What happened
Shares of customer-relationship management software company HubSpot (HUBS 2.96%) soared 38.4% higher in February, according to data provided by S&P Global Market Intelligence. The company started the month by acquiring content company The Hustle. But the real news is its full-year 2020 financial results, which blew away Wall Street's expectations.
So what
News of HubSpot's acquisition of The Hustle first broke early in February, but wasn't officially confirmed until later in the month. HubSpot's management has observed that many of its customers find it through media like videos and podcasts. By acquiring The Hustle (reportedly for $27 million), it hopes to leverage its content to drive new customer acquisition.
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Acquiring new customers is something HubSpot did particularly well in 2020. Toward the end of the year, the company surpassed 100,000 customers, translating to 42% year-over-year growth. This strong growth helped HubSpot beat expectations when it reported full-year financial results on Feb. 11. Full-year revenue increased 31% from 2019 to $883 million and the company is now generating recurring revenue at a rate of over $1 billion annually.
Now what
Unlike many companies, HubSpot management offered guidance for 2021. It expects full-year revenue of $1.16 billion to $1.17 billion, which would represent 31% to 32% year-over-year revenue growth -- a slight acceleration from 2020. Given how well it's executed so far and how strong guidance is, it's not surprising to see this growth stock deliver market-beating gains in February.
