UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 001-36680
HubSpot, Inc.
(Exact name of registrant as specified in its charter)
Delaware 20-2632791
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
Two Canal Park
Cambridge, Massachusetts 02141
(Address of principal executive offices)
(888) 482-7768
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.001 per share HUBS New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
There were 51,348,838 shares of the registrant’s Common Stock issued and outstanding as of August 2, 2024.
HUBSPOT, INC.
Table of Contents
Part I — Financial Information
Item 1. Unaudited Consolidated Financial Statements:
Unaudited Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 6
Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 7
Unaudited Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2024 and 2023 8
Unaudited Consolidated Statement of Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023 9
Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 10
Notes to Unaudited Consolidated Financial Statements 11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22
Item 3. Quantitative and Qualitative Disclosures about Market Risk 33
Item 4. Controls and Procedures 34
Part II — Other Information
Item 1. Legal Proceedings 35
Item 1A. Risk Factors 35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 61
Item 3. Default Upon Senior Securities 61
Item 4. Mine Safety Disclosures 61
Item 5. Other Information 61
Item 6. Exhibits 62
Signatures 63
EX-31.1 CERTIFICATION OF THE CEO PURSUANT TO SECTION 302
EX-31.2 CERTIFICATION OF THE CFO PURSUANT TO SECTION 302
EX-32.1 CERTIFICATION OF THE CEO AND CFO PURSUANT TO SECTION 906
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and these statements involve substantial risks and uncertainties. All
statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking
statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements
because they contain words such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,”
“estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations,
strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
• our future financial and operational performance, including our expectations regarding our revenue, cost of revenue, gross margin and
operating expenses;
• maintaining and expanding our customer base and increasing our average subscription revenue per customer;
• the impact of competition in our industry and innovation by our competitors, including as a result of new or better use of evolving artificial
intelligence technologies;
• our anticipated growth and expectations regarding our ability to manage our future growth;
• our expectations regarding the potential impact of geo-political conflicts, inflationary pressures, foreign currency movement, macroeconomic
stability, and catastrophic events, such as the COVID-19 pandemic, on our business, the broader economy, our workforce and operations, the
markets in which we and our partners and customers operate, and our ability to forecast future financial performance;
• our anticipated areas of investments, including sales and marketing, research and development, including with respect to artificial intelligence
and machine learning, customer service and support, data center infrastructure and service capabilities, and expectations relating to such
investments;
• our predictions about industry and market trends;
• our ability to anticipate and address the evolution of technology and the technological needs of our customers, to roll-out upgrades to our
existing software platform and to develop new and enhanced applications to meet the needs of our customers, including with respect to
artificial intelligence and machine learning;
• our ability to maintain our brand and inbound marketing, selling and servicing thought leadership position;
• the impact of our corporate culture and our ability to attract, hire and retain necessary qualified employees to expand our operations;
• the anticipated effect on our business of litigation to which we are or may become a party;
• our ability to successfully acquire and integrate companies and assets;
• our plans regarding declaring or paying cash dividends in the foreseeable future; and
• our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the
United States and internationally.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in
this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our
business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to
risks, uncertainties and other factors described in “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very
competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and
uncertainties that could have
3
an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the
forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the
forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made.
We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after
the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue
reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers,
dispositions, joint ventures or investments we may make.
In this Quarterly Report on Form 10-Q, the terms “HubSpot,” “we,” “us,” and “our” refer to HubSpot, Inc. and its subsidiaries, unless the context
indicates otherwise.
Risk Factor Summary
The risk factors detailed in Item 1A entitled “Risk Factors” in this Quarterly Report on Form 10-Q are the risks that we believe are material to
our investors and a reader should carefully consider them. Those risks are not all of the risks we face and other factors not presently known to us or that we
currently believe are immaterial may also affect our business if they occur. The following is a summary of the risk factors detailed in Item 1A:
• We are dependent upon customer renewals, the addition of new customers, increased revenue from existing customers and the continued
growth of the market for a customer platform.
• We face significant competition from both established and new companies offering marketing, sales, customer service, operations and
content management software and other related applications, as well as internally developed software, which may harm our ability to add
new customers, retain existing customers and grow our business.
• Failure to effectively develop and expand our marketing, sales, customer service, operations, and content management capabilities could
harm our ability to increase our customer base and achieve broader market acceptance of our platform.
• If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or
requirements, our customer platform may become less competitive.
• Our ability to introduce new products and features, including new products and features that utilize artificial intelligence, is dependent on
adequate research and development resources. If we do not adequately fund our research and development efforts, we may not be able to
compete effectively and our business and operating results may be harmed.
• We are exposed to fluctuations in currency exchange rates that could adversely affect our financial results.
• The current economic downturn may lead to decreased demand for our products and services and otherwise harm our business and results of
operations.
• Interruptions or delays in service from our third-party data center providers could impair our ability to deliver our platform to our customers,
resulting in customer dissatisfaction, damage to our reputation, loss of customers, limited growth, and reduction in revenue.
• If our customer platform has outages or fails due to defects or similar problems, and if we fail to correct any defect or other software
problems, we could lose customers, become subject to service performance or warranty claims or incur significant costs.
• If our or our customers’ security measures are compromised or unauthorized access to data of our customers or their customers is otherwise
obtained, our customer platform may be perceived as not being secure, our customers may be harmed and may curtail or cease their use of
our platform, our reputation may be damaged and we may incur significant liabilities.
• We have a history of losses and may not achieve profitability in the future.
4
• We may experience quarterly fluctuations in our operating results due to a number of factors, which makes our future results difficult to
predict and could cause our operating results to fall below expectations or our guidance.
• If we do not accurately predict subscription renewal rates or otherwise fail to forecast our revenue accurately, or if we fail to match our
expenditures with corresponding revenue, our operating results could be adversely affected.
• Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.
5
PART I — Financial Information
Item 1. Financial Statements
HubSpot, Inc.
Unaudited Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents $ 797,875 $ 387,987
Short-term investments 937,830 1,000,245
Accounts receivable — net of allowance for doubtful accounts of $4,903
at June 30, 2024 and $5,516 at December 31, 2023 269,908 295,303
Deferred commission expense 119,558 99,326
Prepaid expenses and other current assets
111,033
88,679
Total current assets 2,236,204 1,871,540
Long-term investments 209,992 325,703
Property and equipment, net 105,886 103,331
Capitalized software development costs, net 132,026 106,229
Right-of-use assets 228,406 251,071
Deferred commission expense, net of current portion 138,636 122,194
Other assets 93,866 75,247
Intangible assets, net 37,421 42,316
Goodwill
173,565
173,761
Total assets
$ 3,356,002
$ 3,071,392
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 4,115 $ 9,106
Accrued compensation costs 61,206 53,462
Accrued commissions 78,657 78,169
Accrued expenses and other current liabilities 95,078 94,074
Operating lease liabilities 32,886 35,047
Convertible senior notes 457,196 —
Deferred revenue
708,113
672,150
Total current liabilities 1,437,251 942,008
Operating lease liabilities, net of current portion 273,137 296,561
Deferred revenue, net of current portion 4,606 5,810
Other long-term liabilities 40,109 36,459
Convertible senior notes
—
456,206
Total liabilities
1,755,103
1,737,044
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock 51 50
Additional paid-in capital 2,418,608 2,136,908
Accumulated other comprehensive (loss) income (4,822 ) 1,827
Accumulated deficit
(812,938 )
(804,437 )
Total stockholders’ equity
1,600,899
1,334,348
Total liabilities and stockholders’ equity
$ 3,356,002
$ 3,071,392
The accompanying notes are an integral part of the consolidated financial statements.
6
HubSpot, Inc.
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2024
2023
2024
2023
Revenues:
Subscription $ 623,763 $ 517,678 $ 1,227,559 $ 1,007,421
Professional services and other
13,467
11,460
27,085
23,337
Total revenue
637,230
529,138
1,254,644
1,030,758
Cost of revenues:
Subscription 81,618 71,494 162,342 138,116
Professional services and other
13,899
13,462
28,262
27,169
Total cost of revenues
95,517
84,956
190,604
165,285
Gross profit
541,713
444,182
1,064,040
865,473
Operating expenses:
Research and development 198,180 169,955 373,817 297,639
Sales and marketing 293,794 265,294 594,081 515,971
General and administrative 72,597 61,222 141,452 118,630
Restructuring
1,077
63,880
1,859
92,450
Total operating expenses
565,648
560,351
1,111,209
1,024,690
Loss from operations
(23,935 )
(116,169 )
(47,169 )
(159,217 )
Other income (expense):
Interest income 20,370 13,542 39,097 24,013
Interest expense (901 ) (937 ) (1,836 ) (1,867 )
Other income (expense)
1,784
330
14,945
(465 )
Total other income
21,253
12,935
52,206
21,681
(Loss) income before income tax expense (2,682 ) (103,234 ) 5,037 (137,536 )
Income tax expense
(11,753 )
(8,569 )
(13,538 )
(10,987 )
Net loss
$ (14,435 )
$ (111,803 )
$ (8,501 )
$ (148,523 )
Net loss per share, basic and diluted $ (0.28 ) $ (2.25 ) $ (0.17 ) $ (3.00 )
Weighted average common shares used in computing
basic and diluted net loss per share: 51,005 49,703 50,847 49,550
The accompanying notes are an integral part of the consolidated financial statements.
7
HubSpot, Inc.
Unaudited Consolidated Statements of Comprehensive Loss
(in thousands)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2024
2023
2024
2023
Net loss $ (14,435 ) $ (111,803 ) $ (8,501 ) $ (148,523 )
Other comprehensive loss:
Foreign currency translation adjustment (757 ) 399 (2,801 ) 1,026
Changes in unrealized loss on investments, net of income
taxes of $0 for the three and six months ended
June 30, 2024 and 2023 (640 ) (1,028 ) (3,403 ) 3,479
Changes in unrealized loss on cash flow hedges, net of
income taxes of $63 for the three and six months
ended June 30, 2024, and $0 for the three and six months
ended June 30, 2023
(445 )
—
(445 )
—
Comprehensive loss
$ (16,277 )
$ (112,432 )
$ (15,150 )
$ (144,018 )
The accompanying notes are an integral part of the consolidated financial statements.
8
HubSpot, Inc.
Unaudited Consolidated Statements of Stockholders' Equity
(in thousands, except per share amounts)
Common
Stock, $0.001
Par Value
Treasury Stock,
$0.001
Par Value
Additional
Paid-In
Accumulated
Other
Comprehensive
Accumulated
Shares
$
Shares
$
Capital (Loss) Deficit Total
Balances at December 31, 2023 50,448 $ 50 910 $ — $ 2,136,908 $ 1,827 $ (804,437 ) 1,334,348
Issuance of common stock under
stock plans 332 1 (1 ) — 6,513 — — 6,514
Restricted stock units taxes paid
in cash (20 ) — — — (8,791 ) — — (8,791 )
Stock-based compensation — — — — 115,919 — — 115,919
Other comprehensive loss, net
of tax — — — — — (4,807 ) — (4,807 )
Net income
—
—
—
—
—
—
5,934
5,934
Balances at March 31, 2024
50,760
$ 51
909
$ —
$ 2,250,549
$ (2,980 )
$ (798,503 )
$ 1,449,117
Issuance of common stock under
stock plans 384 — (4 ) — 38,074 — — 38,074
Restricted stock units taxes paid
in cash (22 ) — — — (4,700 ) — — (4,700 )
Stock-based compensation — — — — 134,685 — — 134,685
Other comprehensive loss, net
of tax — — — — — (1,842 ) — (1,842 )
Net loss
—
—
—
—
—
—
(14,435 )
(14,435 )
Balances at June 30, 2024
51,122
$ 51
905
$ —
$ 2,418,608
$ (4,822 )
$ (812,938 )
$ 1,600,899
Common
Stock, $0.001
Par Value
Treasury Stock, $0.001
Par Value
Additional
Paid-In
Accumulated
Other
Comprehensive
Accumulated
Shares
$
Shares
$ Capital (Loss) Deficit Total
Balances at December 31, 2022 49,217 $ 49 910 $ — $ 1,647,446 $ (12,890 ) $ (639,927 ) 994,678
Issuance of common stock under
stock plans 260 — — — 1,196 — — 1,196
Restricted stock units taxes paid
in cash (4 ) — — (1,198 ) — — (1,198 )
Stock-based compensation — — — — 87,305 — — 87,305
Other comprehensive income, net
of tax — — — — — 5,134 — 5,134
Net loss
—
—
—
— —
—
(36,720 )
(36,720 )
Balances at March 31, 2023
49,473
$ 49
910
$ — $ 1,734,749
$ (7,756 )
$ (676,647 )
$ 1,050,395
Issuance of common stock under
stock plans 375 1 — — 22,782 — — 22,783
Restricted stock units taxes paid
in cash (7 ) — — — (2,904 ) — — (2,904 )
Stock-based compensation — — — — 135,782 — — 135,782
Other comprehensive loss, net
of tax — — — — — (629 ) — (629 )
Net loss
—
—
—
— —
—
(111,803 )
(111,803 )
Balances at June 30, 2023
49,841
$ 50
910
$ — $ 1,890,409
$ (8,385 )
$ (788,450 )
$ 1,093,624
The accompanying notes are an integral part of the consolidated financial statements.
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HubSpot, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
For the Six Months Ended June 30,
2024
2023
Operating Activities:
Net loss (8,501 ) $ (148,523 )
Adjustments to reconcile net loss to net cash and cash equivalents provided
by operating activities, net of acquisitions
Depreciation and amortization 43,438 32,999
Stock-based compensation 240,116 211,038
Restructuring charges — 64,938
Gain on strategic investments (18,456 ) —
Impairment of strategic investments 4,094 —
(Benefit from) provision for deferred income taxes (212 ) 4,802
Amortization of debt discount and issuance costs 1,002 980
Accretion of bond discount (23,080 ) (18,777 )
Unrealized currency translation (948 ) (122 )
Changes in assets and liabilities
Accounts receivable 18,422 21,626
Prepaid expenses and other assets (27,228 ) (47,445 )
Deferred commission expense (40,084 ) (37,034 )
Right-of-use assets 20,384 20,972
Accounts payable (218 ) (17,814 )
Accrued expenses and other liabilities 15,049 46,527
Operating lease liabilities (23,153 ) (17,985 )
Deferred revenue
44,291
41,431
Net cash and cash equivalents provided by operating activities
244,916
157,613
Investing Activities:
Purchases of investments (651,717 ) (731,363 )
Maturities of investments 849,595 729,834
Purchases of property and equipment (14,082 ) (14,189 )
Purchases of strategic investments (3,627 ) (6,000 )
Capitalization of software development costs (43,075 ) (31,595 )
Proceeds from net working capital settlement
1,933
—
Net cash and cash equivalents provided by (used) in investing activities
139,027
(53,313 )
Financing Activities:
Employee taxes paid related to the net share settlement of stock-based awards (13,484 ) (4,102 )
Proceeds related to the issuance of common stock under stock plans
45,244
24,550
Net cash and cash equivalents provided by financing activities
31,760
20,448
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(5,815 )
1,448
Net increase (decrease) in cash, cash equivalents and restricted cash 409,888 126,196
Cash, cash equivalents and restricted cash, beginning of period
392,040
334,175
Cash, cash equivalents and restricted cash, end of period
$ 801,928
$ 460,371
Supplemental cash flow disclosure:
Cash paid for income taxes $ 7,165 $ 9,467
Cash paid for interest $ 861 $ 861
Right-of-use assets obtained in exchange for operating lease liabilities $ 503 $ 4,674
Right-of-use asset reductions related to operating lease terminations $ — $ (1,217 )
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid $ 2,008 $ 9,628
Asset retirement obligations $ — $ (466 )
The accompanying notes are an integral part of the consolidated financial statements.
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HubSpot, Inc.
Notes to Unaudited Consolidated Financial Statements
1. Organization and Operations
HubSpot, Inc. (the “Company”) provides a customer platform that helps businesses connect and grow better. The Company delivers seamless
connection for customer-facing teams with a unified platform that includes three layers: AI-powered engagement hubs, a Smart customer relationship
management product (“CRM”), and a connected ecosystem supporting the customer platform with a marketplace of integrations, templates, and expert
partners, a community network, and an academy of educational content.
The engagement hubs include Marketing Hub, Sales Hub, Service Hub, Operations Hub, Content Hub and Commerce Hub, as well as other tools
and integrations that enable companies to attract, engage, and delight customers throughout the customer experience.
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in
the United States (“GAAP”) applicable to interim periods, under the rules and regulations of the United States Securities and Exchange Commission
(“SEC”). In the opinion of management, the Company has prepared the accompanying unaudited consolidated financial statements on a basis substantially
consistent with the audited consolidated financial statements of the Company as of and for the year ended December 31, 2023, and these consolidated
financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results of the interim
periods presented. All intercompany balances and transactions have been eliminated in consolidation.
The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or
for the entire year ending December 31, 2024. The year-end balance sheet data was derived from audited financial statements, but this Form 10-Q does not
include all disclosures required under GAAP. Certain information and note disclosures normally included in annual financial statements prepared in
accordance with GAAP have been omitted under the rules and regulations of the SEC.
These interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in
the Company’s Annual Report on Form 10-K filed with the SEC on February 14, 2024. Other than the addition of the accounting policy related to
derivatives as described in Note 6, there have been no changes in the Company’s significant accounting policies from those that were disclosed in the
Company’s Annual Report on Form 10-K that have had a material impact on our consolidated financial statements and related notes.
Recent Accounting Pronouncements
Recent accounting standards not included below are not expected to have a material impact on our consolidated financial position and results of
operations.
In November 2023, the Financial Accounting Standards Board ("FASB") issued guidance enhancing the disclosures of reportable segment
information, primarily about significant segment expenses. The new standard will be effective for the Company for the annual periods beginning January 1,
2024, and for interim periods beginning January 1, 2025, with early adoption permitted. Upon adoption, the guidance should be applied retrospectively to
all prior periods presented in the financial statements. The adoption of this standard only impacts disclosures and is not expected to have a material impact
on the Company's consolidated financial statements.
In December 2023, the FASB issued guidance enhancing income tax disclosure requirements by requiring specified categories and greater
disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions
and related financial statement impacts. The new standard will be effective for the Company on January 1, 2025, with early adoption permitted. The
adoption of this standard only impacts disclosures and is not expected to have a material impact on the Company's consolidated financial statements.
Revision of Previously Issued Financial Statements
During the financial close process for the first quarter of 2024, the Company identified an error related to the calculation of contractual credits in
one of its third-party vendor agreements which impacted the Company's previously issued financial statements beginning with the quarter ended December
31, 2021. The error impacted subsequent annual and quarterly reporting periods through December 31, 2023. The Company assessed the materiality of the
error, in consideration of both quantitative and qualitative factors, and concluded that it is not material to any previously presented interim or annual
financial statements. The Company revised its financial statements for the periods impacted. In connection with the revisions, the Company also corrected a
previously identified immaterial error related to the recording of certain deferred tax balances.
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Changes to the interim consolidated statements of operations for the three and six months ended June 30, 2023, as a result of the error, were as
follows (in thousands, except per share data):
Consolidated Statements of Operations and Comprehensive Loss
For the Three Months Ended June 30, 2023
As Previously Reported
Adjustments
As Revised
(in thousands)
Cost of revenues - Subscription $ 73,824 $ (2,330 ) $ 71,494
Total cost of revenues 87,286 (2,330 ) 84,956
Gross profit 441,852 2,330 444,182
Loss from operations (118,499 ) 2,330 (116,169 )
Loss before income tax expense (105,564 ) 2,330 (103,234 )
Income tax expense (13,382 ) 4,813 (8,569 )
Net loss (118,946 ) 7,143 (111,803 )
Comprehensive loss (119,575 ) 7,143 (112,432 )
Net loss per common share, basic and diluted $ (2.39 ) $ 0.14 $ (2.25 )
For the Six Months Ended June 30, 2023
As Previously Reported
Adjustments
As Revised
(in thousands)
Cost of revenues - Subscription $ 142,163 $ (4,047 ) $ 138,116
Total cost of revenues 169,332 (4,047 ) 165,285
Gross profit 861,426 4,047 865,473
Loss from operations (163,264 ) 4,047 (159,217 )
Loss before income tax expense (141,583 ) 4,047 (137,536 )
Income tax expense (15,645 ) 4,658 (10,987 )
Net loss (157,228 ) 8,705 (148,523 )
Comprehensive loss (152,723 ) 8,705 (144,018 )
Net loss per common share, basic and diluted $ (3.17 ) $ 0.17 $ (3.00 )
2. Revenues
Disaggregation of Revenue
The Company provides disaggregation of revenue based on geographic region (Note 14) and based on the subscription versus professional services
and other classification on the consolidated statements of operations as it believes these best depict how the nature, amount, timing and uncertainty of
revenue and cash flows are affected by economic factors.
Deferred Revenue and Deferred Commission Expense
Amounts that have been invoiced are recorded in accounts receivable and deferred revenue or revenue, depending on whether the revenue
recognition criteria have been met. Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenue that will
be recognized during the succeeding 12-month period is recorded as current deferred revenue, and the remaining portion is recorded as long-term deferred
revenue. Deferred revenue during the six months ended June 30, 2024 increased by $34.8 million resulting from $672.0 million of additional invoicing and
was offset by revenue recognized of $637.2 million during the same period. $375.2 million of revenue was recognized during the three months ended June
30, 2024 that was included in deferred revenue at the beginning of the period. $520.9 million of revenue was recognized during the six months ended June
30, 2024 that was included in deferred revenue at the beginning of the period. As of June 30, 2024, approximately $867.2 million of revenue is expected to
be recognized from remaining performance obligations for contracts with original performance obligations that exceed one year. The Company expects to
recognize revenue on approximately 90% of these remaining performance obligations over the next 24 months, with the balance recognized thereafter.
Additional contract liabilities of $6.3 million and $4.5 million were included in accrued expenses and other current liabilities on the consolidated
balance sheet as of June 30, 2024 and December 31, 2023.
12
The incremental direct costs of obtaining a contract, which primarily consist of sales and Solutions Partner commissions paid for new subscription
contracts, are deferred and amortized on a straight-line basis over a period of approximately two to four years. The two to four-year period has been
determined by taking into consideration the type of product sold, the commitment term of the customer contract, the nature of the Company’s technology
development life-cycle, and an estimated customer relationship period. Sales and Solutions Partner commissions for upgrade contracts are deferred and
amortized on a straight-line basis over the remaining estimated customer relationship period of the related customer. Deferred commission expense that will
be recorded as expense during the succeeding 12-month period is recorded as current deferred commission expense, and the remaining portion is recorded
as long-term deferred commission expense.
Deferred commission expense during the three months ended June 30, 2024 increased by $22.2 million as a result of deferring incremental costs of
obtaining a contract of $55.1 million and was offset by amortization of $32.9 million during the same period. Deferred commission expense during the six
months ended June 30, 2024 increased by $36.7 million as a result of deferring incremental costs of obtaining a contract of $101.7 million and was offset
by amortization of $65.0 million during the same period.
3. Net Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net
loss per share is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation,
options to purchase common stock, restricted stock units (“RSUs”), shares issued pursuant to the Employee Stock Purchase Plan (“ESPP”), performance
restricted stock units (“PSUs”), and the Conversion Option of the 2025 Notes (the “Conversion Options”) (Note 9) are considered to be potential common
stock equivalents.
A reconciliation of the denominator used in the calculation of basic and diluted net loss per share is as follows:
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Net loss
$ (14,435 )
$ (111,803 )
$ (8,501 )
$ (148,523 )
Weighted-average common shares outstanding — basic 51,005 49,703 50,847 49,550
Dilutive effect of share equivalents resulting from
stock options, RSUs, ESPP, PSUs, and the
Conversion Options
—
—
—
—
Weighted-average common shares, outstanding — diluted
51,005
49,703
50,847
49,550
Net loss per share, basic and diluted
$ (0.28 )
$ (2.25 )
$ (0.17 )
$ (3.00 )
Since the Company incurred net losses for each period presented, diluted net loss per share is the same as basic net loss per share. All of the
Company’s outstanding stock options, RSUs, PSUs, and shares issuable under the ESPP, as well as the Conversion Options were excluded in the
calculation of diluted net loss per share as the effect would be anti-dilutive.
The Company uses the if-converted method when calculating any potential dilutive effect of the Conversion Options, which assumes conversion of
outstanding convertible securities at the beginning of the reporting period or date of issuance, if the convertible security was issued during the period.
The following table contains all potentially dilutive common stock equivalents.
As of June 30,
2024 2023
(in thousands)
Options to purchase common shares 360 493
RSUs 1,937 2,267
Conversion Option of the 2025 Notes 1,625 1,625
PSUs 34 —
ESPP 40 24
13
4. Fair Value of Financial Instruments
The Company measures certain financial assets at fair value. Fair value is determined based upon the exit price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most
advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:
• Level 1 — Quoted prices in active markets for identical assets or liabilities.
• Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with
insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable
or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
• Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
The following table details the fair value measurements within the fair value hierarchy of the Company’s financial assets and liabilities at June 30,
2024 and December 31, 2023:
June 30, 2024
Level 1
Level 2
Level 3
Total
(in thousands)
Cash equivalents and investments:
Money market funds $ 10,553 $ — $ — $ 10,553
Commercial paper — 24,099 — 24,099
Corporate bonds — 243,346 — 243,346
U.S. Government agency securities — 132,948 — 132,948
U.S. Treasury securities — 1,157,787 — 1,157,787
Strategic investments — — 31,625 31,625
Restricted cash:
Money market funds
—
4,053
—
4,053
Total assets
$ 10,553
$ 1,562,233
$ 31,625
$ 1,604,411
Accrued expenses and other current liabilities
Foreign currency derivative liabilities
$ —
$ 390
$ —
$ 390
Total liabilities
$ —
$ 390
$ —
$ 390
December 31, 2023
Level 1
Level 2
Level 3
Total
(in thousands)
Cash equivalents and investments:
Money market funds $ 20,003 $ — $ — $ 20,003
Commercial paper — 13,504 — 13,504
Corporate bonds — 237,406 — 237,406
U.S. Government agency securities — 122,758 — 122,758
U.S. Treasury securities — 960,763 — 960,763
Strategic investments — — 13,159 13,159
Restricted cash:
Money market funds
—
4,053
—
4,053
Total
$ 20,003
$ 1,338,484
$ 13,159
$ 1,371,646
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The fair
value of the Company’s investments in certain money market funds is their face value and such instruments are classified as Level 1 and are included in
cash and cash equivalents on the consolidated balance sheets. At June 30, 2024 and December 31, 2023, Level 2 securities were priced by pricing vendors.
These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these
securities, use other observable inputs like market transactions involving identical or comparable securities. Certain non-marketable investments measured
at fair value on a
14
non-recurring basis are classified as Level 3 as their fair value measurements may include a combination of observable and unobservable inputs.
Foreign currency derivative assets and liabilities are classified as Level 2 and are valued using observable inputs, such as quotations on forward and
spot rates for currencies, interest rates and credit derivative market rates.
As of June 30, 2024, the fair value of the 2025 Notes was $963.9 million. The fair value was determined based on the quoted price of the 2025
Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 within the fair value hierarchy.
For certain other financial instruments, including accounts receivable, accounts payable, and other current liabilities, the carrying amounts
approximate their fair value due to the relatively short maturity of these balances.
Restricted cash is comprised of money market funds related to landlord guarantees for leased facilities. These restricted cash balances have been
excluded from our cash and cash equivalents balance on our consolidated balance sheets.
Strategic investments that consist of non-controlling equity investments without readily determinable fair values in privately held companies for
which the Company does not have the ability to exercise significant influence are measured under the measurement alternative method. These investments
are accounted for under the cost method of accounting. Under the cost method of accounting, the non-marketable equity securities are carried at cost less
any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the
same issuer, which is recorded within the statement of operations. The Company holds $40.7 million of strategic investments without readily determinable
fair values at June 30, 2024 and $41.1 million of strategic investments without readily determinable fair values at December 31, 2023. These investments
are included in other assets on the consolidated balance sheets.
In the three months ended June 30, 2024, the Company adjusted the fair value of its strategic investments and recognized a gain of $2.1 million and
also recorded an impairment of the carrying value of its strategic investments of $0.5 million, resulting in a net gain of $1.6 million. In six months ended
June 30, 2024, the Company adjusted the fair value of its strategic investments and recognized a gain of $18.5 million and also recorded an impairment of
the carrying value of its strategic investments of $4.1 million, resulting in a net gain of $14.4 million, which is reported in the consolidated statements of
operations as other income.
The following tables summarize the composition of our short- and long-term investments at June 30, 2024 and December 31, 2023.
June 30, 2024
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Aggregate
Fair Value
(in thousands)
Commercial paper $ 21,612 $ — $ — $ 21,612
Corporate bonds 244,160 8 (822 ) 243,346
U.S. Government agency securities 133,399 5 (456 ) 132,948
U.S. Treasury securities
751,132
—
(1,216 )
749,916
Total
$ 1,150,303
$ 13
$ (2,494 )
$ 1,147,822
December 31, 2023
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Aggregate
Fair Value
(in thousands)
Commercial paper $ 11,513 $ — $ — $ 11,513
Corporate bonds 237,662 422 (678 ) 237,406
U.S. Government agency securities 122,414 520 (176 ) 122,758
U.S. Treasury securities
953,457
1,087
(273 )
954,271
Total
$ 1,325,046
$ 2,029
$ (1,127 )
$ 1,325,948
For all of our securities for which the amortized cost basis was greater than the fair value at June 30, 2024, the Company has concluded that there is
no plan to sell the security nor is it more likely than not that the Company would be required to sell the security before its anticipated recovery. The
Company further assesses whether the decline in fair value below amortized cost is due to credit or non-credit related factors by considering the extent to
which fair value is less than amortized cost, credit ratings, the financial health of the industry and sector of the issuer, the overall risk profile of the
securities, overall macroeconomic conditions, and more. As of June 30, 2024, no allowance for credit losses in investments was recorded.
15
Contractual Maturities
The contractual maturities of short-term and long-term investments held at June 30, 2024 and December 31, 2023 are as follows:
June 30, 2024 December 31, 2023
Amortized
Cost Basis
Aggregate
Fair Value
Amortized
Cost Basis
Aggregate
Fair Value
(in thousands) (in thousands)
Due within one year $ 939,531 $ 937,830 $ 1,000,447 $ 1,000,245
Due after 1 year through 2 years
210,772
209,992 324,599
325,703
Total
$ 1,150,303
$ 1,147,822 $ 1,325,046
$ 1,325,948
5. Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum
to the total of the same such amounts shown in the statement of cash flows for the three months ended June 30, 2024 and 2023.
June 30, 2024
June 30, 2023
December 31, 2023
(in thousands)
Cash and cash equivalents $ 797,875 $ 457,218 $ 387,987
Restricted cash, included other assets
4,053
3,153
4,053
Total cash, cash equivalents, and restricted cash
$ 801,928
$ 460,371
$ 392,040
6. Derivatives
Cash flow hedges
The Company enters into foreign currency forward contracts to reduce the risk of variability in future cash flow due to foreign currency exchange
rate fluctuation from certain forecasted revenue transactions billed in currencies other than the U.S. Dollar. These transactions are designated as cash flow
hedges. The foreign currency forward contracts have maturities 12 months or less. Hedge effectiveness is assessed at inception and at each reporting period
utilizing statistical regression analysis. The derivatives are subject to master netting arrangements and are disclosed on a gross basis on the consolidated
balance sheets. Unrealized foreign exchange gains or losses related to those designated cash flow hedge contracts are recorded in accumulated other
comprehensive income ("AOCI") and are reclassified into revenues in the same periods when the hedged transactions are recognized in earnings. Cash
flows from the settlement of these forward contracts are classified as operating activities on the consolidated statements of cash flows. As of June 30, 2024,
the Company had designated cash flow hedge forward contracts with notional amounts equivalent to $27.4 million.
The following summarizes the fair value of derivative financial instruments as of June 30, 2024 and December 31, 2023:
As of June 30, 2024
As of December 31, 2023
(in thousands)
Accrued expenses and other current liabilities
Cash flow hedges
$ 390
$ —
Total
$ 390
$ —
The following table presents the activity of foreign currency forward contracts designated as hedging instruments and the impact of these
derivatives on AOCI:
Six Months Ended June 30,
2024
2023
(in thousands)
Beginning balance $ — $ —
Net losses recognized in other comprehensive income, net of tax 501 —
Net losses reclassified from AOCI to earnings
(56 )
—
Ending balance
$ 445
$ —
16
The effect of hedges on the consolidated statements of operations was as follows:
Three Months Ended June 30, Six Months Ended June 30,
2024
2023
2024
2023
(in thousands)
Losses reclassified from AOCI related to cash flow hedges
Revenue $ (56 ) $ — $ (56 ) $ —
As of June 30, 2024, the Company estimates the net amount of unrealized gain (losses) before tax on the foreign currency contracts expected to be
reclassified into revenue over the next 12 months is approximately $0.1 million.
7. Property and Equipment
Property and equipment consists of the following:
June 30, 2024
December 31, 2023
(in thousands)
Computer equipment and purchased software $ 16,396 $ 16,395
Employee related computer equipment 53,298 50,018
Furniture and fixtures 20,464 20,666
Leasehold improvements 112,580 112,714
Internal-use software 60,639 48,894
Construction in progress
458
—
Total property and equipment 263,835 248,687
Less accumulated depreciation
(157,949 )
(145,356 )
Property and equipment, net
$ 105,886
$ 103,331
Depreciation and amortization expense on property and equipment was $7.0 million for the three months ended June 30, 2024, $14.1 million for the
six months ended June 30, 2024, $6.7 million for the three months ended June 30, 2023, and $14.1 million for the six months ended June 30, 2023.
As part of the Restructuring Plan (defined in Note 15), the Company disposed of $0.5 million of fixed assets, net, in the three months ended June 30,
2023 and $1.3 million in the six months ended June 30, 2023. The Company also recorded accelerated depreciation expense for fixed assets in connection
with the lease abandonments as part of the Restructuring Plan. See Note 15 for more information.
8. Capitalized Software Development Costs
Capitalized software development costs, exclusive of those recorded within property and equipment, consisted of the following:
June 30, 2024
December 31, 2023
(in thousands)
Gross capitalized software development costs $ 313,489 $ 257,052
Accumulated amortization
(181,463 )
(150,823 )
Capitalized software development costs, net
$ 132,026
$ 106,229
These capitalized software development costs are associated with software developed for the Company's customer platform. Capitalized software
development costs recorded within property and equipment are associated with software developed for Company use.
Amortization of capitalized software development costs, exclusive of costs recorded within property and equipment, was $17.8 million for the three
months ended June 30, 2024, $33.8 million for the six months ended June 30, 2024, $10.7 million for the three months ended June 30, 2023, and $20.5
million for the six months ended June 30, 2023.
9. Convertible Senior Notes
17
2025 Convertible Senior Notes and Capped Call Options
In June 2020, the Company issued $400 million aggregate principal amount of 0.375% convertible senior notes due June 1, 2025 (the “2025 Notes”)
in a private offering and an additional $60 million aggregate principal amount of the 2025 Notes pursuant to the exercise in full of the over-allotment
options of the initial purchasers. The interest rate is fixed at 0.375% per annum and is payable semi-annually in arrears on June 1 and December 1 of each
year. The total net proceeds from the debt offering, after deducting initial purchase discounts and debt issuance costs, were approximately $450.1 million.
Each $1,000 of principal amount of the 2025 Notes will initially be convertible into 3.5396 shares of the Company’s common stock (the
“Conversion Option of the 2025 Notes”), which is equivalent to an initial conversion price of approximately $282.52 per share, subject to adjustment upon
the occurrence of certain specified events. On or after March 1, 2025 until the close of business on the second scheduled trading day immediately preceding
the maturity date, holders may convert their 2025 Notes at any time. The 2025 Notes will be convertible at the option of the holders prior to the close of
business on the business day immediately preceding March 1, 2025 under certain circumstances as described in the indenture governing the 2025 Notes
(the “Indenture”). Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination
of cash and shares of the Company’s common stock, at the Company’s election. The 2025 Notes are classified as short-term debt and the Company expects
to settle the principal amount of the 2025 Notes in cash. Because the last reported sale price of the Company’s common stock for at least 20 trading days
during the period of 30 consecutive trading days ending on the last trading day of the calendar quarter ended June 30, 2024 was equal to or greater than
130% of the applicable conversion price on each applicable trading day, the 2025 Notes are convertible at the option of the holders thereof during the
calendar quarter ending June 30, 2024. As of August 2, 2024, the Company has not received any conversion notices.
The net carrying amount of the liability component of the 2025 Notes is as follows:
As of June 30, 2024
As of December 31, 2023
(in thousands)
Principal $ 459,071 $ 459,076
Unamortized issuance costs
(1,875 )
(2,870 )
Net carrying amount
$ 457,196
$ 456,206
Interest expense related to the 2025 Notes is as follows:
Three Months Ended June 30, Six Months Ended June 30,
2024
2023
2024
2023
(in thousands)
Contractual interest expense $ 430 $ 430 $ 861 $ 861
Amortization of issuance costs
502
496
1,002
980
Total interest expense
$ 932
$ 926
$ 1,863
$ 1,841
In connection with the offering of the 2025 Notes, the Company purchased capped call options (“Capped Call Options”) with respect to its common
stock for $50.6 million. The Capped Call Options are purchased call options that give the Company the option to purchase up to approximately 1.6 million
shares of its common stock for $282.52 per share, which corresponds to the approximate initial conversion price of the 2025 Notes. The Capped Call
Options were purchased in order to offset potential dilution to the Company’s common stock upon any conversion of the 2025 Notes, subject to a cap of
$426.44 per share, and expire concurrently with the 2025 Notes. The $50.6 million paid for the Capped Call Options is recorded in stockholders’ equity as
a reduction in additional paid-in capital and the Capped Call Options are not accounted for as separate derivative financial instruments.
