HUBS - Earnings call transcript Q1 2019

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Operator

Good afternoon. My name is Mike and I will be your conference operator today. At this time, I would like to welcome everyone to the HubSpot's Q1 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question-and-answer session. Instructions] [Operator

turn to now of MacGlashing, call Relations. Investor the will Chuck over Head I

your conference. begin may You

Chuck MacGlashing

Thanks, afternoon the conference after call. the operator. quarter release the Today, first Good press we'll and market welcome closed. be was discussing that results in HubSpot's announced issued to earnings

With the Officer. Financial afternoon call is Chief Halligan, our Chief me Officer Bueker, and our on Executive Chairman; this Brian and Kate

in attention start, to draw the today's I'd press statement Harbor we release. Before your included like Safe to

our to XXA related that statements Exchange make Securities we'll call, of as the and Section this considered Exchange be of Act amended XXXX within the amended. of business forward-looking XXE as During may Securities of Section Act of meaning XXXX the

statements, operational regarding financial outlook, All the of fiscal future and including performance including expectations for second statements, growth of than are quarter statements our statements other management's and and the expenditures, of operational XXXX. expected historical guidance business financial forward-looking fact,

risks as XXXX and today, with our reflect the revise statements. XX, statements Forward-looking the was to Please update to today's refer no cautionary these except views which law, or forward-looking press discussion to cause for as results of that uncertainties filed we undertake a in obligation materially our of February on release from expectations. could SEC Form the actual and language differ and required XX-K, only to by

non-GAAP measure defined found press section hubspot.com. our in GAAP each the discussed financial between the or non-GAAP Investor During quarter XXXX the at most non-GAAP reconciliation measure earnings and each as course differences to GAAP release comparable call, a of comparable financial measures today's of and certain first Regulation financial to website directly be measure G. refer can our by measure we'll within The Relations financial used of the financial

call Now, and HubSpot's Brian it's turn pleasure CEO to to Halligan. my over the Chairman,

Brian Halligan

earnings quarter review XX% results. a strong as Great constant X% you overall margins Thanks, start at joining us currency, We're Thank year over first in to customer our Chuck, good to for HubSpot's operating growth total today the quarter. XXXX non-GAAP we afternoon folks. bringing customers revenue XX,XXX. off growth XX% and

Now step to We a view moment arbitrage experiences. like create we're opportunity the customer seeing a these how into give to world and you I'd the remarkable back ability feel days the these in for company for like days. real is business

product. create experience. Business schools teach used to that But the create better win to I they'll to future, a needed better XXx a to you need you that to teach believe XXx in win

have may an my I'm before, remind I'll about. this what of but You heard you morning example as talking routine of

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I do Now that morning they're all start-ups. they with routine? tell why you doing I'm those Well business my companies fascinating, about

they're companies All of those like growing those weeds. start-ups

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of that Those these us sold software. move enable us to remarkable This from a single a customer products a that leads company this products to well. sells buying enable a shift move company application customers that company that is generate going new a experiences. from its helps full suite helped new to to very company create Those a

getting major our the spinning. whole me This that our and our suite in numbers large Really flywheel are We're products our is progress new proud upfront. is customers in value adoption that proposition working our buying to base it we've shift. growth that signals of are customer great across multi-product made news as of

I'm of product not proud thing recent that is we One the had. outage

I and means on us. our them rerun HubSpot to think that customers HubSpot give and convenience

outage. Here's what it say about that

our make reliability we've It the on already great strengthen some our only to to at Since and board. outage HubSpot's already reliability already. stability, team built We've progress of doubled best engineers a across delight serves they down customers. the resolve new security our

phase sweet next of a of a platform. Now, shifting HubSpot to more from is the

created You Well most that? might that. scores and that explosion is valuables reality been ask why over of of applications the SaaS use decade do of customers the our would last there's an we

experience Rather its for in is plug help they and for their us progress. shift orchestrate HubSpot those than This fight but to nice want gravity, remarkable them more our customers. early customers even there's of enable into to applications them to an all been days create all

If HubSpot XX cranking starting up HubSpot. to you're integration natively customer built XXX that our and fuel to you applications year partners. is HubSpot integrations investments companies. our the iPass that choose were work. from endpoints are endless by array of That's really integrations or developer can more our integrates This and create built nearly almost by customer The use up into you on integrations cases even This already our adding we're five an top by have in through API different with partnerships experience. average platform ourselves top our to shift opening of

we had chat fact are with to of many week, growing better together per delighted In us. with was HubSpot I them XXX meeting. into And who partners developer of these last

platform of any on two health The basically things. depends

growing use the integrations you of You have supply new users steady in to to stream invest top-notch and need them. a of

major is is our and a users freemium major to applications. new source motion new of Our of commitment source a developers

more are gets platform of to of which for flywheel even there all want developers apps who more build valuable on developers build, our More platform. hundreds HubSpot get, the users thousands faster. More users our the we of spins the those

to enable to leverage customers own create to their platform to remarkable create want experiences our Now to delightful customers. we our for we only don't experience our own customers, friction low want

