In this video clip from "3 Minute Stock Updates" on Motley Fool Live, recorded on July 6, Fool.com contributor Brian Feroldi takes a look at the most recent earnings report for HubSpot (HUBS -0.78%) and several positive indicators reveal the company enjoyed a great quarter and is headed in the right direction.
10 stocks we like better than HubSpot
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and HubSpot wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of June 2, 2022
Brian Feroldi: We're talking HubSpot, ticker symbol H-U-B-S. This is a pioneer of inbound marketing, they provide a suite of marketing, sales, service, CMS tools, etc., that help primarily small and medium-sized businesses to attract customers as opposed to having to do sales outreach.
The company had a great quarter all around. Total customers grew 26% to 144,000. Average subscription per customer, so this kind of a measure of same customer spending, that figure was up 12% to $11,000. If you want to turn that into a dollar-based base net revenue retention rate or dollar-based net expansion rate, rather, then it was 112%.
Now the Marketing Hub, which is the company's oldest hub, that recently surpassed one billion dollars in sales. As a reminder, at the time of their IPO, that was their only product. Now, they offer marketing, sales, services, CMS, and operations, and they're saying that their marketing business alone surpassed one billion dollars in annualized sales. Really good to see that.
Total revenue for the quarter was up 41%, not bad, given this company's been on the market for many years. Adjusted net income was $28 million. That was up about 80% over the year-ago period. Shares outstanding, which has been a problem for this company historically, were only up about 3%. The dilution rate is much more acceptable now.
Balance sheet is in great shape, $1.5 billion in cash, $62 million in free cash flow during the period. Management expects some pretty strong growth rates moving forward, total revenue growth in the upcoming quarter is expected to be 39%, and revenue growth for the full year is expected to be 32%. When I look at this quarter, I can't help but say, thesis on track.
