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Cloud Stocks: HubSpot Soars to a New High

Posted on Monday, Aug 26th 2019

Inbound-marketing software specialist HubSpot recently reported a strong second quarter that blew past expectations. The market is pleased with its strong performance and its stock has soared to a new high.

HubSpot’s Financials

HubSpot’s second quarter revenue grew 33% over the year to $163.3 million, ahead of the Street’s forecast of $157.3 million and higher than the company outlook of $156.5-$157.5 million. GAAP net loss was $17.4 million or $0.41 per share. Non-GAAP net income was $17.6 million or $0.42 per share, ahead of the market’s estimate of $0.25 per share.

By segment, subscription revenues grew 34% to $155.9 million and Professional services and other revenues grew 23% over the year to $7.4 million.

Among other operating metrics, total customers grew 35% to 64,836. Total average subscription revenue per customer fell 1% over the year to $9,913. International revenues increased 41% over the year and accounted for 40% of the quarter’s revenues.

For the third quarter, HubSpot expects revenues of $168-$169 million with non-GAAP EPS of $0.22-$0.24. The market was looking for revenues of $167.3 million with an EPS of $0.22.

Based on its strong performance, HubSpot raised its full-year guidance. For the full year, it now expects revenues of $663-$665 million with non-GAAP EPS of $1.39-$1.41. Its earlier forecast was for revenues of $655.5-$658.5 million with an EPS of $1.26-$1.30. The market was looking for revenues of $664.6 million for the year with an EPS of $1.4.

HubSpot’s Expansion

HubSpot had been investing on expanding its products and making its platform even more sticky. Its strategy is to shift from an applications company to much more of a platform company. 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.

Cross-platform adoption has seen significant traction. Its multi-product customers have increased 80% from 14,000 a year ago to about 25,000. Its youngest product the Service Hub has surpassed 5,000 paying customers. HubSpot now plans to increase its headcount over the next couple of quarters.

HubSpot is also expanding internationally. Over the past few years, it has opened offices in Ireland, Australia, Japan, Singapore, and Columbia and does business in more than 100 countries. It recently opened its ninth international office in Paris.

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 $192.93 with a market capitalization of $8.2 billion. It had touched a 52-week high of $196.79 earlier this month. It had fallen to a 52-week low of $108.39 in December last year.

This segment is a part in the series : Cloud Stocks

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