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Cloud marketing automation vendor HubSpot files for $100M IPO

  • HubSpot, a well-known player in the growing cloud marketing automation software space, has filed for a $100M IPO under the symbol HUBS. Morgan Stanley, JPMorgan, UBS, Pac Crest, Canaccord, and Raymond James are underwriting. (prospectus)
  • Like rivals, HubSpot tries to provide an integrated approach to handling a slew of digital marketing channels, including e-mail, search, and social media. The company focuses on mid-market businesses more than large enterprises, and had 11.6K customers and 1.9K marketing agency partners at the end of June.
  • HubSpot had 1H14 revenue of $51.3M (+46% Y/Y), and a net loss of $17.7M. Sales/marketing totaled $33M, and the deferred revenue balance stood at $32.4M at the end of the period.
  • The marketing automation space has seen plenty of consolidation, with Adobe, IBM, Oracle, and Salesforce having each made big acquisitions. HubSpot, Marketo (NASDAQ:MKTO), and Constant Contact (NASDAQ:CTCT) are arguably the most prominent independent players left. SAP remains a potential suitor, though it has a partnership with Adobe.
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Comments (2)
  • Equitable Research
    , contributor
    Comments (2172) | Send Message
     
    Add MRIN and RLOC to the list of prominent independents left in this marketing space. Both offer SIGNIFICANTLY better value than MKTO and CTCT (which is a great short).
    25 Aug 2014, 10:38 PM Reply Like
  • 166649
    , contributor
    Comments (384) | Send Message
     
    MKTo is a great long here...CTCT has been moving nicely

     

    MKTO is a high-quality SaaS company that's growing very rapidly, is gaining share, and no longer trades at nosebleed multiples.

     

    MKTO got hit hard earlier in the year, with the stock eventually losing half of its value. Right now, it's just quietly basing. This is a high quality growth story, and we're seeing some signs that money has been flowing back into growth stocks lately.

     

    If you're not familiar with the company, here is the gist of what they do:

     

    MKTO sells cloud-based marketing automation software that helps businesses reach consumers via a wide variety of digital media such as online, social media, email etc. Nothing unique there -- this is a pretty crowded space. However, most of MKTO's pure-play rivals have been acquired. Because of this, historically the big concern with MKTO was that the entry of big competitors into the space (ORCL acquired Eloqua and Responsys, ADBE bought Neolane, and CRM acquired ExactTarget) was going to negatively impact MKTO's pricing and market share.

     

    Perhaps unsurprisingly, MKTO has thrived as its main rivals were gobbled up by larger, slower-moving entities. MKTO has been putting up 60+% sales growth every quarter since its IPO, and regularly beats consensus by large margins. Mgmt has claimed that rather than suffering from competing against some of software's behemoths, it has steadily been gaining share in a market segment with a very large TAM. Valuation is no longer a hindrance with the stock trading at 5x forward EV/Sales

     

    Bottom Line: MKTO is a high-quality SaaS company that's growing very rapidly, is gaining share, and no longer trades at nosebleed multiples. Keep this stock on your radar as it looks to be the next growth stock to move
    26 Aug 2014, 04:41 PM Reply Like
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