You to see the us. expect our experience they great when customers come consumer

with be deal back. they going able product products to expect try Specifically that's of freemium a really and buying removed that great decision of well. before getting couple to them. To years alone a been introduced we of set end, friction started HubSpot a That

automate, users. process chat information our and just here. help I HubSpot's to more the we starting increase and better sales and nice software we'll on this initiative customers the able hard box, buying making Nowadays, on heavily we're on a by have need amount with working progress leaning org relying they software for into better be forming for to to the making some conversations process our can users the these one our intuitive suspect that make We're grow of

All right. years. evolve We over suite for We're application to to an customers laser-focused last the value help from HubSpot. our a few our in them them on proposition grow better

own them a and our We're We're opportunity evolving make on buying platform a our light process HubSpot's also applying delightful. grow to better. even own and again technology suite focused to help from to

Kate. it over I'll to that, hand With

Kathryn Bueker

Brian. Thanks

flow and operating to growth pleased a in we our non-GAAP cash with first the strong Let's QX. off delivered for results the guidance is quarter turn start. free revenue, and second in financial XXXX I'm to profit our quarter.

QX revenue on XX% grew quarter both year-over-year First constant XX% reported. year-over-year currency XX% XX% and grew while basis. as-reported grew in year-over-year, as revenues subscription services revenue

down which X% customers, and up customer total XX,XXX was currency. subscription with QX in as ended year-over-year HubSpot reported per revenue year-over-year. was Average QX flat $X,XXX constant XX% in

We in of any versus depending product mix quarter. continue base selling metric bounce to to on expect this the installed and amount new around

revenue points XX%, represented Domestic an in basis. year-over-year XX% revenue was XX% while international grew constant of and currency XX% QX, up three in revenue growth year-over-year. as-reported International revenue on total

to significant opportunity world. around domestically see the as well continue for growth We as

almost increase headwind $XXX XX% Calculated Deferred billings billings FX in of million, quarter. end up the calculated revenue as-reported $XXX an given March and million, five-point of as XX% year-over-year. currency a to was constant over XX% year-over-year the in was

The remainder will to my comments non-GAAP measures. of refer

Subscription XX%, XX%, less year-over-year. at point points up margin quarter X%, was up gross XX flat year-over-year. was margin gross margin was services First slightly gross while a than

from impact to minimal for margin anticipate First that be as almost last year. X.X%, operating was a headwind full the ASC but operating a still point one leverage leverage QX, up points of year. QX in The four quarter operating had to adoption ASC will XXX a we reminder, XXX of

the quarter. was Net income XX% the employees, software At end development $X.XX was year-over-year. X.X% the X,XXX $X the we in $XX or per or quarter, up capitalized diluted costs million, in had of revenue share. of million, first including first CapEx, quarter

the CapEx new due Dublin as still the facilities percentage plans in to as was as build-out be year expect lower well of We of into a in of quarter. pushed some build-out in of the spending QX, X% second of that our primarily a result revenue half planned timing as facility CapEx the the to XXXX, the about our second throughout year.

to quarter-over-quarter cash, the was marketable due Finally, offering equivalents the totaled the in and $XXX in cash X.XX March. received share from completed at February. The largely million of million stock we our increase proceeds we end substantial common securities million $XXX

of XXXX. With into that, second dive the let's quarter guidance for

million And be full million expected million This to be million. expected million. Total between be XXXX, and to Non-GAAP between assumes $X.X $X.XX. income $XXX.X $X.XX to range revenue of outstanding. is the to range diluted income year diluted $XXX.X million. to for is is $XX.X shares approximately of the expected the to Non-GAAP $XXX.X operating be total share per expected is revenue to in in net fully of $XXX.X million XX.X

$XX between fully up is assumes shares million. full profit expect cash share $XX from outstanding. income approximately about be million, expected XX.X year our of free and million to to diluted to is flow between $X.XX million. million $XX net operating expected per now be forecast We Non-GAAP $XX diluted and $X.XX. prior about be Non-GAAP This

to The the models, from in quarter up and a XXXX which incremental prior the full your you forecast exchange We're an strength foreign the As is $X dollar second impact. mind revenue recent our $XX year. headwind now to revenue, keep growth in of U.S. adjust the as-reported an creates million anticipating million of following. approximately of headwind as-reported

revenue full as-reported FX prior two-point our point revenue This to two growth we headwind anticipate full of growth. impact in revised negative forecast to forecast to from up QX, points. XXXX, as-reported In one equates three to a a

our quarters. of operating and in first the As indicated fourth we the call, majority leverage we in last expect our XXXX

leverage expect the operating leverage the in delivered in our strong occur we to we of remainder Given QX, QX. still

