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HubSpot, Inc.’s (HUBS - Free Report) third-quarter 2020 non-GAAP earnings of 28 cents per share beat the Zacks Consensus Estimate of 13 cents and improved 7.8% from the year-ago quarter. The bottom line also exceeded management’s guided range of 11-13 cents.
Revenues of $228.4 million surpassed the Zacks Consensus Estimate by 8.5% and improved 32% (up 30% on a constant currency basis) year over year. The top line was also above the higher end of management’s guidance of $210-$211 million.
The top line was driven by accelerating Subscription revenues. Further, growing customer base, which surged 39% year over year to 95,634, contributed to the results.
Following stellar third-quarter results and raised 2020 guidance, shares of HubSpot were up more than 11% in the pre-market trading on Nov 6.
Coming to the year-to-date price performance, shares of HubSpot have gained 50.1%, compared with the industry’s rally of 63.3%.
Quarter Details
Subscription revenues (96.8% of the total revenues) surged 32% from the year-ago quarter to $221.1 million. Professional services and other revenues (3.2%) were down 12% year over year to $7.3 million.
Total average subscription revenue per customer was down 3% year over year to $9,669.
Deferred revenues (including current portion) improved 27% year over year to $259.1 million. Meanwhile, calculated billings, defined as revenues plus the change in deferred revenues, amounted to $246 million, surging 38% year over year (up 33% at cc).
International revenues climbed 40% from the year-ago quarter (up 39% at cc), representing 44% of total revenues in the reported quarter.
Margins in Detail
Non-GAAP gross margin during the reported quarter remained flat year over year at 82%. Further, non-GAAP subscription margin of 85.7% expanded 10 basis points (bps) on a year-over-year basis.
Non-GAAP Research and development (R&D) expenses as a percentage of revenues expanded 90 bps year over year to 19.2%. Non-GAAP General and administrative (G&A) expenses contracted 80 bps to 9.5% on a year-over-year basis. Meanwhile, non-GAAP Sales and marketing (S&M) expenses shrunk 100 bps to 46.4% from the year-ago quarter.
The company reported non-GAAP operating income of $16.5 million, up 57.1% from the year-ago figure. Management had projected non-GAAP operating income to be $7.5-$8.5 million for the third quarter.
Non-GAAP operating margin expanded 110 bps on a year-over-year basis to 7.2%.
Balance Sheet & Cash Flow
As of Sep 30, 2020, HubSpot reported cash and cash equivalents and short-term investments of $1.18 billion, up from $1.14 billion as of Jun 30, 2020.
Cash flow from operations during the reported quarter was $38.7 million compared with $15 million reported in the prior quarter and $19.7 million in the year-ago quarter.
Free cash flow was $25.3 million compared with the prior-quarter figure of $0.8 million and $6.7 million reported in the year-ago quarter.
Guidance
For fourth-quarter 2020, HubSpot forecast revenues to be $235-$237 million. The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $217.4 million.
Management expects non-GAAP operating income in the band of $13-$15 million.
Moreover, the company anticipates non-GAAP net income per share to be 21-23 cents. The Zacks Consensus Estimate is currently pegged at 13 cents per share.
For 2020, the company has raised guidance. The company now anticipates revenues between $866 million and $868 million compared with the prior range of $828-$832 million. The Zacks Consensus Estimate for 2020 revenues currently stands at $830.6 million.
Management expects non-GAAP operating income in the band of $63.5-$65.5 million compared with the earlier guided range of $52-$54 million.
HubSpot anticipates non-GAAP net income per share to be $1.13-$1.15 compared with the previous range of 92-96 cents. The Zacks Consensus Estimate is currently pegged at 94 cents per share.
Covetrus is set to report Nov 10, while Himax and NVIDIA are scheduled to report earnings on Nov 12 and Nov 18, respectively.
The long-term earnings growth rate for NVIDIA and Covetrus is currently pegged at 20.1% and 31.6%, respectively. Meanwhile, Himax’s current-year earnings of 13 cents per share, indicate year over year growth of 285.7%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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HubSpot (HUBS) Beats on Q3 Earnings & Revenues, Ups '20 View
HubSpot, Inc.’s (HUBS - Free Report) third-quarter 2020 non-GAAP earnings of 28 cents per share beat the Zacks Consensus Estimate of 13 cents and improved 7.8% from the year-ago quarter. The bottom line also exceeded management’s guided range of 11-13 cents.
