Inbound marketing specialist HubSpot (NYSE: HUBS) recently reported its first-quarter results that continued to surpass market expectations. HubSpot has been gaining its market share by expanding its product offerings.

HubSpot’s Financials

HubSpot’s first-quarter revenues grew 41% to $395.6 million, ahead of the Street’s forecast of $381.98 million. Non GAAP EPS of $0.54 beat the market’s estimate of $0.47.

By segment, subscription revenues grew 42% to $385 million and Professional services and other revenues fell 4% to $10.6 million.

Among other operating metrics, its customer base grew 26% to over 143,689. Total average subscription revenue per customer fell 12% to $11,030.

HubSpot forecast revenues of $409-410 million and an EPS of $0.42-$0.44 for the second quarter. The market was looking for revenues of $410.39 million and an EPS of $0.43. HubSpot expects to end the year with revenues of $1.722-$1.728 billion and an EPS of $2.40-$2.42. The market was looking for revenues of $1.73 billion for the year and an EPS of $2.41.

HubSpot’s Product Expansion

HubSpot is following a three-pronged approach to drive growth. First, it is focusing on delivering a leading front-office platform by investing in its anchor hubs and innovating with new emerging hubs. As part of this focus, it recently crossed two important milestones. First, its Marketing Hub surpassed $1 billion in annual recurring revenue in the first quarter. The second milestone is that it recently relaunched Service Hub with expanded features and functionality.

Service Hub enables small, and medium businesses to deliver exceptional service. As part of the relaunch, it introduced service level agreements, a mobile helpdesk, and a support workspace to deliver a modern support center offering. Its omnichannel support includes customer portals, live chat, Facebook Messenger, and email functionality.

Its second strategic priority is to strengthen its segmentation approach across both products and go to market. It wants to drive volume at the lower end of the market with products that are easy to buy and easy to use, and it wants to fuel value on the higher end with robust features for customers with sophisticated needs. It recently introduced simple automation for free and starter tiers to drive adoption in the lower end of the market. It is also running experiments like pricing page optimization and self-guided demos in this segment and is already seeing strong adoption of its starter suite. Within its upmarket segment, both its direct sales team and partner channels are focused on driving multi-hub sales. Multi-hub adoption is growing, and 24% of its professional and enterprise customers now use three or more hubs.

Its third strategic priority is to invest in payments and commerce. HubSpot payments were earlier available in the U.S. for B2B customers. It has now been expanded with new features such as the recurring ACH functionality, payment dashboard, and objects. Payments object is becoming a top-requested feature as it enables customers to see commerce data in all of their CRM interactions.

Meanwhile, it continues to expand its partner network. Recently, HubSpot announced its partnership with Pipe. The partnership will provide access to a total of $100 million in funding for HubSpot for Startups customers, while Pipe customers will receive a 30% discount on HubSpot’s CRM Suite. Startups have the ability to pursue business growth with HubSpot’s market-leading CRM platform while also accessing growth capital through Pipe.

According to a report released earlier this year, HubSpot had more than 31% of the marketing automation market share, up from under 30% six months ago. It continues to compete with big players including Adobe and Oracle. Adobe was the second largest player, but it saw its market share fall significantly from 11.8% to less than 8% during the same period. Oracle was the third largest player with a market share of under 8% this year. Analysts believe that HubSpot has managed to expand its lead due to its freemium offering. The freemium offering helps it get into the SMB segment, and then upsell its premium offerings and other tools to grow market share.

Its stock is trading at $336.68 with a market capitalization of $16.08 billion. It touched a 52-week high of $866.00 in November of last year. Earlier this month, it had fallen to a 52-week low of $295.53.