Reviewing HubSpot, monday.com, and Global-e

Starting to come to the end of third quarter reports! Let's take a look at the reports from HubSpot, monday.com, and Global-e.

HubSpot (HUBS)

I didn't see much that was especially notable in HubSpot's Q3 report. Everything was pretty much to our model. Revenue grew 26%, with subscription revenue up 25% and representing 98% of total sales. Customer count was up 22% to 194k clients, and average subscription revenue per customer grew 3%. There were no particular surprises to the up or downside. The fair value target gets a small, time-based bump from $309 to $313. The stock is still trading well above that at present.

monday.com (MNDY)

WorkOS business application provider monday.com delivered nice results for Q3, and the stock has rebounded strongly since we bought in about a month ago. Revenues were up 38%. Big clients with over $50,000 a year in recurring revenue grew an impressive 57% to over 2,000. As always, we like big clients with SaaS companies, as they are slower to churn and can be expanded within much easier than smaller firms.

Management touched on the Israeli situation a bit. Obviously, acknowledging those affected, particularly employees. From a business perspective, though, management reminded the market that Israel is less than 5% of total ARR, the firm has a global workforce, and its data server assets are distributed and third party. Management does not expect any material disruption to business from the current, ongoing war.

I'm still a big fan of these kind of businesses, and monday.com is a well-run firm. We are seeing a good bit of share dilution, however, with share count up 12% in the quarter. Our model probably didn't account for this as much as it should have, and revenue growth isn't enough to offset it. The fair value drops a bit from $186 down to $174.

Global-e (GLBE)

Global-e reported a 27% revenue increase and 35% increase in gross merchandise volume in Q3, both of which were a little weak against expectations. Annual guidance was also reduced slightly. The market punished the stock aggressively, sending shares down over 25% (they have since rebounded a bit). Management pointed to softening consumer demand in Europe, particularly in the luxury fashion segment that accounts for a good portion of Global-e's customer base. The good news is that the company saw a rebound beginning in late October and extending into November. As of now, they expect growth rates to recover heading into 2024.

We will of course keep an eye on this. Macroeconomic weakness is one thing - all firms are subject to this and it is largely out of their control. What we want to be mindful of are competitive or execution challenges. I'm not seeing any sign of that yet. Operations are churning along, with the Shopify partnership going into general availability in the U.S., new platform partners like Wix, and more high-end customers added including Lacoste, Bang & Olufson, Guess Watches, and 3 more LMVH divisions.

It was a bit of a down quarter but Global-e still looks attractive from where I sit. Our model over-estimated share dilution, and bringing that back into line offsets the slight decline in revenue growth expectations. The fair value target remains $39.