HubSpot, a marketing software and customer relationship management (CRM) platform, announced last week that they are acquiring media startup The Hustle. The Hustle creates newsletters, podcasts and premium research content (Trends) for readers. Axios reports that The Hustle’s daily business newsletter has more than 1.5 million subscribers. Though terms of the deal were not disclosed, Axios estimates HubSpot’s acquisition of the privately-held media startup at about $27 million. Assuming shareholders approve the deal, it should close this week.
Founded in 2005, HubSpot (NYSE: HUBS) works with 95,000 customers in more than 120 countries. Clients include WWF, Trello, SurveyMonkey, SoundCloud, ClassPass and others. The company is headquartered in Cambridge, Massachusetts and has offices around the world.
Kieran Flanagan, senior vice president of marketing at Hubspot, commented on the acquisition of the media startup.
“For many customers, their first introduction to HubSpot is through our educational blog, Academy, and YouTube content, not our software. More recently, our customers have started to seek out news and trends-based content across new forms of media like podcasts, newsletters, and research,” said Flanagan in the announcement.
“By acquiring The Hustle, we'll be able to better meet the needs of these scaling companies by delivering educational, business, and tech trend content in their preferred formats. Sam and his team have a proven ability to create content that entrepreneurs, startups, and scaling companies are deeply passionate about, and I'm excited to bring them on board to take that work to the next level,” Flanagan added.
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One of HubSpot’s strengths has been building a community around educational content. Each month 7 million people reach the company’s blogs and hundreds of thousands view HubSpot videos on YouTube. In addition, each month, over 100,000 take lessons and more than 300,000 receive a HubSpot certification. HubSpot is hoping that their acquisition of The Hustle will help them better serve their customers and community through content.
Sam Parr, founder of The Hustle, remarked on the relationship with HubSpot.
“I started The Hustle with the mission to help give business builders the information they needed to put their dent into the world and change how media companies operate. By joining the HubSpot team, we'll take that mission to the next level to build the best business content networks in the world. I know the HubSpot team shares our commitment to creating high quality content to help companies scale, and I can't wait to get started,” Parr said.
HubSpot will report its fourth quarter and full year 2020 financials later this week. The company’s third quarter financials reveal that the majority of HubSpot’s revenue comes from subscription revenue. In the third quarter of 2020 (ended September 30, 2020), HubSpot reported total revenue of $228.4 million, a 32% increase year-over-year. Of that total, $221.1 million came from subscription revenue, a 32% increase year-over-year. Professional services and other revenue made up the remainder at $7.3 million, a 12% decrease year-over-year. Total average subscription revenue per customer was $9,669 during the third quarter of 2020. Despite the increase in revenue, the company reported a GAAP net loss of ($22.5) million, or ($0.49) per basic and diluted share.
Despite reporting a significant net loss in the third quarter, HubSpot has close to $1.9 billion in assets, so it can afford to make an acquisition. What isn’t quite clear is how acquiring The Hustle will benefit HubSpot’s customers. Axios speculates that the deal could help HubSpot generate leads to potential customers, saving it money in advertising costs. HubSpot will also benefit from any subscription revenue generated by The Hustle.