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Cloud Stocks: HubSpot Counts on its API Strategy

Posted on Wednesday, May 22nd 2019

According to a Grand View Research Report, the global digital marketing software market is estimated to grow 15% annually through to 2025. Cambridge, Massachusetts-based HubSpot (NYSE:HUBS) is a leading player in the inbound marketing campaigns segment that recently reported a strong quarter.

HubSpot’s Financials

For the recently announced first quarter results, HubSpot’s revenues grew 33% over the year to $151.8 million, ahead of the Street’s forecast of $148 million and higher than the management’s outlook of $146.5-$147.5 million. Growth was primarily driven by the 36% growth in customer base to 56,628. Non-GAAP EPS was $0.37, up an impressive 208.3% and ahead of the market’s estimate of $0.30.

By segment, subscription revenues grew 33% to $144.2 million and Professional services and other revenues grew 27% over the year to $7.6 million.

Among other operating metrics, total average subscription revenue per customer fell 2% over the year to $9,811. Deferred revenues grew 28% to $193.5 million. Calculated billings, defined as revenues plus the change in deferred revenues grew 27% to $160 million. International revenues increased 42% over the year and accounted for 39% of the quarter’s revenues.

For the current quarter, HubSpot expects revenues of $156.5-$157.5 million with an EPS of $0.24-$0.26. The market was looking for revenues of $155.9 million with an EPS of $0.23. HubSpot expects to end the year with revenues of $655.5-$658.5 million with an EPS of $1.26-$1.30. The market was looking for revenues of $651.77 million for the year with an EPS of $1.15.

HubSpot’s Product Expansion

Meanwhile, HubSpot’s services are gaining strong recognition. Recently it announced that it had achieved Amazon Web Services (AWS) Digital Customer Experience Competency status for Marketing Automation. The designation makes HubSpot a member of the Amazon Partner Network, thus certifying that it possesses deep AWS expertise and can deliver solutions seamlessly on AWS.

Recently, HubSpot also announced that it had integrated its service with LinkedIn so that LinkedIn ads are now available in the Professional and Enterprise tiers of Marketing Hub as part of the HubSpot Ads tool. HubSpot’s customers will be now able to target ads at their ideal customer across the buyer’s entire journey. Customers will be able to automatically sync, de-dupe, and nurture any new leads from LinkedIn’s Lead Gen ads to the HubSpot CRM, analyze LinkedIn ad spend with true ROI reporting, and align LinkedIn ads with the rest of the company’s marketing efforts within HubSpot. HubSpot Ads had earlier included integrations with Facebook and Google.

HubSpot’s API Focus

HubSpot is driving growth by focusing on its API strategy. To help its customers leverage the explosion of SaaS applications, it is working towards building a platform that can plug all these applications and orchestrate all of them to create a seamless experience. HubSpot currently offers more than 300 integrations that have been built using its integration partners. These integrations are in addition to the 10 natively built integrations.

HubSpot’s analysis reveals that an average HubSpot customer integrates five different applications into HubSpot. As part of its initiative to further strengthen HubSpot as a platform, and to invite more integrations, HubSpot is building even more API end points and investing in improving the developer experience.

In December last year, HubSpot also launched its own venture capital firm, HubSpot Ventures. The $30 million fund will focus on providing early stage funding for upcoming SaaS companies. Prior to setting up the VC, HubSpot had directly invested in nearly 10 start-ups. The Venture fund will now invest in startups that are aligned with its mission to help organizations grow better and add value to the ecosystem of companies benefiting from the HubSpot platform.

Its stock is trading at $188.74 with a market capitalization of $7.95 billion. It had touched a year high of $192.49 earlier this month. Like other tech stocks, it had fallen to a year low of $108.39 in December last year.

This segment is a part in the series : Cloud Stocks

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