HubSpot Files for IPO, On Pace for $100M in Revenue

Online marketing software company HubSpot is finally heading to the public stock markets, seeking a $100 million IPO after nine years as a private company.

Cambridge, MA-based HubSpot made its stock sale ambitions public late Monday. The news wasn’t a surprise—HubSpot’s leaders have been aiming to take the company public for some time, and it has raised some $100 million in private investment cash over the years.

HubSpot’s software helps companies reach potential customers online using a combination of e-mail, search engine optimization, social media, and other digital marketing tools. There are plenty of competitors in the field, ranging from previous HubSpot investor Salesforce (which bought competing startup ExactTarget last year) to standalone public companies like Marketo (NASDAQ: MKTO).

HubSpot is still losing money, which is relatively expected as a growing company. Most of its losses are due to heavy spending on sales and marketing to help increase its customer base, which stood at nearly 12,000 businesses as of June 30. The company primarily targets medium-sized companies that sell their services to other businesses. Its software is sold on a subscription basis.

HubSpot’s financial reports show that the company might be trying to stabilize its losses. In the first six months of the year, HubSpot says it generated about $51 million in revenue, an increase of about 46 percent from the same period in 2013. In that same span, the company’s losses grew by less than 9 percent, to nearly $18 million.

Publicly traded competitor Marketo has reported proportionally higher losses so far this calendar year, with about $68 million in revenue but a nearly $26 million net loss.

Venture capitalists own most of HubSpot’s stock, which you’d expect from a company that has raised several rounds of private financing—its latest investment was a $35 million Series E stock sale in late 2012. General Catalyst is the biggest shareholder, with about 27 percent of the company. Matrix Partners holds about 17 percent of HubSpot stock, and Sequoia Partners has a roughly 10 percent stake.



The company’s co-founders have cashed out most of their shares already, with CEO Brian Halligan reporting a roughly 5 percent stake in HubSpot and technology chief Dharmesh Shah owning nearly 9 percent.

In their note to potential investors, Halligan and Shah sounded typically warm-and-friendly HubSpot notes, comparing their company to a “movement” and a “journey.”

“When we started HubSpot in a tiny one-room office a block from the MIT campus, we thought we were starting a software company. We were wrong. We had not just started a software company, we had sparked an entire movement,” they wrote. “We believe we’re still in the early innings of what the inbound movement can and will become, and that we’ve built a company and a community that is ambitious, crazy and talented enough to transform how the world’s organizations market and sell.”

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