Hackathons are events in which diverse teams work together to explore and develop solutions, software, or even ideas. Hackathons have been recognized not only as public events for hacking but also as a corporate mechanism for innovation. Hackathons are a way for established large-scale agile organizations to achieve increased employee wellbeing as well as being a curator for innovation and developing new products. The sudden transition to the work-from-home mode caused by the COVID-19 pandemic first put many corporate events requiring collocation, such as hackathons, temporarily on hold and then motivated companies to find ways to hold these events virtually. In this paper, we report our findings from investigating hackathons in the context of a large agile company by first exploring the general benefits and challenges of hackathons and then trying to understand how they were affected by the virtual setup. We conducted nine interviews, surveyed 23 employees, and analyzed a hackathon demo. We found that hackathons provide both individual and organizational benefits of innovation, personal interests, and acquiring new skills and competencies. However, several challenges such as added stress due to stopping the regular work, employees fearing not having enough contribution to deliver, and potential mismatch between individual and organizational goals were also found. With respect to the virtual setup, we found that virtual hackathons are not diminishing the innovation benefits. However, some negative effects surfaced on the social and networking side.