HubSpot Subscription Revenue Grows 35 Percent to $136.8 Million in Q4

In last week’s fourth quarter and full year 2018 earnings report, Hubspot (NYSE: HUBS), a B2B marketing, sales and service software company, reported subscription

Subscription News: HubSpot Subscription Revenue Grows 35 Percent to $136.8 Million in Q4

Source: HubSpot

In last week’s fourth quarter and full year 2018 earnings report, Hubspot (NYSE: HUBS), a B2B marketing, sales and service software company, reported subscription revenue of $136.8 million, representing a 35 percent increase year-over-year. The company reported total revenue of $144.0 million, also a 35 percent increase-year-over. HubSpot’s total revenue for the fourth quarter includes $7.2 million in professional services and other revenue, a 49 percent increase year-over-year. Subscription revenue makes up 95 percent of HubSpot’s total revenue.

For the fourth quarter, the company reported a GAAP operating loss of $7.8 million, which was an improvement over the Q4 2017 loss of $9.4 million. GAAP operating margin was (5.4 percent). Non-GAAP operating margin was 9.8 percent. GAAP net loss was $11.5 million, or $0.29 per basic and diluted share, roughly equal to the GAAP net loss in Q4 2017.

The company reported the following full year results:

  • Total revenue of $513.0 million, a 37 percent increase over 2017
  • Subscription revenue of $487.5 million, a 37 percent increase over 2017
  • Professional services and other revenue of $25.5 million, a 35 percent increase over 2017
  • At the end of the year, the company had $603.7 million in cash, cash equivalents and investments.
  • The customer reported 56,628 customers on December 31, 2018, a 36 percent increase over the prior year.
  • Total average subscription revenue per customer was $10,012 during Q4 2018, a 2 percent decrease over Q4 2017.

For the full year, the company reported a GAAP operating loss of $48.3 million, which was an improvement over the Q4 2017 loss of $40.1 million. GAAP operating margin was (9.4 percent). Non-GAAP operating margin was 6.3 percent. The GAAP net loss for the year was $63.8 million, or $1.66 per basic and diluted share, compared to a GAAP net loss of $39.7 million, or $1.08 per basic or diluted share.

“2018 was one of the best years in our history,” said Brian Halligan, co-founder and CEO, in a February 12 news release. “We started the year with a really strong marketing application business that helped our customers generate leads and a fast-growing sales enablement business. We ended the year with a full suite of marketing, sales and customer service products that helps our customers grow better by crafting a remarkable experience for their customers.  We’re extremely pleased with our Q4 results, and I’m very excited on the outlook for our business entering 2019.”

HubSpot provided the following guidance for the first quarter of 2019:

  • Total revenue between $146.5 million and $147.5 million
  • Non-GAAP operating income between $9.5 million to $10.5 million
  • Non-GAAP net income per common share between $0.23 and $0.25, assuming about 44.4 million weighted average diluted shares outstanding

HubSpot provided the following guidance for the full year 2019:

  • Total revenue between $648 million and $652 million
  • Non-GAAP operating income between $46 million to $50 million
  • Non-GAAP net income per common share between $1.08 and $1.16, assuming about 45.6 million weighted average diluted shares outstanding

HubSpot investors weren’t overly excited about the financial report, but there was not a significant change in stock value. On February 11, the day before the earnings report, stock was valued at $167.63. It jumped up to $172.00 per share on February 12, but has now levelized at $165.27 as of 4:45 p.m. EST yesterday.

Subscription News: HubSpot Subscription Revenue Grows 35 Percent to $136.8 Million in Q4

Source: Google

Insider Take:

As we said in November, HubSpot is in growth mode, investing in customer growth, R&D and staffing. While net losses are never attractive, HubSpot stock has gone up in value since November 15, 2018 when HubSpot stock was valued at $133.89. This represents an increase of $31.38 per share in the last quarter. That’s not too shabby. It will be interesting to watch HubSpot as they begin to stabilize and turn those losses into profits.

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