Hubspot (NYSE:NYSE:HUBS) Q2: Beats On Revenue, Upgrades Full Year Guidance

Kayode Omotosho /
2021/08/04 4:21 pm EDT
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Sales and marketing software maker Hubspot (NYSE:HUBS) announced better-than-expected results in the Q2 FY2021 quarter, with revenue up 52.6% year on year to $310.7 million. Hubspot made a GAAP loss of $24.5 million, improving on its loss of $29.4 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 (NYSE:HUBS) Q2 FY2021 Highlights:

  • Revenue: $310.7 million vs analyst estimates of $296 million (4.99% beat)
  • EPS (non-GAAP): $0.43 vs analyst estimates of $0.32 (35.2% beat)
  • Revenue guidance for Q3 2021 is $326 million at the midpoint, above analyst estimates of $318.6 million
  • The company lifted revenue guidance for the full year, from $1.24 billion to $1.27 billion at the midpoint, a 2.25% increase
  • Free cash flow of $25.5 million, down 58.2% from previous quarter
  • Customers: 121,048, up from 113,925 in previous quarter
  • Gross Margin (GAAP): 79.7%, in line with previous quarter

"We finished out the first half of the year with yet another quarter of strong performance across the business," said Yamini Rangan, Chief Customer Officer at HubSpot.

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

Although the share of digital commerce is rising every year, the majority of the small and medium sized businesses have still not fully embraced it. It is this digitization of SMBs, together with the rise of social media platforms and other customer engagement channels that has been fueling the demand for online marketing and sales platforms such as HubSpot.

Sales Growth

As you can see below, Hubspot's revenue growth has been impressive over the last year, growing from quarterly revenue of $203.6 million, to $310.7 million.

Hubspot Total Revenue

This was a standout quarter for Hubspot with quarterly revenue up an absolutely stunning 52.6% year on year. which is above average for the company. Quarter on quarter the revenue increased by $29.4 million in Q2, which was roughly in line with the Q1 2021 increase. This steady quarter-on-quarter growth shows the company is able to maintain a strong growth trajectory.

Analysts covering the company are expecting the revenues to grow 32.2% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

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Customer Growth

You can see below that Hubspot reported 121,048 customers at the end of the quarter, an increase of 7,123 on last quarter. That is a bit slower customer growth than what we are used to seeing lately, suggesting that the customer acquisition momentum is slowing a little bit.

Hubspot Customers

Key Takeaways from Hubspot's Q2 Results

With market capitalisation of $27.2 billion, more than $1.21 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 were impressed by the exceptional revenue growth Hubspot delivered this quarter. And we were also excited to see it that it outperformed Wall St’s revenue expectations. On the other hand, it was unfortunate to see the slowdown in customer growth. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. The company is down -2.89% on the results and currently trades at $573 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 full report which you can read here, it's free.

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