HubSpot, Inc.’s (HUBS - Free Report) fourth-quarter 2019 non-GAAP earnings of 45 cents per share beat the Zacks Consensus Estimate by 7.1% and surged 21.6% from the year-ago quarter. The figure also exceeded management’s guided range of 40-42 cents.
Revenues of $186.2 million comfortably surpassed the Zacks Consensus Estimate of $180.9 million and improved 29.3% (31% on a constant currency basis) year over year. The figure was also higher than management’s guided range of $180.3-$181.3 million.
The top line was driven by accelerating Subscription revenues. Further, growing customer base, which surged 30% year over year to 73,483, contributed to the results.
Quarter Details
Subscription revenues (96.2% of the total revenues) improved 31% from the year-ago quarter to $179.1 million. Professional services and other revenues (3.8%) were down 2% year over year to $7.1 million.
Total average subscription revenue per customer was up 0.3% year over year to $10,047.
Deferred revenues (including current portion) improved 26.2% year over year to $234.1 million. Meanwhile, calculated billings, defined as revenues plus the change in deferred revenues came in at $217 million, surging 30% year over year on reported as well as constant currency basis.
International revenues advanced 39% from the year-ago quarter (43% at cc), representing 41% of total revenues in the reported quarter.
Margins in Detail
Per management, non-GAAP gross margin during the reported quarter came in at 82%, contracting approximately 30 basis points (bps) from the year-ago quarter. We note that non-GAAP services gross margin was negative 5%. Further, non-GAAP subscription margin of 85% contracted 150 bps on a year-over-year basis.
Non-GAAP Research and development (R&D) expenses as a percentage of revenues remained flat year over year at 18%. Non-GAAP General and administrative (G&A) expenses contracted 200 bps to 10% on a year-over-year basis. Meanwhile, non-GAAP Sales and marketing (S&M) expenses expanded 100 bps to 44% from the year-ago quarter.
The company reported non-GAAP operating income of $17.6 million, soaring 24.5% from the year-ago figure. Non-GAAP operating margin contracted 30 bps on a year-over-year basis to 9.5%.
Balance Sheet & Cash Flow
HubSpot ended the fourth quarter with cash and cash equivalents and short-term investments of $961.5 million, up from $948.5 million at the end of the previous quarter.
Cash flow from operations during the reported quarter came in at $47.9 million compared with $19.7 million reported in the prior quarter.
Free cash flow came in at $24.4 million compared with the prior-quarter figure of $6.7 million.
Guidance
For first-quarter 2020, HubSpot forecasts revenues in the range of $192.5 million to $193.5 million. The mid-point of the range — $193 million — is higher than the current Zacks Consensus Estimate for the first quarter of $189.09 million.
Management expects non-GAAP operating income in the band of $9.5-$10.5 million for the first quarter.
Moreover, HubSpot anticipates non-GAAP net income per share to be in the range of 22-24 cents. The higher end of the guided range is below the Zacks Consensus Estimate, currently pegged at 35 cents per share.
For 2020, HubSpot forecasts revenues in the range of $840.5 million to $844.5 million. The mid-point of the range — $842.5 million — is higher than the current Zacks Consensus Estimate for the first quarter of $826.73 million.
Management expects non-GAAP operating income in the band of $54-$58 million for the full year.
HubSpot anticipates non-GAAP net income per share to be in the range of $1.24-$1.32. The higher end of the guided range is below the Zacks Consensus Estimate, currently pegged at $1.58 per share.
Zacks Rank & Key Picks
HubSpot currently has a Zacks Rank #3 (Hold).
Alteryx , Cirrus Logic (CRUS - Free Report) and Garmin (GRMN - Free Report) are some better-ranked stocks worth considering, in the broader computer and technology sector, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Alteryx, Cirrus Logic and Garmin is pegged at 39.85%, 15.27% and 7.35%, respectively.
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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, Inc.’s (HUBS - Free Report) fourth-quarter 2019 non-GAAP earnings of 45 cents per share beat the Zacks Consensus Estimate by 7.1% and surged 21.6% from the year-ago quarter. The figure also exceeded management’s guided range of 40-42 cents.
Revenues of $186.2 million comfortably surpassed the Zacks Consensus Estimate of $180.9 million and improved 29.3% (31% on a constant currency basis) year over year. The figure was also higher than management’s guided range of $180.3-$181.3 million.
The top line was driven by accelerating Subscription revenues. Further, growing customer base, which surged 30% year over year to 73,483, contributed to the results.
Quarter Details
Subscription revenues (96.2% of the total revenues) improved 31% from the year-ago quarter to $179.1 million. Professional services and other revenues (3.8%) were down 2% year over year to $7.1 million.
Total average subscription revenue per customer was up 0.3% year over year to $10,047.
Deferred revenues (including current portion) improved 26.2% year over year to $234.1 million. Meanwhile, calculated billings, defined as revenues plus the change in deferred revenues came in at $217 million, surging 30% year over year on reported as well as constant currency basis.
International revenues advanced 39% from the year-ago quarter (43% at cc), representing 41% of total revenues in the reported quarter.
Margins in Detail
Per management, non-GAAP gross margin during the reported quarter came in at 82%, contracting approximately 30 basis points (bps) from the year-ago quarter. We note that non-GAAP services gross margin was negative 5%. Further, non-GAAP subscription margin of 85% contracted 150 bps on a year-over-year basis.
Non-GAAP Research and development (R&D) expenses as a percentage of revenues remained flat year over year at 18%. Non-GAAP General and administrative (G&A) expenses contracted 200 bps to 10% on a year-over-year basis. Meanwhile, non-GAAP Sales and marketing (S&M) expenses expanded 100 bps to 44% from the year-ago quarter.
The company reported non-GAAP operating income of $17.6 million, soaring 24.5% from the year-ago figure. Non-GAAP operating margin contracted 30 bps on a year-over-year basis to 9.5%.
Balance Sheet & Cash Flow
HubSpot ended the fourth quarter with cash and cash equivalents and short-term investments of $961.5 million, up from $948.5 million at the end of the previous quarter.
Cash flow from operations during the reported quarter came in at $47.9 million compared with $19.7 million reported in the prior quarter.
Free cash flow came in at $24.4 million compared with the prior-quarter figure of $6.7 million.
Guidance
For first-quarter 2020, HubSpot forecasts revenues in the range of $192.5 million to $193.5 million. The mid-point of the range — $193 million — is higher than the current Zacks Consensus Estimate for the first quarter of $189.09 million.
Management expects non-GAAP operating income in the band of $9.5-$10.5 million for the first quarter.
Moreover, HubSpot anticipates non-GAAP net income per share to be in the range of 22-24 cents. The higher end of the guided range is below the Zacks Consensus Estimate, currently pegged at 35 cents per share.
For 2020, HubSpot forecasts revenues in the range of $840.5 million to $844.5 million. The mid-point of the range — $842.5 million — is higher than the current Zacks Consensus Estimate for the first quarter of $826.73 million.
Management expects non-GAAP operating income in the band of $54-$58 million for the full year.
HubSpot anticipates non-GAAP net income per share to be in the range of $1.24-$1.32. The higher end of the guided range is below the Zacks Consensus Estimate, currently pegged at $1.58 per share.
Zacks Rank & Key Picks
HubSpot currently has a Zacks Rank #3 (Hold).
Alteryx , Cirrus Logic (CRUS - Free Report) and Garmin (GRMN - Free Report) are some better-ranked stocks worth considering, in the broader computer and technology sector, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Alteryx, Cirrus Logic and Garmin is pegged at 39.85%, 15.27% and 7.35%, respectively.
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.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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