Post on 24-Jan-2018
transcript
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This presentation includes certain “forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995,including statements concerning our cash flow and margin improvement expectations, our position to execute on our growth strategy in themid-market, and our ability to expand our leadership position and market opportunity for our inbound platform. These forward-lookingstatements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this pressrelease that are not historical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks,""estimates" or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions,expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we havemade. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained orachieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by avariety of risks and factors that are beyond our control including, without limitation, our history of losses, our ability to retain existingcustomers and add new customers, the continued growth of the market for an inbound platform; our ability to differentiate our platform fromcompeting products and technologies; our ability to manage our growth effectively to maintain our high level of service; our ability to maintainand expand relationships with our marketing agency partners; our ability to successfully recruit and retain highly-qualified personnel; theprice volatility of our common stock, and other risks set forth under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed onAugust 3, 2016 and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document asa result of new information, future events or otherwise.
Safe Harbor
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Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
RevenueCustomers by Country
An Inbound Marketing & Sales SaaS Company
20,444 customers, 90+ countries, 6 locations worldwide
Cambridge, MA | Portsmouth, NH | Dublin, Ireland | Sydney, Australia | Singapore | Tokyo, Japan
$30.4M51% Y/Y
$34.2M53% Y/Y
$38.2M58% Y/Y
$42.9M58% Y/Y
$47.7M57% Y/Y
$53.1M56% Y/Y
$59.0M54% Y/Y
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$65.0M51% Y/Y
Why does exist?
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Marketing has become an arms race for attention.
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94% skip TV ads
94% unsubscribefrom email
27% direct mail is
never opened
50% (Over 200M)
are on do-not-call lists
Base: Varied bases, minimum 598 global digital consumersSource: HubSpot Global Interruptive Ads Survey, Q4 2015 – Q1 2016.
The old marketing and sales playbook is broken.(Because the way people shop for and buy things has changed)
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But today’s consumers have the tools to fight back.
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Skip commercials
Screen calls Delete spam
Ignore print Straight inthe binPop-up
blockers
It’s easier than ever for customers to
block out the noise
Blocking Out the Noise
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So how do you reach a consumer who doesn’t want to be bothered?
Be helpful.
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Inbound Marketing & Sales
1010
“Wait. What is inbound?”
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Inbound is about the size of your brain, not the width of your wallet
Helpful | Human | Personal | Transformational | Empowering | Educational
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How Does Inbound Work?
Aggressively pushescontent at innocent
bystanders, interrupting their life
Inbound pulls in prospects by offering helpful content
and experience when they need it
VS.
Outbound Inbound
SEO | Blogs | SocialCold Calling | Spam | Interruptive Ads
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How does HubSpot do inbound?
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Inbound Methodology
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The Inbound Value Proposition: Simply put, it’s about growing an asset vs. renting one.
1 2 3Predictable Measurable Proven ROI
Icon Source: http://thenounproject.com via Gregor Cresnar 16
Did you know: More than 90% of HubSpot’s new leads each month come from “Old Content”?
92% Leads from Old Posts
8% Leads from New Posts
In other words, if HubSpot’s blogging team took next month off, we’d still generate 92% of leadsas if we’d continued to publish new content.
Source: Historical Blog Post Optimization Project (learn more here: http://blog.hubspot.com/marketing/historical-blog-seo-conversion-optimization)
Predictable
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This post was written by HubSpot CEO Brian Halligan in July 2010. In 2015, it:
● Still ranks #1 in Google searches
● Received 17,854 views
● Generated 117 leads
5 Years later, still moving the needle.
What Does an Inbound Asset Look Like?
Article ranks #1 for “inbound marketing vs outbound marketing”
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In a digital world, track everything from clicks to conversions to revenue
Measurable
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No matter the size of your marketing budget, inbound can bring you ROI.This is the real deal.From big marketing budget to small, a significant number of businesses saw higher returns from inbound marketing than from outbound.
