HubSpot, Inc. reports 220% EBITDA decline in 2020 while 30.8% Revenue growth
02/11/2021 • About HubSpot, Inc. (
$HUBS) • By InTwits
HubSpot, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- HubSpot, Inc. is a fast growth stock: FY2020 revenue growth was 30.8%, 5 year revenue CAGR was 37.2% at FY2020 ROIC -3.6%
- The company operates at negative EBITDA Margin: -1.6%
- HubSpot, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 5.7%. Average EBITDA Margin for the same period was -3.1%
- HubSpot, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.0%. At the same time it's in pair with industry average of 14.0%
- CAPEX is quite volatile: $59m in FY2020, $54m in FY2019, $22m in FY2018, $20m in FY2017, $16m in FY2016
- The company has unprofitable business model: ROIC is -3.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
HubSpot, Inc.'s Revenue jumped on 30.8%. Revenue growth showed acceleration in FY20Q4 - it increased 35.4% YoY. Revenue decline was accelerating on average at -4.3 pp per annum in the last 5 years. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.3 pp from -3.5% to 1.9% in 2020. EBITDA Margin stuck to a growing trend at 3.0 pp per annum in FY2016-FY2020.
Gross Margin showed almost no change in FY2020. Gross Margin followed a growing trend at 0.88 pp per annum in FY2016-FY2020. SG&A as a % of Revenue decreased slightly on 0.69 pp from 64.3% to 63.6% in FY2020. SG&A as a % of Revenue followed a declining trend at -3.4 pp per annum in the last 5 years.
Net Income margin decreased slightly on 1.7 pp from -8.0% to -9.6% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 6.7%. HubSpot, Inc. showed small growth in CAPEX/Revenue of 1.3 pp from 5.4% in FY2017 to 6.7% in FY2020. It's average level of CAPEX/Revenue for the last three years was 6.3%.
Return on investment
The company operates at negative ROIC (-3.6%) and ROE (-12.0%). ROIC showed almost no change in FY2020. ROE showed almost no change in FY2020. ROIC followed a growing trend at 7.5 pp per annum in the last 5 years. ROE followed a growing trend at 6.4 pp per annum in FY2016-FY2020.
Leverage (Debt)
Debt level is -5.8x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 29.4x from 29.4x to in FY2020. Debt jumped on 29.6% while cash jumped on 40.2%.
HubSpot, Inc. has no short term refinancing risk: cash is higher than short term debt (998.8%).
Management team
The company's CEO Brian Halligan has spent 16 years with the company. Kate Bueker is a the company's CFO. Kate Bueker has spent 2 years at the company.
Financial and operational results
HubSpot, Inc. ($HUBS) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 271.0 | 375.6 | 513.0 | 674.9 | 883.0 | 30.8% |
| Gross Profit | 209.1 | 299.9 | 412.6 | 544.9 | 716.1 | 31.4% |
| SG&A | 207.8 | 269.6 | 343.3 | 433.7 | 561.3 | 29.4% |
| EBITDA | -33.5 | -24.4 | -24.8 | 11.5 | -13.8 | -219.7% |
| EBIT | -44.7 | -40.1 | -48.3 | | | |
| Tax | 0.5 | -10.3 | 1.9 | | | |
| Net Income | -45.6 | -39.7 | -63.8 | -53.7 | -85.0 | |
| Stock Based Compensation | 32.7 | 47.3 | 76.3 | | | |
