HubSpot Increasing Expectations
CAMBRIDGE, Mass., Sept. 26, 2017 /PRNewswire/ -- HubSpot, Inc. (NYSE: HUBS), a leading inbound marketing and sales software company, today announced it has raised its expectations for its Q3 2017 financial performance.
Business Outlook
Based on preliminary information and estimates of the management of HubSpot, Inc. (the "Company") for the three months ending September 30, 2017, and subject to the completion of the 2017 third quarter and its financial closing procedures, the Company has raised its expectations for its Q3 2017 financial performance as indicated below.
Third Quarter 2017:
-- Total revenue is expected to be in the range of $95.9 million to $96.9
million, an expected improvement when compared to our
previously-announced range of $92.8 million to $93.8 million.
-- Non-GAAP operating loss is expected to be between a loss of ($2.2)
million to ($1.2) million, an expected improvement when compared to our
previously-announced range of a loss of ($4.5) million to ($3.5)
million. This excludes stock-based compensation expense of approximately
$10.9 million.
-- Non-GAAP net loss per common share is expected to be between a loss of
($0.04) to ($0.02) an expected improvement when compared to our
previously-announced range of ($0.10) to ($0.08). This excludes
stock-based compensation expense of approximately $10.9 million,
non-cash interest expense for the amortization of debt discount and debt
issuance costs of approximately $4.8 million, and the deferred income
tax benefit from convertible notes of approximately $3.4 million. This
assumes approximately 37.1 million weighted average basic and diluted
shares outstanding.
The above information should not be viewed as a substitute for full financial statements prepared in accordance with GAAP. In addition, the above information is not necessarily indicative of the results to be achieved for Q3 2017 or any other future period and is subject to risks and uncertainties, many of which are not within the Company's control. The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is warranted.
Webcast Information
The Company's increased expectations for Q3 2017 are being shared during the Company's annual INBOUND event. A live webcast and replay of the investor events are available in the "Investor" section of HubSpot's web site.
About HubSpot
HubSpot is a leading inbound marketing and sales platform. Over 34,000 total customers in over 90 countries use HubSpot's award-winning software, services, and support to create an inbound experience that will attract, engage, and delight customers. Learn more at www.hubspot.com .
Cautionary Language Concerning Forward-Looking Statements
This press release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning our financial expectations for the quarter ending September 30, 2017, our position to execute on our growth strategy in the mid-market, and our ability to expand our leadership position and market opportunity for our inbound platform. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, our history of losses, our ability to retain existing customers and add new customers, the continued growth of the market for an inbound platform; our ability to differentiate our platform from competing products and technologies; our ability to manage our growth effectively to maintain our high level of service; our ability to maintain and expand relationships with our marketing agency partners; our ability to successfully recruit and retain highly-qualified personnel; the price volatility of our common stock, and other risks set forth under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed on August 2, 2017 and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
In this release, HubSpot's non-GAAP operating loss and net loss per share are not presented in accordance with GAAP and are not intended to be used in lieu of GAAP presentations of results of operations.
Management presents these non-GAAP financial measures because it considers them to be important supplemental measures of performance. Management uses the non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. However, these non-GAAP financial measures have limitations as an analytical tool and are not intended to be an alternative to financial measures prepared in accordance with GAAP. We intend to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the above in this press release.
Non-GAAP operating loss excludes stock-based compensation. Non-GAAP net loss per share excludes stock-based compensation, amortization of acquired intangible assets, non-cash interest expense for the amortization of debt discount and debt issuance costs, and the deferred income tax benefit from convertible notes. We believe investors may want to exclude the effects of these items in order to compare our financial performance with that of other companies and between time periods:
(a) Stock-based compensation is a non-
cash expense accounted for in
accordance with FASB ASC Topic 718.
We believe that the exclusion of
stock-based compensation expense
allows for financial results that
are more indicative of our
operational performance and provide
for a useful comparison of our
operating results to prior periods
and to our peer companies because
stock-based compensation expense
varies from period to period and
company to company due to such
things as differing valuation
methodologies and changes in stock
price.
(b) Expense for the amortization of
acquired intangible assets is a
non-cash item, and we believe that
the exclusion of this amortization
expense provides for a useful
comparison of our operating results
to prior periods and to our peer
companies.
(c) In May 2017, the Company issued $400
million of convertible notes due in
2022 with a coupon interest rate of
0.25%. The imputed interest rate of
the convertible senior notes was
approximately 6.95%. This is a
result of the debt discount
recorded for the conversion feature
that is required to be separately
accounted for as equity, and debt
issuance costs, which reduce the
carrying value of the convertible
debt instrument. The debt discount
is amortized as interest expense
together with the issuance costs of
the debt. The expense for the
amortization of debt discount and
debt issuance costs is a non-cash
item, and we believe the exclusion
of this interest expense provides
for a useful comparison of our
operating results to prior periods
and to our peer companies.
(d) The deferred income tax benefit from
the convertible notes issued in May
2017 is a non-cash item created by
the difference in the carrying
amount and tax basis of the
convertible notes. This taxable
temporary difference resulted in
the Company recognizing a $9.4
million deferred tax liability
which was recorded as an adjustment
to additional paid-in capital on
the consolidated balance sheet.
The creation of the deferred tax
liability is recognized as a
component of equity and represents
a source of future taxable income
which supports the realization of a
portion of the income tax benefit
associated with the current year
loss from operations. The deferred
income tax benefit from the
convertible notes is a non-cash
item that is unique to the issuance
of the Company's convertible notes,
and we believe the exclusion of
this deferred tax benefit provides
for a useful comparison of our
operating results to prior periods
and to our peer companies.
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SOURCE HubSpot, Inc.
