There’s no more obvious IPO candidate among Boston-area technology companies than HubSpot—especially if you ask HubSpot.
The marketing software company, founded in 2006, has been keen to discuss its hopes of going public. And it’s not alone in those ambitions: HubSpot is one of the bigger technology bets in the Boston region, having raised about $100 million in private financing from the likes of Google Ventures, Salesforce.com, and firms that typically bankroll public companies.
The topic came up again at a Tuesday briefing at HubSpot headquarters in Cambridge. “The earliest we want to do it is early next year,” COO J.D. Sherman said. “We’re not in a rush,” CEO Brian Halligan added.
Why be so vocal with your plans, when most private company executives would just say “no comment”? Well, this is a marketing company, after all. But HubSpot also has a culture that embraces transparency, which is something Halligan has noted in publishing the company’s annual revenue numbers.
And as we’ve noted before, talking up an IPO can also be a way of letting would-be corporate buyers know that you’re available, and potentially attractive.
That kind of positioning matters in the online marketing software world. In just the past few months, we’ve seen some prominent evidence that the market for these companies is starting to heat up.
The big reasons are pretty simple. Cheaper Web publishing, tons of social media tools, and an explosion of mobile devices have given a growing bunch of digital weapons to companies that want to sell their wares.
At the same time, old-school business software providers (Oracle, SAP, Microsoft) face increasing competition from challengers that grew up in the Web era, rather than the boxes-of-software days (HubSpot investor Salesforce; along with Amazon and Google).
The bottom line is, there are some relatively sizable companies being built in this sector—and they are offering tools that all-in-one business software companies are probably going to want at some point.
Yes, they offer different features, and serve different groups of customers, so the comparisons aren’t necessarily identical. But looking at two recent big movers in the marketing-software market can give you some idea of how HubSpot stacks up, thanks to the private company’s decision to publish its top-line revenue numbers.
I also got a rough idea from HubSpot marketing chief Mike Volpe of the company’s recent annual loss, which it hasn’t published, which provides a better sense of where HubSpot fits into this picture. As you’ll see, at least from this back-of-the-envelope portrait, HubSpot appears to compare closest to Marketo, which recently filed to go public as well.
(I should also disclose that HubSpot co-founder and CTO Dharmesh Shah is one of Xconomy’s angel investors, but all editorial decisions on coverage are made independently by editors.)
Marketo
Recently filed paperwork with federal regulators for its initial public offering, seeking $75 million. Marketo has more than 2,000 customers, and recently expanded into serving larger companies. Based in San Mateo, CA.
Revenues:
2010: $14 million
2011: $32.4 million (131 percent increase)
2012: $58.4 million (80 percent increase)
Net losses:
2010: $11.8 million
2011: $22.6 million
2012: $34.4 million
Eloqua
A public company when it was acquired by Oracle in December 2012 for $871 million. Eloqua serves large and small-to-medium clients, reporting more than 1,200 customers. Based in Vienna, VA.
Revenues:
2010: $50.8 million
2011: $71.3 million (40 percent increase)
2012: $95.8 million (34 percent increase)
Net losses:
2010: $1.5 million
2011: $6.2 million
2012: $11.2 million
(I’ve backed out a big stock-related expense that Eloqua listed in its losses to give a more figure more comparable to the other two companies.)
HubSpot
Private, says it expects to file paperwork for an initial public offering in early 2014 at the soonest. More than 8,400 customers as of the end of 2012, attempting to expand beyond its traditional base of small and medium-sized businesses. Based in Cambridge, MA.
Revenues:
2010: $16 million
2011: $29 million (81 percent increase)
2012: $52.5 million (82 percent increase)
Losses:
HubSpot has not published these figures as it does with annual revenues. But Chief Marketing Officer Mike Volpe tells Xconomy that HubSpot lost “less than half” of the $34.4 million that Marketo lost in 2012.
