HubSpot (HUBS) 5 Nov 202020 Q3 Earnings call transcript

Company Profile

Participants

Charles MacGlashing	Investor Relations
Brian Halligan	Chief Executive Officer
Kathryn Bueker	Chief Financial Officer
Mark Murphy	JPMorgan
Alex Zukin	RBC Capital Markets
Samad Samana	Jefferies
Stan Zlotsky	Morgan Stanley
Drew Foster	Citigroup
Parker Lane	Stifel
Arjun Bhatia	William Blair
Ryan Macdonald	Needham
Kirk Materne	Evercore ISI
Koji Ikeda	Oppenheimer

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the HubSpot Q3 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. [Operator Instructions] I would now like to hand the conference over to your speaker today, Chuck MacGlashing, Head of Investor Relations. you. Thank ahead. go Please

Charles MacGlashing

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

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

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

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

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

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

Brian Halligan

today. joining afternoon, Thanks, for Chuck. you Thank Good us folks.

companies software an industry front that digital CRM for combination integrations. to with as as multi-product of with That XXXX, over, margin deliver embedded continued customer These a growth as terrific of we've tailwind is customers. quarter things. more story enter result couples Revenue nearly in experience year is a focus While that quarter have this the million but the year in HubSpot continued none is increasingly is have building platform, take, X%. path adoption of environment, in a XX% foreseen seen record We also in flywheels. non-GAAP to that was HubSpot CRM growth unique have consumer I'm challenging few built nicely our nicely. powerful a big our their third have for build and excellent very XX,XXX not both and modern more A industry. QX grade rare the product third customers. and is cumulative a quarter Despite customers, This X surpassing grown was a enterprise with I back-end in platform could of year-over-year, growth by the strengthen over difficult execution it. representing on partners grateful through XXXX is would believe also total The end-to-end while XX,XXX, this we employees a of reached us. it intuitive us trends has an the ecosystem, Demand us digitized the operating our we become to in for final the grow had XX% customers customer combination combined team's is transformation rare and grown

to way. traditional and reporting our set to messaging, automation. Hub all intuitive the a on which we colors data coupled is internal primary First, work create CRMs, which in are are same colors of content, together These through hand contrast acquisition. crafted primary HubSpot combined This

we have that design and consumer-like Second, gives HubSpot research large investment feel. user that in multi-year a

offering. investment customers as on delighting Custom changes flywheel funnel company and objects mindset, values influenced a are was as the objects, since develop. over growth object QuickBooks really Culturally getting release rate exciting as the our customers. Xero to our addition and the release a their set these last game a of particular, where like relatively from Prior is for the huge automation, Sales primary CRM. our This thing of customers to into our rigid well for to model. as over had the lot took sales a our moved release, entire for was our our Enterprise partners, is in this to the NetSuite, Third, The last model customers. large which laser-focused economic heavily leverages we've was the spoke our we to happened custom few integrations, that that the object our of Hub by custom customers proposal, colors us mindset years, business from a very year advanced and

and we business a model knocked a can customer, happier. LegalZoom, saying praised we One adopter, our that sales around our have down. this Now, set provide couldn't big - model. scale block by Hub and XXX% we've was adoption customers Enterprise businesses had be for This - intersection we of their ease object us user an with power early

record certain days, enterprise in world thing we today, uncertainty building of, the October. early the it's a you There done of today. year had still the we've for is of new it's a on paying Now, thank We're proud giving of that is and keep so net still QX a closing But strong predict hard start focused optimistic to the momentum one want products your lot it's high I'm sales remain AOR, in time to off. but strong. out future. going to I approach far so in and delight customers, to our with

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

Kathryn Bueker

Brian. Thanks,

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

Third services needed basis. year-over-year while reported. QX, as revenue grew quarter year-over-year to was QX points year-over-year. currency Domestic to re-accelerated X proactive million provide growth an and HubSpot's represented an XX% XX% of in constant revenue $XXX in year-over-year XX% Deferred was in in end as-reported as revenue parts as-reported in constant subscription reported. QX, XX% grew XX% and revenue customers as of XX% engaged $XXX total XX% billings currency XX% and revenue flexibility remain International were and in and productive partners Earlier increase constant increased XX% September revenue year-over-year. the year-over-year, year-over-year QX, currency on growth XX% measures international we up while revenue a of Calculated up the introduced basis. XX% on in revenue of year, the to ecosystem. million, the

