HubSpot, Inc. (HUBS): A Bull Case Theory

We came across a bullish thesis on HubSpot, Inc. on Compounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on HUBS. HubSpot, Inc.'s share was trading at $280.00 as of January 30th. HUBS’s forward P/E was 24.63 according to Yahoo Finance.

HubSpot, Inc., together with its subsidiaries, provides a cloud-based customer relationship management (CRM) platform for businesses in the Americas, Europe, and the Asia Pacific. HUBS continues to execute consistently, balancing solid operational discipline with a growth profile that remains in a normalization phase. In Q3 FY2025, revenue reached $810 million, growing 18.4% year-over-year in constant currency, led by 21% subscription revenue growth.

Profitability trends were encouraging, with operating margin expanding to 20% and free cash flow of $147 million, representing an 18% margin, while full-year free cash flow guidance was reaffirmed at approximately $580 million. Customer momentum remained healthy with 10,900 net new additions, taking the total base to roughly 279,000, though ARPC growth of only about 1% in constant currency reflects ongoing mix and pricing headwinds that are tempering near-term revenue acceleration.

HubSpot’s competitive positioning remains rooted in its product-led simplicity and breadth, particularly for SMB and mid-market customers seeking platform consolidation rather than deep, enterprise-specific customization. Multi-hub adoption continues to strengthen durability, with 43% of Pro Plus customers now using three core hubs and 39% using four or more, driving higher stickiness and incremental wallet share. Importantly, up-market traction is improving, as deals above $5,000 in monthly recurring revenue grew 35% year-over-year, signaling increasing competitiveness in the mid-market, even as enterprise penetration remains constrained by scale and procurement complexity.

Agentic AI is emerging as a meaningful qualitative driver, improving customer outcomes and retention rather than near-term revenue. Adoption across customer, prospecting, and embedded AI tools is strong and correlates with higher sales win rates, supporting indirect monetization through seat expansion and attach rates. However, direct AI monetization remains early, with revenue impact likely deferred into 2026 and beyond. Overall, while billings and ARR trends suggest underlying momentum, revenue growth remains a lagging indicator, leaving the medium-term upside dependent on sustained ARR outperformance, gradual ASP recovery, and clearer AI monetization.

Previously, we covered a bullish thesis on Salesforce, Inc. (CRM) by Quality Equities in April 2025, which highlighted the company’s tariff insulation, resilient subscription model, improving margins, and undervalued free cash flow growth potential driven by AI initiatives. CRM’s stock price has depreciated by approximately 14.14% since our coverage due to broader market volatility and macro uncertainty. Sergey shares a similar view but emphasizes HubSpot’s SMB focus, normalization-phase growth, and AI-led retention dynamics.

HubSpot, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 63 hedge fund portfolios held HUBS at the end of the third quarter which was 56 in the previous quarter. While we acknowledge the potential of HUBS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.