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HubSpot's (HUBS) Q2 Earnings Beat Estimates on Solid Revenues
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HubSpot, Inc. (HUBS - Free Report) reported solid second-quarter 2023 results, with the bottom and the top line surpassing the respective Zacks Consensus Estimate.
Despite the persistence of macroeconomic challenges, the company recorded top-line expansion year over year, driven by solid demand for its marketing and sales applications and growing customer engagement. Strong emphasis on product innovation, AI integration and a flexible bi-modal approach to target different market segments boosted the top line.
Net Income
On a GAAP basis, the company incurred a net loss of $118.9 million or a loss of $2.39 per share compared with a loss of $56.4 million or a loss of $1.18 per share in the year-earlier quarter. Despite top-line growth, higher operating expenses, owing to restructuring charges, negatively impacted the bottom line.
Non-GAAP net income stood at $70 million or $1.34 per share, up from $22.4 million or 44 cents per share reported in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 35 cents.
Total revenues rose to $529.1 million from $421.8 million reported in the prior-year quarter. The top line beat the Zacks Consensus Estimate of $504 million. HubSpot added 7,600 net new customers during the quarter, which increased the total customer count to $184,924, up 23% year over year. The customer count fell short of our estimated figure of 186,926.
During the quarter, the company focused on greater volume at the lower end of the market through product and pricing optimization. Additionally, it also actively invested to improve premium market functionalities like customization, extensibility and enhanced governance in its applications. This flexible bi-modal approach enables the company to address different market segments and maximize revenue potential. The company has also been taking positive actions to incorporate advanced AI capabilities across its CRM (customer relationship management) platform to drive more value to customers.
Subscription revenues increased to $517.7 million from $412.4 million in the prior-year quarter and surpassed our revenue estimate of $492.4 million. Solid multi-hub adoption from professional and enterprise customers boosted net sales in the June quarter. However, a large volume of starter customers partially offset this improvement. Average subscription revenues per customer rose 2% year over year to $11,400.
Professional services and other revenues increased to $11.5 million, up 23% year over year. The top line marginally beat our revenue estimate of $11.4 million.
Other Details
Gross profit in the quarter improved to $441.9 million from $342.8 million in the prior-year quarter. Operating loss, on a GAAP basis, was reported at $118.5 million compared with an operating loss of $52.3 million in the year-ago quarter. Non-GAAP operating income was $74.2 million compared with $29.4 million in the prior year quarter, with respective margins of 14% and 7%.
Cash Flow & Liquidity
In the second quarter of 2023, the company generated $76.5 million in cash from operating activities compared with $40.9 million cash generated in the prior year quarter. It generated $157.6 million of cash from operating activities in the first six months of 2023 compared with $123.1 million in the prior-year period. As of Jun 30, 2023, HubSpot had $457.2 million in cash and cash equivalents with $455.2 million in convertible senior notes.
Outlook
Management expects customers’ budgets to remain tight for the second half of the year due to the persistence of macroeconomic challenges. Foreign exchange rates are likely to have a positive impact on the company’s third-quarter revenues.
For the third quarter of 2023, HubSpot expects revenues in the range of $532-$534 million. It expects non-GAAP operating income in the range of $67-$69 million. Non-GAAP net income is estimated within the range of $1.22-$1.24.
For 2023, HubSpot raised its revenue guidance to $2.116-$2.122 billion from the previously estimated figure of $2.080-$2.088 billion. Non-GAAP operating income is expected to be within $293-$297 million, up from $275-$279 million expected earlier. Non-GAAP net income per share is likely to be in the range of $5.24-5.29 per share, up from the $4.8-$4.85 estimated previously.
Akamai is a global provider of content delivery networks and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
InterDigital, Inc. (IDCC - Free Report) , sporting a Zacks Rank #1 at present, delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. It delivered an earnings surprise of 579.03% in the last reported quarter.
It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.
Workday Inc. (WDAY - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 13.05%, on average, in the trailing four quarters.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, which makes it easier for organizations to provide analytical insights and decision support.
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HubSpot's (HUBS) Q2 Earnings Beat Estimates on Solid Revenues
HubSpot, Inc. (HUBS - Free Report) reported solid second-quarter 2023 results, with the bottom and the top line surpassing the respective Zacks Consensus Estimate.