I relief COVID see at the strong. continue requests the year. the Day, As new at we of shared a the our number to the customers and customer the first of half Overall, the Analyst end of small saw retention majority of in these vast we remains short-term requests of plays

in carefully, COVID We particularly continue to these cases. watch given global the recent trends uptick

and we during was by to continue another year-over-year. demand growth customers. saw roughly growth with the strength also than was down as XX,XXX customer over suite X,XXX strength set XXX% that greater starter driven in points up sequentially, a in up we've see across $X,XXX Net ended retention a company notable of subscription few year-over-year, were Average We XX% nearly revenue Total QX We from customers, the new record, business, low customers the revenue quarter. although broad of seen at additions portfolio. of per QX. result the total but customer continued strength the in our end

short-term would above XXX% remainder While have performance of without retention benefited customers refer comments non-GAAP upgrading discount, retention revenue this measures. of benefit. remained from the my end will the to at of The

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

software up margin employees, At was in Net or Third year-over-year. third of X% quarter diluted or up quarter XX% X.X as quarter. result quarter, in million of our was capitalized income million expectations, in costs, compared $XX $X.XX margin nearly had the including the Operating performance. development operating revenue primarily we last to per revenue share. a the CapEx, X,XXX $XX same strong was third the period of quarter end exceeded the year. the X%,

Free expect a percentage as flow driven million, CapEx, in XXXX. revenue, $XX third was We cash the of quarter business in to performance. X% to strong X% be by

result quarter And with we're year increasing HubSpot quarter guidance with long will sheet balance to of for that the strong for our fourth flow of provide with the expectations As invest cash full billion remain financial free and term. securities. and $X.X a let's that XXXX. dive into full flexibility We the to us the XXXX marketable $XX year approximately cash confident ended our million. for

diluted up This be is and to $XXX diluted to total midpoint. fully for of the per revenue This the expected million and the the between expected between is range to income year-over-year. year-over-year Non-GAAP range $XXX be to expected in XX.X Non-GAAP million revenue XXXX fully range is and expected million is full $XX to $X.XX in For be million. up of quarter, $X.XX. income dollars, income to million assumes $XX.X and outstanding. million. and $XXX be at million operating of in assumes between XX% $XX Non-GAAP Non-GAAP XX% total be operating expected of to fourth income net share diluted million per XX.X the the shares shares diluted to year is be share million, expected is $XXX $XX.X net million XX% outstanding XX%.

to neutral models, FX for expect expect following. QX XXXX. adjust the your point year a in current impact As a rates, revenue of you full to revenue now reported FX and X spot keep mind the we tailwind reported At

in Analyst from some shift increase percentage expect work. strong as remote modest we with We reiterated our and coupled I R&D a for a commitment XXXX term cost long spending of investing to result have leverage savings Day, indicated to our business At our of operating delivered to the that margin performance, revenue. as our our

with normal to more a employee result of this deliver expect As over of margin the next in operating to coupled not year, a level increase, we spend XXXX. return do leverage a

grow product Brian paying we detailed with are outlook for in to our remarks. off both will for the call And profitability We planning and our a making position so more share back over we're our well his investments that, teams I'll we process, when still The results. QX us and are hand will XXXX in go-to-market report in and beyond. closing to early

Brian Halligan

and like thanking the close out It's I'd who leadership are year. my challenging been an listening HubSpotters to tonight. all exceptionally team by there

execution on during lucky feel I tough stepped resilience. terrific be up You all have to these team. and with times, great your

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

Operator

Please Morgan. JP [Operator first Instructions] from question from ahead. Your comes go Murphy Mark

Mark Murphy

discussion congrats was Yes, thank and thinking performance. at see to more the you started in of special of this adding is much inbound, you back surprised how target year you company enterprise at power hearing you now custom you much the quickly Brian, very that I of upper a in objects. environment? this terms functionality kind size? on market to resonated do has legitimate platform And your we're that and Are the activity commented very so the bound had of

