HubSpot (HUBS) Earnings Growth Forecast of 54.91% Sets Up for Profitability Debate

HubSpot (HUBS) remains unprofitable but has steadily narrowed its losses at a rate of 15.8% per year over the past five years. With earnings set to grow by 54.91% annually and profitability expected within three years, investors are watching closely as revenue projections call for 14.4% yearly growth, outpacing the broader US market average of 10.4%. The company's price-to-sales ratio of 7x is below rival averages, rounding out a rewards-heavy outlook that depends on sustained expansion and improving financial fundamentals.

See our full analysis for HubSpot.

Now, let’s see how these numbers measure up to current market narratives and whether they reinforce or disrupt popular views among investors.

See what the community is saying about HubSpot

Profit Margins Seen Rising to 8.5% by 2027

• Analysts expect HubSpot’s net profit margin to widen from -0.4% today to 8.5% in three years, signaling a clear turnaround from its current loss-making position.
• Analysts' consensus view emphasizes that broader expansion into integrated platforms and AI-powered tools is driving higher recurring revenue and better margins.
  • Larger enterprise deals and premium feature cross-sells are increasing average deal sizes. This is setting up stronger operating leverage as revenue grows.
  • However, bears caution that reaching those higher profit margins hinges on the successful monetization of newer AI features, which remain in early stages of adoption.
• For investors weighing the growth story against execution risks, consensus points out that international revenue now accounts for nearly half of total sales. This is diversifying HubSpot’s customer base and improving profit durability.
• Consensus analysts say sustained margin improvement could make bulls and bears converge if momentum continues. See why debate over HubSpot's future is intensifying and what analysts expect next. 📊 Read the full HubSpot Consensus Narrative.

Share Dilution: 2.07% Annual Rise

• The analyst consensus projects HubSpot's shares outstanding will increase by 2.07% per year over the next three years. This slightly dilutes existing shareholders but provides fuel for growth investments.
• Analysts' consensus view notes share growth aligns with investment in international expansion and AI development.
  • Ongoing investment supports revenue growth, but the share count creep means investors should focus on per-share metrics rather than just total profits.
  • With margin expansion and revenue scaling, analysts believe per-share profit gains can still be meaningful even with dilution.

Peer Discount vs. Industry Premium

• HubSpot’s price-to-sales ratio currently sits at 7x, which offers a discount to direct peer averages of 8.9x but remains above the broader US software industry average of 5.1x.
• Analysts' consensus view argues that the company's rapid growth and improving margins justify the peer premium but warns the stock still trades at a sector premium, which could prompt hesitation from more value-focused investors.
  • With a share price at $394.95 compared to a DCF fair value of $588.07, valuation-minded buyers may see added upside if the margin story holds.
  • That said, analysts note that valuation is only justified if rapid revenue growth and profitability targets are achieved without running into competitive or international headwinds.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for HubSpot on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding HubSpot.

Explore Alternatives

Despite HubSpot’s rapid growth, its profit margins rely heavily on executing new initiatives. It also trades at a premium to the broader sector.

If you’re looking for better value relative to business fundamentals, compare with these 853 undervalued stocks based on cash flows that may offer a more attractive risk-reward profile for your portfolio.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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