Summary
- HubSpot, a stalwart of the digital marketing software sector, delivered a strong acceleration in growth in Q3.
- The company has also been cashflow positive for some time now.
- We believe the company will continue to benefit from the shift to digital marketing.
- We rate the stock at Buy-Long Term Hold as a result.
- Looking for more investing ideas like this one? Get them exclusively at The Fundamentals. Get started today »
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Doesn't Eat Its Own Cooking
Given that HubSpot, Inc (HUBS) is a leader in digital marketing software, it's rather surprising to us at least that it's not a more high-profile company. You rarely see it made mention of among the cloud-sector commentariat on Twitter and elsewhere. A little long in the tooth, HUBS was established in 2006, making it a fully paid-up member of the original Internet 2.0 cohort, alongside Workday (WDAY) and others born at that time. Likely due to its age you don't see the name bandied around so much in breathless recants of hot cloud stocks.
That's a little odd, since its performance has trounced the NASDAQ - below we show the stock price gain since IPO vs. the NASDAQ proxy ETF, QQQ.
Source: YCharts.com
Speaking as a customer, HUBS software is a little old-school to use in fact. Firstly, it's a rare suite offering in a world where right now growth stocks are mainly point solutions. If you so choose you can use HUBS to handle your digital marketing, your corporate contacts, sales funnel and even your website and the content management functionality sat behind the site. Our guess is that few customers use all its functions. Secondly, the user interface requires a little more technical understanding than the very latest front-office enterprise cloud apps. We aren't quite talking command-line interface vs. iPhone here, but certainly the age of the HUBS UI designs does show a little.
