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What changed in HUBSPOT INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HUBSPOT INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+309 added−285 removedSource: 10-K (2026-02-11) vs 10-K (2025-02-12)

Top changes in HUBSPOT INC's 2025 10-K

309 paragraphs added · 285 removed · 220 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

117 edited+49 added−35 removed311 unchanged
Biggest changeOur 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, 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.
Biggest changeOur 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, including tariffs or other trade restrictions; • 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; 21 • global economic uncertainty caused by global political events, including changes in trade policies, including trade wars, tariffs or other trade restrictions or the threat of such actions; • 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; • perceptions of U.S.-based companies in the regions where we operate or plan to operate; • perceptions of regions or governments in the regions where we operate or plan to operate, resulting in negative publicity or reputational harm; • international disputes, wars, 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.
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.
If such access, unauthorized access or our own operations, cause 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.
Such developments, may include certain Organization for Economic Co-operation and Development's proposals including the implementation of global minimum tax under the Pillar Two model rules, the European Commission’s and certain major jurisdictions’ heightened interest in and taxation of companies participating in the digital economy.
Such developments, may include certain Organization for Economic Co-operation and Development's proposals including the implementation of global minimum tax under the Pillar Two model rules, and the European Commission’s and certain major jurisdictions’ heightened interest in and taxation of companies participating in the digital economy.
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; • 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; 38 • changes in key personnel; and • other events or factors, including changes in general economic, industry and market conditions and trends, international disputes, wars, and political stability.
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; • 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; 39 • 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, and political stability.
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.
In addition, our growth strategy involves a scalable pricing model (including freemium versions of our products and our recent seats-based and consumption-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.
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.
The Company’s inability, for technological, legal 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.
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 17 expand their use of our platform, all of which would materially and adversely affect our business, financial condition and results of operations.
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.
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.
Technical mistakes in complying with the detailed DMCA take-down procedures could subject us to liability for copyright infringement. 33 • 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.
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 33 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.
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.
Access and use of our customer platform is provided via the cloud, which, itself, was disruptive to the previous enterprise software 18 model. If new technologies emerge that are able to deliver marketing software and related applications at lower prices, more efficiently, more conveniently or more securely, such technologies could adversely affect our ability to compete.
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 marketing software and related applications at lower prices, more efficiently, more conveniently or more securely, such technologies could adversely affect our ability to compete.
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 22 highly competitive market for skilled workers and leaders, cost inflation, and workforce participation rates.
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 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 24 arranging new facilities and services. Even with current and planned disaster recovery arrangements, our business could be harmed.
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.
Development of new approaches and processes to provide attribution or 19 remuneration to content creators and building and/or integrating systems that enable creatives to have greater control over the use of their work in the development of AI may be costly and could impact our profit margin if we are unable to monetize such assets.
Development of new approaches and processes to provide attribution or remuneration to content creators and building and/or integrating systems that enable creatives to have greater control over the use of their work in the development of AI may be costly and could impact our profit margin if we are unable to monetize such assets.
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.
Accordingly, if our cybersecurity measures or those of our service 27 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.
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.
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 agentic and generative AI features.
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 30 shared with us in compliance with all applicable data privacy laws.
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.
If customers do not renew their subscriptions, do not purchase additional features or enhanced subscriptions or if attrition rates increase our operating results in future reporting periods may be significantly below the expectations of the public 36 market, equity research analysts or investors, which could harm the price of our common stock.
If customers do not renew their subscriptions, do not purchase additional features or enhanced subscriptions or if attrition rates increase 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 common stock.
Compliance 29 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.
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.
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 23 government spending and volatility in financial markets.
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.
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.
If we fail to successfully promote and maintain our brand, our business could suffer. 18 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.
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.
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 37 our operating results on a period-to-period basis may not be meaningful.
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.
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 17 headcount and operations over the long-term.
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.
We believe 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.
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.
We also cannot be 28 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.
We face significant competition from both established and new companies in the software market in which we operate, which may harm our ability to add new customers, retain existing customers and grow our business. The software market in which we operate is evolving, highly competitive and significantly fragmented.
We face significant competition from both established and new companies in the software market in which we operate, which may harm our ability to add new customers, retain existing customers and grow our business. 16 The software market in which we operate is evolving, highly competitive and significantly fragmented.
Significant changes in the fair value of this portfolio, including changes in the valuation of our investments in privately held companies, could negatively impact our financial results. 20 We have made, and expect in the future to make, strategic investments in privately held companies and private limited partnerships.
