HubSpot (HUBS) 6 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Chuck MacGlashing	Head of Investor Relations
Brian Halligan	Chairman & Chief Executive Officer
Kate Bueker	Chief Financial Officer
Arjun Bhatia	William Blair
Chris Merwin	Goldman Sachs
Stan Zlotsky	Morgan Stanley
Ken Wong	Guggenheim Securities
Kirk Materne	Evercore
Brad Sills	Bank of America Merrill Lynch
James Rutherford	Stephens Inc.
Jennifer Lowe	UBS
Michael Turrin	Deutsche Bank
Terry Tillman	SunTrust
Samad Samana	Jefferies
Tom Roderick	Stifel
Pinjalim Bora	JPMorgan

Call transcript

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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 Q2 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 at to HubSpot. now of MacGlashing, call Relations Investor the will Chuck over Head I

You begin may your conference.

Chuck MacGlashing

Chairman; results we'll Thanks to operator. after Officer. Chief call Chief discussing the Today, on With was Halligan, our this HubSpot's welcome our the and the be Financial the second quarter market Executive release Good earnings and conference issued afternoon that Bueker, announced in and afternoon Kate me Brian press closed. call. Officer is

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

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

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

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

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

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

Brian Halligan

was Good to for HubSpot's growth the joining us customer results customers happy margins, our as XX,XXX. today Chuck. HubSpot another we quarter nearly quarter X% constant in folks. with with operating revenue Thanks non-GAAP afternoon for quarter. Thank QX bringing you growth, strong second XX% and total Really review results. our currency, earnings XXXX XX% in

how investments ahead Let's talk we've to about days about of most world we're some the the thinking position the to significant us these them. made make the of and of opportunities us

slew in we've rolled to tiers filled that history Over and our biggest out of new entire footprint gaps product the with our year, the of have in introduction last the suite. expansion products a the the HubSpot across

nearly As terrific cross-platform multiproduct we've We reached youngest customers, done quarter the great Service paying we've stuff. seen and Hub this has XX,XXX adoption. our X,XXX surpassed so, customers product

We've enables isn't into manage will HubSpot. our truly for own experience entire Expanding a customers them. customer orchestrate their our connect all of platform our enough. This and products customer's enable to end-to-end that functionality within to building been front-office applications us

partners, and customer, really XXX that with five with app our lightweight customers on third-party access Today, through many This built have many, integrate built, we HubSpot work. integrations a average more our more you're to by starting can HubSpot. than if applications Today than companies. more integrations you is we integrations our iPass XX partnerships different

API able will be do the our in will partners to be experience, so the we're coverage customers opening investments our developer significantly fire to fuel do overall platform more adding year This to by more. themselves increasing more and up able even and our

free expect free want users in the on. lots attractive provide developers it's We're is e-mail ads who and to time. will our offering. the HubSpot and CRM of of it our market attractive launched attainable This the we we users to started started the for The -- we foot. the it This and just a We the play. recently there's CRM to of That's value attract initiative unique on flywheel future to platform. forth over offering have, here so more we platform increase so more have is lot getting and more to more for new growth right get why the promise and product a we be in is the want customers users to companies truly of the integrate

mentioned, I their very model responsibility HubSpot. seriously. go-to-market today take As build that on We companies nearly XX,XXX

of year, invested this earlier engineering security, resources product performance, the infrastructure reliability, So, made work we and significantly number in and the usability. increase to decision

to standards new on dedicated set strength team, systems. infrastructure overseeing We and fully key our a the meet for testing focused team funded every of and product solely

I deliver think customer going win are to these that be in over and overall higher-quality us the to better double haul and our enable they'll the future. long investments a experience improve products

operating remarks. Before opening up follow started in margin I my I finish, with want X% I on the to

hair approached in more second, about our delivered talk operating the a we to hiring. will because a frankly made Kate leverage inspected little on our in we've own execution and say, a corrections I'd this. have is due would behind was I fallen than As hoped, we some how good or we news it

the opportunity That in We're rapidly motion pleased us back said, of in accelerate of this the We're to gears the suite, go-to-market. the large. the we've really making we're catching progress front aiming year. making good the hiring our and with quite on progress and I'm The platform is in been are already and up. half

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

Kate Bueker

Thanks, Brian.

results financial our for quarter. strong to the Let's guidance turn quarter third and our second

revenue year-over-year total an XX% with revenue XX% year-over-year subscription grew and XX% grew QX constant currency Second year-over-year. as-reported both up quarter year-over-year, XX% XX% grew ended reported. HubSpot was on services customers, QX while as which in basis. revenue XX,XXX

constant as-reported revenue revenue in XX% and up XX% QX Average revenue down QX. International growth was currency year-over-year. in of XX%, in on revenue and year-over-year three slightly total year-over-year from grew an QX, subscription Domestic X% $X,XXX, represented international up customer points per XX% revenue while was basis.

