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 strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.6% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 7.8% since the latest earnings results.
Best Q2: HubSpot (NYSE: HUBS)
Born from the idea that traditional interruptive marketing was becoming less effective, HubSpot (NYSE: HUBS) provides an integrated platform that helps businesses attract, engage, and manage customer relationships through marketing, sales, service, and content management tools.
HubSpot reported revenues of $760.9 million, up 19.4% year on year. This print exceeded analysts’ expectations by 2.9%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.
“Q2 was another solid quarter of continued revenue growth and customer expansion,” said Yamini Rangan, Chief Executive Officer at HubSpot.
HubSpot scored the fastest revenue growth of the whole group. The company added 9,724 customers to reach a total of 267,982. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 4.2% since reporting and currently trades at $470.
Is now the time to buy HubSpot? Access our full analysis of the earnings results here, it’s free for active Edge members.
Freshworks (NASDAQ: FRSH)
Starting as a customer service solution before expanding into a comprehensive software suite, Freshworks (NASDAQ: FRSH) provides AI-powered software-as-a-service solutions that help companies manage customer service, IT support, sales, and marketing functions.
Freshworks reported revenues of $204.7 million, up 17.5% year on year, outperforming analysts’ expectations by 2.9%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and EPS guidance for next quarter beating analysts’ expectations.
Freshworks scored the highest full-year guidance raise among its peers. The company added 700 enterprise customers paying more than $5,000 annually to reach a total of 23,975. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 18% since reporting. It currently trades at $11.40.
Is now the time to buy Freshworks? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: Salesforce (NYSE: CRM)
With its cloud-based platform named after its stock ticker symbol CRM (Customer Relationship Management), Salesforce (NYSE: CRM) provides customer relationship management software that helps businesses connect with their customers across sales, service, marketing, and commerce.
Salesforce reported revenues of $10.24 billion, up 9.8% year on year, exceeding analysts’ expectations by 1%. Still, it was a mixed quarter as it posted a miss of analysts’ billings estimates.
Salesforce delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. The stock is flat since the results and currently trades at $255.10.
Read our full analysis of Salesforce’s results here.
ZoomInfo (NASDAQ: GTM)
Operating a platform it calls "RevOS" - short for Revenue Operating System - ZoomInfo (NASDAQ: GTM) provides sales, marketing, and recruiting teams with business intelligence and analytics to identify prospects and deliver targeted outreach.
ZoomInfo reported revenues of $306.7 million, up 5.2% year on year. This number surpassed analysts’ expectations by 3.5%. Zooming out, it was a satisfactory quarter as it also logged accelerating growth in large customers but EPS guidance for next quarter missing analysts’ expectations.
ZoomInfo achieved the biggest analyst estimates beat but had the slowest revenue growth among its peers. The company added 16 enterprise customers paying more than $100,000 annually to reach a total of 1,884. The stock is down 8.5% since reporting and currently trades at $11.12.
Read our full, actionable report on ZoomInfo here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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