Significant changes in the fair value of this portfolio, including changes in the valuation of our investments in privately held companies, could negatively impact our financial results. We have made, and expect in the future to make, strategic investments in privately held companies and private limited partnerships.
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.
As our customers react to global economic conditions and the potential for 24 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.
If such 28 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 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.
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 32 management’s time and attention.
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.
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.
These third parties could also interpret our, or our service providers’ data collection policies or practices as being inconsistent with their policies, which 26 could result in the loss of our ability to collect this data for our customers.
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.
In connection with the operation of some of our business lines, such as business intelligence and AI services, we collect, process and share personal data, such as business contact information or other personal data individuals make available in their professional capacity.
In 25 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.
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.
The Company may be required to commit significant resources to developing new products, software and services, such as Breeze, before knowing whether such investment will result in products or services that the market will accept.
The 19 Company may be required to commit significant resources to developing new products, software and services, such as Breeze, before knowing whether such investment will result in products or services that the market will accept.
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.
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 25 internal operations.
We may be subject 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.
We may be subject to additional requirements under privacy and data protection laws that could lead to additional compliance costs, regulatory scrutiny, claims, and reputational risks that may affect our business.
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.
If we are unable to develop, license or acquire 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.
Uncertainty around new and emerging AI applications such as generative AI content creation, including Breeze, may require additional investment in the development or acquisition of proprietary datasets, machine learning models and systems to test for accuracy, bias and other variables, which are often complex.
Uncertainty around new and emerging AI applications such as agentic AI technologies and generative AI content creation, including Breeze, may require additional investment in the development or acquisition of proprietary datasets, machine learning models and other AI systems to test for accuracy, bias and other variables, which are often complex.
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. 35 From time to time, we may invest in social impact investment funds.
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.
The occurrence of any of these events may have a material adverse effect on our business. 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.
The occurrence of any of these events may have a material adverse effect on our business. In our subscription agreements with customers, we agree to indemnify them against claims by a third party alleging infringement of a valid patent, registered copyright or registered trademark.
The extent to which global pandemics, 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.
The extent to which global pandemics, 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, employees, suppliers and other partners.
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.
Additionally, with the expansion of remote work and resource access, 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.
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.
From time to time, we find 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.
We anticipate future volatility in our consolidated statements of operations due to changes in market prices, observable price changes and impairments of our strategic investments. The resulting gains or losses could be material depending on market conditions and events, particularly in periods with economic uncertainty, inflation, geopolitical conflict, volatile public equity markets or unsettled global market conditions.
We may experience future volatility in our consolidated statements of operations due to changes in market prices, observable price changes and impairments of our strategic investments. The resulting gains or losses could be material depending on market conditions and events, particularly in periods with economic uncertainty, inflation, geopolitical conflict, volatile public equity markets or unsettled global market conditions.
In addition to the other risks described in this Annual Report on Form 10-K, factors that may affect our quarterly operating results include the following: • changes in spending on 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 customer platform, increasing our existing customers’ use of our customer 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.
In addition to the other risks described in this Annual Report on Form 10-K, factors that may affect our quarterly operating results include the following: • changes in spending on 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 customer platform, increasing our existing customers’ use of our customer 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, including economic sanctions, trade policy changes and restrictions, trade wars, tariffs, or the threat posed by such actions.
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 during the acquisition process, including data handling and privacy violations.
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 20 due diligence during the acquisition process, including data handling, cybersecurity risks and privacy violations.
These cyber-attacks could be carried 27 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.
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, malicious insiders, and/or advanced persistent threat groups). In addition, we may experience intrusions on our physical premises by any of these threat actors.
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.
Weak economic conditions or significant uncertainty regarding the stability of financial markets related to stock market volatility, inflation, recession, changes in tariffs or other trade restrictions, trade agreements, trade wars or governmental fiscal, monetary and tax policies, among others, could adversely impact our business, financial condition and operating results.
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.
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 AI, is dependent on adequate research and development resources.
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 26 incur significant liability.
If our security measures, or those of our service providers, are compromised as a result of third-party action, employee, vendor or customer error or wrongful conduct, 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.
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.
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, attacks enhanced or facilitated by AI, computer viruses, unauthorized access, natural disasters, cybersecurity threats, terrorism, geopolitical conflict, war and telecommunication and electrical failures.
Also, our customer platform 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 worldwide.