10. Commitments and Contingencies
Contractual Obligations
The Company leases its office facilities under non-cancelable operating leases that expire at various dates through February 2035. Certain leases
contain optional termination dates. The table below only includes payments up to the optional termination date. If the Company were to extend leases
beyond the optional termination date, the future commitments would increase by approximately $77.2 million.
Included in the table below are various operating lease commitments for leases that have not yet commenced of approximately $4.1 million.
18
Future minimum payments under all operating lease agreements as of June 30, 2024 are as follows:
(in thousands)
Remainder of 2024 $ 28,258
2025 56,432
2026 51,816
2027 46,866
2028 34,134
Thereafter 162,489
Total
$ 379,995
The Company has entered into certain non-cancelable vendor commitments, which require the future purchase of goods or services. Future
minimum payments under all non-cancelable vendor commitments as of June 30, 2024 are as follows:
(in thousands)
Remainder of 2024 $ 123,037
2025 237,793
2026 236,789
2027 187,846
2028 184
Thereafter —
Total
$ 785,649
Legal Contingencies
From time to time, the Company may become a party to litigation and subject to claims incident to the ordinary course of business, including
intellectual property claims, labor and employment claims, and threatened claims, breach of contract claims, tax, and other matters. The Company currently
has no material pending litigation.
11. Leases
The Company leases office facilities under non-cancelable operating leases that expire at various dates through February 2035. During the six
months ended June 30, 2024, the Company modified various leases of office spaces globally. The Company recorded a reduction in right-of-use assets of
$7.3 million and an increase in lease liabilities of $0.5 million for these leases during the period upon the lease modification.
Operating lease expense and cash payments related to operating lease liabilities for the three and six months ended June 30, 2024 and 2023 are as
follows:
Three Months Ended June 30,
Six Months Ended June 30,
2024 2023
2024 2023
(in thousands)
(in thousands)
Operating lease expense $ 9,860 $ 9,989 $ 19,740 $ 22,910
Cash payments 13,555 16,705 29,425 31,127
The Company subleases some of its unused spaces to third parties. Operating sublease income generated under all operating lease agreements for the
three and six months ended June 30, 2024 and 2023 are as follows:
Three Months Ended June 30,
Six Months Ended June 30,
2024 2023
2024 2023
(in thousands)
(in thousands)
Operating sublease income $ 1,679 $ 2,015 $ 3,926 $ 4,042
19
12. Changes in Accumulated Other Comprehensive Loss
The following table summarizes the changes in accumulated other comprehensive loss, which is reported as a component of stockholders’ equity, for
the six months ended June 30, 2024 and 2023.
Cumulative
Translation
Adjustment
Unrealized
Loss on
Investments
Unrealized
Loss on
Derivate
Instruments
Total
(in thousands)
Beginning balance at January 1, 2024 $ 950 $ 877 $ — $ 1,827
Other comprehensive loss before reclassifications (2,801 ) (3,403 ) (501 ) (6,705 )
Amounts reclassified from accumulated other
comprehensive income, net of tax
—
—
56
56
Ending balance at June 30, 2024
(1,851 )
(2,526 )
(445 )
(4,822 )
Cumulative
Translation
Adjustment
Unrealized
Loss on
Investments
Unrealized
Loss on
Derivate
Instruments
Total
(in thousands)
Beginning balance at January 1, 2023 $ (3,070 ) $ (9,820 ) $ — $ (12,890 )
Other comprehensive gain before reclassifications 1,026 3,479 — 4,505
Amounts reclassified from accumulated other
comprehensive income, net of tax
—
—
—
—
Ending balance at June 30, 2023
(2,044 )
(6,341 )
—
(8,385 )
13. Stock-Based Compensation Expense
The following two tables show stock-based compensation expense by award type and where the stock-based compensation expense is recorded in
the Company’s consolidated statements of operations:
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
(in thousands) (in thousands)
Options $ 1,822 $ 3,133 $ 4,392 $ 5,839
RSUs 116,913 117,891 216,743 190,937
PSUs 6,340 2,783 11,167 6,017
Employee stock purchase plan
3,919
4,196
7,814
8,245
Total stock-based compensation expense
$ 128,994
$ 128,003
$ 240,116
$ 211,038
Effect of stock-based compensation expense on income by line item:
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
(in thousands) (in thousands)
Cost of revenue, subscription $ 5,444 $ 3,516 $ 10,404 $ 6,259
Cost of revenue, professional services and other 1,128 1,459 2,215 2,546
Research and development 64,693 64,060 115,318 97,384
Sales and marketing 36,168 38,625 71,325 68,794
General and administrative
21,561
20,343
40,854
36,055
Total stock-based compensation expense
$ 128,994
$ 128,003
$ 240,116
$ 211,038
Capitalized software development costs excluded from stock-based compensation expense is $10.2 million for the three months ended June 30,
2024, $19.0 million for the six months ended June 30, 2024, $9.4 million for the three months ended June 30, 2023, and $14.0 million for the six months
ended June 30, 2023. Also excluded in the six months ended June 30, 2023 is $1.0 million of stock-based compensation expense incurred in connection
with the Restructuring Plan. See Note 15 for more details.
20
14. Segment Information and Geographic Data
The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial
information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s chief executive officer, in deciding how to
allocate resources and assess performance. The Company’s CODM evaluates the Company’s financial information and resources and assesses the
performance of these resources on a consolidated basis. Since the Company operates in one operating segment, all required financial segment information
can be found in the consolidated financial statements. Revenue and long-lived assets by geographic region, based on the physical location of the operations
recording the sale or the asset, are as follows:
Revenues by geographical region:
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
(in thousands) (in thousands)
Americas $ 386,325 $ 321,827 $ 760,872 $ 629,650
Europe 199,673 162,741 392,795 313,580
Asia Pacific
51,232
44,570
100,977
87,528
Total
$ 637,230
$ 529,138
$ 1,254,644
$ 1,030,758
Percentage of revenues generated outside of the
Americas
39 %
39 %
39 %
39 %
Revenue derived from customers outside the United States (international) was approximately 47% of total revenue in the three and six months ended
June 30, 2024, 47% of total revenue in the three months ended June 30, 2023 and 46% of total revenue in the six months ended June 30, 2023.
Total long-lived assets by geographical region:
As of June 30, 2024
As of December 31, 2023
(in thousands)
Americas $ 226,822 $ 235,141
Europe 101,818 112,176
Asia Pacific
5,652
7,085
Total long-lived assets
$ 334,292
$ 354,402
Percentage of long-lived assets held outside of the Americas
32 %
34 %
15. Restructuring Plan
On January 25, 2023, the Company's board of directors authorized a restructuring plan (the “Restructuring Plan”) that was designed to reduce
operating costs and enable investment in key opportunities for long-term growth while driving continued profitability. The Restructuring Plan included a
reduction of the Company’s workforce by approximately 7% and a global lease consolidation to create higher density across our workspaces.
The Company incurred restructuring charges of $1.1 million in the three months ended June 30, 2024 and $1.9 million in the six months ended June
30, 2024 consisting of variable facilities related costs on unused space. In the six months ended June 30, 2023, the Company terminated and abandoned
various leases of office spaces globally. The Company recorded a reduction in right-of-use assets of $44.6 million and an increase in lease liabilities of $6.3
million for these leases during the period upon the lease terminations or abandonments. In the three months ended June 30, 2023, the Company incurred
$63.8 million of restructuring charges in connection with these leases. In the six months ended June 30, 2023, the Company incurred $92.5 million of
restructuring charges, composed of $65.6 million related to facilities and $26.9 million for severance, employee related benefits, and other costs, including
$1.0 million of stock-based compensation expense. The charges are recorded to the restructuring line item within the consolidated statements of operations.
Future variable facilities related costs for vacated properties will continue to be recorded to restructuring charges. As of June 30, 2024, the Company
did not have any remaining liabilities accrued related to the Restructuring Plan.
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated
financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year
ended December 31, 2023 filed with the SEC on February 14, 2024. As discussed in the section titled “Special Note Regarding Forward-Looking
Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if
they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.
Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled
“Risk Factors” included under Part II, Item 1A below.
Company Overview
We provide a customer platform that helps businesses connect and grow better. We deliver seamless connection for customer-facing teams with a
unified platform that includes three layers: AI-powered engagement hubs, a Smart CRM, and a connected ecosystem that extends the customer platform
with app marketplace integrations, a community network, and educational content.
Our engagement hubs include Marketing Hub, Sales Hub, Service Hub, Operations Hub, Content Hub and Commerce Hub, as well as other tools
and integrations that enable companies to attract, engage, and delight customers throughout the customer experience. Our customer platform features a
central database of lead and customer interactions and integrated applications designed to help businesses attract visitors to their websites, convert visitors
into leads, close leads into customers, transact with those customers, and delight them so they become promoters of those businesses.
The core of our customer platform is our Smart CRM: a single database of lead and customer information that allows businesses to track their
interactions with contacts and customers, manage their customer activities, and report on their pipeline and sales. Our customer platform was built to easily
and seamlessly integrate third party applications to further customize to an individual company’s industry or needs. As data is becoming more important to
our customers’ success and a differentiator for our business, there is a need to move quickly on data enrichment. The acquisition of APIHub, Inc. (dba
Clearbit), which closed in December 2023, will allow us to build enriched B2B records directly into our customer platform.
We designed and built our customer platform to serve a broad range of customers globally. Our customer platform starts completely free and grows
with our customers to meet their needs at different stages in their life-cycles. It supports multiple languages and currencies and offers an array of
sophisticated features, including content partitioning at the enterprise level for companies operating in or serving multiple countries.
We focus on selling to mid-market business-to-business, or B2B, companies, which we define as companies that have between two and 2,000
employees. While our customer platform was built to grow with any company, we focus on selling to mid-market businesses because we believe we have
significant competitive advantages attracting and serving this market segment. 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, sales, and customer service budgets. We efficiently
reach these businesses at scale through our proven inbound methodology, our Solutions Partners, and our “freemium” model. A Solutions Partner is a
service provider that helps businesses with strategy, execution, and implementation of go-to-market activities and technology solutions. Our freemium
model attracts customers who begin using our customer platform through our free products and then upgrade to our paid products. As of June 30, 2024, we
had 8,002 full-time employees and 228,054 Customers of varying sizes in more than 135 countries, representing many industries.
We derive most of our revenue from subscriptions to our cloud-based customer platform and related professional services, which consist of
customer on-boarding, training and consulting services. Subscription revenue accounted for 98% of our total revenue for the three and six months ended
June 30, 2024 and 2023. We sell multiple product plans at different base prices on a subscription basis, each of which includes our Smart CRM and
integrated applications to meet the needs of the various customers we serve. Customers pay additional fees if the number of contacts stored and tracked in
the customer’s database exceeds specified thresholds. We also generate additional revenue based on the purchase of additional subscriptions, products and
seats, and the number of account users and subdomains. Most of our Customers’ subscriptions are one year or less in duration.
Subscriptions are billed in advance on various schedules. Because the mix of billing terms for orders can vary from period to period, the annualized
value of the orders we enter into with our customers will not be completely reflected in deferred revenue at any single point in time. Accordingly, we do not
believe that change in deferred revenue is an accurate indicator of future revenue.
Many of our customers purchase on-boarding, training, and consulting services, as well as other tools, which are designed to help customers
enhance their ability to attract, engage and delight their customers using our customer platform. We also generate
22
revenue from Commerce Hub and a number of revenue-share agreements with other companies based on mutually agreed upon terms. Professional services
and other revenue accounted for 2% of total revenue for three and six months ended June 30, 2024 and 2023.
We have focused on rapidly growing our business and plan to continue to make investments to help us address some of the challenges facing us to
support this growth, such as demand for our customer platform by existing and new customers, significant competition from other providers of marketing,
sales, customer service, operations, commerce, and content management software and related applications and rapid technological change in our industry.
We believe that the growth of our business is dependent on many factors, including our ability to expand our customer base, increase adoption of
our customer platform within existing customers, develop new products and applications to extend the functionality of our customer platform and provide a
high level of customer service. We have invested and intend to continue investing for long-term growth. We intend to continue to invest in sales and
marketing to support our growth. We plan to continue to invest in research and development as we continue to introduce new products and applications to
extend the functionality of our customer platform. We intend to continue maintaining a high level of customer service and support which we consider
critical for our continued success. We also plan to continue investing in our data center infrastructure and services capabilities in order to support continued
future customer growth. We also expect to continue to incur additional general and administrative expenses as a result of both our growth and the
infrastructure required to be a public company. We expect to use our cash flow from operations to fund these growth strategies and support our business
and do not expect to be profitable in the next 12 months.
Global Economic Conditions
Our results of operations may be significantly influenced by general macroeconomic conditions, including, but not limited to, the impact of
pandemics (such as the COVID-19 pandemic), geo-political conflicts, foreign currency fluctuations, interest rates, inflation, recession risks, existing and
new domestic and foreign laws and regulations, all of which are beyond our control. Fluctuations in foreign exchange rates and rising inflation have had,
and may continue to have an adverse impact on our financial condition and operating results in future periods. As we continue to monitor the direct and
indirect impacts of these circumstances, the broader implications of these macroeconomic events on our business, results of operations and overall financial
position, particularly in the long term, remain uncertain. See the section titled “Risk Factors'' included under Part II, Item 1A below for further discussion
of the possible impact of these factors and other risks on our business.
Key Business Metrics
Customers. We believe that our ability to increase our customer base is an indicator of our market penetration, the growth of our business, and our
potential future business opportunities as we continue to expand our sales force and invest in marketing efforts. We define our Customers at the end of a
particular period as the number of business entities with one or more paid subscriptions to our customer platform either purchased directly with us or
purchased from a Solutions Partner. A single customer may have separate paid subscriptions to our customer platform, but we count these as one Customer
if certain customer-provided information such as company name, URL, or email address indicate that these subscriptions are managed by the same business
entity.
Average Subscription Revenue per Customer. We believe that our ability to increase the Average Subscription Revenue per Customer is an
indicator of our ability to grow the long-term value of our existing customer relationships. We define Average Subscription Revenue per Customer during a
particular period as subscription revenue from our Customers during the period divided by the average Customers during the same period.
Net Revenue Retention. We believe that our ability to retain and expand a customer relationship is an indicator of the stability of our revenue base
and the long-term value of our Customers. Net Revenue Retention is a measure of the percentage of recurring revenue retained from Customers over a
given period of time. Our Net Revenue Retention for a given period is calculated by first dividing Retained Subscription Revenue by Retention Base
Revenue in the given period, calculating the weighted average of these rates using the Retention Base Revenue for the period, and then annualizing the
resulting rates. A definition of each of the key terms used to calculate Net Revenue Retention is included below.
Retained Subscription Revenue. Contractual Monthly Subscription Revenue of the same cohort of Customers as those that comprise the Retention
Base Revenue at the end of the same month.
23
Retention Base Revenue. Contractual Monthly Subscription Revenue of our Customers as of the beginning of each month.
Contractual Monthly Subscription Revenue. The subscription fees contractually committed to be paid for a full month under our Customer
agreements, converted into USD at fixed rates that are held consistent over time, excluding commissions owed to our Solutions Partners.
24
Results of Operations for the Three Months Ended June 30, 2024 and 2023
The following tables set forth our results of operations for the periods presented and as a percentage of our total revenue for those periods. The data
has been derived from the unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q which include, in our opinion, all
adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair statement of the financial position and results of
operations for the interim periods presented. The period-to-period comparison of financial results is not necessarily indicative of financial results to be
achieved in future periods.
Three Months Ended June 30,
Six Months Ended June 30,
(dollars in thousands) 2024
2023
2024
2023
Revenues:
Subscription $ 623,763 $ 517,678 $ 1,227,559 $ 1,007,421
Professional services and other
13,467
11,460
27,085
23,337
Total revenue
637,230
529,138
1,254,644
1,030,758
Cost of revenues:
Subscription 81,618 71,494 162,342 138,116
Professional services and other
13,899
13,462
28,262
27,169
Total cost of revenues
95,517
84,956
190,604
165,285
Gross profit
541,713
444,182
1,064,040
865,473
Operating expenses:
Research and development 198,180 169,955 373,817 297,639
Sales and marketing 293,794 265,294 594,081 515,971
General and administrative 72,597 61,222 141,452 118,630
Restructuring
1,077
63,880
1,859
92,450
Total operating expenses
565,648
560,351
1,111,209
1,024,690
Loss from operations
(23,935 )
(116,169 )
(47,169 )
(159,217 )
Other expense:
Interest income 20,370 13,542 39,097 24,013
Interest expense (901 ) (937 ) (1,836 ) (1,867 )
Other income (expense)
1,784
330
14,945
(465 )
Total other income
21,253
12,935
52,206
21,681
(Loss) income before income tax expense (2,682 ) (103,234 ) 5,037 (137,536 )
Income tax expense
(11,753 )
(8,569 )
(13,538 )
(10,987 )
Net loss
$ (14,435 )
$ (111,803 )
$ (8,501 )
$ (148,523 )
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Revenue:
Subscription 98 % 98 % 98 % 98 %
Professional services and other
2
2
2
2
Total revenue
100
100
100
100
Cost of revenue:
Subscription 13 14 13 13
Professional services and other
2
3
2
3
Total cost of revenue
15
16
15
16
Gross profit
85
84
85
84
Operating expenses:
Research and development 31 32 30 29
Sales and marketing 46 50 47 50
General and administrative 11 12 11 12
Restructuring
0
12
0
9
Total operating expenses
89
106
89
99
Loss from operations (4 ) (22 ) (4 ) (15 )
Total other income
3
2
4
2
(Loss) income before income tax expense (0 ) (20 ) 0 (13 )
Income tax expense
(2 )
(2 )
(1 )
(1 )
Net loss
(2 )%
(21 )%
(1 )%
(14 )%
Percentages are based on actual values. Totals may not sum due to rounding.
25
Three and Six Months Ended June 30, 2024 Compared to the Three and Six Months Ended June 30, 2023
Revenue
Three Months Ended June 30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
Revenues:
Subscription $ 623,763 $ 517,678 $ 106,085 20 % $ 1,227,559 $ 1,007,421 $ 220,138 22 %
Professional services and other
13,467
11,460
2,007
18 %
27,085
23,337
3,748
16 %
Total revenue
$ 637,230
$ 529,138
$ 108,092
20 %
$ 1,254,644
$ 1,030,758
$ 223,886
22 %
Three month change
Subscription revenue increased during the three months ended June 30, 2024 compared to the same period in 2023 primarily due to the increase in
Customers, which grew from 150,865 as of June 30, 2023 to 228,054 as of June 30, 2024. Average Subscription Revenue per Customer decreased from
$11,432 for the three months ended June 30, 2023 to $11,215 for the three months ended June 30, 2024. The growth in Customers was primarily driven by
increased demand for our lower-priced Starter products, as well as Professional and Enterprise products from our new seats model. The decrease in
Average Subscription Revenue per Customer was primarily driven by continued purchases of our lower-priced Starter products and the impact of our new
seats pricing model, offset by a continued demand for our Professional and Enterprise products, as well as the addition of customers from the acquisition of
Clearbit.
Professional services and other revenue increased during the three months ended June 30, 2024 compared to the same period in 2023 primarily due
to an increase in other revenue streams, including Commerce Hub.
Six month change
Subscription revenue increased during the three months ended June 30, 2024 compared to the same period in 2023 primarily due to the increase in
Customers, which grew from 150,865 as of June 30, 2023 to 228,054 as of June 30, 2024. Average Subscription Revenue per Customer decreased from
$11,436 for the six months ended June 30, 2023 to $11,335 for the six months ended June 30, 2024. The growth in Customers was primarily driven by
increased demand for our lower-priced Starter products, as well as Professional and Enterprise products from our new seats model. The decrease in
Average Subscription Revenue per Customer was primarily by continued purchases of our lower-priced Starter products and the impact of our new seats
pricing model, offset by a continued demand for our Professional and Enterprise products, as well as the addition of customers from the acquisition of
Clearbit.
Professional services and other revenue increased during the six months ended June 30, 2024 compared to the same period in 2023 primarily due to
an increase in other revenue streams, including Commerce Hub.
Cost of Revenue, Gross Profit and Gross Margin Percentage
Three Months Ended June 30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
Total cost of revenue $ 95,517 $ 84,956 $ 10,561 12 % $ 190,604 $ 165,285 $ 25,319 15 %
Gross profit $ 541,713 $ 444,182 $ 97,531 22 % $ 1,064,040 $ 865,473 $ 198,567 23 %
Gross margin percentage 85 % 84 % 85 % 84 %
Total cost of revenue for the three and six months ended June 30, 2024 increased compared to the same period in 2023 primarily due to an increase
in subscription and hosting costs, amortization of capitalized software development costs, amortization of acquired technology and employee-related costs,
offset by a decrease in allocated overhead expenses. Gross margins remained consistent year-over-year.
Three Months Ended June 30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
Subscription cost of revenue $ 81,618 $ 71,494 $ 10,124 14 % $ 162,342 $ 138,116 $ 24,226 18 %
Percentage of subscription revenue 13 % 14 % 13 % 14 %
26
The increase in subscription cost of revenue for the three and six months ended June 30, 2024 compared to the same period in 2023 was primarily
due to the following:
Change
Three Months
Six Months
(in thousands)
Subscription and hosting costs $ 1,209 $ 7,011
Amortization of capitalized software development costs 6,401 11,947
Amortization of acquired technology 1,474 2,957
Employee-related costs 951 2,533
Allocated overhead expenses
89
(222 )
$ 10,124
$ 24,226
Three month change
Subscription and hosting costs increased primarily due to growth in our Customer base from 150,865 as of June 30, 2023 to 228,054 as of June 30,
2024. We also saw higher subscription and hosting costs as we continued to focus on the security, reliability and performance of our customer platform.
Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we
continued to develop new products and increased functionality. Amortization of acquired technology increased due to the amortization of acquired
technology associated with our acquisition of Clearbit in December 2023. Employee-related costs increased as a result of increased headcount as we
continue to grow our customer support organization to support our customer growth and improve service levels and offerings. Allocated overhead expenses
increased due to an increase in shared company third-party services costs.
Six month change
Subscription and hosting costs increased primarily due to growth in our Customer base from 150,865 as of June 30, 2023 to 228,054 as of June 30,
2024. We also saw higher subscription and hosting costs as we continued to focus on the security, reliability and performance of our customer platform.
Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we
continued to develop new products and increased functionality. Amortization of acquired technology increased due to the amortization of acquired
technology associated with our acquisition of Clearbit in December 2023. Employee-related costs increased as a result of increased headcount as we
continue to grow our customer support organization to support our customer growth and improve service levels and offerings. Allocated overhead expenses
decreased primarily due to the reduction of our leased space as a result of the global lease consolidation under the Restructuring Plan, offset slightly by an
increase in shared company third-party services costs.
Three Months Ended June 30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
Professional services and other cost of
revenue $ 13,899 $ 13,462 $ 437 3 % $ 28,262 $ 27,169 $ 1,093 4 %
Percentage of professional services and
other revenue 103 % 117 % 104 % 116 %
The increase in professional services and other cost of revenue for three and six months ended June 30, 2024 compared to the same period in
2023 was primarily due to the following:
Change
Three Months
Six Months
(in thousands)
Allocated overhead and other expenses $ 2,699
$ 5,193
Employee-related costs
(2,262 )
(4,100 )
$ 437
$ 1,093
Three month change
27
Allocated overhead and other expenses increased primarily due to increased costs associated with our other service offering, including Commerce
Hub. Employee-related costs decreased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services.
Six month change
Allocated overhead and other expenses increased primarily due to increased costs associated with our other service offerings, including Commerce
Hub. Employee-related costs decreased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services.
Research and Development
Three Months Ended June
30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
Research and development $ 198,180 $ 169,955 $ 28,225 17 % $ 373,817 $ 297,639 $ 76,178 26 %
Percentage of total revenue 31 % 32 % 30 % 29 %
The increase in research and development expense for the three and six months ended June 30, 2024 compared to the same period in 2023 was
primarily due to the following:
Change
Three Months
Six Months
(in thousands)
Employee-related costs $ 25,022
$ 71,475
Allocated overhead expenses 2,206
2,696
Professional fees
997
2,007
$ 28,225
$ 76,178
Three month change
Employee-related costs increased as a result of increased headcount as we continued to grow our engineering organization to develop new products,
increase functionality and to maintain our existing customer platform. Allocated overhead expenses increased due to an increase in shared company
expenses associated with our systems and infrastructure as we continued to grow our business. Professional fees increased due to an increase in the use of
third-party services and contractors.
Six month change
Employee-related costs increased as a result of increased headcount as we continued to grow our engineering organization to develop new products,
increase functionality and to maintain our existing customer platform. Allocated overhead expenses increased due to an increase in shared company
expenses associated with our systems and infrastructure as we continued to grow our business. Professional fees increased due to an increase in the use of
third-party services and contractors.
Sales and Marketing
Three Months Ended June 30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
Sales and marketing $ 293,794 $ 265,294 $ 28,500 11 % $ 594,081 $ 515,971 $ 78,110 15 %
Percentage of total revenue 46 % 50 % 47 % 50 %
The increase in sales and marketing expense for the three and six months ended June 30, 2024 compared to the same period in 2023 was primarily
due to the following:
Change
Three Months
Six Months
(in thousands)
Employee-related costs $ 25,700 $ 68,170
Marketing programs 325 7,651
Allocated overhead expenses 3,192 4,134
Solutions Partner commissions
(717 )
(1,845 )
$ 28,500
$ 78,110
28
Three month change
Employee-related costs increased as a result of increased headcount as we expanded our selling and marketing organizations to grow our customer
base. Marketing programs increased due to the timing and size of certain marketing efforts as we made investments in attracting new customers. Allocated
overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure. Solutions Partner commissions
decreased as we changed the duration of certain Solutions Partner commissions term from lifetime to three years and began to defer these costs and
amortize over a period of approximately two to four years in the first quarter of 2023.
Six month change
Employee-related costs increased as a result of increased headcount as we expanded our selling and marketing organizations to grow our customer
base. Marketing programs increased due to the timing and size of certain marketing efforts as we made investments in attracting new customers. Allocated
overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure. Solutions Partner commissions
decreased as we changed the duration of certain Solutions Partner commissions term from lifetime to three years and began to defer these costs and
amortize over a period of approximately two to four years in the first quarter of 2023.
General and Administrative
Three Months Ended June 30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
General and administrative $ 72,597 $ 61,222 $ 11,375 19 % $ 141,452 $ 118,630 $ 22,822 19 %
Percentage of total revenue 11 % 12 % 11 % 12 %
The increase in general and administrative expense for the three and six months ended June 30, 2024 compared to the same period in 2023 was
primarily due to the following:
Change
Three Months
Six Months
(in thousands)
Employee-related costs $ 6,308
$ 14,849
Customer credit card fees 1,001
2,174
Allocated overhead expenses 2,239
3,253
Professional fees
1,827
2,546
$ 11,375
$ 22,822
Three month change
Employee-related costs increased as a result of increased headcount as we grew our business and required additional personnel to support our
expanded operations. Customer credit card fees increased due to increased customer transactions as we continued to grow our business. Allocated overhead
expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business.
Professional fees increased due to an increase in the use of third-party services and contractors.
Six month change
Employee-related costs increased as a result of increased headcount as we grew our business and required additional personnel to support our
expanded operations. Customer credit card fees increased due to increased customer transactions as we continued to grow our business. Allocated overhead
expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business.
Professional fees increased due to an increase in the use of third-party services and contractors.
Restructuring
Three Months Ended June 30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
Restructuring $ 1,077 $ 63,880 $ (62,803 ) -98 % $ 1,859 $ 92,450 $ (90,591 ) -98 %
Percentage of total revenue * 12 % * 9 %
29
Three month change
Restructuring charges in the three months ended June 30, 2024 consists of only variable facilities-related costs on unused space. Restructuring
charges were $63.9 million in the three months ended June 30, 2023 due to the implementation of the Restructuring Plan in the first quarter of 2023 and its
continued execution during the second quarter. Restructuring costs consisted primarily of facilities related costs for the terminations and abandonments of
leases globally.
Six month change
Restructuring charges in the six months ended June 30, 2024 consists of only variable facilities-related costs on unused space.
Restructuring charges in the six months ended June 30, 2023 were $92.5 million due to the implementation of the Restructuring Plan in the first
quarter of 2023 and its continued execution during the second quarter. Restructuring costs primarily consisted of $26.9 million of severance, employee
related benefits and other costs, and $65.6 million related to facilities for the termination and abandonment of leases globally.
Interest income
Three Months Ended June 30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
Interest income $ 20,370 $ 13,542 $ 6,828 50 % $ 39,097 $ 24,013 $ 15,084 63 %
Percentage of total revenue 3 % 3 % 3 % 2 %
Three and Six month change
Interest income primarily consists of interest earned on invested cash and cash equivalents balances and investments. The increase during the three
and six months ended June 30, 2024 is due to an increase in yields on our investment balances.
Interest expense
Three Months Ended June 30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
Interest expense $ (901 ) $ (937 ) $ 36 (4 )% $ (1,836 ) $ (1,867 ) $ 31 (2 )%
Percentage of total revenue * * * *
* not meaningful
Three and Six month change
Interest expense primarily consists of amortization of the debt discount and issuance costs and contractual interest expense related to our 2025
Notes. Interest expense remained relatively consistent.
Other income (expense)
Three Months Ended June 30,
$ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Chang
e
Change
2024
2023
Chang
e
Change
Other income (expense) $ 1,784 $ 330 $
1,45
4 441 % $ 14,945 $ (465 ) $
15,4
10 3314 %
Percentage of total revenue * * 1 % *
* not meaningful
30
The change in other income (expense) during six months ended June 30, 2024 is primarily due to the following:
Change
Three Months
Six Months
(in thousands)
Foreign currency gains and losses
$ (170 )
$ 1,048
Impairment of strategic investments
(479 )
(4,094 )
Gain on strategic investments
2,103
18,456
$ 1,454
$ 15,410
Three month change
Other income (expense) primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and
liabilities. The change in foreign currency transactions is primarily attributable to the increase in the value of the Euro and British Pound Sterling relative to
the U.S. Dollar. The increase in gain on strategic investments is due to an impairment of $0.5 million and gains of $2.1 million from observable price
changes in the value of certain strategic investments in the three months ended June 30, 2024 that did not occur in 2023.
Six month change
Other income (expense) primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and
liabilities. The change in foreign currency transactions is primarily attributable to the increase in the value of the Euro and British Pound Sterling relative to
the U.S. Dollar. The increase in the impairment of and gain on strategic investments is due to an impairment of $4.1 million and gains of $18.5 million
from observable price changes in the value of certain strategic investments in the six months ended June 30, 2024 that did not occur in 2023.
Income tax expense
Three Months Ended June 30, $ %
Six Months Ended June 30,
$ %
(dollars in thousands) 2024
2023
Change
Change
2024
2023
Change
Change
Income tax expense $ (11,753 ) $ (8,569 ) $ (3,184 ) 37 %
$ (13,538 ) $ (10,987 ) $ (2,551 ) 23 %
Effective tax rate 438 % 8 %
(269 )% 8 %
Three month change
Income tax expense consists of current and deferred taxes for U.S. and foreign income taxes. The increase in income tax expense was primarily due
to income generated in higher tax jurisdictions.
Six month change
Income tax expense consists of current and deferred taxes for U.S. and foreign income taxes. The increase in income tax expense was primarily due
to income generated in higher tax jurisdictions offset by an increase in shared-based compensation windfall benefits.
In December 2021, the Organization for Economic Cooperation and Development (“OECD”) released Pillar Two Global Anti-Base Erosion Model
Rules (“Pillar Two”), designed to ensure large corporations are taxed at a minimum rate of 15% in all countries of operation. Although the U.S. has not yet
enacted legislation implementing Pillar Two, other countries where the Company does business have enacted legislation implementing Pillar Two which
are effective on January 1, 2024. The implementation of Pillar Two in each jurisdiction in which we operate does not have a material impact on our
effective tax rate. We will continue to evaluate the impact as jurisdictions implement legislation.
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Liquidity and Capital Resources
Our principal sources of liquidity to date have been cash and cash equivalents, net accounts receivable, our common stock offerings, and our
convertible notes offerings.
The following table shows cash and cash equivalents, working capital, net cash and cash equivalents provided by operating activities, net cash and
cash equivalents used in investing activities, and net cash and cash equivalents provided by financing activities for the six months ended June 30, 2024 and
2023.
Six Months Ended June 30,
2024
2023
(in thousands)
Cash and cash equivalents $ 797,875 $ 457,218
Working capital 798,953 1,071,549
Net cash and cash equivalents provided by operating activities 244,916 157,613
Net cash and cash equivalents provided by (used) in investing activities 139,027 (53,313 )
Net cash and cash equivalents provided by financing activities 31,760 20,448
Our cash and cash equivalents at June 30, 2024 were held for working capital purposes. At June 30, 2024, $225.0 million of our cash and cash
equivalents was held in accounts outside the United States. We do not assert indefinite reinvestment of our foreign earnings because these earnings have
been subject to United States Federal tax. While we have concluded that any incremental tax incurred upon ultimate distribution of these earnings to be
immaterial, our current plans do not demonstrate a need to repatriate undistributed earnings to fund our U.S. operations.
Cash from operations could be affected by various risks and uncertainties detailed in the section titled “Risk Factors” included under Part II, Item
1A. However, based on our current business plan and revenue prospects, we believe that our existing cash, cash equivalents and investment balances, and
our anticipated cash flows from operations will be sufficient to meet our working capital and operating resource expenditure requirements for the next
twelve months.
Net Cash and Cash Equivalents Provided by Operating Activities
Net cash and cash equivalents provided by operating activities consists primarily of net loss adjusted for certain non-cash items, including stock-
based compensation, depreciation and amortization and other non-cash charges, net.
Net cash and cash equivalents provided by operating activities during the six months ended June 30, 2024 primarily reflected our net loss of $8.5
million, $43.4 million of depreciation and amortization, $240.1 million in stock-based compensation, an impairment of strategic investments of $4.1
million, and $1.0 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $23.1 million accretion of bond
discounts, a gain on strategic investments of $18.5 million, and $0.9 million of unrealized currency translation. Working capital sources of cash and cash
equivalents primarily included a $44.3 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during
the period, a $18.4 million decrease in accounts receivable related to increased collection, a $15.0 million decrease in accrued expenses and other liabilities,
and a $20.4 million increase in right-of-use asset. These sources of cash and cash equivalents were offset by a $27.2 million increase in prepaid expenses
and other assets, a $23.2 million decrease in operating lease liabilities, a $40.1 million increase in deferred commissions, and a $0.2 million increase in
accounts payable related to timing of bill payments.
Net cash and cash equivalents provided by operating activities during the six months ended June 30, 2023 primarily reflected our net loss of $157.2
million, $18.8 million accretion of bond discounts, offset by non-cash expenses that included $33.0 million of depreciation and amortization, $211.0
million in stock-based compensation, restructuring charges of $64.9 million, and $1.0 million of amortization of debt discount and issuance costs. Working
capital sources of cash and cash equivalents primarily included a $41.4 million increase in deferred revenue primarily resulting from the growth in the
number of customers invoiced during the period, a $21.6 million decrease in accounts receivable related to increased collection, a $21.0 million increase in
right-of-use asset, and $46.5 million increase in accrued expenses and other liabilities. These sources of cash and cash equivalents were offset by a $47.4
million increase in prepaid expenses and other assets, a $18.0 million decrease in operating lease liabilities, a $37.0 million increase in deferred
commissions, and a $17.8 million increase in accounts payable related to timing of bill payments.
Net Cash and Cash Equivalents Used in Investing Activities
Our investing activities have consisted primarily of purchases and maturities of investments, property and equipment purchases, purchases of
strategic investments, and capitalization of software development costs. Capitalized software development costs are related to new products or
improvements to our existing software platform that expands the functionality for our customers.
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Net cash and cash equivalents provided by investing activities during the six months ended June 30, 2024 consisted primarily of $849.6 million
received related to the maturity of investments and $1.9 million of proceeds from a net working capital settlement, offset by cash used for $651.7 million
purchases of investments, $14.1 million of purchased property and equipment, and $43.1 million of capitalized software development costs.
Net cash and cash equivalents used in investing activities during the six months ended June 30, 2023 consisted primarily of $731.4 million
purchases of investments and $14.2 million of purchased property and equipment, $6.0 million of purchases of strategic investments, and $31.6 million of
capitalized software development costs. These uses of cash were offset by $729.8 million received related to the maturity of investments.
Net Cash and Cash Equivalents Provided by Financing Activities
Our financing activities have consisted primarily of the issuance of common stock under our stock plans, and payments of employee taxes related to
the net share settlement of stock-based awards.
For the six months ended June 30, 2024 cash provided in financing activities consisted of $45.2 million of proceeds related to issuance of common
stock under stock plans, offset by $13.5 million used for payment of employee taxes related to the net share settlement of stock-based awards.
For the six months ended June 30, 2023 cash used in financing activities consisted $4.1 million used for payment of employee taxes related to the
net share settlement of stock-based awards, offset by $24.6 million of proceeds related to issuance of common stock under stock plans.
