It has been more than a month since the last earnings report for HubSpot, Inc. (HUBS - Free Report) . Shares have added about 2.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 reported revenues of $89.1 million, showcasing a year-over-year increase of 37.1% in second-quarter 2017. The figure surpassed the Zacks Consensus Estimate of $86 million as well as the guided range of $85-$86 million.
The company posted adjusted profit of 7 cents per share against a loss of 7 cents per share in the year-ago quarter. The figure was much better than the Zacks Consensus Estimate of a loss of 2 cents per share.
The year-over-year growth in revenues can be primarily attributed to the growing customer base.
Total customers increased 40% year over year to 34,326. Marketing customers increased 30% to 26,560.
Average subscription revenue per customer was up 6.6% year over year to $12,773. The company continues to witness rapid adoption of its $50 per month marketing starter product, but we believe this will hurt the average subscription revenue per customer in the near term.
Management stated that it is hopeful about these customers upgrading to higher priced products over time.
Deferred revenues grew 44% year over year to $111.3 million, while calculated billings, defined as revenue plus the change in deferred revenues, came in at $94.8 million, up 39% year over year. Management noted that growth in billings was partially backed by a forex benefit.
International revenues grew 62% year over year, representing 32% of total revenue in the quarter.
Management stated that the growing adoption of Hubspot’s flagship product, One Hubspot and launch of a few other freemium products as a complementary addition to the company’s core paid sales and marketing products, have been positives for the top line.
Adjusted subscription revenue gross margin expanded 160 basis points (bps) from the year-ago quarter to 85.4%.
The company reported non-GAAP operating income of $2.4 million against a loss of $2.5 million in the year-ago quarter.
HubSpot forecasts revenues in the range of $92.8-$93.8 million for the third quarter of 2017, which reflects sequential improvement of almost 4.7% at the mid-point.
Management expects non-GAAP operating loss in the range of $4.5 million to $3.5 million for the quarter. Moreover, HubSpot expects non-GAAP net loss to be in the range $0.08 to $0.10 per share.
For full-year 2017, HubSpot expects revenues in the range of $362.8 million to $364.8 million. Non-GAAP operating income is expected in the range of breakeven to $2 million, up from the previous guidance of a loss of $3 million to $5 million.
Non-GAAP net income is anticipated to be in the range of $0.03 to $0.07 per share compared with the previously guided range of $0.04 to $0.10.
The company expects free cash flow for the year in the range of $15 million to $16 million, up from $13 million to $14 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
At this time, the stock has a strong Growth Score of A, though it is lagging a bit on the momentum front with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth 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.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.