HubSpot's (NYSE:HUBS) sales and customer growth have been on a tear over the past few years, and in the first quarter of this year the company (mostly) delivered similar results.

Some highlights from the quarter include sales and earnings that outpaced the company's own expectations, and a 35% year-over-year increase in total customers. But to get a clearer picture of what happened with HubSpot in the first quarter, let's take a quick look at how the company is growing its sales, how it's improving its underlying technology after a short outage in March, and what management expects in the second quarter.

Man using calculator at desk.

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1. First-quarter sales jumped 33% and beat management's expectations

HubSpot's sales growth slowed a bit compared to growth in the previous four quarters -- revenue increased by 35% in both the third and fourth quarters of 2018, was up 38% in Q2, and jumped 39% in Q1 2018 -- but was still up 33% year over year.

Management also gave sales guidance for the quarter of $146.5 million to $147.5 million, and the company delivered $151.8 million. Part of the sales growth came from increases from the company's subscription and services revenue. HubSpot's chief financial officer Kathryn Bueker said on the company's earnings call that "Q1 subscription revenues grew 33% year-over-year, while services revenue grew 27% year-over-year, both on an as reported basis."

2. HubSpot still isn't profitable on a GAAP basis, but losses narrowed

The company's net loss in the first quarter was $11.1 million, compared to a loss of $15.4 million in the year-ago quarter. Over the past three years, the company's quarterly net loss has been all over the map (see below).

HUBS Net Income (Quarterly) ChartImage source: YCharts.

But on a non-GAAP basis, HubSpot's earnings of $0.36 per share represented a 140% improvement from the year-ago quarter, and surpassed past management's forecast of between $0.23 and $0.25.

3. After a tech outage, the company is doubling down on making its service more stable

Management mentioned on the call that HubSpot experienced an outage in March that affected some of its customers, as well as the company's own ability to use some of its services.

"One thing I'm not proud of is the recent product outage that we had that inconvenienced our customers and given we run HubSpot on HubSpot, inconvenienced us," HubSpot co-founder and CEO Brian Halligan said on the call.

"Here's what I'd say about that outage. It only serves to strengthen our resolve to delight our customers. Since the outage we've already doubled down on HubSpot's stability, security and reliability across the board," Halligan added.

He said that they've created a new "reliability team" with some of the company's best engineers to help prevent similar outages in the future.

4. Average subscription revenue per customer was down

HubSpot's average subscription revenue per customer (ASRPC) fell by 2% in the quarter to $9,811, but management didn't seem concerned about the slight drop. "[W]e've got some customers that are definitely moving it up, and we got some customers that are definitely moving it down," Halligan said.

Bueker added to that thought, saying, "... I think the trend in Q1 is very similar to what we've been seeing over the last few quarters, which is the product mix really being the thing that impacts both the customer account growth and the ASRPC, and we see it again in Q1. That said, if you look at the individual hubs, we are seeing growth or expansion in ASRPC."

The ASRPC drop may not be much of concern right now, but HubSpot should certainly aim to get this figure up. Stagnant or falling ASRPC over a long period could indicate that HubSpot can't move its customer up to higher-priced services.

5. Sales growth in the second quarter may slow down

HubSpot's management said that total revenue is expected to be in the range of $156.5 million to $157.5 million, which would be a year-over-year increase of 28% at the midpoint.

Sales growth of 28% isn't bad, but if the company meets its revenue expectations, it will mark at least several quarters of decreasing sales growth. Investors should watch to see how the company responds if HubSpot's sales growth continues to decline in each quarter. New products and services could help improve sales, as could more customer growth. But if HubSpot's customers continue to grow and add new services -- but sales growth continues to slow -- then that could be a sign that the company can't sell its services effectively to customers.

There's no need to panic

Overall HubSpot had a solid quarter, and while there are a few areas where investors should pay special attention, the company likely isn't finished growing yet. While this quarter's sales growth may not have been as impressive as that of past quarters, there still doesn't seem to be much for investors to worry about at the moment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.