Also, our customer platform 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 worldwide, particularly for engineers with experience in AI.
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. Our headcount and operations continue to grow. For example, we had 8,246 full-time employees as of December 31, 2024 and 7,663 as of December 31, 2023.
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. Our headcount and operations continue to grow. For example, we had 8,882 full-time employees as of December 31, 2025 and 8,246 as of December 31, 2024.
Our amended and restated certificate of incorporation and bylaws include provisions that: • authorize “blank check” preferred stock, which could be issued by the board of directors 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 of directors, the chief executive officer or the president; • prohibit stockholder action by written consent; 39 • 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.
Our amended and restated certificate of incorporation and bylaws include provisions that: • authorize “blank check” preferred stock, which could be issued by the board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of the board of directors, 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 a majority vote of the holders of our outstanding common stock to amend specified provisions of our charter documents.
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 works from home.
We offer 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 works from home.
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.
This legislation imposes significant obligations on providers and deployers of high-risk AI systems, and encourages providers and deployers of AI systems to account for EU ethical principles in their development and use of these systems.
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 report and in our other public filings.
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 Annual Report on Form 10-K and in our other public filings.
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.
In particular, we compete with many other companies for software developers with high levels of experience in designing, developing and managing cloud-based software, or with AI and machine learning backgrounds, 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.
Any new taxes could adversely affect our domestic and international business operations, and our business and financial performance. Further, 34 existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
Any new tax laws could adversely affect our current tax position, 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.
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, and general and administrative functions.
Our success and future growth depend upon the continued services of our management team, including our co-founder, Dharmesh Shah, our chief executive officer, Yamini Rangan, and other key employees in the areas of research and development, 22 marketing, sales, services, operations, and general and administrative functions.
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.
In the U.S., 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.
As of December 31, 2024, we had an accumulated deficit of $799.8 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.
As of December 31, 2025, we had an accumulated deficit of $753.9 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.
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.
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 conflicts between Russia and Ukraine and in Israel, Gaza, Iran, and in Venezuela.
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 December 31, 2024.
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 $881.13 through December 31, 2025.
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.
These policies could have a significant impact on the operation of our customer platform, impair our attractiveness to customers, and lead to claims or threatened claims, which would harm our business.
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.
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, 23 supply chain disruptions, bankruptcies, inflation and overall uncertainty with respect to the economy, including with respect to trade issues, such as trade wars, tariffs or other trade restrictions or the threat of such actions.
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.
The effects of such conflicts, 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.
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.
Cyber-attacks, denial-of-service attacks, ransomware attacks, supply chain attacks, business email compromises, computer malware, viruses, wrongful intrusions, data breaches social engineering (including phishing), and other compromises are prevalent in our industry, the industries of certain of our service providers and our customers' industries.
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.
Laws and regulations governing privacy, data protection, cybersecurity, and online safety 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 or inhibit our improvement and development of our platform or its features, including AI models.
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.
Additionally, the intellectual property ownership and license rights surrounding AI technologies, which we are increasingly building into our product offerings, have not been fully addressed by U.S. courts or other federal, state or international laws or regulations, and the use or adoption of AI technologies in our products and services may expose us to claims of copyright infringement or other intellectual property infringement or misappropriation, violation of applicable laws or regulations, or breach of contractual obligations to which we are or may become subject.
We have in the past experienced threats and security incidents related to our data and systems, and we may in the future experience other threats, compromises, breaches, or incidents.
Like other companies in our industry, we and our third party vendors have in the past experienced threats and security incidents related to our data and systems, and we may in the future experience other threats, compromises, breaches, or incidents.
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.
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 not be able to utilize a significant portion of our net operating loss carryforwards, which could adversely affect our profitability. As of December 31, 2024, we had $640.0 million of U.S. federal and $723.7 million of state net operating loss carryforwards.
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, 2025, we had $1.1 billion of U.S. federal and $866.1 million of state net operating loss carryforwards.
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.
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.
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.
Additionally, the credit facility restricts 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.
To the extent that a pandemic, harms our business and results of operations, many of the other risks described in this “Risk Factors” section, may be heightened.
To the extent that a pandemic, harms our business and results of operations, many of the other risks described in this “Risk Factors” section, may be heightened. Climate-related risks, regulatory compliance and evolving stakeholder expectations may impact our business.
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.
These attacks and activity are also being facilitated or enhanced by evolving technologies, including AI. 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.
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.