Despite the persistence of macroeconomic challenges, the company recorded top-line expansion year over year, driven by solid demand for its marketing and sales applications and growing customer engagement. Strong emphasis on product innovation, AI integration and a flexible bi-modal approach to target different market segments boosted the top line.
Net Income
On a GAAP basis, the company incurred a net loss of $118.9 million or a loss of $2.39 per share compared with a loss of $56.4 million or a loss of $1.18 per share in the year-earlier quarter. Despite top-line growth, higher operating expenses, owing to restructuring charges, negatively impacted the bottom line.
Non-GAAP net income stood at $70 million or $1.34 per share, up from $22.4 million or 44 cents per share reported in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 35 cents.
HubSpot, Inc. Price, Consensus and EPS Surprise
HubSpot, Inc. price-consensus-eps-surprise-chart | HubSpot, Inc. Quote
Revenues
Total revenues rose to $529.1 million from $421.8 million reported in the prior-year quarter. The top line beat the Zacks Consensus Estimate of $504 million. HubSpot added 7,600 net new customers during the quarter, which increased the total customer count to $184,924, up 23% year over year. The customer count fell short of our estimated figure of 186,926.
During the quarter, the company focused on greater volume at the lower end of the market through product and pricing optimization. Additionally, it also actively invested to improve premium market functionalities like customization, extensibility and enhanced governance in its applications. This flexible bi-modal approach enables the company to address different market segments and maximize revenue potential. The company has also been taking positive actions to incorporate advanced AI capabilities across its CRM (customer relationship management) platform to drive more value to customers.
Subscription revenues increased to $517.7 million from $412.4 million in the prior-year quarter and surpassed our revenue estimate of $492.4 million. Solid multi-hub adoption from professional and enterprise customers boosted net sales in the June quarter. However, a large volume of starter customers partially offset this improvement. Average subscription revenues per customer rose 2% year over year to $11,400.
Professional services and other revenues increased to $11.5 million, up 23% year over year. The top line marginally beat our revenue estimate of $11.4 million.
Other Details
Gross profit in the quarter improved to $441.9 million from $342.8 million in the prior-year quarter. Operating loss, on a GAAP basis, was reported at $118.5 million compared with an operating loss of $52.3 million in the year-ago quarter. Non-GAAP operating income was $74.2 million compared with $29.4 million in the prior year quarter, with respective margins of 14% and 7%.
Cash Flow & Liquidity
In the second quarter of 2023, the company generated $76.5 million in cash from operating activities compared with $40.9 million cash generated in the prior year quarter. It generated $157.6 million of cash from operating activities in the first six months of 2023 compared with $123.1 million in the prior-year period. As of Jun 30, 2023, HubSpot had $457.2 million in cash and cash equivalents with $455.2 million in convertible senior notes.
Outlook
Management expects customers’ budgets to remain tight for the second half of the year due to the persistence of macroeconomic challenges. Foreign exchange rates are likely to have a positive impact on the company’s third-quarter revenues.
For the third quarter of 2023, HubSpot expects revenues in the range of $532-$534 million. It expects non-GAAP operating income in the range of $67-$69 million. Non-GAAP net income is estimated within the range of $1.22-$1.24.
For 2023, HubSpot raised its revenue guidance to $2.116-$2.122 billion from the previously estimated figure of $2.080-$2.088 billion. Non-GAAP operating income is expected to be within $293-$297 million, up from $275-$279 million expected earlier. Non-GAAP net income per share is likely to be in the range of $5.24-5.29 per share, up from the $4.8-$4.85 estimated previously.
Zacks Rank & Stocks to Consider
HubSpot currently carries a Zacks Rank #3 (Hold).
Akamai Technologies, Inc. (AKAM - Free Report) , currently carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It delivered an earnings surprise of 6.06% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Akamai is a global provider of content delivery networks and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
InterDigital, Inc. (IDCC - Free Report) , sporting a Zacks Rank #1 at present, delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. It delivered an earnings surprise of 579.03% in the last reported quarter.
It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.
Workday Inc. (WDAY - Free Report) , sporting a Zacks Rank #1, delivered an earnings surprise of 13.05%, on average, in the trailing four quarters.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, which makes it easier for organizations to provide analytical insights and decision support.