September. QX a spend cash flow ramping cash free in free lower be as in strong saw in we CapEx INBOUND Similarly, our quarters annual flow of will QX QX. event and result

we XXXX majority we remaining result, first to are on come quarter. year a fourth in this well the a of close, anticipate cash As the to we throughout represented strong to positioned momentum XXXX. our start To and flow the build free quarter believe the

hand With Brian call to for that, I'll back over his closing remarks. the

Brian Halligan

strong off We're start Kate. XXXX. to Thanks, in a really

playing investing our marketing our as front Our and office customers up our for service suite friction, and is buy running with it's dividends play play are try full reducing as HubSpot. sales is HubSpot easier their customers flywheel to get product in so even and

on play easier HubSpot more is extend, ever customers our are their than investment. leverage valuable build momentum to get gaining than as more finding ever platform and and Their serious from partners it and

the and close their call a organizations to millions open to around us Operator, want please by all of our I our investors grow our questions? the for for few with HubSpotters we can mission Okay. customers, partners, help the better. globe thanking up helping

Operator

your is question first Roderick, comes line Tom with Roderick Your from Instructions] open. Stifel. [Operator Tom

Tom Roderick

Thanks taking questions. Good Hi, afternoon. guys. for my

do I on points quarter-on-quarter So a headwind five the kind revenue of the in that was how basis little much more that deferred of here hit I bookings said revenue versus speak to and wanted if in the just curious you versus deferred a terms on think bit that on the you basis. hit to the FX year-on-year

highlight of you'd particular strongest great. going if sort there doing thoughts And would are be saw you headwinds that on Thanks. we of how well internationally particularly sort also about that any to in the forward? are And models forward, our FX any that that's hit modeling the think from that deferred should geographies then attempt

Kathryn Bueker

Thanks. Yes.

calculated headwinds primary billings. the in are there which that billings a don't we we of to focus to relates things story and one QX FX metrics impact billings components The internally. about talked as why FX we it in point the is of that different of there bunch was as an is clearly two As really past, story on

one with in is deferred a revenue, about to headwind in There that was billings first point change two and frankly growth same of revenue The year-over-year revaluation as around plus deferred. the so defined we half about calculated revenue quarter, recall you'll the revenue. the the the

- the end and the of rates U.S. starting in recalculated is we difference and So the at point half of balance and that the you that dollars us. deferred and points know, the two ending sheet balance impact between headwind on revenue value another as of for FX the March

Tom Roderick

of Excellent. Excellent. relative to And impact a Hub little ARPU that and bit. you both know would some fantastic you SKU to the here might be the it looking the you Thanks. bit. INBOUND, That's side, great. again little introduced a bouncing turning to talked could at SKU move ARPU But Brian of is the Perhaps that growth product about Sales about love needle starting then around ARPU. I the hear XX% growth and have to to that sort fast on forward Pro new talk how starting customer

Brian Halligan

Sure the Tom. Thanks question. for

all pretty Just the last a we are September, starter call bunch it for our to products happy those well. but it. they're the products. and products not going of Overall, side we're and never a announced the of mid-market, get the new like bunch a are really of if about clock we which Enterprise products feeling roll new then but new it doing the us, really crafted. has businesses. we - you done, on all a there page, on with All bunch Enterprise get start-ups performance SKU I'd last is new done. sculpture to good products back INBOUND Enterprise products same It's of and pretty for where and and on well better I'm small to done the year, whole in say is man everyone It's

that ARPU we thing that tricky good it line product is definitely Anything we've line, - customers customers are number for definitely it doing that particularly feel products. moving are got The product the well starter to that's those up and And add really starter about it bit. investors overall, it's and some down. want I you there, really a But some because moving is marketing all Kate? pulling to got new

Kathryn Bueker

No.

last in been which very account really the that quarters mix we've I the is QX this similar customer trend ASRPC what in think we is thing being it product to impacts seeing the the again and over QX. few both and the see

Starter at said, That standalone you so both ASRPC, trend. a Marketing on hubs, individual Hub X the growth and if we Sales positive are seeing in look basis are showing the expansion the or

Brian Halligan

That's good point Starter a growing X is Marketing nicely.

Tom Roderick

you queue. guys. back in And Outstanding. great. Thank I'll that's jump

Operator

Your next question Brian Peterson comes Raymond James. from from

Brian Peterson

question. Hi. Thanks for the taking

think are you're And the resonating internationally international maybe So expand domestically? just difference if seeing what But success? to just you're seeing I some a question. from on where any you what about bit a strength, follow-up Tom's could products

Brian Halligan

Japan. Brian? in great. made Brian. investment years got in the How investments. Australia. We're I in just system, seeing and those opening done and We've return done nice Bogotá. We've really our big announcing of is We've then is we've we you a five This Dublin did big on last International a investments over lots international office Paris - think Singapore, doing we're office

those mix identical. a the are growth we're made language it some products is also investments investments domestic What's about nice, IT nice growth and internationally, in there. I market. interesting of lot between nearly localization the and well, seeing like think out looked The We going the

the Thanks. there but it's lines. slight That same there, think all product close across pretty good to different difference in really was be the question. some will You

Brian Peterson

just if anything And retention sorry, on one but share follow-up that I maybe the can quick for Thanks during missed revenue net just Kate on the retention? number. call, I'm guys. you the

Kathryn Bueker

Yeah.