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, including risks relating to the physical impact of climate change and to transitioning to a lower carbon economy. Any of our primary locations may be vulnerable to the adverse effects of climate change.
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.
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. 35 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.
Climate-related events, including the increasing frequency of extreme weather events and their impact on the U.S.’s, Europe’s and other major region’s 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 of our employees, losses and additional costs to maintain or resume operations.
Climate-related events, including the increasing frequency of extreme weather events and their impact on the U.S.’s, Europe’s and other major region’s 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 of our employees, losses and additional costs to maintain or resume operations. 42 In addition to physical and transition risks, regulatory developments, evolving market dynamics and stakeholder expectations regarding climate change may impact our business, financial condition and results of operations.
While we have experience maintaining effective control 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.
While we have experience maintaining effective control 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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CISO has over 25 years of experience working in security and infrastructure for SaaS and hosted services.
Biggest changeOur CISO has over 25 years of experience working in security and infrastructure for SaaS and hosted services. She has a master's degree in cybersecurity and has maintained an active CISSP certification since 2012.
For more information, please see “Item 1A, Risk Factors.” Governance Related to Cybersecurity Risks 42 Board oversight : Our board of directors has final oversight responsibility over cybersecurity-related matters. The full board of directors participates in interactive sessions with management, typically twice a year, dedicated to cybersecurity risks.
For more information, please see “Item 1A, Risk Factors.” Governance Related to Cybersecurity Risks 44 Board oversight : Our board of directors has final oversight responsibility over cybersecurity-related matters. The full board of directors participates in interactive sessions with management, typically twice a year, dedicated to cybersecurity risks.
Cyber Risk Management and Strategy Under the board of directors’and audit committee’s oversight, we have implemented and maintain a risk management program that includes processes for the systematic identification, assessment and treatment (through mitigation, transfer, avoidance and/or acceptance) of cybersecurity risks.
Cyber Risk Management and Strategy Under the board of directors’ and audit committee’s oversight, we have implemented and maintain a risk management program that includes processes for the systematic identification, assessment and treatment (through mitigation, transfer, avoidance and/or acceptance) of cybersecurity risks.
This risk management program addresses, but is not limited to, risks identified by internal auditors and assessors, threat intelligence providers, internal stakeholders, vulnerability management programs and security management programs. We also engage external independent assessors from time to time to conduct cyber risk assessments and to report both findings and recommendations to management.
This risk management program addresses, but is not limited to, risks identified by internal auditors and assessors, threat intelligence providers, internal stakeholders, vulnerability management programs and security management programs. We also engage external independent assessors regularly to conduct cyber risk assessments and to report both findings and recommendations to management.
Removed
She has a master's degree in cybersecurity and has maintained an active CISSP certification since 2012.The CISO reports to the Chief Technology Officer, who has overseen the cybersecurity team since 2020 and has led infrastructure teams at the Company for over 12 years.
Added
Our CISO is part of our product and engineering leadership team and reports to our Senior Vice President, Engineering, who reports to our Chief Product and Technology Officer.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless 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 4. Mine Safety Disclosu res Not Applicable. 43 PART II
Biggest changeRegardless 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 4. Mine Safety Disclosu res Not Applicable. 45 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−3 removed5 unchanged
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans The information required by this Item is incorporated by reference herein to our definitive proxy statement for our 2025 Annual Meeting of Stockholders Outstanding Convertible Senior Notes and Capped Call Options In June 2020, we issued $460 million aggregate principal amount of convertible senior notes due June 1, 2025 (the “2025 Notes”), of which $459.0 million of the principal amount remained outstanding as of December 31, 2024.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers None. Securities Authorized for Issuance Under Equity Compensation Plans The information required by this Item is incorporated by reference herein to our definitive proxy statement for our 2026 Annual Meeting of Stockholders ITEM 6. [ Reserved] Not Applicable. 47
The following graph shows a comparison of the cumulative total return for our common stock, the Nasdaq Computer Index and the S&P 500 Index for each of the last six fiscal years ended December 31, 2024. The graph assumes an initial investment of $100 in each of the Company’s common stock, the Nasdaq Computer Index and the S&P 500.
The following graph shows a comparison of the cumulative total return for our common stock, the Nasdaq Computer Index and the S&P 500 Index for each of the last six fiscal years ended December 31, 2025. The graph assumes an initial investment of $100 in each of the Company’s common stock, the Nasdaq Computer Index and the S&P 500.
