HubSpot (HUBS) Stock Forecast & Price Target

HubSpot has demonstrated a strong financial performance with a notable increase in net revenue retention, which rose by 200 basis points sequentially from 102% to 104%, primarily due to the successful implementation of a new seat-based pricing model. The company's gross margin expanded by 100 basis points year-over-year to 86.7%, driven by improvements in both subscription and services margins, reflecting effective cost management and service profitability. Additionally, HubSpot reported a significant increase in free cash flow to $158.5 million, marking a substantial year-over-year growth that reinforces its operational efficiency and capacity for sustained investment in growth initiatives.

HubSpot's financial outlook is hindered by anticipated revenue challenges, primarily stemming from a declining install base and the implications of currency fluctuations, including a significant foreign exchange headwind of approximately 2 percentage points in FY25. The company's average subscription revenue per customer (ASRPC) has seen a slight decrease of 1% year-over-year in constant currency, resulting in minimal growth on an as-reported basis. Furthermore, guidance suggests that the net revenue retention (NRR) rate will decrease seasonally and may struggle to recover adequately, indicating potential headwinds for overall revenue performance as customer churn continues to impact growth.