XXs, in said up which don't retention move specific is down. the a to was around We that number high going this and we So actually on revenue retention. QX number was expected. disclose

and of over bookings in tend we strength tend think that it and a little can in still We moderate to a call to XXX-plus QX. heavier long-term. the quarters, see the bit We a QX retention we it bit QX in do see

Brian Peterson

Great. you. Thank

Operator

Your Lynch. America Bank from Sills next question of Merrill from comes Brad

Brad Sills

moving Hey, curve sales agency ask ad sales thanks the on sales? how on in guys. ramping how speed channel been about within sell-in getting Wanted up learning and to these your channels to direct Any two color that's and and up are the force.

Brian Halligan

on Brian. early the I we started with help on was it's take We we describe I'll leads. software people that. Brad, when first just and step company. going HubSpot really HubSpot, when of channel, HubSpot marketing If kind at generate what's only back

if And lot agencies and and had pretty happened PR it they so through channel to early of If scaled it website and they're they it buy a to would us. search And they agency, from want an we a If themselves, directly it agencies through going buy started agency, what went well. an in they was buy agencies would agency great. folks do optimization to really wanted building it's choice engine HubSpot. an basically do was

of happening people to agencies, help from that couple years, experience underneath been last behind people the lead-generation this have sort flywheel What's by of experience. transformed best into lot marketing whole is business that really agencies our our creating business agencies, not the been leads scenes with a themselves customer just entire shipping value flywheel full helping generate prop agencies of Over we've process. a

year agencies, sales pull agencies, effort lot types agencies up coaching, different got of starting signing pretty these going of well. And that an was sales lot it's more of and it's implementation, implementations, types we sales started tracking, a a to agencies. we're And in IT sign implementations, then and some up started a we've we initiative probably of ago a CRM and boutique new to

couple agency them. top the we're I all house I'm forward HubSpot. of in into really meeting Now look I dinner. partners And weeks, get next all having our to my to all of with over for them them having tier meet

the overall and the bullish progress agency whole program and and the really IT and the group at happy group's performing over sales That with mid- well that on term. the I'm making is long Really partners HubSpot. new

Brad Sills

more Brian. Thanks, great. if then And one I That's may.

Could channel operation. yourself? bit? QX? speaking own channel push being made the outage Thank little are result HubSpot direct on comments that elaborate your in impact and you. the your you partner disrupting as some You a more more in on see you're earlier a operations sales your deals given you you own running sales Or Did just to into the

Brian Halligan

while Sure. super outage. to there. and interested I'd are the we bit like JD more little the to outage blog I stuff bundle published mean, COO was an our Folks on article a on. of out our published a comment going points It broadly in

And on would post-mortem then a post happened a our what our there. architect chief in blog like did of

by it the long for it's on for those If March of hit customers places disruptive you listening look. a are any just Around right take day a customers were you've really that apologize talked our HubSpot. I to the end it. that's the like I to was dig and outage have happened It those the got at at to us for in disruptive want of of and if lot call you,

We've about a and weeks really disappointed and built our then reliability of already we're by which So engineer around We've reliability there Since built - progress. outage. the few new and a changed we're process that we're making built some very, the nice in product team. team, we very frankly took we only kind been ourselves top them built active. we've

you don't the Lama with pleased as don't And I'm lose mistake, when say the Dalai lesson. like the So lose make to I think we'll lesson. a effort. the

our to going learn change even we're future. can we we make org, the better sure lesson think and I our our change so in be processes,

customers. quarter, there wasn't It it quarter. more very impact, we sleep major the huge slight but day disruption us, HubSpot. last on lot the of the over. of a out lost very, yes, A terms impact to may nothing that of use sleep impact our huge, a There the was get day I wasn't over that be we one In

Brad Sills

Thanks, Brian.

Operator

from Your Mark comes from JPMorgan. next Murphy question

Mark Murphy

thank you, Yes, Brian.

three very customers If to marketing, in using Growth percent or parts Stack? run, what as are your the do viewing other long office of to front you continue you and going essentially the In succeed sales end of the think core up service words, all system. HubSpot

just they're retention curious said also do up what that if integrating think also end HubSpot integrating stickiness apps apps. and And do many I five can they into you think I'm you for

Brian Halligan

you are How Thanks your doing Yes. Mark? question. for

Mark Murphy

Good.

