Company Reports

We are maintaining our fair value estimate of $610 per share after narrow-moat HubSpot reported good first-quarter results. Guidance was mixed relative to our expectations, with full-year revenue maintained and non-GAAP operating profits raised. The most immediately impactful takeaway from the call was that the stronger environment experienced in the fourth quarter has retreated to the cautious backdrop we saw throughout 2023. We view the outlook as several offsetting factors that do not have a material impact on our long-term assessment. 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. After months of being overvalued, we now see the stock as undervalued.

We believe HubSpot is a leader in marketing and sales automation software for the mid-market. We see a long runway for growth as it gathers new customers and continues to move its existing clients up a tiered pricing structure and sell multiple hubs to larger clients. We also see the SMB and mid-market as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Therefore, we believe that HubSpot’s robust and expanding suite has helped carve out a defensible niche.

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.

We believe HubSpot is a leader in marketing and sales automation software for the mid-market. We see a long runway for growth as it gathers new customers and continues to move its existing clients up a tiered pricing structure and sell multiple hubs to larger clients. We also see the SMB and mid-market as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Therefore, we believe that HubSpot’s robust and expanding suite has helped carve out a defensible niche.

Narrow-moat HubSpot has been on a roll, reporting good results over the last several quarters, and the third quarter was no exception. The company delivered revenue and profitability that appreciably bested our expectations, while fourth-quarter guidance was generally in line. New solutions with a focus on artificial intelligence are being released at a rapid pace, which we expect to support strong revenue growth over the next several years. After filtering results and guidance through our model, we are raising our fair value estimate to $505 per share, from $480. We see shares as slightly undervalued and continue to view HubSpot as well-positioned in the mid-market for marketing and sales automation software, with an expanding and powerful portfolio and a robust growth profile coupled with solid execution.

We believe HubSpot is a leader in marketing and sales automation software for the mid-market. We see a a long runway for growth as it gathers new customers and continues to move its existing clients up a tiered pricing structure and sell multiple hubs to larger clients. We also see the SMB and mid-market as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Therefore, we believe that HubSpot’s robust and expanding suite has helped carve out a meaningful niche.

We believe HubSpot is a leader in marketing and sales automation software for the mid-market. We see a a long runway for growth as it gathers new customers and continues to move its existing clients up a tiered pricing structure and sell multiple hubs to larger clients. We also see the SMB and mid-market as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Therefore, we believe that HubSpot’s robust and expanding suite has helped carve out a meaningful niche.

Similar to the last couple of quarters, narrow-moat HubSpot reported good results with meaningful upside to revenue and profitability relative to the high end of guidance. It raised its 2023 outlook on the top and bottom lines, and third-quarter guidance was better than we anticipated. We think the reason for the negative stock reaction in after-hours trading reflects the more rapid slowdown in billings growth relative to revenue growth, coupled with a step down in customer additions during the quarter.

Similar to last quarter, wide-moat HubSpot reported good results with both revenue and non-GAAP operating profit coming in above the high end of guidance. The 2023 outlook was raised on both the top and bottom lines. The firm’s high-value software helps attract free and low-price tier customers, while feature-rich offerings and multiple modules help drive upsells. This has been the case in recent quarters as well, and the value proposition and vendor consolidation available to mid-market clients was apparent, as macro uncertainty seems to benefit HubSpot relative to peers. We raised our near-term estimates, particularly on profitability, over the next several years, and as a result we are raising our fair value estimate to $445 per share, from $425 previously. We continue to view HubSpot as well positioned in marketing and sales automation software, with an expanding portfolio and a robust growth profile coupled with solid execution. With shares up nearly 50% since the beginning of the year, we now see shares as fairly valued.

We believe HubSpot is a leader in marketing and sales automation software for the mid-market. We see a a long runway for growth as it gathers new customers and continues to move its existing clients up a tiered pricing structure and sell multiple hubs to larger clients. We also see the SMB and mid-market as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Therefore, we believe that HubSpot’s robust and expanding suite has helped carve out a meaningful niche.

HubSpot reported good results with both revenue and non-GAAP operating profit coming in above the high end of guidance. The outlook was better across the board compared with our model, with 2023 non-GAAP operating profit a staggering 60% above our estimate. The firm’s high-value software helps attract customers, while feature-rich offerings and multiple modules help drive upsells. This dynamic was on full display even during continued macro uncertainty. We raised our near-term estimates, particularly on profitability, over the next several years, and as a result we are raising our fair value estimate to $425 per share, from $395 previously. We continue to view HubSpot as well positioned in marketing and sales automation software, with an expanding portfolio and a robust growth profile coupled with solid execution. With shares up nearly 50% since early January, we now see shares as modestly undervalued.

