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HubSpot's Motion AI Buyout Reflects Customer-Centric Approach

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HubSpot Inc (HUBS - Free Report) recently announced the acquisition of Motion AI, a leading provider of Chatbot building tools. The company was launched in 2015 and “has facilitated more than 40 million total messages since May 2016, with over 80,000 bots built to date.”

By using Motion AI’s tools, anyone, irrespective of programming skills, can create a chatbot that will work on websites, Facebook (FB - Free Report) Messenger, SMS and Slack.

Reportedly, New York-based Crunch Ventures and Chicago’s Hyde Park Angels have invested almost $700,000 in Motion AI. However, financial details of the current transaction were not disclosed.

HubSpot has been a customer of Motion AI. The company’s free CRM product already integrates Motion AI tools, which has helped in delivering a more customer-centric offering. This was evident from the fact that number of marketing qualified leads using Motion AI was six times higher compared with email communication.

HubSpot, Inc. Price and Consensus


HubSpot, Inc. Price and Consensus | HubSpot, Inc. Quote

Acquisitions Expanding Portfolio

Motion AI’s acquisition will improve HubSpot’s expertise in gaining customer insights, personalize marketing and enhance customer engagement that will help in qualifying leads at a much less time than conventional marketing channels.

We note that HubSpot has been focusing on using more artificial intelligence (AI) tools to help the sales and marketing team effectively target customers. In July, the company acquired Kemvi that launched DeepGraph. Per TechCrunch, the product analyzes public data to identify the best time to reach out to potential customers.

We believe that the expanded product portfolio following the integration of Motion AI into HubSpot’s platform and Kemvi’s acquisition will eventually boost the company’s customer base. At the end of second-quarter 2017, HubSpot had more than 34K customers, up 40% on a year-over-year basis.

Partnerships Boosts Marketing Expertise

Apart from acquisitions, partnerships have been a significant growth driver for HubSpot. In recent times, the company has partnered with Brightcove (BCOV - Free Report) , Sales Force Europe (SFE) and Qstream, which has improved marketing expertise.  

The Brightcove partnership has enabled HubSpot to offer video analytics to consumers, which helps in improving conversion. With Qstream’s sales acceleration software, the company is hoping to reduce time to revenue for its expanding global sales force. Moreover, the collaboration with SFE is likely to boost HubSpot’s footprint in Europe.

We believe that these partnerships along with acquisitions will continue to drive the customer base, which will eventually boost top-line growth. In the last quarter, revenues surged 37.1% to $89 million, which not only surpassed the Zacks Consensus Estimate of $86 million but also the guided range of $85-$86 million.

HubSpot now projects revenues in the range of $92.8-$93.8 million for the third quarter of 2017. The Zacks Consensus Estimate for revenues is currently pegged at $93.3 million, reflecting year-over-year growth of 32.2%.

Currently, HubSpot has a Zacks Rank #3 (Hold).

Stock to Consider

AppFolio (APPF - Free Report) with Zacks Rank #1 (Strong Buy) is a stock worth considering in the same sector. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2017 is currently pegged at 32 cents for AppFolio, which has remained steady over the last 30-days.

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