Summary
HubSpot's first quarter of fiscal 2024 produced revenue of $617.4 million, up 23.1% from $501.6 million in the prior-year quarter. Subscription revenue accounted for 98% of the total, and professional services and other revenue was $13.6 million, up 15%. The customer base grew 22% to 216,840 as of March 31, 2024. Average subscription revenue per customer was $11,447, up 1% year over year. Management tied the customer gains largely to demand for lower-priced Starter products, while Professional and Enterprise demand and the Clearbit acquisition lifted the per-customer figure.
Margins moved the right way. Gross profit was $522.3 million, up 24%, and gross margin reached 84.6%, up 0.6 percentage points from 84.0%. The GAAP operating loss narrowed to $23.2 million from $43.1 million, and operating margin improved to negative 3.8% from negative 8.6%. Non-GAAP operating income was $92.6 million at a 15.0% margin, against $69.4 million and 13.8% a year earlier. GAAP net income swung to a profit of $5.9 million, or $0.12 per diluted share, from a net loss of $36.7 million, or $0.74 per diluted share. Non-GAAP net income was $89.1 million, or $1.68 per diluted share, compared with $63.0 million and $1.22. Operating expenses still grew. Research and development rose 38% to $175.6 million and sales and marketing rose 20% to $300.3 million, both driven by employee-related costs. Restructuring charges fell sharply from the prior-year quarter, and interest income rose on higher investment yields.
Cash generation was the standout. Operating cash flow was $127.1 million, up 56.8% from $81.1 million in the prior-year quarter. Capital expenditures were $5.9 million, up 77.7% from $3.3 million. Non-GAAP free cash flow was $103.8 million, compared with $85.2 million a year earlier, and non-GAAP operating cash flow was $131.3 million against $103.6 million. Cash, cash equivalents, and short-term and long-term investments totaled $1.8 billion at March 31, 2024. Deferred revenue was $696.9 million, up 21.9%, and remaining performance obligations were $827.1 million, up 32.9%. Management cautioned that changes in deferred revenue are not an accurate indicator of future revenue because billing terms vary from period to period. Net cash used in investing activities was $74.1 million, and net cash provided by financing activities was $11.2 million. The company ended the quarter with 7,829 full-time employees.
Guidance for the second quarter of 2024 calls for non-GAAP operating income of $92.0 million to $93.0 million and non-GAAP net income per share of $1.62 to $1.64 on roughly 53.3 million weighted average diluted shares. For the full year 2024, the company guided to non-GAAP operating income of $426.0 million to $430.0 million and non-GAAP net income per share of $7.30 to $7.38 on about 53.5 million weighted average diluted shares. Foreign exchange rates are expected to be a 1 point headwind to revenue growth in both the second quarter and the full year.
The risk list is familiar. The CEO called the macro environment challenging, and the company said it does not expect to be profitable on a GAAP basis over the next 12 months. The filing points to a history of losses, the ability to retain existing customers and add new ones, competition, the development of AI and machine learning products, regulatory developments around AI, foreign currency movements, inflation, and geopolitical conflicts. The restructuring plan authorized in January 2023 will bring $14 million to $17 million of incremental charges and about $54.0 million in fixed rent payments for abandoned facilities over the next three years. HubSpot also disclosed an immaterial error in how it calculated contractual credits in a third-party vendor agreement, revised prior-period figures, and expects to correct the matter in the Form 10-Q due May 10, 2024.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $617.4M | $581.9M | +6.1% | $501.6M | +23.1% |
| Gross profit | $522.3M | $493.3M | +5.9% | $419.6M | +24.5% |
| Gross margin | 84.6% | 84.8% | -0.2 pp | 83.6% | +1.0 pp |
| Research & development | $175.6M | $163.2M | +7.6% | $127.7M | +37.6% |
| Sales & marketing | $300.3M | $281.1M | +6.8% | $250.7M | +19.8% |
| General & administrative | $68.9M | $69.7M | -1.2% | $57.4M | +20.0% |
| Total operating expenses | $545.6M | $517.6M | +5.4% | $464.3M | +17.5% |
| Operating income (loss) | -$23.2M | -$24.3M | +4.6% | -$44.8M | +48.1% |
| Operating margin | -3.8% | -4.2% | +0.4 pp | -8.9% | +5.2 pp |
| Net income (loss) | $5.9M | -$13.6M | +143.6% | -$38.3M | +115.5% |
| Net margin | 1.0% | -2.3% | +3.3 pp | -7.6% | +8.6 pp |
| Diluted EPS | $0.12 | -$0.27 | +$0.39 | -$0.78 | +$0.90 |
| Customers | 216,060 | 205,091 | +5.3% | 177,298 | +21.9% |
Risks
Risk factors state competitors may use evolving AI technologies to render HubSpot's products less competitive or obsolete, and the company must invest in AI features. MD&A describes AI-powered engagement hubs, while risk factors note generative AI content may be inaccurate, contain protected material, and increase computing costs.
Risk factors describe the market as highly competitive and fragmented, with competitors that may bundle marketing, sales, and customer service software at little or no additional cost. Some competitors have more financial, technical, and marketing resources, which could pressure pricing and margins.
The 2025 Notes are convertible at holders' option during the quarter ending June 30, 2024 because the stock price condition was met. If holders convert, HubSpot may need to settle in cash, which could adversely affect liquidity, and accounting rules could require reclassifying principal as a current liability.
Net income was $5.9 million for the quarter ended March 31, 2024, primarily due to a non-recurring gain on investment, and management does not expect to be profitable in the next 12 months. Accumulated deficit was $798.5 million as of March 31, 2024.
Risk factors disclose that HubSpot experienced a cybersecurity incident in 2022 and has experienced attempts to exfiltrate customer data. A breach could result in liability, remediation costs, negative publicity, and customer loss.
MD&A states foreign exchange fluctuations and rising inflation have had, and may continue to have, an adverse impact on financial condition and operating results. Risk factors cite recession risk, higher interest rates, and uncertainty around the 2024 U.S. Presidential Election as factors that could delay customer purchasing decisions.
MD&A attributes customer growth to lower-priced Starter products, while Average Subscription Revenue per Customer increased only from $11,365 to $11,447. Risk factors warn that enterprise sales may entail longer sales cycles and small-business sales greater credit risk, and mix shifts could decrease gross margins.
Headcount grew to 7,829 full-time employees as of March 31, 2024 from 7,663 at December 31, 2023. Risk factors cite difficulty hiring and retaining skilled personnel, especially in a remote or hybrid environment, and note that a declining or volatile stock price could impair equity-based retention.
Compliance with GDPR, CCPA/CPRA, and other evolving privacy laws may require changes to data collection and could result in fines up to €20 million or 4% of worldwide annual revenue. AI regulation may also increase the burden and cost of research and development.
The December 2023 Clearbit acquisition may not realize anticipated benefits. Risk factors cite integration risks including unanticipated costs, inability to maintain customer and partner relationships, and potential goodwill impairment.
SaaS KPIs
All quarters →Average Subscription Revenue Per Customer
Non-GAAP Operating Margin
Non-GAAP Subscription Margin
Total Customers
Non-GAAP Free Cash Flow
Non-GAAP Operating Cash Flow
Summary, forecast, risks and KPIs are extracted from HUBSPOT INC's SEC filings for Q1 FY2024 (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.