Critical Accounting Policies and Estimates
There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2024 as compared to
the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Contractual Obligations and Commitments
Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our
contractual obligations consist of operating lease liabilities that are included in our consolidated balance sheet and vendor commitments associated with
agreements that are legally binding. See Note 10 for all obligations the Company is committed to in the notes to the consolidated financial statements
appearing elsewhere in this Quarterly Report on Form 10-Q.
Recent Accounting Pronouncements
For information on recent accounting pronouncements, see Recent Accounting Pronouncements in the notes to the consolidated financial statements
appearing elsewhere in this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements
As of June 30, 2024, we are committed to contribute additional capital of $4.0 million to the Black Economic Development Fund. There were no
other material off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Exchange Risk
We have foreign currency risks related to our revenue, cost of revenue, and operating expenses denominated in currencies other than the U.S. dollar,
primarily the Euro, British Pound Sterling, Australian dollar, Singaporean dollar, Japanese Yen, Colombian Peso and Canadian dollar. Since we translate
foreign currencies into U.S. dollars for financial reporting purposes, currency fluctuations can have an impact on our financial results. In 2024, we
implemented a hedging program intended to allow us to mitigate foreign exchange impacts, such as exposure to currency exchange rates in connection with
significant transactions denominated in currencies other than the U.S. dollar, by entering into derivatives transactions such as foreign exchange forwards.
See Note 6 in the notes to the consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Interest Rate Sensitivity
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Our portfolio of cash and cash equivalents and short- and long-term investments is maintained in a variety of securities, including government
agency obligations, corporate bonds and money market funds. Investments are classified as available-for-sale securities and carried at their fair market
value with cumulative unrealized gains or losses recorded as a component of accumulated other comprehensive loss within stockholders' equity. A sharp
rise in interest rates could have an adverse impact on the fair market value of certain securities in our portfolio. We do not currently hedge our interest rate
exposure and do not enter into financial instruments for trading or speculative purposes.
Market Risk and Market Interest Risk
In June 2020, we issued $460 million aggregate principal amount of convertible senior notes due June 1, 2025, of which $459.1 million remains
outstanding as of June 30, 2024. The fair value of the 2025 Notes is subject to interest rate risk, market risk and other factors due to the convertible feature.
The fair value of the 2025 Notes will generally increase as our common stock price increases and will generally decrease as our common stock price
declines in value. The interest and market value changes affect the fair value of the 2025 Notes but do not impact our financial position, cash flows or
results of operations due to the fixed nature of the debt obligation. Generally, the fair values of the 2025 Notes will increase as interest rates fall and
decrease as interest rates rise. Additionally, we carry the 2025 Notes at face value less unamortized discount on our balance sheet, and we present the fair
value for required disclosure purposes only. The Federal Reserve has raised, and may continue to raise interest rates in an effort to combat high inflation.
There continues to be uncertainty in the changing market and economic conditions, including the possibility or additional measures that could be taken by
the Federal Reserve and other government agencies, related to concerns over inflation risk.
The table below provides a sensitivity analysis of hypothetical 10% changes of our stock price as of June 30, 2024 and the estimated impact on the
fair value of the 2025 Notes. The selected scenarios are not predictions of future events, but rather are intended to illustrate the effect such an event may
have on the fair value of the 2025 Notes.
2025 Notes
Hypothetical change in HubSpot stock price Fair value
Estimated change in
fair value
Hypothetical percentage
increase (decrease) in fair
value
10% increase $ 1,052,544 $ 88,614 9 %
No change $ 963,930 $ — —
10% decrease $ 860,864 $ (103,066 ) (11 )%
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our principal executive officer and principal financial
officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as of the three months ended June 30, 2024 covered by this Quarterly Report on Form 10-Q.
Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and
procedures were effective.
Changes in Internal Control Over Financial Reporting. There was no change in our internal control over financial reporting (as defined in Rules 13a-
15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected,
or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations of Internal Controls. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that
our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have
been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a
simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by
management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls
may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the
inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II
Other Information
Item 1. Legal Proceedings
From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Although the
results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have
a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse
impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information
in this Quarterly Report on Form 10-Q and in our other public filings before making an investment decision. Our business, prospects, financial condition,
or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. If any
such risks and uncertainties actually occurs, our business, financial condition or operating results could differ materially from the plans, projections and
other forward-looking statements included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and elsewhere in this Quarterly Report on Form 10-Q and in our other public filings. The trading price of our common stock could decline due to any of
these risks, and, as a result, you may lose all or part of your investment.
Risks Related to Our Business and Strategy
We are dependent upon customer renewals, the addition of new customers, increased revenue from existing customers and the continued growth of the
market for a customer platform.
We derive, and expect to continue to derive, a substantial portion of our revenue from the sale of subscriptions to our customer platform. The market
for inbound marketing, sales, service, operations, commerce and customer management products is still evolving, and competitive dynamics may cause
pricing levels to change as the market matures and as existing and new market participants introduce new types of point applications and different
approaches to enable businesses to address their respective needs. As a result, we may be forced to, or strategically choose to, reduce the prices we charge
for our platform and may be unable to renew existing customer agreements or enter into new customer agreements at the same prices and upon the same
terms that we have historically. In addition, our growth strategy involves a scalable pricing model (including freemium versions of our products and our
recent seats-based pricing model changes) intended to provide opportunities to increase the value of our customer relationships over time, including as
customers expand their use of our platform, or we sell to other parts of their organizations, cross-sell additional products and seats through touchless or low
touch in product purchases, and upsell additional offerings and features. If our scalable pricing and cross-selling efforts are unsuccessful or if our existing
customers do not expand their use of our platform or adopt additional offerings and features, or if the anticipated benefits from scalable pricing take longer
to realize or are not realized at all, our revenue and operating results may suffer.
Our subscription renewal rates may decrease, and any decrease could harm our future revenue and operating results.
Our customers have no obligation to renew their subscriptions for our platform after the expiration of their subscription periods, substantially all of
which are one year or less. In addition, our customers may seek to renew for lower subscription tiers, for fewer contacts or seats, or for shorter contract
lengths. Also, customers may choose not to renew their subscriptions for a variety of reasons. Our renewal rates may decline or fluctuate as a result of a
number of factors, including limited customer resources, pricing changes, the prices of services offered by our competitors, adoption and utilization of our
platform and add-on applications by our customers, adoption of our new products, customer satisfaction with our platform, mergers and acquisitions
affecting our customer base, reductions in our customers’ spending levels or declines in customer activity as a result of economic downturns or uncertainty
in financial markets. If our customers do not renew their subscriptions for our platform or decrease the amount they spend with us, our revenue will decline
and our business will suffer.
In addition, a subscription model creates certain risks related to the timing of revenue recognition and potential reductions in cash flows. A portion
of the subscription-based revenue we report each quarter results from the recognition of deferred revenue relating to subscription agreements entered into
during previous quarters. In addition, we do not record deferred revenue beyond
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amounts invoiced as a liability on our balance sheet. A decline in new or renewed subscriptions in any period may not be immediately reflected in our
reported financial results for that period, but may result in a decline in our revenue in future quarters. If we were to experience significant downturns in
subscription sales and renewal rates, our reported financial results might not reflect such downturns until future periods.
We face significant competition from both established and new companies offering marketing, sales, customer service, operations, commerce, and
content management software and other related applications, as well as internally developed software, which may harm our ability to add new
customers, retain existing customers and grow our business.
The marketing, sales, customer service, operations, commerce, and content management software market is evolving, highly competitive and
significantly fragmented. With the introduction of new technologies and the potential entry of new competitors into the market, we expect competition to
persist and intensify in the future, which could harm our ability to increase sales, maintain or increase renewals and maintain our prices.
We face intense competition from other software companies that develop marketing, sales, customer service, operations, and content management
software and from marketing services companies that provide interactive marketing services. Competition could significantly impede our ability to sell
subscriptions to our customer platform on terms favorable to us. Our current and potential competitors may develop and market new technologies including
as a result of new or better use of evolving artificial intelligence (“AI”) technologies that render our existing or future products less competitive, or
obsolete. In addition, if these competitors develop products with similar or superior functionality to our platform, we may need to decrease the prices or
accept less favorable terms for our platform subscriptions in order to remain competitive. If we are unable to maintain our pricing due to competitive
pressures, our margins will be reduced and our operating results will be negatively affected.
Our competitors include:
• cloud-based marketing automation providers;
• email marketing software vendors;
• sales force automation and CRM software vendors;
• large-scale enterprise suites;
• customer service software providers; and
• content management systems.
In addition, instead of using our platform, some prospective customers may elect to combine disparate point applications, such as content
management, marketing automation, CRM, analytics and social media management. We expect that new competitors, such as enterprise software vendors
that have traditionally focused on enterprise resource planning or other applications supporting back office functions, will develop and introduce
applications serving customer-facing and other front office functions. This development could have an adverse effect on our business, operating results and
financial condition. In addition, sales force automation and CRM vendors could acquire or develop applications that compete with our sales and CRM
offerings. Some of these companies have acquired social media marketing and other marketing software providers to integrate with their broader offerings.
Our current and potential competitors may have significantly more financial, technical, marketing and other resources than we have, be able to
devote greater resources to the development, promotion, sale and support of their products and services, may have more extensive customer bases and
broader customer relationships than we have, and may have longer operating histories and greater name recognition than we have. As a result, these
competitors may respond faster to new technologies and undertake more extensive marketing campaigns for their products. In a few cases, these vendors
may also be able to offer marketing, sales, customer service and content management software at little or no additional cost by bundling it with their
existing suite of applications. To the extent any of our competitors has existing relationships with potential customers for either marketing software or other
applications, those customers may be unwilling to purchase our platform because of their existing relationships with our competitor. If we are unable to
compete with such companies, the demand for our customer platform could substantially decline.
In addition, if one or more of our competitors were to merge or partner with another of our competitors, our ability to compete effectively could be
adversely affected. Our competitors may also establish or strengthen cooperative relationships with our current or future strategic distribution and
technology partners or other parties with whom we have relationships, thereby limiting our ability to promote and implement our platform. We may not be
able to compete successfully against current or future competitors, and competitive pressures may harm our business, operating results and financial
condition.
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We have experienced rapid growth and organizational change in recent periods and expect growth of headcount and operations over the long-term. If
we fail to manage growth and organizational change effectively, we may be unable to execute our business plan, maintain high levels of service or
address competitive challenges adequately.
After the implementation of our Restructuring Plan in January 2023, our headcount and operations continued to grow. For example, we had 8,002
full-time employees as of June 30, 2024 and 7,663 as of December 31, 2023. To date, we have opened several international offices. This growth has placed,
and will continue to place, a significant strain on our management, administrative, operational and financial infrastructure. We expect to continue to grow
headcount and operations over the long-term. We anticipate future growth will be required over the long term to address increases in our product offerings
and continued expansion. Our success will depend in part upon our ability to recruit, hire, train, manage and integrate qualified managers, technical
personnel and employees in specialized roles within our company, including in technology, sales and marketing. Furthermore, as more of our employees
work remotely from geographic areas across the globe on a permanent basis pursuant to our hybrid workplace model, which provides our employees with
the option to be fully remote, work full-time from one of our offices, or have the flexibility to work both in the office and remotely, we may need to
reallocate our investment of resources and closely monitor a variety of local regulations and requirements, including local tax laws. We may experience
unpredictability in our expenses and employee work culture. If we experience any of these effects in connection with future growth, if our new employees
perform poorly, or if we are unsuccessful in recruiting, hiring, training, managing and integrating new employees, or retaining our existing employees, it
could materially impair our ability to attract new customers, retain existing customers and expand their use of our platform, all of which would materially
and adversely affect our business, financial condition and results of operations.
Failure to effectively develop and expand our marketing, sales, customer service, operations, commerce and content management capabilities could
harm our ability to increase our customer base and achieve broader market acceptance of our platform.
To increase Customers and achieve broader market acceptance of our customer platform, we will need to continue to expand our marketing, sales,
customer service, operations, and content management capabilities, including our sales force and third-party channel partners. We will continue to dedicate
significant resources to inbound sales and marketing programs. The effectiveness of our inbound sales and marketing and third-party channel partners has
varied over time and may vary in the future and depends on our ability to maintain and improve our customer platform including with respect to AI and
machine learning. All of these efforts will require us to invest significant financial and other resources. Our business will be seriously harmed if our efforts
do not generate a correspondingly significant increase in revenue. We may not achieve anticipated revenue growth from expanding our sales force if we are
unable to hire, develop and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable
period of time or if our sales and marketing programs are not effective.
The rate of growth of our business depends on the continued participation and level of service of our Solutions Partners.
We rely on our Solutions Partners to provide certain services to our customers, as well as pursue sales of our customer platform to customers. To the
extent we do not attract new Solutions Partners, or existing or new Solutions Partners do not refer a growing number of customers to us, due to changes in
our Solutions Partner relationship models or otherwise, our revenue and operating results would be harmed. In addition, if our Solutions Partners do not
continue to provide services to our customers, we would be required to provide such services ourselves either by expanding our internal team or engaging
other third-party providers, which would increase our operating costs.
If we fail to maintain our inbound thought leadership position, our business may suffer.
We believe that maintaining our thought leadership position in inbound marketing, sales, services, operations, commerce and content management is
an important element in attracting new customers. We devote significant resources to develop and maintain our thought leadership position, with a focus on
identifying and interpreting emerging trends in the inbound experience, shaping and guiding industry dialog and creating and sharing the best inbound
practices. Our activities related to developing and maintaining our thought leadership may not yield increased revenue, and even if they do, any increased
revenue may not offset the expenses we incurred in such effort. We rely upon the continued services of our management and employees with domain
expertise with inbound marketing, sales, services, operations, and content management, and the loss of any key employees in this area could harm our
competitive position and reputation. If we fail to successfully grow and maintain our thought leadership position, we may not attract enough new customers
or retain our existing customers, and our business could suffer.
If we fail to further enhance our brand and maintain our existing strong brand awareness, our ability to expand our customer base will be
impaired and our financial condition may suffer.
We believe that our development of the HubSpot brand is critical to achieving widespread awareness of our existing and future inbound experience
solutions, and, as a result, is important to attracting new customers and maintaining existing customers. In the
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past, our efforts to build our brand have involved significant expenses, and we believe that this investment has resulted in strong brand recognition in the
B2B market. Successful promotion and maintenance of our brands will depend largely on the effectiveness of our marketing efforts and on our ability to
provide a reliable and useful customer platform at competitive prices. Brand promotion activities may not yield increased revenue, and even if they do, any
increased revenue may not offset the expenses we incurred in building our brand. If we fail to successfully promote and maintain our brand, our business
could suffer.
If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements,
our customer platform may become less competitive.
Our future success depends on our ability to adapt and innovate our customer platform. To attract new customers and increase revenue from existing
customers, we need to continue to enhance and improve our offerings to meet customer needs at prices that our customers are willing to pay. Such efforts
will require adding new functionality and responding to technological advancements, including AI and machine learning, which will increase our research
and development costs. If we are unable to develop new applications that address our customers’ needs, or to enhance and improve our platform in a timely
manner, we may not be able to maintain or increase market acceptance of our platform. Our ability to grow is also subject to the risk of future disruptive
technologies. Access and use of our customer platform is provided via the cloud, which, itself, was disruptive to the previous enterprise software model. If
new technologies emerge that are able to deliver inbound marketing software and related applications at lower prices, more efficiently, more conveniently
or more securely, such technologies could adversely affect our ability to compete.
If we fail to offer high-quality customer support, our business and reputation may suffer.
High-quality education, training and customer support are important for the successful marketing, sale and use of our customer platform and for the
renewal of existing customers. Providing this education, training and support requires that our personnel who manage our online training resource,
HubSpot Academy, or provide customer support have specific inbound experience domain knowledge and expertise, making it more difficult for us to hire
qualified personnel and to scale up our support operations. The importance of high-quality customer support will increase as we expand our business and
pursue new customers. If we do not help our customers use multiple applications within our customer platform and provide effective ongoing support, our
ability to sell additional functionality and services to, or to retain, existing customers may suffer and our reputation with existing or potential customers
may be harmed.
We may not be able to scale our business quickly enough to meet our customers’ growing needs and if we are not able to grow efficiently, our operating
results could be harmed.
As usage of our customer platform grows and as customers use our platform for additional inbound applications, such as sales and services, we will
need to devote additional resources to improving our application architecture, integrating with third-party systems and maintaining infrastructure
performance. In addition, we will need to appropriately scale our internal business systems and our services organization, including customer support and
professional services, to serve our growing customer base, particularly as our customer demographics change over time. Any failure of or delay in these
efforts could cause impaired system performance and reduced customer satisfaction. These issues could reduce the attractiveness of our customer platform
to customers, resulting in decreased sales to new customers, lower renewal rates by existing customers, the issuance of service credits, or requested refunds,
which could impede our revenue growth and harm our reputation. Even if we are able to upgrade our systems and expand our staff, any such expansion will
be expensive and complex, requiring management’s time and attention. We could also face inefficiencies or operational failures as a result of our efforts to
scale our infrastructure. Moreover, there are inherent risks associated with upgrading, improving and expanding our information technology systems. We
cannot be sure that the expansion and improvements to our infrastructure and systems will be fully or effectively implemented on a timely basis, if at all.
Our ability to introduce new products and features, including new products and features that utilize artificial intelligence, is dependent on adequate
research and development resources. If we do not adequately fund our research and development efforts, we may not be able to compete effectively and
our business and operating results may be harmed.
To remain competitive, we must continue to develop new product offerings, applications, features and enhancements to our existing customer
platform. Maintaining adequate research and development personnel and resources to meet the demands of the market is essential. If we are unable to
develop our platform internally due to certain constraints, such as high employee turnover, lack of management ability or a lack of other research and
development resources, we may miss market opportunities. Further, many of our competitors expend a considerably greater amount of funds on their
research and development programs, and those that do not may be acquired by larger companies that would allocate greater resources to our competitors’
research and development programs. Our failure to maintain adequate research and development resources or to compete effectively with the research and
development programs of our competitors could materially adversely affect our business.
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The development of next-generation solutions that utilize new and advanced features, including AI and machine learning, involves making
predictions regarding the willingness of the market to adopt such technologies over legacy solutions. The Company may be required to commit significant
resources to developing new products, software and services before knowing whether such investment will result in products or services that the market
will accept.
The Company’s inability, for technological or other reasons, some of which may be beyond the Company’s control, to enhance, develop, introduce
and monetize products and services in a timely manner, or at all, in response to changing market conditions or customer requirements could have a material
adverse effect on the Company’s business, results of operations and financial condition or could result in its products and services not achieving market
acceptance or becoming obsolete. In addition, if the Company fails to deliver a compelling customer experience or accurately predict emerging
technological trends and the changing needs of customers and end users, or if the features of its new products and services do not meet the demands of its
customers or are not sufficiently differentiated from those of its competitors, the Company’s business, results of operations and financial condition could be
materially harmed.
Uncertainty around new and emerging AI applications such as generative AI content creation may require additional investment in the development
of proprietary datasets, machine learning models and systems to test for accuracy, bias and other variables, which are often complex, development of new
approaches and processes to provide attribution or remuneration to content creators and building systems that enable creatives to have greater control over
the use of their work in the development of AI, which may be costly and could impact our profit margin if we are unable to monetize such assets. In
addition, AI technologies, including generative AI, may create content that appears correct but is factually inaccurate or flawed, or contains copyrighted or
other protected material, and if our customers or others use this flawed content to their detriment, we may be exposed to brand or reputational harm,
competitive harm, and/or legal liability. Developing, testing and deploying AI systems may also increase the cost profile of our offerings due to the nature
of the computing costs involved in such systems.
Changes in the sizes or types of businesses that purchase our platform or in the applications within our customer platform purchased or used by our
customers could negatively affect our operating results.
Our strategy is to sell subscriptions to our customer platform to mid-sized businesses, but we have sold and will continue to sell to organizations
ranging from small businesses to enterprises. Our gross margins can vary depending on numerous factors related to the implementation and use of our
customer platform, including the sophistication and intensity of our customers’ use of our platform and the level of professional services and support
required by a customer. Sales to enterprise customers may entail longer sales cycles and more significant selling efforts. Selling to small businesses may
involve greater credit risk and uncertainty. If there are changes in the mix of businesses that purchase our platform or the mix of the product plans
purchased by our customers, our gross margins could decrease and our operating results could be adversely affected.
We have in the past completed acquisitions and may acquire or invest in other companies or technologies in the future, which could divert
management’s attention, fail to meet our expectations, result in additional dilution to our stockholders, increase expenses, disrupt our operations or
harm our operating results.
We have in the past acquired, and we may in the future acquire or invest in, businesses, products or technologies that we believe could complement
or expand our platform, enhance our technical capabilities or otherwise offer growth opportunities. For example, in December 2023, we acquired Clearbit,
a B2B data provider. We may not be able to fully realize the anticipated benefits of historical or any future acquisitions. The pursuit of potential
acquisitions may divert the attention of management and cause us to incur various expenses related to identifying, investigating and pursuing suitable
acquisitions, whether or not they are consummated.
There are inherent risks in integrating and managing acquisitions. If we acquire additional businesses, we may not be able to assimilate or integrate
the acquired personnel, operations and technologies successfully or effectively manage the combined business following the acquisition and our
management may be distracted from operating our business. We also may not achieve the anticipated benefits from the acquired business due to a number
of factors, including: unanticipated costs or liabilities associated with the acquisition; incurrence of acquisition-related costs, which would be recognized as
a current period expense; inability to generate sufficient revenue to offset acquisition or investment costs; the inability to maintain relationships with
customers and partners of the acquired business; the difficulty of incorporating acquired technology and rights into our platform and of maintaining quality
and security standards consistent with our brand; delays in customer purchases due to uncertainty related to any acquisition; the need to integrate or
implement additional controls, procedures and policies; challenges caused by distance, language and cultural differences; harm to our existing business
relationships with business partners and customers as a result of the acquisition; the potential loss of key employees; use of resources that are needed in
other parts of our business and diversion of management and employee resources; and use of substantial portions of our available cash or the incurrence of
debt to consummate the acquisition. Acquisitions also increase the risk of unforeseen legal and compliance liabilities, including for potential violations of
applicable law or industry rules and regulations, arising from prior or ongoing acts or omissions by the acquired businesses which are not discovered by
due diligence
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during the acquisition process, including data handling and privacy violations. Generally, if an acquired business fails to meet our expectations, our
operating results, business and financial condition may suffer. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of
debt, which could adversely affect our business, results of operations or financial condition.
In addition, a significant portion of the purchase price of companies we acquire may be allocated to goodwill and other intangible assets, which must
be assessed for impairment at least annually. If our acquisitions do not ultimately yield expected returns, we may be required to make charges to our
operating results based on our impairment assessment process, which could harm our results of operations.
Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible
to risks associated with international operations.
A component of our growth strategy involves the further expansion of our operations and customer base internationally. We have formed several
international entities and may plan to form additional entities in the future. These international operations focus primarily on sales, professional services
and support, and select international locations have development teams. Our current international operations and future initiatives will involve a variety of
risks, including:
• difficulties in maintaining our company culture with a dispersed and distant workforce;
• more stringent regulations relating to data security and the unauthorized use of, or access to, commercial and personal data, particularly in the
European Union;
• unexpected changes in regulatory requirements, taxes or trade laws;
• differing labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared
to the United States, including deemed hourly wage and overtime regulations in these locations;
• challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to
implement appropriate systems, policies, benefits and compliance programs;
• difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and
regulatory systems;
• currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging
transactions;
• global economic uncertainty caused by global political events;
• limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries;
• limited or insufficient intellectual property protection;
• international disputes, wars (such as the conflict between Russia and Ukraine and the evolving events in Israel and Gaza), political instability
or terrorist activities and resulting economic instability;
• likelihood of potential or actual violations of domestic and international anticorruption laws, such as the U.S. Foreign Corrupt Practices Act
and the U.K. Bribery Act, or of U.S. and international export control and sanctions regulations, which likelihood may increase with an
increase of sales or operations in foreign jurisdictions and operations in certain industries; and
• adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash.
Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we may undertake
will not be successful. If in the future, we invest substantial time and resources to expand our international operations and are unable to do so successfully
and in a timely manner, our business and operating results will suffer. We continue to implement policies and procedures to facilitate our compliance with
U.S. laws and regulations applicable to or arising from our international business. Inadequacies in our past or current compliance practices may increase the
risk of inadvertent violations of such laws and regulations, which could lead to financial and other penalties that could damage our reputation and impose
costs on us.
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Social and ethical issues relating to the use of new and evolving technologies, such as AI, in our offerings may result in reputational harm and liability.
Social and ethical issues relating to the use of new and evolving technologies such as AI in our offerings, may result in reputational harm and
liability, and may cause us to incur additional research and development costs to resolve such issues. We are increasingly building AI into many of our
offerings, including early-stage generative AI features. As with many innovations, AI presents risks and challenges that could affect its adoption, and
therefore our business. If we enable or offer solutions that draw controversy due to their perceived or actual impact on human rights, privacy, employment,
or in other social contexts, we may experience brand or reputational harm, competitive harm or legal liability. Potential government regulation related to AI
use and ethics may also increase the burden and cost of research and development in this area, and failure to properly remediate AI usage or ethics issues
may cause public confidence in AI to be undermined, which could slow adoption of AI in our products and services. The rapid evolution of AI will require
the application of resources to develop, test and maintain our products and services to help ensure that AI is implemented ethically in order to minimize
unintended, harmful impact.
Adverse litigation results could affect our business.
From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Litigation
can be lengthy, expensive and disruptive to our operations, and can divert our management’s attention away from running our core business. The results of
our litigation also cannot be predicted with certainty. Even a favorable judgment may be subject to appeals leading to protracted litigation, additional costs
and the prospect that our desired outcome will be overturned. An adverse decision could result in monetary damages or injunctive relief that could affect
our business, operating results or financial condition.
Risks Related to Employee Matters
If we cannot maintain our company culture as we experience changes in our workforce, we could lose the innovation, teamwork, passion and focus on
execution that we believe contribute to our success and our business may be harmed.
We believe that a critical component to our success has been our company culture, which is based on transparency and personal autonomy. We have
invested substantial time and resources in building our team within this company culture. In 2020, we made the decision to permanently move to a hybrid
workplace model, which means our employees have the option to be fully remote, work full-time from one of our offices, or work both in the office and
remotely. Preservation of our corporate culture has been made more difficult as the majority of our workforce has been working from home. Any failure to
preserve our culture could negatively affect our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. As
we grow and continue to develop our company infrastructure, and experience organizational change, we may find it difficult to maintain these important
aspects of our company culture and our business may be adversely impacted.
We rely on our management team and other key employees, and the loss of one or more key employees could harm our business.
Our success and future growth depend upon the continued services of our management team, including our co-founders, Brian Halligan and
Dharmesh Shah, our chief executive officer, Yamini Rangan, and other key employees in the areas of research and development, marketing, sales, services,
operations, content management, and general and administrative functions. From time to time, there may be changes in our management team resulting
from the hiring or departure of executives, which could disrupt our business. We also are dependent on the continued service of our existing software
engineers and information technology personnel because of the complexity of our platform, technologies and infrastructure. We may terminate any
employee’s employment at any time, with or without cause, and any employee may resign at any time, with or without cause. We do not have employment
agreements with any of our key personnel. The loss of one or more of our key employees could harm our business.
The failure to attract and retain additional qualified personnel could prevent us from executing our business strategy.
To execute our business strategy, we must attract and retain highly qualified personnel. In particular, we compete with many other companies for
software developers with high levels of experience in designing, developing and managing cloud-based software, as well as for skilled information
technology, marketing, sales and operations professionals, and we may not be successful in attracting and retaining the professionals we need. Also,
inbound sales, marketing, services, operations, and content management domain experts are very important to our success and are difficult to replace. We
have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and difficulty in retaining highly
skilled employees with appropriate qualifications. In particular, we have experienced a competitive hiring environment in the Greater Boston area, where
we are headquartered and will continue to experience a competitive hiring environment as we recruit for remote talent worldwide. Many of
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the companies with which we compete for experienced personnel have greater resources than we do. The change by companies to offer a remote or hybrid
work environment may increase the competition for such employees from employers outside of our traditional office locations. In addition, if we choose to
no longer offer a remote or hybrid work environment, we may face more difficulty in retaining our workforce. Further, labor is subject to external factors
that are beyond our control, including our industry’s highly competitive market for skilled workers and leaders, cost inflation, and workforce participation
rates. In addition, if our reputation were to be harmed, whether as a result of media, legislative, or regulatory scrutiny or otherwise, it could make it more
difficult to attract and retain personnel that are critical to the success of our business.
In addition, in making employment decisions, particularly in the software industry, job candidates often consider the value of equity incentives they
are to receive in connection with their employment. If the price of our stock declines, or experiences significant volatility, our ability to attract or retain key
employees will be adversely affected. If we fail to attract new personnel or fail to retain and motivate our current personnel, our growth prospects could be
severely harmed.
Risks Related to Global Economic Conditions
We are exposed to fluctuations in currency exchange rates that could adversely affect our financial results.
We face exposure to movements in currency exchange rates, which may cause our revenue and operating results to differ materially from
expectations. As we have expanded our international operations, our exposure to exchange rate fluctuations has increased, in particular with respect to the
Euro, British Pound Sterling, Australian Dollar, Singapore Dollar, Japanese Yen, Colombian Peso, and Canadian Dollar. Fluctuations in the value of the
U.S. dollar versus foreign currencies may impact our operating results when translated into U.S. dollars. Thus, our results of operations and cash flows are
subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign currency
exchange rates. As exchange rates vary, revenue, cost of revenue, operating expenses and other operating results, when re-measured, may differ materially
from expectations. In addition, our operating results are subject to fluctuation if our mix of U.S. and foreign currency denominated transactions and
expenses changes in the future. We recently implemented a hedging program intended to allow us to mitigate foreign exchange impacts, such as exposure
to currency exchange rates in connection with significant transactions denominated in currencies other than the U.S. dollar, by entering into derivatives
transactions such as foreign exchange forwards. We may also employ certain other strategies in the future to mitigate foreign currency risk. There can be no
guarantee or assurance that such hedging program and the strategies we employ pursuant thereto will be effective to reduce or eliminate our exposure to
foreign exchange rate fluctuations to the extent we anticipate, or at all. Furthermore, the hedging program and the derivatives transactions employed as part
thereof involve costs and risks of their own, including ongoing management time and expertise, external costs to implement the programs and strategies,
potential counterparty credit risk and liquidity risk, and potential accounting implications.. Additionally, as we anticipate growing our business further
outside of the United States, the effects of movements in currency exchange rates will increase as our transaction volume outside of the United States
increases.
Weakened global economic conditions may harm our industry, business and results of operations.
Our overall performance depends in part on worldwide economic conditions. Global financial developments and downturns seemingly unrelated to
us or the software industry may harm us. The United States and other key international economies have been affected from time to time by falling demand
for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets,
volatility in the banking sector, changes in the labor market, supply chain disruptions, bankruptcies, inflation and overall uncertainty with respect to the
economy, including with respect to tariff and trade issues. Moreover, a potential U.S. federal government shutdown resulting from budgetary decisions, a
prolonged continuing resolution, breach of the federal debt ceiling, or a potential U.S. sovereign default and the uncertainty surrounding the 2024 U.S.
Presidential Election may increase uncertainty and volatility in the global economy and financial markets. Weak economic conditions or significant
uncertainty regarding the stability of financial markets related to stock market volatility, inflation, recession, changes in tariffs, trade agreements or
governmental fiscal, monetary and tax policies, among others, could adversely impact our business, financial condition and operating results. Further, weak
market conditions have, and could in the future result in, impairment of our investments and long-lived assets.
Further, the economies of countries in Europe have been experiencing weakness associated with high sovereign debt levels, weakness in the banking
sector, uncertainty over the future of the Eurozone and volatility in the value of the pound sterling and the Euro and instability resulting from the ongoing
conflict between Russia and Ukraine. The effect of the conflict between Russia and Ukraine, including any resulting sanctions, export controls or other
restrictive actions that may be imposed against governmental or other entities in, for example, Russia, have in the past contributed and may in the future
contribute to disruption, instability and volatility in the global markets. We have operations, as well as current and potential new customers, throughout
Europe. If economic conditions in Europe and other key markets for our platform continue to remain uncertain or deteriorate further, it could adversely
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affect our customers’ ability or willingness to subscribe to our platform, delay prospective customers’ purchasing decisions, reduce the value or duration of
their subscriptions or affect renewal rates, all of which could harm our operating results.
More recently, global inflation rates have increased to levels not seen in several decades, which may result in decreased demand for our products
and services, increases in our operating costs, including our labor costs, constrained credit and liquidity, reduced government spending and volatility in
financial markets. The Federal Reserve and other international government agencies have raised, and may again raise, interest rates in response to concerns
over inflation risk. Increases in interest rates on credit and debt that would increase the cost of any borrowing that we may make from time to time and
could impact our ability to access the capital markets. Increases in interest rates, especially if coupled with reduced government spending and volatility in
financial markets, may have the effect of further increasing economic uncertainty and heightening these risks. In an inflationary environment, we may be
unable to raise the sales prices of our products and services at or above the rate at which our costs increase, which could/would reduce our profit margins
and have a material adverse effect on our financial results and net income. We also may experience lower than expected sales and potential adverse impacts
on our competitive position if there is a decrease in consumer spending or a negative reaction to our pricing. A reduction in our revenue would be
detrimental to our profitability and financial condition and could also have an adverse impact on our future growth.
There continues to be uncertainty in the changing market and economic conditions, including the possibility of additional measures that could be
taken by the Federal Reserve and other domestic and international government agencies, related to concerns over inflation risk. A sharp rise in interest rates
could have an adverse impact on the fair market value of certain securities in our portfolio and investments in some financial instruments could pose risks
arising from market liquidity and credit concerns, which could adversely affect our financial results.
The current economic downturn may lead to decreased demand for our products and services and otherwise harm our business and results of
operations.
Our overall performance depends, in part, on worldwide economic conditions. In recent months, we have observed increased economic uncertainty
in the United States and abroad. Impacts of such economic weakness include:
• falling overall demand for goods and services, leading to reduced profitability;
• reduced credit availability;
• higher borrowing costs;
• reduced liquidity;
• changes in the labor market;
• supply chain disruptions;
• volatility in credit, equity and foreign exchange markets; and
• bankruptcies.
These developments could lead to inflation, higher interest rates, and uncertainty about business continuity, which may adversely affect our business
and our results of operations. As our customers react to global economic conditions and the potential for a global recession, we may see them reduce
spending on our products and take additional precautionary measures to limit or delay expenditures and preserve capital and liquidity. Reductions in
spending on our solutions, delays in purchasing decisions, lack of renewals, inability to attract new customers, as well as pressure for extended billing
terms or pricing discounts, would limit our ability to grow our business and could negatively affect our operating results and financial condition.
Risks Related to Our Technical Operations Infrastructure and Dependence on Third Parties
Interruptions or delays in service from our third-party data center providers could impair our ability to deliver our platform to our customers, resulting
in customer dissatisfaction, damage to our reputation, loss of customers, limited growth and reduction in revenue.
We currently serve the majority of our platform functions from third-party data center hosting facilities operated by Amazon Web Services in the
United States and Europe. We also have several colocations which host certain critical services (for example, VPN access) in various locations around the
world. In addition, we use Cloudflare Global CDN to optimize content delivery across our locations.
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Any damage to, or failure of, the systems of our third-party providers could result in interruptions to our platform. Despite precautions taken at our
data centers, the occurrence of spikes in usage volume, a natural disaster, such as earthquakes or hurricane, an act of terrorism, geopolitical conflict,
vandalism or sabotage, a disruptive cyber attack, a decision to close a facility without adequate notice, power or telecommunications failures or other
unanticipated problems at a facility could result in lengthy interruptions in the availability of our on-demand software. In the event that any of our third-
party facilities arrangements is terminated, or if there is a lapse of service or damage to a facility, we could experience interruptions in our platform as well
as delays and additional expenses in arranging new facilities and services. Even with current and planned disaster recovery arrangements, our business
could be harmed. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.
These factors in turn could further reduce our revenue, subject us to liability and cause us to issue credits or cause customers to fail to renew their
subscriptions, any of which could materially adversely affect our business.
If our customer platform has outages or fails due to defects or similar problems, and if we fail to correct any defect or other software problems, we
could lose customers, become subject to service performance or warranty claims or incur significant costs.
Our customer platform and its underlying infrastructure are inherently complex and may contain material defects or errors. We release
modifications, updates, bug fixes and other changes to our software several times per day, without traditional human-performed quality control reviews for
each release. We have from time to time found defects in our software and may discover additional defects in the future. We may not be able to detect and
correct defects or errors before customers begin to use our platform or its applications. Consequently, we or our customers may discover defects or errors
after our platform has been implemented. Defects or errors could result in product outages and could also cause inaccuracies in the data we collect and
process for our customers, or even the loss, damage or inadvertent release of such confidential data. We implement bug fixes and upgrades as part of our
regular system maintenance, which may lead to system downtime. Even if we are able to implement the bug fixes and upgrades in a timely manner, any
history of product outages, defects or inaccuracies in the data we collect for our customers, or the loss, damage or inadvertent release of confidential data
could cause our reputation to be harmed, and customers may elect not to purchase or renew their agreements with us. Furthermore, these issues could
subject us to service performance credits (whether offered by us or required by contract), warranty claims or increased insurance costs. The costs associated
with product outages, any material defects or errors in our platform or other performance problems may be substantial and could materially adversely affect
our operating results.
