HUBSPOT INC

Previous wording

We focus on selling to mid-market business-to-business, or B2B, companies, which we define as companies that have between two and 2,000 employees. While our customer platform was built to grow with any company, we focus on selling to mid-market businesses because we believe we have significant competitive advantages attracting and serving this market segment. These mid-market businesses seek an integrated, easy-to-implement and easy-to-use solution to reach customers and compete with organizations that have larger marketing, sales, and customer service budgets. We efficiently reach these businesses at scale through our traditional and AI-enhanced engagement strategies, our Solutions Partners, and our “freemium” model. A Solutions Partner is a service provider that helps businesses with strategy, execution, and implementation of go-to-market activities and technology solutions. Our freemium model attracts customers who begin using our customer platform through our free products and then upgrade to our paid products. As of March 31, 2025, we had 8,574 full-time employees and 258,258 Customers of varying sizes in more than 135 countries, representing many industries.

Current wording

We focus on selling to mid-market business-to-business, or B2B, companies, which we define as companies that have between two and 2,000 employees. While our customer platform was built to grow with any company, we focus on selling to mid-market businesses because we believe we have significant competitive advantages attracting and serving this market segment. These mid-market businesses seek an integrated, easy-to-implement and easy-to-use solution to reach customers and compete with organizations that have larger marketing, sales, and customer service budgets. We efficiently reach these businesses at scale through our traditional and AI-enhanced engagement strategies, our Solutions Partners, and our “freemium” model. A Solutions Partner is a service provider that helps businesses with strategy, execution, and implementation of go-to-market activities and technology solutions. Our freemium model attracts customers who begin using our customer platform through our free products and then upgrade to our paid products. As of June 30, 2025, we had 8,723 full-time employees and 267,982 Customers of varying sizes in more than 135 countries, representing many industries.

Previous wording

We derive most of our revenue from subscriptions to our cloud-based customer platform and related professional services, which consist of customer on-boarding, training and consulting services. Subscription revenue accounted for 98% of our total revenue for the three months ended March 31, 2025 and 2024. We sell multiple product plans at different base prices on a subscription basis, each of which includes our Smart CRM and integrated applications to meet the needs of the various customers we serve. We also generate revenue through usage and consumption-based models. Customers pay additional fees if the number of contacts stored and tracked in the customer’s database exceeds specified thresholds. We also generate additional revenue based on the purchase of additional subscriptions, products and seats, and the number of account users. Most of our Customers’ subscriptions are one year or less in duration.

Current wording

We derive most of our revenue from subscriptions to our cloud-based customer platform and related professional services, which consist of customer on-boarding, training and consulting services. Subscription revenue accounted for 98% of our total revenue for the three and six months ended June 30, 2025 and 2024. We sell multiple product plans at different base prices on a subscription basis, each of which includes our Smart CRM and integrated applications to meet the needs of the various customers we serve. We also generate revenue through usage and consumption-based models. Customers pay additional fees if the number of contacts stored and tracked in the customer’s database exceeds specified thresholds. We also generate additional revenue based on the purchase of additional subscriptions, products and seats, and the number of account users. Most of our Customers’ subscriptions are one year or less in duration.

Previous wording

Many of our customers purchase on-boarding, training, and consulting services, which are designed to help customers enhance their ability to attract, engage and delight their customers using our customer platform. We also generate revenue from Commerce Hub and a number of revenue-share agreements with other companies. Professional services and other revenue accounted for 2% of total revenue for three months ended March 31, 2025 and 2024.

Current wording

Many of our customers purchase on-boarding, training, and consulting services, which are designed to help customers enhance their ability to attract, engage and delight their customers using our customer platform. We also generate revenue from Commerce Hub and a number of revenue-share agreements with other companies. Professional services and other revenue accounted for 2% of total revenue for the three and six months ended June 30, 2025 and 2024.

Previous wording

Results of Operations for the Three Months Ended March 31, 2025 and 2024

Current wording

Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

Previous wording

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Current wording

Three and Six Months Ended June 30, 2025 Compared to the Three and Six Months Ended June 30, 2024

Previous wording

Subscription revenue increased during the three months ended March 31, 2025 compared to the same period in 2024 primarily due to the increase in Customers, which grew from 216,060 as of March 31, 2024 to 258,258 as of March 31, 2025. Average Subscription Revenue per Customer decreased from $11,447 for the three months ended March 31, 2024 to $11,038 for the three months ended March 31, 2025. The growth in Customers was primarily driven by increased demand for our lower-priced Starter products. The decrease in Average Subscription Revenue per Customer was primarily driven by continued purchases of our lower-priced Starter products and the impact of foreign currency translation primarily attributable to the increase in the value of the U.S. Dollar relative to the Euro and British Pound Sterling, offset by increased demand for our Professional and Enterprise products.

