HubSpot, Inc.’s ( HUBS Quick Quote HUBS - Free Report) fourth-quarter 2020 non-GAAP earnings of 40 cents per share beat the Zacks Consensus Estimate by 73.9%. The bottom line exceeded management’s guidance of 21-23 cents. The figure also surpassed non-GAAP earnings of 38 cents reported in the year-ago quarter. Revenues of $252.1 million surpassed the Zacks Consensus Estimate by 6.6% and increased 35% (up 32% on a constant-currency basis) year over year. The top line was also above the higher end of management’s guidance of $235-$237 million. The top line was driven by improvement in Subscription revenues. Further, growing customer base, which surged 42% year over year to 103,994, contributed to the results.
Following stellar fourth-quarter results, shares of HubSpot were up more than 18.12% in the pre-market trading on Feb 12.
Coming to the year-to-date price performance, shares of HubSpot have surged 118.8% compared with the industry’s rally of 104.7%. Quarter Details
Subscription revenues (96.9% of the total revenues) surged 36% from the year-ago quarter’s levels to $244.3 million. Professional services and other revenues (3.1%) were up 9% year over year to $7.7 million.
Total average subscription revenue per customer was down 3% year over year to $9,758. Deferred revenues (including current portion) increased 35% year over year to $317 million. Meanwhile, calculated billings, defined as revenues plus the change in deferred revenues, amounted to $309 million, surging 43% year over year (up 38% at cc). International revenues climbed 47% from the year-ago quarter’s levels (up 40% at cc), contributing 44% to total revenues in the reported quarter. Margins in Detail
Gross margin during the reported quarter were flat year over year at 82%.
Further, non-GAAP subscription margin of 85.3% also remained unchanged on a year-over-year basis.
Non-GAAP Research and development (R&D) expenses, as a percentage of revenues, contracted 70 basis points (bps) year over year to 17.8%. Non-GAAP General and administrative (G&A) expenses contracted 120 bps to 9.1% on a year-over-year basis. Meanwhile, non-GAAP Sales and marketing (S&M) expenses expanded 170 bps to 45.3% from the year-ago quarter’s levels.
The company reported non-GAAP operating income of $24.6 million, up 39% from the year-ago quarter’s figure. Management had projected non-GAAP operating income to be $13-$15 million for the fourth quarter.
Non-GAAP operating margin expanded 30 bps on a year-over-year basis to 9.8%.
Balance Sheet & Cash Flow
As of Dec 31, 2020, HubSpot reported cash and cash equivalents and short-term investments of $1.251 billion, up from $1.18 billion as of Sep 30, 2020.
Cash flow from operations during the reported quarter was $60.9 million compared with $47.9 million reported in the year-ago quarter. Free cash flow was $45.8 million compared with the prior-quarter figure of $24.4 million reported in the year-ago quarter. 2020 Numbers in Details
HubSpot reported revenues of $883 million in 2020, up 31% (30% at cc) over 2019 tally. The Zacks Consensus Estimate was pegged at $867.3 million.
For the full year, subscription revenues rallied 32% to $853 million. Non-GAAP earnings per share were $1.32, up 4.8% from $1.26 reported for 2019. The Zacks Consensus Estimate was pegged at $1.14.
For 2020, HubSpot’s non-GAAP operating margin expanded 40 bps to 8.5%.
In 2020, HubSpot generated cash flow from operations of $88.9 million compared with $119 million in the previous year. Free cash flow for full year was $79.1 million compared with $65.1 million reported in 2019.
For first-quarter 2021, HubSpot forecast revenues in the range of $260-$265 million. The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $242.9 million.
Management expects non-GAAP operating income in the band of $17-$19 million. Moreover, the company anticipates non-GAAP net income per share to be 28-30 cents. The Zacks Consensus Estimate is currently pegged at 26 cents per share. For 2021, the company anticipates revenues between $1.16 billion and $1.17 billion. The Zacks Consensus Estimate for 2021 revenues is currently at $1.05 billion. Management expects non-GAAP operating income in the band of $98-$102 million.
HubSpot anticipates non-GAAP net income per share to be $1.51-$1.59. The Zacks Consensus Estimate is currently pegged at $1.34 per share.
Zacks Rank & Key Picks
HubSpot currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Shopify ( SHOP Quick Quote SHOP - Free Report) , CrowdStrike ( CRWD Quick Quote CRWD - Free Report) and Workday ( WDAY Quick Quote WDAY - Free Report) . Shopify flaunts a Zacks Rank #1 (Strong Buy), while CrowdStrike and Workday carry a Zacks Rank #2 (Buy). You can see . the complete list of today's Zacks #1 Rank stocks here Shopify, Workday and CrowdStrike are scheduled to release earnings on Feb 17, Feb 25 and Mar 16, respectively. Long-term earnings growth rate for Shopify, CrowdStrike and Workday are currently pegged at 32.5%, 25%, and 25.4%, respectively. Zacks Top 10 Stocks for 2021
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