HubSpot (HUBS) Stock Forecast & Price Target

HubSpot demonstrated strong financial performance, as evidenced by a net revenue retention increase of 200 basis points, rising from 102% to 104%, which was mainly driven by the new seat-based pricing model. The company also achieved an expansion in gross margins, which improved 100 basis points year-over-year to 86.7%, alongside significant growth in free cash flow to $158.5 million, representing a 22.5% margin, compared to the prior year's $78.5 million with a 13.5% margin. Furthermore, robust international revenue growth of 20% year-over-year in constant currency and an increase in the number of customers utilizing multiple Hubs underlines HubSpot's expanding market position and ongoing partner momentum.

HubSpot's financial outlook appears negative due to anticipated challenges in revenue growth, specifically as its install base is expected to continue shrinking in FY25, resulting in lower guidance. The company is also facing a significant foreign exchange (FX) headwind, estimated at 2 percentage points, which is compounded by 1 percentage point from customer churn related to Clearbit, contributing to overall revenue decline. Additionally, the average subscription revenue per customer has seen a slight decrease, which, when coupled with seasonally lower net revenue retention rates and an overall reduction in topline estimates, threatens the company’s growth trajectory.