Current wording

Subscription revenue increased during the six months ended June 30, 2025 compared to the same period in 2024 primarily due to the increase in Customers, which grew from 228,054 as of June 30, 2024 to 267,982 as of June 30, 2025. Average Subscription Revenue per Customer decreased from $11,335 for the six months ended June 30, 2024 to $11,183 for the six months ended June 30, 2025. The growth in Customers was primarily driven by increased demand for our lower-priced Starter products. The decrease in Average Subscription Revenue per Customer was primarily driven by continued purchases of our lower-priced Starter products and the impact of foreign currency translation primarily attributable to the increase in the value of the U.S. Dollar relative to the Euro and British Pound Sterling, offset by increased demand for our Professional and Enterprise products.

Previous wording

Total cost of revenue for the three months ended March 31, 2025 increased compared to the same period in 2024 primarily due to an increase in subscription and hosting costs, amortization of capitalized software development costs, and amortization of acquired technology, offset by decreases in allocated overhead expenses and employee-related costs. Gross margins remained relatively consistent year-over-year.

Current wording

Total cost of revenue for the three and six months ended June 30, 2025 increased compared to the same period in 2024 primarily due to an increase in subscription and hosting costs, amortization of capitalized software development costs, and amortization of acquired technology, offset by decreases in allocated overhead expenses and employee-related costs. Gross margins remained relatively consistent year-over-year.

Previous wording

Subscription and hosting costs increased primarily due to growth in our Customer base from 216,060 as of March 31, 2024 to 258,258 as of March 31, 2025. We also saw higher subscription and hosting costs as we continued to focus on the security, reliability and performance of our customer platform. Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we continued to develop new products and increased functionality. Amortization of acquired technology increased due to the amortization of acquired technology associated with our acquisition of Frame AI in January 2025. Employee-related costs decreased as a result of improved resource alignment and operational efficiencies.

Current wording

Subscription and hosting costs increased primarily due to growth in our Customer base from 228,054 as of June 30, 2024 to 267,982 as of June 30, 2025. We also saw higher subscription and hosting costs as we continued to support the growth of our customer base and increased usage of our customer platform. Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we continued to develop new products and increased functionality. Amortization of acquired technology increased due to the amortization of acquired technology associated with our acquisitions of Frame AI and Dashworks in 2025. Employee-related costs decreased as a result of improved resource alignment and operational efficiencies. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in subscription cost of revenue.

Previous wording

The increase in professional services and other cost of revenue for three months ended March 31, 2025 compared to the same period in 2024 was primarily due to the following:

Current wording

The increase in professional services and other cost of revenue for three and six months ended June 30, 2025 compared to the same period in 2024 was primarily due to the following:

Previous wording

Commerce payment processing fees increased due to higher payment volume and merchant activity. Amortization of capitalized software development costs increased as we continued to increase functionality with our internally build software platform. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in subscription cost of revenue. Employee-related costs decreased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services.

Current wording

Commerce payment processing fees increased due to higher payment volume and merchant activity. Amortization of capitalized software development costs increased as we continued to increase functionality with our internally built software platform. Amortization of acquired technology increased due to the amortization of acquired technology associated with our acquisitions of Cacheflow in the fourth quarter of 2024. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in subscription cost of revenue. Employee-related costs decreased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services.

Previous wording

The increase in research and development expense for the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to the following:

Current wording

The increase in research and development expense for the three and six months ended June 30, 2025 compared to the same period in 2024 was primarily due to the following:

Previous wording

Employee-related costs increased as a result of increased headcount as we continued to grow our engineering organization to develop new products, increase functionality and to maintain our existing customer platform. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business and increased proportional allocation of shared company expenses associated with headcount in research and development.

Current wording

Employee-related costs increased as a result of increased headcount as we continued to grow our engineering organization to develop new products, increase functionality and to maintain our existing customer platform. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business and increased proportional allocation of shared company expenses associated with headcount in research and development. Professional fees increased due to an increase in the use of third party services and contractors as we continued to grow our engineering organization.