Brian Halligan

business we time period year and to been into and our I we enterprise wanted for your I'm products, we side on from of thought -- things There's report to way this HubSpot platform gone Customers to to really and model. deals. of lot custom products have or model, was wrap great. that's in for surprised. but around who out, not into custom and sell ability rigid object sort it when strengthen a gosh, major that more really model, it jam going fixed of structured business the XXXX knew it's the graduating do on Mark, new a evolving of XXX like Hey in I of level. hard potential that object that been read into customers gives size get we your work were model an our long contacts, was level was our evolving companies, the it, tier of customers a came object the that a we objection It's your this relatively -- existing complicated model is business what customers the object and we

object. can gives So can there a for student for be more for a for better SaaS could a an be subscription just ton this inventory flexibility company, company, object, company. us a be university, makes you fit, you're there scaling a a can if example object, be a There so manufacturing

object part from that and we're of Sales in that we nice a part great. it's they undertook is that really apple-like and use. came they loud sort adoption. other about custom automation last in there, parcel powerful out shocked and for your year great and Enterprise to they're and all customer not I'm the all are noise it number and the and to reporting, us project getting really of I'm bolted a The so easy It's field And of so about of great an good like HubSpot, kind and inherit years Hub of so thing for

I I'm shocked. not So, guess

Mark Murphy

Okay, great.

Now, mathematical math Kate, I at Day. question I Analyst to had the was a you, for the run trying

you're for that or actually not the October this a highest see considering, just soon all I I kind twin-engine it Hub; said with over with think what getting level $XXX Is said it fair Sales ran Marketing it it couple think IRR. that I think? new million I'm close, it this math Sales next to Because now least Sales to new was that, and possible said -- together over million was start much of Brian at October Hub Enterprise net the you way on are I see you've already XX% crossover trying Hub XX%. you hit Marketing that is thought as as Hub you growing like was growing I in also kind we'd thinking it's of think and looks I September, booking of of situation. almost years? there tie the Hub business $XXX

Kathryn Bueker

I going Hub flows the see Sales and of the to think the over time. Marketing across you're enhancing Hub

I both both come. and big they're the for be drivers think company engines they're great to I think to going growth

Operator

from go Zukin Please comes question Alex RBC. next ahead. from Your

Alex Zukin

different a inbound, Hey what demand it Because you the seeing for you're some the set on customers. you're with out the thanks feel come call cycles, is guys, of it of ago the respect numbers, of in and saw acceleration bit results does pipeline, the of question. days the the priority that like it, one in how to taking since for XX are posting inbound? solving does terms from, sales what there Maybe environment feel first that is billings like even

any favourite just and So comments, everybody's got of I've a quick follow-up high-level topic then on billings.

Brian Halligan

We inbound optimistic, well-positioned QX, pretty get offline headwind I early blew I'm for looks is very again, too. like tailwind turned happen better. prop of where that things an outside think the want in June, lot getting huge all the year selling, also the customers a we're if really into of: I'm products through and we're last at this starting move of to an to last credit I an at are with think shutdown, inside with model we've lot and this months. quite about a Hey, sitting end and going over headwind to of selling stronger, election to that. a our were moment, about good, interesting bit end that the so internally, customers from strong to happier, Alex. like are March of hard It's value happy X January year, outbound year Customers this June, started the kind to year, position, next not to year work the model, February. I'm from in kind it October pretty put couple of need and very team bullish deal blew so from of and going tailwind, done some well to to sure are from get the the to say what's online. pipeline in to ready, to quite some with through really the hard credit give us years a hard starting help it's work over It's execution both. through of the little and the I

Our fit type product thing. really for is good really, that of a

these I'm feeling positive actually. quite so, days And

Alex Zukin

next comps the take think of I invest selling. easing, way depending could way investors for should of A of to it of advantage tougher and you out general because comps if working and at actually we and billings about in guess start software comps from coming both around quarter mind, look in is thinking you feels just the it about puts the year? to the lot takes Brian, -- clearly some about sales the are you're What's we And look us to any to are going growth. is when some that and But you're here? year, get next as stimulus tie companies cycles next like are as that -- everything you for and right kind that think resonating, do you, for keep we possible with getting in you're what it accelerate and on of

Brian Halligan

a I I I HubSpot. will what about can control We what the don't say like great the a is arc marketing progress coming making the a to know I the can went when don't don't lot can making think we're answer, what a company stimulus I made and on our relative really more prop know, for investments, and a and -- like for a to good influence. and We huge come. really think progress, arc, first we to our CRM I just I we're solid really about there's is lot that. and a I ago. is, pretty what tracking public from that progress early on back, -- where multi-year we've be made very it's like and partners company's and it know you've in built. can what of long impact transition were I lot honest if modern seems influence our employees still vision think we I our feeling sit. just way app customers like a time, years the It's we XXX And platform very CRM shape, in value been our think

feeling quite good these general, in So days.

