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HubSpot (HUBS) Q2 Earnings Beat Estimates, Top Line Surges Y/Y
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HubSpot, Inc. (HUBS - Free Report) reported impressive second-quarter 2024 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. The company reported a top-line expansion year over year, backed by growing user engagement across all segments. Integration of advanced AI tools across its product suites and customer platform is driving growth. However, cautious spending decision stemming from an unfavorable macro environment is a headwind.
Net Income
On a GAAP basis, the company reported a net loss of $14.4 million or 28 cents per share compared to a loss of $111.8 million or $2.25 per share in the year-ago quarter. Solid net sales growth led to a narrower loss during the quarter.
Non-GAAP net income was $103.5 million or $1.94 per share, up from $71.8 million or $1.38 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate of $1.63.
Quarterly revenues improved to $637.2 million from $529.1 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $619 million. HubSpot is witnessing steady multi-hub adoption from professional and enterprise customers in the premium market. Demand for Marketing and sales hubs are the primary growth drivers. Service Hub is also gaining momentum. Healthy net customer adds in the starter edition, and pricing optimization drove net sales in the lower tier of the market spectrum.
The company has integrated HubSpot AI across the entire platform, enabling users to leverage AI features at no additional cost. AI-powered content marketing solutions such as content remix, AI blogs and brand voice, GPT-powered chatbots and real-time recommendations are gaining popularity.
HubSpot added more than 11,200 net new customers during the quarter, which increased the total customer count to 228,054, up 23% year over year. The customer count surpassed the consensus estimate of 226,632.
Subscription revenues rose to $623.8 million, up 20% year over year. The figure surpassed the Zacks Consensus Estimate of $606.22 million. Average subscription revenues per customer declined 2% year over year to $11,225. Strong customer engagement at low priced started edition led to the decline.
Professional services and other revenues totaled $13.5 million, up from $11.5 million in the year-ago quarter. The top line marginally beat the consensus estimate of $12.59 million.
Other Details
Gross profit in the quarter was $541.7 million, up from $444.2 million in the year-ago quarter. Operating loss, on a GAAP basis, was $23.9 million compared with an operating loss of $116.2 million in the year-ago quarter. Non-GAAP operating income improved to $109.3 million from $76.6 million, with respective margins of 17.2% and 14.5%.
Cash Flow & Liquidity
In the second quarter of 2024, the company generated $117.8 million in cash from operating activities compared with $76.5 million cash generated in the year-ago quarter. As of Jun 30, 2024, HubSpot had $797.9 million in cash and cash equivalents, with $457.2 million in convertible senior notes.
Outlook
For the third quarter of 2024, HubSpot forecasts revenues in the range of $646 million to $647 million. The company expects non-GAAP net income per share to be in the band of $1.89 to $1.91. The anticipated range for non-GAAP operating income is $107-$108 million. Foreign exchange rates are expected to have a neutral impact on third-quarter revenue growth.
Backed by solid momentum, management has raised its guidance for 2024. Revenues are now projected between $2.567-$2.573 billion, up from $2.55-$2.56 billion estimated earlier. Non-GAAP operating income is expected to be in the range of $437-$441 million, up from $426-$430 million expected earlier. Non-GAAP net income per share is likely to be in the range of $764-$7.70, up from $7.30-$7.38 forecasted earlier.
It is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.
Motorola Solutions Inc. (MSI - Free Report) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Motorola carries a Zacks Rank #2 (Buy) at present.
It delivered a trailing four-quarter average earnings surprise of 8.06% and has a long-term growth expectation of 9.63%. In the last reported quarter, Motorola delivered an earnings surprise of 7.64%.
CommScope Holding Company, Inc. (COMM - Free Report) , sporting a Zacks Rank #1 at present, delivered an earnings surprise of 65.22% in the last reported quarter.
It is a premier provider of infrastructure solutions, including wireless and fiber optic solutions, for the core, access and edge layers of communication networks. The company has created a niche market for itself, helping customers scale network capacity, delivering better network response time and performance, and simplifying technology migration.
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HubSpot (HUBS) Q2 Earnings Beat Estimates, Top Line Surges Y/Y
HubSpot, Inc. (HUBS - Free Report) reported impressive second-quarter 2024 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. The company reported a top-line expansion year over year, backed by growing user engagement across all segments. Integration of advanced AI tools across its product suites and customer platform is driving growth. However, cautious spending decision stemming from an unfavorable macro environment is a headwind.