revenue up constant as of XX% million, June measures. was billings Deferred currency. non-GAAP and both my The was in the of as $XXX.X of comments remainder XX% million, a year-over-year increase to Calculated end $XXX.X refer will year-over-year. reported

quarter was gross at XX%, XX%, flat up year-over-year Subscription two was margin gross X%. QX nearly margin services points positive at year-over-year. in margin gross while Second was again

last operating was points X.X%, margin quarter Second up of from QX three year.

benefited While XX% half of we're we operating expansion the first the pleased leverage delivered, margin the end with quarter, lower-than-expected in we hiring that At year-over-year. employees, the year. the of up second our X,XXX had from

in QX, but and less we and margin will that changes half in operational investments reaccelerate result expansion in believe first also made have XXXX. We additional hiring we operating of delivered will than help QX the

diluted income $XX.X was share. including Net software quarter. in development or cost $X.XX revenue CapEx million was million second per capital and the or X.X% $XX.X the quarter in of

to CapEx our the as build-out heavily As second call, as facility half in expect and new weighted QX we expect revenue result last to a of year. a of We the still XXXX. in of X% to the be X% be CapEx on we noted QX of our Dublin to percentage

million marketable cash, investments our and of end June. Finally, securities at totaled $XXX the cash

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

is $X.XX. million XX.X million million. and $XX outstanding. fully Non-GAAP free This year. flow share assumes to be approximately million full to and million be profit diluted operating net between shares and be per expected now between $XX the income Non-GAAP $X.XX to expected for We $XX is expect $XX cash diluted

million point million in headwind to adjust $X X growth keep revenue your currency a mind to reported to forecast. in revenue a prior in point the negative impact models, following. and $X spot would you impact equates negative X to to as rates as This revenue our QX. growth growth At a relative to reported current increased X point have QX As to

XXXX holding September X As quarter will impact event INBOUND to points a we'll in have of third and reminder, anticipate it negative our operating be margins.

in In quarter addition, positive we the slightly of cash timing the would payments. INBOUND-related to flow third be expect free given

cash We free expect the quarter fourth quarter to be flow. a strong for

HubSpot. Analyst Day To close look on the to September you at second strong was our forward at INBOUND X. quarter another seeing quarter for We

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

Brian Halligan

Kate. Thanks,

is suite of Our for value ton a customers. product play delivering

a and investment product solid user in even serious momentum among integration is years better in flywheel us and infrastructure up ahead. setting experience with play And now gaining deliver platform base. to our the core customer the our an Our is scalable expanding partners

our of help of investors our want see to at mission just you I and us the organizations few around thanking to Okay. Day close all our weeks. Analyst customers, partners, better. the in our grow all a for hope millions to with globe helping I HubSpotters by

Operator, call for can we few a please open up questions? the

Operator

[Operator Instructions] Your first from William Bhavan Blair. Suri question comes from

Arjun Bhatia

questions. for on It's our for Bhavan. Hey, Arjun taking actually guys. Thanks Bhatia

more been activity be customer a as built on fully Enterprise that a subscriptions. including tier suite since able out. is couple was over landing you'd full touch customers? it's point Should that time? new this we the to just Or upgrade been be happens out since new the much So seeing still hoping quarters of enterprise of was this thinking tier an built I upsell you the you've very for

Brian Halligan

Good Brian. question. take this I'll It's one.

done really of next tier later in Service. quite Really, improvements we Marketing nice year kind HubSpot -- step function a potential being about did good Enterprise We make year more Enterprise some Enterprise Sales and really work in lots Last right. excited You're there. year. this and the products the at had

customers way me don't Enterprise a product of to far seeing is or I bit of activity and so the on amount I anything upgrade would of it. out a Pro if surprising know, We're decent amount say both. not. new. decent of either you add our Nothing a little have

Kate Bueker

continue both good No. probably the be, -- customer… sort It's into things new feeders of, Enterprise queue. XX-XX It's to

Arjun Bhatia

Okay.

Kate Bueker

On balance.

