HubSpot, Inc. HUBS reported impressive third-quarter 2024 results, with both adjusted earnings and revenues surpassing the Zacks Consensus Estimate.
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The company reported a top-line expansion year over year, backed by growing user engagement across all segments. The integration of advanced AI tools across its product suites and customer platform drives growth. However, cautious spending decisions by clients stemming from an unfavorable macro environment is a headwind.
Net Income
On a GAAP basis, the company recorded a net income of $8.1 million or 16 cents per share against a loss of $3.6 million or 7 cents per share in the year-ago quarter. The improvement is primarily attributable to solid net sales growth.
Non-GAAP net income was $116.6 million or $2.18 per share, up from $84.9 million or $1.62 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 29 cents.
HubSpot, Inc. Price, Consensus and EPS Surprise
HubSpot, Inc. price-consensus-eps-surprise-chart | HubSpot, Inc. Quote
Revenues
Quarterly revenues improved to $669.7 million from $557.6 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $647 million. HubSpot is witnessing steady multi-hub adoption from professional and enterprise customers in the premium market. Demand for marketing and sales hubs is the primary growth driver. Service hub is also gaining momentum. Healthy net customer adds in the starter edition and pricing optimization drove net sales in the lower tier of the market spectrum.
The company has integrated HubSpot AI across the entire platform, enabling users to leverage AI features at no additional cost. AI native tools such as GPT-powered chatbots, real-time recommendations and call summaries are gaining popularity. Clients are leveraging this advanced feature for multiple use cases, such as crafting marketing emails, blogs, personalized content generation and more.
HubSpot added 10,000 net new customers during the quarter, which increased the total customer count by 23% year over year to 238,128.
Subscription revenues rose to $654.7 million from $545.8 million in the year-ago quarter. Average subscription revenues per customer declined 2% year over year to $11,235.
Professional services and other revenues totaled $15 million, up 28% year over year.
Other Details
Gross profit in the quarter was $570.4 million, up from $471.9 million in the year-ago quarter. Operating loss, on a GAAP basis, was $9.6 million compared with $18.6 million in the year-earlier quarter. Non-GAAP operating income improved to $125.2 million from $92.1 million, with respective margins of 18.7% and 16.5%.
Cash Flow & Liquidity
In the third quarter of 2024, the company generated $159.5 million in cash from operating activities compared with $89 million in cash generated in the year-ago quarter. As of Sept. 30, 2024, HubSpot had $410.1 million in cash and cash equivalents and $457.7 million in convertible senior notes.
Outlook
For the fourth quarter of 2024, the company expects revenues in the range of $672-$674 million. It expects non-GAAP operating income in the range of $128-$129 million. Non-GAAP earnings are projected to be in the range of $2.18-$2.20 per share.
Backed by solid momentum, management has raised its guidance for 2024. Revenues are now projected to be between $2.597 and $2.599 billion, up from the previously estimated figure of $2.567-$2.573 billion.
Non-GAAP operating income is expected to be within $455-$456 million, up from $437-$441 million expected earlier. Non-GAAP net income per share is likely to be in the range of $7.98-8.00 per share, up from $7.64-7.70 estimated previously.
HUBS’ Zacks Rank
HubSpot currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Light and Wonder LNW is scheduled to release third-quarter 2024 earnings on Nov. 12. The Zacks Consensus Estimate for earnings is pegged at $1.11 per share, indicating growth of 37% from the year-ago figure.
AST SpaceMobile, Inc. ASTS is scheduled to release third-quarter earnings on Nov. 14. The Zacks Consensus Estimate for earnings is pegged at a loss of 18 cents per share, indicating a growth of 21.74% from the year-ago reported figure.
The company delivered an average earnings surprise of 26.32% in the last reported quarter.
Keysight Technologies, Inc. KEYS is scheduled to release third-quarter earnings on Nov. 19. The Zacks Consensus Estimate for earnings is pegged at $1.57 per share, indicating a decline of 21.1% from the year-ago reported figure.
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