HubSpot's (HUBS) Q2 results beat expectations, easing investor worries about AI disruption and rising competition, Morgan Stanley said in a note Thursday.
Revenue rose 18% in constant currency, about 2 points above guidance, while billings grew 20%, helped by longer contract durations, the investment firm said.
Net revenue retention improved to 103%, driven by strong seat upgrades and broader adoption of its Sales and Service hubs under the updated pricing model, Morgan Stanley said.
Adoption of AI tools is increasing, with thousands of users trying features like Customer Agent and Content Agent, though revenue impact is expected to be modest in fiscal 2025, according to the note.
Multi-hub usage is expanding, with 42% of annual recurring revenue now on all three core hubs, giving HubSpot a stronger position against niche AI competitors.
Management remains confident in long-term growth, supported by product upgrades, upmarket expansion and seat-based pricing, though short-term enthusiasm may be tempered by a narrower beat and billing growth from longer duration, Morgan Stanley analysts said.
Morgan Stanley maintained an overweight rating for Hubspot and cut its price target to $747 from $752.
Shares of the company were down about 8% in recent trading.
Price: 452.08, Change: -40.55, Percent Change: -8.23
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