In addition, third-party applications and features on our customer platform may not meet the same quality standards that we apply to our own
development efforts and, to the extent they contain bugs, vulnerabilities or defects, they may create disruptions in our customers’ use of our products, lead
to data loss, unauthorized access to customer data, damage our brand and reputation and affect the continued use of our products, any of which could harm
our business, results of operations and financial condition.
If our information technology systems, including our customer platform, have outages or fail due to defects or similar problems, and if we fail to
correct any defect or other software problems, it could disrupt our internal operations or services provided to customers, and could reduce our revenue,
increase our expenses, damage our reputation and adversely affect our cash flows and stock price.
We rely on our information technology systems, including the sustained and uninterrupted performance of our customer platform, to manage
numerous aspects of our business, including marketing, sales, content management, customer service and other internal operations. Our information
technology systems are an essential component of our business and any disruption could significantly limit our ability to manage and operate our business
efficiently.
Our customer platform and its underlying infrastructure are inherently complex and may contain material defects or errors. We release
modifications, updates, bug fixes and other changes to our software several times per day, without traditional human-performed quality control reviews for
each release. While we seek to implement secure development practices, we cannot eliminate the risk that our applications may have vulnerabilities. We
have from time to time found defects in our software and may discover in the future additional defects, outages, delays or cessations of service,
performance and quality problems or may produce errors in connection with systems integrations, migration work or other causes, which could result in
business disruptions and the process of remediating them could be more expensive, time-consuming, disruptive and resource intensive than planned. Such
disruptions could adversely impact our internal operations and interrupt other processes. Delayed sales, lower margins or lost customers resulting from
these disruptions could reduce our revenue, increase our expenses, damage our reputation and adversely affect our cash flows and stock price.
We are dependent on the continued availability of third-party data hosting and transmission services.
A significant portion of our operating cost is from our third-party data hosting and transmission services, including Amazon Web Services (“AWS”),
which hosts the substantial majority of our products and platform. If the costs for such services increase due
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to vendor consolidation, regulation, contract renegotiation, or otherwise, we may not be able to increase the fees for our customer platform or services to
cover the changes, which could have a negative impact on our operating results.
Additionally, our customers need to be able to access our platform at any time, without interruption or degradation of performance. AWS runs its
own platform that we access, and we are, therefore, vulnerable to service interruptions at AWS. We have experienced, and expect that in the future we may
experience interruptions, delays and outages in service and availability due to a variety of factors, including infrastructure changes, human or software
errors, website hosting disruptions and capacity constraints. In some instances, including because we do not control our service providers, we may not be
able to identify the cause or causes of these problems within a period of time acceptable to our customers. Additionally, as our business continues to grow,
to the extent that we do not effectively address capacity constraints, through our providers of cloud infrastructure, our results of operations may be
adversely affected. In addition, any changes in service levels from our service providers may adversely affect our ability to meet our customers’
requirements, result in negative publicity which could harm our reputation and brand and may adversely affect the usage of our platform.
If we do not or cannot maintain the compatibility of our customer platform with third-party applications that our customers use in their businesses, our
revenue will decline.
A significant percentage of our customers choose to integrate our platform with certain capabilities provided by third-party application providers
using application programming interfaces (“APIs”) published by these providers. The functionality and popularity of our customer platform depends, in
part, on our ability to integrate our platform with third-party applications and platforms, including CRM, CMS, e-commerce, call center, analytics and
social media sites that our customers use and from which they obtain data. Third-party providers of applications and APIs may change the features of their
applications and platforms, restrict our access to their applications and platforms, or alter the terms governing use of their applications and APIs and access
to those applications and platforms in an adverse manner. Such changes could functionally limit or terminate our ability to use these third-party applications
and platforms in conjunction with our platform, which could negatively impact our offerings and harm our business. If we fail to integrate our platform
with new third-party applications and platforms that our customers use for marketing, sales, services, operations, commerce, or content management
purposes, or fail to renew existing relationships pursuant to which we currently provide such integration, we may not be able to offer the functionality that
our customers need, which would negatively impact our ability to generate new revenue or maintain existing revenue and adversely impact our business.
We rely on data provided by third parties, the loss of which could limit the functionality of our platform and disrupt our business.
Select functionality of our customer platform depends on our ability to deliver data, including search engine results and social media updates,
provided by unaffiliated third parties, such as Facebook, Google, LinkedIn and Twitter. Some of this data is provided to us pursuant to third-party data
sharing policies and terms of use, under data sharing agreements by third-party providers or by customer consent. In the future, any of these third parties
could change its data sharing policies, including making them more restrictive, or alter its algorithms that determine the placement, display, and
accessibility of search results and social media updates, any of which could result in the loss of, or significant impairment to, our ability to collect and
provide useful data to our customers. These third parties could also interpret our, or our service providers’ data collection policies or practices as being
inconsistent with their policies, which could result in the loss of our ability to collect this data for our customers. Any such changes could impair our ability
to deliver data to our customers and could adversely impact select functionality of our platform, impairing the return on investment that our customers
derive from using our solution, as well as adversely affecting our business and our ability to generate revenue.
Privacy concerns and end users’ acceptance of Internet behavior tracking may limit the applicability, use and adoption of our customer platform.
Privacy concerns may cause end users to resist providing the personal data necessary to allow our customers to use our platform effectively. We
have implemented various features intended to enable our customers to better protect end user privacy, but these measures may not alleviate all potential
privacy concerns and threats. Even the perception of privacy concerns, whether or not valid, may inhibit market adoption of our platform. Privacy advocacy
groups and the technology and other industries are considering various new, additional or different self-regulatory standards that may place additional
burdens on us. The costs of compliance with, and other burdens imposed by these groups’ policies and actions may limit the use and adoption of our
customer platform and reduce overall demand for it, or lead to significant fines, penalties or liabilities for any noncompliance or loss of any such action.
If our or our customers’ security measures are compromised or unauthorized access to data of our customers or their customers is otherwise obtained,
our customer platform may be perceived as not being secure, our customers may be harmed and may curtail or cease their use of our platform, our
reputation may be damaged and we may incur significant liabilities.
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Our operations involve the storage and transmission of data of our customers and their customers, including personal data. Our storage is typically
the sole source of record for portions of our customers’ businesses and end user data, such as initial contact information and online interactions. Security
incidents could result in unauthorized access to, loss of or unauthorized disclosure of this information, litigation, indemnity obligations and other possible
liabilities, as well as negative publicity, which could damage our reputation, impair our sales and harm our customers and our business. Cyber-attacks and
other malicious Internet-based activity continue to increase generally, and cloud-based platform providers of marketing services have been targeted. If our
security measures, or those of our service providers, are compromised as a result of third-party action, employee or customer error, malfeasance, stolen or
fraudulently obtained log-in credentials or otherwise, our reputation could be damaged, our business may be harmed and we could incur significant
liability. Additionally, if third parties with whom we work, such as vendors or developers, violate applicable laws, our security policies or our acceptable
use policy, such violations may also put our customers’ information at risk and could in turn have an adverse effect on our business. In addition, if the
security measures of our customers or our service providers are compromised, even without any actual compromise of our own systems, we may face
negative publicity or reputational harm if our customers or anyone else incorrectly attributes the blame for such security breaches to us or our systems. We
may be unable to anticipate or prevent techniques used to obtain unauthorized access or to sabotage systems because they change frequently and generally
are not detected until after an incident has occurred. As we increase our customer base and our brand becomes more widely known and recognized, we may
become more of a target for third parties seeking to compromise our security systems or gain unauthorized access to our customers’ data. Additionally, we
provide our employees with extensive access to our databases, which store our customer data, and to our APIs to facilitate our rapid pace of product
development and to support our customers. If such access, unauthorized access or our own operations, cause the loss, damage, destruction or loss
(including, without limitation, because of actions by a bad actor, attempts to exfiltrate customer data (which attempts we have experienced in the past and
could experience in the future), our systems being compromised or unintentional or accidental disclosure, or destruction of our customers’ business data,
their sales, lead generation, support and other business operations may be permanently harmed. As a result, our customers may bring claims against us for
lost profits and other damages, or such concerns may cause us to limit access by our development team. Additionally, in certain of our subscription
agreements with our customers, we agree to indemnify these customers against claims by a third party alleging our breach of confidentiality obligations or
our misuse of customer data in violation of the subscription agreement.
Cyber-attacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, social engineering
(including phishing), and other compromises are prevalent in our industry, the industries of certain of our service providers and our customers' industries.
Our internal computer systems and those of our current and any future strategic collaborators, vendors, and other contractors or consultants are vulnerable
to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, cybersecurity threats, terrorism, geopolitical conflict, war and
telecommunication and electrical failures. Accordingly, if our cybersecurity measures or those of our service providers fail to protect against unauthorized
access, attacks (which may include sophisticated cyber-attacks), compromise or the mishandling of data by our employees and contractors, then our
reputation, customer trust, business, results of operations and financial condition could be adversely affected. Cyber incidents have been increasing in
sophistication and frequency and can include third parties gaining access to employee or customer data using stolen or inferred credentials, computer
malware, viruses, spamming, phishing attacks, ransomware, vulnerabilities in first- or third-party code, card skimming code, and other deliberate attacks
and attempts to gain unauthorized access. This risk is increased by the difficulty of balancing rapid vulnerability patching and system availability in a large
and rapidly-changing production environment. At times, we may be unable to patch all of our systems in a manner that strictly adheres to our internally
prescribed timelines. The techniques used to sabotage or to obtain unauthorized access to our platform, systems, networks, or physical facilities in which
data is stored or through which data is transmitted change frequently, and we may be unable to implement adequate preventative measures or stop security
breaches while they are occurring. Because the techniques used by threat actors who may attempt to penetrate and sabotage our computer systems change
frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques. Additionally, as remote work and
resource access expand, there is an increased risk that we may experience cybersecurity-related events such as phishing attacks, exploitation of any
cybersecurity flaws that may exist, an increase in the number of cybersecurity threats or attacks, and other security challenges as a result of most of our
employees and our service providers continuing to work remotely from non-corporate managed networks. There is also a risk of potential increase in such
attacks due to cyberwarfare in connection with the ongoing global conflicts, and this could adversely affect our and our suppliers' ability to maintain or
enhance key cybersecurity and data protection measures. We have previously been, and may in the future become, the target of cyber-attacks, incidents, or
compromises by third parties seeking unauthorized access to our or our customers' data, systems, or infrastructure, or to disrupt our operations or ability to
provide our services.
Additionally, it is also possible that unauthorized access to sensitive customer and business data may be obtained through inadequate use of security
controls by our customers, suppliers or other vendors, using social engineering to cause an employee or contractor to install malware or exploiting known
vulnerabilities. Like other businesses, we rely on hardware and software supplied by third-parties and, therefore, are susceptible to supply chain attacks.
Such attacks are becoming increasingly common, and we may not be able to anticipate and prevent negative impacts from such an attack. If we are
impacted by a supply chain attack, we could incur liability, our competitive position could be harmed and the further development and commercialization
of our product and services could be hindered or delayed.
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Recent cybersecurity incidents and compromises affecting large institutions, including an incident that affected us in 2024, suggest that the risk of
such events is significant, even if privacy protection and security measures are implemented and enforced. A cyber-attack, incident, or compromise could
result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary
information or other disruptions. These cyber-attacks could be carried out by threat actors of all types (including but not limited to nation states, organized
crime, other criminal enterprises, individual actors and/or advanced persistent threat groups). In addition, we may experience intrusions on our physical
premises by any of these threat actors. To the extent that any compromise, disruption or security breach were to result in a loss of, or damage to, our data or
applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, incur significant costs associated with
remediation and the implementation of additional security measures, including costs to deploy additional personnel and protection technologies, train
employees, and engage third-party experts and consultants, and our competitive position could be harmed. Any breach, loss, or compromise of personal
data may also subject us to civil fines and penalties, or claims for damages either under the General Data Protection Regulation (the “EU GDPR”), the EU
GDPR as incorporated into United Kingdom law, and relevant member state law in the European Union, other foreign laws, and other relevant state and
federal privacy laws in the United States.
Many governments have enacted laws requiring companies to notify individuals of data security incidents or unauthorized transfers involving
certain types of personal data. In addition, the data processing agreement we execute with our customers contractually requires us to notify them of any
personal data breach. Under payment card network rules and our contracts with our payment processors, if there is a data breach of payment resulting in the
compromise of cardholder payment information that is stored by our direct payment card processing vendors, we could be liable to the payment card
issuing banks for their cost of issuing new cards and related expenses depending on the cause of such data breach. Data breaches and other data security
compromises experienced by our competitors, by our customers or by us may lead to public disclosures, which may lead to widespread negative publicity.
Any security compromise in our industry, whether actual or perceived, could harm our reputation, erode customer confidence in the effectiveness of our
security measures, negatively impact our ability to attract new customers, cause existing customers to elect not to renew their subscriptions or subject us to
third-party lawsuits, regulatory fines or other action or liability, which could materially and adversely affect our business and operating results.
There can be no assurance that any limitations of liability provisions in our contracts for a security breach would be enforceable or adequate or
would otherwise protect us from any such liabilities or damages with respect to any particular claim. We also cannot be sure that our existing insurance
coverage will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer
will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or
the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could
have a material adverse effect on our business, financial condition and operating results.
Risks Related to Intellectual Property
Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others.
The software industry is characterized by the existence of a large number of patents, copyrights, trademarks, trade secrets and other intellectual and
proprietary rights. Companies in the software industry are often required to defend against litigation claims based on allegations of infringement or other
violations of intellectual property rights. Many of our competitors and other industry participants have been issued patents and/or have filed patent
applications and may assert patent or other intellectual property rights within the industry. Moreover, in recent years, individuals and groups that are non-
practicing entities, commonly referred to as “patent trolls,” have purchased patents and other intellectual property assets for the purpose of making claims
of infringement in order to extract settlements. From time to time, we may receive threatening letters or notices or may be the subject of claims that our
services and/or platform and underlying technology infringe or violate the intellectual property rights of others. Responding to such claims, regardless of
their merit, can be time consuming, costly to defend in litigation, divert management’s attention and resources, damage our reputation and brand and cause
us to incur significant expenses. Our technologies may not be able to withstand any third-party claims or rights against their use. Claims of intellectual
property infringement might require us to redesign our application, delay releases, enter into costly settlement or license agreements or pay costly damage
awards, or face a temporary or permanent injunction prohibiting us from marketing or selling our platform. If we cannot or do not license the infringed
technology on reasonable terms or at all, or substitute similar technology from another source, our revenue and operating results could be adversely
impacted. Additionally, our customers may not purchase our customer platform if they are concerned that they may infringe third-party intellectual property
rights. The occurrence of any of these events may have a material adverse effect on our business.
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In certain of our subscription agreements with customers, we agree to indemnify these customers against claims by a third party alleging
infringement of a valid patent, registered copyright or registered trademark. However, whether or not a subscription agreement includes an indemnity
obligation in favor of a customer, there can be no assurance that customers will not assert a common law indemnity claim or that any existing limitations of
liability provisions in our contracts would be enforceable or adequate, or would otherwise protect us from any such liabilities or damages with respect to
any particular claim. Our customers who are accused of intellectual property infringement may in the future seek indemnification from us under common
law or other legal theories. If such claims are successful, or if we are required to indemnify or defend our customers from these or other claims, these
matters could be disruptive to our business and management and have a material adverse effect on our business, operating results and financial condition.
If we fail to adequately protect our proprietary rights, in the United States and abroad, our competitive position could be impaired and we may lose
valuable assets, experience reduced revenue and incur costly litigation to protect our rights.
Our success is dependent, in part, upon protecting our proprietary technology. We rely on a combination of patents, copyrights, trademarks, service
marks, trade secret laws and contractual restrictions to establish and protect our proprietary rights in our products and services. However, the steps we take
to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we
do not detect unauthorized use of our intellectual property. Any of our trademarks or other intellectual property rights may be challenged by others or
invalidated through administrative process or litigation. Furthermore, legal standards relating to the validity, enforceability and scope of protection of
intellectual property rights are uncertain. Additionally, the intellectual property ownership and license rights, including copyrights and patents surrounding
AI technologies, which we are increasingly building into our product offerings, has not been fully addressed by U.S. courts or other federal or state laws or
regulations, and the use or adoption of AI technologies in our products and services may expose us to copyright infringement or other intellectual property
misappropriation claims. Despite our precautions, it may be possible for unauthorized third parties to copy our technology and use information that we
regard as proprietary to create products and services that compete with ours. Some license provisions protecting against unauthorized use, copying, transfer
and disclosure of our offerings may be unenforceable under the laws of certain jurisdictions and foreign countries. In addition, the laws of some countries
do not protect proprietary rights to the same extent as the laws of the United States. To the extent we expand our international activities, our exposure to
unauthorized copying and use of our technology and proprietary information may increase.
We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements
with the parties with whom we have strategic relationships and business alliances. No assurance can be given that these agreements will be effective in
controlling access to and distribution of our products and proprietary information. Further, these agreements may not prevent our competitors from
independently developing technologies that are substantially equivalent or superior to our platform and offerings.
We may be required to spend significant resources to monitor and protect our intellectual property rights. Litigation may be necessary in the future
to enforce our intellectual property rights and to protect our trade secrets. Such litigation could be costly, time consuming and distracting to management
and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be
met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our
proprietary technology against unauthorized copying or use, as well as any costly litigation, could delay further sales or the implementation of our platform
and offerings, impair the functionality of our platform and offerings, delay introductions of new features or enhancements, result in our substituting inferior
or more costly technologies into our platform and offerings, or injure our reputation.
Our use of “open source” software could negatively affect our ability to offer our platform and subject us to possible litigation.
A substantial portion of our cloud-based platform incorporates so-called “open source” software, and we may incorporate additional open source
software in the future. Open source software is generally freely accessible, usable and modifiable. Certain open source licenses may, in certain
circumstances, require us to offer the components of our platform that incorporate the open source software for no cost, that we make available source code
for modifications or derivative works we create based upon, incorporating or using the open source software and that we license such modifications or
derivative works under the terms of the particular open source license. If an author or other third party that distributes open source software we use were to
allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending
against such allegations and could be subject to significant damages, including being enjoined from the offering of the components of our platform that
contained the open source software and being required to comply with the foregoing conditions, which could disrupt our ability to offer the affected
software. We could also be subject to suits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us
to defend, have a negative effect on our operating results and financial condition and require us to devote additional research and development resources to
change our products.
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Risks Related to Government Regulation
We are subject to governmental regulation and other legal obligations, particularly related to privacy, data protection and information security, and our
actual or perceived failure to comply with such obligations could harm our business. Compliance with such laws could also impair our efforts to
maintain and expand our customer base and business lines, and thereby decrease our revenue.
Our handling of data across our products and services is subject to a variety of laws and regulations, including regulation by various government
agencies, including the U.S. Federal Trade Commission ("FTC"), and various state, local and foreign agencies. We collect personal data and other data
from our customers, prospects, partners, and publicly available sources. We also handle personal data about our customers’ customers. We use this
information to provide services to our customers, to support, expand and improve our business. We may also share customers’ personal data with third
parties as authorized by the customer or as described in our privacy policy.
The U.S. federal and various state and foreign governments have adopted or proposed limitations on the collection, processing, distribution, use,
storage and safeguarding of personal data. In the United States, the FTC and many state attorneys general are applying federal and state privacy and
consumer protection laws to impose standards for the online collection, use and dissemination of personal and other data. However, these obligations may
be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other requirements or our practices. Any
failure or perceived failure by us to comply with privacy or data security laws, policies, legal obligations or industry standards or any security incident that
results in the unauthorized, disclosure, release or transfer of personal data or other customer data may result in governmental enforcement actions,
litigation, fines and penalties and/or adverse publicity, and could cause our customers to lose trust in us, which could have an adverse effect on our
reputation and business.
Laws and regulations governing privacy, data protection and cybersecurity are rapidly evolving, and changes to such laws and regulations could
require us to change features of our platform or restrict our customers’ ability to collect and use email addresses, page viewing data and other personal data,
which may reduce demand for our platform. Our failure to comply with federal, state and foreign privacy and cybersecurity laws and regulations could
harm our ability to successfully operate our business and pursue our business goals.
For example, the California Consumer Privacy Act (the “CCPA”), as amended by the California Privacy Rights Act (the “CPRA”), among other
things, require covered companies to provide new disclosures to California residents and afford such individuals the ability to opt out of the sales or sharing
of their personal data. The CCPA may require us to modify our data collection or processing practices and policies and to potentially incur substantial costs
and expenses in an effort to comply. In addition to increasing our potential exposure to regulatory enforcement, the CCPA also provides for violations and a
limited private right of action, which may increase our exposure to civil litigation.
Numerous other states have passed comprehensive privacy and data security laws, which impose obligations on covered businesses similar – but not
identical – to those under the CCPA. Some of these laws entered into force in 2023, and others will enter into force in 2024 and beyond. A number of other
states have proposed similar or sector specific privacy legislation, and the U.S. Congress is considering legislation that may preempt some or all of such
U.S. state privacy laws, providing a more robust private right of action. Through executive and legislative action, the federal government has also taken
steps to restrict data transactions involving persons affiliated with China, Russia, and other countries of concern. The evolving complexity of privacy and
data security legislation in the U.S. may complicate our compliance efforts and further increase our risk of regulatory enforcement, penalties and litigation.
In addition, many foreign jurisdictions in which we do business, including the European Union, Japan, United Kingdom, Canada, Australia, and
others have laws and regulations dealing with the collection and use of personal data obtained from their residents, which are more restrictive in certain
respects than those in the U.S. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of personal
data that identifies or may be used to identify an individual. In relevant part, these foreign laws and regulations may affect our ability to engage in lead
generation activities by imposing heightened requirements, such as affirmative opt-ins or other consent prior to sending commercial correspondence,
obtaining leads or engaging in electronic tracking activities that aid our marketing and business intelligence. We may be required to modify our policies,
procedures, and data processing measures in order to address requirements under these or other privacy, data protection, or cyber security regimes, and may
face claims, litigation, investigations, or other proceedings regarding them and may incur related liabilities, expenses, costs, and operational losses.
In connection with the operation of some of our business lines, such as business intelligence services, we collect, process and share business contact
information or other personal data individuals make available in their professional capacity. We may be subject
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to additional requirements under privacy and data protection laws that could lead to additional compliance costs, regulatory scrutiny, and reputational risks
that may affect our business. For example, we may be required to send notifications to individuals and respond to higher volumes of data privacy requests,
which may require substantial costs and expenses, or reduce the potential value of our business intelligence services. We may also receive data from third-
party vendors (e.g., data brokers) in connection with such services. While we have implemented certain contractual measures with such vendors to protect
our interests, we are ultimately unable to verify with complete certainty the source of such data, how it was received, and that such information was
collected and is being shared with us in compliance with all applicable data privacy laws. Furthermore, the uncertain and shifting regulatory environment
and trust climate may cause concerns regarding data privacy and may cause our vendors, customers, users, or our customers’ customers to decline to
provide the data necessary to allow us to offer some of our services to our customers and users effectively, or could prompt individuals to opt out of our
collection of their personal data. Concern regarding our use of the personal data collected when performing our services could keep prospective customers
from subscribing to our services.
Within the European Union, the EU GDPR, and in the United Kingdom, the EU GDPR as incorporated into the laws of the United Kingdom (the
“UK GDPR” together with the EU GDPR, the “GDPR”), impose heightened obligations and risk upon our business and may substantially increase the
penalties to which we could be subject in the event of any non-compliance. Non-compliance with the GDPR and the related national data protection laws of
the European Union Member States may result in monetary penalties of up to €20 million (£17.5 million) or 4% of worldwide annual revenue, whichever is
higher.
The proliferation of privacy and data protection laws has heightened risks and uncertainties concerning cross-border transfers of personal data and
other data, which could impose significant compliance costs and expenses on our business, increase our potential exposure to regulatory enforcement
and/or litigation, and have a negative effect on our existing business and on our ability to attract and retain new customers. To enable the transfer of
personal data outside of the European Union or United Kingdom, adequate safeguards must be implemented in compliance with data protection laws. On
June 4, 2021, the European Commission published new versions of its Standard Contractual Clauses (“SCCs”), which are required for all transfers of
personal data from the European Union to third countries (including the U.S). The United Kingdom is not subject to the new SCCs but has its own
equivalent, being the international data transfer agreement and/or UK Addendum (“IDTAs”). The IDTAs must be entered into for new contracts, but allow
for a transition period until March 21, 2024 for existing contracts. Our customer agreements include the updated SCCs and UK IDTAs. We are in the
process of transitioning to the IDTAs for existing contracts, and doing so will require significant effort and cost. Under the new SCCs and IDTAs,
companies are also required to assess the risk of a data transfer on a case-by-case basis by undertaking a transfer impact assessment, and may be required to
adopt additional measures to accomplish transfers of personal data to the United States and other third countries. There continue to be concerns about
whether the SCCs will face additional challenges.
On July 10, 2023, the European Commission approved the EU-U.S. Data Privacy Framework (“DPF”) to support transfers of personal data from the
EU to companies in the U.S. Because we have maintained our certification under the previously invalidated Privacy Shield, we have now automatically
become subject to the DPF and are required to maintain policies and procedures to comply with the DPF principles. We may be subject to regulatory
enforcement by the FTC if we are found to be noncompliant with any of the DPF principles, and this regulatory enforcement may lead to significant civil
penalties.
Until the remaining legal uncertainties regarding SCCs, DPF and other transfer mechanisms are settled, we will continue to face uncertainty as to
whether our customers will be permitted to transfer personal data to the United States for processing by us as part of our platform services. Our customers
may view data transfer mechanisms as being too costly, too burdensome, too legally uncertain or otherwise objectionable and therefore decide not to do
business with us.
We publicly post documentation regarding our practices concerning the collection, processing, use and disclosure of data. Although we endeavor to
comply with our published policies and documentation, we may at times fail to do so or be alleged to have failed to do so. Any failure or perceived failure
by us to comply with our privacy policies or any applicable privacy, security or data protection, information security or consumer-protection related laws,
regulations, orders or industry standards could expose us to costly litigation, significant awards, fines or judgments, civil and/or criminal penalties or
negative publicity, and could materially and adversely affect our business, financial condition and results of operations. The publication of our privacy
policy and other documentation that provide promises and assurances about privacy and security can subject us to potential state and federal action if they
are found to be deceptive, unfair, or misrepresentative of our actual practices, which could, individually or in the aggregate, materially and adversely affect
our business, financial condition and results of operations.
If our privacy or data security measures fail to comply with current or future laws and regulations, we may be subject to claims, legal proceedings or
other actions by individuals or governmental authorities based on privacy or data protection regulations and our commitments to customers or others, as
well as negative publicity and a potential loss of business. Moreover, if future laws and regulations limit our subscribers’ ability to use and share personal
data or our ability to store, process and share personal data, demand for our solutions could decrease, our costs could increase, and our business, results of
operations and financial condition could be harmed.
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Separately, as the regulatory framework for machine learning technology and AI evolves, it is possible that new laws and regulations will be
adopted, or that existing laws and regulations may be interpreted in ways that would affect our business and the ways in which we use AI and machine
learning technology, our financial condition and our results of operations, including as a result of the cost to comply with such laws or regulations. For
example, the EU’s Artificial Intelligence Act (“AI Act”) - the world’s first comprehensive AI law - is anticipated to enter into force in Summer 2024 and,
with some exceptions, become effective 24 months thereafter. This legislation imposes significant obligations on providers and deployers of high-risk
artificial intelligence systems, and encourages providers and deployers of artificial intelligence systems to account for EU ethical principles in their
development and use of these systems. If we develop or use AI systems that are governed by the AI Act, it may necessitate ensuring higher standards of
data quality, transparency, and human oversight, as well as adhering to specific ethical, accountability, and administrative requirements, some of which may
increase our costs and compliance obligations. Further, potential government regulation related to AI use and ethics may also increase the cost of research
and development in this area, and failure to properly remediate AI usage or ethics issues may cause public confidence in AI to be undermined, which could
slow adoption of AI in our products and services.
We could face liability, or our reputation might be harmed, as a result of the activities of our customers, the content of their websites or the data they
store on our servers.
As a provider of a cloud-based inbound marketing, sales and customer service software platform, we may be subject to potential liability for the
activities of our customers on or in connection with the data they store on our servers. Although our customer terms of use prohibit illegal use of our
services by our customers and permit us to take down websites or take other appropriate actions for illegal use, customers may nonetheless engage in
prohibited activities or upload or store content with us in violation of applicable law or the customer’s own policies, which could subject us to liability or
harm our reputation. Furthermore, customers may upload, store, or use content on our customer platform that may violate our policy on acceptable use
which prohibits content that is threatening, abusive, harassing, deceptive, false, misleading, vulgar, obscene, or indecent. While such content may not be
illegal, use of our customer platform for such content could harm our reputation resulting in a loss of business.
Several U.S. federal statutes may apply to us with respect to various customer activities:
• The Digital Millennium Copyright Act of 1998 ("DMCA"), provides recourse for owners of copyrighted material who believe that their
rights under U.S. copyright law have been infringed on the Internet. Under the DMCA, based on our current business activity as an Internet
service provider that does not own or control website content posted by our customers, we generally are not liable for infringing content
posted by our customers or other third parties, provided that we follow the procedures for handling copyright infringement claims set forth in
the DMCA. Generally, if we receive a proper notice from, or on behalf, of a copyright owner alleging infringement of copyrighted material
located on websites we host, and we fail to expeditiously remove or disable access to the allegedly infringing material or otherwise fail to
meet the requirements of the safe harbor provided by the DMCA, the copyright owner may seek to impose liability on us. Technical mistakes
in complying with the detailed DMCA take-down procedures could subject us to liability for copyright infringement.
• The Communications Decency Act of 1996 ("CDA"), generally protects online service providers, such as us, from liability for certain
activities of their customers, such as the posting of defamatory or obscene content, unless the online service provider is participating in the
unlawful conduct. Under the CDA, we are generally not responsible for the customer-created content hosted on our servers. Consequently,
we do not monitor hosted websites or prescreen the content placed by our customers on their sites. However, the CDA does not apply in
foreign jurisdictions and we may nonetheless be brought into disputes between our customers and third parties which would require us to
devote management time and resources to resolve such matters and any publicity from such matters could also have an adverse effect on our
reputation and therefore our business.
• In addition to the CDA, the Securing the Protection of our Enduring and Established Constitutional Heritage Act (the "SPEECH Act"),
provides a statutory exception to the enforcement by a U.S. court of a foreign judgment for defamation under certain circumstances.
Generally, the exception applies if the defamation law applied in the foreign court did not provide at least as much protection for freedom of
speech and press as would be provided by the First Amendment of the U.S. Constitution or by the constitution and law of the state in which
the U.S. court is located, or if no finding of defamation would be supported under the First Amendment of the U.S. Constitution or under the
constitution and law of the state in which the U.S. court is located. Although the SPEECH Act may protect us from the enforcement of
foreign judgments in the United States, it does not affect the enforceability of the judgment in the foreign country that issued the judgment.
Given our international presence, we may therefore, nonetheless, have to defend against or comply with any foreign judgments made against
us, which could take up substantial management time and resources and damage our reputation.
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Although these statutes and case law in the United States have generally shielded us from liability for customer activities to date, court rulings in
pending or future litigation may narrow the scope of protection afforded us under these laws. In addition, laws governing these activities are unsettled in
many international jurisdictions, or may prove difficult or impossible for us to comply with in some international jurisdictions. Also, notwithstanding the
exculpatory language of these bodies of law, we may become involved in complaints and lawsuits which, even if ultimately resolved in our favor, add cost
to our doing business and may divert management’s time and attention. Finally, other existing bodies of law, including the criminal laws of various states,
may be deemed to apply or new statutes or regulations may be adopted in the future, any of which could expose us to further liability and increase our costs
of doing business.
Additionally, HubSpot payments, our end-to-end payment solution as well as our Stripe payment processing integration (together with HubSpot
payments, the “Payments” offering), are both built within Commerce Hub and are susceptible to potentially illegal or improper uses, including money
laundering, terrorist financing, fraudulent or illegal sales of goods or services, piracy of software, movies, music, and other copyrighted or trademarked
information, bank fraud, securities fraud, pyramid or ponzi schemes, or the facilitation of other illegal or improper activity. While we engage a third party
as our registered payment facilitator, the use of Payments for illegal or improper uses may subject us to claims (including claims brought by our third-party
payment processor), government and regulatory requests, inquiries, or investigations that could result in liability, and harm our reputation. Moreover,
certain activity that may be legal in one jurisdiction may be illegal in another jurisdiction, and a merchant may be found responsible for intentionally or
inadvertently importing or exporting illegal goods, resulting in liability for us. Owners of intellectual property rights or government authorities may seek to
bring legal action against providers of payments solutions, including Payments, that are peripherally involved in the sale of infringing or allegedly
infringing items. Any threatened or resulting claims could result in reputational harm, and any resulting liabilities, loss of transaction volume, or increased
costs could harm our business.
If Payments is used for illegal or improper uses, we may incur substantial losses as a result of claims from merchants and their buyers, including
consumers. Allowances for transaction losses that we have established may be insufficient to cover incurred losses. Moreover, if measures to detect and
reduce the risk of fraud are not effective and our loss rate is higher than anticipated, Payments and our business could be negatively impacted.
The standards that private entities use to regulate the use of email have in the past interfered with, and may in the future interfere with, the
effectiveness of our customer platform and our ability to conduct business.
Our customers rely on email to communicate with their existing or prospective customers. Various private entities attempt to regulate the use of
email for commercial solicitation. These entities often advocate standards of conduct or practice that significantly exceed current legal requirements and
classify certain email solicitations that comply with current legal requirements as spam. Some of these entities maintain “blacklists” of companies and
individuals, and the websites, internet service providers and internet protocol addresses associated with those entities or individuals that do not adhere to
those standards of conduct or practices for commercial email solicitations that the blacklisting entity believes are appropriate. If a company’s internet
protocol addresses are listed by a blacklisting entity, emails sent from those addresses may be blocked if they are sent to any internet domain or internet
address that subscribes to the blacklisting entity’s service or purchases its blacklist.
From time to time, some of our internet protocol addresses may become listed with one or more blacklisting entities due to the messaging practices
of our customers. There can be no guarantee that we will be able to successfully remove ourselves from those lists. Blacklisting of this type could interfere
with our ability to market our customer platform and services and communicate with our customers and, because we fulfill email delivery on behalf of our
customers, could undermine the effectiveness of our customers’ email marketing campaigns, all of which could have a material negative impact on our
business and results of operations.
Existing federal, state and foreign laws regulate Internet tracking software, the senders of commercial emails and text messages, website owners and
other activities, and could impact the use of our customer platform and potentially subject us to regulatory enforcement or private litigation.
Certain aspects of how our customers utilize our platform are subject to regulations in the United States, European Union and elsewhere. In recent
years, U.S. and European lawmakers and regulators have expressed concern over the use of third-party cookies or web beacons for online behavioral
advertising, and legislation adopted recently in the European Union requires informed consent for the placement of a cookie on a user’s device. Regulation
of cookies and web beacons may lead to restrictions on our activities, such as efforts to understand users’ Internet usage. New and expanding “Do Not
Track” regulations have recently been enacted or proposed that protect users’ right to choose whether or not to be tracked online. These regulations seek,
among other things, to allow end users to have greater control over the use of private information collected online, to forbid the collection or use of online
information, to demand a business to comply with their choice to opt out of such collection or use, and to place limits upon the disclosure of information to
third-party websites. These policies could have a significant impact on the operation of our customer platform and could impair our attractiveness to
customers, which would harm our business.
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Many of our customers and potential customers in the healthcare, financial services and other industries are subject to substantial regulation
regarding their collection, use and protection of data and may be the subject of further regulation in the future. Accordingly, these laws or significant new
laws or regulations or changes in, or repeals of, existing laws, regulations or governmental policy may change the way these customers do business and
may require us to implement additional features or offer additional contractual terms to satisfy customer and regulatory requirements, or could cause the
demand for and sales of our customer platform to decrease and adversely impact our financial results.
In addition, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM Act"), establishes certain
requirements for commercial email messages and specifies penalties for the transmission of commercial email messages that are intended to deceive the
recipient as to source or content. The CAN-SPAM Act, among other things, obligates the sender of commercial emails to provide recipients with the ability
to opt out of receiving future commercial emails from the sender. The ability of our customers’ message recipients to opt out of receiving commercial
emails may minimize the effectiveness of the email components of our customer platform. In addition, certain states and foreign jurisdictions, such as
Australia, Canada and the European Union, have enacted laws that regulate sending email, and some of these laws are more restrictive than U.S. laws. For
example, some foreign laws prohibit sending unsolicited email unless the recipient has provided the sender advance consent to receipt of such email, or in
other words has “opted-in” to receiving it. A requirement that recipients opt into, or the ability of recipients to opt out of, receiving commercial emails may
minimize the effectiveness of our platform.
While these laws and regulations generally govern our customers’ use of our customer platform, we may be subject to certain laws as a data
processor on behalf of, or as a business associate of, our customers. For example, laws and regulations governing the collection, use and disclosure of
personal data include, in the United States, rules and regulations promulgated under the authority of the Federal Trade Commission, the Health Insurance
Portability and Accountability Act of 1996, the Gramm-Leach-Bliley Act of 1999 and state breach notification laws, and internationally, the GDPR and
other privacy and data protection laws. If we were found to be in violation of any of these laws or regulations as a result of government enforcement or
private litigation, we could be subjected to civil and criminal sanctions, including both monetary fines and injunctive action that could force us to change
our business practices, all of which could adversely affect our financial performance and significantly harm our reputation and our business.
