HUBSPOT INC (HUBS)
SIC breadcrumb: Services > Business Services > SIC 7372 Services-Prepackaged Software
SEC company page: https://www.sec.gov/edgar/browse/?CIK=1404655. Latest filing source: 0001193125-26-046646.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 3,131,266,000 | USD | 2025 | 2026-02-11 |
| Net income | 45,911,000 | USD | 2025 | 2026-02-11 |
| Assets | 3,854,151,000 | USD | 2025 | 2026-02-11 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-11. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001404655.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.
| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 270,967,000 | 375,612,000 | 512,980,000 | 674,860,000 | 883,026,000 | 1,300,658,000 | 1,730,969,000 | 2,170,230,000 | 2,627,543,000 | 3,131,266,000 |
| Net income | -45,562,000 | -39,714,000 | -63,828,000 | -53,746,000 | -85,031,000 | -77,837,000 | -107,347,000 | -164,510,000 | 4,628,000 | 45,911,000 |
| Operating income | -44,662,000 | -40,136,000 | -48,258,000 | -46,991,000 | -50,828,000 | -54,799,000 | -102,862,000 | -200,929,000 | -67,602,000 | 7,379,000 |
| Gross profit | 209,102,000 | 299,883,000 | 412,623,000 | 544,902,000 | 716,067,000 | 1,041,801,000 | 1,422,949,000 | 1,831,868,000 | 2,234,278,000 | 2,622,779,000 |
| Diluted EPS | -1.90 | -1.66 | -2.23 | -3.30 | 0.09 | 0.86 | ||||
| Operating cash flow | 19,366,000 | 49,614,000 | 84,851,000 | 118,973,000 | 88,913,000 | 238,728,000 | 273,174,000 | 350,971,000 | 598,599,000 | 760,717,000 |
| Capital expenditures | 15,789,000 | 20,276,000 | 22,305,000 | 40,372,000 | 37,274,000 | 28,726,000 | 37,426,000 | 33,718,000 | 37,939,000 | 53,165,000 |
| Share buybacks | 500,019,000 | |||||||||
| Assets | 259,755,000 | 712,175,000 | 833,953,000 | 1,569,268,000 | 1,973,366,000 | 2,174,854,000 | 2,544,738,000 | 3,071,392,000 | 3,795,833,000 | 3,854,151,000 |
| Liabilities | 141,055,000 | 501,815,000 | 589,312,000 | 919,310,000 | 1,210,711,000 | 1,301,055,000 | 1,550,060,000 | 1,737,044,000 | 1,887,547,000 | 1,787,907,000 |
| Stockholders' equity | 118,700,000 | 210,360,000 | 244,641,000 | 649,958,000 | 762,655,000 | 870,851,000 | 994,678,000 | 1,334,348,000 | 1,908,286,000 | 2,066,244,000 |
| Cash and cash equivalents | 59,702,000 | 87,680,000 | 111,489,000 | 269,670,000 | 378,123,000 | 377,013,000 | 331,022,000 | 387,987,000 | 512,667,000 | 882,242,000 |
| Free cash flow | 3,577,000 | 29,338,000 | 62,546,000 | 78,601,000 | 51,639,000 | 210,002,000 | 235,748,000 | 317,253,000 | 560,660,000 | 707,552,000 |
Ratios
| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
| Net margin | -16.81% | -10.57% | -12.44% | -7.96% | -9.63% | -5.98% | -6.20% | -7.58% | 0.18% | 1.47% |
| Operating margin | -16.48% | -10.69% | -9.41% | -6.96% | -5.76% | -4.21% | -5.94% | -9.26% | -2.57% | 0.24% |
| Return on equity | -38.38% | -18.88% | -26.09% | -8.27% | -11.15% | -8.94% | -10.79% | -12.33% | 0.24% | 2.22% |
| Return on assets | -17.54% | -5.58% | -7.65% | -3.42% | -4.31% | -3.58% | -4.22% | -5.36% | 0.12% | 1.19% |
| Liabilities / equity | 1.19 | 2.39 | 2.41 | 1.41 | 1.59 | 1.49 | 1.56 | 1.30 | 0.99 | 0.87 |
| Current ratio | 1.38 | 3.38 | 3.01 | 3.44 | 3.27 | 2.35 | 2.33 | 1.99 | 1.67 | 1.67 |
Financial Charts
Quarterly
Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001404655.json.
