Alphabet looks to shake up CRM space with HubSpot acquisition

HubSpot is valued at $33.95 billion, making it the company's largest purchase ever

There's been a bit of an acquisition spree in the customer relationship management (CRM) space the last few years, with many smaller companies getting picked up, including Follow Up Boss, a CRM app for real estate professional, being acquired by Zillow Group. Other deals include Meta buying Kustomer (though the company has since been spun back out); Cendyn purchasing PUSHTech, a CRM for the hotel industry; and Tempest acquiring Jupiter from destination marketing organization Visit Indy.

Now, it seems like one of the biggest companies in the CRM space may also find itself being scooped up, as Google parent Alphabet has been talking to its advisers about the possibility of making an offer for HubSpot, according to a report from Reuters. 

The company has even gone as far as meeting with Morgan Stanley investment bankers in recent days, discussing how much it should offer and whether it would clear antitrust regulators, though no formal offer has yet been submitted to HubSpot, the report said.  

Launched in 2006, HubSpot positions itself as a customer platform where companies can manage customer service in addition to fulfilling their marketing, sales, CMS, operations, and commerce needs. The company has over 194,000 clients across 120 countries, including Reddit, Eventbrite, Doordash, WeightWatchers, Casio, and the World Wildlife Fund.

The company, which had its IPO in 2014, has also been outperforming on the public market for the last six months, with shares having spiked 63%, from $411 a share in October 2023 to $670 as of the end of trading on Friday. That's despite seeing a net loss of $176.3 million on $2.2 billion in revenue in 2023. 

Part of the increased interest in HubSpot comes from the introduction of HubSpot AI, a new set of platform-wide AI-powered products and features including AI Assistants, AI Agents, predictive AI features, and ChatSpot, which the company says, "combines the power of ChatGPT with dozens of unique data sources, like a HubSpot customer’s Smart CRM, to give growing business access to powerful generative AI capabilities." Since launching in March 2023, ChatSpot saw over 80,000 total users with 20,000 prompts created in its first six months. 

With the growth in its stock price, HubSpot is now worth $33.95 billion, meaning that this would be Alphabet's largest acquisition ever by far, easily beating the $12.5 billion it paid for Motorola Mobility in 2011.

As for how a deal like would benefit Alphabet, Reuters notes that HubSpot would expand Google's offerings in the market for CRM software, allow it to tap a wider base of enterprise customers who spend on marketing and advertising. It would also help Google's cloud computing business grows as it seeks to narrow its competitive gap with Microsoft and Amazon.

In addition, Alphabet CEO Sundar Pichai is looking for avenues to boost growth after the company disclosed in January that its fourth-quarter advertising sales came in below expectations.

As for what such a deal would mean for the larger CRM space, a deal of this size would likely spark an even larger frenzy to acquire other companies in the space, including those that are smaller and more niche, such as Lofty, another CRM designed specifically for real estate agents or Mindbody, which provides CRM for lead management.

There's also Bitrix24 which combines CRM, project management, communication tools, and AI capabilities; AddaxCRM, a registered Salesforce partner that specializes in end-to-end Salesforce implementations, customizations, and integrations for enterprises of all sizes; and Leadfox, which offers CRM aimed at vacation agencies, gyms, marketing agencies, and financial consultants.

VatorNews has reached out to HubSpot and Alphabet for confirmation and comment on this report. We will update the story if we learn more. 

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