HubSpot (HUBS) Beats on Q2 Earnings & Revenues, Ups '20 View
HubSpot, Inc.’s HUBS second-quarter 2020 non-GAAP earnings of 34 cents per share beat the Zacks Consensus Estimate by 41.7% and improved 9.7% from the year-ago quarter. The bottom line also exceeded management’s guided range of 23-25 cents.
Revenues of $203.6 million surpassed the Zacks Consensus Estimate by 4.2% and improved 25% (up 26% on a constant currency basis) year over year. The top line was also above the higher end of management’s guided range of $195-$196 million.
The top line was driven by accelerating Subscription revenues. Further, growing customer base, which surged 34% year over year to 86,672, contributed to the results.
Following stellar second-quarter results and raised 2020 guidance, shares of HubSpot were up more than 7.5% in the pre-market trading on Aug 6.
Coming to the year-to-date price performance, shares of HubSpot have gained 50.1%, compared with the industry’s growth of 63.3%.
Subscription revenues (96.5% of the total revenues) improved 26% from the year-ago quarter to $196.4 million. Professional services and other revenues (3.5%) were down 3% year over year to $7.2 million.
Total average subscription revenue per customer was down 5% year over year to $9,466.
Deferred revenues (including current portion) improved 22% year over year to $241 million. Meanwhile, calculated billings, defined as revenues plus the change in deferred revenues, amounted to $202 million, surging 21% year over year (up 21% at cc).
International revenues climbed 32% from the year-ago quarter (up 36% at cc), representing 42% of total revenues in the reported quarter.
Margins in Detail
Per management, non-GAAP gross margin during the reported quarter remained flat year over year at 82%. Further, non-GAAP subscription margin of 85.5% contracted 40 basis points (bps) on a year-over-year basis.
Non-GAAP Research and development (R&D) expenses as a percentage of revenues expanded 80 bps year over year to 19.1%. Non-GAAP General and administrative (G&A) expenses contracted 90 bps to 9.6% on a year-over-year basis. Meanwhile, non-GAAP Sales and marketing (S&M) expenses contracted 100 bps to 44.1% from the year-ago quarter.
The company reported non-GAAP operating income of $19.2 million, up 39.2% from the year-ago figure. Management had projected non-GAAP operating income in the band of $10.5-$11.5 million for the second quarter.
Non-GAAP operating margin expanded 100 bps on a year-over-year basis to 9.4%.
Balance Sheet & Cash Flow
As of Jun 30, 2020, HubSpot reported cash and cash equivalents and short-term investments of $1.14 billion, up from $968.6 million as of Mar 31, 2020.
HubSpot, Inc. Price, Consensus and EPS Surprise
Cash flow from operations during the reported quarter was $15 million compared with $23 million reported in the prior quarter.
Free cash flow came in at $0.8 million compared with the prior-quarter figure of $7.1 million.
For third-quarter 2020, HubSpot forecast revenues in the range of $210-$211 million. The Zacks Consensus Estimate for third quarter revenues is currently pegged at $200.5 million.
Management expects non-GAAP operating income in the band of $7.5-$8.5 million.
Moreover, the company anticipates non-GAAP net income per share in the range of 11-13 cents. The Zacks Consensus Estimate is currently pegged at 24 cents per share.
For 2020, the company has raised guidance. The company now anticipates revenues between $828 million and $832 million compared with the prior range of $800-$810 million. The Zacks Consensus Estimate for 2020 revenues currently stands at $805.8 million.
Management expects non-GAAP operating income in the band of $52-$54 million compared with the earlier guided range of $40-$42 million.
HubSpot anticipates non-GAAP net income per share in the range of 92-96 cents compared with the previous range of 88-92 cents. The Zacks Consensus Estimate is currently pegged at 92 cents per share.
Zacks Rank & Key Picks
HubSpot currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Dropbox DBX, Asure Software, Inc. ASUR and Analog Devices ADI. While Asure Software sports a Zacks Rank #1 (Strong Buy), both Analog Devices and Dropbox carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate of Dropbox, Asure Software, and Analog Devices is pegged at 16.83%, 14% and 13.33%, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>
Click to get this free report
Analog Devices, Inc. (ADI): Free Stock Analysis Report
Asure Software Inc (ASUR): Free Stock Analysis Report
HubSpot, Inc. (HUBS): Free Stock Analysis Report
Dropbox, Inc. (DBX): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.