Previous wording

The increase in sales and marketing expense for the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to the following:

Current wording

The increase in sales and marketing expense for the three and six months ended June 30, 2025 compared to the same period in 2024 was primarily due to the following:

Previous wording

Employee-related costs increased as a result of increased headcount as we expanded our selling and marketing organizations to grow our customer base. Marketing programs increased due to the timing and size of certain marketing efforts as we made investments in attracting new customers. Solutions Partner commissions increased as a result of increased revenue generated through our Solutions Partners. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure.

Current wording

Employee-related costs increased as a result of increased headcount as we expanded our selling and marketing organizations to grow our customer base. Marketing programs increased due to the timing and size of certain marketing efforts as we made investments in attracting new customers. Solutions Partner commissions increased as a result of increased revenue generated through our Solutions Partner, offset by a decrease in the second quarter of 2025 as we changed the duration of lifetime commissions for certain Solutions Partner to better align with the value delivered to customers. Professional fees increased due to an increase in the use of third party services and contractors for our marketing efforts. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure to support our business growth.

Previous wording

The increase in general and administrative expense for the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to the following:

Current wording

The increase in general and administrative expense for the three and six months ended June 30, 2025 compared to the same period in 2024 was primarily due to the following:

Previous wording

Restructuring charges in the three months ended March 31, 2025 and 2024 consisted of variable facilities-related costs on unused space.

Current wording

Restructuring charges in the three and six months ended June 30, 2025 and 2024 consisted of variable facilities-related costs on unused space.

Previous wording

Interest expense decreased slightly due to the early conversion of a portion of our 2025 notes during the three months ended March 31, 2025.

Current wording

Interest expense decreased due to the early conversion of a portion of our 2025 Notes during the three and six months ended June 30, 2025 and settlement of our 2025 Notes upon maturity in June 2025.

Previous wording

The change in other income (expense) during three months ended March 31, 2025 is primarily due to the following:

Current wording

The change in other income (expense) during the three and six months ended June 30, 2025 is primarily due to the following:

Previous wording

The decrease in the impairment of strategic investments is due to an impairment of $3.6 million in the first quarter of 2024 compared to $1.6 million loss in 2025. The decrease in gain on strategic investments is due to gains of $16.4 million from observable price changes in the value of certain strategic investments in the first quarter of 2024 that did not occur in 2025. The change in foreign currency gains and losses transactions is primarily attributable to the value of the U.S. Dollar relative to the Euro and British Pound Sterling.

Current wording

The change in foreign currency gains and losses transactions is primarily attributable to the value of the U.S. Dollar relative to the Euro and British Pound Sterling. The decrease in the impairment of strategic investments is due to an impairment of $0.5 million in the three months ended June 30, 2024 that did not occur in 2025. The decrease in gain on strategic investments is due to gains of $2.1 million from observable price changes in the value of certain strategic investments in the three months ended June 30, 2024 compared to $1.8 million in the three months ended June 30, 2025.

Previous wording

The increase in income tax expense was primarily driven by an uneven mix in U.S. pre-tax earnings and losses.

Current wording

The decrease in income tax expense in the three and six months ended June 30, 2025 was primarily driven by the timing of when our U.S. entity realizes pre-tax earnings and losses throughout the year.

Previous wording

The following table shows cash and cash equivalents, working capital, net cash and cash equivalents provided by operating activities, net cash and cash equivalents used in investing activities, and net cash and cash equivalents provided by financing activities for the three months ended March 31, 2025 and 2024.

Current wording

The following table shows cash and cash equivalents, working capital, net cash and cash equivalents provided by operating activities, net cash and cash equivalents used in investing activities, and net cash and cash equivalents provided by financing activities for the six months ended June 30, 2025 and 2024.

Previous wording

Our cash and cash equivalents at March 31, 2025 were held for working capital purposes and for a business acquisition (See Note 17 of the notes to consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q). At March 31, 2025, $250.7 million of our cash and cash equivalents was held in accounts outside the United States. We do not assert indefinite reinvestment of our foreign earnings because these earnings have been subject to United States Federal tax. While we have concluded that any incremental tax incurred upon ultimate distribution of these earnings to be immaterial, our current plans do not demonstrate a need to repatriate undistributed earnings to fund our U.S. operations.

