, so no more expense is expected[31] Strategic Investments Gains, impairment losses, or proportionate share of net earnings from non-controlling equity investments in privately held companies are excluded as they are not indicative of fundamental operating activities - Gains, impairment losses, or proportionate share of net earnings from strategic investments (non-controlling equity investments in privately held companies) are excluded as they are not indicative of fundamental operating activities[32] Restructuring Charges Restructuring charges, including severance, employee benefits, and facility costs from the January 2023 plan, are excluded as they fluctuate and are not reflective of core business operating results. Future incremental charges and cash payments related to abandoned facilities are also expected to be excluded - Restructuring charges (severance, employee benefits, facilities, and other costs) from the January 2023 plan are excluded as they fluctuate and are not reflective of core business operating results[32] - Expected incremental restructuring charges of $10-11 million and $35.0 million in fixed rent payments through 2027 for abandoned facilities will also be excluded from non-GAAP earnings, operating cash flow, and free cash flow metrics[32] Income Tax Effects of Non-GAAP Items A fixed long-term projected tax rate of 20% is applied to non-GAAP items to ensure consistency across reporting periods, with periodic reevaluation for significant events - A fixed long-term projected tax rate of 20% is applied to non-GAAP items to provide better consistency across reporting periods, with periodic reevaluation for significant events[32] Contact Information Contact details for investor relations and media inquiries are provided - Investor Relations Contact: investors@hubspot.com[32] - Media Contact: media@hubspot.com[32]