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HubSpot (HUBS) to Report Q2 Earnings: What's in the Offing?

Zacks Equity Research

HubSpot, Inc. HUBS is scheduled to release second-quarter 2019 results on Aug 6.

The company surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 79.96%.

Coming to price performance, shares of HubSpot have gained 42.1% year to date, outperforming the industry’s rally of 33.3%.

Q1 at a Glance

HubSpot had delivered first-quarter 2019 non-GAAP earnings of 36 cents per share, which beat the Zacks Consensus Estimate by 44% and soared 140% from the year-ago quarter.

Revenues of $151.8 million comfortably surpassed the Zacks Consensus Estimate of $148 million and surged 32.5% (35% on a constant currency basis) year over year.

Guidance & Estimates

HubSpot forecasts revenues in the range of $156.5 million to $157.5 million for second-quarter 2019. The corresponding Zacks Consensus Estimate is pegged at $157.37 million, indicating an improvement of 28.4% from the year-ago quarter.

Moreover, HubSpot anticipates non-GAAP net income per share to be in the range of 24-26 cents. The Zacks Consensus Estimate is currently pegged at 25 cents per share, suggesting growth of 38.9% from the year-ago quarter. Notably, the consensus has remained stable over the past 30 days.

The Zacks Consensus Estimate for Subscription revenues is $150 million, indicating year over year growth of 28.6%. Further, the Zacks Consensus Estimate for Professional Services and Other segment revenues is $7.48 million, translating to year over year growth of 24.5%.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

HubSpot is benefiting from robust adoption of its inbound marketing and sales applications over the cloud. Notably, the company’s customer base surged 35% to 60,814 in the first quarter. The Zacks Consensus Estimate for total customers is pegged at 64,289 for the second quarter, indicating year-over-year improvement of 33.7%.

Moreover, the company’s expanding international footprint is expected drive top-line growth in the to-be-reported quarter. Notably, International revenues advanced 42% from the year-ago quarter, representing 39% of total revenues in the first-quarter.

HubSpot is striving to improve subscription levels with portfolio expansion and collaborations. Moreover, integration of its various in-house offerings is likely to boost adoption of subscription services, which is expected to aid the to-be-reported quarter’s top line.

In fact, HubSpot’s product portfolio is gaining from integration with LinkedIn, Shopify & Facebook, which is enabling it in expanding business.

HubSpot, Inc. Price and EPS Surprise

HubSpot, Inc. Price and EPS Surprise

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

Recently, HubSpot in a strategic alliance with General Catalyst announced ELEVATE, a virtual accelerator to help startups with inbound marketing and to grow their business. These initiatives are likely to favor the company’s financials in the upcoming quarterly results.

The company also announced that its latest HubSpot plugin for WordPress will be integrated with all of WP Engine's StudioPress themes, which bodes well.

The company is likely to benefit from increasing popularity of its Marketing Hub Starter. Moreover, HubSpot recently accomplished Amazon Web Services (AWS) Digital Customer Experience capability status for Marketing Automation.

Markedly, HubSpot rolls out updates to its starter packs and freemium services, which are enabling the company to attract new customers. However, the low priced pack is deterring ASR or average subscription revenue per customer growth rate in the near term.

The Zacks Consensus Estimate for ASU per customer is pegged at $9,811 for the second-quarter, in line with the first-quarter and representing year-over-year decline of 1.9%.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

HubSpot has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks that Warrant a Look

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Clearway Energy CWEN has an Earnings ESP of +15.00% and a Zacks Rank #1. The company is slated to report second-quarter 2019 results on Aug 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

CACI International Inc CACI has an Earnings ESP of +4.02% and a Zacks Rank #2. The company is scheduled to report fourth-quarter fiscal 2019 results on Aug 14.

SeaWorld Entertainment SEAS has an Earnings ESP of +11.01% and a Zacks Rank #3. The company is set to report second-quarter 2019 results on Aug 6.

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