| Quarter | End Date | Revenue | Net Income | Diluted EPS | Method |
|---|---|---|---|---|---|
| 2022-Q2 | 2022-06-30 | -1.18 | reported discrete quarter | ||
| 2022-Q3 | 2022-09-30 | -0.65 | reported discrete quarter | ||
| 2023-Q1 | 2023-03-31 | -0.78 | reported discrete quarter | ||
| 2023-Q2 | 2023-03-31 | -38,282,000 | reported discrete quarter | ||
| 2023-Q2 | 2023-06-30 | 529,138,000 | -2.39 | reported discrete quarter | |
| 2023-Q3 | 2023-09-30 | 557,557,000 | -5,463,000 | -0.11 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 581,915,000 | -13,604,000 | derived Q4 = FY annual - nine-month YTD | |
| 2024-Q1 | 2024-03-31 | 617,414,000 | 5,934,000 | 0.12 | reported discrete quarter |
| 2024-Q2 | 2024-03-31 | 5,934,000 | reported discrete quarter | ||
| 2024-Q2 | 2024-06-30 | 637,230,000 | -0.28 | reported discrete quarter | |
| 2024-Q3 | 2024-09-30 | 669,721,000 | 8,146,000 | 0.16 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 703,178,000 | 4,983,000 | derived Q4 = FY annual - nine-month YTD | |
| 2025-Q1 | 2025-03-31 | 714,137,000 | -21,793,000 | -0.42 | reported discrete quarter |
| 2025-Q2 | 2025-03-31 | -21,793,000 | reported discrete quarter | ||
| 2025-Q2 | 2025-06-30 | 760,866,000 | -0.06 | reported discrete quarter | |
| 2025-Q3 | 2025-06-30 | -3,258,000 | reported discrete quarter | ||
| 2025-Q3 | 2025-09-30 | 809,518,000 | 0.31 | reported discrete quarter | |
| 2025-Q4 | 2025-12-31 | 846,746,000 | 54,426,000 | derived Q4 = FY annual - nine-month YTD | |
| 2026-Q1 | 2026-03-31 | 880,995,000 | 32,554,000 | 0.62 | reported discrete quarter |
Quarterly Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
- MSPUS - Median Sales Price of Houses Sold for the United States
- HSN1F - New One Family Houses Sold: United States
- RHORUSQ156N - Homeownership Rate in the United States
- TTLCONS - Total Construction Spending: Total Construction in the United States
- RRVRUSQ156N - Rental Vacancy Rate in the United States
- TOTALSL - Total Consumer Credit Owned and Securitized
- REVOLSL - Revolving Consumer Credit Owned and Securitized
- DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
- GDP - Gross Domestic Product
- GPDI - Gross Private Domestic Investment
- GCE - Government Consumption Expenditures and Gross Investment
- PCEC - Personal Consumption Expenditures
- NETEXP - Net Exports of Goods and Services
- GFDEBTN - Federal Debt: Total Public Debt
- GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- FYFSD - Federal Surplus or Deficit
- FGRECPT - Federal Government Current Receipts
- FGEXPND - Federal Government: Current Expenditures
- MANEMP - All Employees, Manufacturing
- USCONS - All Employees, Construction
- USTRADE - All Employees, Retail Trade
- USFIRE - All Employees, Financial Activities
- USGOVT - All Employees, Government
- AWHAETP - Average Weekly Hours of All Employees, Total Private
- DGORDER - Manufacturers' New Orders: Durable Goods
- NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- BUSINV - Total Business Inventories
- EXPGS - Exports of Goods and Services
- IMPGS - Imports of Goods and Services
- IR - Import Price Index (End Use): All Commodities
- PPIFIS - Producer Price Index by Commodity: Final Demand
Latest quarter (10-Q)
Latest 10-Q source: 0001193125-26-212122.
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, 2025 filed with the SEC on February 11, 2026. 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 an agentic customer platform that helps marketing, sales, and customer service teams drive business growth. We deliver seamless connection for customer-facing teams with a unified platform that includes three layers: Artificial Intelligence (“AI”)-powered agents and engagement Hubs, a Smart customer relationship management product (“CRM”), and a connected ecosystem supporting the customer platform with a marketplace of integrations, templates, expert partners, a community network, and an academy of educational content. Breeze is our AI that powers the customer platform, including our Smart CRM, engagement Hubs, and the connected ecosystem. Our engagement Hubs that enable companies to attract, engage, and delight customers throughout the customer lifecycle include Marketing, Sales, Service, Operations, Content and Commerce. The Smart CRM is the foundational context layer that combines customer data with AI to power the entire customer platform with unified customer profiles and tools to manage and govern your team and business processes. Our customer platform features a central database of lead and customer interactions and integrated applications designed to help businesses build their presence online, attract prospects across channels, convert prospects into leads, close leads into customers, transact with those customers, and delight them so they become promoters of those businesses. We designed and built our customer platform to serve a broad range of customers globally. It was built to easily and seamlessly integrate third party applications to further customize to an individual company’s industry or needs. 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 2 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 traditional and AI-enhanced engagement strategies, our Solutions Partners, and our “freemium” model. AI-enhanced engagement strategies leverage AI to personalize, automate, and optimize how businesses attract, engage, and retain customers across channels and throughout the customer lifecycle. 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 March 31, 2026, we had 9,021 full-time employees and 299,458 Customers of varying sizes in more than 135 countries, representing many industries. We primarily sell our customer platform on a subscription basis. Our total revenue increased to $881.0 million for the three months ended March 31, 2026 from $714.1 million for the three months ended March 31, 2025, representing a year-over-year increase of 23% in 2026. We generated net income of $32.6 million for the three months ended March 31, 2026 and net losses of $21.8 million for the three months ended March 31, 2025. 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 months ended March 31, 2026 and 2025. 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. We also generate revenue through usage and consumption-based models. Customers pay additional fees if the number of contacts stored and tracked in the customer’s database exceeds specified thresholds. We also generate revenue based on the purchase of additional subscriptions, products and seats. Most of our Customers’ subscriptions are one year or less in duration. 24 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, which are designed to help customers enhance their ability to attract, engage and delight their customers using our customer platform. Professional services and other revenue accounted for 2% of total revenue for the three months ended March 31, 2026 and 2025. 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 customer platform providers and related applications and rapid technological changes 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, including investments in AI-enabled tools for guided selling and content generation designed to drive efficiencies and improve conversion rates. 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, including machine learning capabilities intended to accelerate innovation and increase productivity. We intend to continue maintaining a high level of customer service and support which we consider critical for our continued success, and investing in AI to support automated ticket resolution. 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 our growth and the infrastructure required to operate as a public company, including continued efforts to automate and streamline processes using AI-enabled tools. We expect to use our cash flow from operations to fund these growth strategies and support our business. Global Economic Conditions Our results of operations may be significantly influenced by general macroeconomic conditions, including, but not limited to, the impact of pandemics, geo-political conflicts, foreign currency fluctuations, interest rates, inflation, recession risks, tariffs or other trade restrictions, and 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. 25 Key Components of Consolidated Statements of Operations Revenue We derive our revenue from two major sources, revenue from subscriptions to our customer platform and professional services and other revenue consisting mainly of on-boarding, training, consulting services fees, and Payments. Subscription-based revenue is derived from customers using our customer platform for their marketing, sales, service, data, and content management needs. Our customer platform includes a system of record for maintaining a unified view of the customer experience, a system of engagement for efficiently engaging customers through AI agents, SEO, AEO, AI-powered content creation, web content, social, blogging, email, marketing automation, messaging, support ticketing, knowledge base, conversation routing, video hosting, deal progression, prospecting, and data enrichment. Over 2,000 integrations and applications are available for our users, across a wide range of categories, including integrations with leading social media, email, sales, video, analytics, content and webinar tools. All subscription fees that are billed in advance of service are recorded in deferred revenue. Subscription based revenue is recognized net of consideration paid to Solutions Partners when those Solutions Partners purchase the subscription to our customer platform. Professional services and other revenue are derived primarily from customer on-boarding, training, consulting services, and Payments. Depending on which Hubs and services a customer purchases, they receive on-boarding guidance or training from technical consultants via web meetings. Cost of Revenue, Operating and Other Expenses Cost of Revenue Cost of subscription revenue consists primarily of managed hosting providers and other third-party service providers, employee-related costs including payroll, benefits and stock-based compensation expense for our customer support team, amortization of capitalized software development costs and acquired technology, and allocated overhead costs, which include facilities costs, depreciation of fixed assets, and costs related to information technology. Cost of professional services and other revenue consists primarily of personnel costs of our professional services organization, including salaries, benefits, bonuses and stock-based compensation, amortization of capitalized software development costs associated with Payments, as well as professional fees and allocated overhead costs, which we define as [Excerpt truncated for page length; source filing is linked above.]
