HubSpot Continues to Impress With Growth and Profitability in Uneven Macro; FVE Up to $425

HubSpot reported good results with both revenue and non-GAAP operating profit coming in above the high end of guidance. The outlook was better across the board compared with our model, with 2023 non-GAAP operating profit a staggering 60% above our estimate. The firm’s high-value software helps attract customers, while feature-rich offerings and multiple modules help drive upsells. This dynamic was on full display even during continued macro uncertainty. We raised our near-term estimates, particularly on profitability, over the next several years, and as a result we are raising our fair value estimate to $425 per share, from $395 previously. We continue to view HubSpot as well positioned in marketing and sales automation software, with an expanding portfolio and a robust growth profile coupled with solid execution. With shares up nearly 50% since early January, we now see shares as modestly undervalued.