HubSpot Provides Strong Growth, but Macro Factors Contribute to Lower Guidance; FVE Cut to $510

HubSpot reported good results for the second quarter, with revenue and non-GAAP operating profits coming in above the high end of guidance. Revenue growth remains impressive, while other positive indicators can be found in billings growth, new customer adds, and retention. However, macro pressures caused lengthening deal cycles and, along with worsening currency impacts, drove HubSpot to lower its full-year outlook. Accordingly, we reduced our estimates over the next couple of years and are lowering our fair value estimate to $510 per share from $640. As with most of the software names we cover, we see the shares as attractive. We view HubSpot as well positioned in marketing automation software with an expanding portfolio and a robust growth profile coupled with solid execution.