3 Things HubSpot's Management Wants Investors to Know

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HubSpot (NYSE: HUBS) released its fourth-quarter 2018 and full-year results earlier this month, and the cloud-based marketing software and services company saw its sales climb 35%, year over year, and non-GAAP net income expand from $4.6 million in the year-ago quarter to $15.8 million. Both the company's reported sales and earnings in the fourth quarter beat HubSpot management's own guidance for the quarter.

While the company's fourth-quarter and full-year results were strong, investors can get an even better idea of how HubSpot is doing by taking a look at what its management said on the most recent earnings call.

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HubSpot's leadership talked about three things that are of particular importance, including a slight drop in average subscription revenue per customer, the fact that customers are signing up for more services than before, and why international sales continue climbing. Here's what investors need to know about each.

1. Fluctuating average subscription revenue per customer

Subscription sales are the core of HubSpot's revenue and accounted for 95% of the company's total revenue in the fourth quarter. Subscription sales are multiplying, and the segment was up 37% for full-year 2018 to $487.5 million.

Some investors may have been concerned by the fact that the total average subscription revenue per customer dropped 2.4% in the fourth quarter, to $10,012. But HubSpot's chief financial officer, Kate Buecker, said that some minor fluctuations in this figure are to be expected:

HubSpot is continually adding new services to its platform, and as it does this -- while adding more customers at the same time -- it's going to change the company's average subscription revenue per customer figure a bit.

While it would undoubtedly be better for this figure to be going up, it's more important for the company to focus its attention on growing its number of paid customers right now. That's why it's great to see that HubSpot ended the year with 56,628 customers, up 36% from 2017.

2. Customers are buying more than one product

Aside from the company's customer growth, HubSpot's also getting those customers to sign up for more than one product. This not only helps HubSpot make more money, but it also makes it harder for the customer to switch to a rival platform as they embed themselves further into the HubSpot's ecosystem.

Fortunately for HubSpot, the company is seeing strong growth in multiple-product sales. The company's co-founder and CEO, Brian Halligan, said on the conference call:

That's significant growth over the past year, and it's a good indicator that HubSpot's customers are happy with the products and service they're getting.

3. International sales keep climbing

Finally, it's important to note that HubSpot isn't just focused on its domestic market. While HubSpot's U.S. sales in the fourth quarter were up 28%, its international sales jumped by 48%. Buecker said on the earnings call:

HubSpot's expanding international sales are essential to the company because they continually account for a larger portion of its total revenue. International sales made up 35% of the company's total sales last year, but they accounted for 38% at the end of 2018.

Final thoughts

HubSpot's strong 2018 results are starting the company off on the right foot this year, and the company's management believes 2019 is already shaping up to be a great year. Management forecasts sales in the range of $648 million to $652 million, which would be a nearly 27% increase from 2018. Investors should continue to keep an eye on the company's customer growth, international sales, and whether or not customers are buying more than one product -- as each is an important indicator for the company's overall health.

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends HubSpot. The Motley Fool has a disclosure policy.