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01/11 07:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with significant revenue growth, a new share repurchase program, and increased customer base. While the average subscription revenue per customer decreased slightly, the overall sentiment is positive due to robust growth in international revenue and calculated billings. The Q&A indicates stable demand across segments and positive momentum in AI adoption. The cautious guidance revision does not indicate immediate concerns, and the share repurchase is a positive signal. Overall, the sentiment is positive, suggesting a stock price increase of 2% to 8% over the next two weeks.
Revenue Q1 revenue grew 18% year-over-year in constant currency and 16% on an as reported basis.
Subscription Revenue Subscription revenue grew 16% year-over-year.
Services and Other Revenue Services and other revenue increased 13% on an as reported basis.
Domestic Revenue Q1 domestic revenue grew 16% year-over-year.
International Revenue International revenue growth was 19% in constant currency and 15% as reported, representing 47% of total revenue.
Net New Customers Added over 10,000 net new customers in Q1, growing total customers to 258,000, a 19% year-over-year increase.
Average Subscription Revenue per Customer Average subscription revenue per customer was $11,000 in Q1, down 2% year-over-year in constant currency and 4% on an as reported basis.
Net Revenue Retention Net revenue retention was 102% in Q1, down two points sequentially as expected.
Calculated Billings Calculated billings were $767 million in Q1, growing 18% year-over-year in constant currency and 20% on an as reported basis.
Operating Margin Q1 operating margin was 14%, down one point compared to the year ago period.
Net Income Net income was $96 million in Q1 or $1.78 per fully diluted share.
Free Cash Flow Free cash flow was $122 million or 17% of revenue in Q1.
Cash and Marketable Securities Cash and marketable securities totaled $2.2 billion at the end of March.
Share Repurchase Program Board authorized a share repurchase program of up to $500 million.
Free Cash Flow for Full Year 2025 Expect free cash flow to be about $570 million for the full year of 2025.
AI Integration: HubSpot is embedding AI into every hub and part of the platform, introducing hundreds of embedded features and launching Copilot to enhance productivity.
Customer Agent: Customer Agent adoption has doubled, now serving over 2,500 customers with average resolution rates of over 50%.
Prospecting Agent: Prospecting Agent is in public beta, helping sales teams grow pipeline by automatically researching target accounts and personalizing outreach.
Knowledge-Based Agent: Introduced to enhance multi-agent orchestration, automatically identifying knowledge gaps and drafting new articles from unstructured data.
Customer Growth: Total customers grew by 19% to over 258,000 globally, with over 10,000 net customer additions in Q1.
International Revenue Growth: International revenue growth was 19% in constant currency, representing 47% of total revenue.
Large Deal Growth: Large deal growth was strong, up 23% year-over-year.
Share Repurchase Program: The Board authorized a share repurchase program of up to $500 million, reflecting confidence in business growth.
Operational Efficiency: Average subscription revenue per customer was $11,000 in Q1, down 2% year-over-year.
Market Positioning: HubSpot is focusing on platform consolidation, upmarket expansion, and enhancing customer acquisition downmarket.
AI Strategy: The strategy includes embedding AI across all hubs, with a focus on delivering value before monetizing.
Macro Environment: Uncertainty remains a constant factor affecting business trends, with a heightened focus on value and economic uncertainty expected to persist throughout the year.
Customer Acquisition: While customer acquisition remains strong, there is a noted moderation in net additions expected to roughly 9,000 in upcoming quarters.
Revenue Growth: Average subscription revenue per customer has decreased by 2% year-over-year in constant currency, indicating potential pricing pressures.
Operating Margin: Operating margin decreased by one point compared to the previous year, partly due to increased costs associated with 401(k) contributions.
Convertible Bond Settlement: The upcoming convertible bond settlement may impact cash flow and EPS guidance, with expectations of slight dilution in the second half of 2025.
Share Repurchase Program: The share repurchase program, while reflecting confidence in long-term opportunities, may also lead to lower interest income due to reduced cash reserves.
Share Repurchase Program: The Board of Directors has authorized a share repurchase program with up to $500 million under authorization, signaling confidence in the business and growth opportunities.
AI Strategy: HubSpot is embedding AI into every hub and part of the platform, with significant adoption and engagement metrics reported.
Customer Growth: Total customers grew by 19% to over 258,000 globally, with over 10,000 net customer additions in Q1.
Platform Consolidation: HubSpot's customer platform is becoming the choice for businesses looking to drive AI innovation and reduce total cost of ownership.
Enterprise Growth: Large deal growth was strong, up 23% year-over-year, driven by product innovation and go-to-market execution.
Q2 2025 Revenue Guidance: Total as reported revenue is expected to be in the range of $738 million to $740 million, up 16% year-over-year.
Full Year 2025 Revenue Guidance: Total as reported revenue is now expected to be in the range of $3.036 billion to $3.044 billion, up 16% year-over-year.
Operating Profit Margin Guidance: Non-GAAP operating profit is expected to be between $558 million and $562 million, representing an 18% operating profit margin for the full year.
Free Cash Flow Guidance: Expected free cash flow for the full year of 2025 is about $570 million.
CapEx Guidance: CapEx as a percentage of revenue is expected to be roughly 5%.
Share Repurchase Program: The Board of Directors has authorized HubSpot’s first ever share repurchase program with up to $500 million under authorization.
The earnings call summary indicates solid financial performance with strong revenue growth and optimistic guidance. Although there are constraints in billing growth, the company is confident in its AI and credit monetization strategies. The Q&A section reveals positive trends in AI adoption and international growth, despite some uncertainties in revenue translation timing. Overall, the optimistic guidance and strong financial metrics suggest a positive stock price movement in the short term.
The earnings call summary and Q&A reveal strong financial performance, with revenue and profit growth, robust free cash flow, and a positive outlook on AI integration and market strategy. The share repurchase program and customer growth further bolster confidence. Despite some uncertainty in AI monetization specifics, overall guidance remains optimistic, and the market strategy is well-aligned with current trends. These factors suggest a positive stock price movement over the next two weeks.
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