Net Income
On a GAAP basis, the company reported a net loss of $14.4 million or 28 cents per share compared to a loss of $111.8 million or $2.25 per share in the year-ago quarter. Solid net sales growth led to a narrower loss during the quarter.
Non-GAAP net income was $103.5 million or $1.94 per share, up from $71.8 million or $1.38 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate of $1.63.
HubSpot, Inc. Price, Consensus and EPS Surprise
HubSpot, Inc. price-consensus-eps-surprise-chart | HubSpot, Inc. Quote
Revenues
Quarterly revenues improved to $637.2 million from $529.1 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $619 million. HubSpot is witnessing steady multi-hub adoption from professional and enterprise customers in the premium market. Demand for Marketing and sales hubs are the primary growth drivers. Service Hub is also gaining momentum. Healthy net customer adds in the starter edition, and pricing optimization drove net sales in the lower tier of the market spectrum.
The company has integrated HubSpot AI across the entire platform, enabling users to leverage AI features at no additional cost. AI-powered content marketing solutions such as content remix, AI blogs and brand voice, GPT-powered chatbots and real-time recommendations are gaining popularity.
HubSpot added more than 11,200 net new customers during the quarter, which increased the total customer count to 228,054, up 23% year over year. The customer count surpassed the consensus estimate of 226,632.
Subscription revenues rose to $623.8 million, up 20% year over year. The figure surpassed the Zacks Consensus Estimate of $606.22 million. Average subscription revenues per customer declined 2% year over year to $11,225. Strong customer engagement at low priced started edition led to the decline.
Professional services and other revenues totaled $13.5 million, up from $11.5 million in the year-ago quarter. The top line marginally beat the consensus estimate of $12.59 million.
Other Details
Gross profit in the quarter was $541.7 million, up from $444.2 million in the year-ago quarter. Operating loss, on a GAAP basis, was $23.9 million compared with an operating loss of $116.2 million in the year-ago quarter. Non-GAAP operating income improved to $109.3 million from $76.6 million, with respective margins of 17.2% and 14.5%.
Cash Flow & Liquidity
In the second quarter of 2024, the company generated $117.8 million in cash from operating activities compared with $76.5 million cash generated in the year-ago quarter. As of Jun 30, 2024, HubSpot had $797.9 million in cash and cash equivalents, with $457.2 million in convertible senior notes.
Outlook
For the third quarter of 2024, HubSpot forecasts revenues in the range of $646 million to $647 million. The company expects non-GAAP net income per share to be in the band of $1.89 to $1.91. The anticipated range for non-GAAP operating income is $107-$108 million. Foreign exchange rates are expected to have a neutral impact on third-quarter revenue growth.
Backed by solid momentum, management has raised its guidance for 2024. Revenues are now projected between $2.567-$2.573 billion, up from $2.55-$2.56 billion estimated earlier. Non-GAAP operating income is expected to be in the range of $437-$441 million, up from $426-$430 million expected earlier. Non-GAAP net income per share is likely to be in the range of $764-$7.70, up from $7.30-$7.38 forecasted earlier.
Zacks Rank & Stocks to Consider
HubSpot currently has a Zacks Rank #4 (Sell).
Arista Networks, Inc. (ANET - Free Report) sports a Zacks Rank #1 (Strong Buy) at present. In the last reported quarter, it delivered an earnings surprise of 8.25%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.
Motorola Solutions Inc. (MSI - Free Report) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Motorola carries a Zacks Rank #2 (Buy) at present.
It delivered a trailing four-quarter average earnings surprise of 8.06% and has a long-term growth expectation of 9.63%. In the last reported quarter, Motorola delivered an earnings surprise of 7.64%.
CommScope Holding Company, Inc. (COMM - Free Report) , sporting a Zacks Rank #1 at present, delivered an earnings surprise of 65.22% in the last reported quarter.
It is a premier provider of infrastructure solutions, including wireless and fiber optic solutions, for the core, access and edge layers of communication networks. The company has created a niche market for itself, helping customers scale network capacity, delivering better network response time and performance, and simplifying technology migration.