HUBS - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the HubSpot Q2 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions]. [Operator like MacGlashing, conference Head now speaker to hand Chuck today, of to would over the your I Investor Relations. you. Thank ahead. go Please

Charles MacGlashing

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

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

business During and within this make are statements the Section statements, Securities Exchange expected financial operational XXE to other of XXXX, the XXXX. performance related forward-looking forward-looking Section that and of of and guidance full Act fiscal including our year of quarter those of amended. and including historical XXA statements the expenditures, business call, future of management's expectations we'll for the of and outlook, than All meaning Securities Act operational considered amended, may third as our as be financial facts Exchange statements regarding XXXX, growth,

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

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

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

Brian Halligan

was pandemic ran. world’s in after I’m of Thank back Chuck. was were Collectively, progress last strong happy even Total to our and a revenue fortunate came onslaught with Marketing favor, the have QX Good including customers attribution our customers began folks. and an also economic Thanks, in is in product. we’ve nicely plays adoption Hub Marketers wind re-imagined growth lot our spring at afternoon, enterprise we’re base This The to marketing. grew of to Constant throughout partners a Nevertheless, our of Marketing to AI-powered our last with we might X%. months. the respond you and currency account-based early nice in in joining features, company QX, our power operating With and This the over that’s say so with revenue Enterprise start helped still storm advanced and in the surpassing QX weathering version to along some bit was the really have was a share while ton XX,XXX features us grow global new stage a version can updated been made HubSpot's some through our multi-product advanced Enterprise. backs Hub. of the I’m margin the that in Hub some up products the today. felt year. has raised important a the released disruptive in XX% completely mix. non-GAAP A/B QX in of XX% reporting, scale CMS XX,XXX on start for to testing making new large relaunch with a eased and helping tier. much introduction entirely continuing an into for over and far nicely, thankful now us We’ve resonating of grow and headwinds the CMS the us is this Today, us Add-on We we now the Enterprise customers. QX year-over-year quarter. this line, In while product Pro and shift to early of previous we by representing faced adding focused introduced tier execution a market. of downturn. year that begun the our product customer strong had to few

Hub led legacy tiers built products management have security not between site of monitoring, content benefit have on We really needs like and simple CMS midmarket nice that advanced our through of in with with testing addition content Companies maintenance found of gives solutions. Wildlife reacceleration system in Randstad comes sites ClassPass, in the new like limited World complex to CMS adaptive XX/X Fund Hub in features all the management design line. fit not organizations CMS these and Hub. that dynamic but systems. heavy the formulization strong and Web and overly content, The growth a market product our companies product the

of a has You lot for HubSpot see, a approach. enterprise We’ve the to enterprise traditional pretty traditional that chosen product instead married handcraft in-house. cobble skewed rough through solid acquisitions. a backend. to approach is frontend pretty our to product This SaaS has products to a together playbook led enterprise

real of experience a the see, married a customer across one in view new frontend. that You marketplace. HubSpot, consistent advantage a there’s enterprise We’ve power is and this and frontend underneath with us user consumer-like that only giving

and approach patient our to think starting off. our really is pay Apple with slight obsession I

businesses price on the been Suite call transition after tier. the and make the to email that offline send more working first in online we just limit. from To hit, by haven’t reduced of help Enterprise Growth we Starter Now, crisis our more increased XX% year

Additionally, starter. we released ad and editing campaigns our greater controls Facebook LinkedIn of Google, marketing across

many plus fully content record moved the our and Academy we’ve ramp on online a with increase this in a users as XXX% in starter a new and upgraded businesses growth in for We base result. resulted coupled seen first surge as this educational HubSpot of HubSpot in install All and engagement to time. free

environment In in saw to roadmap in go-to for midmarket. team gradual Academy fact, we’ve to now of the has accelerated become customer people we product dramatically teams, businesses Companies on encouraged similarly entire continued market growth second certified by the their But the HubSpot, transaction XXX% part and been have demand our changing and their strategies that this move some to great early the of deliver times. and stuff. short-term impact number strong see a digital year-over-year we getting customers ups platform entire been the incredibly amid fluid, every of our What to rapidly transformation watching the really have of sign still by in in saw on so embedded had the nearly the I’m industry the evidence we might the of quarter support online. experience QX in help the in transformation pandemic and closely. we’re things QX. increase way continuation quite performance a on nearly that I’m proud is of HubSpot very

in detail. take to Kate results to you operating through financial over things hand I’ll more our and QX Now,

Kathryn Bueker

Thanks, Brian.

our quarter second third our to the for and full XXXX. financial results quarter turn Let’s guidance year and

as June services QX reported in in revenue total International subscription in as XX% currency Calculated was declined represented and XX% XX% as on as revenue XX% grew was grew strength elevated result Average the total $XXX seen year-over-year. customer revenue sequentially growth revenue was while product X% XX% revenue an per over Deferred billings customers, of second and year-over-year. strong of our currency. constant a Starter Suite. year-over-year of was downgrades. reported. end the currency XX% company an $X,XXX entire as a of while demand up of set driven in revenue with revenue was and reported reported. but Domestic in XX% Growth of and constant increase particularly revenue XX% year-over-year grew low QX, additions quarter basis $XXX QX a nearly the both HubSpot with basis. our we've XX% combined quarter portfolio revenue and ended portfolio the which XX% customer X,XXX by Net Second subscription year-over-year as down international exceeded on the million, million, year-over-year levels year-over-year both X points up constant across up record, in year-over-year customer year-over-year. of XX,XXX end at

