HubSpot (NYSE:HUBS) specializes in customer relationship management. Its portfolio of software products aims to improve sales, customer service, marketing, and more. But the company continues to innovate, expanding the functionality of its platform. And that has translated into impressive financial results.

In this Backstage Pass video, which was recorded on Nov. 5, 2021, Motley Fool contributor Trevor Jennewine discusses the company's third-quarter earnings, and Fool analyst Tim Beyers explains the importance of HubSpot's organic growth strategy.

Trevor Jennewine: HubSpot is, like Brian mentioned, they're in the customer relationship management space. It all started with inbound marketing, which is just a different take on the outbound approach where you deliver unsolicited ads to people. Instead, you're creating content that brings people to you. Then they've since expanded on their marketing hub, and they've added sales, customer service, content management, and most recently an Operations Hub.

Diving into the third-quarter earnings, revenue was $339 million, up 49%. That was a beat on the top line. Non-GAAP profit was $0.50 per diluted share. Beat on the bottom line. And free cash flow to the first nine months of the year is $38 million, up 51 percent. Strong growth there, financially.

Looking at customers over 128,000 now, up 34%. The average subscription revenue per customer was also up 9%, so customers are spending more and I think that has a lot to do with the fact that they are expanding the number of Hubs that are available. They had an investor day recently where less than 35% of the customers had more than one Hub, and that number is now up to 57%. As they expand their ecosystem, it's generating synergies there.

Then, two things that they mentioned on the earnings call. They did highlight the opportunity with the Operations Hub. Operations Hub just essentially allows clients to sync data with HubSpot and other applications, and it allows them to automate workflows. Then, the other big thing management talked about was that they're integrating payments onto the platform, tying their CRM software and more tightly with commerce. And I think they've had that function up for about a month now. Very new, but they mentioned they're seeing good momentum with it. I think that could be a potential growth driver for the business.

For the quarter four outlook, revenue of $357 million; that would be up 42% in their forecasting. A non-GAAP profit of $0.52 to $0.54 cents per diluted share. Let's see, I'll stop my share in there and we'll get Tim's thoughts.

Tim Beyers: Just quickly because I know we're running out of time. HubSpot does this organically, and that's another thing you really want to be clear about. HubSpot made, I think it's three acquisitions, guys, and they're all really small. This is primarily driven internally. When HubSpot does introduce something like the new Operations Hub and they expand their platform. It is a very high-margin addition when the customer adopts that new hub, that's why the subscription gross margin continues to go higher.

The partnership with Stripe around payments, I think it's brilliant. They're just capturing more and more of the overall spend that small business customer would have in the areas where HubSpot operates. It's a very healthy, really well-orchestrated business.

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