Brian Halligan

a high. person. seeing market TV. know for I sales my words of it's I'm - don't want but like that them And better going to Apple I I with what I to in go have an iPhone, bit mixed in what I - have tons be I earbuds of is I'm I Macs, and I is, even little a tons to Apple use happening an number talk people iPhone. in it's myself of customers. the couple machine calls the I have don't And have a Windows don't mix the

some for provider in of Salesforce very think what applications are I they're and see I other the thing and front platform applications of good I doing see then we two it's buying plugging from platform picking provider obviously us. same day market a competitor core primary the every office, that I HubSpot kind - where ones day, the a kind a lots companies every in. see see for That's the of and

think I well. quite And compete we

offering good really every I offering think Our stronger and getting our is day. stronger and is

customers will our the as think I percentage very the pick haul, long platform. a high So over of of

that. not of of consider our apps and I product, may of different think record three, into of sort they and us in something a all in our use plug plug system of for different will tens other plug-in couple applications they in but may they'll us their They a they'll part

think can Now a do be I haul, it retention is that will today. can that don't be. I to long than lot what higher the retention? know over our what

to me now. I I gives me of is. my think know I the wouldn't I that side a is in lot. hole think But - a dare Kate staring what head don't right it

of and to mixed a we're products platform, getting a problem lots commits while buy people our starter. of really customers just like our buying marketing existing our there's to three there But all of lot the

over that's why say So long we JD because the haul do likes - it? we've haul to in got what of you call as the kind say, short

Kathryn Bueker

A humidifier and de-humidifier.

Brian Halligan

Do we over get a on HubSpot. humidifier of upgrading. or after But rate things there's that. a going de-humidifier going much there retention the retention of few we'll than and I new great on are long on on that have haul better solution lots this ASRPC going inside with lots and people customers think And point

Kathryn Bueker

way instinct a right. customers. meaningfully see think higher Mark a go. see that you're Yes right to But do journey multiproduct then customer long in we is retention We I rate has is for Brian for single-product

Mark Murphy

Okay.

XX% constant a very grew Kate, great. just said in think follow-up, Okay, nice quick to I currency, And you billings see.

You Did currency. adjust in prior just is had had I that as duration you done that the believe for you it also that quarter's currency? adjusted or for for

Kathryn Bueker

happening impact billings from of critical internally. quarter. so here there There's There into on little don't it of pull the about in that's the results billings. But a a stuff lot a play to this billings a push we are QX. and billing and you in point we as in That's bit different is things of bunch currency. obsess constant bit some actual seasonality that terms pride out, Again why

Brian Halligan

at Leading of currency where feel good bit that although - the really at Overall but like indicators headwind, are look we is I look year fine good ago. the about really at I of good. a feel million business - little like I about feel numbers. business a I very just

Mark Murphy

the that reference what of pipeline your dashboard, across to talking the Okay. feedback and is that whatever and tenor And just the you're forward sales Brian? comes else about tone and is the

Brian Halligan

are are look million kind to is them a numbers, headwind but making I'm rates today position a backward-looking, competitive if our Yes. ago a a reps forward-looking. looks I'm me Everything There's to but like of There's there look lot currency business by control we good, bullish I good. are ago sales compared still - good win versus ever some is our is like year of numbers get that's I still perfect, their was good. feeling app, year bullish yours. hard are at generally for little today Nothing good,

Chuck MacGlashing

Which of Mark. has captured course our guidance,

Mark Murphy

Thank you Chuck for clarifying. night. a All right, good have

Operator

Your next Samana from Jefferies. comes from Samad question

Samad Samana

Is make was looking Hi, taking for I think guys hiring. you rate. said thank think view I'm I XX% just that's slowdown I my just was a up how the wanted effect? year-over-year. I questions. to growth employee decent you headcount in the sure; of maybe a headcount back that curious pretty just you terms seasonal

they're so that the And are. investment Should curious then that are company's at well. we a headcount expect faster, heads higher I'm as even what follow-up have we companies growth? and growing other larger question As still I think the about some look I of just

Kathryn Bueker

Yes.

a very to for a hiring got hard was We're also compare by bit slower start us. headcount a in that seeing was a trends March the QX out I encouraged off January we're is holidays. continue coming April, of really which great. of relatively quarter. said, hiring That and really and So frankly of the low notable to QX we strong think, little attrition levels we see XXXX

Samad Samana

maybe rates just one for of items there And accordingly. one-time on or is any well. maybe Is Got or that there there as follow-up to customers? any maybe if adjust any change financial other we sure just churn remediation then outage the is of make or impact companies you. type to kind happens want Kate Just

Kathryn Bueker

the outage, probably including a including quantify to hard small on bunch different obviously of it's billings, things mean, I but Yeah. I they're impact the including churn, think impact a specific revenue. of

Brian Halligan

to that. I just So add might

Kathryn Bueker

Yeah.