impact terms customers and As we proactive offering commissions. and customers customer we quarter, most help March These COVID-XX in our prepaying to some the of friendly alleviate our for and late downgrade included payment last alternatives impacted partner flexible highlighted partners. to some measures took

well due programs. impact as to rates customer trend result, weaker a As our expected economic as lower to QX the we environment from friendly in retention the

in XX% rates pressure the we in While coming in first It's the customers a cohorts revenue QX, we these rate come retention but have more we pricing. the cautiously see maintained of did to of adapt we’ve want early, from still of majority still decline encouraging net with these seen near-term comments downgrades. from continuing the customer times. optimistic place we’re uncertain, remainder I that my and short-term discounts non-GAAP that but normal refer put and moving will partners our in back stress the measures. plays economic to difficult to is to helped customers fact performance quite of our on retention The off environment

year-over-year. flat gross margin was XX%, XX% Second negative quarter margin was services margin Subscription gross gross was while X%.

strong Second reduced same related to home. result expectations last of and quarter slightly margins from year. exceeded as work well travel as shift revenue period other to quarter as Operating X%, the margin discretionary our was performance our expenses operating the to compared up a in

to disciplined X,XXX to XXXX, we in our we second up approach offset quarter, year-over-year. At had of While we a these of work largely maintain expense investment expect remainder through initiative plan R&D savings. investment and the planned XX% to the end return the to employees, continued

income to costs, in total headcount growth million $XX the development X% or million the expect quarters we second second was CapEx, quarter as moderate to start capitalized or $XX software $X.XX the year of compare Net from half the was per including quarter. our revenue against of XXXX. in strong share. hiring in diluted We

better CapEx revenue second quarter cash continue was about driven inflows. the strong and expected in Free flow performance business customer expect to of cash as We in a XXXX. to X% percentage by than $XXX,XXX be

expectations and cash ended our increasing bond repurchase beginning free HubSpot roughly the concurrent year million we marketable convertible of with are bond $X.X issuance to XXXX. due the we XX% of successfully with billion XXXX of our securities. result, $XXX the a flow million. quarter in for of approximately a June, As existing $XX At executed full convertible cash

dive to into financial the provide us invest XXXX. future, will look As sheet full balance long for the strong that let's for third guidance we with with term. And our of to the we year remain the that, confident and quarter flexibility

the $XXX and diluted $XXX Non-GAAP expected third $X.X outstanding. now diluted income to per to million million now total XX% operating million. net point of now revenue in total range fully Non-GAAP XX.X from a year be share million diluted outstanding. This $X.X midpoint. September. expected This year-over-year. in of XX% range and range is for $X.XX. be year-over-year is fully the share to $X.XX. be Non-GAAP income of the per shares up million between expected operating million our For $XX to $X.XX to the shares be XX.X is million. the in INBOUND event X income diluted between million, million This to of net quarter, to a $X.XX to be expected is is And full and to million, $XX range expected revenue is includes be operating XXXX, in assumes to $XXX Non-GAAP at headwind between margins income up assumes $XXX expected

environment, reflects the guidance of by future with that a heightened in comfortable business the given economic we and also today view pandemic. are uncertainty factors caused Our the current

mind your you models, in following. As keep adjust the

our reported FX neutral income reported current affecting spot related a a better with we reduction year to and the result currency the a net of U.S. expect SEC of to the meaningful for believe in elected for non-GAAP QX, revenue the to dollar, aligns QX tax we guidance. rates, seen headwinds we point revenue to full X year. we have weakening a XXXX. which now tailwind the As remainder foreign In recent FX impact begin of At the

impact the EPS updated the for non-GAAP Our of includes year and QX full guidance XXXX change. this of

of information. non-GAAP press QX, income our change reported does flow we closing impact the flow. press the in that, impact net excluded tables release financials. net cash this GAAP In cash included income not call his release the our to prior period convertible accounting free reconciliation Brian to with Please and historical refer to for Importantly, free table our our more earnings. for from the impact historical our debt non-GAAP to included over in refer non-GAAP for and hand Please the I'll And remarks. repurchase

Brian Halligan

thus been of far of one XXXX has story The adversity.

the world a When health will As crisis crisis and the of faced public and society, we economic conscience. settles, the dust changed. a be crisis

into partners help with our to ourselves lean and and trying future the We’re us. pull customers

On the in conscience our we’ve of HubSpot inclusion diversity and to that at working side been belonging culture equation, representation. advance

on hope will story to that a long adversity racial go, I of you me for at this Day see become important in look your one one to many you strategic and ways become on again resilience there. our our Analyst XX one, the of My speak started to is resilience of way against ways more seeing so time. injustice year INBOUND I’ll evolve priorities. of relies it’s re-imagined in I you become first-ever out September We as It’s for this as so virtual have a what personally part the diversity. than top Analyst can. also year Day XX. that forward learn, and We of all Thank

it open some let’s operator, up Okay, questions. to

Operator

Instructions]. [Operator

Stan from Stanley. Zlotsky question Your comes first from Morgan

Stan Zlotsky

the guys. Perfect. in guys that and overall of quarter. contributions a customer much, me Thank strong thing that quarter growth hope congratulations the the you the is starter you so stood the Maybe staying quarter. out the and package well to the had in reported very was really on And to everybody strength

customers this starter across then are a in have to look you As follow slice quick there, that that and and maybe current the similarities strength environment? try package up. dice adopting within I the any And