Latest 10-K MD&A
ITEM 7. 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 that appear elsewhere in this Annual Report on Form 10-K. 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 I, Item 1A within this Annual Report on Form 10-K. A discussion of our financial condition, results of operations, and cash flows for the year ended December 31, 2024 compared to the year ended December 31, 2023 is included in section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed on February 12, 2025.
Company Overview
We provide an agentic customer platform that helps marketing, sales, and customer service teams drive business growth. We deliver seamless connection for customer-facing teams with a unified platform that includes three layers: Artificial Intelligence ("AI")-powered agents and engagement hubs, a Smart customer relationship management product (“CRM”), and a connected ecosystem supporting the customer platform with a marketplace of integrations, templates, expert partners, a community network, and an academy of educational content.
Breeze is our AI that powers the customer platform, including our Smart CRM, engagement Hubs, and the connected ecosystem. Our engagement Hubs that enable companies to attract, engage, and delight customers throughout the customer lifecycle include Marketing, Sales, Service, Operations, Content and Commerce. The Smart CRM is the foundational context layer that combines customer data with AI to power the entire customer platform with unified customer profiles and tools to manage and govern your team and business processes. Our customer platform features a central database of lead and customer interactions and integrated applications designed to help businesses build their presence online, attract prospects across channels, convert prospects into leads, close leads into customers, transact with those customers, and delight them so they become promoters of those businesses.
We designed and built our customer platform to serve a broad range of customers globally. It was built to easily and seamlessly integrate third party applications to further customize to an individual company’s industry or needs. 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 2 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 traditional and AI-enhanced engagement strategies, our Solutions Partners, and our “freemium” model. AI-enhanced engagement strategies leverage AI to personalize, automate, and optimize how businesses attract, engage, and retain customers across channels and throughout the customer lifecycle. 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 December 31, 2025, we had 8,882 full-time employees and 288,706 Customers of varying sizes in more than 135 countries, representing many industries.
We primarily sell our customer platform on a subscription basis. Our total revenue increased to $3.1 billion in 2025, from $2.6 billion in 2024, and from $2.2 billion in 2023, representing year-over-year increases of 19% in 2025 and 21% in 2024. We had net income of $45.9 million in 2025 and $4.6 million in 2024, and net losses of $164.5 million in 2023.
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 years ended December 31, 2025, 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. We also generate revenue through usage and consumption-based models. Customers pay additional fees if the number of contacts stored and tracked in the customer’s database exceeds specified thresholds. We also generate revenue based on the purchase of additional subscriptions, products and seats. Most of our Customers’ subscriptions are one year or less in duration.
48
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, which are designed to help customers enhance their ability to attract, engage and delight their customers using our customer platform. Professional services and other revenue, which includes revenue from Payments, accounted for 2% of total revenue for the years ended December 31, 2025, 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 customer platform providers and related applications and rapid technological changes 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, including investments in AI-enabled tools for guided selling and content generation designed to drive efficiencies and improve conversion rates. 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, including machine learning capabilities intended to accelerate innovation and increase productivity. We intend to continue maintaining a high level of customer service and support which we consider critical for our continued success, and investing in AI to support automated ticket resolution. 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 our growth and the infrastructure required to operate as a public company, including continued efforts to automate and streamline processes using AI-enabled tools. We expect to use our cash flow from operations to fund these growth strategies and support our business.
Global Economic Conditions
Our results of operations may be significantly influenced by general macroeconomic conditions, including, but not limited to, the impact of pandemics, geo-political conflicts, foreign currency fluctuations, interest rates, inflation, recession risks, tariffs or other trade restrictions, and existing and new domestic and foreign laws and regulations, all of which are beyond our control. Fluctuations in foreign exchange rates and 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 Part I, Item 1A. "Risk Factors" for further discussion of the impact of these general macroeconomic factors and risks on our business.
Recent Developments
Revolving Credit Facility
On February 10, 2026, we entered into a Credit Agreement with Bank of America, N.A., as the administrative agent and L/C Issuer, and the banks and other financial institutions or entities party thereto as lenders (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for (i) a five year senior secured revolving credit facility in the amount of up to $500 million and (ii) an uncommitted incremental facility subject to certain conditions. We may use the proceeds of future borrowings under the credit facility to finance working capital, capital expenditures and for other general corporate purposes, including permitted acquisitions and investments. The facility may be drawn as a Base Rate Loan (at the highest of the federal funds rate plus 0.50%, the Bank of America prime rate, or one-month Term SOFR plus 1.00%, all subject to a 1.00% floor, plus an applicable margin ranging from 0.125% to 0.875%) or Term SOFR Loan (SOFR plus an applicable margin ranging from 1.125% to 1.875%). The facility is subject to customary fees for loan facilities of this type, including ongoing commitment fees at a rate between 0.125% and 0.300% per annum on the daily undrawn balance.
