HomeMost PopularInvestingHubSpot (HUBS) Q1 Earnings Beat Estimates on Solid Revenues

HubSpot (HUBS) Q1 Earnings Beat Estimates on Solid Revenues

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HubSpot, Inc. HUBS reported impressive first-quarter 2024 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. The company reported a top-line expansion year over year, backed by growing user engagement across all segments. Integration of advanced AI tools across its product suites and customer platform is driving growth.

Net Income

On a GAAP basis, the company recorded a net income of $5.9 million or 12 cents per share against a loss of $36.6 million or a loss of 74 cents per share in the year-ago quarter. The improvement is primarily attributable to solid net sales growth.

Non-GAAP net income was $89.1 million or $1.68 per share, up from $63 million or $1.22 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 19 cents.

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

HubSpot, Inc. price-consensus-eps-surprise-chart | HubSpot, Inc. Quote

Revenues

Quarterly revenues improved to $617.4 million from $501.6 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $596 million. HubSpot is witnessing steady multi-hub adoption from enterprise customers in the premium market. Demand for sales hub remains strong. Healthy net customer adds in the starter edition and pricing optimization drove net sales in the lower tier of the market spectrum.

The company has integrated HubSpot AI across the entire platform, enabling users to leverage AI features at no additional cost. AI native tools such as GPT-powered chatbots, real-time recommendations and call summaries are gaining popularity. Clients are leveraging this advanced feature for multiple use cases, such as crafting marketing emails, blogs, personalized content generation and more.

HubSpot added over 11,700 net new customers during the quarter, which increased the total customer count to 216,840, up 22% year over year. The customer count surpassed the consensus estimate of 214,877.

Subscription revenues rose to $603.8 million, up 23% year over year. The figure surpassed the Zacks Consensus Estimate of $585 million. Average subscription revenues per customer rose 1% year over year to $11,447, driven by multi-hub adoption by enterprise and professional customers.

Professional services and other revenues totaled $13.6 million, up from $11.9 million in the year-ago quarter. The top line marginally beat consensus estimate of $12.22 million.

Other Details

Gross profit in the quarter was $522.3 million, up from $421.3 million in the year-ago quarter. Operating loss, on a GAAP basis, was $23.2 million compared with an operating loss of $43 million in the year-ago quarter. Non-GAAP operating income improved to $92.6 million from $69.4 million, with respective margins of 15% and 13.8%.

Cash Flow & Liquidity

In the first quarter of 2024, the company generated $127.1 million in cash from operating activities compared with $81.1 million cash generated in the year-ago quarter. As of Mar 31, 2024, HubSpot had $447.8 million in cash and cash equivalents, with $456.7 million in convertible senior notes.

Outlook

For second-quarter 2024, HubSpot forecasts revenues in the range of $617 million to $619 million. The company expects non-GAAP net income per share to be in the band of $1.62 to $1.64. The anticipated range for non-GAAP operating income is $92-$93 million. Foreign exchange rates are expected to have a negative impact on second-quarter revenue growth.

For 2024, management estimates revenues between $2.55 billion and $2.56 billion. Non-GAAP operating income is expected to be in the range of $426-$430 million. Non-GAAP net income per share is likely to be in the range of $7.30-$7.38.

Zacks Rank & Stocks to Consider

HubSpot currently has a Zacks Rank #3 (Hold).

Pinterest PINS, carrying a Zacks Rank #2 (Buy) at present, delivered a trailing four-quarter average earnings surprise of 38.78%. In the last reported quarter, it delivered an earnings surprise of 42.86%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pinterest is increasingly establishing a unique value proposition to advertisers that could provide a competitive advantage in the long haul. Through various innovations, it continues to dramatically improve the advertising platform, which appears to be one of the best ad platforms for consumer discretionary brands looking for ways to reach customers and stretch smaller ad budgets.

Arista Networks, Inc. ANET, carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 15.39%, on average, in the trailing four quarters.

It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.

Silicon Motion Technology Corporation SIMO, carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 4.72%.

It is a leading developer of microcontroller ICs for NAND flash storage devices. The semiconductor company also designs, develops and markets high-performance, low-power semiconductor solutions for original equipment manufacturers and other customers.

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