0%
10%
20%
30%
40%
50%
60%
$25K or less $25,001 to$100K
$100,001 to$500K
$500,001 to$1M
$1M to $5M More than$5M
We see higher ROI using inboundmarketing
We see higher ROI using outboundmarketing
42%
Inbound vs. Outbound ROI by Marketing SpendBig budget or small – everyone gets big returns from inbound
8%
47%
52%
44%
48%
52%
14%
11%
18%
14%
18%
Proven ROI
Source: HubSpot’s 2015 State of Inbound Report; survey of approximately 4,000 respondents; majority of respondents are marketers at B2Bs; approx one-third of respondents have an affiliation with HubSpot; approx ½ of respondents generate revenue under $1M
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0% 10% 20% 30% 40% 50% 60% 70% 80%
0 to 25 employees
26 to 200 employees
201 or more employees
As it turns out, ROI matters. A lot.
Proving the ROI of our marketing activities
Securing enough budget
Managing our website
Identifying the right technologies for my needs
Training our team
Targeting content for an international audience
Hiring top talent
Finding an executive sponsor
42%57%
71%
32%32%
51%
32%31%31%
31%22%
29%
23%24%
26%
23%23%
24%
19%25%
22%
9%5%
8%
Top Challenges by Company SizeProving ROI and subsequently securing more budget are marketers’ biggest roadblocks
Source: HubSpot’s 2015 State of Inbound Report; survey of approximately 4,000 respondents; majority of respondents are marketers at B2Bs; approx one-third of respondents have an affiliation with HubSpot; approx ½ of respondents generate revenue under $1M21
We are an inbound marketing & sales SaaS company.
Our mission is to transform how companies market and sell.
Our vision is a world where business is inbound.
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Total Addressable Market
With growth in international via new market exploration and in ASRPC via new products, we anticipate this opportunity will continue to grow.
Mid Market Opportunity
-3.0M is US, CAN, and Europe. 1.6M mid-market businesses with a web presence in the United States and Canada. 1.4M mid-market businesses with a web presence in Europe. -AMI Partners data, 2014. Avg. Subscription Revenue per Customer from Q2’16
There are ~ 3 million mid-market companies in US, Canada, and Europe alone. With an ASRPC of $11,978, we’re looking at $30+ billion of untapped potential.
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160,000+ MembersWhere the inbound movement grows the other 360 days of the year
14,000+ Registered AttendeesWhere the inbound movement grows every year
● 40% more registered attendees than 2014
● 250+ speakers; hundreds of hours of content
● 123k mentions of #INBOUND15
3,300+ PartnersHubSpot provides training and support to our agency partners, working together to sell our products.
45,000+ CertificationsHubSpot’s one-stop-shop for free education on all things inbound
47,000+ Linking DomainsThe number of websites linking back to HubSpot, providing us with both authority in search engines and recognition among industry professionals
The Inbound Community
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HubSpot Marketing
All-in-one marketing software platform Sales Productivity Tools Free CRM for Small Business
HubSpot CRM
Content
Marketing Automation
Analytics & Reporting
Websites
Ads Add-on
Email Templates
Profiles
Email Tracking
Sequences
Contact Timeline
Reporting
Analytics
Prospects
HubSpot Sales
The HubSpot Platform
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HubSpot Marketing Pricing
Upgrade based on contact database
size.
Upgrade based on features.
Cross sell new products into both
marketing and sales customers
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Company Awards
● Glassdoor: #4 Workplace
● Fortune & Great Place to Work: Top Workplace for Camaraderie, Best Small & Medium Workplace, Top Workplace for Women
● Entrepreneur: Top Company Culture
● The Boston Globe: Top Place to Work
● Boston Business Journal: Best Place to Work
Product and Service Awards
● Named a “Visionary” in Gartner’s 2015 Magic Quadrant for CRM Lead Management
● Frost & Sullivan 2015 Global Marketing Automation Software Customer Value Leadership Award
● G2 Crowd: Best Marketing Automation Software, Best Web Content Management Software, Named a “Leader” in the Summer 2015 Marketing Automation Grid
What do these accolades mean? In combination with HubSpot’s close proximity to Boston’s top-tier schools, we attract top talent.