Brian Halligan

would closely. the and adoption. that presently Suite question That’s were Thanks you’re I we’re Kate talking We’ve I actually say, Stan. something relatively about surprised for that. with hope just Hi, well. and watching been, Starter

to call’s refresh XX%, XX a marketing, months. worked. it new it’s service sales everyone started suite X,XXX starter it the There’s lots month memory the that of customers’ we now price suite [ph], on in number. when And right that in really COVID can you Just get the so by altogether lowered we to new did customers starter with of and net been and the and nice $XX first see that adoption in product

happy really super cohorts it and carefully. with those we’re we’re watching So

rate looking at cohorts who’s quality that good. like similar so good. companies They pretty Starter look cohorts, so upgrade retention of the look and We’re And What good. far before. The the those the what the and it? Suite sized buying is size on those rates company They retention makeup pretty buying are what’s of is were calculation rate? the

gross if keep to So lever a use we’re going now we and of going $XX first as that that year see for forward. can

We’re happy it. pretty with

Stan Zlotsky

qualitative very geographies, international the U.S. slowed to geographic fair better? kind me. all to of international of far as you. the That’s and the where geographies? as opportunity the be downgrades with you XX%, the across to currency. various look at Perfect. is The And in that say commentary seems U.S. it one be well more. you’re from maybe strong Any it seems as impacted constant to just hanging When then various growth; in seeing strength most Thank XX% as pockets of

Brian Halligan

going in have return investments, well starting we’ve guess high a get at In Europe, I Dublin really business like five and some a big investments think to level, last that’s in big years the on offices. we international office the large is I made those because now. over a investment Okay. and we’re

got and in have in we Sydney Paris, Berlin. even Singapore, America in Japan, We’ve one We offices Latin in now. have

in big those in we’ve So different but just experience the different whole heavily are investments invested languages. languages not products into translating our customer

We’re that. getting on return nice

I so just think economics is another international is good. well doing reason really unit are

a so total of huge America to I customers, and word North value The market faster America, we’re I’ve happy in be in bullish growing market. lifetime of sales We’re relative to customer great organization cost tons of is It’s that product terms about fast to [indiscernible], tons a little mature. it. good hiring acquire guess a North and continued got We’ve there. mouth.

we’re about for North think come in I up good growth years steady I it. strong here America for to well set feel several and

Kathryn Bueker

Stan, would I just to comments. add Brian’s

developed in outsized of an markets. If you U.S. markets. emerging the QX more more – really sort more was we you mature, decelerated And a markets look overall of to on from saw is deceleration what across you revenue some the those growth a saw if bit very at QX. of impact the similar Where level international, and look of

Stan Zlotsky

Thank you so it. much. Got

Operator

Your next from Christopher Sachs. from Merwin Goldman question comes

Christopher Merwin

Thanks I ask wanted questions. very about much for CMS taking to my Hub.

you prepared think seeing you in brand there color to particular early I base? remarks. success there, with that existing you Just you’re Thank seeing some where But is Are selling curious other could that some helping to the in about talked the cross that it you. success about any customers? share onboard new product.

Brian Halligan

product. server of open doing called and Thank for But it’s of on that’s company that’s that market private there’s you’ve most – industry got both. It’s funny in bottom down little Wix Squarespace really it’s very I’m The And about buying of that a guess players new there really excited the source, SaaS is a their technology. the the a strong the like well like client you industry, SaaS I funny down industry. question. of kind way. hub.

those great advantage together from and equals use like with true scratch we’ve big think you’re CMS great user scratch build that interface two combine them the from customers and just products to plus product. in able the and CRM built a a and of when because for SaaS those this XX benefits we it’s market a X our to opportunity we there’s to create so a SaaS same built you experience all And product We have your feel X we’ve together.

So I feel about really good it.

of done getting it have launched it despite think well launching April. going help But having it, really of We through like it’s on some terrible in timing in kind getting it that’s a new and couldn’t we’re big We’re I and accounts worse upsell through We it. be us, lots -- time. to a really, for launched

Christopher Merwin

a one growth. quick billings; just great. I churn slower very called number bit maybe the you Okay, Kate quarter. think out to And you there, spoke little follow than revenue up had which on And a some solid last

So can us And the just just given of line I your in or imagine quarter? a sense give there of in the magnitude in it what you you than was even better terms saw? outperformance expectations

Kathryn Bueker

Yes, sure thing.

decrease side. in probably bit thought of we better new on came performance had business of things billings QX. one hoped is turbulence. or solid on Most that a of we that the QX So was of frankly And expected driven term performance last regard what But a we about than economic by bit period we talked that in quarter little during the billing would also the we that saw better that in just sort for. see little a

to We continue our will bit constant and time see duration base over that revenue billings shy to some growth at of currency. growth in customer compression expect to a little be cause

Christopher Merwin

Perfect. Thanks so much.

Operator

from William Bhatia question from next Blair. Your Arjun comes

Arjun Bhatia

commissions. some channel of the the Brian, question. kind you’ve and that of talked with worked prepay my partner about agencies taking for Thanks guys. Hi, the you to

the and – going? if holding XX partners is strength had after worked has of days partner any keep their Just been business channel you’ve to seen change and over in floating the them past them how those what curious kind up keep much of you how with the [ph] contribution

Brian Halligan

Sure.

kind went commissions of hitting on really our the When that call. well. to one started six first partners to memory think to everyone’s Just of things was and things several of refresh mid-March, advance we ran in months I over

worked were business. and stabilize for able kind to I of think their us They that worked them. for

very numbers quite through prevented and weathering are red it look through I’m big in feeling that our think about I cases, looked good seem storm solid well. I They to even weathering. I pretty think lot don’t I If And QX flags. be the of layoffs July, generally so call. stable. and the at see a they partners any

right and I good others, think tailwinds market some now. some lot are more better doing pretty but are feeling headwinds some about than feeling generally a that channel

