HubSpot, Inc. (NYSE:HUBS) About To Shift From Loss To Profit

We feel now is a pretty good time to analyse HubSpot, Inc.'s (NYSE:HUBS) business as it appears the company may be on the cusp of a considerable accomplishment. HubSpot, Inc., together with its subsidiaries, provides a cloud-based customer relationship management (CRM) platform for businesses in the Americas, Europe, and the Asia Pacific. The US$40b market-cap company posted a loss in its most recent financial year of US$176m and a latest trailing-twelve-month loss of US$25m shrinking the gap between loss and breakeven. The most pressing concern for investors is HubSpot's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for HubSpot

Consensus from 29 of the American Software analysts is that HubSpot is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$20m in 2025. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 41% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of HubSpot's upcoming projects, though, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 26% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of HubSpot which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at HubSpot, take a look at HubSpot's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

1. Valuation: What is HubSpot worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether HubSpot is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on HubSpot’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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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.