As of February 7, 2025, we had 23 holders of record of our common stock. The actual number of shareholders is greater than this number of record holders, and includes shareholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
As of February 6, 2026, we had 24 holders of record of our common stock. The actual number of shareholders is greater than this number of record holders, and includes shareholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Such returns are based on historical results and are not intended to suggest future performance. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 HubSpot $ 100 $ 126 $ 315 $ 524 $ 230 $ 462 $ 554 S&P 500 Index $ 100 $ 129 $ 150 $ 190 $ 153 $ 190 $ 235 Nasdaq Computer Index $ 100 $ 150 $ 225 $ 311 $ 200 $ 332 $ 453 44 Recent Sales of Unregistered Securities None.
Such returns are based on historical results and are not intended to suggest future performance. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 HubSpot $ 100 $ 250 $ 416 $ 182 $ 366 $ 440 $ 253 S&P 500 Index $ 100 $ 116 $ 148 $ 119 $ 148 $ 182 $ 212 Nasdaq Computer Index $ 100 $ 150 $ 207 $ 133 $ 221 $ 301 $ 388 46 Recent Sales of Unregistered Securities None.
Removed
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
Removed
In connection with the offering of the 2025 Notes, the Company purchased capped call options (“Capped 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.
Removed
Between December 31, 2024 and the date of filing this report, the Company settled $89.3 million of the principal balance of the 2025 Notes in cash in response to conversion notices received prior to December 31, 2024. ITEM 6. [ Reserved] Not Applicable. 45

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

89 edited+36 added−20 removed42 unchanged
Biggest changeYear Ended December 31, 2024 2023 2022 (in thousands) Revenue: Subscription $ 2,569,546 $ 2,123,479 $ 1,690,538 Professional services and other 57,997 46,751 40,431 Total revenue 2,627,543 2,170,230 1,730,969 Cost of revenue: Subscription 336,878 283,675 251,274 Professional services and other 56,387 54,687 56,746 Total cost of revenue 393,265 338,362 308,020 Gross profit 2,234,278 1,831,868 1,422,949 Operating expenses: Research and development 778,714 617,745 442,022 Sales and marketing 1,218,844 1,068,560 886,069 General and administrative 300,332 249,649 197,720 Restructuring 3,990 96,843 — Total operating expenses 2,301,880 2,032,797 1,525,811 Loss from operations (67,602 ) (200,929 ) (102,862 ) Other income (expense) Interest income 82,706 58,828 15,000 Interest expense (3,721 ) (3,801 ) (3,762 ) Other income (expense) 17,294 (4,673 ) (6,829 ) Total other income (expense) 96,279 50,354 4,409 Income (loss) before income tax expense 28,677 (150,575 ) (98,453 ) Income tax expense (24,049 ) (13,935 ) (8,894 ) Net income (loss) $ 4,628 $ (164,510 ) $ (107,347 ) 50 Year Ended December 31, 2024 2023 2022 Revenue: Subscription 98 % 98 % 98 % Professional services and other 2 2 2 Total revenue 100 100 100 Cost of revenue: Subscription 13 13 15 Professional services and other 2 3 3 Total cost of revenue 15 16 18 Gross profit 85 84 82 Operating expenses: Research and development 30 28 26 Sales and marketing 46 49 51 General and administrative 11 12 11 Restructuring 0 4 0 Total operating expenses 88 94 88 Loss from operations (3 ) (9 ) (6 ) Total other income (expense) 4 2 0 Income (loss) before income tax expense 1 (7 ) (6 ) Income tax expense (1 ) (1 ) (1 ) Net income (loss) 0 % -8 % -6 % * Percentages are based on actual values.
Biggest changeYear 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.
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.
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.
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. 58 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 Annual Report on Form 10-K.
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.
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. 47 Average Subscription Revenue per Customer.
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 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 trade 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.
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.
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 change in our industry.
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.
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.
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.
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 Notes.
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.
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 Company use.
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.
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 commissions for upgrade contracts are deferred and amortized on a straight-line basis over the remaining estimated customer relationship period of the related customer.
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.
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 than similar key business metrics used by other companies.
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.
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 our Commerce Hub. Our customers do not have the right to take possession of the online software products.
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.
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 we define as facilities, depreciation of fixed assets, and costs related to information technology.
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 our internally built software platform, as well as professional fees and allocated overhead costs, which we define as facilities, 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.
