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HubSpot's (HUB) Earnings & Revenues Beat Estimates in Q3

HubSpot's (HUBS) Q3 results reflect benefits from strong growth in subscription revenues and expanding customer base.

This story originally appeared on Zacks

HubSpot HUBS reported third-quarter 2021 non-GAAP earnings of 50 cents per share, which improved 78.6% on a year-over-year basis and beat the Zacks Consensus Estimate by 13.6%. The bottom line exceeded management’s guidance of 42-44 cents.

Revenues of $339.2 million surpassed the Zacks Consensus Estimate by 3.9% and increased 49% (up 47% on a constant-currency basis) year over year. The top line was also above the higher end of management’s guidance range of $325-$327 million.

The top line was driven by improvement in subscription revenues. Growing customer base, which surged 34% year over year to 128,144, also contributed to the results.

- Zacks

Quarter Details

Subscription revenues (97% of the total revenues) surged 49% from the year-ago quarter’s levels to $329 million. Professional services and other revenues (3%) were up 39% year over year to $10.2 million.

Total average subscription revenue per customer was up 9% year over year to $10,536.

Deferred revenues (including current portion) as of Sep 30, 2021, increased 45% year over year to $376 million. Calculated billings, defined as revenues plus the change in deferred revenues, amounted to $353 million, surging 43% year over year (up 45% at cc).

International revenues climbed 58% from the year-ago quarter’s levels (up 54% at cc), contributing 46% to total revenues in the reported quarter. Domestic revenues rallied 41% in the quarter under review, contributing the remaining 54% to total revenues.

HubSpot, Inc. Price, Consensus and EPS Surprise HubSpot, Inc. Price, Consensus and EPS Surprise

HubSpot, Inc. price-consensus-eps-surprise-chart | HubSpot, Inc. Quote


Non-GAAP subscription margin of 83.1% contracted 260 basis points (bps) on a year-over-year basis.

Non-GAAP Research and development (R&D) expenses, as a percentage of revenues, contracted 180 bps year over year to 17.4%. Non-GAAP General and administrative (G&A) expenses contracted 100 bps to 8.5% on a year-over-year basis.

Non-GAAP Sales and marketing (S&M) expenses contracted 170 bps to 44.7% from the year-ago quarter’s levels.

The company reported non-GAAP operating income of $32.9 million, up 99.4% from the year-ago quarter’s figure. Management had projected non-GAAP operating income to be $27-$29 million for the third quarter.

Non-GAAP operating margin expanded 250 bps on a year-over-year basis to 9.7%.

Balance Sheet & Cash Flow

As of Sep 30, 2021, HubSpot reported cash and cash equivalents and short-term investments of $1.3 billion, up from $1.2 billion as of Jun 30, 2021.

Operating cash flow (excluding repayment of 2022 Convertible Notes attributable to the debt discount worth $11.4 million) during the reported quarter was $42.7 million compared with $38.7 million in the prior-year quarter.  During the first nine months of 2021, the company generated operating cash flow of $143.5 million.

Free cash flow was $38.2 million compared with the prior-year figure of $25.3 million. During the first nine months, the company generated $125 million of free cash flow.


For fourth-quarter 2021, HubSpot forecast revenues in the range of $356 million to $358 million. The Zacks Consensus Estimate for revenues is currently pegged at $352.4 million.

Management expects non-GAAP operating income in the band of $34-36 million.

The company anticipates non-GAAP net income per share to be 52-54 cents. The Zacks Consensus Estimate is currently pegged at 52 cents per share.

For 2021, the company raised guidance. The company now anticipates revenues between $1.287 billion and $1.289 billion compared with the prior range of $1.268-$1.272 billion. The Zacks Consensus Estimate for 2021 revenues is currently at $1.27 billion.

Management now expects non-GAAP operating income to be $113-$115 million compared with the earlier guidance of $107-$109 million.

HubSpot now anticipates non-GAAP net income per share to be $1.76-$1.78 compared with the prior range of $1.67-$1.69. The Zacks Consensus Estimate currently stands at $1.69 per share.

Zacks Rank & Key Picks

HubSpot currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader computer and technology sector are Salesforce CRM, which sports a Zacks Rank #1 (Strong Buy), while both HP Inc. HPQ and Avnet AVT carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for Salesforce, HP and Avnet are currently pegged at 16.8%, 12.7% and 27.7%, respectively.

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