Balance Sheet
|
|---|
| Cash | 59.7 | 87.7 | 111.5 | 269.7 | 378.1 | 40.2% |
| Accounts Receivable | 39.0 | 60.7 | 77.1 | | | |
| Accounts Payable | 4.4 | 4.7 | 7.8 | | | |
| Short Term Debt | 0.8 | 0.0 | 0.0 | 23.6 | 37.9 | 60.3% |
| Long Term Debt | 0.3 | 298.4 | 318.8 | 584.8 | 750.8 | 28.4% |
Cash flow
|
|---|
| Capex | 15.8 | 20.3 | 22.3 | 53.8 | 58.9 | 9.3% |
| Acquisitions | | 9.4 | | | | |
Ratios
|
|---|
| Revenue growth | 48.9% | 38.6% | 36.6% | 31.6% | 30.8% | |
| EBITDA growth | -14.4% | -27.3% | 2.0% | -146.3% | -219.7% | |
|
|---|
| Gross Margin | 77.2% | 79.8% | 80.4% | 80.7% | 81.1% | 0.3% |
| EBITDA Margin | -12.4% | -6.5% | -4.8% | 1.7% | -1.6% | -3.3% |
| EBIT Margin | -16.5% | -10.7% | -9.4% | | |
| SG&A, % of revenue | 76.7% | 71.8% | 66.9% | 64.3% | 63.6% | -0.7% |
| SBC, % of revenue | 12.1% | 12.6% | 14.9% | | |
| Net Income Margin | -16.8% | -10.6% | -12.4% | -8.0% | -9.6% | -1.7% |
| CAPEX, % of revenue | 5.8% | 5.4% | 4.3% | 8.0% | 6.7% | -1.3% |
|
|---|
| ROIC | -36.7% | -12.7% | -9.0% | -3.5% | -3.6% | -0.1% |
| ROE | -37.9% | -24.1% | -28.1% | -12.0% | -12.0% | -0.0% |
| Net Debt/EBITDA | | | | 29.4x | |
People
|
|---|
| Insider ownership | 6.0% | 6.0% | 6.0% | | | |
| Employees | 1,597 | 2,081 | 2,638 | | | |
| Revenue/Employee, th. $ | 170 | 180 | 194 | | | |
HubSpot, Inc. ($HUBS) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 199 | 204 | 228 | 252 | | 31.1% | 24.7% | 31.5% | 35.4% |
| EBITDA | -5 | -5 | -6 | 2 | | -230.3% | - | -494.4% | -68.2% |
| Net Income | -18 | -29 | -22 | -15 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 229 | 201 | 125 | 378 | | -19.6% | -15.5% | -44.7% | 40.2% |
| Short Term Debt | 25 | 30 | 30 | 38 | | 54.1% | 93.4% | 93.4% | 60.3% |
| Long Term Debt | 586 | 743 | 757 | 751 | | 18.3% | 31.6% | 35.1% | 28.4% |
Ratios
|
|---|
| Gross Margin | 80.8% | 81.0% | 81.3% | 81.2% | | 0.2% | 0.0% | 0.5% | 0.6% |
| EBITDA Margin | -2.7% | -2.3% | -2.7% | 0.9% | | -5.4% | -1.3% | -3.5% | -3.0% |
| Net Income Margin | -8.9% | -14.4% | -9.9% | -6.1% | | -1.6% | -3.8% | -1.2% | -0.6% |
Peers in Application Software
Below we provide HubSpot, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 14.8% | 15.1% | 19.4% | 14.5% |
|---|
| HubSpot, Inc. ($HUBS) | - | 38.6% | 36.6% | 31.6% | 30.8% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| HubSpot, Inc. ($HUBS) | 77.2% | 79.8% | 80.4% | 80.7% | 81.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -4.7% | -3.3% | -3.3% | 4.5% | 7.7% |
|---|
| HubSpot, Inc. ($HUBS) | -12.4% | -6.5% | -4.8% | 1.7% | -1.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 2.9% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| HubSpot, Inc. ($HUBS) | 5.8% | 5.4% | 4.3% | 8.0% | 6.7% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.2% | -10.2% | -10.6% | -4.5% | -1.8% |
|---|
| HubSpot, Inc. ($HUBS) | -36.7% | -12.7% | -9.0% | -3.5% | -3.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (54 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.2x |
|---|
