HubSpot’s slim cash load and expanding losses — the firm had a deficit attributable to common shareholders of $16.37 million in the first six months of 2013 — are contravened by its rising revenues: HubSpot had revenue of $51.27 million during the first two quarter period of the year, compared to $35.08 million in the preceding-year calendar period.
HubSpot’s days of hyper-growth appear to be mostly behind it: The company’s revenue ramp from 2009 — $6.62 million — to 2012 — $51.60 million– was incredibly quick paced. The company’s 2012 to 2013 growth rate was a more modest 50%. The company’s first half of 2014 revenue growth rate, when compared to the year-ago period, is a slightly lower 46%.
HubSpot’s losses are growing, but less quickly than its revenue — investors may value its still-quickly expanding top line more than its modestly increasing negative bottom line.
The company is not cash-wealthy in its current form. Given its current cash account, HubSpot’s proposed $100 million IPO is potential material recapitalization of its business.
After dipping to $6.95 million in cash in 2010, HubSpot locked in cash positions of $13.97 million at the end of 2011, and $41.09 million when 2012 concluded. In 2013 that tally fell to $12.64 million. As you might expect given the figures, the company’s last traunch of external capital came in 2012.
HubSpot, which provides in-bound marketing and sales tools, is therefore turning to the public markets for business oxygen, a change from its past where it raised capital from private investors to finance its growth.
The stock market has shown something akin to reticence in recent quarters when it comes to companies looking to go public that have large, sustaining losses. HubSpot’s negative 37 percent GAAP profit margin, however, is slimmer than that of other firms, both those looking to go public, and those already floated.