Sales and marketing software maker HubSpot (NYSE:HUBS) reported Q1 CY2024 results beating Wall Street analysts' expectations , with revenue up 23.1% year on year to $617.4 million. On the other hand, the company expects next quarter's revenue to be around $618 million, slightly below analysts' estimates. It made a non-GAAP profit of $1.68 per share, improving from its profit of $1.20 per share in the same quarter last year.

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HubSpot (HUBS) Q1 CY2024 Highlights:

• Revenue: $617.4 million vs analyst estimates of $598.2 million (3.2% beat)

• EPS (non-GAAP): $1.68 vs analyst estimates of $1.50 (12.2% beat)

• Revenue Guidance for Q2 CY2024 is $618 million at the midpoint, below analyst estimates of $623.8 million

• The company reconfirmed its revenue guidance for the full year of $2.56 billion at the midpoint

• Gross Margin (GAAP): 84.6%, up from 83.6% in the same quarter last year

• Free Cash Flow of $99.57 million, up 26.8% from the previous quarter

• Customers: 216,840, up from 205,091 in the previous quarter

• Market Capitalization: $31.33 billion

Started in 2006 by two MIT grad students, HubSpot (NYSE:HUBS) is a software-as-a-service platform that helps small and medium-sized businesses market themselves, sell, and get found on the internet.

Sales Software

Companies need to be able to interact with and sell to their customers as efficiently as possible. This reality coupled with the ongoing migration of enterprises to the cloud drives demand for cloud-based customer relationship management (CRM) software that integrates data analytics with sales and marketing functions.

Sales Growth

As you can see below, HubSpot's revenue growth has been very strong over the last three years, growing from $281.4 million in Q1 2021 to $617.4 million this quarter.

This quarter, HubSpot's quarterly revenue was once again up a very solid 23.1% year on year. On top of that, its revenue increased $35.5 million quarter on quarter, a very strong improvement from the $24.36 million increase in Q4 CY2023. This is a sign of acceleration of growth and great to see.

Next quarter's guidance suggests that HubSpot is expecting revenue to grow 16.8% year on year to $618 million, slowing down from the 25.5% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 17.1% over the next 12 months before the earnings results announcement.

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Customer Growth

HubSpot reported 216,840 customers at the end of the quarter, an increase of 11,749 from the previous quarter. That's roughly the same customer growth as we observed last quarter and quite a bit above what we've typically seen over the last year, confirming that the company is sustaining a good sales pace.

Key Takeaways from HubSpot's Q1 Results

We enjoyed seeing HubSpot exceed analysts' billings expectations this quarter. Free cash flow also came in strong, on top of a top-line beat. On the other hand, its quarterly revenue guidance slightly missed Wall Street's estimates but the company seems to believe it will make up for it later in the year as full year guidance was unchanged. Overall, this was a decent quarter for HubSpot. The stock is up 1.9% after reporting and currently trades at $601 per share.

So should you invest in HubSpot right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.