A discussion of our financial condition, results of operations, and cash flows for the year ended December 31, 2023 compared to the year ended December 31, 2022 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, 2023, filed on February 14, 2024.
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.
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, existing and new domestic and foreign laws and regulations, all of which are beyond our control.
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.
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 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.
Over 1,700 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.
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.
We believe our working capital is sufficient to support our operations for at least the next 12 months. At December 31, 2024, $184.3 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.
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.
Net Cash and Cash Equivalents 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 strategic investments, and capitalization of software development costs.
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.
In instances where there are not sufficient data points, 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.
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.
For the year ended December 31, 2024, cash provided by financing activities 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. 56 For the year ended December 31, 2023, cash provided by financing activities consisted of $47.7 million of proceeds related to issuance of common stock under stock plans, offset by $10.7 million used for payment of employee taxes related to the net share settlement of stock-based awards.
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.
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.
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.
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.
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.
These judgments 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.
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.
Other income 49 (expense) primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities and any gains, losses, or impairments on our strategic investments. Income Tax Expense Income tax expense consists of current and deferred taxes for U.S. and foreign jurisdictions.
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.
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 and useful life 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.
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.
Allocated overhead expenses increased due to an increase in shared company expenses associated with infrastructure 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 and increased proportional allocation of shared company expenses associated with headcount in research and development.
Net cash and cash equivalents provided by operating activities during the year ended December 31, 2023 primarily reflected our net loss of $164.5 million and $42.9 million accretion of bond discounts, offset by non-cash expenses that included $72.7 million of depreciation and amortization, restructuring charges of $67.3 million, $432.3 million in stock-based compensation, $1.7 million on impairment of strategic investments, and $2.0 million of amortization of debt issuance costs.
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.
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, the addition of customers from the acquisition of Clearbit, and the impact of foreign currency translation primarily attributable to the increase in the value of the U.S.
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.
Subscription based revenue is recognized net of consideration paid to Solutions Partners when those Solutions Partners purchase a subscription to our customer platform. Professional services and other revenue are derived primarily from customer on-boarding, training, and consulting services.
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.
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 Commerce Hub as the services are provided.
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.
Working capital sources of cash and cash equivalents primarily included a $109.9 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $29.2 million decrease in right-of-use assets, and $79.9 million increase in accrued expenses and other liabilities.
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 $47.0 million increase in prepaid expenses and other assets, a $36.9 million decrease in operating lease liabilities, a $14.0 million decrease in accounts payable related to timing of bill payments, a $81.2 million increase in deferred commissions, and a $57.6 million increase in accounts receivable as a result of increased billings to customers.
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.
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.
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.
We calculate SSP for each type of online software product and professional service offering by averaging the selling price of all purchases within the trailing four calendar quarters.
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.
Marketing programs increased due to the timing and size of certain marketing efforts as we made investments in attracting new customers.
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.
Average Subscription Revenue per Customer also decreased from $11,384 for the year ended December 31, 2023 to $11,343 for the year ended December 31, 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.
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.
These uses of cash were offset by $1.5 billion 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.
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.
Subscription revenue accounted for 98% of our total revenue for the years ended December 31, 2024, 2023, and 2022. 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 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.
It also consists of costs associated with our other service offerings, including Commerce Hub. 48 We expect that the cost of subscription and professional services and other revenue will increase in absolute dollars as we continue to invest in growing our business.
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.
The increase in income tax expense was primarily due to an increase in income generated in tax paying jurisdictions. 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.
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.
Results of Operations The following tables set forth certain consolidated financial data in dollar amounts and as a percentage of total revenue.
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.
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 Commerce Hub.
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.
Employee-related costs decreased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services. 52 Research and Development Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Research and development $ 778,714 $ 617,745 $ 160,969 26 % Percentage of total revenue 30 % 28 % The increase in research and development expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change (in thousands) Employee-related costs $ 141,720 Hosting expenses 6,479 Allocated overhead expenses 9,805 Professional fees 2,965 $ 160,969 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.
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.
Our AI-powered engagement hubs include Marketing, Sales, Service, Operations, Content, and Commerce, as well as other tools and integrations that enable companies to attract, engage, and delight customers throughout the customer lifecycle.
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.
Net cash and cash equivalents used in investing activities during the year ended December 31, 2023 consisted primarily of $1.6 billion purchases of investments, $33.7 million of purchased property and equipment, $14.4 million of purchases of strategic investments, $66.4 million of capitalized software development costs, and $142.1 million for a business acquisition.