Our obligations under the Revolving Credit Agreement are secured by substantially all of our assets. The Revolving Credit Agreement contains customary representations and warranties, customary affirmative and negative covenants, and, during periods when we do not maintain investment-grade credit ratings, a financial covenant that is tested quarterly and requires us to maintain a certain consolidated leverage ratio, and customary events of default.
2026 Share Repurchase Program
49
On February 7, 2026, our Board of Directors authorized a share repurchase program for the repurchase of shares of the company’s common stock, in an aggregate amount of up to $1.0 billion (the “2026 Share Repurchase Program”) over a period of up to 24 months.
Key Business Metrics
The following key business metrics are presented in this Annual Report on Form 10-K or in our press releases announcing our financial results which are furnished on Form 8-K. We use these key business metrics to evaluate our business, measure our performance, identify trends affecting our business and results of operations, formulate financial projections and make strategic decisions. These key business metrics may be calculated in a manner different from similar key business metrics used by other companies.
Year Ended December 31,
2025
2024
2023
Customers
288,706
247,939
205,091
Average Subscription Revenue per Customer
$
11,414
$
11,343
$
11,384
Net Revenue Retention
103.5
%
101.8
%
103.0
%
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. In 2025, we adjusted our calculation to remove the impact of commissions owed to Solutions Partners that are no longer eligible to receive commissions due to our change in duration and eligibility of lifetime commissions to better align with the value delivered to customers. We reported Net Revenue Retention of 102.2% in 2024 and 103.9% in 2023 under the previous methodology. 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.
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.
Key Components of Consolidated Statements of Operations
Revenue
We derive our revenue from two major sources, revenue from subscriptions to our customer platform and professional services and other revenue consisting mainly of on-boarding, training, consulting services fees, and Payments.
Subscription-based revenue is derived from customers using our customer platform for their marketing, sales, service, data, and content management needs. Our customer platform includes a system of record for maintaining a unified view of the customer experience, a system of engagement for efficiently engaging customers through AI agents, SEO, AEO, AI-powered content creation, web content, social, blogging, email, marketing automation, messaging, support ticketing, knowledge base, conversation routing, video hosting, deal progression, prospecting, and data enrichment. Over 2,000 integrations and applications are available for our
50
users, across a wide range of categories, including integrations with leading social media, email, sales, video, analytics, content and webinar tools. All subscription fees that are billed in advance of service are recorded in deferred revenue. Subscription based revenue is recognized net of consideration paid to Solutions Partners when those Solutions Partners purchase the subscription to our customer platform.
Professional services and other revenue are derived primarily from customer on-boarding, training, consulting services, and Payments. Depending on which Hubs and services a customer purchases, they receive on-boarding guidance or training from technical consultants via web meetings.
Cost of Revenue, Operating and Other Expenses
Cost of Revenue
Cost of subscription revenue consists primarily of managed hosting providers and other third-party service providers, employee-related costs including payroll, benefits and stock-based compensation expense for our customer support team, amortization of capitalized software development costs and acquired technology, and allocated overhead costs, which include facilities costs, depreciation of fixed assets, and costs related to information technology.
Cost of professional services and other revenue consists primarily of personnel costs of our professional services organization, including salaries, benefits, bonuses and stock-based compensation, amortization of capitalized software development costs associated with Payments, as well as professional fees and allocated overhead costs, which we define as facilities, depreciation of fixed assets, and costs related to information technology. It also consists of costs associated with Payments and our other service offerings.
We expect that the cost of subscription and professional services and other revenue will increase in absolute dollars as we continue to invest in data center infrastructure and capitalize software development costs for new offerings to grow our business and scale with AI capabilities. As a result of these investments, over time, we expect gross margins to decline slightly, exclusive of stock-based compensation.
Research and Development
Research and development expenses consist primarily of personnel costs of our development team, including payroll, benefits and stock-based compensation expense, professional and contractor fees and allocated overhead costs. We capitalize certain software development costs that are attributable to developing new products and adding incremental functionality to our customer platform and amortize such costs as costs of subscription and cost of professional services and other revenue over the estimated life of the new product or incremental functionality, which is generally two years. We also capitalize certain development costs that are attributable to developing our internally developed software platforms and amortize such costs throughout the consolidated statement of operations over the estimated life of our internally developed software platforms, which is generally five years. We focus our research and development efforts on improving our products and developing new ones, delivering new functionality and enhancing the customer experience. We believe delivering new functionality for our customers is an integral part of our solution and provides our customers with access to a broad array of options and information critical to their marketing, sales, and customer service efforts. We expect to continue to make investments in and expand our offerings to enhance our customers’ experience and satisfaction and attract new customers. Over time, we expect research and development expenses to increase in absolute dollars as we continue to increase the functionality of our customer platform and decline as a percentage of total revenue, exclusive of stock-based compensation expense.
51
Sales and Marketing
Sales and marketing expenses consist primarily of personnel costs of our sales and marketing employees, including sales commissions and incentives, benefits and stock-based compensation expense, marketing programs, including lead generation, costs of our annual INBOUND conference, other brand building expenses, amortization of intangible assets, professional and contractor fees and allocated overhead costs. Sales and marketing expenses also include commissions paid to our Solutions Partners in instances where the end customer purchases and pays for a subscription to our customer platform. We defer certain sales and Solutions Partner commissions related to acquiring new contracts and amortize them ratably over a period of benefit that we have determined to be approximately two to four years.
We plan to continue to invest in sales and marketing to grow our customer base and increase sales to existing customers. This growth will include adding sales personnel and expanding our marketing activities to continue to generate leads and build brand awareness. We expect sales and marketing expenses to increase in absolute dollars as we continue to develop our sales and marketing teams. Over time, we expect sales and marketing expenses will decline as a percentage of total revenue, exclusive of stock-based compensation.
