Sales and marketing software maker HubSpot (NYSE:HUBS) reported Q2 CY2024 results beating Wall Street analysts' expectations, with revenue up 20.4% year on year to $637.2 million. The company expects next quarter's revenue to be around $646.5 million, in line with analysts' estimates. It made a non-GAAP profit of $1.94 per share, improving from its profit of $1.48 per share in the same quarter last year.
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HubSpot (HUBS) Q2 CY2024 Highlights:
- Revenue: $637.2 million vs analyst estimates of $619.3 million (2.9% beat)
- Adjusted Operating Income: $109.3 million vs analyst estimates of $93.03 million (17.5% beat)
- EPS (non-GAAP): $1.94 vs analyst estimates of $1.64 (18.2% beat)
- Revenue Guidance for Q3 CY2024 is $646.5 million at the midpoint, roughly in line with what analysts were expecting
- The company slightly lifted its revenue guidance for the full year from $2.56 billion to $2.57 billion at the midpoint
- Gross Margin (GAAP): 85%, up from 83.5% in the same quarter last year
- Free Cash Flow of $88.19 million, down 11.4% from the previous quarter
- Customers: 228,054, up from 216,840 in the previous quarter
- Billings: $650.3 million at quarter end, up 19.9% year on year
- Market Capitalization: $22.94 billion
“Q2 was another solid quarter of revenue growth and profitability driven by our rapid pace of innovation and consistent execution,” 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-sized businesses market themselves, sell, and get found on the internet.
Sales Software
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 integrates data analytics with sales and marketing functions.
Sales Growth
As you can see below, HubSpot's 30.7% annualized revenue growth over the last three years has been impressive, and its sales came in at $637.2 million this quarter.
This quarter, HubSpot's quarterly revenue was once again up a very solid 20.4% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $19.82 million in Q2 compared to $35.5 million in Q1 CY2024. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.
Next quarter's guidance suggests that HubSpot is expecting revenue to grow 16% year on year to $646.5 million, slowing down from the 25.6% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 15.6% over the next 12 months before the earnings results announcement.
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Customer Growth
HubSpot reported 228,054 customers at the end of the quarter, an increase of 11,214 from the previous quarter. That's roughly the same customer growth as we observed last quarter and quite a bit above what we've typically seen over the last year, confirming that the company is sustaining a good sales pace.
Key Takeaways from HubSpot's Q2 Results
We enjoyed seeing HubSpot exceed analysts' billings expectations this quarter. We were also glad its revenue outperformed Wall Street's estimates. Overall, this quarter was mixed but with some key positives. The stock traded up 7.2% to $494 immediately after reporting.
So should you invest in HubSpot right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.