Alex Zukin

And the in that aware of given products the anything then some of, market? Kate, billings your for on should terms now different be we

Kathryn Bueker

guess a and about I billings. duration compression talked of last we upfront the time

different a have on I that to is it we would with this than quarter. conversation FX think to I reminder have billings frankly start the revenue. on is different the

And QX. benefit to so, X point there billings a in was

COVID on that bit Hub and to strong we a that Enterprise and currency constant a of billings mix constant some the is I improvement would an anchor and also as of advise and is growth point the a is, saw the see saw did out but side. the would they drive where normal revenue still a focus just Pro things performance the we and retention really of long-term other to is So with saw strong out. just great would business currency billings to couple really One revenue strengths number the we're duration strong is return billing of going tailwind XX% we tracking. of these there but short-term came to point Marketing discounts skews, the to or under constant I like in customers currency and billing we some billing growth, is growth quarter-over-quarter, that I some

Brian Halligan

your the take we feedback Operator, there one. had the to for Thanks next so could line. we're if we some mute getting Alex, questions.

Operator

Your comes ahead. Samana Samad next from Jefferies. Please from question go

Samad Samana

evening. Thanks my good taking question. Hi, for

a adds but first quarter-over-quarter, very Kate, in for impressive quite also It were net you. bit maybe quarter-over-quarter. really up performance was increased that ASRPC the to question echo, is results me great see. Let strong a

or Enterprise of fair had and QX as to that else? assume either mix the company it of a signings more percentage the Pro something is that function was So a in

Kathryn Bueker

Thanks for the question.

was that the driver QX. the suite frankly, of really Sales. We would new that customer not X,XXX quarter one strong adds with of for things a was but the I and for are growth both that adds Professional to I about we customers had obviously the in new But count adds expect the the great in quarter. in Enterprise customer also and I quarter, and additions say another quarter add. was really big starter really growth it in happy Marketing or every so a customer us caution strong X,XXX and of quarter new liked would was

sequential expected attributed to as be is you in to a Professional bit far of the uptick exactly the some Enterprise and As ASRPC, more adds. going as customer

bit we that under coming the little mix expecting finish, a talked from going also of the going about quarters few would is the and pressure pricing. back at of more starter we're off there discounts to I the how the think next short-term normal as be just tier. for there help I ASRPC shifts customer was to to customer least,

I think that still holds true.

Samad Samana

That's helpful been or maybe off then, be X for the home pretty Okay, even we've you, seen strong for for you zoom for guys we upgrades months. follow-up Brian, of net at if discount a stuck retention. ex may now pricing, modeling. a great. what that out, to just And But we've X almost is

it into are as additional particularly translating seems back, and the customers back heading new you products. what our us like selling prioritizing base? stepping that's are just into XXXX how they reality adding existing may adjust and as customers again into Could buying help be So

Brian Halligan

be digitize to I on crazy to-do companies were prospects had a go-to in think kind experience. vols have see though the people their think works to really built think go-to digitize people people was few I it years add ago for create inbound. up; their we bad many today we've in mainstream really very and compelling the should done sped we I all new of -- starting early are do to that. at up people their I pretty surprising might to we a at of and really don't modern on It And entire that idea. and plans very digitize customers There's terrific say market. well. market market event we people and their customer well-positioned. -- their were that home in with a to becomes all very well-positioned HubSpot COVID there, home flywheel, world everybody Ten really now so their to that go-to platform think up help lists a create that's

advances we're product the made year we've been I think the go-to-market going those. getting the returns well-positioned think on on like and we've as improvements substantial I very last we're made forward and the too, the nice have over

Samad Samana

Great, all off. thanks for that. to It's great the investments paying a night. good Have see

Operator

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

Stan Zlotsky

now far in bookings, have space, definitely for you seeing router your Perfect, kind mid-market thank yourselves solution was release, guys is as particular you're stuck really put was and coming Is the the you of press viewing are in the focusing mid-market, traction where I certainly reading that the the and that -- have When the so thing that is, the right it, as SMB now is That that's most into the one that these the a way company? you incremental much. yes, been that of as statement. the but ongoing transformation that very digital out some way that you days, billings you're mid-market. that's of the strong from you are that seeing really the benefits where a