Brian Halligan

we happiness at referral rates. customer Net metrics million is the Score, Promoter look of One customer

back climbed up you As it dipped. dipped look and up steadily to three at really a since and I've it outage. to where imagine it's I And really was looking might they at way all back it been it that the low week down

it's us. very But So think I we I for don't to game it's think and change for it. apologize going the unfortunate

Samad Samana

We definitely the appreciate the in amount of that's blog. information

it want one and to big-picture just helpful. ask was think I Brian question. I very maybe just

I think just extra we're about how going the impacting me. that's of you And overall adoption. out. is indulging again a and offering maybe suite customer the how year curious into for that for the Thanks that's that being I'm ramp question. feel it service

Brian Halligan

that. That's Sure We hear to with great. you. from doing okay is up Samad. Nice came operation

seen way I we think a better Historically, it in that we footprint better product. continually better of released then we've feeling better. year getting with good. get that going growing. from enjoy small we is a even people started products release that seeing product kind it it's so now; and and It's last the We're lot May adopt year. a service of to and our it of and It's

compared is the it a did things to business sales the think on the customer said the offering continues service lot really offering, of seeing before rate growth I service sales last or released of quarter we we faster to we're suite upfront, relative And did. from when day the to One the whole is grow which we the quarter that heartening. of offering by what than lots

Operator

Your comes Stan Stanley. Morgan next from from Zlotsky question

Stan Zlotsky

taking chime on how adoption. with metrics XX,XXX share the for just much as you you like Brian the as is versus far so that on you could on that guys if you of Thank mentioned Any adoption question. the us call? that mentioned maybe multi-product Perfect. my can going QX what I in

Kathryn Bueker

can I that that. take One

of past one I we think the customers, tracking more to of of said milestone you our what sort we some numbers have in We're above that than will milestone base HubSpot that we're mid-XX% and now. product. customer comfortably give we multi-product XX,XXX have is

Stan Zlotsky

in QX in that I subscriber? you. maybe metric. customer back dynamic if the customer And compared in saw from of mix quarters. takes it. headwind, go hits FX the that there to subscription some quarter-on-quarter it there I the dips some we revenue per understand kind significantly of Got years average last that fairly shift happens phenomenon - over a are really average could place kind X% wherein revenue just two some that but Thank and that dynamic other dipped all QX, or to QX similar Is per it In QX a

Kathryn Bueker

Yes.

on I to in price the there's announced a of we of guess the lot a attention products enterprise the equation. humidifier of we announced we side lot new I that think increase side QX, I'm - that going of announced a suite, call

strong Then for sales the quarter the QX particularly hubs service a side was equation. of and

you're sort on depending to around. of to that of so going in bounce see any selling composition And quarter continue the

Stan Zlotsky

you Got right. so it. All much. Thank

Operator

from Suri Bhavan next question comes Your William Blair. from

Unidentified Analyst

the actually than just a for on they impact HubSpot is purchasing make Arjun with if know This any funnel customers a the seeing more touch But customers little are multi-product land one more on on just customers Bhavan. you're staying product. before to bit how and I sales want y. you're cycle at I more. seeing decision. curious in long the

through that a landing consistent customers? And are single-product also fairly customer the is of multi-product is HubSpot of it there this channel? Or a - terms in customers proportion greater

Brian Halligan

I continue that theme. guess, humidifier/de-humidifier I'll

you If at the it overall hasn't changed all. cycle, at sales much really look

are buying a the If they're might particularly much. they're Enterprise point growth it Growth suite but moved longer, solution. little deals hasn't if it Suite, be the starter or of net, net Some really faster, buying the a

In similar of you I indirect at pretty terms it's know - of but looked channel the... believe and if don't I - pretty have processes direct carefully, and this similar this in haven't terms I

Kathryn Bueker

the I'm actually but to don't happy I know answer, follow-up.

Brian Halligan

Yes.

Unidentified Analyst

pretty know has international I the And then been phenomenal it's Okay, growth fair. XX%.

versus Just competitive from at else? abroad perspective seeing see if everything or competitor curious home - you're presence environment a the any difference if you what there's in

Brian Halligan

the Pretty it's HubSpot and in Salesforce to and easier a companies internationally It's go international. like others similar U.S. lot on going similar, dynamic

over we So XXX now. business countries in do

And so to Tanzania you in don't goes need competitors. and down companies an a office bunch have same to the our of

pretty unlike XX ago the XX similar. landscape So or competitive years maybe looks

Unidentified Analyst

Thanks taking for my questions. Okay.

Operator

comes Your Bank. from from next SunTrust question Terry Tillman

Eric.Lemus

for outcomes talked Hey friction around any process? friction you. for with on that on the the purchasing? past anything Have seen We guys. you've about in And doing reduce guys had in been more I one of you to that taking Eric.Lemus in the sort strategies the so is buying process. the This Terry. on buying for the by reducing Thanks just question.

