Posted on Friday, Mar 13th 2015
According to a survey of small and medium businesses conducted by CAN Capitol, 38% of SMB owners plan to increase their advertising and marketing activities this year. Billion Dollar Unicorn club member HubSpot is a rising star in this market, focusing on the inbound marketing segment for these SMBs.
Cambridge, Massachusetts-based HubSpot was founded in 2006 by Brian Halligan and Dharmesh Shah to provide an all-in-one inbound marketing software platform for small- and medium-sized businesses. The company was set up with the goal of centralizing different marketing automation and search engine optimization (SEO) tools into one platform to help with “inbound” marketing.
Today HubSpot provides a cloud-based inbound marketing and sales software platform. It integrates various digital properties including social media networks, SEO results, and blogging and website content to provide marketers with tools for marketing automation, email, analytics, and reporting. It is thus able to manage the entire process of attracting visitors to websites, converting them into leads, closing leads to sales, and managing the actual customer experience.
The premise behind HubSpot’s founding is that due to the Internet, the way buyers engage with businesses for products and services has undergone a transformation. Customers today are more aware of what they want and reach out to search engines and social media tools in search for the optimal product, service, and its price. Customers have been able to manage the information that reaches them by blocking out sales calls and spam mail. By keeping their platform geared to inbound marketing strategies, HubSpot is able to offer businesses a more effective marketing tool. Their platform now supports more than 13,600 customers in 65 countries worldwide.
HubSpot earns revenues by charging a flat fee based on the contacts targeted per month. Fee ranges from $2,400 annually for less than 100 contacts targeted to as high as $60,000 a year for 2 million contacts annually. HubSpot has seen rapid revenue growth, but continued investments are yet to turn them profitable.
Their revenues increased from $28.6 million in 2011 to $77.6 million in 2013. Net losses for the same period grew from $24.4 million to $34.3 million in 2013. They recently reported fourth quarter results that saw fourth quarter revenues grow 53% to $34.2 million. Subscription revenues increased 52% to $31.3 million and services revenues increased 57% to $2.8 million during the quarter. They ended the year 2014 with revenues of $115.9 million. Subscription revenues for the year increased 50% to $106.3 million and services revenues increased 40% to $9.6 million. Loss for the quarter has reduced from $1.39 per share a year ago to $0.25 per share. For the year, losses have reduced from $5.97 per share to $2.77 per share. The Street had forecast revenues of $31.68 million for the quarter with a loss of $0.27 per share.
For the current quarter, HubSpot expects revenues of $34.8 million-$35.8 million with a loss per share of $0.22-$0.26. They expect to end the year with revenues of $159 million-$163 million and a net loss of $32 million-$36 million.
Till October 2014, HubSpot was venture funded. They had raised $100.5 million in funding from investors including CRV, Altimeter Capital, Cross Creek Advisors, Dharmesh Shah, General Catalyst Partners, Brian Shin, Mike Volpe, Matrix Partners, Scale Venture Partners, Sequoia Capital, Google Ventures, and Salesforce.com. Their last round of funding was held in November 2012 when they raised $35 million at an undisclosed valuation. In October 2014, HubSpot went public under the ticker HUBS on the NYSE by selling 5 million shares at $25 each to raise $125 million.
Today, their stock is trading at $40.60 with a market capitalization of $1.28 billion. It touched a high of $44.34 last month.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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