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Why Is HubSpot (HUBS) Up 5.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for HubSpot (HUBS - Free Report) . Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is HubSpot due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
HubSpot Q2 Earnings Beat Estimates, Top Line Surges Y/Y
HubSpot 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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 43.75% due to these changes.
VGM Scores
Currently, HubSpot has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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 broadly 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.
Performance of an Industry Player
HubSpot is part of the Zacks Internet - Software industry. Over the past month, Aspen Technology (AZPN - Free Report) , a stock from the same industry, has gained 9.3%. The company reported its results for the quarter ended June 2024 more than a month ago.
Aspen Technology reported revenues of $342.91 million in the last reported quarter, representing a year-over-year change of +7%. EPS of $2.37 for the same period compares with $2.13 a year ago.
Aspen Technology is expected to post earnings of $1.51 per share for the current quarter, representing a year-over-year change of +30.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +12.2%.
Aspen Technology has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Why Is HubSpot (HUBS) Up 5.8% Since Last Earnings Report?
A month has gone by since the last earnings report for HubSpot (HUBS - Free Report) . Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is HubSpot due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
HubSpot Q2 Earnings Beat Estimates, Top Line Surges Y/Y
HubSpot 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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 43.75% due to these changes.
VGM Scores
Currently, HubSpot has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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 broadly 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.
Performance of an Industry Player
HubSpot is part of the Zacks Internet - Software industry. Over the past month, Aspen Technology (AZPN - Free Report) , a stock from the same industry, has gained 9.3%. The company reported its results for the quarter ended June 2024 more than a month ago.
Aspen Technology reported revenues of $342.91 million in the last reported quarter, representing a year-over-year change of +7%. EPS of $2.37 for the same period compares with $2.13 a year ago.
Aspen Technology is expected to post earnings of $1.51 per share for the current quarter, representing a year-over-year change of +30.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +12.2%.
Aspen Technology has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.