Current wording

Our cash and cash equivalents at June 30, 2025 were held for working capital purposes. At June 30, 2025, $331.5 million of our cash and cash equivalents was held in accounts outside the United States. We do not assert indefinite reinvestment of our foreign earnings because these earnings have been subject to United States Federal tax. While we have concluded that any incremental tax incurred upon ultimate distribution of these earnings to be immaterial, our current plans do not demonstrate a need to repatriate undistributed earnings to fund our U.S. operations.

Previous wording

Net cash and cash equivalents provided by operating activities consists primarily of net (loss) income adjusted for certain non-cash items, including stock-based compensation, depreciation and amortization and other non-cash charges, net.

Current wording

Net cash and cash equivalents provided by operating activities consists primarily of net loss adjusted for certain non-cash items, including stock-based compensation, depreciation and amortization and other non-cash charges, net.

Previous wording

Net cash and cash equivalents provided by operating activities during the three months ended March 31, 2025 primarily reflected our net loss of $21.8 million, $28.8 million of depreciation and amortization, $116.7 million in stock-based compensation and an impairment of strategic investments of $1.6 million, $0.5 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $14.0 million accretion of bond discounts, and $2.7 million of unrealized currency translation. Working capital sources of cash and cash equivalents primarily included a $39.4 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $45.7 million decrease in accounts receivable related to increased collection, a $18.0 million increase in accounts payable related to timing of bill payments, and a $6.4 million decrease in right-of-use asset. These sources of cash and cash equivalents were offset by a $26.4 million increase in prepaid expenses and other assets, a $7.5 million decrease in operating lease liabilities, a $27.2 million increase in deferred commissions, and $1.2 million decrease in accrued expenses and other liabilities.

Current wording

Net cash and cash equivalents provided by operating activities during the six months ended June 30, 2025 primarily reflected our net loss of $25.1 million, $62.0 million of depreciation and amortization, $257.7 million in stock-based compensation, an impairment of strategic investments of $1.6 million, and $0.6 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $24.4 million accretion of bond discounts, a gain on strategic investments of $1.9 million, and $2.8 million of unrealized currency translation. Working capital sources of cash and cash equivalents primarily included a $63.9 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $30.0 million decrease in accounts receivable related to increased collection, a $9.1 million increase in accounts payable related to timing of bill payments, a $59.9 million increase in accrued expenses and other liabilities, and a $12.8 million decrease in right-of-use asset. These sources of cash and cash equivalents were offset by a $50.1 million increase in prepaid expenses and other assets, a $17.7 million decrease in operating lease liabilities, and a $49.6 million increase in deferred commissions.

Previous wording

Net cash and cash equivalents provided by operating activities during the three months ended March 31, 2024 primarily reflected our net income of $5.9 million, $21.2 million of depreciation and amortization, $111.1 million in stock-based compensation and an impairment of strategic investments of $3.6 million, $0.5 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $12.6 million accretion of bond discounts, a gain on strategic investments of $16.4 million, and $0.5 million of unrealized currency translation. Working capital sources of cash and cash equivalents primarily included a $31.2 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $25.4 million decrease in accounts receivable related to increased collection, and a $6.4 million decrease in right-of-use asset. These sources of cash and cash equivalents were offset by a $5.5 million increase in prepaid expenses and other assets, a $12.7 million decrease in operating lease liabilities, a $17.0 million increase in deferred commissions, a $1.3 million decrease in accounts payable related to timing of bill payments, and $13.3 million decrease in accrued expenses and other liabilities.

Current wording

Net cash and cash equivalents provided by operating activities during the six months ended June 30, 2024 primarily reflected our net loss of $8.5 million, $43.4 million of depreciation and amortization, $240.1 million in stock-based compensation, an impairment of strategic investments of $4.1 million, and $1.0 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $23.1 million accretion of bond discounts, a gain on strategic investments of $18.5 million, and $0.9 million of unrealized currency translation. Working capital sources of cash and cash equivalents primarily included a $44.3 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $18.4 million decrease in accounts receivable related to increased collection, a $15.0 million increase in accrued expenses and other liabilities, and a $20.4 million decrease in right-of-use asset. These sources of cash and cash equivalents were offset by a $27.2 million increase in prepaid expenses and other assets, a $23.2 million decrease in operating lease liabilities, a $40.1 million increase in deferred commissions, and a $0.2 million decrease in accounts payable related to timing of bill payments.