Brian Halligan

create and in of holds traditional that. we touch. is generate lowering channels of for through Eric one we think the freemium content that of HubSpot. us around we just inside people that used is of the through big our links, idea I written The have things leads And and channel a and two large, lot this to search like blogs, HubSpot initiatives if through opportunities about

say at I that. good we're pretty And would

draw and opportunity my where all gone. would time improve. We're one at whiteboard pretty the freemium with left draw, way And pleased pretty freemium whiteboard That on then draw There's new. I inning to We of good we're of side is Atlassian is very the of favorite it's model. here I but there, have the initiative opportunities that is the this of I I that. say, what the thing first the kind Lots around room which company. in

where not all far, I of then draw kind we're enterprise opportunity salesforce Oracle there. the longer in and sales way don't to lots model. that's the that closer towards And on left between Atlassian's of to but so moving of of there, and of side in lots I'll there, heading, opportunities We're kind with the other whiteboard get the here the Salesforce, we're and that. we're all it, good know so of a company the a way with on cycle middle lots

Eric.Lemus

Thanks Brian. Great.

Operator

Jennifer from comes question next UBS. from Your Lowe

Jennifer Lowe

I Enterprise into through are tiers segments of thank that is And the another price at Great, touch the that sort much customers guess starting targeted? the that wanted is to of a I first bit how that that question who to upper win the of growing versus customer you you're the on traditionally success echelon seeing. there you you.

Kathryn Bueker

It's relatively similar.

XX-XX, we but I like it's number. think can an you get exact

Brian Halligan

Generally, us. in lot learned the Slack, when grow us, HubSpot like model going phase in other of model a good people. is in and like and five from with companies people really will the buy on start-up they'll that And we've a that what's for with get you're a is market AWS who

quite the got the and of if a a set of on settled bit The competing customized, XX, game we're platform the and platform company in a haven't everyone's that's we're there. us. going and yet, up next That's choice. We're on of XXX-person they well they're trained for certainly thing and playing. do are a thing completely we next got kind people But you've into already tougher XXX platform I compete

Jennifer Lowe

embrace that the that fragmented more a kind where think HubSpot of will a in as lot little question it push the start was replace out. a having or have in of and was I to bit past opportunity don't people And the tools customers going and Okay. go anything very have greenfield can

the have Now able sort replacement suite larger to from start customer as to like bit are more and a What's to landscape of the to that the have start see maybe versus you you're perspective? you greenfield? technology of target, of that you starting

Brian Halligan

picked up a XX-XX A good I company. the five-person a then And haven't losing other they're platform, - company their choice let's platform. set the half a with the completely chance got It's they them socket. and and of are kind picked company so a a half company It's have platform everyone, unhappy of having and bunch let's of or a it like think hasn't yet. points. question XXX-person so A say those, of the trained of a platform, pick half those take if XX-person XX-person just that company five-person

really say those are fit. of Let's good XX%

have Company them swag, have you up. and and a got it set XXX-person platform of more could the total imagine is more picked this

And there. left so certainly there's plenty

time, people with in but place grow well. extremely that for winning been customers. now, those while is a And they - in where deals get disruptors play XX. I existing well business and all they early and really their go working that and play has Where it's platform, think We're a compete replace we will the the will go in over

Jennifer Lowe

Okay. Great. Thank you.

Operator

next Materne of from And Kirk question comes Evercore. our

Peter Levine

Great. Thank for you. Kirk. This is in Peter Levine

been sticks $XXX cash that out is, of most equivalents. have my roughly it's I $XXX million answered. So cash, But, million one guess, questions of kind

capital? So just you any on how deploying comments, that plan

- prior of discussed believe kind don't calls hub. in I potential I the believe you fourth

today evaluations organic about what of Thank feel maybe you So - M&A kind how versus you. discuss development?

Brian Halligan

Sure.

a Airbnb do Let's get just Francisco talk on about M&A. a spent to rented a Francisco. of San talk have flexibility increases I do urgency in the to San doesn't March. for in deal, balance sheet. say some our cash deal increase done. but cash apartment our would - month that We the it the I about an I month

companies of done I the I a did there, that heads of and was like with And of out M&A. successfully learning and while met tour the sort CEOs have corporate

And got looks of deals. at so, little we've that I team learned a lot a who and people

fits something, grow to we enable a good lot our and about overall, with a really and so story. learned culture We want our in it to you'd But, with enable think, better, I not it. we're to If see fit, it prudent approaches, going it. to - team want buy buy we're our helps that's grow about you the story something better customers a have

dangerous. company can that nicely, in be that really a team without buy you a If fits

Tech much multiples stacks then at different that - relatively you stacks, more tech look makes high today. matter. integrate. a to it fully going to And it's evaluation, everything If difficult are

I going prudent going be stewards we're going so, And we're be and it. to think careful, to that we're good about of cash, would how be to is

Peter Levine

you. Thank Great.

Operator

next Michael Your from comes question Bank. Turrin from Deutsche

Michael Turrin

Great. Thanks.