General and Administrative
General and administrative expenses consist of personnel costs and related expenses for executive, finance, legal, human resources, employee-related information technology, administrative personnel, including payroll, benefits and stock-based compensation expense, professional fees for external legal, accounting and other consulting services, and allocated overhead costs. We expect that general and administrative expenses will increase on an absolute dollar basis as we incur the costs of compliance associated with being a publicly traded company, and remain relatively consistent as a percentage of total revenue, exclusive of stock-based compensation expense, as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business.
Restructuring
Restructuring expenses primarily consist of variable lease costs related to properties vacated under our restructuring plan. On January 25, 2023, our 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 our workforce by approximately 7% and a global lease consolidation to create higher density across our workspaces. Future variable facilities related costs for vacated properties will continue to be recorded to restructuring charges. See Note 18 of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
Other Income (Expense)
Interest income primarily consists of interest earned on invested cash and cash equivalents balances and investments. Interest expense primarily consists of amortization of issuance costs and contractual interest expense related to our 2025 Notes. Other (expense) income primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities and any gains, losses on, or impairments of our strategic investments.
Income Tax Expense
Income tax expense consists of current and deferred taxes for U.S. and foreign jurisdictions.
52
Results of Operations
The following tables set forth certain consolidated financial data in dollar amounts and as a percentage of total revenue.
Year Ended December 31,
2025
2024
2023
(in thousands)
Revenue:
Subscription
$
3,063,917
$
2,569,546
$
2,123,479
Professional services and other
67,349
57,997
46,751
Total revenue
3,131,266
2,627,543
2,170,230
Cost of revenue:
Subscription
445,336
336,878
283,675
Professional services and other
63,151
56,387
54,687
Total cost of revenue
508,487
393,265
338,362
Gross profit
2,622,779
2,234,278
1,831,868
Operating expenses:
Research and development
905,943
778,714
617,745
Sales and marketing
1,379,376
1,218,844
1,068,560
General and administrative
326,045
300,332
249,649
Restructuring
4,036
3,990
96,843
Total operating expenses
2,615,400
2,301,880
2,032,797
Income (loss) from operations
7,379
(67,602
)
(200,929
)
Other income (expense)
Interest income
66,218
82,706
58,828
Interest expense
(876
)
(3,721
)
(3,801
)
Other (expense) income, net
(3,258
)
17,294
(4,673
)
Total other income
62,084
96,279
50,354
Income (loss) before income tax expense
69,463
28,677
(150,575
)
Income tax expense
(23,552
)
(24,049
)
(13,935
)
Net income (loss)
$
45,911
$
4,628
$
(164,510
)
Year Ended December 31,
2025
2024
2023
Revenue:
Subscription
98
%
98
%
98
%
Professional services and other
2
2
2
Total revenue
100
100
100
Cost of revenue:
Subscription
14
13
13
Professional services and other
2
2
3
Total cost of revenue
16
15
16
Gross profit
84
85
84
Operating expenses:
Research and development
29
30
28
Sales and marketing
44
46
49
General and administrative
10
11
12
Restructuring
0
0
4
Total operating expenses
84
88
94
Income (loss) from operations
0
(3
)
(9
)
Total other income
2
4
2
Income (loss) before income tax expense
2
1
(7
)
Income tax expense
(1
)
(1
)
(1
)
Net income (loss)
1
%
0
%
(8
%)
* Percentages are based on actual values. Totals may not sum due to rounding.
53
Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024
Revenue
Year Ended December 31,
Change
(in thousands)
2025
2024
Amount
%
Subscription
$
3,063,917
$
2,569,546
$
494,371
19
%
Professional services and other
67,349
57,997
9,352
16
%
Total revenue
$
3,131,266
$
2,627,543
$
503,723
19
%
Subscription revenue increased during 2025 due to an increase in Customers, which grew from 247,939 as of December 31, 2024 to 288,706 as of December 31, 2025. Average Subscription Revenue per Customer also increased from $11,343 for the year ended December 31, 2024 to $11,414 for the year ended December 31, 2025. The growth in Customers was primarily driven by increased demand for our products. The increase in Average Subscription Revenue per Customer was primarily driven by increased demand for our Professional and Enterprise products and the impact of foreign currency translation primarily attributable to the decrease in the value of the U.S. Dollar relative to the Euro and British Pound Sterling, offset by continued purchases of our lower-priced Starter products.
The increase in professional services and other revenue during 2025 was primarily driven by Payments.
Cost of Revenue, Gross Profit and Gross Margin Percentage
Year Ended December 31,
Change
(in thousands)
2025
2024
Amount
%
Total cost of revenue
$
508,487
$
393,265
$
115,222
29
%
Gross profit
$
2,622,779
$
2,234,278
$
388,501
17
%
Gross margin
84
%
85
%
Total cost of revenue increased during 2025 primarily due to an increase in subscription and hosting costs, amortization of capitalized software development costs, and amortization of acquired technology, offset by decreases in employee-related and allocated overhead expenses. Gross margins remained relatively consistent year-over-year.
Year Ended December 31,
Change
(in thousands)
2025
2024
Amount
%
Subscription cost of revenue
$
445,336
$
336,878
$
108,458
32
%
Percentage of subscription revenue
15
%
13
%
The increase in subscription cost of revenue for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to the following:
Change
(in thousands)
Subscription and hosting costs
$
65,318
Amortization of capitalized software development costs
42,611
Amortization of acquired technology
1,545
Employee-related costs
(449
)
Allocated overhead expenses
(567
)
$
108,458
54
Subscription and hosting costs increased primarily due to growth in our Customer base from 247,939 at December 31, 2024 to 288,706 at December 31, 2025. We also saw higher subscription and hosting costs as we continued to support the growth of our customer base, increased usage of our customer platform, and continued investments to expand AI functionality. 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 acquisitions in 2025 and later in 2024. Employee-related costs decreased as a result of improved resource alignment and operational efficiencies by leveraging AI to resolve customer inquiries. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in subscription cost of revenue.
