HubSpot's (HUBS) Q2 miss and lowered full-year revenue guidance delay AI-led reacceleration past 2026 as buying scrutiny, extended sales cycles and changes in pricing affect growth, Morgan Stanley said in a note Thursday.
The company reported Q2 revenue growth of 17.5% in constant currency, which fell short of investor expectations, and issued a Q3 revenue growth outlook that calls for further deceleration to 15%, while 2026 revenue guidance was lowered to a range of $3.68 billion to $3.69 billion from $3.7 billion to $3.71 billion, according to the note.
The investment firm traced the softer results and lowered outlook to two core factors, a change in customer-buying criteria and a rise in budget scrutiny.
Customers now demand proof of value before purchasing, while also requesting more pricing predictability tied to value creation, the firm said. In reaction, HubSpot changed its go-to market, as well as pricing and packaging strategy, extending the current sales cycle although these changes could potentially prove beneficial over the long-term, the firm added.
Morgan Stanley kept an overweight rating on the stock, but lowered its price target to $287 from $350.
Shares of HubSpot were down more than 21% in Thursday trading.
Price: $195.84, Change: $-54.37, Percent Change: -21.73%