HubSpot (NYSE:HUBS) Beats Q1 Sales Targets, Stock Soars

Adam Hejl /
2023/05/03 4:19 pm EDT

Sales and marketing software maker HubSpot (NYSE:HUBS) beat analyst expectations in Q1 FY2023 quarter, with revenue up 26.8% year on year to $501.6 million. Guidance for next quarter's revenue was $504 million at the midpoint, which is 1.14% above the analyst consensus. HubSpot made a GAAP loss of $38.3 million, down on its loss of $9.34 million, in the same quarter last year.

Is now the time to buy HubSpot? Access our full analysis of the earnings results here, it's free.

HubSpot (HUBS) Q1 FY2023 Highlights:

  • Revenue: $501.6 million vs analyst estimates of $475.7 million (5.46% beat)
  • EPS (non-GAAP): $1.20 vs analyst estimates of $0.83 (44.8% beat)
  • Revenue guidance for Q2 2023 is $504 million at the midpoint, above analyst estimates of $498.3 million
  • The company lifted revenue guidance for the full year, from $2.06 billion to $2.08 billion at the midpoint, a 1.41% increase
  • Free cash flow of $85.2 million, up 20.1% from previous quarter
  • Customers: 177,298, up from 167,386 in previous quarter
  • Gross Margin (GAAP): 83.6%, up from 81.6% same quarter last year

“We had a strong start to the year and I’m pleased with the focused execution of the HubSpot team," said Yamini Rangan, Chief Executive Officer at HubSpot.

Started in 2006 by two MIT grad students, HubSpot (NYSE:HUBS) is a software as a service platform that helps small and medium-size businesses sell, market themselves, and get found on the internet.

Companies need to be able to interact with and sell to their customers as efficiently as possible. This reality, coupled with the ongoing migration of enterprises to the cloud drives demand for cloud-based customer relationship management (CRM) software that integrate data analytics with sales and marketing functions.

Sales Growth

As you can see below, HubSpot's revenue growth has been very strong over the last two years, growing from quarterly revenue of $281.4 million in Q1 FY2021, to $501.6 million.

HubSpot Total Revenue

This quarter, HubSpot's quarterly revenue was once again up a very solid 26.8% year on year. On top of that, revenue increased $32 million quarter on quarter, a very strong improvement on the $25.7 million increase in Q4 2022, which shows re-acceleration of growth, and is great to see.

Guidance for the next quarter indicates HubSpot is expecting revenue to grow 19.5% year on year to $504 million, slowing down from the 35.7% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 17.8% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Customer Growth

You can see below that HubSpot reported 177,298 customers at the end of the quarter, an increase of 9,912 on last quarter. That is a fair bit better customer growth than last quarter and quite a bit above the typical customer growth we have seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

HubSpot Customers

Key Takeaways from HubSpot's Q1 Results

With a market capitalization of $20.6 billion, more than $1.48 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

We liked to see that HubSpot beat analysts’ revenue expectations pretty strongly this quarter. And we were also glad to see the acceleration in customer growth. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. The company is up 6.46% on the results and currently trades at $445 per share.

Should you invest in HubSpot right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.