Arjun Bhatia

Thanks. bit. two kind helpful. point counterbalancing kind just of there's a It like then up -- And on seems of here Very forces little cycles. that sales Okay. on that on following

fastens or the one then increases on other the that tier the sale it's offering freemium presumably Enterprise and here end. cycles on So the side

kind Just overall impact of in -- sales both on seeing the zoom bit are little these -- with these with are now? if out cycles how of we you market you a what offerings

Brian Halligan

Yes.

nail on the hit -- on cycles coming got you improved shorter Starter of new head. We've our think on tier I customers in tier. that lots Starter

with slightly customers the buy product, cycles coming in if Enterprise particularly, the longer in Suite. And to going Enterprise they're some

head the over standard balancing your on So nail it the hasn't but question. long-haul, And that with higher. changed it's actually bit I a much think you hit the out the deviations

Arjun Bhatia

Got All questions. right. Thanks it. my for taking

Operator

from Merwin Your next Chris comes Sachs. the Goldman from of question line

Chris Merwin

ask very quarter, much. acceleration think, international. an last from I like a XX% up, to Thanks about that organic wanted It's which very quarter. strong I was basis in the on was

you all are quarter seeing could is So that vendors there what maybe front? markets? a Some bit demand curious those challenges inflected in in have the called the just you so other just you. on talk Thank actually about what

Kate Bueker

Yeah.

I So the on a why just clarification growth start don't with rates.

was international And was quarter quarter XX% flat basically it it's XX% currency. up as from constant That's Last up this -- reported as quarter. in in last So reported. XX%. up year-over-year

Brian Halligan

Yeah.

seen a think I the several lot opened far. I different -- I've and cranks offices. We the think the not some but translated and investment languages in international's five There's we're demand other well of on getting it's other about vendors of return from it. only into the been so of Dublin. think investments we a just Big over environment haven't a a the last a experience we've bit We've product along. I going nice bunch years. into softness result whole made heard really that

Chris Merwin

Okay, sneak great. in And if I just one more. could

the could Enterprise And which kind build far? more of your is as terms proving customers relates type segment? is taking you to SMB? of bit so to customers Or it the a more in in about, integrations product there? in more it of it Is CRM, be driving higher are helpful Just as talk it retention

Brian Halligan

a getting of about but companies feeling start-ups first are lot small those buying buy on it spreading And offering starting of lots CRM time it The with little would offering, when out into Yeah. it. are mid-size products full marketing our we Definitely. were decent buying as days. But as stronger. to really companies characterize are these -- tiny our I out a as goes well, it came good

Chris Merwin

That’s it. Okay.

Operator

the from next comes Stanley. of Zlotsky Your line question from Stan Morgan

Stan Zlotsky

questions. from How Good Really did a you for of thank retention details quarter? net my trend afternoon taking couple quarter. impressive revenue Hi just in and Maybe guys. me. the

Kate Bueker

Yeah.

retention QX seasonality. typically Revenue this step We from that. take a of normal just was QX I'll in up with bit a QX So to saw part year. We under of again that XXX%. -- see as

you quarter over do we've said to quarter, continue around As we one that. a But the long-term, numbers probably from know we They retention the comfortable retention in bit to little and around every think the next. are XXX%. levels bounced

Brian Halligan

as little like give earlier. the around for it has higher. It's that on deviation's bounce would while. I right question answer the hovering Yeah. sales kind XXX% same of Standard a a around --

comfortable Growth Suite pretty a where is. starter products, a get higher which we're then little it Enterprise You lower got but customers little and you've are

Stan Zlotsky

high just as Sales. you. the moving Head We of that are saw level Okay, and transition perfect. in then kind post after role about Thank And on Maybe question. gone he's of forward? fill on how of about the a opportunity maybe blog that Hunter guys going thinking a you us just intra-quarter

Brian Halligan

for happy -- lived for great new a years did And he's there. five, actually quite six Really over taken He Hunter us Sure. gig. Hunter. Toronto. in job

So to he was and quite him. a Boston grind was that for commuting

be is he's his in about CEO going And cool proud happy new his family. he's I and around live one Toronto gig be And and think that he's a CEO what's to gig. to for So and two him great. able it's I'm the

So super happy him. super, we're for

to for Chief pretty have a forever. Chief gone reporting I'm the HubSpot, to and search do job. Hunter's And Service for That's for an Marketing Officer really got firm and this search me, old hiring I'm Officer Interim I've people. enjoying it. well. Customer interview to Sales to don't so Customer executive Starting in job plan HubSpot. And

a think really I backfill him. to we'll person get good

we We to can I'm great. work. place have confident very a somebody great great brand. We're a find

got But be find I going to We've patient to great in the on team a say and will I'm try person. today. it place right

think so Hunter I've replacement CCO But Interim being to ability the far whatnot. good I So on in patient. and the got of so be

Stan Zlotsky

Thank perfect. much guys. Okay, you so

Operator

of Your next Guggenheim question Ken comes line Wong from from the Securities.

