HubSpot, Inc. (NYSE: HUBS) today announced its intention to offer, subject to market conditions and other factors, $400 million aggregate principal amount of Convertible Senior Notes due 2025 in a private offering (the "offering") to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. HubSpot also expects to grant the initial purchasers of the notes an option to purchase up to an additional $60 million aggregate principal amount of notes .

The notes will be senior, unsecured obligations of HubSpot, and interest on the notes will be payable semi-annually in arrears. The notes will be convertible into cash, shares of HubSpot's common stock or a combination thereof, at HubSpot's election. The interest rate, conversion rate and other terms of the notes are to be determined upon pricing of the offering.

In connection with the pricing of the notes, HubSpot expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers of the notes or their affiliates or other financial institutions (the "option counterparties"). The capped call transactions are expected generally to reduce potential dilution to HubSpot's common stock upon conversion of any notes and/or offset any potential cash payments HubSpot is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap.

HubSpot expects that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates will purchase shares of HubSpot's common stock and/or enter into various derivative transactions with respect to HubSpot's common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of HubSpot's common stock or the notes at that time.

In addition, HubSpot expects that the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to HubSpot's common stock and/or purchasing or selling HubSpot's common stock or other securities of HubSpot in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so on each exercise date for the capped call transactions, which are expected to occur on each trading day during the 30 trading day period beginning on the 31st scheduled trading day prior to the maturity date of the notes, or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversion of the notes). This activity could also cause a decrease or avoid an increase in the market price of HubSpot's common stock or the notes, which could affect the ability of noteholders to convert the notes and, to the extent the activity occurs following a conversion or during any observation period related to a conversion of notes, it could affect the amount and value of the consideration that noteholders will receive upon conversion of such notes.

HubSpot intends to use a portion of the net proceeds from the offering of notes to pay the cost of the capped call transactions. If the initial purchasers exercise their option to purchase additional notes, HubSpot expects to use a portion of the net proceeds from the sale of the additional notes to enter into additional capped call transactions with the option counterparties. HubSpot intends to use the remainder of the net proceeds from the offering of notes to fund the cash portion, if any, of the consideration used to finance any repurchases or exchanges of a portion of HubSpot's 0.25% Convertible Senior Notes due 2022 (the "2022 notes") described below and for working capital and other general corporate purposes, which may include potential acquisitions and strategic transactions. From time to time, HubSpot evaluates potential acquisitions and strategic transactions of businesses, technologies or products. However, HubSpot has not designated any specific uses and has no current agreements with respect to any material acquisition or strategic transaction. These intentions are subject to change.

Contemporaneously with the pricing of the notes, HubSpot expects to enter into one or more separate and individually negotiated transactions with one or more holders of the 2022 notes to repurchase or exchange a portion of the 2022 notes on terms to be negotiated with each holder (each, a "note repurchase"). The terms of each note repurchase are anticipated to be individually negotiated with each holder of 2022 notes and will depend on several factors, including the market price of HubSpot's common stock and the trading price of the 2022 notes at the time of each such note repurchase. No assurance can be given as to how much, if any, of these 2022 notes will be repurchased or exchanged or the terms on which they will be repurchased or exchanged. The consideration for any such note repurchases may include cash, shares of HubSpot's common stock, or a combination thereof.

HubSpot expects that holders of the 2022 notes that sell or exchange their 2022 notes as described above may enter into or unwind various derivatives with respect to HubSpot's common stock (including entering into derivatives with one or more of the initial purchasers in the notes offering or their respective affiliates) and/or purchase or sell shares of HubSpot's common stock concurrently with or shortly after the pricing of the notes. This activity could affect the market price of HubSpot's common stock and the initial conversion price of the notes.

In connection with the issuance of the 2022 notes, HubSpot entered into convertible note hedge transactions (the "existing convertible note hedge transactions") with certain financial institutions (the "existing counterparties"). HubSpot also entered into separate warrant transactions (the "existing warrant transactions") with the existing counterparties. To the extent HubSpot effects note repurchases, HubSpot intends to enter into agreements with the existing counterparties to terminate a portion of: (i) the existing convertible note hedge transactions in a notional amount corresponding to the principal amount of 2022 notes repurchased or exchanged and (ii) the existing warrant transactions with respect to a number of shares equal to the notional shares underlying such 2022 notes repurchased or exchanged. In connection with such terminations and the related unwinding of the existing hedge position of the existing counterparties with respect to such transactions, such existing counterparties and/or their respective affiliates may sell shares of HubSpot's common stock in secondary market transactions, and/or unwind various derivative transactions with respect to HubSpot's common stock concurrently with or shortly after the pricing of the notes. In connection with such terminations, HubSpot anticipates that it will receive cash from the existing counterparties, which HubSpot intends to use for general corporate purposes.

The repurchase or exchange of the 2022 notes and the unwind of the existing convertible note hedge transactions and the existing warrant transactions described above, and the potential related market activities by holders of the 2022 notes participating in the note repurchases and the existing counterparties, as applicable, could increase (or reduce the size of any decrease in) or decrease (or reduce the size of any increase in) the market price of HubSpot's common stock, which may affect the trading price of the notes at that time and the initial conversion price of the notes. HubSpot cannot predict the magnitude of such market activity or the overall effect it will have on the price of the notes or HubSpot's common stock.

The notes will only be offered to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. Neither the notes nor the shares of HubSpot's common stock potentially issuable upon conversion of the notes, if any, have been, or will be, registered under the Securities Act or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States except pursuant to an applicable exemption from such registration requirements.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful.

About HubSpot

HubSpot is a leading growth platform. Since 2006, HubSpot has been on a mission to make the world more inbound. Today, over 78,700 total customers in more than 120 countries use HubSpot's award-winning software, services, and support to transform the way they attract, engage, and delight customers. Comprised of Marketing Hub, Sales Hub, Service Hub, CMS Hub, and a powerful free CRM, HubSpot gives companies the tools they need to Grow Better.