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Why HubSpot Stock Climbed 18.6% in May

By Keith Noonan – Jun 3, 2020 at 7:57AM

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The marketing software company is crushing the market in 2020, with its stock now up roughly 34% year to date.

What happened

Shares of HubSpot (HUBS 1.16%) climbed 18.6% in May, according to data from S&P Global Market Intelligence. Last month's double-digit gains followed a 26.6% increase for the company's share price in April. 

^SPX Chart

^SPX data by YCharts.

HubSpot stock jumped after the company posted better-than-expected first-quarter results on May 6, and continued to rise amid momentum for the broader market as the month progressed. Non-GAAP (adjusted) earnings per share fell roughly 3% year over year to land at $0.35 per share, but sales jumped 31% to hit $199 million. The average analyst target had called for adjusted per-share earnings of $0.23 on revenue of $190.9 million.

A person touching a tablet.

Image source: Getty Images.

So what

HubSpot's strong first-quarter performance stemmed from new customer additions driving big growth for subscription services. Subscription revenue climbed 33% year over year in the first quarter, reaching $191.2 million. Total customers on HubSpot's platform went up 30% year over year to hit 78,776, and total subscription revenue per customer rose 2% year over year to $10,018. Sales for the company's professional services segment reached $7.7 million, inching up 2% compared to the prior year.

Now what

HubSpot stock, which has continued to gain ground early in June, is up roughly 6% so far.

^SPX Chart

^SPX data by YCharts.

HubSpot will hold its annual meeting for shareholders virtually on June 17. The company is guiding for second-quarter revenue between $195 million and $196 million and adjusted earnings per share be between $0.23 and $0.25 for the period.

For the full-year period, management expects to post adjusted earnings per share between $0.88 and $0.92 on revenue of $800 million to $810 million. However, it has warned that uncertainty related to conditions created by the novel coronavirus pandemic could result in significant modifications to performance targets -- for better or worse.

HubSpot is valued at roughly 11.5 times the average analyst target for this year's sales. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends HubSpot. The Motley Fool has a disclosure policy.

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