Year Ended December 31,
Change
(in thousands)
2025
2024
Amount
%
Professional services and other cost of revenue
$
63,151
$
56,387
$
6,764
12
%
Percentage of professional services and other revenue
94
%
97
%
The increase in professional services and other cost of revenue for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to the following:
Change
(in thousands)
Commerce payment processing fees
$
7,921
Amortization of capitalized software development costs
2,901
Amortization of acquired technology
667
Professional fees
551
Allocated overhead expenses
(369
)
Employee-related costs
(4,907
)
$
6,764
Commerce payment processing fees increased due to higher payment volume and merchant activity. Amortization of capitalized software development costs increased as we continued to increase functionality with our internally built payments solution. Amortization of acquired technology increased due to the amortization of acquired technology associated with our acquisition of Cacheflow in the fourth quarter of 2024. Professional fees increased and employee-related costs decreased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in subscription cost of revenue.
Research and Development
Year Ended December 31,
Change
(in thousands)
2025
2024
Amount
%
Research and development
$
905,943
$
778,714
$
127,229
16
%
Percentage of total revenue
29
%
30
%
The increase in research and development expense for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to the following:
Change
(in thousands)
Employee-related costs
$
110,653
Software and services
9,719
Professional fees
7,855
Allocated overhead expenses
5,481
Hosting expenses
(6,479
)
$
127,229
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. Software and services expense increased due to an increase in use of AI tools. Professional fees increased due to an increase in the use of third party services and contractors as
55
we continued to grow our engineering organization. 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 and increased proportional allocation of shared company expenses associated with headcount in research and development. Hosting expense decreased due to incremental spend in the second half of 2024 associated with product development infrastructure that is unrelated to the hosting of our customer platform for paying Customers. In 2025, we launched the data center and the ongoing expenses related to the hosting of our customer platform on that data center are classified as subscription cost of revenue.
Sales and Marketing
Year Ended December 31,
Change
(in thousands)
2025
2024
Amount
%
Sales and marketing
$
1,379,376
$
1,218,844
$
160,532
13
%
Percentage of total revenue
44
%
46
%
The increase in sales and marketing expense for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to the following:
Change
(in thousands)
Employee-related costs
$
115,714
Marketing programs
26,507
Professional fees
14,973
Allocated overhead expenses
5,367
Software and services
5,058
Solutions Partner commissions
(7,087
)
$
160,532
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. Professional fees increased due to an increase in the use of third party services and contractors for our marketing efforts. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure to support our business growth. Software and services cost increased due to an increase in the use of third party software and AI-enabled tools to improve productivity. Solutions Partner commissions decreased as we changed the duration and eligibility of commissions for certain Solutions Partners to better align with the value delivered to customers. The decrease from the change in duration and eligibility of commissions was partially offset by increased revenue generated through our Solutions Partners.
General and Administrative
Year Ended December 31,
Change
(in thousands)
2025
2024
Amount
%
General and administrative
$
326,045
$
300,332
$
25,713
9
%
Percentage of total revenue
10
%
11
%
The increase in general and administrative expense for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to the following:
Change
(in thousands)
Employee-related costs
$
14,954
Customer credit card fees
4,666
Allocated overhead expenses
4,280
Professional fees
1,813
$
25,713
56
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 primarily due to increase in the use of third-party services and contractors.
Restructuring
Year Ended December 31,
(in thousands)
2025
2024
$ Change
% Change
Restructuring
$
4,036
$
3,990
$
46
1
%
Percentage of total revenue
*
*
* not meaningful
Restructuring charges in 2025 and 2024 consisted of variable facilities-related costs related to properties vacated under our Restructuring Plan.
Interest Income
Year Ended December 31,
Change
(in thousands)
2025
2024
Amount
%
Interest income
$
66,218
$
82,706
$
(16,488
)
(20
%)
Percentage of total revenue
2
%
3
%
The decrease during the year is primarily due to lower average investment balances driven by cash outlays from our 2025 Notes settlements and 2025 Share Repurchase Program and lower yields.
Interest Expense
Year Ended December 31,
Change
(in thousands)
2025
2024
Amount
%
Interest expense
$
(876
)
$
(3,721
)
$
(2,845
)
(76
%)
Percentage of total revenue
*
*
* not meaningful
Interest expense decreased due to the early conversion of a portion of our 2025 Notes in the first quarter of 2025 and settlement of the remaining 2025 Notes upon maturity in June 2025.
Other (Expense) Income
Year Ended December 31,
Change
(in thousands)
2025
2024
Amount
%
Other (expense) income, net
$
(3,258
)
$
17,294
$
(20,552
)
119
%
Percentage of total revenue
*
1
%
* not meaningful
The change in other expense during 2025 is primarily due to the following:
Change
(in thousands)
Foreign currency gains and losses
$
(4,190
)
Impairment of strategic investments
(617
)
Gain on strategic investments
(15,745
)
$
(20,552
)
57
The change in foreign currency gains and losses transactions is primarily attributable to the value of the U.S. Dollar relative to the Euro and British Pound Sterling. The increase in the impairment of strategic investments is due to an impairment of $5.3 million in 2024 compared to $5.7 million in 2025. The decrease in gain on strategic investments is due to gains of $21.2 million from changes in the value of certain strategic investments in 2024 compared to $5.0 million in 2025.
Income Tax Expense
Year Ended December 31,
Change
2025
2024
Amount
%
(dollars in thousands)
Income tax expense
$
(23,552
)
$
(24,049
)
$
497
(2
%)
Effective tax rate
(34
%)
(84
%)
The decrease in the income tax expense is a result of a reduction in U.S. tax expense partially offset by increased foreign tax expense.
On July 4th, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing changes to U.S. tax law. The effects of the OBBBA have been incorporated into the income tax provision computation for the accompanying financial statements for the twelve months ended December 31, 2025 and the impact was not material. The Act includes multiple effective dates, with certain provisions effective in 2025 and others phased in through 2027. We continue to evaluate the impact of the Act's provisions that take effect in future years.
