-- HubSpot (HUBS) could face a "significant" execution risk from its simultaneous change to pricing, packaging and go-to-market focus, BofA Securities said Friday.
Late Thursday, the customer relationship management platform provider raised its full-year outlook after delivering a first-quarter beat.
"We believe (artificial intelligence) value should be measured on outcomes, so we recently updated our pricing for agents to match," HubSpot Chief Executive Yamini Rangan said on an earnings conference call Thursday, according to a FactSet transcript. "Customer agent has moved to consuming credits based on resolved tickets, and prospecting agent has moved to qualified leads recommended for outreach."
The company now offers a free 28-day trial for both agents, so customers can "see the value" before committing, Rangan told analysts.
"The biggest surprise from yesterday's print is that HubSpot is reorienting its go-to-market model to be agent-first, with reps now expected to position AI agents as the tip of the spear during sales conversations rather than traditional products," BofA analyst Matt Bullock said in a note to clients Friday.
Last month, the company introduced a new outcomes-based pricing model for AI agents.
"While we view these moves as strategically sound for the long term, a concurrent change to both pricing/packaging and go-to-market focus introduces significant execution risk," Bullock said Friday. "We expect this to constrain investor sentiment until clear traction can be proven, which we believe could take multiple quarters."
BofA downgraded its rating on the HubSpot stock to underperform from buy and slashed its price objective to $180 from $300. "We believe a lower multiple is justified given a meaningfully cloudier path to durable growth reacceleration," the analyst wrote.
The company's shares were down nearly 20% in Friday late-afternoon trade, bringing its year-to-date losses to 51%.
The changes announced by HubSpot have reduced BofA's confidence in a "meaningful" growth reacceleration in the second half of the year, the brokerage said in the note.
"The shift toward an agent-first sales motion could lengthen sales cycles and temper the historically consistent momentum of the core business," Bullock wrote. "At the same time, we note that end-market readiness for broad-based agent adoption remains unproven, creating additional uncertainty around near-term sales productivity."
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