We are subject to governmental export controls and economic sanctions laws that could impair our ability to compete in international markets and
subject us to liability if we are not in full compliance with applicable laws.
Our business activities are subject to various restrictions under U.S. and other global export controls and trade and economic sanctions laws,
including the U.S. Commerce Department’s Export Administration Regulations and economic and trade sanctions regulations maintained by the U.S.
Treasury Department’s Office of Foreign Assets Control. If we fail to comply with these laws and regulations, we and certain of our employees could be
subject to civil or criminal penalties and reputational harm. Obtaining the necessary authorizations, including any required license(s), for a particular
transaction may be time-consuming, is not guaranteed, and may result in the delay or loss of sales opportunities. Furthermore, export control laws and
economic sanctions laws prohibit certain transactions with embargoed or sanctioned countries, governments, persons and entities. These sanctions laws
with which we must comply may also change rapidly from time to time as a result of geopolitical events, such as the imposition of sanctions on Russia as a
result of the conflict between Russia and Ukraine. Although we take precautions to prevent unlawful transactions and business relationships with sanction
targets, the possibility exists that we could inadvertently provide our products and services to persons or entities prohibited by U.S and other global
sanctions regimes. This could result in negative consequences to us, including government investigations, enforcement actions resulting in civil and/or
criminal penalties and reputational harm.
Risks Related to Taxation
We may be subject to additional obligations to collect and remit sales tax and other taxes, and we may be subject to tax liability for past sales, which
could harm our business.
State, local, and non-U.S. jurisdictions have differing rules and regulations governing sales, use, value added, digital service, and other taxes, and
these rules and regulations are subject to varying interpretations that may change over time. In particular, the applicability of such taxes to our customer
platform in various jurisdictions can be unclear. Further, these jurisdictions’ rules regarding tax nexus are complex and vary significantly. As a result, we
could face the possibility of tax assessments and audits, and our liability for these taxes and associated penalties could exceed our original estimates. A
successful assertion that we should be collecting additional sales, use, value added or other taxes in those jurisdictions where we have not historically done
so and do not accrue for such taxes could result in substantial tax liabilities and related penalties for past sales, discourage customers from purchasing our
application or otherwise harm our business and operating results.
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Changes in tax laws or regulations that are applied adversely to us or our customers could increase the costs of our customer platform and adversely
impact our business.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Any new taxes could adversely
affect our domestic and international business operations, and our business and financial performance. Further, existing tax laws, statutes, rules, regulations
or ordinances could be interpreted, changed, modified or applied adversely to us. These events could require us or our customers to pay additional tax
amounts on a prospective or retroactive basis, as well as require us or our customers to pay fines and/or penalties and interest for past amounts deemed to
be due. Additionally, new, changed, modified or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and
other costs, as well as the costs of our platform. Any or all of these events could adversely impact our business, cash flows and financial performance.
Furthermore, as our employees continue to work remotely from geographic locations across the United States and internationally, we may become subject
to additional taxes and our compliance burdens with respect to the tax laws of additional jurisdictions may increase.
We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes
in various jurisdictions.
As a multinational organization, we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the
application of which can be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable
tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, or challenges to our tax positions
by tax authorities, any of which could have a material adverse effect on our liquidity, financial condition or operating results. In addition, the authorities in
these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding
requirements apply to us or our subsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries, or assert that we are subject to
tax in a jurisdiction where we believe we have not established a taxable nexus, often referred to as a “permanent establishment” under international tax
treaties, any of which could have a material impact on us, our financial condition or our operating results.
We may not be able to utilize a significant portion of our net operating loss carryforwards, which could adversely affect our profitability.
As of December 31, 2023, we had $861.4 million of U.S. federal and $740.0 million of state net operating loss carryforwards due to prior period
losses, which have an indefinite carryforward and begin to expire in 2025 for state purposes. The state net operating loss carryforwards could expire unused
and be unavailable to offset future income tax liabilities, which could adversely affect our profitability. In addition, under Section 382 and Section 383 of
the Code, our ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be further
limited if we experience an “ownership change.” An ownership change generally occurs if one or more stockholders or groups of stockholders who own at
least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage (by value) within a rolling three-
year period. Similar rules may apply under state tax laws. We may have experienced an ownership change in the past, and future issuances of our stock
could cause an ownership change. It is possible that any such ownership change could have a material effect on the use of our net operating loss
carryforwards or other tax attributes accrued prior to such ownership change, which could adversely affect our profitability.
Risks Related to Our Operating Results and Financial Condition
We have a history of losses and may not achieve, maintain or increase profitability in the future.
We generated net losses of $8.5 million for the six months ended June 30, 2024 and net losses of $148.5 million for the six months ended June 30,
2023. As of June 30, 2024, we had an accumulated deficit of $812.9 million. We will need to generate and sustain increased revenue levels in future
periods to become consistently profitable, and, even if we do, we may not be able to maintain or increase our level of profitability. We have spent and
intend to continue to expend significant funds on our marketing, sales, customer service, operations, and content management operations, develop and
enhance our customer platform, scale our data center infrastructure and services capabilities and expand into new markets. Our efforts to grow our business
may be more costly than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses. We may incur
significant losses in the future for a number of reasons, including the other risks described in this Quarterly Report on Form 10-Q, and unforeseen
expenses, difficulties, complications and delays and other unknown events. If we are unable to achieve and sustain profitability, the market price of our
common stock may significantly decrease.
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From time to time, we may invest funds in social impact investment funds, and may receive no return on our investment or lose our entire investment.
From time to time, we may invest in social impact investment funds. As of June 30, 2024, we have invested $8.5 million in the Black Economic
Development Fund and $7.5 million in support of Minority Depository Institutions to help close the racial wealth, health and opportunity gap. There is no
guarantee as to the performance of this investment or any similar investments we make in the future. Depending on the performance of this investment and
future investments we may make, we may not receive any return on our investment or we may lose our entire investment, which could have an adverse
effect on our business.
We may experience quarterly fluctuations in our operating results due to a number of factors, which makes our future results difficult to predict and
could cause our operating results to fall below expectations or our guidance.
Our quarterly operating results have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are
outside of our control. As a result, our past results may not be indicative of our future performance, and comparing our operating results on a period-to-
period basis may not be meaningful. In addition to the other risks described in this Quarterly Report on Form 10-Q, factors that may affect our quarterly
operating results include the following:
• changes in spending on marketing, sales, customer service, operations, and content management software by our current or
prospective customers;
• pricing our customer platform subscriptions effectively so that we are able to attract and retain customers without compromising our
profitability;
• attracting new customers for our marketing, sales, customer service, operations, and content management software, increasing our
existing customers’ use of our platform and providing our customers with excellent customer support;
• customer renewal rates and the amounts for which agreements are renewed;
• global awareness of our thought leadership and brand;
• changes in the competitive dynamics of our market, including consolidation among competitors or customers and the introduction of
new products or product enhancements;
• changes to the commission plans, quotas and other compensation-related metrics for our sales representatives;
• the amount and timing of payment for operating expenses, particularly research and development, sales and marketing expenses and
employee benefit expenses;
• the amount and timing of costs associated with recruiting, training and integrating new employees while maintaining our company
culture;
• our ability to manage our existing business and future growth, including increases in the number of customers on our platform and the
introduction and adoption of our customer platform in new markets outside of the United States;
• unforeseen costs and expenses related to the expansion of our business, operations and infrastructure, including disruptions in our
hosting network infrastructure and privacy and data security;
• foreign currency exchange rate fluctuations;
• rising inflation in the economies in which we operate and our ability to control costs, including operating expenses; and
• general economic and political conditions in our domestic and international markets.
We may not be able to accurately forecast the amount and mix of future subscriptions, revenue and expenses and, as a result, our operating results
may fall below our estimates or the expectations of public market analysts and investors. If our revenue or operating results fall below the expectations of
investors or securities analysts, or below any guidance we may provide, the price of our common stock could decline.
If we do not accurately predict subscription renewal rates or otherwise fail to forecast our revenue accurately, or if we fail to match our expenditures
with corresponding revenue, our operating results could be adversely affected.
Because our recent growth has resulted in the rapid expansion of our business, we do not have a long history upon which to base forecasts of
renewal rates with customers or future operating revenue. As a result, our operating results in future reporting periods may be significantly below the
expectations of the public market, equity research analysts or investors, which could harm the price of our
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common stock.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could
significantly affect our financial condition and results of operations.
We apply accounting principles and related pronouncements, implementation guidelines and interpretations to a wide range of matters that are
relevant to our business, are highly complex and involve subjective assumptions, estimates and judgments by our management. Changes in these rules or
their interpretation, or changes in underlying assumptions, estimates or judgments by our management, could significantly change our reported or expected
financial performance.
Risks Related to Our Notes
Servicing our debt may require a significant amount of cash. We may not have sufficient cash flow from our business to pay our indebtedness, and we
may not have the ability to raise the funds necessary to settle for cash conversions of the Notes or to repurchase the Notes for cash upon a fundamental
change, which could adversely affect our business and results of operations.
In June 2020, we incurred indebtedness in the aggregate principal amount of $460.0 million in connection with the issuance of our 0.375%
convertible senior notes due June 1, 2025 (the “2025 Notes”). Our ability to make scheduled payments of the principal of, to pay interest on or to refinance
our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond
our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital
expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or
obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability to refinance any future indebtedness will
depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities
on desirable terms, which could result in a default on our debt obligations. In addition, any of our future debt agreements may contain restrictive covenants
that may prohibit us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not
cured or waived, could result in the acceleration of our debt.
In addition, holders of the Notes have the right to require us to repurchase their Notes upon the occurrence of a fundamental change at a fundamental
change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. Upon conversion of
the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional
share), we will be required to make cash payments in respect of the Notes being converted. We may not have enough available cash or be able to obtain
financing at the time we are required to make repurchases of Notes surrendered therefor or Notes being converted. In addition, our ability to repurchase the
Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.
Our failure to repurchase Notes at a time when the repurchase is required by the indenture governing the notes or to pay any cash payable on future
conversions of the Notes as required by such indenture would constitute a default under such indenture. A default under the indenture or the fundamental
change itself could also lead to a default under agreements governing our future indebtedness. If the repayment of the related indebtedness were to be
accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash
payments upon conversions thereof.
In addition, our indebtedness, combined with our other financial obligations and contractual commitments, could have other important
consequences. For example, it could:
• make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and
adverse changes in government regulation;
• limit our flexibility in planning for, or reacting to, changes in our business and our industry;
• place us at a disadvantage compared to our competitors who have less debt; and
• limit our ability to borrow additional amounts to fund acquisitions, for working capital and for other general corporate purposes.
Any of these factors could materially and adversely affect our business, financial condition and results of operations. In addition, if we incur
additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.
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The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional conversion feature of the 2025 Notes is triggered, the holders thereof will be entitled to convert the 2025 Notes at any
time during specified periods at their option. Because the last reported sale price of the Company’s common stock for at least 20 trading days during the
period of 30 consecutive trading days ending on the last trading day of the calendar quarter ended June 30, 2024 was equal to or greater than 130% of the
applicable conversion price on each applicable trading day, the 2025 Notes are convertible at the option of the holders thereof during the calendar quarter
ending September 30, 2024. As of August 2, 2024, the Company has not received any material conversion notices with respect to the 2025 Notes. Whether
the Notes that remain outstanding will be convertible following the calendar quarter ended June 30, 2024 will depend on the continued satisfaction of this
condition or another conversion condition in the future. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion
obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to
settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported
financial results.
In August 2020, the FASB issued guidance simplifying the accounting for convertible instruments by reducing the number of accounting models for
convertible debt instruments and convertible preferred stock. The new standard eliminates requirements to separately account for liability and equity
components of such convertible debt instruments and requires the use of the if-converted method for calculating the diluted earnings per share for
convertible debt instruments. We adopted the guidance on January 1, 2022, using the modified retrospective method. Future interest expense of the
convertible notes will be lower as a result of adoption of this guidance and net loss per share will be computed using the if-converted method for these
securities.
The if-converted method assumes that all of the Notes were converted solely into shares of common stock at the beginning of the reporting period,
unless the result would be anti-dilutive. The application of the if-converted method may reduce our reported diluted net income per share to the extent we
are profitable, and accounting standards may change in the future in a manner that may otherwise adversely affect our diluted net income per share.
We are subject to counterparty risk with respect to the Capped Call Options.
In connection with the offering of the 2025 Notes, we purchased capped call options (“Capped Call Options”) with respect to our common stock for
$50.6 million. The counterparties to the Capped Call Options are financial institutions, and we will be subject to the risk that one or more of the
counterparties may default, fail to perform or exercise their termination rights under the Capped Call Options. Global economic conditions have, from time
to time, resulted in the actual or perceived failure or financial difficulties of many financial institutions. If a counterparty to the Capped Call Options
becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at the time
under such transaction. In addition, upon a default, failure to perform or a termination of the Capped Call Options by a counterparty, we may suffer more
dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of the
counterparties.
Risks Related to Our Common Stock
Our stock price may be volatile and you may be unable to sell your shares at or above the price you purchased them.
The trading prices of the securities of technology companies, including providers of software via the cloud-based model, have been highly volatile.
Since shares of our common stock were sold in our initial public offering in October 2014 at a price of $25.00 per share, our stock price has ranged from
$25.79 to $866.00 through June 30, 2024. The market price of our common stock may fluctuate significantly in response to numerous factors, many of
which are beyond our control, including:
• actual or anticipated fluctuations in our revenue and other operating results, including as a result of the addition or loss of any number
of customers;
• announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures or
capital commitments;
• the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
57
• failure of securities analysts to initiate or maintain coverage of us, changes in ratings and financial estimates and the publication of
other news by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
• changes in operating performance and stock market valuations of cloud-based software or other technology companies, or those in our
industry in particular;
• price and volume fluctuations in the trading of our common stock and in the overall stock market, including as a result of trends in the
economy as a whole;
• sales of large blocks of our common stock or the dilutive effect of our Notes or any other equity or equity-linked financings;
• new laws or regulations or new interpretations of existing laws or regulations applicable to our business or industry, including data
privacy and data security;
• lawsuits threatened or filed against us;
• changes in key personnel; and
• other events or factors, including changes in general economic, industry and market conditions and trends, international disputes, wars
(such as the conflict between Russia and Ukraine and the evolving events in Israel and Gaza), and political stability.
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of
equity securities of many technology companies. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to
the operating performance of those companies.
In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in
securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our
business.
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate
financial statements or comply with applicable regulations could be impaired.
As a public company we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and
the rules and regulations of the New York Stock Exchange (the “NYSE”). We expect that compliance with these rules and regulations will continue to
increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain
on our personnel, systems and resources.
The Sarbanes-Oxley Act requires, among other things, that we assess the effectiveness of our internal control over financial reporting annually and
the effectiveness of our disclosure controls and procedures quarterly. In particular, Section 404 of the Sarbanes-Oxley Act (“Section 404”), requires us to
perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent
registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. Our compliance with applicable provisions
of Section 404 requires that we incur substantial accounting expenses and expend significant management time on compliance-related issues as we
implement additional corporate governance practices and comply with reporting requirements. Moreover, if we are not able to comply with the
requirements of Section 404 applicable to us in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our
internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to
sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.
Furthermore, investor perceptions of our company may suffer if deficiencies are found, and this could cause a decline in the market price of our
stock. Irrespective of compliance with Section 404, any failure of our internal control over financial reporting could have a material adverse effect on our
stated operating results and harm our reputation. If we are unable to implement these requirements effectively or efficiently, it could harm our operations,
financial reporting, or financial results and could result in an adverse opinion on our internal controls from our independent registered public accounting
firm. In addition, as a result of our hybrid culture, many of our employees – including those critical to maintaining an effective system of disclosure
controls and internal control over financial reporting – are working, and are expected to continue to work, in a remote environment and not in the office
environment from which they have historically performed their duties. We have limited experience maintaining effective control
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systems with our employees working in remote environments, and risks that we have not contemplated may arise and result in our failure to maintain
effective disclosure controls or internal control over financial reporting.
Anti-takeover provisions in our charter documents and Delaware law may delay or prevent an acquisition of our company.
Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that may have the effect
of delaying or preventing a change in control of us or changes in our management. Our amended and restated certificate of incorporation and bylaws
include provisions that:
• authorize “blank check” preferred stock, which could be issued by the board without stockholder approval and may contain voting,
liquidation, dividend and other rights superior to our common stock;
• provide for a classified board of directors whose members serve staggered three-year terms;
• specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of the board, the chief
executive officer or the president;
• prohibit stockholder action by written consent;
• establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including
proposed nominations of persons for election to our board of directors;
• provide that our directors may be removed only for cause;
• provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a
quorum;
• specify that no stockholder is permitted to cumulate votes at any election of directors;
• authorize our board of directors to modify, alter or repeal our amended and restated bylaws; and
• require supermajority votes of the holders of our common stock to amend specified provisions of our charter documents.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law,
which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us in certain circumstances.
Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of
delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and
could also affect the price that some investors are willing to pay for our common stock.
General Risks
Catastrophic events could disrupt our business and adversely affect our financial condition and results of operations.
We rely on our network infrastructure and enterprise applications, internal technology systems and website for our development, marketing,
operations, support, hosted services and sales activities. In addition, some of our businesses rely on third-party hosted services, and we do not control the
operation of third-party data center facilities serving our customers from around the world, which increases our vulnerability. A disruption, infiltration or
failure of these systems or third-party hosted services in the event of a major earthquake, fire, flood, tsunami or other weather event, power loss,
telecommunications failure, software or hardware malfunctions, pandemics (such as the COVID-19 pandemic), cyber-attack, war, terrorist attack or other
catastrophic event that we do not adequately address, could cause system interruptions, reputational harm, loss of intellectual property, delays in our
product development, lengthy interruptions in our services, breaches of data security and loss of critical data. Any of these events could prevent us from
fulfilling our customer demands or could negatively impact a country or region in which we sell our products, which could in turn decrease that country’s
or region’s demand for our products. A catastrophic event that results in the destruction or disruption of any of our data centers or our critical business or
information technology systems could severely affect our ability to conduct normal business
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operations and, as a result, our future operating results could be adversely affected. The adverse effects of any such catastrophic event would be
exacerbated if experienced at the same time as another unexpected and adverse event, such as the COVID-19 pandemic.
The occurrence of regional epidemics or a global pandemic, such as the COVID-19 pandemic, may have an adverse effect on how we and our
customers operate our businesses and our operating and financial results. Our operations may in the future be negatively affected by a range of external
factors related to the pandemic that are not within our control, including the emergence and spread of more transmissible variants and the degree of
transmissibility and severity thereof. The extent to which global pandemics, such as the COVID-19 pandemic, impact our financial condition or results of
operations will depend on factors, such as the duration and scope of the pandemic, as well as whether there is a material impact on the businesses or
productivity of our customers, partners, employee, suppliers and other partners. To the extent that a pandemic, such as the COVID-19 pandemic, harms our
business and results of operations, many of the other risks described in this “Risk Factors” section, may be heightened.
Failure to comply with laws and regulations could harm our business.
Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for
monitoring and enforcing employment and labor laws, workplace safety, environmental laws, consumer protection laws, anti-bribery laws, import/export
controls, federal securities laws and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than those in the
United States. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory recalls, enforcement
actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions.
Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.
Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds to invest in future
growth opportunities. Additional financing may not be available on favorable terms, if at all. In addition, recent volatility in capital markets and lower
market prices for many securities may affect our ability to access new capital through sales of shares of our common stock or issuance of indebtedness,
which may materially harm our liquidity, limit our ability to grow our business, pursue acquisitions or improve our operating infrastructure and restrict our
ability to compete in our markets.
If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could seriously harm our
business and operating results. If we incur debt, the debt holders would have rights senior to common stockholders to make claims on our assets, and the
terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. Furthermore, if we issue equity securities,
stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock. The Notes are and any
additional equity or equity-linked financings would be dilutive to our stockholders. Because our decision to issue securities in any future offering will
depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. As a
result, our stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.
Climate change may have a long-term impact on our business
While we seek to partner with organizations that mitigate their business risks associated with climate change, we recognize that there are inherent
risks wherever business is conducted. Any of our primary locations may be vulnerable to the adverse effects of climate change. For example, our offices
globally may experience climate-related events at an increasing frequency, including drought, water scarcity, heat waves, cold waves, wildfires and
resultant air quality impacts and power shutoffs associated with wildfire prevention. While this danger has a low-assessed risk of disrupting normal
business operations, it has the potential to disrupt employees’ abilities to commute to work or to work from home and stay connected effectively.
Furthermore, it is more difficult to mitigate the impact of these events on our employees to the extent they work from home. Climate-related events,
including the increasing frequency of extreme weather events and their impact on the U.S.’s, Europe’s and other major regions’ critical infrastructure, have
the potential to disrupt our business, our third-party suppliers and/or the business of our customers, and may cause us to experience higher attrition, losses
and additional costs to maintain or resume operations. Regulatory developments, changing market dynamics and stakeholder expectations regarding
climate change may impact our business, financial condition and results of operations. To inform our disclosures and take potential action as appropriate,
we are working to align our reporting with emerging disclosure and accounting standards such as the Financial Stability Board’s Task Force on Climate-
Related Financial Disclosures, the Sustainability Accounting Standards Board and the Global Reporting Initiative, as well as new disclosure requirements
from regulators.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults on Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
The following table describes contracts, instructions or written plans for the sale or purchase of our securities adopted by our directors and certain officers
in the three months ended June 30, 2024, each of which is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c), referred
to as Rule 10b5-1 trading plans.
Name Action Taken Nature of Trading Arrangement
Duration of Trading
Arrangement
Aggregate Number of
Securities
Brian Halligan (Co-
Founder and Executive
Chairperson)
Adoption (June 3, 2024) Trading plan intended to satisfy the affirmative
defense conditions of Exchange Act Rule 10b5-
1(c)
351 days 58,565 shares
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Item 6. Exhibits
The exhibits listed below are filed or incorporated by reference into this Report.
Exhibit
Number Exhibit Title
3.1(1) Amended and Restated Certificate of Incorporation of the Registrant
3.1(2) Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant
3.2(3) Fifth Amended and Restated Bylaws of the Registrant
4.1(4) Form of Common Stock certificate of the Registrant
10.1**# HubSpot, Inc. 2024 Stock Option and Incentive Plan, and forms of restricted stock and option agreements thereunder
10.2**# Non-Employee Director Compensation Policy (as amended and currently in effect)
31.1**
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
amended
31.2**
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
amended
32.1* Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS**
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded
within the Inline XBRL document
101.SCH** Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104** Cover page formatted as Inline XBRL and contained in Exhibit 101
** Filed herewith.
(1) Incorporated by reference to Exhibit 3.1 to HubSpot, Inc.’s Annual Report on Form 10-K filed on February 24, 2016.
(2) Incorporated by reference to Exhibit 3.1 to HubSpot Inc.’s Current Report on Form 8-K filed on June 14, 2024.
(3) Incorporated by reference to Exhibit 3.1 to HubSpot Inc.’s Current Report on Form 8-K filed on May 1, 2024.
(4) Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to registrant’s Registration Statement on Form S-1 (SEC file No. 333-198333) filed on
September 26, 2014.
* The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by
reference. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.
62
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUBSPOT, INC.
By:
/s/ Kate Bueker
Name: Kate Bueker
Title:
Chief Financial Officer
(Principal Financial and Accounting
Officer and Authorized Signatory)
August 7, 2024
63
Exhibit 10.1
HUBSPOT, INC.
2024 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the HubSpot, Inc. 2024 Stock Option and Incentive Plan (as amended from time to time, the
“Plan”). The purpose of the Plan is to encourage and enable the officers, employees, Non-Employee Directors and Consultants
of HubSpot, Inc. (the “Company”) and its Affiliates upon whose judgment, initiative and efforts the Company largely depends
for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company’s welfare will assure a closer identification of their interests with those of the
Company and its stockholders, thereby stimulating their efforts on the Company’s behalf and strengthening their desire to remain
with the Company.
The following terms shall be defined as set forth below:
“Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Administrator” means either the Board or the compensation committee of the Board or a similar committee performing
the functions of the compensation committee and which is comprised of not less than two Non-Employee Directors who are
independent.
“Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined
in Rule 405 of the Act. The Board will have the authority to determine the time or times at which “parent” or “subsidiary” status
is determined within the foregoing definition.
“Award” or “Awards,” except where referring to a particular category of grant under the Plan, includes Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Unrestricted
Stock Awards, Cash-Based Awards, and Dividend Equivalent Rights.
“Award Certificate” means a written or electronic document setting forth the terms and provisions applicable to an
Award granted under the Plan. Each Award Certificate is subject to the terms and conditions of the Plan.
“Board” means the Board of Directors of the Company.
“Cash-Based Award” means an Award entitling the recipient to receive a cash-denominated payment upon the
attainment of specified performance goals.
“Cause” means (i) a grantee’s dishonest statements or acts with respect to the Company or any Affiliate, or any current
or prospective customers, suppliers vendors or other third parties with which such entity does business; (ii) a grantee’s
commission of (A) a felony (or crime of similar magnitude under non-U.S. laws, as determined by the Administrator) or (B) any
misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) a grantee’s failure to perform the grantee’s assigned
duties and responsibilities to the reasonable satisfaction of the Company or an Affiliate, which failure continues, in the reasonable
judgment of the Company or an Affiliate, after written notice given to the grantee by the Company or an Affiliate; (iv) a grantee’s
gross negligence, willful misconduct or insubordination with respect to the Company or any Affiliate (including, but not limited
to, any violation of the Company’s or any Affiliate’s code of conduct, insider trading, willful accounting improprieties or failure
to cooperate with investigations); or (v) a grantee’s material
violation of any provision of any agreement(s) between the grantee and the Company or any Affiliate relating to noncompetition,
nonsolicitation, nondisclosure and/or assignment of inventions.
“Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations
and interpretations.
“Consultant” means a consultant or adviser who provides bona fide services to the Company or an Affiliate as an
independent contractor and who qualifies as a consultant or advisor under Instruction A.1.(a)(1) of Form S-8 under the Act.
Dividend Equivalent Right” means an Award entitling the grantee to receive credits based on ordinary cash dividends
that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if
such shares had been issued to and held by the grantee.
“Effective Date” means the date on which the Plan becomes effective as set forth in Section 19.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Fair Market Value” of the Stock on any given date means the fair market value of the Stock determined in good faith
by the Administrator; provided, however, that if the Stock is listed on the National Association of Securities Dealers Automated
Quotation System (“NASDAQ”), the NASDAQ Global Market, The New York Stock Exchange or another national securities
exchange or traded on any established market, the determination shall be made by reference to market quotations. If there are no
market quotations for such date, the determination shall be made by reference to the last date preceding such date for which there
are market quotations.
“Good Reason” means (i) a material diminution in a grantee’s base salary except for across-the-board salary reductions
similarly affecting all or substantially all similarly situated employees of the Company or an Affiliate or (ii) a change by the
Company of more than 50 miles in the geographic location at which a grantee provides services to the Company or an Affiliate,
so long as the grantee provides notice to the Company or the Affiliate within 90 days following the initial occurrence of any such
event and the Company or the Affiliate fails to cure such event within 30 days of such notice (the “Cure Period”) and the grantee
terminates the grantee’s Service Relationship within 60 days after the end of the Cure Period.
“Incentive Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in
Section 422 of the Code.
“Non-Employee Director” means a member of the Board who is not also an employee of the Company or any
Subsidiary.
“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.
“Option” or “Stock Option” means any option to purchase shares of Stock.
“Prior Plans” means the HubSpot, Inc. 2014 Stock Option and Incentive Plan, as amended from time to time, and the
HubSpot, Inc. 2007 Equity Incentive Plan.
“Restricted Shares” means the shares of Stock underlying a Restricted Stock Award that remain subject to a risk of
forfeiture or the Company’s right of repurchase.
2
“Restricted Stock Award” means an Award of Restricted Shares.
“Restricted Stock Units” means an Award of stock units.
“Sale Event” means (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an
unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s
outstanding voting power and outstanding stock immediately prior to such transaction do not own a majority of the outstanding
voting power and outstanding stock or other equity interests of the resulting or successor entity (or its ultimate parent, if
applicable) immediately upon completion of such transaction, (iii) the sale of all of the Stock of the Company to an unrelated
person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company’s outstanding
voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the
Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of
securities directly from the Company.
“Sale Price” means the value as determined by the Administrator of the consideration payable, or otherwise to be
received by stockholders, per share of Stock pursuant to a Sale Event.
“Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.
“Service Relationship” means any relationship as an officer, employee, director or Consultant of the Company or any
Affiliate (e.g., a Service Relationship shall be deemed to continue without interruption in the event an individual’s status changes
from full-time employee to part-time employee or Consultant or vice versa).
“Stock” means the Common Stock, par value $0.001 per share, of the Company, subject to adjustments pursuant to
Section 3.
“Stock Appreciation Right” means an Award entitling the recipient to receive shares of Stock (or cash, to the extent
explicitly provided for in the applicable Award Certificate) having a value equal to the excess of the Fair Market Value of the
Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock
with respect to which the Stock Appreciation Right is exercised.
“Subsidiary” means any corporation or other entity (other than the Company) in which the Company has at least a 50
percent interest, either directly or indirectly.
“Substitute Awards” means Awards granted or Stock issued by the Company in assumption of, or in substitution or
exchange for, awards previously granted, in each case by a company acquired by the Company or any Affiliate or with which the
Company or any Affiliate combines.
“Ten Percent Owner” means an employee of the Company or any Subsidiary that is a “subsidiary corporation” within
the meaning of Section 424(f) of the Code who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of
the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary
corporation.
“Unrestricted Stock Award” means an Award of shares of Stock free of any restrictions.
3
SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND
DETERMINE AWARDS
(a) Administration of Plan. The Plan shall be administered by the Administrator.
(b)Powers of Administrator. The Administrator shall have the power and authority to grant Awards consistent with the
terms of the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified
Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Unrestricted Stock Awards, Cash-
Based Awards, and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more grantees;
(iii) to determine the number of shares of Stock or, in the case of a Cash-Based Award, the amount of cash, to
be covered by any Award;
(iv) to determine and, subject to Section 16, modify from time to time the terms and conditions, including
restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual
Awards and grantees, and to approve the forms of Award Certificates;
(v) to accelerate at any time the exercisability or vesting of all or any portion of any Award;
(vi) subject to the provisions of Section 5(c) or Section 6(d), as applicable, to extend at any time the period in
which Stock Options and Stock Appreciation Rights may be exercised;
(vii) at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan
and for its own acts and proceedings as it deems advisable;
(viii) to interpret the terms and provisions of the Plan and any Award (including related written instruments);
(ix) to make all determinations it deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and
(x) to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan
grantees.
(c) Delegation of Authority to Grant Awards. Subject to applicable law, the Administrator, in its discretion, may delegate
to a committee consisting of one or more officers of the Company, including the Chief Executive Officer of the Company, all or
part of the Administrator’s authority and duties with respect to the granting of Awards to individuals who are (i) not subject to the
reporting and other provisions of Section 16 of the Exchange Act and (ii) not members of the delegated committee. Any such
delegation by the Administrator shall include a limitation as to the amount of Stock underlying Awards that may be granted
during the period of the delegation and shall contain guidelines as to the determination of the exercise price and the vesting
criteria. The Administrator may revoke or amend the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Administrator’s delegate or delegates that were consistent with the terms of the Plan.
4
(d)Award Certificate. Other than with respect to Cash-Based Awards, Awards under the Plan shall be evidenced by
Award Certificates that set forth the terms, conditions and limitations for each Award which may include, without limitation, the
term of an Award and the provisions applicable in the event employment or service terminates.
(e) Indemnification. Neither the Board nor the Administrator, nor any member of either or any delegate thereof, shall be
liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the
members of the Board and the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable
attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the Company’s articles or
bylaws or any directors’ and officers’ liability insurance coverage that may be in effect from time to time and/or any
indemnification agreement between such individual and the Company.
(f) Non-U.S. Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the
laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for
Awards, the Administrator, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be
covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify
the terms and conditions of any Award granted to individuals outside the United States to comply with applicable non-U.S. laws;
(iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator
determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as
appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in
Section 3(a) hereof; and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary
or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the
foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the
Exchange Act or any other applicable United States securities law, the Code or any other applicable United States governing
statute or law.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Stock Issuable. Subject to adjustment as provided in this Section 3, the maximum number of shares of Stock reserved
and available for issuance under the Plan shall be 3,950,000 shares less one share for every one share of Stock subject to an
award granted under the Prior Plans after April 1, 2024. For purposes of this limitation, the shares of Stock underlying any
awards under the Plan and under the Prior Plans that are forfeited, canceled, cash-settled or otherwise terminated (other than by
exercise) shall be added back to the shares of Stock available for issuance under the Plan and, to the extent permitted under
Section 422 of the Code and the regulations promulgated thereunder, the shares of Stock that may be issued as Incentive Stock
Options. Shares of Stock tendered or held back to cover tax withholding with respect to an Award other than an Option or Stock
Appreciation Right or, after April 1, 2024, an award other than an option or stock appreciation right under the Prior Plans shall be
added to the shares available for Awards under the Plan. Notwithstanding the foregoing, the following shares shall not be added
to the shares authorized for grant under the Plan: (i) shares tendered or held back upon exercise of an Option or settlement of an
Option or Stock Appreciation Right to cover the exercise price or tax withholding, and (ii) shares subject to a Stock Appreciation
Right that are not issued in connection with the stock settlement of the Stock Appreciation Right upon exercise thereof. In the
event the Company repurchases shares of Stock on the open market, such shares shall not be added to the shares of Stock
available for issuance under the Plan. Subject to such overall limitations, shares of Stock may be issued up to such maximum
number pursuant to any type or types of Award; provided, however, that no more than 3,950,000 shares of the Stock may be
issued in the form of Incentive Stock Options. The shares available
5
for issuance under the Plan may be authorized but unissued shares of Stock, treasury Stock or shares of Stock reacquired by the
Company. Upon effectiveness of the Plan, no new awards shall be granted under the Prior Plans.
(b)Substitute Awards. Substitute Awards shall not reduce the shares of Stock authorized for grant under the Plan, nor
shall shares subject to a Substitute Award be added to the shares of Stock available for Awards under the Plan as provided in
Section 3(a) above. Additionally, in the event that a company acquired by the Company or any Affiliate or with which the
Company or any Affiliate combines has shares available under a pre-existing plan approved by stockholders and not adopted in
contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan
(as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such
acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares authorized for grant under the
Plan (and shares subject to such Awards shall not be added to the shares available for Awards under the Plan as provided in
Section 3(a) above); provided that Awards using such available shares shall not be made after the date awards or grants could
have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to
individuals who were not employees or directors prior to such acquisition or combination.
(c) Changes in Stock. Subject to Section 3(d) hereof, if, as a result of any reorganization, recapitalization,
reclassification, stock dividend, extraordinary cash dividend, stock split, reverse stock split or other similar change in the
Company’s capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or
kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the
Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, or, if, as a result of any
merger or consolidation or sale of all or substantially all of the assets of the Company, the outstanding shares of Stock are
converted into or exchanged for securities of the Company or any successor entity (or a parent or subsidiary thereof), the
Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance
under the Plan, including the maximum number of shares that may be issued in the form of Incentive Stock Options, (ii) the
number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iii) the repurchase price, if
any, per share subject to each outstanding Restricted Stock Award, and (iv) the exercise price for each share subject to any then
outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of shares subject to Stock Options and Stock Appreciation Rights) as to which such
Stock Options and Stock Appreciation Rights remain exercisable. The Administrator shall also make equitable or proportionate
adjustments in the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to
take into consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event. The
adjustment by the Administrator shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the
Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional
shares.
(d)Mergers and Other Transactions.
(i) In the case of and subject to the consummation of a Sale Event, the parties thereto may cause the
assumption or continuation of Awards theretofore granted by the successor entity, or the substitution of such Awards with new
Awards of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if
appropriate, the per share exercise prices, as such parties shall agree.
(ii) To the extent the parties to such Sale Event do not provide for the assumption, continuation or substitution
of Awards, upon the effective time of the Sale Event, the Plan and all outstanding
6
Awards granted hereunder shall terminate. In such case, except as may be otherwise provided in the relevant Award Certificate,
all Awards shall become fully vested and nonforfeitable as of the effective time of the Sale Event (with performance-based
Awards being deemed earned at the greater of the target level of performance or actual performance). In the event of a
termination of outstanding Awards granted under the Plan upon a Sale Event, (i) the Company shall have the option (in its sole
discretion) to make or provide for a payment, in cash or in kind, to the grantees holding Options and Stock Appreciation Rights,
in exchange for the cancellation thereof, in an amount equal to the difference between (A) the Sale Price multiplied by the
number of shares of Stock subject to outstanding Options and Stock Appreciation Rights (to the extent then exercisable at prices
not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Stock Appreciation
Rights (provided that, in the case of an Option or Stock Appreciation Right with an exercise price equal to or greater than the
Sale Price, such Option or Stock Appreciation Right shall be canceled for no consideration); or (ii) each grantee shall be
permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to
exercise all outstanding Options and Stock Appreciation Rights (to the extent then exercisable) held by such grantee. The
Company shall also have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the grantees
holding other Awards in an amount equal to the Sale Price multiplied by the number of vested shares of Stock under such
Awards.