Brian Halligan

XXX XXXX, enterprise. to roughly We X call our question. that XXX call we that's good a mid, That's company to we it to segment small, XX-employee stand of employees, XX break

market XXX, middle We product well we have to in fit and XX perfect do go-to that perfect fit in market there. product extremely

seeing [ph] is to encouragement you've this product what market market go-to fit the market think enterprise. nice I on in non-go a and small year bit ME and

did side, repackaged On small starter basically suite. that we we the that,

well. with at month that lot per been to XXX -- to in of they're improvements on have going they time, Customers seen line our really We're retained up, are boy, what's a sounds upgrading happy product $XX signing the there. same and we've X,XXX. that very So nicely, up and

HubSpot like it's similar for I I this time two want little of one really that's I that's in not and the up real think a flower it's I bit my number market. And so, -- just What we describe like going to just tiny at little to and but scale that's based analogy, It's them, it's of kind us, to near smoothies, a don't as company, where the little a business per see make business. where using in to have this, like little house this to small so grow. not it's we're they up. shop start for market. a for people, shop. don't be We CRM sit bit NetSuite on used scaling for a companies, the little fit similar we're

and I think X but CM start-up up employees. of for grand in a it's scale the our [ph] NetSuite's scheme company is lot that ham smaller, things than [ph] between X,XXX and

Stan Zlotsky

Perfect, thank you. And follow-up. quick then if I could a sneak in

QX strong we're results about kind seeing on how guys thinking hand, October, very guidance extremely is summer you consideration. tailwinds into guys, same spiking that and this because QX. then Brian, And you mentioned you prepared understand us in the all one are help about of through your through through -- been -- seeing the you've better So, and talked cases in remarks a that time, are we but the seeing at way are the COVID clearly you the

So, Maybe you. how Kate. did you guys guide? that in for, question that's reflect a QX your Thank

Kathryn Bueker

now, three approach many In model guidance. for terms pretty we the predictable think next a we've we're providing for is just very about short-term, guidance our of I take been years months. in the to and Yes, consistent think how trying

we we're well, the in, I so And two mean, next so a months. -- month

forward. looking And outcomes. And we that so to in us, at and it's we're confident a bit put of performance a at balance potential just business the numbers then looking

Stan Zlotsky

Thank it. Got you much. so

Operator

the of Please Your go Citigroup. next line from ahead. question Walter comes from Pritchard

Drew Foster

that factor noticed that for and Hi, key technology this Day, you your the for office consolidate what HubSpot in of was Drew some And to extent deciding questions. be were going they demographics will I two; whether desire systems follow a with trend growth the and drawn Analyst consolidate that you, plays theme specific have different Foster, any is driver to is highlighted hubs in specific the reliably around to a you've go your of front able taking I'm is and I with addressing you, to up. across customers in thanks customers out combinations you've Brian? if to wondering common any opportunity so,

Brian Halligan

it. all it, good from Radio there of and it a And is very -- newspaper. question. as bit They're iPhone together pull devices the been much then way all an together stops a the iPhone, of cut broad is ad very get bunch we'll to heard on that. name few There And it sort platform, applications clock, stranger great of HubSpot. Shack. And customer, about that. you a with the is like elegant. We're in to a integrations. thing applications good. for XXXX to in ad can -- so of like, to seeing plugging The XX suite it Particularly well, to we're kind HubSpot. That's there fair you different then they've from Hub. consolidating of does overtime, of It's roll. They're for a a experience And And here's similar all an come here. is and really has think our we out an ad have stuff kind it's HubSpot, really their come a there all tighter, whole to of and that now. total -- have that then kind -- move compass, like dealing I We'll a it And that's HubSpot, to that People and an of doesn't a like and a really [indiscernible] platform. this a through ad, from so set people manage delighted seeing a managing like they just little really this right, into people that back that's Apple's hundreds never of alarm next very plug amount integrations that's CRM to but that there's marketing are weave

Radio how So kind that. about Shack ad. that's old of think we That

Drew Foster

time. growth newer cross-sell marketing your growth of ARR Brian, some for And didn't was the at newer that has Obviously, it. have where period and curve as benefit hubs, to for that of the time. this marketing got about Okay, compare thinking had vector hubs, to I'm the of the

benefit qualitative you're back do observe the in evidence or for a newer up in their of that shaking those success confidence the merits, -- that marketing? those markets out of did same we what things exercise kind gives sort you hubs way of if and the and you cross-sells So their of those with hubs own trend on own

