According to a research report by WARC and Moore Stephens, the global MarTech budgets have grown 44% last year to $99.9 billion with about 23% of marketing budgets now spent on MarTech in the UK and North America. Billion Dollar Unicorn HubSpot (NYSE: HUBS) continues to see rapid adoption of its services as well.

HubSpot’s Financials

HubSpot recently announced its fourth-quarter results that saw revenues grow 35% over the year to $144 million, ahead of the Street’s forecast of $138 million. Revenue growth was primarily driven by the 36% growth in customer base to 56,628. It ended the quarter with non-GAAP earnings of $0.37 per share, which was ahead of the market’s estimate of $0.30 and recorded an impressive 208.3% growth over the year.

By segment, revenues from subscription services grew 35% to $136.8 million. Professional and other services revenues also grew by 49% to $7.2 million for the quarter.

Among key metrics, average subscription revenue per customer fell 2.4% over the year to $10,012. Deferred revenues grew 33% to $185.5 million. Calculated billings, defined as revenues plus the change in deferred revenues grew 33% to $166.9 million. Research and development spending grew 44% over the year to $32 million in the quarter.

For the year, revenues grew 37% to $513 million, and non-GAAP earnings soared 256% to $0.89.

For the current quarter, HubSpot expects revenues of $146.5-$147.5 million with an EPS of $0.23-$0.25. The market was looking for revenues of $146.5 million with an EPS of $0.25. HubSpot expects to end the year with revenues of $648-$652 million with an EPS of $1.08-$1.16 compared to analyst estimates of $637.1 million with an EPS of $1.12.

HubSpot’s Platform Expansion

Over the past year, HubSpot has worked to transition from an app company to a suite company. It has continuously upgraded its platform to add other services for its customers. In the current year, HubSpot wants to continue to focus on its platform strategy. It is driving from an all-in-one suite to much more of an all-on-one platform. It realizes that while it would want companies to rely only on HubSpot’s applications, modern business will ultimately rely on lots of other applications as well. Instead of pushing them all over to HubSpot, it is working to get its customers to use all of their applications with HubSpot. Today, HubSpot manages its own applications’ data, workflow, and reports. In the future, it wants to manage all of its customers’ front office applications’ data, workflow, and report on that entire experience.

As part of this focus, it recently entered into a strategic partnership with AWS. The three-year agreement will allow HubSpot to leverage AWS services to expand its platform to members of the Connect and HubSpot for Startups programs. Additionally, AWS will support HubSpot’s Connect program by co-investing to build an ecosystem for HubSpot partners including content tailored to developers.

Recently, HubSpot also announced the integration of LinkedIn Ads with its platform. LinkedIn ads will now be available in the Professional and Enterprise tiers of Marketing Hub as part of the HubSpot Ads tool. HubSpot Ads has already included integrations with Facebook and Google, enabling customers to manage all their advertising efforts within the HubSpot platform.

HubSpot has also grown its products through acquisitions. While it did not make any acquisitions last year, it has acquired nine organizations to date. Some of the more recent acquisitions include AI start-ups like Motion AI and Kemvi that were added in 2017. Founded in 2015, Motion AI was a software company that developed and trained chatbots. It had raised $700,000 prior to the acquisition and was trending at annual revenues of $2 million. HubSpot integrated Motion AI’s technology into the HubSpot platform to create tools that have helped users automate important tasks, scale conversations, and proactively engage with potential new customers. Terms of the acquisition were not disclosed.

Kemvi was another AI based startup acquisition. Founded in 2014, San Francisco-based Kemvi had raised $1 million to develop an AI-powered growth automation engine for B2B sales and marketing teams. It was operating at revenues of $3 million and was known for its proprietary algorithm DeepGraph, which sifts through data about buyers and prospects and delivers it to sales reps to generate sales leads. HubSpot integrated that technology into HubSpot CRM to give salespeople additional ammunition to reach out to their contacts. Terms of the acquisition were not disclosed.

HubSpot has been adding smaller capital-efficient players to its portfolio to help build additional capabilities to its platform. The market is clearly impressed with the company’s performance. What other companies do you think HubSpot should acquire to continue on this growth path?

HubSpot was venture funded till 2014. It had raised $100.5 million in funding from investors including CRV, Altimeter Capital, Cross Creek Advisors, Dharmesh Shah, General Catalyst Partners, Brian Shin, Mike Volpe, Matrix Partners, Scale Venture Partners, Sequoia Capital, Google Ventures, and Salesforce.com. In October 2014, it went public and raised $125 million at a valuation of $759 million. Its stock is currently trading at $169.5 with a market capitalization of $6.98 billion. It had touched a record high of $180 earlier this month soon after result announcement. It has been climbing from the 52-week low of $101.45 that it was trading at in March last year. HubSpot announced plans to offer additional common shares this year to raise $300 million.

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