HubSpot reports huge revenue gains in Q3 2020

HubSpot, a customer relationship management (CRM) platform, announced its financial results for the third quarter of 2020.

The company’s total Q3 revenue was $228.4 million, up 32% compared to Q3 2019. Subscription revenue was also up 32% over the same time frame at $221.1 million. Professional services and other revenue was down 12% to $7.3 million.

HubSpot had a 6.8% loss in generally accepted accounting principles (GAAP) operating margin, which is an improvement over its 8.1% loss in 2019. Its non-GAAP Q3 operating margin was 7.2% versus 6.1% in Q3 2019. HubSpot had a GAAP operating loss of $15.5 million versus $14.1 million loss for Q3 2019, and its non-GAAP operating income was $16.5 million versus $10.5 million for Q3 2019.

The company had a GAAP net loss of $22.5 million or 49 cents per basic and diluted share against $15 million loss or 35 cents per basic and diluted share in Q3 2019. Its non-GAAP net income was $13.6 million 30 cents per basic and 28 cents per diluted share against $12.3 million or 29 cents per basic and 26 cents per diluted share in Q3 2019.

HubSpot’s cash, cash equivalents and investments balance was $1.228 billion as of September 30. In the Q3, it generated $38.7 million of operating cash flow against $19.7 million during Q3 2019. It also showed $25.3 million of free cash flow against $6.7 million in Q3 2019.

HubSpot added 95,634 total customers as of September 30, which is up 39% year over year. Its total average subscription revenue per customer was $9,669 during this time, which is down 3% year over year.

"We're happy that the tailwinds continued to strengthen last quarter for HubSpot," said Brian Halligan, CEO at HubSpot. "The year is not over, but I believe the growth we've seen in the third quarter is both a sign of the ongoing digital transformation of the mid-market and a reflection of newly heightened expectations when it comes to how easy CRM platforms need to be to match rapidly changing times."

Looking ahead to Q4 2020, total revenue is expected to between $235 million and $237 million. Non-GAAP operating income should be between $13 million to $15 million, and non-GAAP net income per common share should be 21 cents to 23 cents, assuming 49.6 million weighted average diluted shares outstanding.

HubSpot estimates its total 2020 revenue will be between $866 million and $868 million. Non-GAAP Q4 operating income is projected to be between $63.5 million and $65.5 million.