Arjun Bhatia

you. Perfect. And Thank --

Charles MacGlashing

perspective, It bit a from little ticked quarter. revenue. was XX%, XX% just Arjun, revenue it in percentage of a of up the

Arjun Bhatia

up Perfect. Thanks, quick Kate, Chuck. for a follow you.

of kind beat above You year more back about revenue seeing in will talk meaningfully the the quarter. two confidence and quarters of out? just in gives little how did raise Can what a your full half the the you’re bit you pretty you beyond next in maybe that year current play the guidance

Kathryn Bueker

approached always start same guidance I Yes. just that guidance. we’ve the with that foundational guess would I saying by sort approached framework we of

the Our we uncertainty it sort quarter, we year of scenarios quite of the half to particularly predictable, model frankly of short upside of And to last a did confident that set more the and try there numbers to we a like understand at about term. feel of as downside sort is putting we ran outcomes. is relates Much recognized broader of forward-looking forward. really sort we’re bit to second and and look

Arjun Bhatia

quarter. very you and on the Thank congrats helpful. much That’s Great.

Operator

from comes question Company. Needham from & MacDonald next Your Ryan

Ryan MacDonald

for taking Hi. my questions. Thanks

didn’t First of sort of found have or pockets that of the pandemic impact see verticals you up, Brian, all? saw – the increased pre-COVID gone as demand were we’ve through that you here, where demand you maybe at kind surprised you sort of

Brian Halligan

BXB. like restaurants of have and for Those in small The got pretty are is a some kind there’s us. couple of of We travel. some thing a and didn’t a concentration have really. and industries, concentration We’ve just that just Not of brutal decimated lot hospitality industries. about been that’s those heavy in interesting it’s on industries

of The SMB call software. is that us other side people

comes like than from employees. We’re our two-thirds of XX more S, revenue M than that companies over more are

office. is to bit little for back office NetSuite front like a and we’re the HubSpot is So the

demand a impacted. felt as a in QX, better soft a about feel July. like things June We in strong but definitely marshmallow So headwind lot and was were we

Ryan MacDonald

quick Excellent. And then just up. a follow

you quarter bit a maybe or with that single-product. deterioration you mentioned you’re some second that customers talk seeing all? Thank how and were Can there improvements at about just You quarter you. seeing there than trended if last during any multi-product better retention

Kathryn Bueker

to continue and Yes, that retain to than in changed. we better not customers tend see the single-product That sure. Multi-product customers quarter. has do

Operator

And your next question from James. comes Raymond Peterson from Brian

Brian Peterson

hope Hi, everyone’s and on good everyone. congrats a I well quarter.

look Brian, think pace you the obviously about as the out we So, over at kind that of added we hubs the to innovation back time, about and year. look product think this I’m Mainsail, we of had should platform CMS Hub come how cadence like? being curious should what

Brian Halligan

to here. or four we’re it return with get starting off year. Enterprise start to Hub that patient well just three in guess kind steps a hubs, step back HubSpot certainly for get were so super on on on I real fast paying of to is year we January done and it. bunch a product see that ago of February, or did not us two of you take step back of we this if think HubSpot I taking talked we’re Well, what’s when we about I that. a And We’ve a And can call, could tell now. could a and and us about a that’s killer We and sort off announced kind the you go we about going just Marketing with inside really were that.

approach building around get us, our different we and for a our thing to other patience company product. The

well these software there of attached them. enterprise the to be like across in solutions I it And the will lots really is than think of to up They lot going look CRM. that the are compete I private We enterprise colors. haul companies changed we scratch they approach I internally giant kind one off. of think companies. set industry, all-in-one long to we building of that them our you the in-house. CRM The these way from with And cobble will that. a midmarket their new there’s with over in very quite more equity true software together pay They’re sales If like M&A. and of call companies to handcrafted primary the forces value in CRM describe days it companies in way way describe think it’s has We us

different designers, And underneath product got you’ve you’ve you’ve it. sort increasingly got reporting, Marketing of easy then Hub shared these applications you’ve you’ve themselves CMS punch got to kind are HubSpot, the of managers the frontend. they’re our with these underneath real developers our hubs our So data, got deliver and services creating on a that messaging, – automation, got they of Hub Enterprise, beautiful powerful year really use Enterprise, this And in top it. and

build of office more that here. really great road. companies build in front for we hubs our So experiences good products down that about edges will There the feel be can to feeling product. help the come the We don’t like vision reached we’ve

Brian Peterson

color, double Is is June sounds a of a a from color logo new can or And that like Understood. as things bit. customer a That’s follow on that. Thanks, perspective guys. just from July. well? in perspective add maybe wanted that kind Brian. It click on to as great also linearity better retention you I up, got Any and

Brian Halligan

I of how like give of vision Yes. sort was And office months credit stuff for is of up. And to is I’ve approach. over years last it COVID? is from back. now. through sped the much really to front kind going marketing, been we – outside It’s the great How bounce the got much of we’ve asking like sales to inside to the a and a we time rethink build digital this espousing July, the marshmallow of myself going digitalized this tale May, It’s June transformation track flywheel, your six And incredible. things on? March on cities. HubSpot market for three for happen what’s three long thought One is, then over been back offline a marketing January little bit. – in soft. a online felt And February, question six the need wow, move to of build and over to happened the last to really sales we use to and

year the a ran them vision well I partners well. we customers but we back And really plays conceived steps two time. last had there well ran two storm, getting return the that. the I think we we’re forward executed. help and the our talked offerings are to talked took We our CMS Promoter Enterprise high. That matches and about of customers. this Scores records our of Scores the four So could sort on plays whole of sky Net play. that our The the broke new worked product year to so launch year and think and with bunch Net We worked. take from Hub starter executed about, this We in a then steps were Marketing weather I team our we product was just Hub and series They and Promoter really well,

things So companies terrible – happen future. can’t This what our so so But has for tragedy to know June we better or and course. so many future, of economy the and a and don’t don’t [indiscernible] we will to yes, in it’s happen demand did that. curve the I been get I will many what in the July in know with think been people

Brian Peterson

Good Thanks, Brian. to hear.