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.
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 an academy of educational content.
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.
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.
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.
As of December 31, 2024, the total obligation for operating leases was $356.6 million, of which $51.8 million is expected in the next twelve months. As of December 31, 2024, our vendor commitment was $681.0 million, of which $247.7 million is expected in the next twelve months.
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.
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.
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.
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 years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) Cash and cash equivalents $ 512,667 $ 387,987 $ 331,022 Working capital 1,060,204 929,532 1,000,058 Net cash and cash equivalents provided by operating activities 598,599 350,971 273,174 Net cash and cash equivalents used in investing activities (515,861 ) (334,766 ) (319,658 ) Net cash and cash equivalents provided by financing activities 53,495 37,011 7,428 55 Our cash and cash equivalents at December 31, 2024 were held for working capital purposes and for a business acquisition (See Note 19 of the Notes to Consolidated Financial Statements).
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.
The increase in gain on strategic investments is due to gains of $21.2 million from observable price changes in the value of certain strategic investments in 2024 that did not occur in 2023.
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.
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 may break-even from a profitability perspective in the next 12 months.
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.
Sales and Marketing Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Sales and marketing $ 1,218,844 $ 1,068,560 $ 150,284 14 % Percentage of total revenue 46 % 49 % The increase in sales and marketing expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change (in thousands) Employee-related costs $ 125,840 Marketing programs 14,862 Solutions Partner commissions 3,966 Software and services 6,147 Allocated overhead expenses 1,143 Intangible asset write off (1,674 ) $ 150,284 Employee-related costs increased as a result of increased headcount as we expanded our selling and marketing organizations to grow our customer base.
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.
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.
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.
Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Subscription cost of revenue $ 336,878 $ 283,675 $ 53,203 19 % Percentage of subscription revenue 13 % 13 % The increase in subscription cost of revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change (in thousands) Amortization of capitalized software development costs $ 27,937 Subscription and hosting costs 16,766 Amortization of acquired technology 5,402 Employee-related costs 3,727 Allocated overhead expenses (629 ) $ 53,203 Subscription and hosting costs increased primarily due to growth in our Customer base from 205,091 at December 31, 2023 to 247,939 at December 31, 2024.
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.
Off Balance Sheet Arrangements We have no material off-balance sheet arrangements at December 31, 2024 or 2023 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.
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. 60 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.
Professional services and other revenue increased during 2024 primarily due to an increase in other revenue streams, including Commerce Hub. 51 Cost of Revenue, Gross Profit and Gross Margin Percentage Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Total cost of revenue $ 393,265 $ 338,362 $ 54,903 16 % Gross profit $ 2,234,278 $ 1,831,868 $ 402,410 22 % Gross margin 85 % 84 % Total cost of revenue increased during 2024 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.
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.
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 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.
Management evaluates the useful 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.
Management evaluates the useful 61 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 also generate revenue through usage and consumption-based models. Customers pay additional fees if the number of contacts stored 46 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.
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.
Professional fees increased due to an increase in the use of third-party services and contractors.
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.
Year Ended December 31, 2024 2023 2022 Customers 247,939 205,091 167,386 Average Subscription Revenue per Customer $ 11,343 $ 11,384 $ 11,163 Net Revenue Retention 102.2 % 103.9 % 110.3 % Customers .
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 .
In addition, during 2023, we recorded a one-time write off of an intangible asset which did not recur in 2024. 53 General and Administrative Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) General and administrative $ 300,332 $ 249,649 $ 50,683 20 % Percentage of total revenue 11 % 12 % The increase in general and administrative expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change (in thousands) Employee-related costs $ 34,681 Customer credit card fees 4,519 Professional fees 5,037 Software and services 5,025 Allocated overhead expenses 1,421 $ 50,683 Employee-related costs increased as a result of increased headcount as we grew our business and required additional personnel to support our expanded operations.
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.
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. 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 acquisitions in 2025 and later in 2024.
Hosting expense increased due to incremental spend associated with our product development infrastructure that is unrelated to the hosting of our customer platform for our paying Customers. Allocated overhead expenses increased due to the increased proportional allocation of shared company expenses associated with the growth in research and development headcount relative to other departments.
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.
Subscription based revenue is derived from customers using our customer platform for their marketing, sales, service, operations, and content management needs. Our customer platform includes a system of engagement for efficiently engaging customers through SEO, web content, social, blogging, email, marketing automation, messaging, support ticketing, knowledge base, commerce, conversation routing, video hosting, and data enrichment.
