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HubSpot (HUBS) Up 3.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for HubSpot (HUBS - Free Report) . Shares have added about 3.5% 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 catalysts.
HubSpot Surpasses Q4 Earnings and Revenue Estimates
HubSpot reported healthy fourth-quarter 2023 results, with the bottom line and the top line surpassing the respective Zacks Consensus Estimate. Despite exchange rate volatility and macroeconomic headwinds, the company recorded higher revenues year over year, driven by a strong subscription base, expansion to an underpenetrated market and innovative cross-selling products.
Net Income
GAAP net loss was $13.6 million, or a loss of 27 cents per share compared with $15.6 million or a loss of 32 cents per share in the prior-year quarter. Despite higher operating expenses and cost of revenues, significant revenue growth led to a narrower net loss in the fourth quarter.
Non-GAAP net income in the fourth quarter was $92.4 million or $1.76 per share compared with $56.8 million or $1.11 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 22 cents.
For 2023, GAAP net loss totaled $176.3 million or a loss of $3.53 per share compared with a net loss of $112.7 million or a loss of $2.35 per share in 2022. On a non-GAAP basis, net income was $307.4 million or $5.89 per share compared to respective tallies of $141.8 million or 2.78 per share in the previous year.
Revenues
For full-year 2023, total revenues were $2.17 billion, up 25% from $1.7 billion in 2022.
Revenues during the reported quarter were $581.9 million compared with $469.7 million in the prior-year quarter, reflecting growth of 24% and beating the Zacks Consensus Estimate of $557.5 million. The top-line performance gained from solid demand trends and an expanding user base, which increased 23% year over year to a total of 205,091.
Subscription revenues in the quarter were $570.2 million, up 24% from $458.2 million in the year-ago quarter. Professional services and other revenues were $11.7 million compared with $11.5 million in the prior-year quarter. Average subscription revenue per customer was $11,365 in the quarter, up 1%.
Other Details
Gross profit reported during the quarter was $493.3 million compared with $389.4 million in the prior-year quarter. GAAP operating loss during the quarter was $24.3 million compared with a loss of $13.5 million in the prior-year quarter. Non-GAAP operating income during the quarter was $98.1 million compared with $64 million in the prior-year quarter. The fourth-quarter non-GAAP operating margin was 16.9% compared to 13.6% in the prior-year quarter.
Cash Flow & Liquidity
During the fourth quarter, HubSpot generated $104.3 million of cash from operating cash flow compared with $90 million a year ago. For 2023, the company generated $351 million from operating activities compared with $273.2 million in the previous year. As of Dec 31, 2023, the company’s cash, cash equivalents, and short-term and long-term investments balance was $1.7 billion.
Outlook
For first-quarter 2024, HubSpot forecasts revenues to be in the range of $596 million to $598 million. The company expects non-GAAP net income per share to be in the band of $1.48 to $1.50. The anticipated range for non-GAAP operating income is $83-$84 million. Foreign exchange rates are expected to have no impact on first-quarter revenue growth.
For 2024, management estimates the revenues between $2.55 billion and $2.56 billion. Non-GAAP operating income is expected to be in the range of $408-$412 million. Non-GAAP net income per share is likely to be in the range of $6.86-$6.94.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 29.35% due to these changes.
VGM Scores
Currently, HubSpot has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, 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 C. 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, Meta Platforms (META - Free Report) , a stock from the same industry, has gained 1.6%. The company reported its results for the quarter ended December 2023 more than a month ago.
Meta Platforms reported revenues of $40.11 billion in the last reported quarter, representing a year-over-year change of +24.7%. EPS of $5.33 for the same period compares with $3 a year ago.
Meta Platforms is expected to post earnings of $4.27 per share for the current quarter, representing a year-over-year change of +61.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.
Meta Platforms has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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HubSpot (HUBS) Up 3.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for HubSpot (HUBS - Free Report) . Shares have added about 3.5% 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 catalysts.
HubSpot Surpasses Q4 Earnings and Revenue Estimates
HubSpot reported healthy fourth-quarter 2023 results, with the bottom line and the top line surpassing the respective Zacks Consensus Estimate. Despite exchange rate volatility and macroeconomic headwinds, the company recorded higher revenues year over year, driven by a strong subscription base, expansion to an underpenetrated market and innovative cross-selling products.
Net Income
GAAP net loss was $13.6 million, or a loss of 27 cents per share compared with $15.6 million or a loss of 32 cents per share in the prior-year quarter. Despite higher operating expenses and cost of revenues, significant revenue growth led to a narrower net loss in the fourth quarter.
Non-GAAP net income in the fourth quarter was $92.4 million or $1.76 per share compared with $56.8 million or $1.11 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 22 cents.
For 2023, GAAP net loss totaled $176.3 million or a loss of $3.53 per share compared with a net loss of $112.7 million or a loss of $2.35 per share in 2022. On a non-GAAP basis, net income was $307.4 million or $5.89 per share compared to respective tallies of $141.8 million or 2.78 per share in the previous year.
Revenues
For full-year 2023, total revenues were $2.17 billion, up 25% from $1.7 billion in 2022.
Revenues during the reported quarter were $581.9 million compared with $469.7 million in the prior-year quarter, reflecting growth of 24% and beating the Zacks Consensus Estimate of $557.5 million. The top-line performance gained from solid demand trends and an expanding user base, which increased 23% year over year to a total of 205,091.
Subscription revenues in the quarter were $570.2 million, up 24% from $458.2 million in the year-ago quarter. Professional services and other revenues were $11.7 million compared with $11.5 million in the prior-year quarter. Average subscription revenue per customer was $11,365 in the quarter, up 1%.
Other Details
Gross profit reported during the quarter was $493.3 million compared with $389.4 million in the prior-year quarter. GAAP operating loss during the quarter was $24.3 million compared with a loss of $13.5 million in the prior-year quarter. Non-GAAP operating income during the quarter was $98.1 million compared with $64 million in the prior-year quarter. The fourth-quarter non-GAAP operating margin was 16.9% compared to 13.6% in the prior-year quarter.
Cash Flow & Liquidity
During the fourth quarter, HubSpot generated $104.3 million of cash from operating cash flow compared with $90 million a year ago. For 2023, the company generated $351 million from operating activities compared with $273.2 million in the previous year. As of Dec 31, 2023, the company’s cash, cash equivalents, and short-term and long-term investments balance was $1.7 billion.
Outlook
For first-quarter 2024, HubSpot forecasts revenues to be in the range of $596 million to $598 million. The company expects non-GAAP net income per share to be in the band of $1.48 to $1.50. The anticipated range for non-GAAP operating income is $83-$84 million. Foreign exchange rates are expected to have no impact on first-quarter revenue growth.
For 2024, management estimates the revenues between $2.55 billion and $2.56 billion. Non-GAAP operating income is expected to be in the range of $408-$412 million. Non-GAAP net income per share is likely to be in the range of $6.86-$6.94.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 29.35% due to these changes.
VGM Scores
Currently, HubSpot has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, 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 C. 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, Meta Platforms (META - Free Report) , a stock from the same industry, has gained 1.6%. The company reported its results for the quarter ended December 2023 more than a month ago.
Meta Platforms reported revenues of $40.11 billion in the last reported quarter, representing a year-over-year change of +24.7%. EPS of $5.33 for the same period compares with $3 a year ago.
Meta Platforms is expected to post earnings of $4.27 per share for the current quarter, representing a year-over-year change of +61.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.
Meta Platforms has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.