Brian Halligan

question. good a it's no, -- a That's

released And Marketing side Sales Signal. most it's back they the as is of product, think sales early look HubSpot a Hub, Hub. ago door -- ago to Hub but good-sized fast. when front got now. at a month products, it's lot growing cross-sell the people Sales they Sales it a buy much as a on as business, released. while there's Marketing getting I better that's that's and the the And, develop, so Hub in Enterprise now, product and and existing when been Hub, of our like an now and to called started years Sales then Hub Marketing That It's man, are several buy better I just took sort really lot if And right humming from Hub or we if it's that look a then at come I that sales. door a better product

thing the Hub those over and front as the doors time will Service now a to I lot think products think become going selling and are customers, CMS your existing I we're those getting into see but well. you're Hub. better lot of thing a on it on is, same same Where

Drew Foster

Thank you. Really helpful.

Operator

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

Parker Lane

actually it's Lane Parker thanks Hi, question. for Tom, in taking for my

for So, have don't your I Brian, just store bound quarter. during to the think attention with the was many sort you platform? just of contacts feedback, means that And from wondering how in the platform? you for much and really that of mean contacts engagement response attention on if going that marketing customers. upper they launched how do that in can What does I'm forward what Thanks. customers guess,

Brian Halligan

question. that's Parker, Hey, great a

he entire bugs they also in and fix product in cringe they partner and their to and he try a their process, including using Simons, experience, bugs last or friction a terrific Board member file President buying they was called Whenever they long, tracked for go-to-market their was creates that track We it to it. have in find entire the it a named The creates and They in pricing model. Jay lot. bug CMV, they lasting, that fix a time. some company long a admired strive In bugs. his

getting happiness. a Very think more and to your that great. feedback pricing well. HubSpot. HubSpot. time, been We of a all on buy and contact and borrowed add in Sales thousands the might of of this that hub we content. one course, field how adding of of buying is here But pay, larger HubSpot marketing we a marketing to HubSpot, of can Hub into of When you then fairly it that's have idea you completely [ph]; vendors you customers caused you database started lot tens it's the then for at are it priced like the imagine the And other sudden, the SKU, bugs experience And and thousands the cringe and period for way it and it It for actually was works happen. a predictable long where that for going first customer salespeople is over contact, about will the increase took wanted we bidded easier probably long buy and was happy really implemented. did of took fix out it through a we easier, I the people -- we and it make going with will also over think we've do something large time, will it This And We're come this I marketer that There of year from to it's HubSpot. scale roof. more the to terrific lot project a for complaints and change many the years. summer make a is it up to also that

us. I So And our and be win haul. long for think the for a over for itself, customers big that's driver for HubSpot investors a it'll big, and

Parker Lane

I interest great Hub some was of in was announced stats? on inbound in the the the CPQ you Is have things then front CPQ. mostly it's tools tools one Sales you that's there. the addition the new or again. feedback. Yes, really wondering the And about if of that could there Thanks customer if and talk including think, you out initial in broad-based enterprise play you

Brian Halligan

the getting product, early them. this nice on Enterprise a as scaling CRM means something. legit very CPQ that to We the go Hub be some companies. the way Sales is you HubSpot all just sort CRM uptick we want the in. number to kind announced of for we And think the And is to I of be problem one edges Yes, of of want

the to that There's their area to of keep edge connect more. we stuff really an customers built part is want we're and people to the We've and And your that investing in, it that. front. come we're to eye with good closed want really, that If came want so if have they of getting do accounting loop, that and close more enterprise proposal version going like and adoption. on And off really invest do early channel. system an on to out quote that and they all

Operator

of Your William the Arjun next question comes from from Blair. Bhatia line

Arjun Bhatia

front customers we we've conversation. helpful on Hi, but I off, is quarter, if little bit And this are rates, this be had coming that we're of churn, COVID landing in now on would that point, XX cohort from Kate, days terms on starter can give in on I of that upgrade anything on guys, last when any start you thanks. I'll anything, touched know us can update this there that a echo congrats last the quarter. my

Kathryn Bueker

the that last about in very ones think we the day, odd trends Yes. as And earnings frankly, the on call. talked much I and same the are

little to starter are continue size that that on of the or are maybe this a a starter that other signing than a to before those what that's cohorts was new we rate see to another cohorts. They skews there. introduced. They upgrading in skew. We would balance package say, up are rate they vast majority our from enough customers lower that the customers seen I saw we similar for moving downgrading at bit similar. excited the starter about but are historically, big opportunity And HubSpot are healthy those versus we're had at

