Is HubSpot (NYSE:HUBS) Using Debt Sensibly?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, HubSpot, Inc. (NYSE:HUBS) does carry debt. But the more important question is: how much risk is that debt creating?

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. If things get really bad, the lenders can take control of the business. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is HubSpot's Debt?

The image below, which you can click on for greater detail, shows that HubSpot had debt of US$368.9m at the end of March 2025, a reduction from US$456.7m over a year. However, it does have US$2.04b in cash offsetting this, leading to net cash of US$1.67b.

How Healthy Is HubSpot's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that HubSpot had liabilities of US$1.58b due within 12 months and liabilities of US$314.7m due beyond that. Offsetting this, it had US$2.04b in cash and US$294.5m in receivables that were due within 12 months. So it actually has US$445.6m more liquid assets than total liabilities.

Having regard to HubSpot's size, it seems that its liquid assets are well balanced with its total liabilities. So it's very unlikely that the US$32.4b company is short on cash, but still worth keeping an eye on the balance sheet. Succinctly put, HubSpot boasts net cash, so it's fair to say it does not have a heavy debt load! The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine HubSpot's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

See our latest analysis for HubSpot

Over 12 months, HubSpot reported revenue of US$2.7b, which is a gain of 19%, although it did not report any earnings before interest and tax. We usually like to see faster growth from unprofitable companies, but each to their own.

So How Risky Is HubSpot?

While HubSpot lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow US$488m. So although it is loss-making, it doesn't seem to have too much near-term balance sheet risk, keeping in mind the net cash. We'll feel more comfortable with the stock once EBIT is positive, given the lacklustre revenue growth. For riskier companies like HubSpot I always like to keep an eye on the long term profit and revenue trends. Fortunately, you can click to see our interactive graph of its profit, revenue, and operating cashflow.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.