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HubSpot Inc HUBS

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Morningstar’s Analysis

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HubSpot Introduces Payments at Upbeat Investor Day; FVE Up to $580

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

We are raising our fair value estimate for narrow-moat HubSpot to $580 per share from $525 after the company announced a bevy of new products and features along with updated financial metrics at its investor day. We view the introduction of payments as easily the most important announcement, but we see the new Operations Hub enterprise edition, along with other announcements, as providing additional revenue throughout our forecast. Management indicated net revenue retention has improved markedly and is now comfortable that the company can sustain approximately 110% going forward. These two factors, combined with a growing installed base for cross-selling, increasing multihub purchases, and the rise of HubSpot as a complete CRM platform, give us greater confidence in revenue growth. We have made minor adjustments to our margin assumptions to account for the introductions of the lower-gross-margin (but likely higher-operating-margin) payments solution. With the shares up as much as 14% intraday and flirting with $800, we note our model was near FactSet consensus for both revenue and operating income for 2022 heading into the investor day, and we therefore think the valuation is challenging here.

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Company Profile

Business Description

HubSpot provides a cloud-based marketing, sales, and customer service software platform referred to as the growth platform. The applications are available ala carte or packaged together. HubSpot’s mission is to help companies grow better and has expanded from its initial focus on inbound marketing to embrace marketing, sales, and service more broadly. The company was founded in 2006, completed its initial public offering in 2014, and is headquartered in Cambridge, Massachusetts.

Contact
25 First Street, 2nd Floor
Cambridge, MA, 02141
T +1 888 482-7768
Sector Technology
Industry Software - Application
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 4,981