HubSpot: This Fire Sale Won't Last
The customer relationship management platform company may have been overvalued at the start of the year, but it's now trading at a discount.
By Marc Guberti
HubSpot (HUBS +0.59%) was one of the many software stocks that fell victim to the SaaSpocalypse narrative earlier this year. Its stock is down by almost 70% so far in 2026, but that doesn't mean the company has lost market share. In fact, it's continuing to deliver impressive financial results, so the current fire sale on its stock likely won't last long.
HubSpot generates recurring revenue from a wide range of businesses
HubSpot provides its clients with a customer relationship management (CRM) platform, and it has been tapping into artificial intelligence to expand its offerings. That last detail is important in the context of its recent decline: The premise of the SaaSpocalypse that spooked investors was the theory that people and companies would be able to use AI to create inexpensive replacements for popular subscription software offerings, pulling the rug out from under the software-as-a-service business model.
Customers have to pay subscription fees to continue using HubSpot, but once a business starts using one CRM platform, it's a difficult and costly matter to switch to another. HubSpot booked $881.0 million in revenue in Q1, and $862.3 million of that came from subscriptions. Both figures were up by 23% year over year.
That revenue growth also came with an expanding customer base. HubSpot finished the quarter with just under 300,000 subscribers, which was up by 16% year over year.
AI momentum is strengthening for HubSpot
HubSpot has been in the CRM business since its founding in 2006. It has gone through several economic cycles over the past two decades, and capitalized on several opportunities; artificial intelligence will be the next one. As CEO Yamini Rangan noted in the company's Q1 press release: "The AI innovations we launched at Spring Spotlight, including Customer Agent, Prospecting Agent, and Data Agent, are delivering outcomes for customers and will strengthen our AI momentum."
That doesn't sound like a company that is afraid that artificial intelligence will displace what it offers. HubSpot is actively using this technology to enhance its products and attract new customers. Adding AI functions could also improve HubSpot's ability to raise prices or get its customers to upgrade their plans. Businesses have already been spending more on HubSpot on average each year; in Q1, the company reported a 6% year-over-year increase in its average subscription revenue per customer.
HubSpot has even reframed itself as "the agentic customer platform for scaling businesses." The agentic piece is a new angle that aims to position it as a participant in the AI boom.
Management anticipates that its revenue will increase by 18% in 2026. That would be a deceleration relative to its Q1 growth, but still a respectable increase. HubSpot could also beat its guidance in future quarters and raise its full-year outlook; the AI momentum Rangan mentioned suggests this is possible.
It would be harder to feel optimistic about the stock if HubSpot were still trading above $500 per share, as it was at the start of the year. However, its drop to under $200 per share gives it a valuation that's more attractive based on the company's fundamentals.