What happened
Shares of HubSpot, Inc. (HUBS -2.82%) rose 88.1% in 2017, according to data provided by S&P Global Market Intelligence, because investors were happy to see that the company consistently grew its top and bottom lines throughout the year and beat analysts' consensus earnings estimates in each quarter.
So what
Investors kicked off the year with good news, as HubSpot reported a sales increase of 44%, to $76.4 million and a loss per share of $0.13. Those earnings were actually much better than the $0.20 loss that Wall Street estimated. It also grew full-year 2016 sales by 49% and subscription revenue -- its largest sales segment -- popped by 52%. HubSpot's share price climbed 12.7% following the news.
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Then in May, HubSpot announced strong quarterly results once again. Sales jumped by 40% and subscription revenue was up 41%, both year over year. But the big news was that earnings per share moved into positive territory -- at $0.03 in the first quarter of 2017, which was a stark contrast to the $0.08 loss analysts estimated for the quarter. Hubspot investors pushed the shares up 7.4% in May as a result.
An additional 14.5% share-price spike came in late September after HubSpot increased its third-quarter guidance at its annual investor conference. Management had previously expected sales of $92.8 million to $93.8 million, but raised that to $95.9 million to $96.9 million. It also said earnings-per-share loss would be $0.03 at the midpoint, compared to the earlier estimate of $0.09 loss.
The company ended up delivering on its expectations (and then some) for the third quarter, with sales hitting $97.7 million and earnings matching the revised $0.03 guidance. That was enough to outpace analysts' consensus estimate of a $0.04-per-share loss, and helped the company close 2017 with an 88% share-price gain.
Now what
HubSpot's management has forecast fourth-quarter 2017 sales to jump by 32% at the midpoint and full-year revenue to increase by about 37% year over year. Investors are already somewhat optimistic in 2018 and have pushed the share price up about 5% so far. Investors should watch the earnings report next month to see if HubSpot can continue 2017's strong performance into this year.