Ken Wong

up Thanks to question lot obviously, guys. My a about -- taking wanted That, Q-over-Q. for I ticked ask my ASRPC.

was was some related, great? flesh much wondering be of out color you SKU there can if any us mix, Just help will how this tax maybe of this

Kate Bueker

Yes.

flat So sort where it nice QX. to up we was that QX had quarter a see of ASRPC we're of to up to --

driver primary to I the think product for ASRPC us mix. be continues of

as Marketing, ASRPC. there's bigger bigger So of customers sort and a headwind Sales component, and to and starter become the Marketing

the customers. of the that. number The of same of opposite number side we on sort They're multiproduct the coin, a customers, -- a growing of Enterprise have tailwind growing of

And out so quarter. on where balance came this we is for the

But, around. were the to So will with continue again, QX. in move result it we pleased

Brian Halligan

has gone level bounced on things. three thing, deviation standard all the up, the same same story And kind it the same around of

Ken Wong

expect so should mentioned Can then about now you attract of and with and Got time from we it. a talk and path new CRM, similar of part a customers? far lot line monetization customers. to of e-mail this And be cohort you've particular what Yeah. seen expecting you

Brian Halligan

it's I to going go well. think really

rolling the for we free that. roll good our along a with year, Starter into year into And the clock SKU. This that's CRM CRM. business, you things done If with happy added ads e-mail back to free really the we're

Ken. that is There's powerful. two that like So offering I about things free

want The integrate the actively it are HubSpot our the and kind reinforcing and it, using of is so product, It's offering more on. forth it a and users platform so developers to first helps companies their really into going there. flywheel. more more of The to using our move really positive

I will tick-up. that So think

I, It's it business I second Dharmesh The starting want there. what is, my -- employees. a we early intern conference thing basically an X,XXX and and now really eventually of -- we've about that and room out is head like school, in got to them I what have catch HubSpot, HubSpot in about we

Dharmesh I an working companies get We actually and and to a intern room. out of want conference like

really So them. and them this is early grow way get to a easy with

early but far. it's So, so a sign positive

Ken Wong

for the guys. Thanks color, Great.

Operator

from comes Materne question Evercore. the of next Your line Kirk from

Kirk Materne

this and How serious Just continue impacted play. quarter? echo acquisition quarter. partners maybe just that prepared to put you customer relationships wondering Thanks partners. the kind a much, of add on of in could integration mentioned color of momentum remarks, the ago around around today congrats the some I’ll of feedback, your this Thanks. curious was of maybe very you expand a to sort your there. I'm it. little integration as Brian I you if with year broaden us you sort some general a maybe And give sense just context versus and just platform

Brian Halligan

great That's question, a Sure. Kirk. Thanks.

as I our think gone that And sign and over lots IT-type It's all guys well our agency, us. middle of the ecosystem. nice up so program. time. marketing CRM know part It's that's in you of implementers XX% of starting business. lots HubSpot really non-marketing of -- about a agency very of this we're We're our healthy more surround of sales ecosystem there, to and -- kind

and model. together really of our a couple craft possibly they go-to-market, compelling but any customers can applications all pull things go-to-market built ecosystem does all super to who it's and companies, neutral And that other use in promising. newer, HubSpot to also a application much XXX is these integrations well integrations product application their software to the third-party as into but application over built It to iPass The of got craft use other enables HubSpot. of they that think We've much, partner have a those as things? kind is lot our have what use rich companies

that really run And model go-to-market on that they'll HubSpot. whole

that's important. I So think very

more As a we really an the applications to company future, platform look into shift much from to company. HubSpot's going of

progress happy stuff. really the that with on really, So,

And I think going into of this. investment it'll increase. There's a lot

For an It's of but open API be quite more bit. example, footprint our inside will now, a that companies more our of little product been increasing that's can limited and product into of the a bit opened up into. third-party organization integrate

So that over to for opportunities happen innovation more time. it's are going just

excited a get I'm will over to HubSpot's This marketplace thing's going about. be next Our vector really growth interesting better in time. that really

Kirk Materne

Thanks, Super. Brian.