We will continue to maintain a full valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. However, given our anticipated future earnings, management believes that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to reach a conclusion that all or a portion of the valuation allowance may no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.
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 provided by (used in) investing activities, and net cash and cash equivalents (used in) provided by financing activities for the years ended December 31, 2025, 2024 and 2023:
Year Ended December 31,
2025
2024
2023
(in thousands)
Cash and cash equivalents
$
882,242
$
512,667
$
387,987
Working capital
982,264
1,060,204
929,532
Net cash and cash equivalents provided by operating activities
760,717
598,599
350,971
Net cash and cash equivalents provided by (used in) investing activities
491,773
(515,861
)
(334,766
)
Net cash and cash equivalents (used in) provided by financing activities
(910,009
)
53,495
37,011
58
Our cash and cash equivalents at December 31, 2025 were held for working capital purposes. We believe our working capital is sufficient to support our operations for at least the next 12 months. At December 31, 2025, $309.0 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.
Net Cash and Cash Equivalents Provided by Operating Activities
Net cash and cash equivalents provided by operating activities consists primarily of net income (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 year ended December 31, 2025 primarily reflected our net income of $45.9 million, $40.5 million accretion of bond discounts and a $5.5 million gain on strategic investments, offset by non-cash expenses that included $136.3 million of depreciation and amortization, $528.2 million in stock-based compensation, $5.9 million on impairment of strategic investments, and $0.6 million of amortization of debt issuance costs. Working capital sources of cash and cash equivalents primarily included a $183.9 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $25.9 million decrease in right-of-use assets, a $19.0 million increase in accounts payable related to timing of bill payments, and a $118.0 million increase in accrued expenses and other liabilities. These sources of cash and cash equivalents were offset by a $34.1 million increase in prepaid expenses and other assets, a $36.1 million decrease in operating lease liabilities, a $117.0 million increase in deferred commissions, and a $64.0 million increase in accounts receivable as a result of increased billings to customers.
Net cash and cash equivalents provided by operating activities during the year ended December 31, 2024 primarily reflected our net income of $4.6 million, $51.7 million accretion of bond discounts and a $21.2 million gain on investments, offset by non-cash expenses that included $96.8 million of depreciation and amortization, $504.8 million in stock-based compensation, $5.3 million on impairment of strategic investments, $2.7 million provision for deferred income taxes, and $2.0 million of amortization of debt issuance costs. Working capital sources of cash and cash equivalents primarily included a $131.0 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $32.3 million decrease in right-of-use assets, and $89.0 million increase in accrued expenses and other liabilities. These sources of cash and cash equivalents were offset by a $4.4 million increase in prepaid expenses and other assets, a $41.5 million decrease in operating lease liabilities, a $4.6 million decrease in accounts payable related to timing of bill payments, a $96.7 million increase in deferred commissions, and a $48.4 million increase in accounts receivable as a result of increased billings to customers.
Net Cash and Cash Equivalents Provided by (Used in) Investing Activities
Our investing activities have consisted primarily of purchases, maturities and sale of investments, property and equipment purchases, business acquisitions, purchase of intangible assets, purchases of and proceeds from 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 and for our use.
Net cash and cash equivalents used in investing activities during the year ended December 31, 2025 consisted primarily of cash used for $1.4 billion purchases of investments, $130.6 million of capitalized software development costs, $87.6 million for business acquisitions, $53.2 million of purchased property and equipment, and $32.7 million of purchases of strategic investments, offset by $2.2 billion received related to the maturity of investments and $2.7 million of proceeds from strategic investments.
Net cash and cash equivalents used in investing activities during the year ended December 31, 2024 consisted primarily of cash used for $2.0 billion purchases of investments, $15.5 million of purchases of strategic investments, $40.4 million for acquisition of a business, $37.9 million of purchased property and equipment, $1.2 million purchases of intangible assets, and $89.6 million of capitalized software development costs, offset by $1.7 billion received related to the maturity of investments, $2.0 million of proceeds from sale of investments, and $1.9 million of proceeds from a net working capital settlement.
Net Cash and Cash Equivalents (Used in) Provided by Financing Activities
Our financing activities have consisted primarily of the repayment of our 2025 Notes, repurchases of our common stock, the issuance of common stock under our stock plans, and payments of employee taxes related to the net share settlement of stock-based awards.
Net cash and cash equivalents used in financing activities for the year ended December 31, 2025 consisted of $500.0 million used for repurchases of our common stock, $459.8 million for repayments of the 2025 Notes attributable to the principal, and $21.6
59
million used for payment of employee taxes related to the net share settlement of stock-based awards, offset by $71.4 million of proceeds related to issuance of common stock under stock plans.
Net cash and cash equivalents provided by financing activities for the year ended December 31,2024 consisted of $75.5 million of proceeds related to issuance of common stock under stock plans, offset by $21.9 million used for payment of employee taxes related to the net share settlement of stock-based awards.
Liquidity and Capital Resources Considerations
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 sheets and vendor commitments associated with agreements that are legally binding. As of December 31, 2025, the total obligation for operating leases was $313.4 million, of which $56.5 million is expected in the next twelve months. As of December 31, 2025, our vendor commitment was $494.7 million, of which $286.5 million is expected in the next twelve months. See Note 12 of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
Share Repurchase Programs
In May 2025, our Board of Directors authorized a share repurchase program for the repurchase of shares of the our common stock, in an aggregate amount of up to $500 million (the “2025 Share Repurchase Program”) over a period of up to 12 months. All repurchases under the 2025 Share Repurchase Program are made through open market trades pursuant to 10b5-1 plans. In 2025, we repurchased 1.0 million shares of its common stock at an average price of $501.67 per share, for an aggregate repurchase amount of $500.0 million, which completed the 2025 Share Repurchase Program. See Note 14 of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
In February 2026, our Board of Directors authorized the 2026 Share Repurchase Program over a period of up to 24 months. As of the date of filing of this report, a total of $1.0 billion remained available for repurchase under the share repurchase program.
