We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is HubSpot (HUBS) Up 11.5% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for HubSpot (HUBS - Free Report) . Shares have added about 11.5% 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's Q2 Earnings Beat Estimates on Solid Revenues
HubSpot 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.
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 vs $40.9 million cash generated in prior year quarter. The company 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, the company 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, the company 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 $4.8-$4.85 estimated previously.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 21.56% due to these changes.
VGM Scores
Currently, HubSpot has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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, Pinterest (PINS - Free Report) , a stock from the same industry, has gained 1.2%. The company reported its results for the quarter ended June 2023 more than a month ago.
Pinterest reported revenues of $708.03 million in the last reported quarter, representing a year-over-year change of +6.3%. EPS of $0.21 for the same period compares with $0.11 a year ago.
Pinterest is expected to post earnings of $0.21 per share for the current quarter, representing a year-over-year change of +90.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -16.7%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Pinterest. Also, the stock has a VGM Score of C.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is HubSpot (HUBS) Up 11.5% Since Last Earnings Report?
A month has gone by since the last earnings report for HubSpot (HUBS - Free Report) . Shares have added about 11.5% 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's Q2 Earnings Beat Estimates on Solid Revenues
HubSpot 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.
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 vs $40.9 million cash generated in prior year quarter. The company 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, the company 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, the company 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 $4.8-$4.85 estimated previously.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 21.56% due to these changes.
VGM Scores
Currently, HubSpot has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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, Pinterest (PINS - Free Report) , a stock from the same industry, has gained 1.2%. The company reported its results for the quarter ended June 2023 more than a month ago.
Pinterest reported revenues of $708.03 million in the last reported quarter, representing a year-over-year change of +6.3%. EPS of $0.21 for the same period compares with $0.11 a year ago.
Pinterest is expected to post earnings of $0.21 per share for the current quarter, representing a year-over-year change of +90.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -16.7%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Pinterest. Also, the stock has a VGM Score of C.