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HubSpot (HUBS) Down 3.1% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for HubSpot (HUBS - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is HubSpot due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
HubSpot’s Earnings & Revenues Beat Estimates in Q3
HubSpot reported third-quarter 2021 non-GAAP earnings of 50 cents per share, which improved 78.6% on a year-over-year basis and beat the Zacks Consensus Estimate by 13.6%. The bottom line exceeded management’s guidance of 42-44 cents.
Revenues of $339.2 million surpassed the Zacks Consensus Estimate by 3.9% and increased 49% (up 47% on a constant-currency basis) year over year. The top line was also above the higher end of management’s guidance range of $325-$327 million.
The top line was driven by improvement in subscription revenues. Growing customer base, which surged 34% year over year to 128,144, also contributed to the results.
Quarter Details
Subscription revenues (97% of the total revenues) surged 49% from the year-ago quarter’s levels to $329 million. Professional services and other revenues (3%) were up 39% year over year to $10.2 million.
Total average subscription revenue per customer was up 9% year over year to $10,536.
Deferred revenues (including current portion) as of Sep 30, 2021, increased 45% year over year to $376 million. Calculated billings, defined as revenues plus the change in deferred revenues, amounted to $353 million, surging 43% year over year (up 45% at cc).
International revenues climbed 58% from the year-ago quarter’s levels (up 54% at cc), contributing 46% to total revenues in the reported quarter. Domestic revenues rallied 41% in the quarter under review, contributing the remaining 54% to total revenues.
Margins
Non-GAAP subscription margin of 83.1% contracted 260 basis points (bps) on a year-over-year basis.
Non-GAAP Research and development (R&D) expenses, as a percentage of revenues, contracted 180 bps year over year to 17.4%. Non-GAAP General and administrative (G&A) expenses contracted 100 bps to 8.5% on a year-over-year basis.
Non-GAAP Sales and marketing (S&M) expenses contracted 170 bps to 44.7% from the year-ago quarter’s levels.
The company reported non-GAAP operating income of $32.9 million, up 99.4% from the year-ago quarter’s figure. Management had projected non-GAAP operating income to be $27-$29 million for the third quarter.
Non-GAAP operating margin expanded 250 bps on a year-over-year basis to 9.7%.
Balance Sheet & Cash Flow
As of Sep 30, 2021, HubSpot reported cash and cash equivalents and short-term investments of $1.3 billion, up from $1.2 billion as of Jun 30, 2021.
Operating cash flow (excluding repayment of 2022 Convertible Notes attributable to the debt discount worth $11.4 million) during the reported quarter was $42.7 million compared with $38.7 million in the prior-year quarter. During the first nine months of 2021, the company generated operating cash flow of $143.5 million.
Free cash flow was $38.2 million compared with the prior-year figure of $25.3 million. During the first nine months, the company generated $125 million of free cash flow.
Guidance
For fourth-quarter 2021, HubSpot forecast revenues in the range of $356 million to $358 million.
Management expects non-GAAP operating income in the band of $34-36 million.
The company anticipates non-GAAP net income per share to be 52-54 cents.
For 2021, the company raised guidance. The company now anticipates revenues between $1.287 billion and $1.289 billion compared with the prior range of $1.268-$1.272 billion.
Management now expects non-GAAP operating income to be $113-$115 million compared with the earlier guidance of $107-$109 million.
HubSpot now anticipates non-GAAP net income per share to be $1.76-$1.78 compared with the prior range of $1.67-$1.69.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, HubSpot has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, HubSpot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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HubSpot (HUBS) Down 3.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for HubSpot (HUBS - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is HubSpot due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
HubSpot’s Earnings & Revenues Beat Estimates in Q3
HubSpot reported third-quarter 2021 non-GAAP earnings of 50 cents per share, which improved 78.6% on a year-over-year basis and beat the Zacks Consensus Estimate by 13.6%. The bottom line exceeded management’s guidance of 42-44 cents.
Revenues of $339.2 million surpassed the Zacks Consensus Estimate by 3.9% and increased 49% (up 47% on a constant-currency basis) year over year. The top line was also above the higher end of management’s guidance range of $325-$327 million.
The top line was driven by improvement in subscription revenues. Growing customer base, which surged 34% year over year to 128,144, also contributed to the results.
Quarter Details
Subscription revenues (97% of the total revenues) surged 49% from the year-ago quarter’s levels to $329 million. Professional services and other revenues (3%) were up 39% year over year to $10.2 million.
Total average subscription revenue per customer was up 9% year over year to $10,536.
Deferred revenues (including current portion) as of Sep 30, 2021, increased 45% year over year to $376 million. Calculated billings, defined as revenues plus the change in deferred revenues, amounted to $353 million, surging 43% year over year (up 45% at cc).
International revenues climbed 58% from the year-ago quarter’s levels (up 54% at cc), contributing 46% to total revenues in the reported quarter. Domestic revenues rallied 41% in the quarter under review, contributing the remaining 54% to total revenues.
Margins
Non-GAAP subscription margin of 83.1% contracted 260 basis points (bps) on a year-over-year basis.
Non-GAAP Research and development (R&D) expenses, as a percentage of revenues, contracted 180 bps year over year to 17.4%. Non-GAAP General and administrative (G&A) expenses contracted 100 bps to 8.5% on a year-over-year basis.
Non-GAAP Sales and marketing (S&M) expenses contracted 170 bps to 44.7% from the year-ago quarter’s levels.
The company reported non-GAAP operating income of $32.9 million, up 99.4% from the year-ago quarter’s figure. Management had projected non-GAAP operating income to be $27-$29 million for the third quarter.
Non-GAAP operating margin expanded 250 bps on a year-over-year basis to 9.7%.
Balance Sheet & Cash Flow
As of Sep 30, 2021, HubSpot reported cash and cash equivalents and short-term investments of $1.3 billion, up from $1.2 billion as of Jun 30, 2021.
Operating cash flow (excluding repayment of 2022 Convertible Notes attributable to the debt discount worth $11.4 million) during the reported quarter was $42.7 million compared with $38.7 million in the prior-year quarter. During the first nine months of 2021, the company generated operating cash flow of $143.5 million.
Free cash flow was $38.2 million compared with the prior-year figure of $25.3 million. During the first nine months, the company generated $125 million of free cash flow.
Guidance
For fourth-quarter 2021, HubSpot forecast revenues in the range of $356 million to $358 million.
Management expects non-GAAP operating income in the band of $34-36 million.
The company anticipates non-GAAP net income per share to be 52-54 cents.
For 2021, the company raised guidance. The company now anticipates revenues between $1.287 billion and $1.289 billion compared with the prior range of $1.268-$1.272 billion.
Management now expects non-GAAP operating income to be $113-$115 million compared with the earlier guidance of $107-$109 million.
HubSpot now anticipates non-GAAP net income per share to be $1.76-$1.78 compared with the prior range of $1.67-$1.69.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, HubSpot has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, HubSpot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.