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HubSpot's Revenue and Customer Additions Spike in the Third Quarter

HubSpot (NYSE: HUBS), which provides clients with a cloud-based sales and marketing platform, saw sales in its key revenue segments jump by double-digit percentages in the third quarter, which it reported this week. The company also managed to grow its total customers by an impressive 47% year over year. Here's a rundown of HubSpot's most recent results.

HubSpot results: The raw numbers

Metric

Q3 2017

Q3 2016

Year-Over-Year Change

Sales

$97.7 million

$70.5 million

38%

Net income

($10.5 million)

($10.5 million)

N/A

Earnings per share

($0.29)

($0.30)

N/A

Data source: Hubspot.

What happened with HubSpot this quarter

  • Total revenue climbed 38% year over to $97.7 million.
  • HubSpot's core revenue driver -- subscription sales -- jumped 40% compared to the same time last year, reaching $93.2 million in the third quarter.
  • Professional services and other revenue grew 12%, to $4.6 million.
  • The company now has 37,450 customers, which is an increase of 47% from the year-ago quarter.
  • HubSpot's total average subscription revenue per customer is now $10,332.
  • The company's cash, cash equivalents, and investments at the end of the third quarter were $527.5 million.
  • HubSpot generated $1.8 million of free cash flow, compared to $1.5 million the same time last year.

Image source: Getty Images.

What management had to say

HubSpot co-founder and CEO Brian Halligan said in a press release that the past three months were yet another strong quarter for the company and that management was "thrilled with the results."

He noted that the company, "delivered strong revenue growth, positive profitability and continue to see increasing adoption of our growth stack among our customer base." Halligan's comment on profitability likely refers to the company's $1.3 million in non-GAAP net income for the quarter, or $0.03 per share, which was up from a loss of $1.8 million last year.

"All of this reinforces what I saw at our annual INBOUND event in September -- this global movement is just getting started. And it's our mission at HubSpot to lead that movement every step of the way," Halligan said.

Looking ahead

HubSpot expects revenue in the fourth quarter to be in the range of $101 million to $102 million, which would represent a nearly 33% year-over-year increase at the midpoint.

The company's management expects fourth-quarter operating income to be between $1.5 million and $2.5 million and net income to be between $0.06 and $0.08, both on a non-GAAP basis.

HubSpot's management also increased its guidance for the full year in light of the third-quarter results. The company now expects total revenue to be in the range of $370 million to $371 million, up from the previously guided range of $362.8 million to $364.8 million. 

And the biggest forecast change came to the company's full-year non-GAAP net income, which is expected to be between $0.19 and $0.21. That's a significant jump from the previously guided range of $0.03 to $0.07.

HubSpot's strong customer additions and revenue growth in the third quarter are clearly good signs for the company, and there's likely more ahead as HubSpot continues to build out its business. 

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends HubSpot. The Motley Fool has a disclosure policy.