If a top-level insider is spending millions on company stock, it’s often worth taking a closer look. These individuals are some of the most informed participants in the market and their trades can provide valuable insights for investors.
In this report, we are going to highlight buying from a top-level insider at HubSpot Inc (HUBS:US). HubSpot is a software company that offers products for inbound marketing, sales, and customer service. Its main offering, the HubSpot CRM Platform, provides tools for customer relationship management, social media marketing, content management, lead generation, web analytics, search engine optimization, live chat, and more. The company is listed on the New York Stock Exchange and currently has a market capitalization of $14.7 billion.
HubSpot Inc: Insider Buying
Our insider transaction data shows that on May 17, HubSpot Co-Founder and CTO Dharmesh Shah bought 10,000 shares at a price of $340.08 per share. This trade cost the insider roughly $3.4 million and increased his holding to 1.511 million shares.
This trade is worth highlighting for a couple of reasons.
Firstly, as Co-Founder, Mr. Shah is likely to have an intimate understanding of the business, and its prospects. The fact that he has spent $3.4 million of his own money on stock now suggests that he is confident about the future and sees value in the stock at present.
Secondly, Mr. Shah has demonstrated the ability to make well-timed trades in the past. Our data shows that the last time he bought stock was in March 2020 when it was trading near $125. Over the next year, the stock rose approximately 280%.
HubSpot shares have been dragged down in the recent tech sell-off. Year to date, the stock is down around 50%. However, the company continues to grow.
In its first-quarter results, the group posted revenue of $395.6 million, up 41% year on year. Subscription revenue came in at $385.0 million, up 42% year on year.
And encouragingly, profitability improved significantly on the prior year period. For the quarter, non-GAAP operating margin was 8.8%, compared to 6.7% in Q1 2021. Meanwhile, non-GAAP net income was $27.5 million, or $0.54 per diluted share, compared to $15.7 million, or $0.31 per diluted share a year earlier.
“In the first quarter, we continued to make meaningful progress toward our goal of becoming the #1 CRM platform for scaling companies,” commented Yamini Rangan, Chief Executive Officer at HubSpot.
Looking ahead, HubSpot said that it expects to generate revenue of between $1.722 billion and $1.728 billion and non-GAAP operating income of between $152.0 million and $154.0 million for 2022. That compares to revenue of $1.3 billion and non-GAAP operating income of $117.6 million in 2021.
In light of these solid results, we see the insider buying here as a bullish indicator.