Back to top

Image: Bigstock

HubSpot (HUBS) Beats on Q1 Earnings & Revenues, Ups '19 View

Read MoreHide Full Article

HubSpot, Inc. (HUBS - Free Report) delivered first-quarter 2019 non-GAAP earnings of 36 cents per share which soared 140% from the year-ago quarter. The figure also beat the Zacks Consensus Estimate by 44%.

Revenues of $151.8 million comfortably surpassed the Zacks Consensus Estimate of $148 million and surged 32.5% (35% on a constant currency basis) year over year The figure was also higher than management’s guided range of $146.5-$147.5 million.

Year-over-year growth in revenues can primarily be attributed to growing customer base, which surged 35% to 60,814. Moreover, higher Subscription and Professional services revenues positively impacted the reported quarter’s revenues.


Coming to price performance, shares of HubSpot have returned 44.7% year to date, substantially outperforming the industry’s rally of 28%.

Quarter in Detail

Subscription revenues (95% of the total revenues) increased 32.8% from the year-ago quarter to $144.2 million. Professional services and other revenues (almost 5%) were up 27.2% year over year to $7.6 million.

Total average subscription revenue per customer decreased 2% year over year to $9,811.

Deferred revenues (including current portion) grew 28% year over year to $193.5 million. Meanwhile, calculated billings, defined as revenues plus the change in deferred revenues came in at $160 million, surging 27% year over year (up 31% at cc). Management noted that unfavorable currency movements limited growth.

International revenues advanced 42% from the year-ago quarter (50% at cc), representing 39% of total revenues in the reported quarter.

HubSpot, Inc. Price, Consensus and EPS Surprise

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


Margin Highlights

Non-GAAP gross margin during the reported quarter came in at 82%, expanding 60 bps from the year-ago quarter. Non-GAAP subscription margin of 86.2% contracted 10 bps on a year-over-year basis.

Non-GAAP Research and development (R&D) expenses as a percentage of revenues expanded 40 bps to 18.5%. Meanwhile, non-GAAP Sales and marketing (S&M) and General and administrative (G&A) expenses contracted 240 bps and 80 bps to 44.2% and 10.9%, respectively, on a year-over-year basis.

The company reported non-GAAP operating income of $13 million, soaring 133.2% from the year-ago figure of $5.6 million. Non-GAAP operating margin expanded 370 bps on a year-over-year basis to come in at 8.6%.

Balance Sheet & Cash Flow

HubSpot ended the first quarter with cash and cash equivalents and short-term investments of $969.1 million up from $592.3 million recorded at the end of the previous quarter. Management attributed the increase to proceeds worth $343 million received from buyback of approximately 2.15 million shares concluded in February.

Cash flow from operations during the reported quarter came in at $37.7 million compared with $33.1 million reported in fourth quarter.

Free cash flow came in at $30.6 million compared with the previous quarter’s figure of $25.1 million.

Impressive Guidance

HubSpot forecasts revenues in the range of $156.5 million to $157.5 million for the second quarter of fiscal 2019. The Zacks Consensus Estimate is currently pegged at $155.9 million.

Management expects non-GAAP operating income in the band of $9.2-$10.2 million for the second quarter.

Moreover, HubSpot anticipates non-GAAP net income per share to be in the range of 24-26 cents. The Zacks Consensus Estimate is currently pegged at 23 cents.

Updated 2019 Outlook Holds Promise

For full-year 2019, HubSpot raised guidance. The company now expects revenues in the range of $655.5-$658.5 million up from previously guided range of $648-$652 million. The Zacks Consensus Estimate is currently pegged at $651.77 million.

Non-GAAP operating income is now projected in the range of $50-$52 million (prior guidance was in the range of $46-$50 million).

Non-GAAP net income per share is now anticipated to be in the range of $1.26-$1.30 (previously $1.08-$1.16). The Zacks Consensus Estimate is currently pegged at $1.15.


We believe portfolio expansion and collaborations bode well. The company is optimistic regarding the adoption of Marketing Hub Starter. Moreover, integration of its various in-house offerings is likely to improve subscription levels going ahead, consequently bolstering the top line.

Zacks Rank & Stocks to Consider

HubSpot carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering in the broader sector, include Ciena Corp. (CIEN - Free Report) , Cirrus Logic, Inc. (CRUS - Free Report) and Synopsys, Inc. (SNPS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Ciena, Cirrus Logic and Synopsys is pegged at 16.8%, 15% and 10%, respectively.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

HubSpot, Inc. (HUBS) - free report >>

Synopsys, Inc. (SNPS) - free report >>

Cirrus Logic, Inc. (CRUS) - free report >>

Ciena Corporation (CIEN) - free report >>