HubSpot (HUBS) Under Pressure Ahead of Q3 Earnings: Is a Turnaround on the Horizon?

HubSpot Inc. (NYSE: HUBS), a leading customer relationship management (CRM) platform for scaling companies, finds itself at a critical juncture as it prepares to release its Q3 2025 earnings on November 5th. HubSpot stock, currently trading at $471.99, fell 4.57% on the day leading in to the print, adding to a year-to-date decline of 32.32%, significantly underperforming the broader market and its SaaS peers.

This performance raises serious questions about the company's near-term prospects and its ability to navigate an increasingly competitive landscape.

HubSpot's upcoming earnings are expected to show an EPS of $2.59, compared to $2.18 in the same quarter last year. Analysts also expect a revenue of approximately US $786.88 million, marking about 17.5% year-over-year growth in the upcoming earnings period. While this represents growth, the market's reaction will depend heavily on the magnitude of the beat or miss, and equally importantly, on management's forward guidance. Any indication of slowing growth or increased competition could trigger further downside.

Several recent events have contributed to the stock's volatility. The leadership transition in May, which saw Brian Halligan step down as Executive Chairperson, initially sparked uncertainty.

While the concurrent announcement of a $500 million share repurchase program aimed to reassure the markets, its impact appears to have been limited. First quarter results revealed a 16% revenue increase to $714.1 million and 19% customer base growth, which would normally be positive signs, but the market seemingly wants more.

The introduction of “The Loop,” a new AI-driven marketing playbook, in August was intended to position HubSpot as an innovator in the age of artificial intelligence. This initiative, designed to address the challenges of traditional funnel marketing, leverages AI to personalize marketing efforts and optimize campaigns in real-time. However, its effectiveness in driving significant revenue growth remains to be seen.

HubSpot's Analyst Day at the INBOUND conference in September showcased its AI initiatives, including Breeze AI, and management outlined ambitious long-term margin targets. TD Cowen reiterated a Buy rating with a $600 price target, citing the company's strategic financial goals and AI-driven product innovation. However, the market's overall sentiment remains cautious.

One of the most significant blows to market confidence came from OpenAI's entry into the SaaS market in early October. The announcement that OpenAI would be developing internal software applications for sales, marketing, and customer support directly challenged HubSpot's core business areas.

This news triggered a 7.2% drop in HubSpot's stock price, highlighting the perceived threat of AI-native competitors disrupting the SaaS landscape. Even Wells Fargo's initiation of coverage with an “Overweight” rating and a $685 price target couldn't fully offset the negative sentiment.

Furthermore, the terminated acquisition talks with Google in July, which had the potential to significantly bolster Google Cloud's CRM capabilities, sent ripples of disappointment through the market. The subsequent 12% drop in HubSpot's stock price underscored the market's view of the deal as a potential catalyst for growth.

Cantor Fitzgerald's reiteration of its “Overweight” rating and $775 price target in October, describing HubSpot as a “premier software asset,” provided some support, but the stock continues to trade near its 52-week low.

While the prevailing narrative surrounding HubSpot is one of underperformance and challenges, a contrarian perspective suggests that the market may be overly pessimistic. The company has a strong brand, a loyal customer base, and a proven track record of innovation.

The market may be underestimating the value of HubSpot's integrated platform, which offers a comprehensive suite of tools for sales, marketing, and customer service. Moreover, the company's focus on serving scaling companies positions it well to capitalize on the growth of the small and medium-sized business (SMB) sector.

Finally, the fear surrounding OpenAI's entry into the market may be overblown. While OpenAI poses a competitive threat, HubSpot has the advantage of established relationships with customers and a deep understanding of their needs. It's possible that HubSpot could even leverage OpenAI's technology to further enhance its own offerings.

HubSpot faces a critical test as it heads into its Q3 earnings release. The market will be closely scrutinizing the company's results and guidance for clues as to what comes next. Any move may not be enough to remove the underperformer tag on the year, but the company could well be setting up for better times ahead. Time will tell.