Here's our initial take on HubSpot's (HUBS -5.11%) fourth-quarter financial report.
Key Metrics
| Metric | Q4 2023 | Q4 2024 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $581.9 million | $703.1 million | +21% | Beat |
| Adjusted earnings per share | $1.83 | $2.42 | +32% | Beat |
| Customers | 205,091 | 247,939 | +21% | n/a |
| Subscription revenue per customer | $11,365 | $11,312 | -1% | n/a |
Solid Growth, But a Slowdown Is Coming
HubSpot easily beat analyst expectations for both revenue and adjusted earnings per share in the fourth quarter. Both revenue and the total customer count jumped by 21% year over year, while the adjusted EPS soared 32%.
One area where HubSpot continued to struggle in the fourth quarter was subscription revenue per customer. This metric edged down slightly, continuing a long trend of lackluster growth. HubSpot's platform, split into "hubs" that collectively cover a wide range of functionality, is ideal for a land-and-expand strategy. However, the company just isn't making much progress despite its push to include AI-powered features.
For 2025, HubSpot expects revenue growth to slow considerably. The company's guidance calls for year-over-year growth of about 14%, compared to 21% growth in 2024. HubSpot also sees adjusted earnings per share growing slightly slower than revenue this year.
While growth will slow in 2025, HubSpot noted that its penetration rate across all products was still below 10%. With a total addressable market of $76 billion today, the company has a long growth runway.
NYSE: HUBS
Key Data Points
Immediate Market Reaction
Shares of HubSpot were down around 2% in after-hours trading soon after the company released its fourth-quarter report. HubSpot stock has been on a tear since bottoming out in early 2023, up about 170% since the start of that year going into the fourth-quarter report. While the company's results beat expectations, its guidance for 2025 wasn't anything to write home about.
What to Watch
HubSpot is making a big push into AI, which could help boost subscription revenue per customer. As the company adds AI-powered features to its various products, the new functionality could induce customers to upgrade or expand their usage to new areas. However, the company's guidance suggests that this won't be a major factor in 2025.
The change to seats-based pricing implemented in early 2024 was always going to take time to flow through to HubSpot's results, given that the company was careful not to hike renewal prices for existing customers. While this change has the potential to boost per-customer spending, it seemingly won't have much of an effect in 2025.
With HubSpot stock trading close to its all-time high, a growth slowdown could put some pressure on the stock in the short run.
