HubSpot, Inc. (HUBS) Earnings & Analysis

Latest quarter

HubSpot reported Q3 FY2026 revenue of $947.6 million, up 17.1% from $809.5 million a year earlier and 2.4% above the consensus. Its non-GAAP earnings of $3.81 per diluted share also exceeded the $3.28 consensus estimate. Revenue came in above HubSpot’s own Q3 guidance of $924.0 million–$925.0 million.

Subscription revenue was $930.2 million. HubSpot’s filing attributed subscription growth primarily to a larger customer base, with demand for lower-priced Starter products driving customer growth. CFO Kate Bueker said subscription revenue rose 18% year over year, while services and other revenue fell 3%.

HubSpot’s gross margin was 82.6%, compared with 83.5% a year earlier, while operating margin rose to 7.59% from 1.39%. Diluted earnings per share rose to $1.67 from $0.31. Free cash flow was $162.1 million, compared with $142.5 million a year earlier; on the call, Bueker cited $188 million of Q3 free cash flow.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Yamini Rangan said demand and buying headwinds became more pronounced in Q3 as customers reassessed software purchases during the shift to AI. Larger customers involved more decision makers and took longer to close deals, she said, while smaller customers became more price sensitive. In Q&A, Rangan said new demand channels, including connectors to large language models, were not yet offsetting pressure on inbound demand.

Rangan said customers wanted to test AI with their own data before buying. Agent trials grew 64% quarter over quarter in Q3, but she said customers needed help turning trials into paid adoption. HubSpot is using partners and solution consultants to support trials and engaging senior decision makers earlier in larger deals.

Asked about pricing, Rangan said pilots in the Nordics and Benelux removed separate Hub subscriptions, narrowed some price differences between Starter and Pro tiers, and brought usage-based features under a credit mechanism. She said average selling prices were lower in the pilots, while ProPlus customer volume and credit consumption were higher. HubSpot expanded the pilot to new customers across EMEA in Q4 and will use the results to decide when to roll it out further.

CFO Kate Bueker said Q3 net customer additions fell to 5,300 from 7,000 in Q2, reflecting demand pressure and price sensitivity among smaller customers. She said Q3 net revenue retention was 101%, down about one point from Q2 as budget sensitivity increased.

On margins, Bueker said disciplined hiring helped Q3 profitability, partly offset by AI costs. Asked about the October reorganization, she said headcount reductions would benefit Q4 operating profit, but HubSpot was reinvesting a significant portion in employee retention, selective AI hiring and product investments. Bueker said the demand headwinds were expected to persist into 2027; she did not provide formal 2027 guidance on the call.

Guidance

HubSpot raised its FY2026 non-GAAP diluted EPS outlook to $13.59–$13.61 from $13.23–$13.31 and its non-GAAP operating income outlook to $772.0 million–$773.0 million from $762.0 million–$766.0 million. It lowered its free cash flow expectation to about $720.0 million from $750.0 million.

Bueker said HubSpot now expects FY2026 net revenue retention to be down about two points year over year, after previously expecting it to be roughly flat. She said net new annual recurring revenue is now expected to decline year over year. HubSpot stopped providing a specific Q4 net customer additions estimate, though Bueker said additions would be below 5,000.