What happened
HubSpot (NYSE: HUBS) shareholders beat a rising market this week as shares jumped 16% through trading on Thursday compared to a 1.8% increase in the S&P 500.
The rally was sparked by news that the enterprise software specialist is launching a new service aimed at helping businesses process payments from other enterprises.
Image source: Getty Images.
So what
The payments solution was announced at HubSpot's annual investor conference on Oct. 12 and immediately got investors' attention. The software-as-a-service specialist could convince as many as one-third of its existing customers to quickly adopt the functionality.
It might help HubSpot win new clients, too, even as it extends its average contract value over time.
Now what
In an investor presentation at the conference, executives described the payments initiative as a first step in expanding HubSpot's ability to offer complete customer resource management solutions. It will likely reduce profitability for the wider business to start, management said, while helping support long-term growth and profitability.
To that end, management on Tuesday reiterated its financial targets that see operating profit margin eventually reaching between 20% and 25% of sales compared to the 8% rate that investors have seen so far in 2021.
Several successful product offerings will be needed over the next few years to reach that ambitious goal. This week's payments launch is an important part of that growth strategy.
10 stocks we like better than HubSpot
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and HubSpot wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of September 17, 2021
Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends HubSpot. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
