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Cloud Stocks: HubSpot Rethinks Pricing Model to Support Businesses

Posted on Tuesday, Nov 10th 2020

Inbound marketing specialist HubSpot (NYSE:HUBS) recently reported its third quarter results that continued to surpass market expectations. Besides product enhancements, HubSpot has been revamping its pricing model to make its offering more attractive to customers, especially during current uncertain times.

HubSpot’s Financials

HubSpot’s third quarter revenues grew 32% to $228.4 million, ahead of the Street’s forecast of $210.88 million. Non GAAP EPS of $0.28 beat the market’s estimate of $0.13.

By segment, subscription revenues grew 32% to $221.1 million, and Professional services and other revenues dropped 12% to $7.3 million.

Among other operating metrics, its customer base grew 94% to over 95,634. Total average subscription revenue per customer dropped 3% to $9,669. Deferred revenues grew 27% to $259.1 million, and calculated billings grew 38% to $246 million.

HubSpot forecast revenues of $235-237 million for the quarter with an EPS of $0.21-$0.23. The market was looking for revenues of $217.4 million with an EPS of $0.13. HubSpot expects to end the year with revenues of $866-$868 million and an EPS of $1.13-$1.15. The market was looking for revenues of $830.6 million for the year with an EPS of $0.94.

HubSpot’s Product Growth

During the quarter, HubSpot announced the release of Sales Hub Enterprise to enhance custom objects, proposals, sales automation, and economic integrations with platforms such as NetSuite, QuickBooks, and Xero. HubSpot is ensuring that its sales CRM is built with a consumer-grade front-end, enterprise-grade back-end and centralized source of truth on customer data, thus making the CRM experience a lot smoother for its customers.

The new additions to Sales Hub Enterprise include an enterprise-grade CRM that gives sales leaders the flexibility and control to manage their complete operation in HubSpot. Custom objects allows users to create and store categories of information that are unique to the business, as well as provide advanced permissions giving them abilities to control the data available to each team.

Streamlined sales reporting will enable companies to build custom reports that include details such as deal change history, sales activity, and deal outcome. It also comes with sales engagement tools to assist salespeople in connecting with prospects anywhere on any device. The new sequence functionality allows its users to mass enroll contacts, pause email sends, and manually add LinkedIn Sales Navigator Tasks.

Finally, it comes with connected CPQ tools, allowing sales teams to turn quotes into closed deals. New accounting integrations with NetSuite, Quickbooks Online, Xero, and Nubox enable companies to use their preferred accounting software, directly within HubSpot, to generate invoices, associate tax codes and sync currencies.

HubSpot’s Pricing Changes

HubSpot has also been helping businesses during the current pandemic by revisiting its pricing packages. Recently, it announced the launch of Marketing Contacts, a new pricing model that allows customers to only pay for the contacts they want to market to via email or ads. Customers can also store up to one million contacts they don’t actively market to, for free.

Marketing Contacts will encourage its customers to bring all of their contacts into HubSpot without worrying about paying for ones they won’t be marketing to. They will be able to quickly identify marketing contacts with a simple eligibility flow without having to worry about contact limits. Scaled contacts pricing will also become more cost efficient as customers increase their number of contacts, allowing them to grow.

Besides the new pricing model, HubSpot has released additional features earlier in the year to support businesses. These include an increased reporting limit across all product tiers to enable customers to build more than twice as many dashboards, reduced pricing for the Starter Growth Suite, and free embeddable meetings, landing pages, and quotes that are now part of HubSpot CRM.

Its stock is trading at $345.57 with a market capitalization of $15.8 billion. It touched a 52-week high of $395.76 earlier this month. In March, it had fallen to a 52-week low of $90.83.

This segment is a part in the series : Cloud Stocks


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