Key Points
HubSpot delivered an earnings beat last night.
However, the company guided to a softer-than-expected Q2, as management tweaks pricing and packaging for its agentic offerings.
The stock looks very cheap right now, but AI-related fears likely won't cease anytime soon.
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Shares of marketing and customer relationship automation software firm HubSpot (NYSE: HUBS) plunged on Friday, falling 20.1% as of 1:37 p.m. EDT.
HubSpot has been caught up in this year's "SaaS-pocalypse," in which fears over AI disrupting the software industry have driven meaningful sell-offs in most software stocks.
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The phenomenon also means that any imperfection in reported earnings is magnified, and that appears to have happened to HubSpot today following its first-quarter earnings release last night.
HubSpot beats, but the transition to agentic crimps guidance
In the first quarter, HubSpot grew revenue 23.4% to $881 million, with adjusted (non-GAAP) earnings per share rising 52.8% to $2.73. Both figures solidly beat analysts' expectations.
However, forward guidance was a bit softer than expected. For the second quarter, HubSpot management said it expects revenue of $897.0 million to $898.0 million, representing 18% year-over-year growth. That's somewhat of a deceleration from Q1, and below the $902 million that analysts were expecting. However, management guided to $3.00 to $3.02 in adjusted earnings per share, which was actually above the average estimate of $2.86.
Management said the second quarter was off to a slower start as it tweaks its agentic AI offerings. On the conference call with analysts, Chief Financial Officer Kathryn Bueker noted that the company had lowered pricing for some of its newer agentic offerings in April, including its Customer Agent and Prospecting Agent, and also began offering 28-day free trials on some agentic products. Bueker noted some of HubSpot's sales agents also had to be trained on new product offerings and usage-based payment plans, which limited their ability to sell at the start of the month.
Image source: Getty Images.
HubSpot's moves are the right ones long-term
The soft second-quarter guidance has sparked a huge sell-off, but innovating agentic offerings and adopting usage-based pricing should be the right moves for HubSpot to thrive in the agentic era.
HubSpot now trades at just 15.7 times this year's adjusted earnings estimates, which looks like a tremendous bargain price. However, investors shouldn't expect the fears over AI to go away anytime soon, which means the stock may be in limbo until software companies decisively prove they can continue to grow in the agentic AI era.
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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends HubSpot. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