Operator

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

Brad Sills

question. great. activity and wanted comment in ask, in last to seen could going Thanks XXX your for my aggressively. of if more That the think year's inbound. features with Enterprise you're taking kind I Hey, market I range tier company, you that you've within guys, target X,XXX-employee made Enterprise investments on after you've to up next size

So market would that activity any of segment commentary the be please? on helpful in

Brian Halligan

matching next a we're the in XX requirements bunch of that is functionality in of think just there product really year, is Hey, I over job announced We lot business; X And started Brad, are way our segment there. Suite. It's XX Brian. XX that then don't actually I'll take X,XXX call corporate. more market. And we on new months. going be to stuff, it doing There a is I that the feel The business going in is the to to call products of Enterprise a It's Enterprise kind like of we working solid mid-market; better getting employees, to well. XXX it. we're we Last and internally. that small XXX new

So, about it feeling overall. good

Brad Sills

to of in That's marketplace App potentially with emphasis an the opportunity full-scale kind do a been you of see there? more or great. on program go a here making platform investments with Thanks. then you've bigger Store And an kind the

Brian Halligan

friction want not just the sights. we're make the be right over We long-haul, want hamper it on and time, a to I our there over don't to that's part in don't over or ecosystem. the who that. put in now line shift integration – Right we're trying up of now, wants think easy an to we really think business company will we for a thinking I for to third-party But decrease them build and going of will so of our But that, innovation become barriers time. now. I do it our that's to itself want think to to

Brad Sills

Great. Thanks, Brian.

Operator

comes question the James next Stephens of line Your Inc. from from Rutherford

James Rutherford

taking Hey, the thanks for questions. couple me. A for

on is the Growth The first Stack.

I just at I you think XX,XXX now quarters nearly of number Growth customers, that ago. XX,XXX was recall that mentioned you're if south two Stack and

bundling drivers So what you. an main just stack? of Thank is curious the that of the growth And are the this in inflection service? in

Kathryn Bueker

Yeah.

So at give been actually on snuck continued one the I of the see not out upfront we think the quarter up full maybe but where updates, milestone a customers decided buying see of customers. more next. you, say, we we reported multiproduct pleased HubSpot have have I It's to platform. more you the basically would because that we it been lots that new and would majority adopting customers to and are that's actually those evolution,

James Rutherford

Okay. I a year That's know there's to commented what's then on over launch of interest like about hubs It more product of phase something off in lines payments and to the You've announced. also of bases or long the tiers, level those term? in seems that of along product? I'm you and covered what's kind period being product of or last product commerce second But innovation you terms INBOUND coming just your have current the curious, products were all of kind able the hubs. you the improvements you'll itself, new a your helpful. And the big one make. next incremental continue Perhaps, the

Brian Halligan

I'll – big take all, well, was year. of product our really proud you're of out really filled Last We it. product say that year one. grid, right. I a would first just

being of while kind they're And think They're be None continually call. They improved. the now, always right can how will those we product. improved well. on ever we be about products of that's done being think I we're executed quite better.

have There's ways. of building three terms of In as opportunities, hubs that new think the I we're two we today. suite and of kind it

three deliver long-haul be the hubs call – to opportunities, There's head create there a you grow to us enable would them couple more – several for value our will imagine potential but next hubs. that can a two, more – opportunities mentioned customers, over our and potential better. there's years to in it You new

second But think and can So today. is the there monetizing two, can that we the then that. years, as Not on for you we it's to more continue thread a opportunity over us on platform opportunity more next grow this three pull to HubSpot monetize side. nice

much like going HubSpot, And much long-haul. so think bigger, units the I But product innings business more well. way, this it's over the early still a about we very we've and is got our business like the interesting feel

James Rutherford

on Thanks. Congrats the quarter.

Brian Halligan

Thank you.

Operator

Your comes from next from line question the Jennifer Lowe of UBS.

Jennifer Lowe

at Maybe thinking away of view you. if that trying have come Thank to more HubSpot product I lot of of think of a what have vision, around some to look customer. of sort on just to a Great. the the you companies – of way extend unified

is from a providers from talking and points market You big customer sources of But of one. pull-in that being platform concept to of lot one to those create with. to one data that the had view to unified this data go able multiple day a

equivalent got the platform? to what to platform. But maybe thinking of Sunshine You've that the that about their and with to with as enough integrations third-party Zendesk is sort the -- is suite be

do data can that there's that, think Or do profile you unified side? customer you more on

Brian Halligan

Yeah.

the at Zendesk lot a I and HubSpot, conclusion of same are and time. same the coming think people to

customer. a your absolutely you the for as experience -- want As delightful create end-to-end a customer, to what is really

good having these days, enough. product a isn't Just

Particularly different great different applications. it's that, You And your to whole other. talk experience create a you that have today. bunch great, And to databases, customers. doesn't a of to a each if stuff whole tricky actually quite for do bunch of have

we've potential and And is applications. from like more, is for will store people been So all where of a that hub that all And HubSpot data, will this a different predicting pick inside hub, will CDP, hub. we think you those obviously. while, be core a more hub. a a Salesforce

really data, report ways. to able be interesting they'd that on in And out

we So, about initiative. for that's heading over direction. platform way really value in a the time is prop, HubSpot. see emerging think that That to good our It's

Jennifer Lowe

Okay, great. Thank you.