(iii) To the extent the parties to a Sale Event provide for the assumption, continuation or substitution of
Awards, except as may be otherwise provided in the relevant Award Certificate, each such assumed, continued or substituted
Award shall become immediately vested and exercisable or nonforfeitable (with performance-based Awards being deemed earned
at the greater of the target level of performance or actual performance) upon the termination of a grantee’s Service Relationship if
such termination occurs (a) within 12 months after such Sale Event or 90 days prior to such Sale Event, and (b) such termination
is by the Company or any Subsidiary or successor entity without Cause or by the grantee for Good Reason. For the avoidance of
doubt, upon the termination of a grantee’s Service Relationship without Cause or for Good Reason prior to the consummation of
a Sale Event (1) all then unvested shares of Stock underlying Awards held by the grantee as of the date of termination will remain
outstanding for a period of 90 days thereafter and remain eligible to become vested upon the consummation of such Sale Event
during such period and (2) on the 90th day following such termination of employment without Cause or for Good Reason (to the
extent such shares of Stock do not become vested in accordance with the terms set forth in this Section 3(d) prior to such date),
all then-unvested shares of Stock underlying Awards held by such grantee will automatically and without further action be
canceled and forfeited.
(e) Maximum Awards to Non-Employee Directors. Notwithstanding anything to the contrary in this Plan, the value of all
Awards awarded under this Plan and all other cash compensation paid by the Company to any Non-Employee Director in any
calendar year for services as a Non-Employee Director shall not exceed $1,000,000. For the purpose of these limitations, the
value of any Award shall be its grant date fair value, as determined in accordance with FASB ASC 718 or successor provision but
excluding the impact of estimated forfeitures related to service-based vesting provisions.
SECTION 4. ELIGIBILITY
Grantees under the Plan will be such officers, employees, Non-Employee Directors or Consultants of the Company and
its Affiliates as are selected from time to time by the Administrator in its sole discretion; provided that Awards may not be
granted to officers, employees, Non-Employee Directors or Consultants who are providing services only to any “parent” of the
Company, as such term is defined in Rule 405 of the Act, unless (i) the stock underlying the Awards is treated as “service
recipient stock” under Section 409A or (ii) the Company has determined that such Awards are exempt from or otherwise comply
with Section 409A.
7
SECTION 5. STOCK OPTIONS
(a) Award of Stock Options. The Administrator may grant Stock Options under the Plan, subject to such restrictions and
conditions as the Administrator may determine. Conditions may be based on continuing employment (or other Service
Relationship) and/or achievement of pre-established performance goals and objectives. Stock Options granted under the Plan
may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code.
To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.
Stock Options shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator deems desirable. If the Administrator so determines, Stock Options
may be granted in lieu of cash compensation at the grantee’s election, subject to such terms and conditions as the Administrator
may establish.
(b)Exercise Price. The exercise price per share for the Stock covered by a Stock Option shall be determined by the
Administrator at the time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant. In the case
of an Incentive Stock Option that is granted to a Ten Percent Owner, the exercise price of such Incentive Stock Option shall be
not less than 110 percent of the Fair Market Value on the grant date. Notwithstanding the foregoing, Stock Options may be
granted with an exercise price per share that is less than 100 percent of the Fair Market Value on the date of grant (i) pursuant to a
transaction described in, and in a manner consistent with, Section 424(a) of the Code, (ii) to individuals who are not subject to
U.S. income tax on the date of grant or (iii) if the Stock Option is otherwise compliant with Section 409A.
(c) Option Term. The term of each Stock Option shall be fixed by the Administrator, but no Stock Option shall be
exercisable more than ten years after the date the Stock Option is granted. In the case of an Incentive Stock Option that is
granted to a Ten Percent Owner, the term of such Stock Option shall be no more than five years from the date of grant.
Notwithstanding the foregoing, to the extent permitted by Section 409A of the Code, in the event that on the last business day of
the term of a Stock Option other than an Incentive Stock Option (x) the exercise of the Stock Option is prohibited by applicable
law or (y) Stock may not be purchased or sold by the holder of such Stock Option due to the “black-out period” of a Company
policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the term of the Stock
Option shall be extended to the date that is 30 days following the end of the legal prohibition, black-out period or lock-up
agreement and provided further that no extension will be made if the exercise price of such Stock Option at the date the initial
term would otherwise expire is equal to or in excess of the Fair Market Value of a share of Stock on such date.
(d)Exercisability; Rights of a Stockholder. Stock Options shall become exercisable at such time or times, whether or not
in installments, as determined by the Administrator at or after the grant date. A grantee shall have the rights of a stockholder
only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.
(e) Method of Exercise. Stock Options may be exercised in whole or in part, by giving written or electronic notice of
exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one
or more of the following methods except to the extent otherwise provided in the Award Certificate:
(i) In cash, by certified or bank check or other instrument acceptable to the Administrator;
8
(ii) Through the delivery (or attestation to the ownership following such procedures as the Company may
prescribe) of shares of Stock that are owned by the grantee and not then subject to restrictions under any Company plan. Such
surrendered shares shall be valued at Fair Market Value on the exercise date;
(iii) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the
purchase price; provided that in the event the grantee chooses to pay the purchase price as so provided, the grantee and the broker
shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Company prescribes
as a condition of such payment procedure; or
(iv) With respect to Stock Options that are not Incentive Stock Options, by a “net exercise” arrangement
pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of
shares with a Fair Market Value that does not exceed the aggregate exercise price.
Payment instruments will be received subject to collection. The transfer to the grantee on the records of the Company or of the
transfer agent of the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt
from the grantee (or a purchaser acting in the grantee’s stead in accordance with the provisions of the Stock Option) by the
Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Award
Certificate or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to
withhold with respect to the grantee). In the event a grantee chooses to pay the purchase price by previously-owned shares of
Stock through the attestation method, the number of shares of Stock transferred to the grantee upon the exercise of the Stock
Option shall be net of the number of attested shares. In the event that the Company establishes, for itself or using the services of
a third party, an automated system for the exercise of Stock Options, such as a system using an internet website or interactive
voice response, then the paperless exercise of Stock Options may be permitted through the use of such an automated system.
(f) Annual Limit on Incentive Stock Options. To the extent required for “incentive stock option” treatment under
Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect
to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary
corporations become exercisable for the first time by a grantee during any calendar year shall not exceed $100,000. To the extent
that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) Award of Stock Appreciation Rights. The Administrator may grant Stock Appreciation Rights under the Plan, subject
to such restrictions and conditions as the Administrator may determine. Conditions may be based on continuing employment (or
other Service Relationship) and/or achievement of pre-established performance goals and objectives..
(b)Exercise Price of Stock Appreciation Rights. The exercise price of a Stock Appreciation Right shall not be less than
100 percent of the Fair Market Value of the Stock on the date of grant. Notwithstanding the foregoing, Stock Appreciation Rights
may be granted with an exercise price per share that is less than 100 percent of the Fair Market Value on the date of grant (i)
pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code, (ii) to individuals who are not
subject to U.S. income tax on the date of grant or (iii) if the Stock Appreciation Right is otherwise compliant with Section 409A.
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(c) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights may be granted by the Administrator
independently of any Stock Option.
(d)Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights shall be subject to such terms and
conditions as shall be determined on or after the date of grant by the Administrator, and such terms and conditions may differ
among individual Awards and grantees. The term of a Stock Appreciation Right may not exceed ten years. Notwithstanding the
foregoing, to the extent permitted by Section 409A of the Code, in the event that on the last business day of the term of a Stock
Appreciation Right (x) the exercise of the Stock Appreciation Right is prohibited by applicable law or (y) shares may not be
purchased or sold by the holder of such Stock Appreciation Right due to the “black-out period” of a Company policy or a “lock-
up” agreement undertaken in connection with an issuance of securities by the Company, the term of the Stock Appreciation Right
shall be extended to the date that is 30 days following the end of the legal prohibition, black-out period or lock-up agreement and
provided further that no extension will be made if the exercise price of such Stock Appreciation Right at the date the initial term
would otherwise expire is equal to or in excess of the Fair Market Value of a share of Stock on such date.
SECTION 7. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. The Administrator may grant Restricted Stock Awards under the Plan, subject to
such restrictions and conditions as the Administrator may determine. Conditions may be based on continuing employment (or
other Service Relationship) and/or achievement of pre-established performance goals and objectives.
(b)Rights as a Stockholder. Upon the grant of the Restricted Stock Award and payment of any applicable purchase
price, a grantee shall have the rights of a stockholder with respect to the voting of the Restricted Shares and receipt of dividends;
provided that any dividends paid by the Company during the vesting period shall accrue and shall not be paid to the grantee until
and only to the extent the Restricted Stock Award vests. Unless the Administrator otherwise determines, (i) uncertificated
Restricted Shares shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they
are subject to forfeiture until such Restricted Shares are vested as provided in Section 7(d) below and (ii) certificated Restricted
Shares shall remain in the possession of the Company until such Restricted Shares are vested as provided in Section 7(d) below,
and the grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the
Administrator prescribes.
(c) Restrictions. Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed
of except as specifically provided herein or in the Restricted Stock Award Certificate. Except as may otherwise be provided by
the Administrator either in the Award Certificate or, subject to Section 16 below, in writing after the Award is issued, if a
grantee’s employment (or other Service Relationship) with the Company and its Affiliates terminates for any reason, any
Restricted Shares that have not vested at the time of termination shall automatically and without any requirement of notice to
such grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its
original purchase price (if any) from such grantee or such grantee’s legal representative simultaneously with such termination of
employment (or other Service Relationship), and thereafter shall cease to represent any ownership of the Company by the grantee
or rights of the grantee as a stockholder. Following such deemed reacquisition of Restricted Shares that are represented by
physical certificates, a grantee shall surrender such certificates to the Company upon request without consideration.
(d)Vesting of Restricted Shares. The Administrator shall specify the date or dates and/or the attainment of pre-
established performance goals, objectives and other conditions on which the non-transferability of the Restricted Shares and the
Company’s right of repurchase or forfeiture shall lapse.
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Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Shares and shall be deemed “vested.”
SECTION 8. RESTRICTED STOCK UNITS
(a) Nature of Restricted Stock Units. The Administrator may grant Restricted Stock Units under the Plan, subject to such
restrictions and conditions as the Administrator may determine. Conditions may be based on continuing employment (or other
Service Relationship) and/or achievement of pre-established performance goals and objectives. Restricted Stock Units may be
settled in shares of Stock (or cash, to the extent explicitly provided for in the Award Certificate) upon the satisfaction of such
restrictions and conditions. Except in the case of Restricted Stock Units with a deferred settlement date that complies with
Section 409A, at the end of the vesting period, the Restricted Stock Units, to the extent vested, shall be settled in the form of
shares of Stock (or cash, to the extent explicitly provided for in the applicable Award Certificate). Restricted Stock Units with
deferred settlement dates are subject to Section 409A and shall contain such additional terms and conditions as the Administrator
shall determine in its sole discretion in order to comply with the requirements of Section 409A.
(b)Election to Receive Restricted Stock Units in Lieu of Compensation. The Administrator may, in its sole discretion,
permit a grantee to elect to receive a portion of future cash compensation otherwise due to such grantee in the form of an award
of Restricted Stock Units. Any such election shall be made in writing and shall be delivered to the Company no later than the
date specified by the Administrator and in accordance with Section 409A and such other rules and procedures established by the
Administrator. Any such future cash compensation that the grantee elects to defer shall be converted to a fixed number of
Restricted Stock Units based on the Fair Market Value of Stock on the date the compensation would otherwise have been paid to
the grantee if such payment had not been deferred as provided herein. The Administrator shall have the sole right to determine
whether and under what circumstances to permit such elections and to impose such limitations and other terms and conditions
thereon as the Administrator deems appropriate. Any Restricted Stock Units that are elected to be received in lieu of cash
compensation shall be fully vested, unless otherwise provided in the Award Certificate.
(c) Rights as a Stockholder. A grantee shall have the rights as a stockholder only as to shares of Stock acquired by the
grantee upon settlement of Restricted Stock Units; provided, however, that the grantee may be credited with Dividend Equivalent
Rights with respect to the grantee’s Restricted Stock Units, subject to the provisions of Section 11 and such terms and conditions
as the Administrator may determine.
(d)Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to
Section 16 below, in writing after the Award is issued, a grantee’s right in all Restricted Stock Units that have not vested shall
automatically terminate upon the grantee’s termination of employment (or cessation of Service Relationship) with the Company
and its Affiliates for any reason.
SECTION 9. UNRESTRICTED STOCK AWARDS
Grant or Sale of Unrestricted Stock. The Administrator may grant (or sell at par value or such higher purchase price
determined by the Administrator) an Unrestricted Stock Award under the Plan. An Unrestricted Stock Award is an Award
pursuant to which the grantee may receive shares of Stock free of any restrictions under the Plan. Unrestricted Stock Awards
may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee.
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SECTION 10. CASH-BASED AWARDS
Grant of Cash-Based Awards. The Administrator may grant Cash-Based Awards under the Plan. The Administrator
shall determine the maximum duration of the Cash-Based Award, the amount of cash to which the Cash-Based Award pertains,
the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Administrator
shall determine. Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as
determined by the Administrator. Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the
terms of the Award and may be made in cash.
SECTION 11. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. The Administrator may grant Dividend Equivalent Rights under the Plan. A Dividend
Equivalent Right may be granted hereunder to any grantee as a component of an award of Restricted Stock Units or as a
freestanding award. The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Certificate.
Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any such reinvestment shall be at
Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan
sponsored by the Company, if any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination
thereof, in a single installment or installments. A Dividend Equivalent Right granted as a component of an Award of Restricted
Stock Units shall provide that such Dividend Equivalent Right shall be settled only upon settlement or payment of, or lapse of
restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other Award. Notwithstanding anything to the contrary, no Dividend Equivalent Rights shall be granted with
respect to any Stock Options or Stock Appreciation Rights.
(b)Termination. Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to
Section 16 below, in writing after the Award is issued, a grantee’s rights in all Dividend Equivalent Rights shall automatically
terminate upon the grantee’s termination of employment (or cessation of Service Relationship) with the Company and its
Subsidiaries for any reason.
SECTION 12. TRANSFERABILITY OF AWARDS
(a) Transferability. Except as provided in Section 12(b) below, during a grantee’s lifetime, such grantee’s Awards shall
be exercisable only by the grantee, or by the grantee’s legal representative or guardian in the event of the grantee’s incapacity.
No Awards shall be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by the
laws of descent and distribution or pursuant to a domestic relations order. No Awards shall be subject, in whole or in part, to
attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void.
(b)Administrator Action. Notwithstanding Section 12(a), the Administrator, in its discretion, may provide either in the
Award Certificate regarding a given Award or by subsequent written approval that the grantee may transfer the grantee’s Awards
(other than Incentive Stock Options) to the grantee’s immediate family members, to trusts for the benefit of such family members
or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the
Company to be bound by all of the terms and conditions of this Plan and the applicable Award. In no event may an Award be
transferred by a grantee for value.
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(c) Family Member. For purposes of Section 12(b), “family member” means a grantee’s child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-
in-law, brother-in-law or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than a
tenant of the grantee), a trust in which these persons (or the grantee) have more than 50 percent of the beneficial interest, a
foundation in which these persons (or the grantee) control the management of assets and any other entity in which these persons
(or the grantee) own more than 50 percent of the voting interests.
(d)Designation of Beneficiary. To the extent permitted by the Company, each grantee to whom an Award has been made
under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award
payable on or after the grantee’s death. Any such designation shall be on a form provided for that purpose by the Administrator
and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased grantee, or if
the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.
SECTION 13. TAX WITHHOLDING
(a) Payment by Grantee. Each grantee shall, no later than the date as of which the value of an Award or of any Stock or
other amounts received thereunder first becomes includable in the gross income of the grantee for federal income tax purposes,
pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld by the Company with respect to such income. The Company and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the
grantee. The Company’s obligation to deliver evidence of book entry (or stock certificates) to any grantee is subject to and
conditioned on tax withholding obligations being satisfied by the grantee.
(b)Payment in Stock. The Administrator may require the Company or any Affiliate’s tax withholding obligation to be
satisfied, in whole or in part, by the Company withholding from shares of Stock to be issued pursuant to any Award a number of
shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount
due; provided, however, that the amount withheld does not exceed the maximum statutory tax rate or such lesser amount as is
necessary to avoid liability accounting treatment. For purposes of share withholding, the Fair Market Value of withheld shares
shall be determined in the same manner as the value of Stock includible in income of the grantees. The Administrator may also
require the Company or any Affiliate’s tax withholding obligation to be satisfied, in whole or in part, by an arrangement whereby
a certain number of shares of Stock issued pursuant to any Award are immediately sold and proceeds from such sale are remitted
to the Company in an amount that would satisfy the withholding amount due.
SECTION 14. SECTION 409A AWARDS
Awards are intended to be exempt from Section 409A to the greatest extent possible and to otherwise comply with
Section 409A. The Plan and all Awards shall be interpreted in accordance with such intent. To the extent that any Award is
determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “409A Award”), the
Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order to
comply with Section 409A. If any amount under a 409A Award is payable upon a “separation from service” (within the meaning
of Section 409A) to a grantee who is then considered a “specified employee” (within the meaning of Section 409A), then no such
payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from
service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject to
interest, penalties and/or additional tax imposed pursuant to Section 409A. Further, the
13
settlement of any 409A Award may not be accelerated except to the extent permitted by Section 409A. The Company makes no
representation that any or all of the payments or benefits described in the Plan will be exempt from or comply with Section 409A
and makes no undertaking to preclude Section 409A from applying to any such payment. The grantee shall be solely responsible
for the payment of any taxes and penalties incurred with respect to Awards under the Plan, including under Section 409A.
SECTION 15. TERMINATION OF SERVICE RELATIONSHIP, TRANSFER, LEAVE OF ABSENCE, ETC.
(a) Termination of Service Relationship. If the grantee’s Service Relationship is with an Affiliate and such Affiliate
ceases to be an Affiliate, the grantee shall be deemed to have terminated the grantee’s Service Relationship for purposes of the
Plan.
(b)For purposes of the Plan, the following events shall not be deemed a termination of a Service Relationship:
(i) a transfer of employment from the Company to an Affiliate or vice versa, or from one Affiliate to another;
or
(ii) an approved leave of absence for military service or sickness, or for any other purpose approved by the
Company, if the employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Administrator otherwise so provides in writing.
SECTION 16. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any
outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall
materially and adversely affect rights under any outstanding Award without the holder’s consent. Except as provided in Section
3(c) or 3(d), without prior stockholder approval, in no event may the Administrator exercise its discretion to reduce the exercise
price of outstanding Stock Options or Stock Appreciation Rights or effect repricing through cancellation and re-grants or
cancellation of Stock Options or Stock Appreciation Rights in exchange for cash or other Awards or take any other action with
respect to a Stock Option or Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the
principal U.S. national securities exchange on which the Stock is listed. To the extent determined by the Administrator to be
required under the rules of any securities exchange or market system on which the Stock is listed, or by the Code to ensure that
Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code, Plan amendments shall be subject to
approval by Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 16 shall limit the
Administrator’s authority to take any action permitted pursuant to Section 3(c) or 3(d).
SECTION 17. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other
consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company
unless the Administrator otherwise expressly determines in connection with any Award or Awards. In its sole discretion, the
Administrator may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Stock or
make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.
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SECTION 18. GENERAL PROVISIONS
(a) No Distribution. The Administrator may require each person acquiring Stock pursuant to an Award to represent to
and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.
(b)Issuance of Stock. To the extent certificated, stock certificates to grantees under this Plan shall be deemed delivered
for all purposes when the Company or a stock transfer agent of the Company has mailed such certificates in the United States
mail, addressed to the grantee, at the grantee’s last known address on file with the Company. Uncertificated Stock shall be
deemed delivered for all purposes when the Company or a Stock transfer agent of the Company has given to the grantee by
electronic mail (with proof of receipt) or by United States mail, addressed to the grantee, at the grantee’s last known address on
file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry”
records). Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any evidence of
book entry or certificates evidencing shares of Stock pursuant to the exercise or settlement of any Award, unless and until the
Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable),
that the issuance and delivery is in compliance with all applicable laws, regulations of governmental authorities and, if
applicable, the requirements of any exchange on which the shares of Stock are listed, quoted or traded. Any Stock issued
pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or
advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the
Stock is listed, quoted or traded. The Administrator may place legends on any Stock certificate or notations on any book entry to
reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Administrator may
require that an individual make such reasonable covenants, agreements and representations as the Administrator, in its discretion,
deems necessary or advisable in order to comply with any such laws, regulations or requirements. The Administrator has the
right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any
Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.
(c) No Fractional Shares. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award,
and the Administrator shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any
fractional shares, or whether such fractional shares or any rights thereto shall be canceled, terminated or otherwise eliminated.
(d)Stockholder Rights. Except as otherwise provided in this Plan or an Award Certificate, until Stock is deemed
delivered in accordance with Section 18(b), no right to vote or receive dividends or any other rights of a stockholder will exist
with respect to shares of Stock to be issued in connection with an Award, notwithstanding the exercise of a Stock Option or any
other action by the grantee with respect to an Award.
(e) Other Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any
employee any right to continued employment with the Company or any Subsidiary.
(f) Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to the Company’s
insider trading policies and procedures, as in effect from time to time.
(g)Clawback Policy. All Awards shall be subject to reduction, cancellation, forfeiture or recoupment to the extent
necessary to comply with (i) any clawback, forfeiture or other similar policy adopted
15
by the Board or Administrator and as in effect from time to time, including the Company’s Compensation Recovery Policy (as
such policy may be amended and/or restated from time to time); and (ii) applicable law. Further, to the extent that the grantee
receives any amount in excess of the amount that the grantee should otherwise have received under the terms of the Award for
any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative
error), the grantee shall be required to repay any such excess amount to the Company.
SECTION 19. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon stockholder approval in accordance with applicable state law, the Company’s
bylaws and articles of incorporation and applicable stock exchange rules. No Awards may be granted hereunder after the tenth
anniversary of the Effective Date and no Incentive Stock Options may be granted hereunder after the tenth anniversary of the date
the Plan is approved by the Board.
SECTION 20. GOVERNING LAW
This Plan and all Awards and actions taken thereunder shall be governed by, and construed in accordance with, the laws
of the State of Delaware, applied without regard to conflict of law principles.
DATE APPROVED BY BOARD OF DIRECTORS: April 9, 2024
DATE APPROVED BY STOCKHOLDERS: June 11, 2024
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GLOBAL INCENTIVE STOCK OPTION AGREEMENT
UNDER THE HUBSPOT, INC.
2024 STOCK OPTION AND INCENTIVE PLAN
Name of Optionee:
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date (110% of FMV if a 10% owner)]
Grant Date:
Vesting Commencement Date:
Expiration Date:
[No more than 10 years (5 years if a 10% owner)]
Pursuant to the HubSpot, Inc. 2024 Stock Option and Incentive Plan, (as amended from time to time, the “Plan”) and
this Global Incentive Stock Option Award Agreement, including any additional terms and conditions for the Optionee’s country
set forth in the appendix attached hereto (the “Appendix” and together with the Global Incentive Stock Option Agreement, the
“Agreement”), HubSpot, Inc. (the “Company”) hereby grants to the Optionee named above an option (the “Stock Option”) to
purchase on or prior to the Expiration Date specified above all or part of the number of shares of the Company’s Common Stock,
par value $0.001 per share (the “Shares”), specified above at the Option Exercise Price per Share specified above subject to the
terms and conditions set forth herein and in the Plan.
1. Exercisability Schedule. No portion of this Stock Option may be exercised until such portion has become
exercisable. Except as set forth below, and subject to the discretion of the Administrator to accelerate the exercisability schedule
hereunder, this Stock Option shall be exercisable with respect to the following number of Option Shares on the dates indicated
below so long as the Optionee remains in a Service Relationship through the applicable date:
Incremental Number of
Option Shares Exercisable Exercisability Date
_____________ (___%) ____________
_____________ (___%) ____________
_____________ (___%) ____________
_____________ (___%) ____________
Notwithstanding the foregoing, in the event that the Optionee’s Service Relationship terminates due to the Optionee’s
death, then the Option Shares shall be deemed fully vested and exercisable upon the date of the Optionee’s death.
Once exercisable, this Stock Option shall continue to be exercisable at any time or times prior to the close of business on
the Expiration Date, subject to the provisions hereof and of the Plan.
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2. Manner of Exercise.
(a) The Optionee may exercise this Stock Option only in the following manner: from time to time on or prior
to the Expiration Date of this Stock Option, the Optionee may give written notice to the Administrator of the Optionee’s election
to exercise any exercisable portion of this Stock Option at the time of such notice and purchase the corresponding Option Shares.
This notice shall specify the number of Option Shares to be purchased.
Payment of the Option Exercise Price for the Option Shares may be made by one or more of the following methods: (i)
in cash, by certified or bank check or other instrument acceptable to the Administrator; (ii) if permitted by the Administrator,
through the delivery (or attestation to the ownership) of Shares that have been purchased by the Optionee on the open market or
that are beneficially owned by the Optionee and are not then subject to any restrictions under any Company plan and that
otherwise satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee delivering to the Company a
properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a
check payable and acceptable to the Company to pay the Option Exercise Price, provided that in the event the Optionee chooses
to pay the Option Exercise Price as so provided, the Optionee and the broker shall comply with such procedures and enter into
such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment
procedure; (iv) if permitted by the Administrator, by a “net exercise” arrangement pursuant to which the Company will reduce the
number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not
exceed the aggregate exercise price; or (v) a combination of (i), (ii), (iii) and (iv) above. Payment instruments will be received
subject to collection.
The transfer to the Optionee on the records of the Company or of the transfer agent of the Option Shares will be
contingent upon (x) the Company’s receipt from the Optionee of the full Option Exercise Price for the Option Shares, as set forth
above, (y) the fulfillment of any other requirements contained herein or in the Plan or in any other agreement or provision of laws
and (z) the receipt by the Company of any agreement, statement or other evidence that the Company may require to satisfy itself
that the issuance of Option Shares and any subsequent resale of the Option Shares will be in compliance with applicable laws and
regulations. In the event the Optionee chooses (and the Administrator permits the Optionee) to pay the Option Exercise Price by
previously-owned Shares through the attestation method, the number of Shares transferred to the Optionee upon the exercise of
the Stock Option shall be net of the Shares attested to.
(b) The Shares purchased upon exercise of this Stock Option shall be transferred to the Optionee on the
records of the Company or of the transfer agent upon compliance to the satisfaction of the Administrator with all requirements
under applicable laws or regulations in connection with such transfer and with the requirements hereof and of the Plan. The
determination of the Administrator as to such compliance shall be final and binding on the Optionee. The Optionee shall not be
deemed to be the holder of, or to have any of the rights of a holder with respect to, any Option Shares unless and until this Stock
Option has been exercised pursuant to the terms hereof, the Company or the transfer agent has transferred the Option Shares to
the Optionee, and the Optionee’s name has been entered as the shareholder of record on the books of the Company. Thereupon,
the Optionee shall have full voting, dividend and other ownership rights with respect to such Option Shares.
(c) Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be
exercisable after the Expiration Date hereof.
3. Termination of Service Relationship. If the Optionee’s Service Relationship terminates, the period within which to
exercise the Stock Option may be subject to earlier termination as set forth below.
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(a) Termination Due to Death. If the Optionee’s Service Relationship terminates by reason of the Optionee’s
death, any portion of this Stock Option outstanding on such date may thereafter be exercised by the Optionee’s legal
representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier.
(b) Termination Due to Disability. If the Optionee’s Service Relationship terminates by reason of the
Optionee’s disability (as determined by the Administrator), any portion of this Stock Option outstanding on such date, to the
extent exercisable on the date of such termination, may thereafter be exercised by the Optionee for a period of 12 months from
the date of termination or until the Expiration Date, if earlier. Any portion of this Stock Option that is not exercisable on the date
of termination shall terminate immediately and be of no further force or effect.
(c) Termination for Cause. If the Optionee’s Service Relationship is terminated by the Company or an
Affiliate for Cause, any portion of this Stock Option outstanding on such date shall terminate immediately and be of no further
force and effect.
(d) Other Termination. If the Optionee’s Service Relationship terminates for any reason other than the
Optionee’s death, the Optionee’s disability, or Cause, and unless otherwise determined by the Administrator, any portion of this
Stock Option outstanding on such date may be exercised, to the extent exercisable on the date of termination, for a period of three
months from the date of termination or until the Expiration Date, if earlier. Any portion of this Stock Option that is not
exercisable on the date of termination shall terminate immediately and be of no further force or effect.
The Administrator’s determination of the reason for termination and the date of termination of the Optionee’s Service
Relationship shall be conclusive and binding on the Optionee and the Optionee’s representatives or legatees.
4. Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and
governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the
Plan. Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified
herein.
5. Transferability. This Agreement is personal to the Optionee, is non-assignable and is not transferable in any
manner, by operation of law or otherwise, other than by will or the laws of descent and distribution. This Stock Option is
exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or
legatee.
6. Status of the Stock Option. This Stock Option is intended to qualify as an “incentive stock option” under Section
422 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), but the Company does not represent or warrant that
this Stock Option qualifies as such. The Optionee should consult with the Optionee’s own tax advisors regarding the tax effects
of this Stock Option and the requirements necessary to obtain favorable income tax treatment under Section 422 of the Code,
including, but not limited to, holding period requirements and that this Stock Option must be exercised within three months
after termination of employment as an employee (or 12 months in the case of death or disability) to qualify as an “incentive
stock option.” To the extent any portion of this Stock Option does not so qualify as an “incentive stock option,” such portion
shall be deemed to be a non-qualified stock option. If the Optionee intends to dispose or does dispose (whether by sale, gift,
transfer or otherwise) of any Option Shares within the one-year period beginning on the date after the transfer
19
of such shares to the Optionee, or within the two-year period beginning on the day after the grant of this Stock Option, the
Optionee will so notify the Company within 30 days after such disposition.
7. Responsibility for Taxes.
(a) The Optionee acknowledges that, regardless of any action taken by the Company or, if different, the
Affiliate employing the Optionee (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe
benefits tax, payment on account or other tax‑related items related to the Optionee’s participation in the Plan and legally
applicable to the Optionee or deemed by the Company or the Employer in its discretion to be an appropriate charge to the
Optionee even if legally applicable to the Company or the Employer (“Tax-Related Items”) is and remains the Optionee’s
responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer. The Optionee further
acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of this Stock Option, including, but not limited to, the grant, vesting or exercise
of this Stock Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (ii)
do not commit to and are under no obligation to structure the terms of the grant or any aspect of this Stock Option to reduce or
eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Optionee is subject to
Tax-Related Items in more than one jurisdiction, the Optionee acknowledges that the Company and/or the Employer (or former
employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b) In connection with any relevant taxable or tax withholding event, as applicable, the Optionee agrees to
make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard,
the Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable
withholding obligations or rights with regard to all Tax-Related Items by one or a combination of the following: (i) withholding
from the Optionee’s wages or other cash compensation payable to the Optionee; (ii) allowing or requiring the Optionee to make a
cash payment to cover the Tax-Related Items; (iii) withholding from proceeds of the sale of Shares acquired upon exercise of this
Stock Option either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf
pursuant to this authorization without further consent); (iv) withholding from the Shares to be issued to the Optionee upon
exercise of this Stock Option;
or (v) any other method of withholding determined by the Company and permitted by applicable
law; provided, however, that that if the Optionee is a Section 16 officer of the Company under the Exchange Act, the obligation
for Tax-Related Items may be satisfied only by one or a combination of methods (i), (ii) and (iii) above.
(c) The Company and/or the Employer may withhold or account for Tax-Related Items by considering
statutory or other withholding rates, including maximum rates applicable in the Optionee’s jurisdiction. In the event of over-
withholding the Optionee may receive a refund of any over-withheld amount in cash through the Employer's normal payroll
processes (with no entitlement to the equivalent in Stock) or, if not refunded, the Optionee may be able to seek a refund from the
local tax authorities. In the event of under-withholding, the Optionee may be required to pay additional Tax-Related Items
directly to the local tax authorities or to the Company and/or the Employer. If the obligation for Tax-Related Items is satisfied by
withholding in Shares, for tax purposes, the Optionee is deemed to have been issued the full number of Shares subject to the
exercised Stock Option, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-
Related Items.
(d) The Optionee agrees to pay to the Company or the Employer any amount of Tax-Related Items that the
Company or the Employer may be required to withhold or account for as a result of the Optionee’s
20
participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver
the Shares, or the proceeds of the sale of Shares, if the Optionee fails to comply with the Optionee’s obligations in connection
with the Tax-Related Items.
8. No Obligation to Continue Service Relationship. The Employer is not obligated by or as a result of the Plan or this
Agreement to continue the Optionee’s Service Relationship, and neither the Plan nor this Agreement shall interfere in any way
with the right of the Employer to terminate the Optionee’s Service Relationship at any time.
9. Integration. This Agreement constitutes the entire agreement between the parties with respect to this Stock Option
and supersedes all prior agreements and discussions between the parties concerning such subject matter.
10. Nature of Grant. By accepting this Stock Option, the Optionee acknowledges, understands and agrees that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be modified,
amended, suspended, or terminated by the Company at any time, to the extent permitted by the Plan;
(b) the grant of this Stock Option is exceptional, voluntary, and occasional and does not create any contractual
or other right to receive future grants of stock options, or benefits in lieu of stock options, even if stock options have been granted
in the past;
(c) all decisions with respect to future stock option or other grants, if any, will be at the sole discretion of the
Company;
(d) the Optionee is voluntarily participating in the Plan;
(e) this Stock Option and the Option Shares subject to this Stock Option, and the income from and value of
same, are not intended to replace any pension rights or compensation;
(f) the grant of this Stock Option shall not be interpreted as forming or amending any Service Relationship
with the Company or any Affiliate (including the Employer);
(g) unless otherwise agreed with the Company, this Stock Option and the Option Shares subject to this Stock
Option, and the income from and value of same, are not granted as consideration for, or in connection with, the service the
Optionee may provide as a director of a Subsidiary;
(h) this Stock Option and the Option Shares subject to this Stock Option, and the income from and value of
same, are not part of normal or expected compensation for purposes of, including, without limitation, calculating any severance,
resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday-pay, long-service awards, pension or
retirement or welfare benefits, or similar payments;
(i) the future value of the Option Shares subject to this Stock Option is unknown, indeterminable, and cannot
be predicted with certainty;
(j) if the Option Shares subject to this Stock Option do not increase in value, this Stock Option will have no
value;
21
(k) if the Optionee exercises this Stock Option and acquires Shares, the value of such shares may increase or
decrease in value, even below the Option Exercise Price;
(l) no claim or entitlement to compensation or damages shall arise from forfeiture of this Stock Option
resulting from the termination of the Optionee’s Service Relationship (for any reason whatsoever, whether or not later found to be
invalid or in breach of applicable employment or other laws in the jurisdiction where the Optionee is employed or the terms of
the Optionee’s employment agreement, if any);
(m) unless otherwise provided in the Plan or by the Company in its discretion, this Stock Option and the
benefits evidenced by this Agreement do not create any entitlement to have this Stock Option or any such benefits transferred to,
or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction
affecting the Shares; and
(n) if the Optionee resides and/or works in a country outside the United States, the following shall apply:
(i) this Stock Option and any Option Shares subject to this Stock Option, and the income from and
value of same, are not part of normal or expected compensation for any purpose; and
(ii) neither the Company, the Employer, or any other Affiliate shall be liable for any foreign exchange
rate fluctuation between the Optionee’s local currency and the United States dollar that may affect the value of this Stock
Option or of any amounts due to the Optionee pursuant to the exercise of this Stock Option or the subsequent sale of any
Shares acquired upon exercise.
11. Appendix. Notwithstanding any provision of this Global Incentive Stock Option Agreement, if the Optionee
resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, this
Stock Option shall be subject to the additional terms and conditions set forth in the Appendix for the Optionee’s country, if any.
Moreover, if the Optionee relocates to one of the countries included in the Appendix during the term of the Stock Option, the
terms and conditions for such country shall apply to the Optionee, to the extent the Company determines that the application of
such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix forms part of this
Agreement.
12. Language. The Optionee acknowledges that the Optionee is proficient in the English language, or has consulted
with an advisor who is sufficiently proficient in English, so as to allow the Optionee to understand the terms and conditions of
this Agreement. If the Optionee has received this Agreement, or any other documents related to this Stock Option and/or the Plan
translated into a language other than English and if the meaning of the translated version is different than the English version, the
English version will control, unless otherwise required under applicable laws.
13. Notices. Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall
be mailed or delivered to the Optionee at the address on file with the Company or, in either case, at such other address as one
party may subsequently furnish to the other party in writing.
14. Waivers. The Optionee acknowledges that a waiver by the Company of breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the
Optionee or any other grantee.
15. Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of
Delaware, applied without regard to conflict of law principles.
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16. Venue. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties
evidenced by this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Massachusetts
and agree that such litigation shall be conducted only in the courts of Middlesex County, Massachusetts, or the federal courts for
the Commonwealth of Massachusetts, where this grant is made and/or to be performed, and no other courts.
17. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to
be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
18. Imposition of Other Requirements. The Company reserves the right to impose other requirements on this Stock
Option and the Shares acquired upon exercise of this Stock Option, to the extent the Company determines it is necessary or
advisable for legal or administrative reasons, and to require the Optionee to accept any additional agreements or undertakings that
may be necessary to accomplish the foregoing.
19. Electronic Delivery and Participation. The Company may, in its sole discretion, decide to deliver any documents
related to current or future participation in the Plan by electronic means. The Optionee hereby consents to receive such
documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and
maintained by the Company or a third party designated by the Company.
