HubSpot Files For IPO, Aims For $100 Million
- Published in Industry News
In a much anticipated move, HubSpot announced that it has filed the necessary forms to launch an initial public offering. The company is seeking to raise $100 million, according to the filing, and the offering will be managed by Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and UBS Securities LLC.
While there was concern that executive departures might delay the offering, the company filed the IPO prior to its INBOUND conference, which is being held September 15-18 in Boston.
“HubSpot offers a pretty compelling value proposition in a hot marketing space,” said Trip Kucera, VP and CMO-in-Residence, Harte Hanks Content & Data Solutions/Aberdeen Group, in an interview with Demand Gen Report. “I would think the IPO would be well subscribed and there would be plenty of price support following the offering.”
In the filing documents, HubSpot noted that it had 11,500 customers, posted revenue of $77.6 million in 2013 and a reported 50% year-to-year growth. Growth had held steady for the first six months of 2014, with the company reporting revenues of $51.3 million, an increase of 46% year-to-year.
HubSpot is one of the last remaining independent marketing automation vendors, alongside Marketo — which launched a $75 million IPO last year. Marketo’s stock began trading at $23.10 a share on May 17, 2013, hit a high of $45 over the past year and traded at $28.13 on Aug. 25. The vendor reported $36 million in revenues in Q2 1014, a 60% increase over the previous year, but a net loss of $13.1 million.
“I expect they’ll stay independent for now, as they have the same problem as Marketo, that there are no obvious buyers,” said David M. Raab, Principal at Raab Associates. “It’s actually a bigger problem for HubSpot, since revenue per client is so much smaller, making them even less attractive to enterprise software firms like SAP. They might be more attractive to a Google or Amazon, though.”
Raab noted that although the $100 million is higher than Marketo’s $75 million IPO, “it seems reasonable, although the real question is what the valuation is — what percentage of the company is sold for $100 million?”
Kucera added: “My sense is that HubSpot would trade at many multiples of forward earnings giving its strong growth. Marketo would probably be a reasonable guide for valuation, which trades for about 12 times its current revenue.”
The past several years have seen a flurry of acquisitions in the marketing automation space, as Adobe acquired Neolane, IBM bought Silverpop, Salesforce purchased ExactTarget and Oracle acquired Eloqua.
“It's a significant positive indication for the growth of the market overall,” said Jon Russo, Founder and CEO of B2B Fusion Group. “Large companies that are seeking a marketing automation strategy are undoubtedly taking notice, just like Oracle noticed Eloqua's growth.”
HubSpot has run in the red, which is not uncommon for subscription-based software vendors looking to go public. The company had a deficit of $24.4 million in 2011, $18.8 million in 2012, $34.3 million in 2013 and $16.3 million and $17.7 million for the six months ended June 30, 2013 and 2014, respectively. As of June 30, 2014, it had an accumulated deficit of $123.8 million.
HubSpot is one of many companies that had many in the B2B industry awaiting their IPO announcement, with companies like Box awaiting their IPO announcement and Dropbox makes preparations for their IPO announcement.