According to a recent Grand View Research report, the global digital marketing software market is expected to reach $151.8 billion by 2027, growing at an annualized rate of 17.4% from 2020. Inbound marketing specialist HubSpot (NYSE:HUBS) recently reported its fourth quarter results that surpassed market expectations.
HubSpot’s fourth quarter revenues grew 35% to $252.1 million, ahead of the Street’s forecast of by 6.6%. Non GAAP EPS of $0.40 beat the market’s estimate of $0.23.
By segment, Subscription revenues grew 36% to $244.3 million, and Professional services and other revenues dropped 9% to $7.7 million.
Among other operating metrics, its customer base grew 42% to over 103,994. Total average subscription revenue per customer dropped 3% to $9,785.
For the full year 2020, HubSpot announced revenues of $883 million and an EPS of $1.32.
HubSpot forecast revenues of $260-265 million for the first quarter of 2021 with an EPS of $0.28-$0.30. The market was looking for revenues of $242.86 million with an EPS of $0.26. HubSpot expects to end the year 2021 with revenues of $1.16-$1.17 billion and an EPS of $1.51-$1.59. The market was looking for revenues of $1.05 billion for the year with an EPS of $1.34.
Recently, HubSpot announced its agreement to acquire San Francisco-based The Hustle. Founded in 2015 by John Havel and Sam Parr, The Hustle is a media company that produces podcasts, newsletters, and premium research. The Hustle was started with the mission to help give business builders the information needed to make an impression on the world and change how media companies operate.
Its daily email was started in 2016 and it now provides more than 1.5 million readers access to topical stories and perspectives. Its subscription platform Trends and podcast My First Million give entrepreneurs insights, data, and best practices to help scale their companies. HubSpot hopes to leverage the acquisition to provide its customers with new ways to get access to content on a large number of topics through diverse media. With the acquisition, HubSpot will be able to provide access to educational, business, and tech related content in its customers’ preferred format.
Prior to the acquisition, The Hustle had raised $1.3 million in two rounds of funding from investors including Ramit Sethi, Narendra Rocherolle, Jonah Goodhart, Tucker Max, Transmedia Capital, Terry Baker, Timothy Ferriss, Scott Belsky, Dave Nemetz, and The Tribe. Terms of the acquisition were not disclosed.
HubSpot’s services are gaining a lot of positive reviews. It was recently named the number two Best Global Software Seller according to user reviews on G2Crowd, rated between Microsoft and Zoom. This has also translated into financial performance. During the Q4 2020, it surpassed 100,000 total customers, and in December 2020, it crossed $1 billion in annual recurring revenue – two big milestones for the organization.
HubSpot’s PaaS Focus
HubSpot’s APIs are designed to allow developer teams of any shape or size to build integrations that help them customize and get the most value out of HubSpot. It has a dedicated app partner program that also allows developers and organizations to publish apps on its platform. The program helps companies grow their business by distributing their apps to HubSpot’s growing customer base. The App Marketplace allows developers to get their apps in front of HubSpot’s more than 100,000 customers. According to HubSpot, 94% of its paid customers use apps to grow their businesses. More than 1 million apps have been installed through its marketplace, and each of its customer averages more than seven third-party app installs.
HubSpot’s stock is trading at $543.49 with a market capitalization of $25.18 billion. It touched a 52-week high of $529.23 earlier this month. In March last year, it had fallen to a 52-week low of $90.83.
Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.