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HubSpot (HUBS) Beats on Q1 Earnings & Revenues, Ups '21 View

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HubSpot, Inc.’s (HUBS - Free Report) first-quarter 2021 non-GAAP earnings of 31 cents per share improved 3.3% on a year-over-year basis and beat the Zacks Consensus Estimate by 6.9%. The bottom line also exceeded management’s guidance of 28-30 cents.

Revenues of $281.4 million surpassed the Zacks Consensus Estimate by 6.59% and increased 41% (up 41% on a constant-currency basis) year over year. The top line was also above the higher end of management’s guidance of $260-$265 million.

The top line was driven by improvement in Subscription revenues. Further, growing customer base, which surged 45% year over year to 113,925, contributed to the results.

Management is optimistic on uptick in its new offering, Operations Hub, since its launch on Apr 21. Notably, Operations Hubs is designed to assist users to combine customer data on a connected CRM platform and automate various time-consuming tasks to enhance customer experiences.

Moreover, the company is expected to benefit from synergies from acquisition of The Hustle, a media company and provider of premium research content. The buyout is aimed at enabling companies with valuable relevant content across a wide range of topics and a more diverse set of media.

Talking about year-to-date price performance, shares of HubSpot have returned 26.9% against the industry’s decline of 15.3%.

Quarter Details

Subscription revenues (96.1% of the total revenues) surged 41% from the year-ago quarter’s levels to $270.3 million. Professional services and other revenues (3.9%) were up 43% year over year to $11.1 million.

Total average subscription revenue per customer was down 1% year over year to $9,886.

Deferred revenues (including current portion) as of Mar 31, 2021, increased 40% year over year to $339.4 million. Meanwhile, calculated billings, defined as revenues plus the change in deferred revenues, amounted to $304 million, surging 47% year over year (up 43% at cc).

International revenues climbed 51% from the year-ago quarter’s levels (up 42% at cc), contributing 45% to total revenues in the reported quarter. Meanwhile, Domestic revenues improved 33% in the first quarter, accounting for the remaining 55% of total revenues.

Margins in Detail

Non-GAAP subscription margin of 84.3% contracted 110 basis points (bps) on a year-over-year basis.

Non-GAAP Research and development (R&D) expenses, as a percentage of revenues, expanded 140 basis points (bps) year over year to 20.1%. Non-GAAP General and administrative (G&A) expenses contracted 60 bps to 9.4% on a year-over-year basis. Meanwhile, non-GAAP Sales and marketing (S&M) expenses contracted 90 bps to 45.1% from the year-ago quarter’s levels.

The company reported non-GAAP operating income of $18.9 million, up 29.7% from the year-ago quarter’s figure. Management had projected non-GAAP operating income to be $17-$19 million for the first quarter.

Non-GAAP operating margin contracted 60 bps on a year-over-year basis to 6.7%.

HubSpot, Inc. Price, Consensus and EPS Surprise

HubSpot, Inc. Price, Consensus and EPS Surprise

HubSpot, Inc. price-consensus-eps-surprise-chart | HubSpot, Inc. Quote

Balance Sheet & Cash Flow

As of Mar 31, 2021, HubSpot reported cash and cash equivalents and short-term investments of $1.18 billion, up from $1.25 billion as of Dec 31, 2020.

Operating cash flow (excluding repayment of 2022 Convertible Notes attributable to the debt discount worth $9.8 million) during the reported quarter was $72.5 million compared with $23 million in the prior-year quarter.

Free cash flow was $61.2 million compared with the prior-year figure of $7.1 million.


For second-quarter 2021, HubSpot forecast revenues in the range of $293 million to $297 million. The Zacks Consensus Estimate for second-quarter revenues is currently pegged at $275.59 million.

Management expects non-GAAP operating income in the band of $19-21 million.

Moreover, the company anticipates non-GAAP net income per share to be 30-32 cents. The Zacks Consensus Estimate is currently pegged at 32 cents per share.

For 2021, the company has raised guidance. The company now anticipates revenues between $1.237 billion and $1.247 billion compared with the prior range of $1.16-$1.17 billion. The Zacks Consensus Estimate for 2021 revenues currently stands at $1.17 billion.

Management now expects non-GAAP operating income to be $104-$106 million compared with the earlier guided range of $98-$102 million.

HubSpot now anticipates non-GAAP net income per share to be $1.61-$1.65 compared with the prior range of $1.51-$1.59. The Zacks Consensus Estimate is currently pegged at $1.58 per share.

Zacks Rank & Key Picks

HubSpot currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector worth consideration are Agilent Technologies (A - Free Report) , Pure Storage (PSTG - Free Report) and NVIDIA (NVDA - Free Report) . All the stocks carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Agilent scheduled to report quarterly results on May 25, while NVIDIA and Pure Storage are slated to announce results on May 26.

Long-term earnings growth rate of Pure Storage, NVIDIA and Agilent, is pegged at 52.21%, 15.05% and 9%, respectively.

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