HubSpot, in the words of others.
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Customer Case Study: VeriFirst Background Screening
• Low organic traffic
• Poor web presence
• Multiple point solutions
• Inefficient sales funnel
• Poor lead nurturing
• Poor S&M alignment
• Slow sales onboarding
Problem Solution Tools
• Blog
• Sites
• SEO
• Email templates• Email tracking• Sequences
• Contact timeline• Prospects• Tasks
6Xincrease in
monthly customers
12Xincrease in
monthly traffic
11Xincrease in monthly contacts generated
Three Year Results:
Source: Customer data; Note: “Three Year Results” compare the 6-month trailing averages of visits, contacts, and customers in August 2012 to the same values in May 2016.28
HubSpot, in short…
Growth opportunity with multiple drivers- Large, diversified and expanding global addressable market
- Drive new customer growth, cross sell existing products and grow internationally
Efficient and scalable customer acquisition model- We expect margin improvement will drive sustained positive operating cash flow throughout
‘16 and break-even free cash flow in 1H17
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Financial Review
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GROWTH DRIVERS: Domestic | International | Cross Sell Opportunity
REVENUE CUSTOMERS ASRPC
Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
$34.2M53% Y/Y
$38.2M58% Y/Y
$42.9M58% Y/Y
$47.7M57% Y
$53.1M56% Y/Y
$59.0M54% Y/Y
Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
13,60735% Y/Y
14,74635% Y/Y
15,83936% Y/Y
16,85435% Y/Y
18,11633% Y/Y
19,32231% Y/Y
Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
$65.0M51% Y/Y
20,44429% Y/Y
$9,53014% Y/Y
$9,74015% Y/Y
$10,12715% Y/Y
$10,60716% Y/Y
$11,13517% Y/Y
$11,49418% Y/Y
$11,97818% Y/Y
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Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
Operating Margin (Non-GAAP) Gross Margin (Non-GAAP)
1000 bps improvement operating margin year-on-year
Steady growth in Gross and Operating Margin trajectory
32All percentages for historical period are non-GAAP and exclude expenses associated with stock based compensation and amortization of acquired intangibles. Please refer to the end of this presentation for a reconciliation of GAAP to non-GAAP figures.
-34.3% -26.0% -31.8% -20.7% -16.4% -13.2% -18.3% -8.3% -6.1% -3.9%
68.9% 70.0% 70.1% 71.9% 73.5% 74.8% 74.7% 75.1% 77.0% 77.6%
Key Financial Metrics
Key financial metrics 2011 2012 2013 2014 2015 Q1’16 Q2’16
Gross Margin 61% 70% 65% 70% 75% 77% 78%
R&D 27% 19% 18% 17% 14% 14% 14%
S&M 82% 66% 67% 63% 58% 56% 55%
G&A 21% 16% 19% 18% 16% 14% 13%
Operating (Loss) / Income % (69%) (31%) (39%) (28%) (14%) (6%) (4%)
CFFO (44%) (11%) (26%) (11%) (0%) 5% 13%
All percentages for historical period are non-GAAP (other than CFFO) and exclude expenses associated with stock based compensation and amortization of acquired intangibles. Please refer to the end of this presentation for a reconciliation of GAAP to non-GAAP figures.
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Thank you from HubSpot!