We believe HubSpot is a leader in marketing and sales automation software for the mid-market. We see a a long runway for growth as it gathers new customers and continues to move its existing clients up a tiered pricing structure and sell multiple hubs to larger clients. We also see the SMB and mid-market as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Therefore, we believe that HubSpot’s robust and expanding suite has helped carve out a meaningful niche.

HubSpot reported strong results—both revenue and non-GAAP operating profit came in above the high end of guidance. Revenue growth remains impressive even as macroeconomic conditions were incrementally more challenging. Top-line performance was underscored by good billings growth, strong new customer adds, and resilient retention. Despite quarter strength, guidance was mixed, with revenues slightly light and profitability ahead. In the face of worsening macroeconomic conditions, we think guidance is solid. After minimal changes to our estimates, we keep our $395 fair value estimate. Along with most of our software names, we see shares as attractive. We continue to view HubSpot as well positioned in marketing automation software with an expanding portfolio and a robust growth profile coupled with solid execution.

We believe HubSpot is a leader in customer service and engagement software for the midmarket and has a long runway for growth as it gathers new clients, moves existing clients up a tiered pricing structure, and sells multiple hubs to larger clients. We see small/medium businesses and the midmarket as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Therefore, we believe that HubSpot’s robust and expanding suite has helped carve out a meaningful niche.

While HubSpot’s investor day was upbeat, with a variety of new product introductions and market expansion, the muted margin preview for 2023 was the most immediately impactful item. We were modelling margin expansion beyond the approximately 100 to 150 basis points baked into the consensus view. Based on management’s preview, which includes no change to its long-term target of 20% to 25% non-GAAP operating margins, we have slowed the pace of margin improvement throughout our 10-year discrete DCF forecast without materially changing our long-term assumption and are thus lowering our fair value estimate to $395 per share, from $510. Our growth estimates are unchanged. Along with most of our software universe, we see shares as attractive.

We believe HubSpot is a leader in customer service and engagement software for the midmarket and has a long runway for growth as it gathers new clients, moves existing clients up a tiered pricing structure, and sells multiple hubs to larger clients. We see small/medium businesses and the midmarket as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Therefore, we believe that HubSpot’s robust and expanding suite has helped carve out a meaningful niche.

HubSpot reported good results for the second quarter, with revenue and non-GAAP operating profits coming in above the high end of guidance. Revenue growth remains impressive, while other positive indicators can be found in billings growth, new customer adds, and retention. However, macro pressures caused lengthening deal cycles and, along with worsening currency impacts, drove HubSpot to lower its full-year outlook. Accordingly, we reduced our estimates over the next couple of years and are lowering our fair value estimate to $510 per share from $640. As with most of the software names we cover, we see the shares as attractive. We view HubSpot as well positioned in marketing automation software with an expanding portfolio and a robust growth profile coupled with solid execution.

We believe HubSpot is a leader in customer service and engagement software for the midmarket and has a long runway for growth as it gathers new clients, moves existing clients up a tiered pricing structure, and sells multiple hubs to larger clients. We see small/medium businesses and the midmarket as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Therefore, we believe that HubSpot’s robust and expanding suite has helped carve out a meaningful niche.

We are maintaining our fair value estimate of $640 per share after narrow-moat HubSpot reported solid first-quarter results and provided similarly solid guidance after normalizing for the impact of currency. After a nearly 60% drop from its high six months ago and no major blemishes from results, we find shares attractive. First-quarter revenue and non-GAAP operating margin were both above the high end of guidance, while an otherwise constructive outlook is pressured by considerably steeper currency headwinds for the year. Customer additions ticked up, surpassing the 8,000 mark for the first time in a year, even as growth in average subscription revenue per customer, or ASRPC, accelerated to its highest level in the past two years. Billings growth improved to be in line with revenue growth, which had been a minor blemish over the past couple of quarters.

We are raising our fair value estimate to $640 per share from $630 per share, after narrow-moat HubSpot reported strong fourth-quarter results and provided good guidance for the first quarter of 2022. We thought the stock was running ahead of the fundamentals for much of 2021 and after a nearly 50% drop from its recent peak we see shares as attractive again, even after the recent uptick. Fourth-quarter revenue and non-GAAP operating margin were both above the high end of guidance, while the outlook for the first quarter was slightly above FactSet consensus for both figures. We see billings growth coming in below revenue growth for the second straight quarter as the lone cautionary item. After this report, we continue to view HubSpot as well positioned in marketing automation software with an expanding portfolio and a robust growth profile coupled with solid execution.