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.
Business Combinations We account for business acquisitions using the purchase 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.
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.
See Note 10 and Note 19 of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report. Letters of Credit As of December 31, 2024, we had a total of $4.1 million in letters of credit outstanding for office space. These irrevocable letters of credit are expected to remain in effect, in some cases, until 2029.
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 increase in impairment of strategic investments is due to a $5.3 million loss recorded in 2024 from the decrease in value of our strategic investments compared to $1.7 million in 2023. 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.
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.
Other (Expense) Income Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Other income (expense) $ 17,294 $ (4,673 ) $ 21,967 470 % Percentage of total revenue 1 % * * not meaningful The change in other expense during 2024 is primarily due to the following: Change (in thousands) Gain on strategic investments $ 21,245 Impairment of strategic investments (3,602 ) Foreign currency transaction gains and losses 4,324 $ 21,967 Other income (expense) primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities and any gains or impairments on our strategic investments.
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.
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 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 had net income of $4.6 million in 2024, net losses of $164.5 million in 2023, and $107.3 million in 2022. 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.
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.
Restructuring Year Ended December 31, (dollars in thousands) 2024 2023 $ Change % Change Restructuring $ 3,990 $ 96,843 $ (92,853 ) (96 %) Percentage of total revenue * 4 % Restructuring charges in 2024 consisted of variable facilities-related costs on unused space.
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.
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.
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.
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, 2024, we had 8,246 full-time employees and 247,939 Customers of varying sizes in more than 135 countries, representing many industries.
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.
Software and services expense increased as we continued to invest in tools to expand our sales and marketing efforts. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure.
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.
Interest Expense Year Ended December 31, Change 2024 2023 Amount % (dollars in thousands) Interest expense $ (3,721 ) $ (3,801 ) $ (80 ) (2 %) Percentage of total revenue * * * not meaningful 54 Interest expense primarily consists of amortization of the debt issuance costs and contractual interest expense related to our 2025 Notes.
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.
Solutions Partner commissions increased as a result of increased revenue generated through our Solutions Partners, partially offset by certain Solutions Partner commissions that are deferred and amortized over two to four years as we changed the duration of certain Solutions Partner commissions terms from lifetime to three years in 2023.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+3 added−6 removed1 unchanged
Biggest changeWe 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 $460.0 million aggregate principal amount of convertible senior notes due June 1, 2025, of which $459.0 million remained outstanding as of December 31, 2024.
Biggest changeWe do not currently hedge our interest rate exposure and do not enter into financial instruments for trading or speculative purposes. 62
We have experienced and will continue to experience fluctuations in our net income (loss) as a result of transaction gains or losses related to revaluing monetary assets and liabilities that are denominated in currencies other than the functional currency of the entities in which they are recorded.
We have experienced and will continue to experience fluctuations in our net (loss) income as a result of transaction gains or losses related to revaluing monetary assets and liabilities that are denominated in currencies other than the functional currency of the entities in which they are recorded.
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.
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. Our cash and cash equivalents and short- and long-term investments are subject to market risk due to changes in interest rates.
See Note 15 in the Notes to the Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K. Interest Rate Sensitivity 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.
Interest Rate Sensitivity 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.
In the first quarter of 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.
Our hedging program allows 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 15 in the Notes to Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K.
Removed
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.
Added
Fixed rate securities may have their market value adversely affected due to a rise in interest rates.
Removed
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.
Added
As our short- and long-term investments are classified as available-for-sale, no gains or losses are recognized in our consolidated statements of operations due to changes in interest rates unless such securities are sold prior to maturity or the decline in fair value is caused by expected credit losses.
Removed
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.
Added
As of December 31, 2025, a hypothetical increase of 100-basis points in interest rates would not have a material impact on the value of our cash and cash equivalents or short- and long-term investments in our consolidated financial statements. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur.
Removed
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 government agencies, related to concerns over inflation risk.
Removed
The table below provides a sensitivity analysis of hypothetical 10% changes of our stock price as of December 31, 2024 and the estimated impact on the fair value of the 2025 Notes.
Removed
The selected scenarios are not predictions of future events, but rather are intended to illustrate the effect such event may have on the fair value of the 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 $ 1,242,450 $ 111,466 10 % No change $ 1,130,984 $ — — 10% decrease $ 1,016,020 $ (114,964 ) (10 )% 59

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