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GAAP to Non-GAAP Reconciliation
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HubSpot, Inc.GAAP to Non-GAAP Reconciliation
Year ended December 31, Three Months Ended Three Months Ended2011 2012 2013 2014 2015
$ '000s% of
Revenues $ '000s% of
Revenues $ '000s% of
Revenues $ '000s% of
Revenues $ '000s% of
Revenues $ '000s% of
Revenues $ '000s% of
RevenuesCost of Revenue
Subscription* 4,964 17% 9,689 19% 18,745 24% 23,655 20% 32,271 18% 8,910 15% 9,985 15%Stock-based compensation (16) 0% (27) 0% (50) 0% (128) 0% (341) 0% (94) 0% (131) 0%Amortization of acquired intangibles (130) 0% (224) 0% (359) 0% (118) 0% (70) 0% (18) 0% (13) 0%Non-GAAP subscription* 4,818 17% 9,438 18% 18,336 24% 23,409 20% 31,860 18% 8,798 15% 9,841 15%
Professional services and other 6,368 22% 6,004 12% 8,759 11% 11,425 10% 15,652 9% 5,061 9% 5,210 8%Stock-based compensation (131) 0% (100) 0% (211) 0% (498) 0% (1,216) -1% (324) -1% (477) -1%Amortization of acquired intangibles - 0% - 0% - 0% - 0% - 0% - 0% - 0%Non-GAAP professional services and other 6,237 22% 5,904 11% 8,548 11% 10,927 9% 14,436 8% 4,737 8% 4,733 7%
Gross ProfitGross Profit* 17,221 60% 35,911 70% 50,130 65% 80,796 70% 134,020 74% 44,989 76% 49,779 77%Stock-based compensation 147 1% 127 0% 261 0% 626 1% 1,557 1% 418 1% 608 1%Amortization of acquired intangibles 130 0% 224 0% 359 0% 118 0% 70 0% 18 0% 13 0%Non-GAAP gross profit* 17,498 61% 36,262 70% 50,750 65% 81,540 70% 135,647 75% 45,425 77% 50,400 78%
Operating ExpensesResearch and development 10,031 35% 10,585 21% 15,018 19% 25,638 22% 32,457 18% 9,804 17% 11,278 17%Stock-based compensation (2,341) -8% (739) -1% (691) -1% (6,190) -5% (6,327) -3% (1,758) -3% (2,272) -3%Amortization of acquired intangibles - 0% - 0% - 0% - 0% - 0% - 0% - 0%Non-GAAP research and development 7,690 27% 9,846 19% 14,327 18% 19,448 17% 26,130 14% 8,046 14% 9,006 14%
Sales and marketing 24,088 84% 34,949 68% 53,158 68% 78,809 68% 112,629 62% 35,198 60% 39,140 60%Stock-based compensation (647) -2% (691) -1% (1,194) -2% (5,596) -5% (7,658) -4% (2,427) -4% (3,469) -5%Amortization of acquired intangibles - 0% - 0% - 0% (20) 0% (26) 0% (6) 0% (7) 0%Non-GAAP sales and marketing 23,441 82% 34,258 66% 51,964 67% 73,193 63% 104,945 58% 32,765 56% 35,664 55%
General and administrative* 7,517 26% 9,117 18% 16,204 21% 24,958 22% 35,408 19% 9,848 17% 10,391 16%Stock-based compensation (1,484) -5% (958) -2% (1,318) -2% (3,946) -3% (5,766) -3% (1,628) -3% (2,126) -3%Amortization of acquired intangibles - 0% - 0% - 0% - 0% - 0% - 0% - 0%Non-GAAP general and administrative* 6,033 21% 8,159 16% 14,886 19% 21,012 18% 29,642 16% 8,220 14% 8,265 13%
Loss from OperationsLoss from operations (24,415) -86% (18,740) -36% (34,250) -44% (48,609) -42% (46,474) -26% (9,861) -17% (11,030) -17%Stock-based compensation 4,619 16% 2,515 5% 3,464 4% 16,358 14% 21,308 12% 6,231 11% 8,475 13%Amortization of acquired intangibles 130 0% 224 0% 359 0% 138 0% 96 0% 24 0% 20 0%Non-GAAP loss from operations (19,666) -69% (16,001) -31% (30,427) -39% (32,113) -28% (25,070) -14% (3,606) -6% (2,535) -4%
* Amounts in years ended 2011 - 2014 have been adjusted from prior SEC filings for reclassification of customer credit card fees from cost of revenue, subscription to general and administrative expenses to conform with current year's presentation.
March 31, 2016 June 30, 2016