Operator

Michael from next line Turrin of Bank. Your comes Deutsche the question from

Michael Turrin

afternoon. thanks. Great, Hey! Good

days, sizable financials customer profile the base have a consistent. these remarkably geos, yet remains products, You of extends which the across

anything you it if there know can add what about else, is you your business the I a here. helps that we around, But wondering there, that in product the more to of bit terms profile. Just talk observations can vision as talked sustain scale? continues is

Kathryn Bueker

Yeah.

think, words we I Brian X at balance during -- and has X probably times the high-end this have or of the times at low-end call. said the balance sort

profile, the I see same overarching customer think the products.

of don't if for there's overall that's innovating view. the the Because continuing within we're both and ends different to a spectrum you customer a I balance itself, manifest of sort base. have know,

Brian Halligan

understand didn't question. I the

Kathryn Bueker

Okay.

Brian Halligan

didn't I understand question. the

Kathryn Bueker

missed we Maybe your to want question. Do you rephrase?

Michael Turrin

customers consistent financial that think from look businesses perspective. with of No. this delivering of have a longer No. That's -- challenges we fair. I mean, look tales I see I think results

at might kind was kind obviously But sees around. more way of so business the that's commentary out looking we're than to I the what of different just be looking Brian the at. that And is observation curious

Brian Halligan

Okay.

our Sherman, only as Executive it's say, Officer As simple, executive leadership. very kidding. Chief -- No. I'm would JD my

time one over still half second I sit don't sit us that sustained think we for is, of just we're the mean, just well still. a we things here. -- I don't

we're early could That is we're head, much we today. -- in And vision the feel of do feel deliver doing very for our beyond like what in what for in we innings. We far customer. we terms have a our value

customers, end chipping And the it at delighting the on making rewarding at we're the of think I day, the it. it. in us. But the see result. And super, We're think, the when super, I we're progress super our customers. away in we're customers investors are focused focused And delighting on

good I very got think, management. also we've financial

together. Head of has Our act Relations his Investor

together. their has Our CFO act

think, decent we I at are planning. halfway

financial good here controls, in have we as think well. I

Michael Turrin

That's great.

Just one, the And terms … anything I if there can can. a of is you in quick else in add of hiring, terms commentary around

Brian Halligan

Yeah.

Michael Turrin

Or initiatives? of any Does there? can areas add focus anything be near-term there. aware present should of just obstacles, …key we in that else you terms

Brian Halligan

capacity number It's it. issue about was glad off recruiting our needed, hit really a execution core you the a We eye have asked I'm our to pure The we our ball just we had issue issue. recruiters didn't on that. took of of the kind on And goals. side.

we anyway, that. on So, execute didn't well

is much will couple we last has months. for would I very up. our weeks, the capacity the of say a eye We're ball, that, several a is solid. good long, think work. The very Recruiting And last on long still be news pretty is for attrition way been time. period to actually I good for of place

enjoy And they the And And they seem And to tell come. their friends. it. employees stay. so

So it's -- we're made last kind like it's few great I progress like feel I execute we like the well. weeks. feel overall, of -- But didn't for we

think I it'll a blip recruiting good the the over we're and path. haul. on be a long radar I think on

Michael Turrin

Thank Okay. Great. you.

Operator

next comes from question Terry line the Your from Tillman SunTrust. of

Terry Tillman

you Hey, okay? hear good me Can afternoon.

Brian Halligan

Yes.

Chuck MacGlashing

Sure can, Terry.

Terry Tillman

Thanks. Yes.

retention the more So I greater guess Brian customers integrations propensity relates all those of to products the terms seen integrations. or question. kind have statistics first of in five first from question to patterns as have That's you on average? any buy the it just platform that

Brian Halligan

the the more value a or Yes. lot of you you the product the Yes. the more have, vendors stickier committed out integrations get Like platform of you more are.

on will more we of of the tailwind ones, that I Starter And make terms will that that integrations think the quality retention. better and be some we get products headwind a so in offset as available

much So, so. yes very

about right exactly that. You're

Terry Tillman

up Hub. maybe quarter maybe into to Service Thank size had you an on frame comparing the terms average congrats. you're time how of Okay. and the brought when another then of seeing in it the customer, update you And Sales and the same Hub, just it's just

Brian Halligan

Service delighted up X,XXX to customers Feeling yeah. we're it. great Hub, I on about was

look I -- like. pointed versus Service things It's we the the growth of the you were is out Hub your Hub. a into the those the One initiative really in Service Sales And year into initiative quite well. at of what looked question and Hub Sales what revenues clapping year sort look Hub doing this rates is at I that

try we get the the better and that, products in make we something build and to it good we better said Having and better. way market is

and I So a business I that will on way be us. it's potentially improves every to And there's big a day. think it it thing, long for think nice -- go