Operator

Samana next from comes Your Samad Jefferies. question from

Samad Samana

whether Brian, on or particular? any of strong focused curious in wanted hubs of I because BXB I taking And if whether the for echo more in historically or well renewed really performance. in Thanks the online I has done been I’ll SMBs to afternoon. think there’s Good that there’s this as pivot offline I’m BXC follow kind questions. maybe just in ask think up. my smaller the Hi. getting, that and from this differences there to if larger type one cohort about online SMB you’re you to offline have there’s then in congrats

Brian Halligan

margin ginormous – of between X,XXX, got, Not Samad, There’s number really. there. say. let’s just X We’ve and huge employees companies there’s a a a

very, small HubSpot. market a have on very of that We percentage

distracted getting before that new sticking market out our so knitting we’re totally bit props. of killer we’re little with and focused And to solution for a a to value target build kind

think So think got really huge We we’ve strong. market. heads is our our prop value there’s down. a We

competition. We’re differentiated really with relative

we’ve So down Samad. our cracking got [ph], away heads

Samad Samana

maybe And of has trends kind the been then you. asked, a slightly different but Got question I in know way.

reopening downgrades in about in U.S. If see countries the terms that’s as again you’ve if a earlier the change whether seen are are we’re that cycle? those further in have in see trying like might that of deal for new along maybe some there upgrading leading activity, the were what indicator we you you countries think reopening see countries a or to reopen, to just path, there

Brian Halligan

were we the of that tandem haven’t It’s like a bit good kind a don’t opened more honestly. across little slowed EMEA, bigger started they all markets of presence little in emerging the Australia markets. developed markets, But emerging markets Like huge – the a and up into we’re we a – a and pretty moved markets like getting that. really a those Latin that they places in better rushed on are question. Where earlier little have And faster. quite focused America, those ones anyway, in

the say, The I relative quarter. So optimistic cautiously of and United So would will you to we in impacted. don’t know in feeling thing what we we is folks the the this going will path been future. it’s is to thing happen had super call last the with Europe to haven’t what hard predict do? happen what last States, But

Samad Samana

we’re see Well, to hear to that’s well. happy great as certainly and that

I’ll the out and again hop queue. thanks of So

Operator

from comes Alex Zukin RBC. question next Your from

Dylan Reider

operational question clearly This your quarter. guess Brian, Reider guys. just disruptive very of great time Dylan for and on for Hi, on for that’s and clearly some a as a had headwinds and Thanks. of coming and COVID, tailwinds to these you’ve and in and been And Starter you cases steps promotions take work start, my I with that this all taken other to with and offering congrats cases. is from in conversations reducing taking takeaways you’ve Thanks in is with proactive you’re that Alex. causing customers to strategy an some these churn working ensure from HubSpot, you’ve on you been just they’re different getting value think with your just you’ve about the you customers in effective anything them of customers? that or maybe conversations the that Suite. perspective I with learnings throughout speak had might from them, could guess having out new that

Brian Halligan

and way been moving sort for stuff a we’ve time. and really of it’s no we’ve some it’s matches people to years want no, better thing. think buy that just and I books, It’s engage the forward. go-to market. inbound, huge in the I shop XX way the of actually platform built a for future stages just think it in It espousing to from blog and But the in articles manages that

think seemed this number executed and and plays been But good. started we that they’ve well big no, we haven’t pivot. that I to done pretty pretty I when we’re all of think land stuff ran a a

change you two well, talked going this need stuff. that’s match bad. we product we suited into like, a this about roadmap were to three or like, is we what, this? pretty So in be more weeks built know it to What to about this for And we do actually our product

let’s be down So head keep and our cracking.

Operator

your next Citi. Walter question And Pritchard from from comes

Walter Pritchard

past especially question A question as time thinking upselling about line. of the product adds in expanding those Thanks. added end to had another the customers goes And the customer on product? relative the you’ve you’re on, how the the on lower given dynamics and Hi. then

Brian Halligan

Yes.

of well. size customers these lot lot Starter That’s those Suite watching more. And we a Walter, more really cohorts. of in, done So have we’re coming a the

watching the we’re We’re and watching cancellations. upgrades the

cohorts a attract pop product as that is kind previous didn’t bunch about us look same aren’t The pretty on good. by that upgrades the of cancellations so but and all size grow. cohort. good which to to carefully from The as previous as of feels real The that good in. and quite solid mom they’re still cohorts Starter And we’re we line, watching very watching

good than now little differently for a So least stick demand bit the early curve we going looked and to we’re to that a a change there really – made it. our change signs it with are we to thought. at made We

Walter Pritchard

the point M&A, And on any this like accelerate to you then of thinking via that to do in change how as that lot additions make to the feel a have you ability confidence product or you’re doesn’t any enough that more do roadmap at your you plate lines to have your about sense?

