Hubspot Inc (NYSE: HUBS)

Sector: Technology Industry: Software - Application CIK: 0001404655
Market Cap 12.90 Bn
P/B 6.24
P/E 281.03
P/S 4.12
ROIC (Qtr) 0.29
Div Yield % 0.00
Rev 1y % (Qtr) 20.42
Total Debt (Qtr) 262.31 Mn
Debt/Equity (Qtr) 0.13
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About

HubSpot Inc., a leading company in the cloud-based marketing, sales, customer service, operations, and content management software industry, operates under the ticker symbol HUBS. The company's main business activities revolve around providing a comprehensive customer relationship management (CRM) platform designed to help businesses connect and grow better. HubSpot's operations span across more than 135 countries, serving over 205,000 customers of all sizes and industries. The core of HubSpot's customer platform is its Smart CRM, which provides...

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Investment thesis

Bull case

  • Strong operating cash flow of 760.72M provides robust 2.90x coverage of total debt 262.31M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 882.24M provide 22.22x coverage of short-term debt 39.70M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 760.72M provides exceptional 868.40x coverage of interest expenses 876000, showing strong debt service capability.
  • Strong tangible asset base of 3.31B provides 12.63x coverage of total debt 262.31M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 576.93M exceeds capital expenditure of 183.79M by 3.14x, indicating strong organic growth funding capability.

Bear case

  • Investment activities of 491.77M provide weak support for R&D spending of 905.94M, which is 0.54x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 882.24M provide limited coverage of acquisition spending of (87.61M), which is -10.07x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 760.72M provides insufficient coverage of deferred revenue obligations of 1.01B, which is 0.75x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 760.72M shows concerning coverage of stock compensation expenses of 528.15M, with a 1.44 ratio indicating potential earnings quality issues.
  • Operating earnings of 70.34M show weak coverage of depreciation charges of 136.29M, with a 0.52 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 235.43 Bn 27.31 5.44 9.50 Bn
2 SHOP Shopify Inc. 147.12 Bn 119.52 12.73 0.19 Bn
3 UBER Uber Technologies, Inc 147.10 Bn 14.63 2.83 12.08 Bn
4 CRM Salesforce, Inc. 122.20 Bn 594.48 15.45 11.14 Bn
5 INTU Intuit Inc. 113.93 Bn 178.01 32.63 6.78 Bn
6 ADBE Adobe Inc. 111.00 Bn 15.57 4.67 6.65 Bn
7 NOW ServiceNow, Inc. 109.54 Bn 62.67 8.25 2.40 Bn
8 ADP Automatic Data Processing Inc 86.44 Bn 20.41 4.07 4.37 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.26 2.08
EV to Cash from Ops. EV/CFO 16.51 11.38
EV to Debt EV to Debt 47.88 47.67
EV to EBIT EV/EBIT 178.57 6.78
EV to EBITDA EV/EBITDA 87.42 7.15
EV to Free Cash Flow [EV/FCF] EV/FCF 21.77 14.44
EV to Market Cap EV to Market Cap 0.97 -8.88
EV to Revenue EV/Rev 4.01 4.04
Price to Book Value [P/B] P/B 6.24 3.65
Price to Earnings [P/E] P/E 281.03 -117.75
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -4.05
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.38
Dividend per Basic Share Div per Share (Qtr) 0.00 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.48
Interest Coverage Int. cover (Qtr) 80.30 -43.57
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -44.06 -222.46
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 72.09 281.53
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.78
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 789.16 -327.55
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 391.60 30.09
EBIT Growth (1y) % EBIT 1y % (Qtr) 117.11 -213.00
EBT Growth (1y) % EBT 1y % (Qtr) 142.23 -86.84
EPS Growth (1y) % EPS 1y % (Qtr) 877.78 108.58
FCF Growth (1y) % FCF 1y % (Qtr) 22.48 6.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 17.39 94.58
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.81 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 0.60 3.78
Current Ratio Curr Ratio (Qtr) 1.67 8.27
Debt to Equity Ratio Debt/Equity (Qtr) 0.13 0.14
Interest Cover Ratio Int Coverage (Qtr) 80.30 -43.57
Times Interest Earned Times Interest Earned (Qtr) 80.30 -43.57
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 6.60 -105.03
EBIT Margin % EBIT Margin % (Qtr) 2.25 -130.16
EBT Margin % EBT Margin % (Qtr) 2.22 -121.17
Gross Margin % Gross Margin % (Qtr) 83.80 58.37
Net Profit Margin % Net Margin % (Qtr) 1.50 -126.13