HubSpot Inc. (NYSE:HUBS) delivered second-quarter results ahead of Wall Street expectations, but its shares fell more than 20% after management issued full-year revenue guidance that came in below analysts’ forecasts.
Despite reporting solid growth in revenue, earnings and customers, investors focused on the company’s more conservative sales outlook for the remainder of the year.
Revenue and earnings beat expectations
The customer relationship management software provider posted adjusted earnings of $3.26 per share, exceeding analysts’ consensus estimate of $3.02.
Revenue increased 20% year over year to $911.7 million, comfortably ahead of the market forecast of $898.13 million.
Subscription revenue rose 20% to $894.0 million, while professional services revenue increased 8% to $17.7 million.
Full-year sales guidance disappoints investors
HubSpot expects full-year 2026 revenue to range between $3.678 billion and $3.686 billion.
The midpoint of $3.682 billion fell short of Wall Street’s consensus estimate of $3.71 billion, prompting a sharp selloff in the stock.
For the third quarter, the company forecast revenue of between $924.0 million and $925.0 million, representing approximately 14% year-over-year growth.
Company continues AI transformation
Chief Executive Officer Yamini Rangan said: “In Q2, we made deliberate choices to accelerate our AI transformation. Scaling companies want real outcomes and predictable pricing when adopting AI, and we are evolving our product, pricing, and go-to-market to meet those needs.”
Management said it is continuing to invest in AI capabilities while refining its product strategy and pricing model.
Profit outlook remains strong
Although revenue guidance disappointed, HubSpot increased its earnings expectations.
The company now projects full-year adjusted earnings per share of between $13.23 and $13.31, with the midpoint above analysts’ consensus estimate of $13.10.
Third-quarter adjusted earnings are expected to range from $3.25 to $3.27 per share.
Customer growth and cash generation remain healthy
HubSpot ended the quarter with 306,446 customers, an increase of 14% from a year earlier.
Average subscription revenue per customer rose 4% to $11,800.
The company generated $222.8 million in operating cash flow during the quarter and repurchased $531.9 million of its own shares.
In addition, HubSpot’s board approved a further $1.0 billion share repurchase programme on August 3, 2026.
HubSpot stock price
