HubSpot (HUBS)

Customer platform provider HubSpot (NYSE:HUBS) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 20.4% year on year to $846.7 million. Guidance for next quarter’s revenue was optimistic at $862.5 million at the midpoint, 2.9% above analysts’ estimates. Its non-GAAP profit of $3.09 per share was 3.4% above analysts’ consensus estimates.

Company Overview

Born from the idea that traditional interruptive marketing was becoming less effective, HubSpot (NYSE:HUBS) provides an integrated platform that helps businesses attract, engage, and manage customer relationships through marketing, sales, service, and content management tools.

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.

HubSpot competes with Salesforce (NYSE:CRM) in CRM and marketing automation, Adobe (NASDAQ:ADBE) for marketing and content tools, Zendesk (private) for customer service, and Microsoft Dynamics (NASDAQ:MSFT) for integrated business solutions. Other competitors include Zoho, monday.com (NASDAQ:MNDY), and Freshworks (NASDAQ:FRSH).

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, HubSpot’s 28.8% annualized revenue growth over the last five years was impressive. Its growth beat the average software company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. HubSpot’s annualized revenue growth of 20.1% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, HubSpot reported robust year-on-year revenue growth of 20.4%, and its $846.7 million of revenue topped Wall Street estimates by 2%. Company management is currently guiding for a 20.8% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 15.3% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and suggests the market is baking in some success for its newer products and services.

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

HubSpot’s billings punched in at $969.3 million in Q4, and over the last four quarters, its growth was impressive as it averaged 22.4% year-on-year increases. This alternate topline metric grew faster than total sales, meaning the company collects cash upfront and then recognizes the revenue over the length of its contracts - a boost for its liquidity and future revenue prospects.

The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.

HubSpot does a decent job acquiring new customers, and its CAC payback period checked in at 46.7 months this quarter. The company’s relatively fast recovery of its customer acquisition costs gives it the option to accelerate growth by increasing its sales and marketing investments.

Software is eating the world. It’s one of our favorite business models because once you develop the product, it usually doesn’t cost much to provide it as an ongoing service. These minimal costs can include servers, licenses, and certain personnel.

HubSpot’s gross margin is one of the highest in the software sector, an output of its asset-lite business model and strong pricing power. It also enables the company to fund large investments in new products and sales during periods of rapid growth to achieve outsized profits at scale. As you can see below, it averaged an elite 83.8% gross margin over the last year. That means HubSpot only paid its providers $16.24 for every $100 in revenue.

The market not only cares about gross margin levels but also how they change over time because expansion creates firepower for profitability and free cash generation. HubSpot has seen gross margins decline by 0.6 percentage points over the last 2 year, which is slightly worse than average for software.

HubSpot’s gross profit margin came in at 83.7% this quarter , marking a 1.6 percentage point decrease from 85.3% in the same quarter last year. HubSpot’s full-year margin has also been trending down over the past 12 months, decreasing by 1.3 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs.

HubSpot was roughly breakeven when averaging the last year of quarterly operating profits, decent for a software business.

Analyzing the trend in its profitability, HubSpot’s operating margin rose by 2.8 percentage points over the last two years, as its sales growth gave it operating leverage.

This quarter, HubSpot generated an operating margin profit margin of 5.7%, up 7.2 percentage points year on year. The increase was solid, and because its gross margin actually decreased, we can assume it was more efficient because its operating expenses like marketing, R&D, and administrative overhead grew slower than its revenue.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

HubSpot has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 18.6% over the last year, slightly better than the broader software sector.

HubSpot’s free cash flow clocked in at $209.4 million in Q4, equivalent to a 24.7% margin. This result was good as its margin was 2.2 percentage points higher than in the same quarter last year. Its cash profitability was also above its one-year level, and we hope the company can build on this trend.

Over the next year, analysts’ consensus estimates show they’re expecting HubSpot’s free cash flow margin of 18.6% for the last 12 months to remain the same.

We were impressed by how significantly HubSpot blew past analysts’ billings expectations this quarter. We were also glad its EPS guidance for next quarter trumped Wall Street’s estimates. Zooming out, we think this was a solid print. The market seemed to be hoping for more, and the stock traded down 3.5% to $201.85 immediately following the results.

Updated: February 11, 2026 at 9:01 PM EST

When considering an investment in HubSpot, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

There are things to like about HubSpot. To kick things off, its revenue growth was strong over the last five years. And while its expanding operating margin shows it’s becoming more efficient at building and selling its software, its admirable gross margin indicates excellent unit economics. On top of that, its healthy ARR growth shows it’s winning more long-term contracts with predictable revenue streams.

HubSpot’s price-to-sales ratio based on the next 12 months is 3.4x. Looking at the software space right now, HubSpot trades at a compelling valuation. If you trust the business and its direction, this is an ideal time to buy.

Wall Street analysts have a consensus one-year price target of $519.60 on the company (compared to the current share price of $210.75), implying they see 147% upside in buying HubSpot in the short term.