HubSpot ($HUBS) scheduled a $100 million IPO with a market capitalization of $607 million at a price range midpoint of $20 for Thursday, Oct. 9, 2014 on NYSE. Price range raised to $22-24. SEC filings
Seven other companies are scheduled for the week of Oct. 6, 2014. The full IPO calendar is available at IPOpremium.
Manager, Co-managers: Morgan Stanley, J.P. Morgan, and UBS Investment Bank.
Joint-managers: Pacific Crest, Canaccord Genuity, and Raymond James.
End of lockup (180 days): Tuesday, April 7, 2015
End of 25-day quiet period: Monday, November 3, 2014
HubSpot IPO Report
HubSpot provides a cloud-based marketing and sales software platform that enables businesses to deliver an inbound experience.
Mrkt Cap (mm)
% offered in IPO
annualizing June 6 mos
Rev +46%; 92% subscriptions
Gross profit +62%, 35% loss on rev
Deferred rev 63% of total
Inbound marketing & sales cloud-based software
HUBS provides a cloud-based marketing and sales software platform that enables businesses to deliver an inbound experience.
An inbound marketing and sales experience attracts, engages and delights customers by being more relevant, more helpful, more personalized and less interruptive than traditional marketing and sales tactics.
HUBS’s software platform features integrated applications to help businesses attract visitors to their websites, convert visitors into leads, close leads into customers and delight customers so that they become promoters of those businesses.
These integrated applications include social media, search engine optimization, blogging, website content management, marketing automation, email, CRM, analytics and reporting.
People have transformed how they consume information, research products and services, make purchasing decisions and share their views and experiences.
Today, customers are blocking out the tactics from the traditional marketing and sales playbook, such as cold calls, unsolicited emails and disruptive advertisements.
Customers are taking more control of the purchasing process by using technology, including search engines and social media, to research products and services. Despite this transformation, most businesses are using an outdated marketing and sales playbook that is essentially the same today as it was 10 years ago.
To compete effectively, HUBS believes businesses need to deliver an inbound experience by adopting new strategies and technologies to attract, engage and delight customers.
HUBS designed its all-in-one platform from the ground up to enable businesses to provide an inbound experience to their prospects and customers.
At the core of HUBS’s platform is a single inbound database for each business that captures its customer activity throughout the customer lifecycle.
HUBS’s platform uses its centralized inbound database to empower businesses to create more personalized interactions with customers, such as personalized emails, personalized social media alerts, personalized websites and targeted alerts for sales people.
HUBS provides a comprehensive set of integrated applications on its platform, which offers businesses ease of use, power and simplicity. HUBS designed and built its platform to serve a large numbers of customers of any size with demanding use cases.
While its platform can scale to the enterprise, HUBS focuses on selling to mid-market businesses, which HUBS defines as businesses that have between 10 and 2,000 employees, because HUBS believes it has significant competitive advantages attracting and serving them. HUBS efficiently reaches these businesses at scale through its proven inbound go-to-market approach and more than 2,000 marketing agency partners worldwide.
Mid-market B2B companies
HUBS’s platform is particularly suited to serving the needs of mid-market B2B companies. These mid-market businesses seek an integrated, easy to implement and easy to use solution to reach customers and compete with organizations that have larger marketing and sales budgets.
As of June 30, 2014, HUBS had 11,624 customers of varying sizes in more than 70 countries, representing almost every industry.
HUBS protects its intellectual property through trade secrets law, copyrights, trademarks and contracts.
Some of HUBS’s technology relies upon third-party licensed intellectual property.
In addition to the foregoing, HUBS has established business procedures designed to maintain the confidentiality of its proprietary information, including the use of confidentiality agreements and assignment of inventions agreements with employees, independent contractors, consultants and companies with which HUBS conducts business.
HUBS faces intense competition from other software companies that develop marketing software and from marketing services companies that provide interactive marketing services.
HUBS’s competitors offer various point applications that provide certain functions and features that HUBS provides, including:
cloud-based marketing automation providers;
email marketing software vendors; and
large-scale enterprise suites.
5% shareholders pre-IPO
Entities affiliated with General Catalyst Partners 27.1%
Entities affiliated with Matrix Partners 17.1%
Scale Venture Partners III, LP 6.8%
Entities affiliated with Sequoia Capital 10.3%
Entities affiliated with Charles River Ventures 5%
Larry Bohn 27.1%
Dharmesh Shah 8.8%
David Skok 17.1%
No dividends are planned.
Use of proceeds
HUBS intends to use the $90 million in proceeds from its IPO as follows:
for general corporate purposes, including investing further in its sales and marketing and research and development efforts and payment of anticipated general and administrative expenses.
HUBS also intends to use proceeds from this offering to fund its growth strategies described elsewhere in this prospectus.
HUBS may use a portion of the net proceeds for the acquisition of businesses, technologies or other assets that HUBS believes are complementary to its own, although HUBS has no agreements, commitments or understandings with respect to any such transaction.
HUBS also expects to use $18.0 million of the net proceeds to repay all of the outstanding principal and accrued interest on its revolving line of credit. HUBS has used its revolving line of credit for general working capital purposes.
The interest rate on HUBS’s revolving line of credit is the bank’s prime rate plus 0.5%. The outstanding balance under HUBS’s revolving line of credit is due in March 2016.