HUBS: Future Share Momentum Will Be Driven By AI Demand And Partner Strength

Key Takeaways

• Expansion into integrated cloud platforms, AI capabilities, and upmarket enterprise clients is driving higher recurring revenue, larger deals, and improved margins.
  
• Accelerated international growth and adaptation to evolving buyer behavior are broadening customer reach and supporting durable, long-term business expansion.
  
• Disruption from AI, economic sensitivity of its core market, rising competition, unproven monetization models, and international hurdles all threaten HubSpot's sustained growth and margins.

Catalysts

Provides a cloud-based customer relationship management (CRM) platform for businesses in the Americas, Europe, and the Asia Pacific.

• HubSpot is a direct beneficiary of the rapid digitization of SMBs and enterprises, as more customers consolidate their marketing, sales, and service stacks onto integrated cloud platforms like HubSpot-evidenced by rising multi-hub adoption and seat upgrades, which should drive recurring revenue and higher average revenue per customer over time.
  
• The company's quick pivot to adapt to shifting buyer behavior-such as declining traditional SEO and the rise of AI-powered search-positions HubSpot to capture new sources of lead generation (YouTube, social, newsletters, LLM citations), supporting customer growth and improving the durability of top-line expansion.
  
• Rapid adoption and expansion of AI-based functionality-such as Customer Agent, Prospecting Agent, and connectors to leading LLMs-are driving higher customer engagement, sticky workflows, and early-stage monetization opportunities (especially via credit-based AI features), setting the stage for stronger net dollar retention and potentially higher net margins in 2026 and beyond.
  
• Ongoing movement upmarket into larger enterprise customers, combined with a seat-based pricing model and cross-sell of premium platform capabilities (Core Seat, Smart CRM), is leading to larger deals and higher gross margins, which should boost earnings power as operating leverage increases.
  
• Accelerated international growth-reflected in international revenue expansion outpacing domestic and now accounting for nearly half of total revenue-diversifies the business, reduces geographic concentration risk, and provides a long runway for sustained revenue and earnings growth as HubSpot localizes and scales abroad.

HubSpot Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming HubSpot's revenue will grow by 17.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from -0.4% today to 8.5% in 3 years time.
• Analysts expect earnings to reach $388.4 million (and earnings per share of $6.41) by about September 2028, up from $-11.9 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $189 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 127.8x on those 2028 earnings, up from -2089.3x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
• Analysts expect the number of shares outstanding to grow by 2.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.43%, as per the Simply Wall St company report.

HubSpot Future Earnings Per Share Growth

Risks

• The ongoing disruption of SEO and organic search due to generative AI and declining global organic traffic may challenge HubSpot's historical customer acquisition strategies, risking slower top-of-funnel growth and impacting long-term lead generation and revenue.
  
• HubSpot's heavy focus on the SMB and mid-market segments exposes it to higher churn risk and revenue instability during macroeconomic downturns, as these customers are often the first to reduce software spend when faced with economic uncertainty.
  
• Rising competition from larger, consolidated SaaS providers and emerging Agentic/AI-powered platforms could lead to downward pricing pressure, higher customer acquisition costs, and increased difficulty in sustaining market share growth, all of which may compress net margins and earnings.
  
• The company's new AI agent and credit-based monetization model is in very early stages, with unclear adoption rates and monetization patterns; prolonged or unsuccessful monetization of these new products could limit durable revenue growth and delay improvements in net profit.
  
• HubSpot's international expansion may face obstacles due to localization requirements, regulatory complexities, and diverse go-to-market needs; slower growth outside North America could cap TAM expansion, thereby constraining long-term revenue and earnings growth.

Valuation

• The analysts have a consensus price target of $695.33 for HubSpot based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $910.0, and the most bearish reporting a price target of just $589.88.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.6 billion, earnings will come to $388.4 million, and it would be trading on a PE ratio of 127.8x, assuming you use a discount rate of 8.4%.
• Given the current share price of $472.71, the analyst price target of $695.33 is 32.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.