Brian Halligan

single We look reason at in-house. consumer-like deals we’re and the integrated backend reasons. in for systems frontend the into is few we’re kind love It part we frontend, this and and customer on thing just went a the with picky a is One, built different of gorgeous marketplace of deal [indiscernible] bunch on of picky funky together.

way Our is going Net up. word Score mouth Promoter of

a product couple organization now. was It back. really took [indiscernible] steps Our really right of

feel new scale like build ability customers love. we we at So that have great to the products

And there frontend. We’ll on -- evaluations that be so higher that now advantage high confidence is competitive with core our it’s be extent. of been. sensitive than on to messes a sensitive anything super We’ll even certain our

So they’re done unlikely be deals just them, to our some But very going very short-term break we good going they’re growth. core we’re M&A. do prop for be thoughtfully when we’re and thoughtfully be going and about to be to And integrated. to to value careful they’re going

Walter Pritchard

Brian. Great. Thanks,

Operator

from [ph]. comes question next Tillman from SunTrust Your Securities Terry

Terry Tillman

one congrats Brian, testing for my is well. from always learning. HubSpot and about Thanks question the just thing me as I’ve taking liked and

lot you getting? not anymore. to with and curious is, about it rebuilt. plays. lot of Web like what I’m feedback some where going seems You running this, learnings is the a out, early guys you’re you going test learn like with I’m Because and of sites things the talk a and Clunky Web’s CMS is getting work you Hub iterate What

to actually folks go the HubSpot thinking or way really into business a the the as base? new And spear, so it’s am That’s this tip for wrong first to of I CMS opportunity see way with and the of about you after the to do install engage Hub about question. kind more to going be the wedge sticky

Brian Halligan

our right. time, and customers fruit the I likely lots will sales install our in front will of think lowest by think bring that’s base of organization I you’re part towards organization. be that door the – and same But that and with and hanging we fullness think the gravitate way, lots over the I within a

idea Web you the of want – think don’t a I Web a site site.

to CMS to has to new in customer it first-class should be like so that of should light treat and want and build CMS be and to experience light CRM a you customer need type that a that the it should be it bulb the citizen, and married to be modern your experience You [indiscernible]. pull off, need and you

CMS the it about could The I business product good delivered think organization big a really feel I So be us. and product. for

Terry Tillman

marketing Enterprise follow just business I’m I testing, replacing Hub really you’ve you looking got legacy got Got the of more terms to you. at related Marketing the – in to with ABM. product, curious revenue any it. durability attribution platforms? And those in automation the resonating Marketing about of Thank new features of either or helping guess your than others of up with business, what kind the A/B Hub

Brian Halligan

All really, inside solid lots of weren’t done. They our say marketing resonating were the beautifully a lot huge very built primary of getting and product’s user there on has were we’re And been colors. testing us. executed we’re customers of for very that and They them for but and acquisition. automation are They’re A/B base wouldn’t to attribution reporting, little bolted getting account-based And it’s been thoughtfully been marketing has more new huge us. a with – rip replace, well. legacy vendors. just really I an

The about other thing just Hub, marketing I Marketing it’s HubSpot’s not would say automation.

lead, the the does when off elegant way. of you segment Hub think people It does lead, you Marketing almost that optimization. a funnel really is lead. do you got of automation where middle the you’ve that all and that I marketing engine automation old in school describe score HubSpot’s the course lead, really a search stuff

it. through advertising your do can You

your it. do media social can through You

it marry site. Web with can You your

You’ve variety garden got much more than [indiscernible] platform. landing much, pages your and marketing It’s automation your blog.

a lot of that There’s of nice proud really value that marketing coming spent on delivered. it. about lot innovation big more a I’m thing And of ahead There’s the and lot a it’s So There’s They banked money for a being us there. innovated industry. being in marketing the industry. industry is team.

Terry Tillman

lot. a Thanks

Operator

Your next question Partners. from Wong comes from Guggenheim Ken

Ken Wong

kind customer adds, much QX. that of run understand Great. of adds saw you Can new from the a sustainable X,XXX just pace for or is Brian. rate and might about how us should thinking significant even This ago an first uptake to a help be net question’s immediate you roughly from customer been meet we that have in a initial there year surge demand perspective?

Brian Halligan

let that Kate to going I’m one. take

Kathryn Bueker

Yes. you. Thank

we So with X,XXX adds. happy were very obviously

that adds think which in it’s We are think I a we’re were pretty Starter for of particularly excited normal that bit new of us sort a also happy about. very month-over-month. we Growth Suite consistent

think other on was the for going that of positive drop from the our the quarter-over-quarter, a that were we that of we saw earnings not is, as that it significant case across Starter that to that board at be you’re of out, that a delivering. portfolio I couple the last seeing that adds was The pretty talked not just seeing The lot low we’re in traction really obviously says call. product Growth our the One end likely a was reasons. the strength. situation. we sort And the is some One perspective is other strong the where plays sort of thing thing we is about a seen a around COVID that Suite the of new and QX that going that thing impact as the surprisingly. running customer And highlighted point have that downgrades think is Brian would we’re elevated about the value that ASRPC result – saw there. throughout to mix have that I fact natural We of some

Ken Wong

it. a then maybe follow Got quick up. And

that you drop going lower QX. talking think but trend you Last were forward? potentially likely should the XX%. about XXs, the view in XX% have low I how quarter the as retention, from things dropping As as net guys Should be we far mentioned

Kathryn Bueker

which a had path in of say And would plus in the in sort February that a dropped is what QX, low I XXX Yes. we here of the – expected. us. did XX% January performance to and trend XXs. which March It then there you we bit sort hang retention was down for at at of in strong that starting than led better

what Brian here. the cautiously As the did retention see month-in, QX. but optimistic am we’ve who brings We that knows bottom throughout I seen said, month-out future strengthen

Ken Wong

lot. a Thanks Great.

