HubSpot (HUBS) Stock Surges On Better Than Expected Profit Guidance

HubSpot (NYSE: HUBS) jumped 13% in early Thursday trading on the back of its fiscal third-quarter earnings release, which saw it top profit, revenue, and guidance expectations.

The software firm posted third-quarter earnings of $0.73 per share, $0.22 above the analyst estimate of $0.51, while revenue for the quarter came in at $444 million versus the consensus estimate of $425.71 million.

The company's total revenue increased 31% year-over-year, with subscription revenue coming in at $435 million, up 32% and
professional services and other revenue at $8.9 million, down 13%.

Furthermore, customers hit 158,905 on September 30, up 24% from September 30, 2021, with average subscription revenue per customer at $11,233 during Q3, up 7%.

"Q3 was another strong quarter for HubSpot, reflecting our continued focus on innovation and execution," said Yamini Rangan, Chief Executive Officer at HubSpot. "Our platform is driving value for customers and continues to be mission-critical as they look to connect with their customers and increase efficiencies during this period of uncertainty. We are operating from a position of strength with a solid balance sheet, an incredible team, and a company culture that allows us to attract and retain top talent."

Looking ahead, the company's profit forecast also topped expectations. HubSpot sees Q4 earnings per share between $0.82 and $0.84, versus the consensus of $0.79, with revenue for the period expected to be in a range of $444 to $446 million, versus the consensus of $449.54 million.

Full-year 2022 earnings per share are expected to be between $2.48 and $2.50, versus the consensus of $2.27, with full-year revenue from $1.705 billion to 1.707 billion, versus the consensus of $1.69 billion.

Reacting to the report, BMO Capital Markets analyst Keith Bachman said in a note that "HUBS reported better-than-feared results for the quarter, and the CC revenue guide was about in line with our recent estimate reductions. Despite incrementally worse macro conditions, HUBS posted CC billings growth that was 1-2 points above our forecast." The analyst said the firm is encouraged with how the company is holding up, although they continue to have concerns about the FY23 macro impact.

Elsewhere, UBS analyst Taylor McGinnis explained that "despite strength, HUBS' tone remained guarded, saying the macro is worsening (long sales cycles, more approvals, tighter budgets) and that linearity was
difficult in the Q with no material improvement in Oct."

By Sam Boughedda

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