Revenues of $228.4 million surpassed the Zacks Consensus Estimate by 8.5% and improved 32% (up 30% on a constant currency basis) year over year. The top line was also above the higher end of management’s guidance of $210-$211 million.
The top line was driven by accelerating Subscription revenues. Further, growing customer base, which surged 39% year over year to 95,634, contributed to the results.
Following stellar third-quarter results and raised 2020 guidance, shares of HubSpot were up more than 11% in the pre-market trading on Nov 6.
Coming to the year-to-date price performance, shares of HubSpot have gained 50.1%, compared with the industry’s rally of 63.3%.
Quarter Details
Subscription revenues (96.8% of the total revenues) surged 32% from the year-ago quarter to $221.1 million. Professional services and other revenues (3.2%) were down 12% year over year to $7.3 million.
Total average subscription revenue per customer was down 3% year over year to $9,669.
Deferred revenues (including current portion) improved 27% year over year to $259.1 million. Meanwhile, calculated billings, defined as revenues plus the change in deferred revenues, amounted to $246 million, surging 38% year over year (up 33% at cc).
HubSpot, Inc. Price, Consensus and EPS Surprise
HubSpot, Inc. price-consensus-eps-surprise-chart | HubSpot, Inc. Quote
International revenues climbed 40% from the year-ago quarter (up 39% at cc), representing 44% of total revenues in the reported quarter.
Margins in Detail
Non-GAAP gross margin during the reported quarter remained flat year over year at 82%. Further, non-GAAP subscription margin of 85.7% expanded 10 basis points (bps) on a year-over-year basis.
Non-GAAP Research and development (R&D) expenses as a percentage of revenues expanded 90 bps year over year to 19.2%. Non-GAAP General and administrative (G&A) expenses contracted 80 bps to 9.5% on a year-over-year basis. Meanwhile, non-GAAP Sales and marketing (S&M) expenses shrunk 100 bps to 46.4% from the year-ago quarter.
The company reported non-GAAP operating income of $16.5 million, up 57.1% from the year-ago figure. Management had projected non-GAAP operating income to be $7.5-$8.5 million for the third quarter.
Non-GAAP operating margin expanded 110 bps on a year-over-year basis to 7.2%.
Balance Sheet & Cash Flow
As of Sep 30, 2020, HubSpot reported cash and cash equivalents and short-term investments of $1.18 billion, up from $1.14 billion as of Jun 30, 2020.
Cash flow from operations during the reported quarter was $38.7 million compared with $15 million reported in the prior quarter and $19.7 million in the year-ago quarter.
Free cash flow was $25.3 million compared with the prior-quarter figure of $0.8 million and $6.7 million reported in the year-ago quarter.
Guidance
For fourth-quarter 2020, HubSpot forecast revenues to be $235-$237 million. The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $217.4 million.
Management expects non-GAAP operating income in the band of $13-$15 million.
Moreover, the company anticipates non-GAAP net income per share to be 21-23 cents. The Zacks Consensus Estimate is currently pegged at 13 cents per share.
For 2020, the company has raised guidance. The company now anticipates revenues between $866 million and $868 million compared with the prior range of $828-$832 million. The Zacks Consensus Estimate for 2020 revenues currently stands at $830.6 million.
Management expects non-GAAP operating income in the band of $63.5-$65.5 million compared with the earlier guided range of $52-$54 million.
HubSpot anticipates non-GAAP net income per share to be $1.13-$1.15 compared with the previous range of 92-96 cents. The Zacks Consensus Estimate is currently pegged at 94 cents per share.
Zacks Rank & Key Picks
HubSpot currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader sector are Himax Technologies (HIMX - Free Report) , NVIDIA (NVDA - Free Report) and Covetrus . All carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Covetrus is set to report Nov 10, while Himax and NVIDIA are scheduled to report earnings on Nov 12 and Nov 18, respectively.
The long-term earnings growth rate for NVIDIA and Covetrus is currently pegged at 20.1% and 31.6%, respectively. Meanwhile, Himax’s current-year earnings of 13 cents per share, indicate year over year growth of 285.7%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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