Previous wording

Net cash and cash equivalents provided by investing activities during the three months ended March 31, 2025 consisted primarily of $674.4 million purchases of investments, $13.3 million of purchased property and equipment, $11.0 million purchases of strategic investments, $51.4 million related to business acquisitions, and $30.4 million of capitalized software development costs. These uses of cash were offset by $803.1 million received related to the maturity of investments.

Current wording

Net cash and cash equivalents provided by investing activities during the six months ended June 30, 2025 consisted primarily of $1.3 billion received related to the maturity of investments, offset by $830.2 million purchases of investments, $29.4 million of purchased property and equipment, $18.8 million purchases of strategic investments, $69.8 million related to business acquisitions, and $65.9 million of capitalized software development costs.

Previous wording

Net cash and cash equivalents used in investing activities during the three months ended March 31, 2024 consisted primarily of $399.4 million purchases of investments, $5.9 million of purchased property and equipment, and $21.6 million of capitalized software development costs. These uses of cash were offset by $352.8 million received related to the maturity of investments.

Current wording

Net cash and cash equivalents provided by investing activities during the six months ended June 30, 2024 consisted primarily of $849.6 million received related to the maturity of investments and $1.9 million of proceeds from a net working capital settlement, offset by cash used for $651.7 million purchases of investments, $14.1 million of purchased property and equipment, and $43.1 million of capitalized software development costs.

Previous wording

Our financing activities have consisted primarily of the repayment of our 2025 Notes, the issuance of common stock under our stock plans, and payments of employee taxes related to the net share settlement of stock-based awards.

Current wording

Our financing activities have consisted primarily of the repayment of our 2025 Notes, repurchases of our common stock, the issuance of common stock under our stock plans, and payments of employee taxes related to the net share settlement of stock-based awards.

Previous wording

For the three months ended March 31, 2025 cash provided in financing activities consisted of $19.3 million of proceeds related to issuance of common stock under stock plans, offset by $9.1 million used for payment of employee taxes related to the net share settlement of stock-based awards and $90.6 million for repayments of the 2025 Notes attributable to the principal.

Current wording

For the six months ended June 30, 2025 cash used in financing activities consisted of $125.0 million used for repurchases of our common stock, $459.8 million for repayments of the 2025 Notes attributable to the principal, and $13.8 million used for payment of employee taxes related to the net share settlement of stock-based awards, offset by $38.7 million of proceeds related to issuance of common stock under stock plans.

Previous wording

For the three months ended March 31, 2024 cash provided in financing activities consisted of $19.9 million of proceeds related to issuance of common stock under stock plans, offset by $8.8 million used for payment of employee taxes related to the net share settlement of stock-based awards.

Current wording

For the six months ended June 30, 2024 cash provided in financing activities consisted of $45.2 million of proceeds related to issuance of common stock under stock plans, offset by $13.5 million used for payment of employee taxes related to the net share settlement of stock-based awards.

Previous wording

Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our contractual obligations consist of operating lease liabilities that are included in our consolidated balance sheet and vendor commitments associated with agreements that are legally binding. As of March 31, 2025, the total obligation for operating leases was $346.5 million, of which $54.7 million is expected in the next twelve months. As of March 31, 2025, our vendor commitment was $618.2 million, of which $240.4 million is expected in the next twelve months. See Note 12 for all obligations the Company is committed to in the notes to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our contractual obligations consist of operating lease liabilities that are included in our consolidated balance sheet and vendor commitments associated with agreements that are legally binding. As of June 30, 2025, the total obligation for operating leases was $340.2 million, of which $56.7 million is expected in the next twelve months. As of June 30, 2025, our vendor commitment was $546.0 million, of which $221.8 million is expected in the next twelve months. See Note 12 for all obligations the Company is committed to in the notes to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

As of March 31, 2025, we had a total of $4.1 million in letters of credit outstanding for office space. These irrevocable letters of credit are expected to remain in effect, in some cases, until 2029.

Current wording

As of June 30, 2025, we had a total of $2.7 million in letters of credit outstanding for office space. These irrevocable letters of credit are expected to remain in effect, in some cases, until 2029.

Previous wording

There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2025 as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2025 as compared to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.