HubSpot Reports 35% Jump In Total Revenue And Subscription Revenue In Q3 2018 Compared To Q3 2017

Sudipto Ghosh

November 8, 2018

The leading Marketing Automation platform, HubSpot, has announced financial results for the third quarter ended 30 September 2018.

Revenue

Total revenue was $131.8 million, up 35% compared to the third quarter of 2017.
Subscription revenue was $125.5 million, up 35% compared to the third quarter of 2017.
Professional services and other revenue was $6.3 million, up 39% compared to the third quarter of 2017.

Operating Income (Loss)

GAAP operating margin was (11.4%) for the quarter, compared to (12.4%) in the third quarter of 2017.
The non-GAAP operating margin was 4.4% for the quarter, an improvement of approximately 3.9 percentage points from 0.5% in the third quarter of 2017.
GAAP operating loss was ($15.1) million for the quarter, compared to ($12.1) million in the third quarter of 2017.
Non-GAAP operating income was $5.9 million for the quarter, compared to $0.5 million in the third quarter of 2017.

Net Income (Loss)

GAAP net loss was ($18.7) million, or ($0.48) per basic and diluted share for the quarter, compared to ($10.6) million, or ($0.29) per basic and diluted share, in the third quarter of 2017.
Non-GAAP net income was $7.4 million, or $0.19 per basic and $0.17 per diluted share for the quarter, compared to $1.3 million, or $0.03 per basic and diluted share, in the third quarter of 2017.
Third quarter weighted average basic and diluted shares outstanding for GAAP net loss per share was 38.8 million, compared to 37.0 million basic and diluted shares in the third quarter of 2017.
Third quarter weighted average basic and diluted shares outstanding for non-GAAP net income per share was 38.8 million and 43.1 million respectively, compared to 37.0 million and 39.4 million, respectively, in the third quarter of 2017.

The company’s cash, cash equivalents, and investments balance were $574.5 million as of September 30, 2018.
During the third quarter, the company generated $3.2 million of free cash flow compared to $1.8 million during the third quarter of 2017.

Additional Recent Business Highlights

Grew total customers to 52,505 at September 30, 2018, up 40% from September 30, 2017.
Total average subscription revenue per customer was $9,959 during the third quarter of 2018 down 4% compared to the third quarter of 2017.

“HubSpot delivered another strong quarter with total revenue growth of 35% and a 4-point improvement in non-GAAP operating margins versus last year” said Brian Halligan, co-founder and CEO.

Brian added, ” We’ve invested heavily in our platform to capitalize on the massive opportunity in the mid-market. I’m excited about the strength we’re seeing across the business and we’re well positioned to continue to grow with our customers for years to come.”

Business Outlook

Based on information available as of 7 November 2018, HubSpot is issuing guidance for the fourth quarter of 2018 and raising guidance for the full year 2018 as indicated below.

Fourth Quarter 2018:

Total revenue is expected to be in the range of $136.5 million to $137.5 million.
Non-GAAP operating income is expected to be in the range of $11.5 million to $12.5 million.
Non-GAAP net income per common share is expected to be in the range of $0.29 to $0.31. This assumes approximately 43.2 million weighted average diluted shares outstanding.

Full-Year 2018:

Total revenue is expected to be in the range of $505.5 million to $506.5 million, up from the previously guided range of $496.8 million to $498.8 million.
Non-GAAP operating income is expected to in be in the range of $29.5 million to $30.5 million, up from the previously guided range of $24.3 million to $26.3 million.
Non-GAAP net income per common share is expected to be in the range of $0.80 to $0.82, up from the previously guided range of $0.63 to $0.67. This assumes approximately 42.3 million weighted average diluted shares outstanding.

Use of Non-GAAP Financial Measures

In the earnings press releases, conference calls, slide presentations, and webcasts, we may use or discuss non-GAAP financial measures, as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the consolidated financial statements.