What happened
HubSpot (HUBS 0.28%) gained 11.7% in the month of August, according to data from S&P Global Market Intelligence. The sales and marketing software-as-a-service company delivered a strong earnings report early in the month, then held up through an otherwise tumultuous month for the broader market. Since HubSpot's offerings help businesses become more efficient, the company's products and services are thought to be somewhat recession-resistant, and in a slow-growth world, any company that delivers 30%-plus growth will get some attention.
So what
In its second quarter, HubSpot delivered impressive results. Revenue grew 33% year over year, while non-GAAP earnings per share surged 121% to $0.42 per share, both of which beat analyst expectations. Total customers actually grew at a higher rate than revenue, at 35%. Perhaps most importantly, the company raised its full-year guidance to $663 million to $665 million versus the previous guidance of $655.5 million to $658.5 million.
Image source: Getty Images.
HubSpot has several products that help middle-market businesses attract customers, nurture sales, and offer customer service. HubSpot CRM tracks the entire customer life cycle in a single database. Marketing Hub tracks all of a company's online communications to prospective customers (email, SEO, social media) with reporting and analytics. Sales Hub offers tools to enhance the productivity of sales teams. Service Hub, the company's newest offering, enables streamlined customer service. Finally, HubSpot CMS is a smart web content management system.
Consistent product innovation paved the way for this growth. CEO Brian Halligan said, "We reached nearly 25,000 multiproduct customers this quarter, and our youngest product, the Service Hub, has surpassed 5,000 paying customers. Great stuff."
Not only has HubSpot developed more applications and services, but it has also integrated 300 third-party apps into its platform. Management says that the average customer now uses more than five third-party apps through the HubSpot platform, making the offering all the "stickier."
Now what
There's a lot to like about HubSpot going forward. It's a leading software-as-a-service platform that is continuously improving, and its target market opportunity for small and medium-sized businesses worldwide is very large.
In addition, HubSpot is run by founder and CEO Halligan, who has a huge 98% approval rating on Glassdoor.com, and is also an unabashed Deadhead, which is reason enough (in my book!) to be bullish on this rule-breaking company.