Operator

comes question Hynes DJ from from Your Canaccord. next

Luke Morison

Luke This for guys. is Hi, on DJ.

So specifically CMS and whether online interest that wanted a actually to their beef I brick dig more Hub to in as businesses not presence. or the current traditionally and offering your on up has enhanced bit environment mortar like

you’re seeing specifically So any in the Thanks. commentary traction context on adoption? there that accelerating of e-commerce

Brian Halligan

don’t Hub whether get on not think we of BXB. the similar factor I that. of I is integration Most a think CMS times that. A and Shopify were think lot lot of in I But And have our are I product quite just nice customers a better, and bump COVID a we huge times, honestly. BXB people using customers think a to we’d it. COVID bunch that’s more companies are buying [indiscernible]

Operator

Levine question Peter from Evercore. comes from next Your

Kirk Materne

and perhaps there’s from geographic differential seeing customer of a your growth it’s was in Europe seems bit any Europe, U.S. on off Actually it taken I guess a the in just how you’re kind adoption that and Materne. the the based curious to hear you the it’s you delineation pack? just I Brian, adoption hope But faster if perspective? U.S. start, there Kirk I talk starter could between about me. any little can Is just of that

Brian Halligan

maybe steady pretty really markets a the pretty markets. developing little similar are solid all similar. softer but States across developed way and geographies, it across Europe ratios in the a It’s seems the and It United No. landed across like been in

Kirk Materne

words words NRR point And what you like comments, that again, in on in like. amount going are of that in front. want to obviously make obviously downgrade to slowing I of feel this I’m mouth. clear the customers sure feel about you’re of I Kate, getting just like want terms just, forward? sounds those does conversations But put the I it won’t is at helps on it talk kind that and that But and to that of to customer visibility like and through on coming Okay. don’t then because the that’s your point mouth bulk sounds maybe you put it your

Kathryn Bueker

prepared think as the at you’re in it side in as we of I to I requests of how it’s out my plays wanted remarks, other We Yes, right frankly And Brian continued The designed fall. a that here. to help first our kind I to. they of a number impact of that. and And are the really the worked early think highlighted, starting March cohorts weather place come process. largely in to short-term has really put end customers relates to them volume said as

long a go, We but positive. have are early to signs the way

Operator

question Your from from comes next UBS. Jennifer Lowe

Jennifer Lowe

up on they’re you. where coming when look to the about other that out they Kay. Thank that other side? mean that payment out you side, up does does exactly Great. current to just come thought, were starting talk the When finish Actually they’re that like on move to terms? previously maybe just getting customers What they are back or

Kathryn Bueker

of It’s frankly all above, the Jennifer.

more And are in in short-term discount customers I to that have on normal starting path so place, discounts out. example. think put seen of the Many we come discounts there’s a many variety plays we XX progressing days levels. of as length, one would toward of them be a short-term

of coming customers that due, that we and customers. the flexible we payment more those and would payment are so performance pleased that are around and was ran with Another a terms all up our mean have play

Jennifer Lowe

just one more particularly your side enterprise of at And me. or enterprise base, customer more the for the I base curious. look the Great. at If and I’m

maybe when that the that’s or the just changing have created a any rates have given faster, fast. if that I’m in companies want simpler move curious win things are to they you As solution that’s you’re so little differences conversations look buyer little there because needs situation a a looks different is in maybe that would they’re a prioritizing world interesting. different, where you different what be color or little a have competitive the any

Brian Halligan

to think the hard if own. Jennifer, they’re to of hard to up, providers, I use or SaaS legacy hard they’re set

we’re the to And to trying to to the own. buy, of and use can’t it’s We’re make easy it easy easy to and just set I where easy to think well. gain resonating trying up, market rest

I and to of added we’ve that bunch likely Hub combination been added really in think power and our really trick off. easy the release and I Enterprise a We April of bunch more working. of in that’s consumer January research just And come. itself. use then a in Marketing and there’s always design the and frontend worked release Hub paying magic We’ve we’ve kind really Enterprise don’t think with see CMS backend. amounts on did we use easy did that in here we invested user And mass power is to the to we’ve that that’s

Operator

comes Your question from Mizuho. Siti next Panigrahi from

Siti Panigrahi

Thanks for taking my question.

double X%. on Just click that PC ASL, comment to on down want

to supposed go about that advantage should rest then price year? [indiscernible] was $XX the extended taking existing new talked in You [ph] I somehow promotion? And Suite [indiscernible] customers chunk of of Suite – think Starter Starter also that percentage about the big What the we promotion promotion. customers up took saw August How your to of $XX of September. for but

Kathryn Bueker

and Brian then add you anything. to start want I’ll if

is HubSpot. Starter new the of that say would are that I vast that thing first customers Suite adopting majority The Growth to the are

closely resonated So did talked as We what to of it. lot the a pricing here that’s going now seen keep for it’s term closely, $XX. are those what’s we’re bit at as and for the said, as really market really And growth look very performance And remain about to the it here. going surprised at do pricing driving we product. we’ve we change at the were Brian near much adoption continue and that a with frankly least to will obviously this looking to the strong we cohorts, about but that and of

Operator

Michael question Fargo. next from comes from Your Turrin Wells

Michael Turrin

a financials for HubSpot afternoon. Maybe company for the Thanks. Good its stepping culture. is moment, known outside

maybe with Glassdoor team that any as around are as work observations maintaining been remote how I’m on given off insightful have be close-knit the and remotely well, the scores new charts. you here well? coming that likely just the hires built has to wondering would community Your you’ve for culture consistently that pivot

