With the business potentially at an important milestone, we thought we'd take a closer look at HubSpot, Inc.'s (NYSE:HUBS) future prospects. HubSpot, Inc. provides a cloud-based customer relationship management (CRM) platform for businesses in the Americas, Europe, and the Asia Pacific. The company’s loss has recently broadened since it announced a US$113m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$142m, moving it further away from breakeven. The most pressing concern for investors is HubSpot's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
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$58m in 2025. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 68% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving HubSpot's growth isn’t the focus of this broad overview, but, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. HubSpot currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in HubSpot's case is 43%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
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 compiled a list of pertinent aspects you should further examine:
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.
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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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