Operator

the line Your comes Jefferies. from from Samad next of Samana question

Samad Samana

for Hi. maybe Good questions. afternoon, for you. and Kate thanks one taking

kind you the you follow-up plan little from And updated the XXXX? guidance, of bit that productivity a company shifting As start hiring it's of about productivity And a factor should about or to from think did think to in ramping XH how the XH? early. I how then question terms beyond of thought overall as we know in we just even there. the

Kate Bueker

Sure. Yeah.

actually comments, seen. piece biggest we of the volatile In back year. I lot was headwind think It's half I year, my incremental through this So guidance. full in the the that as than the FX. had our we've I an obviously from noted and worked there's for update into we for framework goes you lot know we changed as the a guidance think all. Overall, But haven't more that the FX thinking a at on quarter

first So but certainly the was impact what year. have a the from and you full we we've that factor, sort incorporated half also would hiring told in slow for any the of big

Samad Samana

as either moving if attached questions a Service starting package customer. not vein three multi-product into how get own Marketing are Stack of Growth from one, of Thanks. to how and Brian then I'm and customers, deployments? that if but paying Service On And with part many in is -- X,XXX when the Service those or just many Hub, you're that into are one standalone either Hub using they're on maybe then And customers Great. those seeing and that then curious if are of to are I could. usually curious versus I'm its Marketing Sales

Brian Halligan

It's is a good one Service Samad. all Most question those business of cross Sales Hub with upfront whose got three or being tacked or or Hub on customer the upfront a two a sell being Marketing Service with or of hubs. to purchased

Hub. new We coming on net see some are starting to customers Service in

proud new it's time, in I you'll see happens Sales and way it pull customers. and product progress well as over improves cross lot on sell product think more on the that a that Hub that to as a of magnet That that. more as And really we the of the

time. will So I over develop that think

Samad Samana

my congrats Thanks and questions Great. taking on the quarter. for

Brian Halligan

Thanks, Samad.

Operator

Needham MacDonald Your of from next question from Ryan the & line comes Company.

Unidentified Analyst

changing you sort the get XXst you closer Hi. can what me This of given also Brexit we there? deadline, Brexit? to the have the built constant dynamic in spending would remind And for on regarding the Ryan. to of of major this have trends? for you impact exposure know decisions or FX Alex percentile then in U.K. for is like has I As impacted the just purchasing

Brian Halligan

take I'll half. first the

Kate Bueker

Yes.

Brian Halligan

I hasn't anything demand seen But check Alex. lot, with a in yeah. once that environment whole yet, while haven't the a in changed team. We

Kate Bueker

try our of seen into in of revenue that mid we've we we And account guidance. period put over to take last is to high forward movement overall a currency GDP-denominated it percentage of obviously call time the and lot as single-digit revenue. the

Unidentified Analyst

Thank Great. you.

Operator

comes from line Roderick from of the next Your Tom Stifel. question

Tom Roderick

question. my Thanks guys. Hey for taking

the which like reaccelerated reported So, both levels. and subscription currency guess all that constant your is go I'd revenue on I do is way to here headlines on to what the levels the point back at than getting billings

of So, on both fantastic job those.

last I one-time Were get you of outage, helpful execution. better of would how very, to level positive about the you'd some what bit beneficiaries run guess of understand. depressors the out call or just natural one-time any anything detail business? clearly that of I coming was it this last out expected with a of sort challenges candid little you're be of think than was if the hoping alter highlight there's where the very sort about rate there quarter would you quarter to the quarter off some kind in open -- more and the And is to what

Kate Bueker

not would I say really.

performance are topline. think I we with QX on pleased the the

I from think really tax QX. the benefit work way continue that to we QX economics in frankly with of sort performance strong

there. So, nothing call really to out

Tom Roderick

then the the billings might that had of sort on the the sales the in Okay. efforts of hires follow half impact Anything with of some second the the comment hiring. that on year? growth new new just maybe about or and hiring timing I'll behind you of the And way we think

you be aware hiring capacity? just going the margins comment you and Or and perhaps that we're hey behind not productivity? the more about feel sales ramp maybe impact puts that much think on Do up on wanted way a just sales you that to be you on will is like really to comment where capacity or

Brian Halligan

Board I know probably question. second hiring. we're a huge. the think what think hair that's but hiring will I The slight sales. I will a They of have. behind impact But don't the this behind of headwind they sales would good not we are have in kind half wouldn't just on a across on be year, it