20. Compliance with Law. Notwithstanding any other provision of the Plan or this Agreement, unless there is an
available exemption from any registration, qualification or other legal requirement applicable to the Stock, the Company shall not
be required to permit the exercise of this Stock Option and/or deliver any Shares prior to the completion of any registration or
qualification of the Shares under any U.S. or non-U.S. local, state, or federal securities or other applicable law or under rulings or
regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to
obtaining any approval or other clearance from any U.S. or non-U.S. local, state, or federal governmental agency, which
registration, qualification, or approval the Company shall, in its absolute discretion, deem necessary or advisable. The Optionee
understands that the Company is under no obligation to register or qualify the Shares with the SEC or any state or non-U.S.
securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares
subject to this Stock Option. Further, the Optionee agrees that the Company shall have unilateral authority to amend this
Agreement without the Optionee’s consent to the extent necessary to comply with securities or other laws applicable to issuance
of the Shares subject to this Stock Option.
21. Insider Trading Restrictions / Market Abuse Laws. By accepting this Stock Option, the Optionee acknowledges
that the Optionee is bound by all the terms and conditions of any Company’s insider trading policy as may be in effect from time
to time. The Optionee further acknowledges that, depending on the Optionee’s country, the broker’s country or the country in
which the Shares are listed, the Optionee may be or may become subject to insider trading restrictions and/or market abuse laws
which may affect the Optionee’s ability to accept, acquire, sell, or otherwise dispose of Shares, rights to Shares (e.g., this Stock
Option), or rights linked to the value of Shares under the Plan during such times as the Optionee is considered to have “inside
information” regarding the Company (as defined by the laws in the applicable jurisdictions). Local insider trading laws and
regulations may prohibit the cancellation or amendment of orders the Optionee placed before the Optionee possessed inside
information. Furthermore, the Optionee could be prohibited from (i) disclosing the inside information to any third party, which
may include fellow employees and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions
under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any Company’s
insider trading policy as may be in effect from time to
23
time. The Optionee acknowledges that it is the Optionee’s responsibility to comply with any applicable restrictions, and the
Optionee should speak to the Optionee’s personal advisor on this matter.
22. Foreign Asset/Account, Exchange Control and Tax Reporting. Depending on the Optionee’s country, the Optionee
may be subject to foreign asset/account, exchange control, tax reporting, or other requirements which may affect the Optionee’s
ability acquire or hold Stock Options or Shares under the Plan or cash received from participating in the Plan (including
dividends and the proceeds arising from the sale of Shares) in a brokerage/bank account outside the Optionee’s country. The
applicable laws of the Optionee’s country may require that the Optionee report such Stock Options, Shares, accounts, assets, or
transactions to the applicable authorities in such country and/or repatriate funds received in connection with the Plan to the
Optionee’s country within a certain time period or according to certain procedures. The Optionee acknowledges that the
Optionee is responsible for ensuring compliance with any applicable requirements and should consult the Optionee’s personal
legal advisor to ensure compliance with applicable laws.
23. Clawback. The Optionee acknowledges and agrees that this Award is subject in all respects to the Company’s
Compensation Recovery Policy (the “Clawback Policy”), to the extent applicable, including the Company’s ability to recoup
Erroneously Awarded Compensation (as defined in the Clawback Policy) thereunder. Any action by the Company to recover
Erroneously Awarded Compensation under the Clawback Policy from the Optionee shall not be deemed (i) an event giving rise to
a right to resign for Good Reason, if applicable, or serve as a basis for a claim of constructive termination under any benefits or
compensation arrangement applicable to the Optionee or (ii) to constitute a breach of a contract or other arrangement to which the
Optionee is a party. This Section 23 is a material term of this Agreement.
HUBSPOT, INC.
By:
Title:
This Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned. Electronic
acceptance of this Agreement pursuant to the Company’s instructions to the Optionee (including through an online acceptance
process) is acceptable.
Dated:
Optionee’s Signature
Optionee’s name and address:
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APPENDIX
GLOBAL INCENTIVE STOCK OPTION AGREEMENT
FOR EMPLOYEES
UNDER THE HUBSPOT, INC.
2024 STOCK OPTION AND INCENTIVE PLAN
Capitalized terms used but not defined in this Appendix shall have the same meanings assigned to them in the Plan and/or the
Global Incentive Stock Option Agreement (the “Option Agreement”).
Terms and Conditions
This Appendix includes additional terms and conditions that govern the Optionee’s Stock Option if the Optionee works and/or
resides in one of the countries listed below. If the Optionee is a citizen or resident of a country other than the one in which the
Optionee is currently working and/or residing (or is considered as such for local law purposes), or the Optionee transfers
employment and/or residency to a different country after the grant of this Stock Option, the Company will, in its discretion,
determine the extent to which the terms and conditions contained herein will apply to the Optionee.
Notifications
This Appendix also includes information regarding certain other issues of which the Optionee should be aware with respect to the
Optionee’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the
respective countries as of May 2024. Such laws are often complex and change frequently. As a result, the Company strongly
recommends that the Optionee not rely on the information noted herein as the only source of information relating to the
consequences of participation in the Plan because the information may be out-of-date at the time the Optionee exercises the Stock
Option or sells any Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Optionee’s particular situation. As a
result, the Company is not in a position to assure the Optionee of any particular result. Accordingly, the Optionee should seek
appropriate professional advice as to how the relevant laws in the Optionee’s country may apply to the Optionee’s individual
situation.
If the Optionee is a citizen or resident of a country other than the one in which the Optionee is currently working and/or residing
(or is considered as such for local law purposes), or if the Optionee transfers employment and/or residency to a different country
after the Stock Option is granted, the notifications contained in this Appendix may not be applicable to the Optionee in the same
manner.
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ALL COUNTRIES OUTSIDE THE U.S., EUROPEAN UNION, EUROPEAN ECONOMIC AREA, AND UNITED
KINGDOM
Data Privacy Notification and Consent.
(a) By accepting the Stock Option, the Optionee explicitly and unambiguously consents to the collection, use, and transfer, in
electronic or other form, of the Optionee’s personal data as described in the Agreement by and among, as applicable, the
Employer, the Company and its other Affiliates for the exclusive purpose of implementing, administering, and managing the
Optionee’s participation in the Plan.
(b) The Optionee understands that the Company, the Employer, and other Affiliates hold certain personal information about
the Optionee, including, but not limited to, the Optionee’s name, home address and telephone number, email address, date of
birth, social security number, passport or other identification number (e.g., resident registration number), salary, nationality,
job title, any Shares or directorships held in the Company, details of all Stock Options or any other entitlement to shares
awarded, canceled, vested, unvested, or outstanding in the Optionee’s favor (“Data”), for the purpose of implementing,
administering, and managing the Plan
(c) The Optionee understands that Data will be transferred to Fidelity Stock Plan Services LLC, or such other stock plan
service provider as may be selected by the Company in the future, which assists in the implementation, administration and
management of the Plan. The Optionee understands that the recipients of the Data may be located in the United States or
elsewhere, and that the recipient's country (e.g. the United States) may have different data privacy laws and protections than
the Optionee’s country. The Optionee may request a list with the names and addresses of any potential recipients of the Data
by contacting the Optionee’s local human resources representative. The Optionee authorizes the Company, Fidelity Stock
Plan Services LLC, and other possible recipients that may assist the Company (presently or in the future) with implementing,
administering, and managing the Plan to receive, possess, use, retain, and transfer the Data, in electronic or other form, for
the sole purpose of implementing, administering, and managing the Optionee’s participation in the Plan, including any
requisite transfer of such Data as may be required to a broker, escrow agent, or other third party with whom the Shares
received upon exercise of the Stock Option may be deposited. The Optionee understands that Data will be held only as long as
is necessary to implement, administer, and manage the Optionee’s participation in the Plan. The Optionee may, at any time,
view Data, request information about the storage and processing of Data, require any necessary amendments to Data or
refuse or withdraw the consents herein, in any case without cost, by contacting the Optionee’s local human resources
representative. Further, the Optionee understands that the Optionee is providing the consents herein on a purely voluntary
basis. If the Optionee does not consent, or if the Optionee later seeks to revoke the consent, the Optionee’s Service
Relationship with the Employer will not be affected; the only consequence of refusing or withdrawing consent is that the
Company would not be able to grant Stock Options or other equity awards to the Optionee or administer or maintain such
awards. Therefore, the Optionee understands that refusing or withdrawing the Optionee’s consent may affect the Optionee’s
ability to participate in the Plan. For more information on the consequences of the Optionee’s refusal to consent or
withdrawal of consent, the Optionee understands that the Optionee may contact the local human resources representative.
26
(d) Upon request of the Company or the Employer, the Optionee agrees to provide a separate executed data privacy consent
form (or any other agreements or consents that may be required by the Company and/or the Employer) that the Company
and/or the Employer may deem necessary to obtain from the Optionee for the purpose of administering the Optionee’s
participation in the Plan in compliance with the data privacy laws in the Optionee’s country, either now or in the future. The
Optionee understands and agrees that the Optionee will not be able to participate in the Plan if the Optionee fails to provide
any such consent or agreement requested by the Company and/or the Employer.
CANADA
Terms and Conditions
Non-Qualified Securities. All or a portion of the Option Shares subject to this Stock Option may be “non-qualified securities”
within the meaning of the Income Tax Act (Canada). The Company may provide the Optionee with additional information and/or
appropriate notification regarding the characterization of this Stock Option for Canadian income tax purposes as may be required
by the Income Tax Act (Canada) and the regulations thereunder.
Method of Exercise. Notwithstanding any provision of the Plan or the Option Agreement, the Optionee may not pay the Option
Exercise Price by using the methods of exercise set forth in Section 2(a)(ii) of the Option Agreement or the corresponding
provisions of the Plan.
The following terms and conditions apply if the Optionee resides in Quebec:
Data Privacy. The following provision supplements the “Data Privacy Notification and Consent” provision above in this
Appendix:
The Optionee hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant
information from all personnel, professional or non-professional, involved in the administration and operation of the Plan for
purposes that relate to the administration of the Plan. The Optionee acknowledges and agrees that the Optionee’s personal
information, including any sensitive personal information, may be transferred or disclosed outside of the province of Quebec,
including to the U.S. The Optionee further authorizes the Company, the Employer, its other Affiliates, and the Administrator to
disclose and discuss the Plan with their advisors. The Optionee further authorizes the Company, the Employer, its other
Affiliates, and the Administrator to record information and to keep such information in the Optionee’s employee file. If
applicable, the Optionee also acknowledges and authorizes the Company, the Employer, its other Affiliates, and the
Administrator involved in the administration of the Plan to use technology for profiling purposes and to make automated
decisions that may have an impact on the Optionee’s participation in the Plan or the administration of the Plan.
Notifications
Securities Law Information. The Optionee is permitted to sell Shares acquired under the Plan through the designated broker
appointed under the Plan, if any, provided the resale of Shares acquired under the Plan takes place outside Canada through the
facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the New York Stock Exchange
under the symbol “HUBS.”
IRELAND
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Notifications
Director Notification Information. Directors, shadow directors, and secretaries of an Irish Affiliate must notify such Affiliate in
writing upon (i) receiving or disposing of an interest in the Company (e.g., the Stock Option, Shares, etc.), (ii) becoming aware of
the event giving rise to the notification requirement, or (iii) becoming a director or secretary if such an interest exists at the time,
in each case, if the interest represents more than 1% of the Company. This notification requirement also applies with respect to
the interests of any spouse or children under the age of 18 of the director, shadow director, or secretary (whose interests will be
attributed to the director, shadow director or secretary). The Optionee should consult with a personal legal advisor as to whether
or not this notification requirement applies.
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GLOBAL NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE HUBSPOT, INC.
2024 STOCK OPTION AND INCENTIVE PLAN
Name of Optionee:
No. of Option Shares:
Option Exercise Price per Share: $
[FMV on Grant Date]
Grant Date:
Vesting Commencement Date:
Expiration Date:
[No more than 10 years]
Pursuant to the HubSpot, Inc. 2024 Stock Option and Incentive Plan (as amended from time to time, the “Plan”) and this
Global Non-Qualified Stock Option Award Agreement, including any additional terms and conditions for the Optionee’s country
set forth in the appendix attached hereto (the “Appendix” and together with the Global Non-Qualified Stock Option Agreement,
the “Agreement”), HubSpot, Inc. (the “Company”) hereby grants to the Optionee named above an option (the “Stock Option”) to
purchase on or prior to the Expiration Date specified above all or part of the number of shares of the Company’s Common Stock,
par value $0.001 per share (the “Shares”), specified above at the Option Exercise Price per Share specified above subject to the
terms and conditions set forth herein and in the Plan. This Stock Option is not intended to be an “incentive stock option” under
Section 422 of the U.S. Internal Revenue Code of 1986, as amended.
1. Exercisability Schedule. No portion of this Stock Option may be exercised until such portion has become
exercisable. Except as set forth below, and subject to the discretion of the Administrator to accelerate the exercisability schedule
hereunder, this Stock Option shall be exercisable with respect to the following number of Option Shares on the dates indicated
below so long as the Optionee remains in a Service Relationship through the applicable date:
Incremental Number of
Option Shares Exercisable Exercisability Date
_____________ (___%) ____________
_____________ (___%) ____________
_____________ (___%) ____________
_____________ (___%) ____________
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Notwithstanding the foregoing, in the event that the Optionee’s Service Relationship terminates due to the Optionee’s
death, then the Option Shares shall be deemed fully vested and exercisable upon the date of the Optionee’s death.
Once exercisable, this Stock Option shall continue to be exercisable at any time or times prior to the close of business on
the Expiration Date, subject to the provisions hereof and of the Plan.
2. Manner of Exercise.
(a) The Optionee may exercise this Stock Option only in the following manner: from time to time on or prior
to the Expiration Date of this Stock Option, the Optionee may give written notice to the Administrator of the Optionee’s election
to exercise any exercisable portion of this Stock Option at the time of such notice and purchase the corresponding Option Shares.
This notice shall specify the number of Option Shares to be purchased.
Payment of the Option Exercise Price for the Option Shares may be made by one or more of the following methods: (i)
in cash, by certified or bank check or other instrument acceptable to the Administrator; (ii) if permitted by the Administrator,
through the delivery (or attestation to the ownership) of Shares that have been purchased by the Optionee on the open market or
that are beneficially owned by the Optionee and are not then subject to any restrictions under any Company plan and that
otherwise satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee delivering to the Company a
properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a
check payable and acceptable to the Company to pay the Option Exercise Price, provided that in the event the Optionee chooses
to pay the Option Exercise Price as so provided, the Optionee and the broker shall comply with such procedures and enter into
such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment
procedure; (iv) if permitted by the Administrator, by a “net exercise” arrangement pursuant to which the Company will reduce
the number of Option Shares issuable upon exercise by the largest whole number of Shares with a Fair Market Value that does
not exceed the aggregate Option Exercise Price; or (v) a combination of (i), (ii), (iii) and (iv) above. Payment instruments will be
received subject to collection.
The transfer to the Optionee on the records of the Company or of the transfer agent of the Option Shares will be
contingent upon (x) the Company’s receipt from the Optionee of the full Option Exercise Price for the Option Shares, as set forth
above, (y) the fulfillment of any other requirements contained herein or in the Plan or in any other agreement or provision of
laws, and (z) the receipt by the Company of any agreement, statement or other evidence that the Company may require to satisfy
itself that the issuance of Option Shares and any subsequent resale of the Option Shares will be in compliance with applicable
laws and regulations. In the event the Optionee chooses (and the Administrator permits the Optionee) to pay the Option Exercise
Price by previously-owned Shares through the attestation method, the number of Shares transferred to the Optionee upon the
exercise of the Stock Option shall be net of the Shares attested to.
(b) The Shares purchased upon exercise of this Stock Option shall be transferred to the Optionee on the
records of the Company or of the transfer agent upon compliance
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to the satisfaction of the Administrator with all requirements under applicable laws or regulations in connection with such
transfer and with the requirements hereof and of the Plan. The determination of the Administrator as to such compliance shall be
final and binding on the Optionee. The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder
with respect to, any Option Shares unless and until this Stock Option has been exercised pursuant to the terms hereof, the
Company or the transfer agent has transferred the Option Shares to the Optionee, and the Optionee’s name has been entered as
the shareholder of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Option Shares.
(c) Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be
exercisable after the Expiration Date hereof.
3. Termination of Service Relationship. If the Optionee’s Service Relationship terminates, the period within which to
exercise the Stock Option may be subject to earlier termination as set forth below.
(a) Termination Due to Death. If the Optionee’s Service Relationship terminates by reason of the Optionee’s
death, any portion of this Stock Option outstanding on such date may thereafter be exercised by the Optionee’s legal
representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier.
(b) Termination Due to Disability. If the Optionee’s Service Relationship terminates by reason of the
Optionee’s disability (as determined by the Administrator), any portion of this Stock Option outstanding on such date, to the
extent exercisable on the date of such termination, may thereafter be exercised by the Optionee for a period of 12 months from
the date of termination or until the Expiration Date, if earlier. Any portion of this Stock Option that is not exercisable on the date
of termination shall terminate immediately and be of no further force or effect.
(c) Termination for Cause. If the Optionee’s Service Relationship is terminated by the Company or an
Affiliate for Cause, any portion of this Stock Option outstanding on such date shall terminate immediately and be of no further
force and effect.
(d) Other Termination. If the Optionee’s Service Relationship terminates for any reason other than the
Optionee’s death, the Optionee’s disability, or Cause, and unless otherwise determined by the Administrator, any portion of this
Stock Option outstanding on such date may be exercised, to the extent exercisable on the date of termination, for a period of three
months from the date of termination or until the Expiration Date, if earlier. Any portion of this Stock Option that is not
exercisable on the date of termination shall terminate immediately and be of no further force or effect.
The Administrator’s determination of the reason for termination and the date of termination of the Optionee’s Service
Relationship shall be conclusive and binding on the Optionee and the Optionee’s representatives or legatees.
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4. Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and
governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the
Plan. Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified
herein.
5. Transferability. This Agreement is personal to the Optionee, is non-assignable and is not transferable in any
manner, by operation of law or otherwise, other than by will or the laws of descent and distribution. This Stock Option is
exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or
legatee.
6. Responsibility for Taxes.
(a) The Optionee acknowledges that, regardless of any action taken by the Company or, if different, the
Affiliate employing the Optionee (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe
benefits tax, payment on account or other tax‑related items related to the Optionee’s participation in the Plan and legally
applicable to the Optionee or deemed by the Company or the Employer in its discretion to be an appropriate charge to the
Optionee even if legally applicable to the Company or the Employer (“Tax-Related Items”) is and remains the Optionee’s
responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer. The Optionee further
acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of this Stock Option, including, but not limited to, the grant, vesting or exercise
of this Stock Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (ii)
do not commit to and are under no obligation to structure the terms of the grant or any aspect of this Stock Option to reduce or
eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Optionee is subject to
Tax-Related Items in more than one jurisdiction, the Optionee acknowledges that the Company and/or the Employer (or former
employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b) In connection with any relevant taxable or tax withholding event, as applicable, the Optionee agrees to
make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard,
the Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable
withholding obligations or rights with regard to all Tax-Related Items by one or a combination of the following: (i) withholding
from the Optionee’s wages or other cash compensation payable to the Optionee; (ii) allowing or requiring the Optionee to make a
cash payment to cover the Tax-Related Items; (iii) withholding from proceeds of the sale of Shares acquired upon exercise of this
Stock Option either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf
pursuant to this authorization without further consent); (iv) withholding from the Shares to be issued to the Optionee upon
exercise of this Stock Option;
or (v) any other method of withholding determined by the Company and permitted by applicable
law; provided, however, that that if the Optionee is a Section 16 officer of the Company under the Exchange Act, the obligation
for Tax-Related Items may be satisfied only by one or a combination of methods (i), (ii) and (iii) above.
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(c) The Company and/or the Employer may withhold or account for Tax-Related Items by considering
statutory or other withholding rates, including maximum rates applicable in the Optionee’s jurisdiction. In the event of over-
withholding the Optionee may receive a refund of any over-withheld amount in cash through the Employer's normal payroll
processes (with no entitlement to the equivalent in Stock) or, if not refunded, the Optionee may be able to seek a refund from the
local tax authorities. In the event of under-withholding, the Optionee may be required to pay additional Tax-Related Items
directly to the local tax authorities or to the Company and/or the Employer. If the obligation for Tax-Related Items is satisfied by
withholding in Shares, for tax purposes, the Optionee is deemed to have been issued the full number of Shares subject to the
exercised Stock Option, notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-
Related Items.
(d) The Optionee agrees to pay to the Company or the Employer any amount of Tax-Related Items that the
Company or the Employer may be required to withhold or account for as a result of the Optionee’s participation in the Plan that
cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares, or the proceeds
of the sale of Shares, if the Optionee fails to comply with the Optionee’s obligations in connection with the Tax-Related Items.
7. No Obligation to Continue Service Relationship. The Employer is not obligated by or as a result of the Plan or this
Agreement to continue the Optionee’s Service Relationship, and neither the Plan nor this Agreement shall interfere in any way
with the right of the Employer to terminate the Optionee’s Service Relationship at any time.
8. Integration. This Agreement constitutes the entire agreement between the parties with respect to this Stock Option
and supersedes all prior agreements and discussions between the parties concerning such subject matter.
9. Nature of Grant. By accepting this Stock Option, the Optionee acknowledges, understands and agrees that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be modified,
amended, suspended, or terminated by the Company at any time, to the extent permitted by the Plan;
(b) the grant of this Stock Option is exceptional, voluntary, and occasional and does not create any contractual
or other right to receive future grants of stock options, or benefits in lieu of stock options, even if stock options have been granted
in the past;
(c) all decisions with respect to future stock option or other grants, if any, will be at the sole discretion of the
Company;
(d) the Optionee is voluntarily participating in the Plan;
(e) this Stock Option and the Option Shares subject to this Stock Option, and the income from and value of
same, are not intended to replace any pension rights or compensation;
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(f) the grant of this Stock Option shall not be interpreted as forming or amending any Service Relationship
with the Company or any Affiliate (including the Employer);
(g) unless otherwise agreed with the Company, this Stock Option and the Option Shares subject to this Stock
Option, and the income from and value of same, are not granted as consideration for, or in connection with, the service the
Optionee may provide as a director of a Subsidiary;
(h) this Stock Option and the Option Shares subject to this Stock Option, and the income from and value of
same, are not part of normal or expected compensation for purposes of, including, without limitation, calculating any severance,
resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday-pay, long-service awards, pension or
retirement or welfare benefits, or similar payments;
(i) the future value of the Option Shares subject to this Stock Option is unknown, indeterminable, and cannot
be predicted with certainty;
(j) if the Option Shares subject to this Stock Option do not increase in value, this Stock Option will have no
value;
(k) if the Optionee exercises this Stock Option and acquires Shares, the value of such shares may increase or
decrease in value, even below the Option Exercise Price;
(l) no claim or entitlement to compensation or damages shall arise from forfeiture of this Stock Option
resulting from the termination of the Optionee’s Service Relationship (for any reason whatsoever, whether or not later found to be
invalid or in breach of applicable employment or other laws in the jurisdiction where the Optionee is employed or the terms of
the Optionee’s employment agreement, if any);
(m) unless otherwise provided in the Plan or by the Company in its discretion, this Stock Option and the
benefits evidenced by this Agreement do not create any entitlement to have this Stock Option or any such benefits transferred to,
or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction
affecting the Shares; and
(n) if the Optionee resides and/or works in a country outside the United States, the following shall apply:
(i) this Stock Option and any Option Shares subject to this Stock Option, and the income from and
value of same, are not part of normal or expected compensation for any purpose; and
(ii) neither the Company, the Employer, or any other Affiliate shall be liable for any foreign exchange
rate fluctuation between the Optionee’s local currency and the United States dollar that may affect the value of this Stock
Option or of any amounts due to the Optionee pursuant to the exercise of this Stock Option or the subsequent sale of any
Shares acquired upon exercise.
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10. Appendix. Notwithstanding any provision of this Global Non-Qualified Stock Option Agreement, if the Optionee
resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, this
Stock Option shall be subject to the additional terms and conditions set forth in the Appendix for the Optionee’s country, if any.
Moreover, if the Optionee relocates to one of the countries included in the Appendix during the term of the Stock Option, the
terms and conditions for such country shall apply to the Optionee, to the extent the Company determines that the application of
such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix forms part of this
Agreement.
11. Language. The Optionee acknowledges that the Optionee is proficient in the English language, or has consulted
with an advisor who is sufficiently proficient in English, so as to allow the Optionee to understand the terms and conditions of
this Agreement. If the Optionee has received this Agreement, or any other documents related to this Stock Option and/or the Plan
translated into a language other than English and if the meaning of the translated version is different than the English version, the
English version will control, unless otherwise required under applicable laws.
12. Notices. Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall
be mailed or delivered to the Optionee at the address on file with the Company or, in either case, at such other address as one
party may subsequently furnish to the other party in writing.
13. Waivers. The Optionee acknowledges that a waiver by the Company of breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the
Optionee or any other grantee.
14. Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of
Delaware, applied without regard to conflict of law principles.
15. Venue. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties
evidenced by this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Massachusetts
and agree that such litigation shall be conducted only in the courts of Middlesex County, Massachusetts, or the federal courts for
the Commonwealth of Massachusetts, where this grant is made and/or to be performed, and no other courts.
16. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to
be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
17. Imposition of Other Requirements. The Company reserves the right to impose other requirements on this Stock
Option and the Shares acquired upon exercise of this Stock Option, to the extent the Company determines it is necessary or
advisable for legal or administrative reasons, and to require the Optionee to accept any additional agreements or undertakings that
may be necessary to accomplish the foregoing.
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18. Electronic Delivery and Participation. The Company may, in its sole discretion, decide to deliver any documents
related to current or future participation in the Plan by electronic means. The Optionee hereby consents to receive such
documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and
maintained by the Company or a third party designated by the Company.
19. Compliance with Law. Notwithstanding any other provision of the Plan or this Agreement, unless there is an
available exemption from any registration, qualification or other legal requirement applicable to the Stock, the Company shall not
be required to permit the exercise of this Stock Option and/or deliver any Shares prior to the completion of any registration or
qualification of the Shares under any U.S. or non-U.S. local, state, or federal securities or other applicable law or under rulings or
regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to
obtaining any approval or other clearance from any U.S. or non-U.S. local, state, or federal governmental agency, which
registration, qualification, or approval the Company shall, in its absolute discretion, deem necessary or advisable. The Optionee
understands that the Company is under no obligation to register or qualify the Shares with the SEC or any state or non-U.S.
securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares
subject to this Stock Option. Further, the Optionee agrees that the Company shall have unilateral authority to amend this
Agreement without the Optionee’s consent to the extent necessary to comply with securities or other laws applicable to issuance
of the Shares subject to this Stock Option.
20. Insider Trading Restrictions / Market Abuse Laws. By accepting this Stock Option, the Optionee acknowledges
that the Optionee is bound by all the terms and conditions of any Company’s insider trading policy as may be in effect from time
to time. The Optionee further acknowledges that, depending on the Optionee’s country, the broker’s country or the country in
which the Shares are listed, the Optionee may be or may become subject to insider trading restrictions and/or market abuse laws
which may affect the Optionee’s ability to accept, acquire, sell, or otherwise dispose of Shares, rights to Shares (e.g., this Stock
Option), or rights linked to the value of Shares under the Plan during such times as the Optionee is considered to have “inside
information” regarding the Company (as defined by the laws in the applicable jurisdictions). Local insider trading laws and
regulations may prohibit the cancellation or amendment of orders the Optionee placed before the Optionee possessed inside
information. Furthermore, the Optionee could be prohibited from (i) disclosing the inside information to any third party, which
may include fellow employees and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions
under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any Company’s
insider trading policy as may be in effect from time to time. The Optionee acknowledges that it is the Optionee’s responsibility to
comply with any applicable restrictions, and the Optionee should speak to the Optionee’s personal advisor on this matter.
21. Foreign Asset/Account, Exchange Control and Tax Reporting. Depending on the Optionee’s country, the Optionee
may be subject to foreign asset/account, exchange control, tax reporting, or other requirements which may affect the Optionee’s
ability acquire or hold Stock Options or Shares under the Plan or cash received from participating in the Plan (including
36
dividends and the proceeds arising from the sale of Shares) in a brokerage/bank account outside the Optionee’s country. The
applicable laws of the Optionee’s country may require that the Optionee report such Stock Options, Shares, accounts, assets. or
transactions to the applicable authorities in such country and/or repatriate funds received in connection with the Plan to the
Optionee’s country within a certain time period or according to certain procedures. The Optionee acknowledges that the
Optionee is responsible for ensuring compliance with any applicable requirements and should consult the Optionee’s personal
legal advisor to ensure compliance with applicable laws.
22. Clawback. The Optionee acknowledges and agrees that this Award is subject in all respects to the Company’s
Compensation Recovery Policy (the “Clawback Policy”), to the extent applicable, including the Company’s ability to recoup
Erroneously Awarded Compensation (as defined in the Clawback Policy) thereunder. Any action by the Company to recover
Erroneously Awarded Compensation under the Clawback Policy from the Optionee shall not be deemed (i) an event giving rise to
a right to resign for Good Reason, if applicable, or serve as a basis for a claim of constructive termination under any benefits or
compensation arrangement applicable to the Optionee or (ii) to constitute a breach of a contract or other arrangement to which the
Optionee is a party. This Section 22 is a material term of this Agreement.
HUBSPOT, INC.
By:
Title:
This Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned. Electronic
acceptance of this Agreement pursuant to the Company’s instructions to the Optionee (including through an online acceptance
process) is acceptable.
Dated:
Optionee’s Signature
Optionee’s name and address:
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APPENDIX
GLOBAL NON-QUALIFIED STOCK OPTION AGREEMENT
FOR EMPLOYEES
UNDER THE HUBSPOT, INC.
2024 STOCK OPTION AND INCENTIVE PLAN
Capitalized terms used but not defined in this Appendix shall have the same meanings assigned to them in the Plan and/or the
Global Non-Qualified Stock Option Agreement (the “Option Agreement”).
Terms and Conditions
This Appendix includes additional terms and conditions that govern the Optionee’s Stock Option if the Optionee works and/or
resides in one of the countries listed below. If the Optionee is a citizen or resident of a country other than the one in which the
Optionee is currently working and/or residing (or is considered as such for local law purposes), or the Optionee transfers
employment and/or residency to a different country after the grant of this Stock Option, the Company will, in its discretion,
determine the extent to which the terms and conditions contained herein will apply to the Optionee.
Notifications
This Appendix also includes information regarding certain other issues of which the Optionee should be aware with respect to the
Optionee’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the
respective countries as of May 2024. Such laws are often complex and change frequently. As a result, the Company strongly
recommends that the Optionee not rely on the information noted herein as the only source of information relating to the
consequences of participation in the Plan because the information may be out-of-date at the time the Optionee exercises the Stock
Option or sells any Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Optionee’s particular situation. As a
result, the Company is not in a position to assure the Optionee of any particular result. Accordingly, the Optionee should seek
appropriate professional advice as to how the relevant laws in the Optionee’s country may apply to the Optionee’s individual
situation.
If the Optionee is a citizen or resident of a country other than the one in which the Optionee is currently working and/or residing
(or is considered as such for local law purposes), or if the Optionee transfers employment and/or residency to a different country
after the Stock Option is granted, the notifications contained in this Appendix may not be applicable to the Optionee in the same
manner.
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ALL COUNTRIES OUTSIDE THE U.S., EUROPEAN UNION, EUROPEAN ECONOMIC AREA, AND UNITED
KINGDOM
Data Privacy Notification and Consent.
(a) By accepting the Stock Option, the Optionee explicitly and unambiguously consents to the collection, use, and transfer, in
electronic or other form, of the Optionee’s personal data as described in the Agreement by and among, as applicable, the
Employer, the Company and its other Affiliates for the exclusive purpose of implementing, administering. and managing the
Optionee’s participation in the Plan.
(b) The Optionee understands that the Company, the Employer, and other Affiliates hold certain personal information about
the Optionee, including, but not limited to, the Optionee’s name, home address and telephone number, email address, date of
birth, social security number, passport or other identification number (e.g., resident registration number), salary, nationality,
job title, any Shares or directorships held in the Company, details of all Stock Options or any other entitlement to shares
awarded, canceled, vested, unvested, or outstanding in the Optionee’s favor (“Data”), for the purpose of implementing,
administering, and managing the Plan
(c) The Optionee understands that Data will be transferred to Fidelity Stock Plan Services LLC, or such other stock plan
service provider as may be selected by the Company in the future, which assists in the implementation, administration, and
management of the Plan. The Optionee understands that the recipients of the Data may be located in the United States or
elsewhere, and that the recipient's country (e.g. the United States) may have different data privacy laws and protections than
the Optionee’s country. The Optionee may request a list with the names and addresses of any potential recipients of the Data
by contacting the Optionee’s local human resources representative. The Optionee authorizes the Company, Fidelity Stock
Plan Services LLC, and other possible recipients that may assist the Company (presently or in the future) with implementing,
administering, and managing the Plan to receive, possess, use, retain, and transfer the Data, in electronic or other form, for
the sole purpose of implementing, administering, and managing the Optionee’s participation in the Plan, including any
requisite transfer of such Data as may be required to a broker, escrow agent, or other third party with whom the Shares
received upon exercise of the Stock Option may be deposited. The Optionee understands that Data will be held only as long as
is necessary to implement, administer, and manage the Optionee’s participation in the Plan. The Optionee may, at any time,
view Data, request information about the storage and processing of Data, require any necessary amendments to Data or
refuse or withdraw the consents herein, in any case without cost, by contacting the Optionee’s local human resources
representative. Further, the Optionee understands that the Optionee is providing the consents herein on a purely voluntary
basis. If the Optionee does not consent, or if the Optionee later seeks to revoke the consent, the Optionee’s Service
Relationship with the Employer will not be affected; the only consequence of refusing or withdrawing consent is that the
Company would not be able to grant Stock Options or other equity awards to the Optionee or administer or maintain such
awards. Therefore, the Optionee understands that refusing or withdrawing the Optionee’s consent may affect the Optionee’s
ability to participate in the Plan. For more information on the
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consequences of the Optionee’s refusal to consent or withdrawal of consent, the Optionee understands that the Optionee may
contact the local human resources representative.
(d) Upon request of the Company or the Employer, the Optionee agrees to provide a separate executed data privacy consent
form (or any other agreements or consents that may be required by the Company and/or the Employer) that the Company
and/or the Employer may deem necessary to obtain from the Optionee for the purpose of administering the Optionee’s
participation in the Plan in compliance with the data privacy laws in the Optionee’s country, either now or in the future. The
Optionee understands and agrees that the Optionee will not be able to participate in the Plan if the Optionee fails to provide
any such consent or agreement requested by the Company and/or the Employer.
CANADA
Terms and Conditions
Non-Qualified Securities. All or a portion of the Option Shares subject to this Stock Option may be “non-qualified securities”
within the meaning of the Income Tax Act (Canada). The Company may provide the Optionee with additional information and/or
appropriate notification regarding the characterization of this Stock Option for Canadian income tax purposes as may be required
by the Income Tax Act (Canada) and the regulations thereunder.
Method of Exercise. Notwithstanding any provision of the Plan or the Option Agreement, the Optionee may not pay the Option
Exercise Price by using the methods of exercise set forth in Section 2(a)(ii) and (iv) of the Option Agreement or the
corresponding provisions of the Plan.
The following terms and conditions apply if the Optionee resides in Quebec:
Data Privacy. The following provision supplements the “Data Privacy Notification and Consent” provision above in this
Appendix:
The Optionee hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant
information from all personnel, professional or non-professional, involved in the administration and operation of the Plan for
purposes that relate to the administration of the Plan. The Optionee acknowledges and agrees that the Optionee’s personal
information, including any sensitive personal information, may be transferred or disclosed outside of the province of Quebec,
including to the U.S. The Optionee further authorizes the Company, the Employer, its other Affiliates, and the Administrator to
disclose and discuss the Plan with their advisors. The Optionee further authorizes the Company, the Employer, its other
Affiliates, and the Administrator to record information and to keep such information in the Optionee’s employee file. If
applicable, the Optionee also acknowledges and authorizes the Company, the Employer, its other Affiliates, and the
Administrator involved in the administration of the Plan to use technology for profiling purposes and to make automated
decisions that may have an impact on the Optionee’s participation in the Plan or the administration of the Plan.
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Notifications
Securities Law Information. The Optionee is permitted to sell Shares acquired under the Plan through the designated broker
appointed under the Plan, if any, provided the resale of Shares acquired under the Plan takes place outside Canada through the
facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the New York Stock Exchange
under the symbol “HUBS.”
IRELAND
Notifications
Director Notification Information. Directors, shadow directors, and secretaries of an Irish Affiliate must notify such Affiliate in
writing upon (i) receiving or disposing of an interest in the Company (e.g., the Stock Option, Shares, etc.), (ii) becoming aware of
the event giving rise to the notification requirement, or (iii) becoming a director or secretary if such an interest exists at the time,
in each case, if the interest represents more than 1% of the Company. This notification requirement also applies with respect to
the interests of any spouse or children under the age of 18 of the director, shadow director, or secretary (whose interests will be
attributed to the director, shadow director or secretary). The Optionee should consult with a personal legal advisor as to whether
or not this notification requirement applies.
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GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT
UNDER THE HUBSPOT, INC.
