HubSpot(US:HUBS)2025-11-05 21:30Revenue and Customer Growth - Subscription revenue accounted for 98% of total revenue for the three and nine months ended September 30, 2025 and 2024 [116]. - As of September 30, 2025, the company had 278,880 customers across more than 135 countries [115]. - Subscription revenue for the three months ended September 30, 2025, increased by 21% to $791,678,000 compared to $654,738,000 in 2024, and for the nine months, it rose by 19% to $2,234,937,000 from $1,882,241,000 [143]. - The total revenue for the three months ended September 30, 2025, was $809,518,000, a 21% increase from $669,721,000 in 2024, and for the nine months, it reached $2,284,520,000, up 19% from $1,924,365,000 [143]. - The number of customers grew from 238,128 as of September 30, 2024, to 278,880 as of September 30, 2025, contributing to the increase in subscription revenue [144]. - Average Subscription Revenue per Customer for the three months ended September 30, 2025, increased to $11,578 from $11,235 in 2024, driven by higher demand for Professional and Enterprise products [144]. Financial Performance - The company expects to break-even from a profitability perspective in the next 12 months [120]. - The company reported a net income of $16,536,000 for the three months ended September 30, 2025, compared to $8,146,000 in 2024, while for the nine months, it recorded a net loss of $8,515,000 compared to a loss of $355,000 in 2024 [142]. - The company reported a net loss of $8.5 million for the nine months ended September 30, 2025, compared to a net loss of $0.4 million in the same period of 2024 [185][186]. - The effective tax rate increased to -209% for the nine months ended September 30, 2025, compared to -102% in 2024, reflecting a significant rise in income tax expense [176]. Cost and Expenses - Total cost of revenue for the three months ended September 30, 2025, increased by 34% to $133,518,000 from $99,324,000 in 2024, and for the nine months, it rose by 28% to $370,786,000 from $289,928,000 [148]. - Subscription cost of revenue for the three months ended September 30, 2025, was $117,025,000, a 38% increase from $85,066,000 in 2024, and for the nine months, it was $323,925,000, up 31% from $247,408,000 [149]. - Professional services and other cost of revenue increased by $2,235 (16%) to $16,493 for the three months ended September 30, 2025, and by $4,341 (10%) to $46,861 for the nine months ended September 30, 2025 compared to the same periods in 2024 [153]. - Research and development expenses rose by $36,529 (19%) to $227,714 for the three months ended September 30, 2025, and by $120,150 (21%) to $685,151 for the nine months ended September 30, 2025 compared to the same periods in 2024 [156]. - Sales and marketing expenses increased by $45,340 (15%) to $355,268 for the three months ended September 30, 2025, and by $117,834 (13%) to $1,021,844 for the nine months ended September 30, 2025 compared to the same periods in 2024 [159]. - General and administrative expenses grew by $2,819 (4%) to $80,747 for the three months ended September 30, 2025, and by $25,000 (11%) to $244,380 for the nine months ended September 30, 2025 compared to the same periods in 2024 [162]. Investments and Future Plans - The company plans to continue investing in research and development to introduce new products and applications, with a focus on enhancing customer experience [120]. - The company has invested in AI-enabled tools for guided selling and content generation to improve conversion rates and drive efficiencies [120]. - The company plans to continue expanding its sales force and marketing efforts to increase customer base and revenue [120]. - The restructuring plan included a workforce reduction of approximately 7% to reduce operating costs and enable investment in long-term growth [138]. - The company continued to invest in AI functionality and new product development, contributing to increased subscription and hosting costs due to customer base growth [151]. Cash Flow and Financing - Cash and cash equivalents increased to $614.4 million for the nine months ended September 30, 2025, compared to $410.1 million in the same period of 2024, representing a 50% increase [182]. - Net cash provided by operating activities was $513.3 million for the nine months ended September 30, 2025, up from $404.5 million in 2024, indicating a 27% increase [182]. - Cash used in financing activities totaled $900.5 million for the nine months ended September 30, 2025, primarily due to $485.3 million for stock repurchases and $459.8 million for repayments of the 2025 Notes [192]. - The company repurchased 1.0 million shares at an average price of $501.67 per share, totaling $500 million under the 2025 Share Repurchase Program [195]. - Net cash provided by investing activities included $1.9 billion from the maturity of investments, offset by $1.2 billion in purchases of investments for the nine months ended September 30, 2025 [189]. Other Financial Metrics - Net Revenue Retention is a key metric indicating the stability of the revenue base, calculated by dividing Retained Subscription Revenue by Retention Base Revenue [124]. - Interest income decreased by $7,528 (35%) to $14,252 for the three months ended September 30, 2025, and by $7,771 (13%) to $53,106 for the nine months ended September 30, 2025 compared to the same periods in 2024 [168]. - Other (expense) income showed a significant decline, with a loss of $2,346 for the three months ended September 30, 2025 compared to a loss of $565 in 2024, marking a change of $1,781 (315%) [172]. - The total obligation for operating leases was $328.2 million as of September 30, 2025, with $58.1 million expected in the next twelve months [194]. - The company has $2.7 million in letters of credit outstanding as of September 30, 2025, expected to remain in effect until 2029 [197]. - The company does not currently hedge its interest rate exposure, and a hypothetical increase of 100 basis points in interest rates would not have a material impact on the value of cash and cash equivalents or investments [203].