Tom Roderick

quick last real you. for Brian great. one Okay,

very we to things of heard content a your the traction overall the and on of one of some particular is having customers seems add-ons? talk sort in add-on. of the approach. management just It you Can some the partners seems it's catching impact One becoming that as system and from about be popular the to that stack

Brian Halligan

Sure. We from it last where Hub. decoupled we did something year that with the Marketing

content Marketing buy you to management the Hub system. time For had long the with a long,

system standalone CRM the Now, and Sales you connect use the free product. to can content it your or management

proud lot development gotten the year. So, that I'm over team. That better has last a that product's of well. done

grinding gets -- been the but product day better. cases every little that's Hail have of It's making one that just like bit one those pass, Mary -- a on of one it. where they that not That's product

you on asked about progress I So, that. surprised nice was that.

but You've going is been it doing well. homework, your

Tom Roderick

Great you guys. Thank Wonderful. job.

Operator

question James. Peterson next of Brian Raymond from comes from Your the line

Unidentified Analyst

on here Brian. Kevin my guys. call. Thanks taking for for Hi

quick me. Just from a one

previously of see And seeing forward? ads? you talked motion, customer maybe for the new going that potential touchless trend me across a looking as drive a more about to the how particularly You starter Can you that remind you're products. of self-serve your mix where

Brian Halligan

Like kind of on time. time touch to going And of starter side heavier the want our o a do tilt side, little lighter Yes. pretty what and that want Enterprise a corporate where or lighter well. make is It's the to we go-to-market we over bit touch. over on

where for offering starting started So, we comes we're going and freemium see really of the the over on our with get the we're is And well, that. to we to glad customers that. progress that's with track the number revenue model's us. returns definitely a quite on working gone and and I'm I percentage they long -- haul in nice pleased freemium think the that switched

Kate Bueker

product our through that free our starts in or we businesses a some just new coming that's and in XX% And quite number numbers held put is the net up well a and a Yes to about shared around that customer historically ultimately Kevin. of that of then paid that that range. XX% with one two-thirds product purchases over plus

Unidentified Analyst

Understood. Thanks.

Operator

from Murphy comes question next from of Mark line Your the JPMorgan.

Pinjalim Bora

you for our taking the the partner on is ecosystem. to on question. quarter. behalf Pinjalim Thanks Mark. I Hi. Congrats This of ask wanted about

of evangelize the how with is three selling services, marketing, flywheel have recent I obviously for You they HubSpot partners that pretty so that addition some a inbound separately? all thousands support important -- -- hubs, of can it these et guess and product And versus your the cetera and sales. then robust in added but agencies ecosystem of the you the have partners

Brian Halligan

Sure.

This and channel's It's months. next in partner right. XX% going love to great. about XX very still That of over get some going the us. well revenue partnership the is with performance You're there. It's for pleased going

our we're new enhancements of very to channel nice like. attractive that going will some to will it -- And more I make make that to think really partners existing attractive, think that agencies. And I types we'll

whole Services. seeing sort line. that with And engine flywheel agencies the are embraced doing tiered have Sales of them search what embraced are the job and really and or marketing unpack of agency that really And are and social particularly our their it, if of spreading website got started is of you we're ones nice thousands selling optimization many us and partners. growing product Most with the And out they're them. media underneath of existing development. We've them

numbers a of okay in at that's smaller Fortune we're At and sort nicely. on before Accenture are time, smaller And program I kind new not looking the in consultants, of Many and kind sticking XXX with walked land, with we up the the that marketing -- IT ones that. was just same channel of consultants, sales started to but implementers, right I room mid-market the attract ones in the that picked ones. of that's are

nice have this that partner pleased the So, with I'm I'm ecosystem. program. pleased we

as HubSpot with resilient the to -- really the ecosystem a adding because of the have I'm think we much lot community more pleased and it. this around. value customers giant more I to on progress a

Pinjalim Bora

in than I hiring, Okay. growth mean want for put count your plans Kate, we to ended of on just the give for see should on directionally can point Thanks the numbers. XXXX you a to you a where higher year? sales Kind you -- talk if XXXX? -- about don't that. final -- maybe head

Kate Bueker

year. but I heard do obviously the comment I a specifically not that back we ending aren't of in would headcount. And the we every we growth -- hiring. think question, that the share we sure part sales to last quarter of expect I'm going see reacceleration half But we that on in our headcount

Operator

now to remarks. CEO will our Chairman Halligan, turn HubSpot call And over time, question. At was last and that Brian this I closing the for of

Brian Halligan

Yes. INBOUND. We'll a see couple weeks all of at you in

it. forward Looking to

Operator

call. conference today's concludes This

You disconnect. may now

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