Summary
HubSpot reported first quarter fiscal 2022 revenue of $395.6 million, up 40.6% from $281.4 million in the prior-year quarter. Gross profit rose 42.4% to $322.7 million, and gross margin was 81.6%, up 1.0 percentage point from 80.5%. The customer count reached 143,689 at March 31, 2022, up 26% from March 31, 2021. Average Subscription Revenue Per Customer was $11,030 in the quarter, up 12% from the first quarter of 2021. Management tied the customer growth to higher sales representative capacity and to demand for lower priced starter products as well as Professional and Enterprise products. HubSpot sells to mid-market business-to-business companies with between two and 2,000 employees and counts customers in more than 120 countries.
Profitability improved on both a GAAP and a non-GAAP basis. The GAAP operating loss narrowed to $11.2 million from $15.0 million a year earlier, and operating margin was -2.8%, up 2.5 percentage points from -5.3%. GAAP net loss narrowed to $9.3 million from $23.2 million, and diluted loss per share was $0.20. Non-GAAP operating income was $35.0 million, compared with $18.9 million, and non-GAAP operating margin was 8.8% against 6.7%. Non-GAAP net income was $27.5 million, or $0.54 per diluted share, versus $15.7 million, or $0.31 per diluted share. The spread between the two sets of numbers comes mostly from stock-based compensation and other non-cash items that the company excludes.
Cash generation stayed strong. Operating cash flow was $82.2 million, up 31.1% from $62.7 million in the first quarter of 2021. Free cash flow, a separate non-GAAP measure, was $62.6 million against $61.2 million. Capital expenditures rose 150.6% to $9.94 million from $3.97 million. Deferred revenue, reported on a current portion basis, was $457.9 million, up 36.2% from $336.2 million. Remaining performance obligations were $406.9 million, up 51.0% from $269.4 million. Management cautioned that deferred revenue is not a reliable indicator of future revenue because billing terms vary from period to period. The company adopted ASU 2020-06 on January 1, 2022, which changed how its convertible notes are accounted for and removed the separate equity component from the debt.
Guidance points to continued growth. For the second quarter of 2022, revenue is expected in the range of $409.0 million to $410.0 million, non-GAAP operating income in the range of $27.0 million to $28.0 million, and non-GAAP net income per share in the range of $0.42 to $0.44, assuming roughly 51.2 million diluted shares. For the full year 2022, revenue is now guided to $1.722 billion to $1.728 billion, non-GAAP operating income to $152.0 million to $154.0 million, and non-GAAP net income per share to $2.40 to $2.42, assuming about 51.5 million diluted shares.
Risks look familiar. The company lists its history of losses, its ability to retain existing customers and add new ones, competition in the CRM market, managing growth, reliance on Solutions Partners, and recruiting and retaining qualified staff. It also flags stock price volatility and the impact of geopolitical conflicts, inflation, macroeconomic instability, and the COVID-19 pandemic on the business and on its ability to forecast results. Management said it does not expect to be profitable in the near term and plans to keep investing in sales and marketing, research and development, and customer service. Chief Executive Yamini Rangan called 2022 a year of focus and consistency and pointed to the Service Hub relaunch as a highlight of the quarter. The company ended the quarter with 6,404 full-time employees and committed to contribute an additional $9.4 million to the Black Economic Development Fund.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $395.6M | $369.3M | +7.1% | $281.4M | +40.6% |
| Gross profit | $322.7M | $297.7M | +8.4% | $226.6M | +42.4% |
| Gross margin | 81.6% | 80.6% | +1.0 pp | 80.5% | +1.0 pp |
| Research & development | $92.7M | $83.0M | +11.7% | $68.4M | +35.6% |
| Sales & marketing | $197.1M | $180.8M | +9.0% | $141.0M | +39.8% |
| General & administrative | $43.9M | $42.1M | +4.5% | $32.3M | +36.3% |
| Total operating expenses | $333.8M | $305.9M | +9.1% | $241.7M | +38.1% |
| Operating income (loss) | -$11.2M | -$8.2M | -35.4% | -$15.0M | +25.8% |
| Operating margin | -2.8% | -2.2% | -0.6 pp | -5.3% | +2.5 pp |
| Net income (loss) | -$9.3M | -$16.4M | +42.9% | -$23.2M | +59.7% |
| Net margin | -2.4% | -4.4% | +2.1 pp | -8.2% | +5.9 pp |
| Customers | 143,689 | 135,442 | +6.1% | 120 | +119640.8% |
Risks
U.S. inflation rates have increased to levels not seen in several years, and the Federal Reserve has raised and may again raise interest rates. The ongoing conflict between Russia and Ukraine and related sanctions could disrupt global markets, reduce customers' willingness to subscribe, delay purchasing decisions, or affect renewal rates.
Headcount grew to 6,404 full-time employees as of March 31, 2022 from 5,895 as of December 31, 2021, increasing strain on recruiting and retention. The company cites a competitive hiring environment, remote or hybrid work expanding competition for talent, cost inflation, and a global labor shortage.
New and evolving privacy laws, including the CPRA effective January 1, 2023, Virginia's CDPA, Colorado's CPA, and Utah's UCPA, increase compliance complexity and cost. The company is transitioning to the UK's new international data transfer agreement templates, which it says will require significant effort and cost.
The company notes residual risk from supply chain attacks such as SolarWinds, Log4j, and Kaseya. It also says the ongoing conflict between Russia and Ukraine may create a heightened threat environment and increased risk of retaliatory cyber-attacks against U.S.-based companies.
Because the stock price condition was met, the 2022 Notes and 2025 Notes are convertible at holders' option during specified periods. If holders elect conversion, the company may be required to settle in cash, which could adversely affect liquidity, and accounting rules could require reclassifying principal as a current liability.
The marketing, sales, customer service, operations, and content management software market is highly competitive and fragmented. Competitors may bundle competing products at little or no additional cost, forcing price reductions or less favorable terms and reducing margins.
Substantially all subscription periods are one year or less, and customers may renew for lower tiers, fewer contacts or seats, or shorter contract lengths. A decline in new or renewed subscriptions may not be immediately reflected in reported results but could reduce future revenue.
The company had 6,404 full-time employees as of March 31, 2022 and plans additional international offices, placing strain on management, administrative, operational, and financial infrastructure. Failure to manage growth could impair its ability to execute its business plan or maintain service levels.
The company plans further international expansion and has a development team in Dublin. Risks include the conflict between Russia and Ukraine, Brexit, currency exchange rate fluctuations, and more stringent data security regulations, particularly in the European Union.
The company serves most platform functions from third-party data centers operated by Amazon Web Services and Google Cloud Platform, with ancillary functions from Rackspace. Interruptions, capacity constraints, or cost increases at these providers could impair platform delivery and harm revenue.
Many employees critical to disclosure controls and internal control over financial reporting work remotely, and the company has limited experience maintaining effective control systems in remote environments. This may result in failure to maintain effective controls.
The COVID-19 pandemic and containment measures could still cause business slowdowns, weakened economic conditions, and volatility. The company says conditions may affect customer spending, purchasing decisions, pricing discounts, contract duration, and attrition rates.
SaaS KPIs
All quarters →Average Subscription Revenue Per Customer
Non-GAAP Operating Margin
Non-GAAP Subscription Margin
Free cash flow
Total Customers
Summary, forecast, risks and KPIs are extracted from HUBSPOT INC's SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.