HubSpot Earnings: Strength in New Customer Additions and Large Deals Drive Good Results

Narrow-moat HubSpot’s stretch of strong results continued as the firm beat our top and bottom-line expectations for the fourth quarter. While the revenue outlook was in line with our model, profitability guidance was better, and when coupled with continued quarterly outperformance, it caused us to raise our margin estimates over the medium term. Like some of our other enterprise software companies, HubSpot reported strength in large deals, while maintaining the macroenvironment is unchanged. New customer additions were also robust, which gives us confidence in our higher estimates. Based on various positive indicators, we are raising our fair value estimate to $610 per share, from $505. After a strong run in 2023, we now see shares as fairly valued. We continue to view HubSpot as well-positioned in the midmarket for marketing and sales automation software, with an expanding and powerful portfolio, and a robust growth profile coupled with solid execution.