Convertible Senior Notes
In 2025, we settled the remaining aggregate principal amount due under the 2025 Notes. See Note 10 of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
Letters of Credit
As of December 31, 2025, we had a total of $2.7 million in letters of credit outstanding for office space. The cash held for these irrevocable letters of credit is classified as restricted cash and is expected to remain in effect, in some cases, until 2029.
Revolving Credit Facility
On February 10, 2026 we entered into the Revolving Credit Agreement. As of the date of filing of this report, there were no outstanding borrowings under the revolving credit facility.
Our obligations under the Revolving Credit Agreement are secured by substantially all of our assets. The Revolving Credit Agreement contains customary representations and warranties, customary affirmative and negative covenants, and, during periods when we do not maintain investment-grade credit ratings, a financial covenant that is tested quarterly and requires us to maintain a certain consolidated leverage ratio, and customary events of default. As of the date of filing of this report, we were in compliance with all financial covenants under the Revolving Credit Agreement.
Off Balance Sheet Arrangements
We have no material off-balance sheet arrangements at December 31, 2025 or 2024 exclusive of items described above and indemnifications of officers, directors and employees for certain events or occurrences while the officer, director or employee is, or was, serving at our request in such capacity.
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Critical Accounting Policies and Estimates
Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. In preparing our financial statements, we make estimates, assumptions and judgments that can have a significant impact on our reported revenues, results of operations and net income or loss, as well as on the value of certain assets and liabilities on our balance sheet during and as of the reporting periods. These estimates, assumptions and judgments are necessary because future events and their effects on our results and the value of our assets cannot be determined with certainty and are made based on our historical experience and on other assumptions that we believe to be reasonable under the circumstances. These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates.
We believe that of our significant accounting policies, which are described in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements, the following accounting policies and specific estimates involve a greater degree of judgment and complexity.
Revenue Recognition
We generate revenue from arrangements with multiple performance obligations, which typically include subscriptions to our online software solutions and professional and other services which include on-boarding, training, consulting services and Payments. Our customers do not have the right to take possession of the online software products. Revenue from online software products and support is recognized ratably over the subscription period beginning on the date the online software product is made available to customers. We recognize revenue from on-boarding, training, consulting services, and Payments as the services are provided. Amounts billed that have not yet met the applicable revenue recognition criteria are recorded as deferred revenue.
We allocate the transaction price to each distinct performance obligation based on the standalone selling price (“SSP”) of each good or service. We calculate SSP for each type of online software product and professional service offering by averaging the selling price of purchases within the trailing four calendar quarters. We generally use four quarters of transaction data to determine SSP as most of our customer arrangements are one year or less and pricing may be subject to change upon each customer’s renewal. In instances where there are not sufficient data points, often due to new product introduction, or the average selling prices for a particular online software product or professional service offering are disparate, we estimate the SSP using other observable inputs, such as similar products or services. If the actual selling price for the sale of an online software product or professional service offering within a multiple performance obligation arrangement substantially differs from the SSP of that offering, we use the relative SSP to allocate the transaction price to the performance obligations in the contract.
Costs to Obtain a Contract with a Customer
Sales commissions earned by our sales force and Solutions Partners are considered incremental, recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be approximately two to four years. The two to four-year period has been determined by taking into consideration 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. While we do not anticipate any significant changes to the two to four year amortization period, if a change did occur it could produce a material impact on our financial statements. For example, if the commitment term of our customer contracts significantly increased, our deferred commission expense asset would increase, and our amortization expense would decrease in the period in which the change occurs. Conversely, if the commitment term of our customer contracts significantly decreased, our deferred commission expense asset would decrease and our amortization expense would increase in the period in which the change occurs.
Capitalized Software Development Costs
Software development costs consist of certain payroll and stock compensation costs incurred to develop functionality for our customer platform and internally-built software platforms, as well as certain upgrades and enhancements that are expected to result in enhanced functionality. We capitalize certain software development costs for new offerings as well as upgrades to our existing software platforms, while costs associated with planning new developments and maintaining our customer platform and internally built software platforms are expensed as incurred. We amortize these development costs over the estimated useful life of two to five years on a straight-line basis. We determined that a two to five year life is appropriate for our internal-use software based on our best estimate of the useful life of the internally developed software after considering factors such as continuous developments in the technology, obsolescence, and anticipated life of the service offering before significant upgrades. Management evaluates the useful
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lives of these assets on a quarterly basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
We determine the amount of internal software costs to be capitalized based on the amount of time spent by our developers on projects in the application stage of development. There is judgment involved in estimating the time allocated to a particular project in the application stage. A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods.
Business Combinations
We account for business acquisitions using the acquisition method of accounting, in accordance with which assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date. Goodwill represents the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed.
Significant judgment is used in determining fair values of assets acquired and liabilities assumed, as well as intangible assets and their estimated useful lives. Fair value determinations are based on, among other factors, estimates of replacement costs, future expected cash flows attributable to the acquired intangible assets and appropriate discount rates used in computing present values. Useful life determinations are generally based on future expected cash flows attributable to the acquired intangible assets. For each acquisition, management applied judgment in estimating the fair values of the acquired developed technology intangible assets. Depending on the nature of the acquired developed technology intangible asset, we employed an income, cost, or market valuation methodology. The judgments applied by management during the valuation process may materially impact the estimates used in allocating the purchase price consideration to the fair value of assets acquired and liabilities assumed, as well as our current and future operating results. Actual results may vary from these estimates that may result in adjustments to goodwill and acquisition date fair values of assets and liabilities during a measurement period or upon a final determination of asset and liability fair values, whichever occurs first. Adjustments to the fair value of assets acquired and liabilities assumed made after the end of the measurement period are recorded within our operating results.
Recent Accounting Pronouncements
For information on recent accounting pronouncements, see Recent Accounting Pronouncements in the Notes to Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K.