HubSpot IPO Nets $125 Million, Shares Begin Trading at $33 Per Share

Another day, another through-the-roof tech IPO success story.

BostInno is reporting that HubSpot (NYSE:HUBS), the Cambridge, Massachusetts-based software firm that creates and installs marketing solutions for small and medium sized businesses, ended its IPO netting $125 million dollars, and began trading their public stock at $33 per share, 32 percent higher than the original anticipated startup share cost of $25 per share. The IPO is intended to bankroll the expansion of the Cambridge firm’s inbound marketing software business.

Shares in HubSpot were trading in the $31 range shortly after the opening bell Thursday morning.

At the $31 level, HubSpot’s market valuation is $941 million, putting the company on the cusp of becoming Boston’s next billion-dollar tech company.

Founded in 2006, HubSpot’s software helps small and midsize companies increase their business through web content, such as blogs, search engine optimization, marketing automation, and analytics, among other things.

HubSpot, which generated $51 million in revenue during the first half of the year, has also added offerings for sales software, website personalization and, most recently, customer relationship management CRM).

Along with HubSpot founders Dharmesh Shah and Brian Halligan — who own 8.8 percent and 4.9 percent of HubSpot shares, respectively — other top shareholders include prominent venture capital firms. Among them: General Catalyst Partners (27 percent of shares), Matrix Partners (17 percent), Sequoia Capital (10 percent), and CRV (5 percent).

HubSpot had raised $100 million in funding and employs more than 700.

An IPO is first and foremost a financing event, and it’s a timely one for HubSpot, which might otherwise have needed debt to cover its expenses.

Bidness ETC. is reporting that HubSoft offered five million shares in its initial public offering (IPO) and has managed to raise $125 million, which is higher in comparison to its previous targets. The underwriters have an option of buying 750,000 more shares, exercisable within 30 days of the prospectus’s release. The raised amount will increase if the option is exercised.

During the half year ending June 30, HubSpot reported revenues of $51.3 million, a 46 percent year-over-year (YoY) increase. However, HubSpot made a net loss of $17.7 million during the period as HubSpot’s management continued to invest in sales and marketing to bolster growth potential.

The company intends to use the raised money for working capital requirements. It will also pay the balance on its line of credit, which amounts to approximately $18 million.

Underwriters for HubSpot’s IPO are JPMorgan Chase & Co (NYSE:JPM) and Morgan Stanley (NYSE:MS). The company previously raised $100.5 million in six rounds of funding. Investors in the company include Google ventures, Salesforce, and Scale Venture Partners, among others.

[Image courtesy of BostInno]

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