HubSpot(HUBS) - 2025 Q3 - Quarterly Results

Financial Performance - Total revenue for Q3 2025 was $809.5 million, representing a 21% increase year-over-year on an as-reported basis and an 18% increase in constant currency compared to Q3 2024[6] - Subscription revenue reached $791.7 million, up 21% on an as-reported basis compared to Q3 2024[6] - GAAP net income was $16.5 million, or $0.31 per basic and diluted share, compared to $8.1 million, or $0.16 per basic and diluted share in Q3 2024[6] - Non-GAAP net income was $140.3 million, or $2.67 per basic and $2.66 per diluted share, compared to $116.6 million, or $2.27 per basic and $2.18 per diluted share in Q3 2024[6] - The company generated $187.4 million in cash from operating cash flow, an increase from $159.5 million in Q3 2024[6] - Customers grew to 278,880, a 17% increase from September 30, 2024[6] - Average Subscription Revenue Per Customer was $11,578, up 3% compared to Q3 2024[6] - Total revenue for Q3 2025 reached $809.5 million, a 20.9% increase from $669.7 million in Q3 2024[16] - Subscription revenue was $791.7 million, up 20.9% from $654.7 million year-over-year[16] - Gross profit for Q3 2025 was $676.0 million, compared to $570.4 million in Q3 2024, reflecting a gross margin improvement[16] - Non-GAAP operating income for Q3 2025 was $161.5 million, up 28.9% from $125.2 million in Q3 2024[18] - Net income for Q3 2025 was $16.5 million, compared to $8.1 million in Q3 2024, indicating a significant year-over-year improvement[16] - Cash provided by operating activities for Q3 2025 was $187.4 million, compared to $159.5 million in Q3 2024[17] - The company reported a non-GAAP net income of $140.3 million for Q3 2025, up from $116.6 million in Q3 2024[19] - Non-GAAP diluted net income per share for Q3 2025 was $2.66, compared to $2.18 in Q3 2024, showing strong earnings growth[19] Future Projections - For Q4 2025, total revenue is expected to be in the range of $828.0 million to $830.0 million, up 18% year-over-year on an as-reported basis[12] - Non-GAAP operating income for Q4 2025 is expected to be in the range of $183.0 million to $184.0 million, representing a 22% operating profit margin[12] - Forecasted non-GAAP operating income for the year ended December 31, 2025, is projected to be between $574,000,000 and $575,000,000[24] - Non-GAAP net income for the year ended December 31, 2025, is expected to range from $511,000,000 to $512,000,000, with a non-GAAP net income per diluted share of $9.60 to $9.62[25] Expenses and Investments - Research and development expenses increased to $227.7 million in Q3 2025, compared to $191.2 million in Q3 2024, reflecting ongoing investment in innovation[16] - GAAP expenses for the three months ended September 30, 2025, totaled $117,025,000, with a GAAP expense as a percentage of revenue of 14.5%[20] - Non-GAAP expenses for the same period were $105,456,000, representing 13.0% of revenue[20] - For the nine months ended September 30, 2025, GAAP expenses reached $323,925,000, with a GAAP expense percentage of 14.2%[20] - Non-GAAP expenses for the nine months were $292,033,000, accounting for 12.8% of revenue[20] - The GAAP subscription margin for the nine months ended September 30, 2025, was $674,653,000, with a GAAP subscription margin percentage of 85.2%[21] - Non-GAAP subscription margin for the same period was $686,222,000, with a non-GAAP subscription margin percentage of 86.7%[21] - Non-GAAP free cash flow for the three months ended September 30, 2025, was $146,937,000, compared to $129,231,000 in 2024[22] - Non-GAAP operating cash flow for the same period was $191,780,000, up from $164,008,000 in 2024[23] Strategic Initiatives - The company plans to continue its AI strategy, having released over 200 new product innovations during the annual INBOUND conference[7] - The company issued $460 million of convertible notes due in 2025 with a coupon interest rate of 0.375%[31] - Restructuring charges related to severance and facility costs are expected to be in the range of $9-10 million, with cash payments of approximately $31.0 million for abandoned facilities through 2027[32] - The company plans to exclude restructuring charges and related cash payments from non-GAAP earnings, operating cash flow, and free cash flow metrics to provide clearer insights into operational performance[32] - A fixed long-term projected tax rate of 20% will be used for non-GAAP items to ensure consistency across reporting periods[32] - The exclusion of stock-based compensation and amortization of acquired intangible assets is intended to provide a clearer picture of operational performance compared to peers[30] - Acquisition-related expenses and disposition-related income are excluded from non-GAAP measures to better reflect operational performance[30] - Strategic investments in privately held companies are recognized but excluded from fundamental operating activities for clearer performance comparison[32] - The company expects to incur incremental restructuring charges related to abandoned facilities as part of a consolidation plan initiated in January 2023[32] - Revenue generated from intangible assets is included in non-GAAP income measures, despite the exclusion of amortization expenses[30] - The company believes that excluding non-cash interest expenses from operating results allows for better comparisons with prior periods and peer companies[31]