Or towards you more that, good a or type the any more but to on ample And about? quickly, is how contributor to missed mix forward? of channel. recently I influence move does us motion, Thanks. a marker mile change Atlassian in you then wanted use longer term, there was much seen Apologies Just of the XX% during that we've that for an I follow if add to think the to up as it, this can also quarter? Is mix? way, going

Kathryn Bueker

with So the start I the the in can performance - quarter.

So from channel. the XX% our revenue of came

Brian Halligan

investment way and channel. of it so XX percent gets look similar, term, invest. been of while. level are the unit our we lot just at you HubSpot, what quite economics The if it's long then channel, And we've continuing for And make from we're similar invested of the investments a inside indirect to a and

our have we're to partners about in weeks talk we're and a investments making. couple going going in, not We're to some of

make easier make to - partner it happy and profitable partner a be So it become easier that grow. to

will know attention close what both, would it don't exactly them but to it investing Both I or investment. similar both. be say, we're work. long in pretty term, So, of I paying - just

as steady goes, so, she And as as I'm concerned. far

Michael Turrin

Got it. Thanks. helpful. That's

Operator

Your from Stephens. James next Rutherford from question comes

James Rutherford

Hey. afternoon. Good

question. Just one thanks for me. the taking for And

were you the was I'm year. and on all quarter Kate, revenue mentioned, curious comment to to from what in that of to product can retention similar high you've at that you rebuilt net you seeing Enterprise. that investment the marketing with now if You Are just first seems any saying that in last retention XXs benefits hit product seeing start you're those tier the in line yet? Enterprise what tier the retention

Kathryn Bueker

the starter beyond we relative product Yeah. I I that number, don't share top got tend enterprise we - but is the retention, think information to around do mean, instincts versus level the you've right.

James Rutherford

me. That's Thanks. Great. for it

Operator

Wong Securities. Ken from comes question next Guggenheim Your from

Ken Wong

taking guys. enterprise be of to valuable could last around for Great. believe XXXX that high-return specifically mentioned I Brian, question, Thanks my you lot a in projects quarter customers.

of you that your impact attach? some upward how enterprise potentially towards think migration of multiproduct might and customers and the that on update any wondering Just

Brian Halligan\

Yeah.

making made I them and job over on done think of investments and seen last we've and over time. year the good nice investments product of - we I a lots lots returns in we've think pretty

so the got the product I think kind not think front modern of a I consumer about to company you - I I'm its about to questions the want your the but sure The make way way exactly, end, and way about is think product grade. software

to it good. to the it want really want to uptime highly be you you be want be fast, usable, You

APIs enterprise That's a extent mouth existing more can want we off, and of customers invest. can we same be grade. better. hiring be we build the that to to the to for sort continue value and word a want of that scale as use. at to and back want to going you We're open you good product that want the you to And deliver uptime extent And our we make about end products the get the developers, we high; continue at grow, to we're can Again it. to our people lot time think think to we think the have people way you

Ken Wong

Got appreciate the it. I answer. Thanks.

Operator

from comes Markets. next RBC Your Ross question from Capital MacMillan

Ross MacMillan

Kate. maybe two, for Brian, one had I much. one for so Thanks

customer So was Brian net tier Was adds? outsized the top the anything like know there I lower specific really the you drove of for strong may customer performance net quarter. or that this funnel in did on the don't adds again funnel freemium that be

then And for Kate.

Just duration on FX. the that on from curious obviously much. calculated average impacts billings number I Thanks quarter? any the so just you there were mentioned to was all this

Kathryn Bueker

then I'll Brian you start Yeah. can add and Maybe in.

As bunch billings the billings talked impact terms, QX all of are that we other seasonality, impact think There in we was I yes things right. talked story of you're a billing really talked also but to it We relates impacts, the those billings. things main FX the so definitely about bit But driver. the little player main in about was about FX.

Brian Halligan

Nothing - didn't anything QX. Brian. do really say it's Ross special we would I in

CRM our a stuff motion, all that freemium continued innovate. free of Our to case is

faster the make of something. special steady goes. product to things. she continuing to those functionality, more as usable product are performance kinds more Our and is was and trying It focus There running or all deliver campaign no

Kathryn Bueker

seeing been also But quarters strong. couple growth trends multiproduct adds we Yeah. to over customer adoption. Brian trends starter, And there really we've The to ago. customer strong as talked of the balance and last the be with show about count hub in same continue have marketing a QX continues that the

Ross MacMillan

you great. Thank so Congrats. that's much. Yes,

Brian Halligan

you. Thank

Operator

our time, the of over Brian to Executive will And back now call was last this HubSpot. that turn At I Officer Halligan, question. Chief

Brian Halligan

call. Thanks everyone joining you to forward for the talking to again Look soon.

Operator

conference call. today's concludes This

may You disconnect. now

HubSpot (HUBS) 7 May 192019 Q1 Earnings call transcript