Brian Halligan

That’s question. can great a take that. I

and I in people first pretty teams had So when up. our ops of great lot but that. get and of our credit we well. homes and COVID out That team. to employees a went their hit, offices of of was our ops did to all think I all our a obviously our challenging facilities to give job team All set it

we I trying biggest top it office more think went for of Remote option well, COVID make third and to and our very were the that. were on attractive leaning that when is for new we and I existing our pretty do reason remote. were part think a of strong. was employees we employees, hit culture towards

I think us. it’s a advantage real for

going on things as the with months the an Matter. certainly interesting conscience the of and going that also crisis well it’s saw of – a Lives between crisis been challenging sort and stuff of with been six One crisis the economic we all it’s Black health on,

do feel there. about I in there. inclusion our hard really we progress like care make We like would leaning as employees to too We’re diversity and

needle short in talk stuff. to out So initiatives we’ve try but about that the move not term been the internally to, really just rolling on that

like great that just employees still retains two So retain at a attracts that We forefront. that culture. them we’ve built very product much our We customers and great and attracts feel and product them. we built culture’s a call products. our We product built

Operator

Piper Your next from Brent Bracelin question comes Sandler. from

Brent Bracelin

little of Maybe that Great. Any coming cohort what’s of with you’re versus shift question. Kate, Are monthly the mix you end the environment? think terms with seeing? Thanks helpful annual? and here, more about billing the seeing would traditional of given start Kate cohort the the new there a between for current I’ll relative monthly cohort towards you taking color customers online Brian. be kind the due to versus bit as just

Kathryn Bueker

Sure.

will the monthly have we’re Starter billings turns. that seeing the significant at additions So tier

in reduction I better shift. coming we terms. probably our thought sort my that is and has customers products, see little a to than significant in are that noted of notable to professional thought. hung comments, in there With billing billing what so would And the who as respect That we had had most bit enterprise on a we the pretty

Brent Bracelin

know don’t or Brian, I’ll this answer to that’s Okay, ask helpful able And if not color. anyway. it but I then, you’re

a promotional durable is versus to answered there this that idea and shift are really of June to asked seeing the tied focusing this July more have activity the to I of in questions the shift of kind think lot something of you’re around in is been to kind be wait approach of modern just you about the how industry happening think digital, did of idea online, promotions momentum the what momentum remote midmarket? much durable the more sales around here where a have there perhaps seeing in need company-specific we a in work around So you driving how to could June, trend? as even drivers those much you’re marketing the two versus

Brian Halligan

designed transformation years. were the think think And work, we’ve talking worked. I don’t they – to digital been think but it’s XX were more about for – I promotions they durable. well I

of urgency just picked long community organization got long, well around suited, it. services well. been our around massive going this. We serving little suited, good moving marketing, our We’ve think are a our about from the to from sales our talking or We’re the wave It there’s six customers from on well lot that five been outbound screaming vision’s time. here. our sales, is more marketing from steam products inbound future a for a them that’s marketing inbound And [ph]. hills. vision a flywheels And thought to years. for online, And I outside is a up offline Like we’d digital from phone to transformation of we to take

nice I think here, HubSpot run good. well feed positioned for a

Brent Bracelin

hear. you. Thank to Encouraging

Operator

comes question Parker Stifel. Your next from from Lane

Parker Lane

Roderick. on taking for Parker question. for Thanks It’s my Hi. Tom

wondering from a the could go-to-market and tracking you business is Just an you standpoint and any details acquisition integration late bit that little talk PieSync just there. if more about year have last how from other standpoint,

Brian Halligan

working They’re going going – it’s faster it’s to And I terrific. grown is really HubSpot business some and well. but team stuff. smaller we doing thought That relative great. awesome it’s than itself it’s the on a business think

application interesting somebody’s to I sync and one eat, think another sticky and and is fantastic capability at, what’s problem. what hard we about our they’re with is on like It focused problem. actually they like got a a keep It want PieSync problem good at. really synched they’re if sleep, super was together application, of they they’re their primary live it that particularly drink, not colors. one were It data, wasn’t

perfect added the for us. so us. that to And of it’s acquisition We’ve type kind color primary of

the going road, tuned and So I’m That about new and places to to down up really feeling stay is power some for that in that. show good capability capabilities other piece. going

Operator

Your next Oppenheimer. from Koji comes from Ikeda question

Koji Ikeda

and Hi, of us revenue annual my come a that of to quarter. I act in of and retention? the to Congratulations. the to discounts and is discounts ask how revenue future? tailwind up out renewal guys. anniversarying over for thinking the – the back a net thinking future the to bit little net into wanted trends right on XXX% boost for about those to the as maybe future the those the think Will about revenue net taking just has another you those kind discounts just normalization questions. way question fast have, trends retention normalize as about retention forwarding Great Thanks today discounts up

Kathryn Bueker

turn I the about we XXX COVID, long that is the before clock the what you is way think I retention believe can I still over in think onset If believe talk remember true. we plus revenue that back at that doing would Yes. and we we that were a we retention of say net and fundamentally have would term

show the move discounts, to the in few is a headwinds tailwind to You towards off And are that We due as saw trend of that real. over customers come more QX. activity will retention next that sharp downgrade quarters. short-term and highlighting obviously some a up normal discounts is the

a from help. perspective, should So that near-term

Operator

back over at question was the that I last remarks. CEO, closing will this call our for Brian time. And Halligan, turn to

Brian Halligan

you you everybody Hope and joining at INBOUND. Thanks see stay for we’ll today. well

Operator

concludes call. for participating. you Thank gentlemen, and this Ladies conference today’s

You may disconnect. now

HubSpot (HUBS) 6 Aug 202020 Q2 Earnings call transcript