Q2 Earnings Highlights: HubSpot (NYSE:HUBS) Vs The Rest Of The Sales Software Stocks

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at HubSpot (NYSE:HUBS) and the best and worst performers in the sales software industry.

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.

The 4 sales software stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 1.2% below.

After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.

In light of this news, sales software stocks have held steady with share prices up 1.8% on average since the latest earnings results.

HubSpot (NYSE:HUBS)

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.

HubSpot reported revenues of $637.2 million, up 20.4% year on year. This print exceeded analysts’ expectations by 2.9%. Overall, it was a satisfactory quarter for the company with a decent beat of analysts’ billings estimates.

“Q2 was another solid quarter of revenue growth and profitability driven by our rapid pace of innovation and consistent execution,” said Yamini Rangan, Chief Executive Officer at HubSpot.

HubSpot achieved the fastest revenue growth of the whole group. The company added 11,214 customers to reach a total of 228,054. Unsurprisingly, the stock is up 14.9% since reporting and currently trades at $529.50.

Is now the time to buy HubSpot? Access our full analysis of the earnings results here, it’s free.

Best Q2: Freshworks (NASDAQ:FRSH)

Founded in Chennai, India in 2010 with the idea of creating a “fresh” helpdesk product, Freshworks (NASDAQ: FRSH) offers a broad range of software targeted at small and medium-sized businesses.

Freshworks reported revenues of $174.1 million, up 20% year on year, outperforming analysts’ expectations by 3%. The business had a very strong quarter with accelerating growth in large customers and an impressive beat of analysts’ billings estimates.

Freshworks achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. The company added 1,195 enterprise customers paying more than $5,000 annually to reach a total of 21,744. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 16.1% since reporting. It currently trades at $11.15.

Is now the time to buy Freshworks? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: ZoomInfo (NASDAQ:ZI)

Founded in 2007 as DiscoveryOrg and renamed after a merger in 2019, ZoomInfo (NASDAQ:ZI) is a software as a service product that provides sales departments with access to a database of prospective clients.

ZoomInfo reported revenues of $291.5 million, down 5.5% year on year, falling short of analysts’ expectations by 5.3%. It was a softer quarter as it posted underwhelming revenue guidance for the next quarter and a miss of analysts’ billings estimates.

ZoomInfo delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. The company added 37 enterprise customers paying more than $100,000 annually to reach a total of 1,797. Interestingly, the stock is up 4.2% since the results and currently trades at $10.23.

Read our full analysis of ZoomInfo’s results here.

Salesforce (NYSE:CRM)

Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE:CRM) is a software-as-a-service platform that helps companies access, manage, and share sales information.

Salesforce reported revenues of $9.33 billion, up 8.4% year on year. This result was in line with analysts’ expectations. However, it was a mixed quarter for the company: Salesforce beat analysts’ billings expectations. While revenue guidance for next quarter missed analysts’ expectations, full year revenue guidance was reconfirmed and full year EPS is above expectations.

The stock is up 4.1% since reporting and currently trades at $269.60.

Read our full, actionable report on Salesforce here, it’s free.

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