2024 STOCK OPTION AND INCENTIVE PLAN
Name of Grantee:
No. of Restricted Stock Units:
Grant Date:
Vesting Commencement Date:
Pursuant to the HubSpot, Inc. 2024 Stock Option and Incentive Plan (as amended from time to time, the “Plan”) and this
Global Restricted Stock Unit Award Agreement, including any additional terms and conditions for the Grantee’s country set forth
in the appendix attached hereto (the “Appendix” and together with the Global Restricted Stock Unit Award Agreement, the
“Agreement”), HubSpot, Inc. (the “Company”) hereby grants an award of the number of Restricted Stock Units listed above (an
“Award”) to the Grantee named above. Each Restricted Stock Unit shall relate to one share of Common Stock, par value $0.001
per share (the “Shares”), of the Company.
1. Restrictions on Transfer of Award. This Award may not be sold, transferred, pledged, assigned or otherwise
encumbered or disposed of by the Grantee, and any Shares issuable with respect to the Award may not be sold, transferred,
pledged, assigned or otherwise encumbered or disposed of until (i) the Restricted Stock Units have vested as provided in
Paragraph 2 of this Agreement and (ii) Shares have been issued to the Grantee in accordance with the terms of the Plan and this
Agreement.
2. Vesting of Restricted Stock Units. The restrictions and conditions of Paragraph 1 of this Agreement shall lapse on
the vesting dates (each such date, a “Vesting Date”) specified in the following schedule so long as the Grantee remains in a
Service Relationship through the applicable Vesting Date. If a series of Vesting Dates is specified, then the restrictions and
conditions in Paragraph 1 shall lapse only with respect to the number of Restricted Stock Units specified as vested on such
Vesting Date.
Incremental Number of
Restricted Stock Units Vested Vesting Date
_____________ (___%) ____________
_____________ (___%) ____________
_____________ (___%) ____________
_____________ (___%) ____________
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Notwithstanding the foregoing, in the event that the Grantee’s Service Relationship terminates due to the Grantee’s
death, then the Restricted Stock Units shall be deemed fully vested upon the date of the Grantee’s death. The Administrator may
at any time accelerate the vesting schedule specified in this Paragraph 2.
3. Termination of Service Relationship. If the Grantee’s Service Relationship terminates for any reason (including
disability) prior to the satisfaction of the vesting conditions set forth in Paragraph 2 above, any Restricted Stock Units that have
not vested as of such date shall automatically and without notice terminate and be forfeited, and neither the Grantee nor any of
the Grantee’s successors, heirs, assigns or personal representatives will thereafter have any further rights or interests in such
unvested Restricted Stock Units.
4. Issuance of Shares. As soon as practicable following each Vesting Date (but in no event later than two and one-half
months after the end of the year in which the Vesting Date occurs), the Company shall issue to the Grantee (or in the event of the
Grantee’s death, the Grantee’s designated beneficiary or the Grantee’s estate or legal heirs if the Grantee has not designated a
beneficiary) the number of Shares equal to the aggregate number of Restricted Stock Units that have vested pursuant to
Paragraph 2 of this Agreement on such Vesting Date, rounded down to the nearest whole share, and the Grantee (or the Grantee’s
designated beneficiary or estate, as applicable) shall thereafter have all the rights of a stockholder of the Company with respect to
such Shares. No fractional Shares shall be issued.
5. Incorporation of Plan. Notwithstanding anything herein to the contrary, this Agreement shall be subject to and
governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the
Plan. Capitalized terms in this Agreement shall have the meanings specified in the Plan, unless a different meaning is specified
herein.
6. Responsibility for Taxes.
(a) The Grantee acknowledges that, regardless of any action taken by the Company or any Affiliate with which
the Grantee has a Service Relationship (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax,
fringe benefits tax, payment on account or other tax‑related items related to the Grantee’s participation in the Plan and legally
applicable to the Grantee (“Tax-Related Items”) are and remains the Grantee’s responsibility and may exceed the amount, if any,
actually withheld by the Company or the Employer. The Grantee further acknowledges that the Company and/or the Employer
(i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of
the Restricted Stock Units, including, but not limited to, the grant, vesting, or settlement of the Restricted Stock Units, the
subsequent sale of Shares acquired pursuant to such settlement, and the receipt of any dividends; and (ii) do not commit to and
are under no obligation to structure the terms of the grant or any aspect of the Restricted Stock Units to reduce or eliminate the
Grantee’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Grantee is subject to Tax-Related
Items in more than one jurisdiction, the Grantee acknowledges that the Company and/or the Employer (or former employer, as
applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
43
(b) Prior to any relevant taxable or tax withholding event, as applicable, the Grantee agrees to make adequate
arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Grantee
authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable withholding
obligations or rights with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from the
Grantee’s wages or other cash compensation payable to the Grantee; (ii) withholding from proceeds of the sale of Shares acquired
upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the
Company (on the Grantee’s behalf pursuant to this authorization without further consent); (iii) withholding from Shares to be
issued to the Grantee upon settlement of the Restricted Stock Units;
or (iv) any other method of withholding determined by the
Company and permitted by applicable law; provided, however, that that if the Grantee is a Section 16 officer of the Company
under the Exchange Act, then any Tax-Related Items shall be withheld only by using alternative (iii).
(c) Depending on the withholding method, the Company and/or the Employer may withhold or account for
Tax-Related Items by considering statutory or other withholding rates, including maximum rates applicable in the Grantee’s
jurisdiction. In the event of over-withholding, the Grantee may receive a refund of any over-withheld amount in cash through the
Employer’s normal payroll processes (with no entitlement to the equivalent in Shares) or, if not refunded, the Grantee may be
able to seek a refund from the local tax authorities. In the event of under-withholding, the Grantee may be required to pay
additional Tax-Related Items directly to the local tax authorities or to the Company and/or the Employer. If the obligation for
Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Grantee is deemed to have been issued the full
number of Shares subject to the vested Restricted Stock Units, notwithstanding that a number of the Shares is held back solely for
the purpose of paying the Tax-Related Items.
(d) The Grantee agrees to pay to the Company or the Employer any amount of Tax-Related Items that the
Company or the Employer may be required to withhold or account for as a result of the Grantee’s participation in the Plan that
cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares, or the proceeds
of the sale of Shares, if the Grantee fails to comply with the Grantee’s obligations in connection with the Tax-Related Items.
7. Section 409A of the Code. This Agreement shall be interpreted in such a manner that all provisions relating to the
settlement of the Award are exempt from the requirements of Section 409A as “short-term deferrals” as described in Section
409A.
8. No Obligation to Continue Service Relationship. The Employer is not obligated by or as a result of the Plan or this
Agreement to continue the Grantee’s Service Relationship, and neither the Plan nor this Agreement shall interfere in any way
with the right of the Employer to terminate the Grantee’s Service Relationship at any time.
9. Integration. This Agreement constitutes the entire agreement between the parties with respect to this Award and
supersedes all prior agreements and discussions between the parties concerning such subject matter.
44
10. Nature of Grant. In accepting the Award, the Grantee acknowledges, understands and agrees that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended,
suspended, or terminated by the Company at any time, to the extent permitted by the Plan;
(b) the grant of the Restricted Stock Units is exceptional, voluntary, and occasional and does not create any
contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if
Restricted Stock Units have been granted in the past;
(c) all decisions with respect to future Restricted Stock Units or other grants, if any, will be at the sole
discretion of the Company;
(d) the Grantee is voluntarily participating in the Plan;
(e) the Restricted Stock Units and any Shares subject to the Restricted Stock Units, and the income from and
value of same, are not intended to replace any pension rights or compensation;
(f) the grant of the Restricted Stock Units shall not be interpreted as forming or amending any Service
Relationship with the Company or any Affiliate (including the Employer);
(g) unless otherwise agreed with the Company, the Restricted Stock Units and the Shares subject to the
Restricted Stock Units, and the income from and value of same, are not granted as consideration for, or in connection with, the
service the Grantee may provide as a director of a Subsidiary;
(h) the Restricted Stock Units and any Shares subject to the Restricted Stock Units, and the income from and
value of same, are not part of normal or expected compensation for purposes of, including, without limitation, calculating any
severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, holiday pay,
pension or retirement or welfare benefits, or similar mandatory payments;
(i) the future value of the Shares underlying the Restricted Stock Units is unknown, indeterminable, and
cannot be predicted with certainty;
(j) no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock
Units resulting from the termination of the Grantee’s Service Relationship (for any reason whatsoever, whether or not later found
to be invalid or in breach of labor laws in the jurisdiction where the Grantee is employed or the terms of the Grantee’s
employment agreement, if any);
(k) unless otherwise provided in the Plan or by the Company in its discretion, the Restricted Stock Units and
the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits
transferred to, or assumed by,
45
another company nor to be exchanged, cashed out, or substituted for, in connection with any corporate transaction affecting the
Shares; and
(l) if the Grantee resides and/or works in a country outside the United States, the following shall apply:
(i) the Restricted Stock Units and any Shares subject to the Restricted Stock Units, and the income
from and value of same, are not part of normal or expected compensation for any purpose; and
(ii) neither the Company, the Employer nor any other Affiliate shall be liable for any foreign exchange
rate fluctuation between the Grantee’s local currency and the United States dollar that may affect the value of the
Restricted Stock Units or of any amounts due to the Grantee pursuant to the settlement of the Restricted Stock Units or
the subsequent sale of any Shares acquired upon settlement.
11. Appendix. Notwithstanding any provision of this Global Restricted Stock Unit Award Agreement, if the Grantee
resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, the
Restricted Stock Units shall be subject to the additional terms and conditions set forth in the Appendix for the Grantee’s country,
if any. Moreover, if the Grantee relocates to one of the countries included in the Appendix during the term of the Restricted
Stock Units, the terms and conditions for such country shall apply to the Grantee, to the extent the Company determines that the
application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix forms part
of this Agreement.
12. Language. The Grantee acknowledges that the Grantee is proficient in the English language or has consulted with
an advisor who is sufficiently proficient in English, so as to allow the Grantee to understand the terms and conditions of this
Agreement. If the Grantee has received this Agreement, or any other documents related to the Restricted Stock Units and/or the
Plan translated into a language other than English and if the meaning of the translated version is different than the English
version, the English version will control, unless otherwise required under applicable laws.
13. Notices. Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall
be mailed or delivered to the Grantee at the address on file with the Company or, in either case, at such other address as one party
may subsequently furnish to the other party in writing.
14. Waivers. The Grantee acknowledges that a waiver by the Company of breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the
Grantee or any other grantee.
15. Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of
Delaware, applied without regard to conflict of law principles.
16. Venue. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties
evidenced by this Agreement, the parties hereby submit to and
46
consent to the exclusive jurisdiction of the State of Massachusetts and agree that such litigation shall be conducted only in the
courts of Middlesex County, Massachusetts, or the federal courts for the Commonwealth of Massachusetts, where this grant is
made and/or to be performed, and no other courts.
17. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to
be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
18. Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Restricted
Stock Units and the Shares acquired upon settlement of the Restricted Stock Units, to the extent the Company determines it is
necessary or advisable for legal or administrative reasons, and to require the Grantee to accept any additional agreements or
undertakings that may be necessary to accomplish the foregoing.
19. Electronic Delivery and Participation. The Company may, in its sole discretion, decide to deliver any documents
related to current or future participation in the Plan by electronic means. The Grantee hereby consents to receive such documents
by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by
the Company or a third party designated by the Company.
20. Compliance with Law. Notwithstanding any other provision of the Plan or this Agreement, unless there is an
available exemption from any registration, qualification, or other legal requirement applicable to the Shares, the Company shall
not be required to permit the vesting of the Restricted Stock Units and/or deliver any Shares prior to the completion of any
registration or qualification of the Shares under any U.S. or non-U.S. local, state or federal securities or other applicable law or
under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory
body, or prior to obtaining any approval or other clearance from any U.S. or non-U.S. local, state, or federal governmental
agency, which registration, qualification, or approval the Company shall, in its absolute discretion, deem necessary or advisable.
The Grantee understands that the Company is under no obligation to register or qualify the Shares with the SEC or any state or
non-U.S. securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the
Shares subject to the Restricted Stock Units. Further, the Grantee agrees that the Company shall have unilateral authority to
amend this Agreement without the Grantee’s consent to the extent necessary to comply with securities or other laws applicable to
issuance of the Shares subject to the Restricted Stock Units.
21. Insider Trading Restrictions / Market Abuse Laws. By accepting the Restricted Stock Units, the Grantee
acknowledges that the Grantee is bound by all the terms and conditions of any Company’s insider trading policy as may be in
effect from time to time. The Grantee further acknowledges that, depending on the Grantee’s country, the broker’s country or the
country in which the Shares are listed, the Grantee may be or may become subject to insider trading restrictions and/or market
abuse laws which may affect the Grantee’s ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., the
Restricted Stock Units), or rights linked to the value of Shares under the Plan during such times as the Grantee is considered to
have “inside information” regarding the Company (as defined by the laws in the applicable
47
jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Grantee
placed before the Grantee possessed inside information. Furthermore, the Grantee could be prohibited from (i) disclosing the
inside information to any third party, which may include fellow employees, and (ii) “tipping” third parties or causing them
otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any
restrictions that may be imposed under any Company’s insider trading policy as may be in effect from time to time. The Grantee
acknowledges that it is the Grantee’s responsibility to comply with any applicable restrictions, and the Grantee should speak to
the Grantee’s personal advisor on this matter.
22. Foreign Asset/Account, Exchange Control and Tax Reporting. Depending on the Grantee’s country, the Grantee
may be subject to foreign asset/account, exchange control, tax reporting, or other requirements which may affect the Grantee’s
ability acquire or hold Restricted Stock Units or Shares under the Plan or cash received from participating in the Plan (including
dividends and the proceeds arising from the sale of Shares) in a brokerage/bank account outside the Grantee’s country. The
applicable laws of the Grantee’s country may require that the Grantee report such Restricted Stock Units, Shares, accounts,
assets, or transactions to the applicable authorities in such country and/or repatriate funds received in connection with the Plan to
the Grantee’s country within a certain time period or according to certain procedures. The Grantee acknowledges that the
Grantee is responsible for ensuring compliance with any applicable requirements and should consult the Grantee’s personal legal
advisor to ensure compliance with applicable laws.
23. Clawback. The Grantee acknowledges and agrees that this Award is subject in all respects to the Company’s
Compensation Recovery Policy (the “Clawback Policy”), to the extent applicable, including the Company’s ability to recoup
Erroneously Awarded Compensation (as defined in the Clawback Policy) thereunder. Any action by the Company to recover
Erroneously Awarded Compensation under the Clawback Policy from the Grantee shall not be deemed (i) an event giving rise to
a right to resign for Good Reason, if applicable, or serve as a basis for a claim of constructive termination under any benefits or
compensation arrangement applicable to the Grantee or (ii) to constitute a breach of a contract or other arrangement to which the
Grantee is a party. This Paragraph 23 is a material term of this Agreement.
HUBSPOT, INC.
By:
Title:
This Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned. Electronic
acceptance of this Agreement pursuant to the Company’s instructions to the Grantee (including through an online acceptance
process) is acceptable.
Dated:
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Grantee’s Signature
Grantee’s name and address:
49
APPENDIX
GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT
UNDER THE HUBSPOT, INC.
2024 STOCK OPTION AND INCENTIVE PLAN
Capitalized terms used but not defined in this Appendix shall have the same meanings assigned to them in the Plan and/or the
Global Restricted Stock Unit Award Agreement.
Terms and Conditions
This Appendix includes additional terms and conditions that govern the Restricted Stock Units if the Grantee works and/or
resides in one of the countries listed below. If the Grantee is a citizen or resident of a country other than the one in which the
Grantee is currently working and/or residing (or is considered as such for local law purposes), or the Grantee transfers
employment and/or residency to a different country after the Restricted Stock Units are granted, the Company will, in its
discretion, determine the extent to which the terms and conditions contained herein will apply to the Grantee.
Notifications
This Appendix also includes information regarding certain other issues of which the Grantee should be aware with respect to the
Grantee’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the
respective countries as of May 2024. Such laws are often complex and change frequently. As a result, the Company strongly
recommends that the Grantee not rely on the information noted herein as the only source of information relating to the
consequences of participation in the Plan because the information may be out-of-date at the time the Grantee vests in the
Restricted Stock Units or sells any Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Grantee’s particular situation. As a
result, the Company is not in a position to assure the Grantee of any particular result. Accordingly, the Grantee should seek
appropriate professional advice as to how the relevant laws in the Grantee’s country may apply to the Grantee’s individual
situation.
If the Grantee is a citizen or resident of a country other than the one in which the Grantee is currently working and/or residing (or
is considered as such for local law purposes), or if the Grantee transfers employment and/or residency to a different country after
the Restricted Stock Units are granted, the notifications contained in this Appendix may not be applicable to the Grantee in the
same manner.
ALL COUNTRIES OUTSIDE THE U.S., EUROPEAN UNION, EUROPEAN ECONOMIC AREA, AND UNITED
KINGDOM
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Data Privacy Notification and Consent.
(a) By accepting the Award, the Grantee explicitly and unambiguously consents to the collection, use, and transfer, in
electronic or other form, of the Grantee’s personal data as described in the Agreement by and among, as applicable, the
Employer, the Company, and any Affiliates for the exclusive purpose of implementing, administering, and managing the
Grantee’s participation in the Plan.
(b) The Grantee understands that the Company, the Employer, and any Affiliates hold certain personal information about
the Grantee, including, but not limited to, the Grantee's name, home address and telephone number, email address, date of
birth, social security number, passport or other identification number (e.g., resident registration number), salary, nationality,
job title, any Shares or directorships held in the Company, and details of all Restricted Stock Units or any other entitlement to
shares awarded, canceled, vested, unvested, or outstanding in the Grantee’s favor (“Data”), for the purpose of implementing,
administering and managing the Plan
(c) The Grantee understands that Data will be transferred to Fidelity Stock Plan Services LLC, or such other stock plan
service provider as may be selected by the Company in the future, which assists in the implementation, administration, and
management of the Plan. The Grantee understands that the recipients of the Data may be located in the United States or
elsewhere, and that the recipient’s country (e.g. the United States) may have different data privacy laws and protections than
the Grantee’s country. The Grantee may request a list with the names and addresses of any potential recipients of the Data by
contacting the Grantee’s local human resources representative. The Grantee authorizes the Company, Fidelity Stock Plan
Services LLC, and other possible recipients that may assist the Company (presently or in the future) with implementing,
administering, and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for
the sole purpose of implementing, administering, and managing the Grantee’s participation in the Plan, including any
requisite transfer of such Data as may be required to a broker, escrow agent, or other third party with whom the Shares
received upon vesting of the Restricted Stock Units may be deposited. The Grantee understands that Data will be held only as
long as is necessary to implement, administer, and manage the Grantee’s participation in the Plan. The Grantee may, at any
time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data, or
refuse or withdraw the consents herein, in any case without cost, by contacting the Grantee’s local human resources
representative. Further, the Grantee understands that the Grantee is providing the consents herein on a purely voluntary
basis. If the Grantee does not consent, or if the Grantee later seeks to revoke the Grantee’s consent, the Grantee’s Service
Relationship with the Employer will not be affected; the only consequence of refusing or withdrawing consent is that the
Company would not be able to grant Restricted Stock Units or other equity awards to the Grantee or administer or maintain
such awards. Therefore, the Grantee understands that refusing or withdrawing the Grantee’s consent may affect the
Grantee’s ability to participate in the Plan. For more information on the consequences of the Grantee’s refusal to consent or
withdrawal of consent, the Grantee understands that the Grantee may contact the local human resources representative.
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(d) Upon request of the Company or the Employer, the Grantee agrees to provide a separate executed data privacy consent
form (or any other agreements or consents that may be required by the Company and/or the Employer) that the Company
and/or the Employer may deem necessary to obtain from the Grantee for the purpose of administering the Grantee’s
participation in the Plan in compliance with the data privacy laws in the Grantee’s country, either now or in the future. The
Grantee understands and agrees that the Grantee will not be able to participate in the Plan if the Grantee fails to provide any
such consent or agreement requested by the Company and/or the Employer.
AUSTRALIA
Notifications
Securities Law Information. This offer to participate in the Plan is being made under Division 1A, Part 7.12 of the Corporations
Act 2001 (Cth).
Tax Information. Subdivision 83A-C of the Income Tax Assessment Act, 1997 applies to the Restricted Stock Units granted
under the Plan, such that the Restricted Stock Units are intended to be subject to deferred taxation.
Exchange Control Information. If the Grantee is an Australian resident, exchange control reporting is required for cash
transactions exceeding A$10,000 and international fund transfers. If an Australian bank is assisting with the transaction, the bank
will file the report on the Grantee’s behalf. If there is no Australian bank involved with the transfer, the Grantee will be required
to file the report.
BELGIUM
There are no country-specific provisions.
CANADA
Terms and Conditions
Award Payable Only in Shares. The Restricted Stock Units shall be paid in Shares only and do not provide the Grantee with any
right to receive a cash payment.
The following terms and conditions apply if the Grantee resides in Quebec:
Data Privacy. The following provision supplements the “Data Privacy Notification and Consent” provision above in this
Appendix:
The Grantee hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant
information from all personnel, professional or non-professional, involved in the administration and operation of the Plan for
purposes that relate to the administration of the Plan. The Grantee acknowledges and agrees that the Grantee’s personal
information, including any sensitive personal information, may be transferred or disclosed outside of the province of Quebec,
including to the U.S. The Grantee further authorizes the Company, the Employer, its other
52
Affiliates, and the Administrator to disclose and discuss the Plan with their advisors. The Grantee further authorizes the
Company, the Employer, its other Affiliates, and the Administrator to record all relevant information and to keep such
information in the Grantee’s employee file. If applicable, the Grantee also acknowledges and authorizes the Company, the
Employer, its other Affiliates, and the Administrator involved in the administration of the Plan to use technology for profiling
purposes and to make automated decisions that may have an impact on the Grantee’s participation in the Plan or the
administration of the Plan.
Notifications
Securities Law Information. The Grantee is permitted to sell Shares acquired under the Plan through the designated broker
appointed under the Plan, if any, provided the resale of Shares acquired under the Plan takes place outside Canada through the
facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the New York Stock Exchange
under the symbol “HUBS.”
COLOMBIA
Terms and Conditions
Nature of Grant. The following provision supplements Paragraph 10 of the Global Restricted Stock Unit Award Agreement:
The Grantee acknowledges that, pursuant to Article 128 of the Colombian Labor Code, the Restricted Stock Units and related
benefits do not constitute a component of the Grantee’s “salary” for any legal purpose. Therefore, the Restricted Stock Units and
related benefits will not be included and/or considered for purposes of calculating any and all labor benefits, such as legal/fringe
benefits, vacations, indemnities, payroll taxes, social insurance contributions, and/or any other labor-related amount which may
be payable.
Notifications
Securities Law Information. The Shares are not and will not be registered in the Colombian registry of publicly traded securities
(Registro Nacional de Valores y Emisores) and, therefore, the Shares may not be offered to the public in Colombia. Nothing in
the Plan, the Agreement, or any other document evidencing the grant of the Restricted Stock Units shall be construed as the
making of a public offer of securities in Colombia.
Exchange Control Information. The Grantee is responsible for complying with any and all Colombian foreign exchange
restrictions, approvals, and reporting requirements in connection with the Restricted Stock Units and any Shares acquired or
funds received under the Plan. This may include reporting obligations to the Central Bank (Banco de la República). If
applicable, the Grantee will be required to register the Grantee’s investment with the Central Bank, regardless of the value of
investment. The Grantee should consult with a personal legal advisor regarding any obligations in connection with this reporting
requirement.
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FRANCE
Terms and Conditions
Type of Grant. The Restricted Stock Units are not granted as “French-qualified” awards and are not intended to qualify for the
special tax and social security treatment applicable to shares granted for no consideration under Sections L. 225-197-1 to L. 225-
197-5 and Sections L. 22-10-59 to L. 22-10-60 of the French Commercial Code, as amended.
Language. By accepting the Restricted Stock Units, the Grantee confirms having read and understood the documents relating to
the Restricted Stock Units, which were provided to the Grantee in English.
En acceptant l'attribution d’actions gratuites « Restricted Stock Units », le Grantee confirme avoir lu et compris les documents
relatifs aux Restricted Stock Units qui ont été communiqués au Grantee en langue anglaise.
GERMANY
Notifications
Exchange Control Information. Certain transactions related to the Restricted Stock Units must be reported to the German Federal
Bank (Bundesbank) if the value of the transaction exceeds €12,500 (the “Threshold”). If the Grantee acquires Shares with a
value in excess of the Threshold, the Employer will generally not report the acquisition of such Shares, and the Grantee may
personally be obligated to report it to the Bundesbank.
In addition, the Grantee will be required to report (i) any payment the Grantee makes or receives, (ii) any Shares withheld or sold
by the Company to satisfy the Employer’s withholding obligations for Tax-Related Items, and (iii) any sale proceeds received
when the Grantee subsequently sells the Shares, in either case if the value of the Shares exceeds the Threshold. Note that, if the
Grantee reports the receipt of sale proceeds, the Grantee would not need to file a separate report when repatriating the sale
proceeds to Germany.
The report must be filed with the Bundesbank, either electronically using the “General Statistics Reporting Portal” (Allgemeines
Meldeportal Statistik) available via the Bundesbank’s website (www.bundesbank.de) or by such other method (e.g., email or
telephone) as is permitted or required by the Bundesbank. The report must be submitted monthly or within such other time as is
permitted or required by the Bundesbank. The Grantee should consult a personal advisor to ensure compliance with applicable
reporting obligations.
INDIA
Notifications
Exchange Control Information. Due to Indian exchange control regulations, the proceeds from the sale of Shares acquired at
vesting of the Restricted Stock Units and any cash dividends paid on Shares acquired under the Plan must be repatriated to India
within a certain period of time, as
54
required under applicable regulations. The Grantee will receive a foreign inward remittance certificate (the “FIRC”) from the
bank where the Grantee deposits the foreign currency. The Grantee should maintain the FIRC as evidence of the repatriation of
fund in the event the Reserve Bank of India, the Company, or the Employer requests proof of repatriation. The Grantee may be
required to provide information regarding the Shares or funds related to participation in the Plan to the Company or the Employer
to facilitate their compliance with filing requirements under exchange control laws in India. The Grantee should consult with a
personal advisor in this regard.
IRELAND
Notifications
Director Notification Information. Directors, shadow directors, and secretaries of an Irish Affiliate must notify such Affiliate in
writing upon (i) receiving or disposing of an interest in the Company (e.g., the Restricted Stock Units, Shares, etc.), (ii) becoming
aware of the event giving rise to the notification requirement, or (iii) becoming a director or secretary if such an interest exists at
the time, in each case if the interest represents more than 1% of the Company. This notification requirement also applies with
respect to the interests of any spouse or children under the age of 18 of the director, shadow director, or secretary (whose interests
will be attributed to the director, shadow director or secretary). The Grantee should consult with a personal legal advisor as to
whether or not this notification requirement applies.
JAPAN
Notifications
Exchange Control Information. If the Grantee acquires Shares valued at more than ¥100,000,000 in a single transaction, the
Grantee must file a Securities Acquisition Report with the Ministry of Finance through the Bank of Japan within 20 days of the
acquisition of the Shares.
NETHERLANDS
There are no country-specific provisions.
SINGAPORE
Terms and Conditions
Restrictions on Sale and Transferability. The Grantee hereby agrees that any Shares acquired pursuant to the Restricted Stock
Units will not be offered for sale in Singapore, unless such sale or offer is made: (1) more than six (6) months after the Grant
Date or (2) pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the Securities and
Futures Act (Chapter 289, 2006 Ed.) (“SFA”).
Notifications
Securities Law Information. The grant of the Restricted Stock Units is being made pursuant to the “Qualifying Person”
exemption under section 273(1)(f) of the SFA and is not made with a view to
55
the Shares being subsequently offered for sale to any other party. The Plan has not been lodged or registered as a prospectus with
the Monetary Authority of Singapore.
Director Notification Obligation. The directors (including alternative directors, substitute directors, and shadow directors) of a
Singaporean Affiliate are subject to certain notification requirements under the Singapore Companies Act. The directors must
notify the Singaporean Affiliate in writing of an interest (e.g., the Award or Shares) in the Company within two (2) business days
of (i) its acquisition or disposal, (ii) any change in a previously-disclosed interest (e.g., upon vesting of the Restricted Stock Units
or when Shares acquired under the Plan are subsequently sold), or (iii) becoming a director.
SPAIN
Terms and Conditions
Nature of Grant. The following provision supplements Paragraph 10 of the Global Restricted Stock Unit Award Agreement:
In accepting the Restricted Stock Unit, Grantee consents to participation in the Plan and acknowledges that Grantee has received
a copy of the Plan.
Grantee understands and agrees that, as a condition of the grant of the Restricted Stock Unit, except as provided for in the Global
Restricted Stock Unit Award Agreement, the termination of Grantee’s Service Relationship for any reason (including for the
reasons herein) will automatically result in the loss of the Restricted Stock Unit that may have been granted and that have not
vested on the date of termination.
In particular, Grantee understands and agrees that any unvested Restricted Stock Unit as of Grantee’s termination date, unless
otherwise specified in Global Restricted Stock Unit Award Agreement, will be forfeited without entitlement to the underlying
Shares or to any amount as indemnification in the event of a termination by reason of, including, but not limited to: resignation,
disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without good cause (i.e.,
subject to a “despido improcedente”), individual or collective layoff on objective grounds, whether adjudged to be with cause or
adjudged or recognized to be without cause, material modification of the terms of employment under Article 41 of the Workers’
Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the
Employer, and under Article 10.3 of Royal Decree 1382/1985.
Furthermore, the Grantee understands that the Company has unilaterally, gratuitously, and discretionally decided to grant the
Restricted Stock Unit under the Plan to individuals who may be service providers of the Company or its Affiliates. The decision
is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or
otherwise bind the Company on an ongoing basis other than to the extent set forth in the Global Restricted Stock Unit Award
Agreement. Consequently, Grantee understands that the Restricted Stock Unit is granted on the assumption and condition that the
Restricted Stock Unit and the Shares issued upon vesting shall not become a part of any employment or contract (with the
Company, including the Employer) and shall not be considered a mandatory benefit, salary for any purposes (including
56
severance compensation), or any other right whatsoever. Furthermore, the Grantee understands and freely accepts that there is no
guarantee that any benefit whatsoever will arise from the Restricted Stock Unit, which is gratuitous and discretionary, since the
future value of the Restricted Stock Unit and the underlying Shares is unknown and unpredictable. In addition, Grantee
understands that the grant of the Restricted Stock Unit would not be made to Grantee but for the assumptions and conditions
referred to above; thus, Grantee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should
any of the conditions not be met for any reason, then any grant to Grantee shall be null and void.
Notifications
Securities Law Information. No “offer of securities to the public,” as defined under Spanish law, has taken place or will take
place in the Spanish territory. The Global Restricted Stock Unit Award Agreement (including this Appendix) has not been nor
will it be registered with the Comisión Nacional del Mercado de Valores, and does not constitute a public offering prospectus.
Exchange Control Information. The Grantee will be required to declare electronically to the Bank of Spain any securities
accounts (including brokerage accounts held abroad), as well as the Shares held in such accounts, if the value of the transactions
during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceed €1,000,000.
SWEDEN
Terms and Conditions
Responsibility for Taxes. The following provision supplements Paragraph 6 of the Global Restricted Stock Unit Award
Agreement:
Without limiting the Company’s and the Employer’s authority to satisfy their withholding obligations for Tax-Related Items as
set forth in Paragraph 6 of the Global Restricted Stock Unit Award Agreement, by accepting the Restricted Stock Units, the
Grantee authorizes the Company and/or the Employer to withhold Shares or to sell Shares otherwise deliverable to the Grantee
upon settlement/vesting to satisfy Tax-Related Items, regardless of whether the Company and/or the Employer have an obligation
to withhold such Tax-Related Items.
UNITED KINGDOM
Terms and Conditions
Responsibility for Taxes. The following provisions supplement Paragraph 6 of the Global Restricted Stock Unit Award
Agreement:
Without limitation to Section 6 of the Global Restricted Stock Unit Award Agreement, the Grantee agrees that the Grantee is
liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items as and when requested by the Company
or the Employer or by HM Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority). The
Grantee also agrees to indemnify and keep indemnified the Company or the Employer against any
57
Tax-Related Items that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any
other relevant authority) on the Grantee’s behalf.
Notwithstanding the foregoing, if the Grantee is a director or executive officer of the Company (within the meaning of Section
13(k) of the Exchange Act), the terms of the immediately foregoing provision will not apply if the indemnification can be viewed
as a loan. In such case, if the amount of any income tax due is not collected from or paid by the Grantee within 90 days of the
end of the U.K. tax year in which an event giving rise to the indemnification described above occurs, the amount of any
uncollected income taxes may constitute a benefit to the Grantee on which additional income tax and national insurance
contributions (“NICs”) may be payable. The Grantee will be responsible for reporting and paying any income tax due on this
additional benefit directly to HMRC under the self-assessment regime and for paying to the Company or the Employer, as
applicable, any employee NICs due on this additional benefit, which the Company or the Employer may recover from the
Grantee by any of the means referred to in Section 6 of the Global Restricted Stock Unit Award Agreement.
58
Exhibit 10.2
HUBSPOT, INC.
AMENDED AND RESTATED NON-EMPLOYEE DIRECTOR COMPENSATION POLICY
The purpose of this Amended and Restated Non-Employee Director Compensation Policy (the “Policy”) of HubSpot, Inc. (the “Company”), is to provide
a total compensation package that enables the Company to attract and retain, on a long-term basis, high-caliber directors who are not employees or officers
of the Company or its subsidiaries (“Outside Directors”). This Policy will become effective as of June 11, 2024 (the “Effective Date”). In furtherance of
the purpose stated above, all Outside Directors shall be paid compensation for services provided to the Company as set forth below:
Cash Retainers
Annual Retainer for Board Membership: $50,000 for general availability and participation in meetings and conference calls of the Board of Directors the
(“Board”), to be paid quarterly in advance. No additional compensation will be paid for attending individual meetings of the Board.
Annual Retainer for Lead Independent Director: $25,000 to be paid quarterly, in advance.
Additional Retainers for Committee Membership to be paid quarterly, in advance:
Audit Committee Chairperson:
$ 20,000
Audit Committee member:
$ 15,000
Compensation Committee Chairperson:
$ 15,000
Compensation Committee member:
$ 10,000
Nominating and Corporate Governance Committee Chairperson:
$ 8,500
Nominating and Corporate Governance Committee member:
$ 6,000
Note: Chairperson retainers are in addition to member retainers. No equity retainers shall be paid as compensation for committee membership. No
additional compensation will be paid for attending individual committee meetings.
Outside Directors shall be entitled to retain any retainer fees paid in advance with respect to the quarter in which the Outside Director ceases to be a
director or ceases to serve on a committee, as committee Chair or as Lead Independent Director.
Equity Retainers
Annual equity grants:
On the date of each annual meeting of stockholders of the Company (each, an “Annual Meeting”), each Outside Director will receive an annual equity
award (the “Annual Grant”) with a Value of $250,000. Annual Grants will be in the form of restricted stock units (“RSUs”). Annual Grants will vest in
equal quarterly installments over a one-year period from the grant date, with the final installment vesting on the earlier of (i) the first anniversary of the
date of grant or (ii) the date of the next Annual Meeting following the date of grant, provided, however, that all vesting shall cease if the Outside Director
ceases to serve as a member of the Board, unless the Board determines that the circumstances warrant continuation of vesting. Newly elected Outside
Directors will receive a pro-rated Annual Grant in connection with their appointment or election to the Board.
Value: For purposes of this Policy, “Value” means with respect to RSUs, the product of (A) the 30-trading day trailing average of the closing price of one
share of the Company’s common stock on the New York Stock Exchange (or such other market on which the Company’s common stock is then principally
listed) on the grant date, and (B) the aggregate number of shares of common stock underlying such award.
Acceleration of Equity Awards: All unvested equity awards held by Outside Directors will accelerate and immediately vest if the Outside Director’s service
relationship ends within three months prior to or twelve months following a Sale Event (as defined in the Company’s 2024 Stock Option and Incentive
Plan).
Expenses
The Company will reimburse all reasonable out-of-pocket expenses incurred by non-employee directors in attending meetings of the Board or any
Committee.
Last reviewed and amended: June 11, 2024
Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to
Exchange Act Rules 13a-14(a) and 15d-14(a),
As Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Yamini Rangan, certify that:
1. I have reviewed this quarterly report on Form 10-Q of HubSpot, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: August 7, 2024 By:
/s/ Yamini Rangan
Yamini Rangan
Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to
Exchange Act Rules 13a-14(a) and 15d-14(a),
As Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Kate Bueker, certify that:
1. I have reviewed this quarterly report on Form 10-Q of HubSpot, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: August 7, 2024
By:
/s/ Kate Bueker
Kate Bueker
Chief Financial Officer
(Principal Financial Officer)
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Yamini Rangan, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my
knowledge, the Quarterly Report on Form 10-Q of HubSpot, Inc. for the period ended June 30, 2024 fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of HubSpot, Inc.
Date: August 7, 2024
By:
/s/ Yamini Rangan
Yamini Rangan
Chief Executive Officer
(Principal Executive Officer)
I, Kate Bueker, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my
knowledge, the Quarterly Report on Form 10-Q of HubSpot, Inc. for the period ended June 30, 2024 fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of HubSpot, Inc.
Date: August 7, 2024
By:
/s/ Kate Bueker
Kate Bueker
Chief Financial Officer
(Principal Financial Officer)
The foregoing certifications are not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (Exchange Act), and are not to be incorporated by reference into any filing of HubSpot, Inc. under the Securities Act of
1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