Arjun Bhatia

Do curious, been one this do elevated how moderate we those hearing your customers on focus next dead it from market strategy And for and you're year? has about was what helpful. not how you Brian, obviously audio, beat curious very marketing of budgets digitizing a Or to change terms maybe to you think marketing that's a in that just Okay, on but thinking they're bit next into see in might horse XXXX, going think go continues? little year? you as on

Brian Halligan

predict in. demand more buying connecting like my pretty service coming last hard and is are competitive. in our new to over Feel a People just are say in leader thing. hard and It's just the and sales and accounts more happy with very days. strong more leaders good, couple feeling are customers the I future of is are would and products

if locked it's So good to good this something feeling pretty down election, or with happens know bad yes, what feeling feeling hard good. design pretty but pretty really happens

are I great here think [ph]. they

Arjun Bhatia

Okay. Thank you.

Operator

Your comes question the from next of Ryan from line Macdonald Needham.

Ryan Macdonald

question functionality customers have congrats sort what the to of see may coming-out initially of an curious been first new Hi, of launched you're it net Hub feedback the Hub a customers of of but I that one to sort Hub and and in Marketing feels versus thanks sort product, responses of add-on your processing existing in guess, party sort mix was quarter. new excellent inbound and you just sort on from into inbound given of the pandemic, interest as the Brian bit for CMS midst hearing of a for seeing my terms fully the of the platform. going taking for for like to the terms in wanting that adoption in through in using what upgrade you're CMS

Brian Halligan

hub. Hey Ryan. Hearing great CMS things about

GoDaddy comp a the us the about that public the in players with much up mid-market open-source there people investor work-brand because and content and well facing our talk system but lot advertise in part even -- dominant to going market they called a investors, the lot, with they're we're project product advertise don't of from no compete, in So known industry, large it's probably are compete the t but industry, and open an are really definitely the management not to and source really interesting as company the is we we [ph].

development things is those if be system is I combined on you be the in and think customer with equals your for one of to over together, really development going a this it's going cool content It's And But there the HubSpot. three experience with builder watch relationship arc thing long win combine one management power business. system. for that management to come tremendous The are the overtime when environment an environment CRM to we that's really, management the plus systems you [indiscernible] really content asset. when the really in cool.

scope solid, of been the will great there two are a is for opportunities, haul CMS with over be on really combined growing it, long really those customers are but partners applications. reduction So nearly that business our is is particular in our about excited nicely, collided

Ryan Macdonald

hearing weeks down anything with to the Got in it, recently evolving up, the the all? of or but locked environment at any any obviously And we're you sort thanks. the the internationally impact then past going quickly, Europe seemingly are back few follow over things with sense, pretty business

Brian Halligan

with happen Yes, all now, seems say European right four to really has and hard Brian, right to what pretty seems, future strong good and weeks leaders. happens, two, so feeling The now. from in thing three, prop super our the pretty been think will it's checked value we're what solid asking predict the same demand to it's but my now, execution there. hard but again over It solid

Operator

Ken Wong comes Securities. from from question Guggenheim Your next

Unidentified Analyst

for taking [ph] for Thanks Nancy is Ken. this the question. Hi

on to out figure number been to able Just get work new normal flip guess headroom or again how out further down more I side, from that locked have to the back kind there a through to two you for short-term questions, we is of this on first the your see retention. risk the as discount? to customers if improve track after or Do down start

Kathryn Bueker

Yes, I us. strong was for quarter QX retention a mean very

said in that tailwinds XXX. I north the I of short the that we absent I customers above off see that retention comfortably XXX. been term from also prepared comfortably of discount, So mean we those remarks have said still rate coming would

note majority we're strong I basis. We that excited seeing, seeing those and are so through actually we're the about we're on a customer about we're the that retention retention and the of think particularly that that I would excited really point retention that one that is dollar

number. gross this HubSpot. More sort of with retention that our customers sticking of is So around are

Unidentified Analyst

Great that. that's to helpful. And just hang on

customers their contracted have that maybe expanded So previously back might have have yet. the seat up or skews downgraded

Kathryn Bueker

you think to lead believe larger a It upgrade say overall seeing look as that know QX. what would QX, in in is dramatically we're than hard net that whole you It's at the which to population. rates when we I Yes. saw

Our customers on net upgrading are more.

Operator

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

Kirk Materne

that technology wrong. the opportunity new land just sort net sort with to you Sales of the to very that Thanks of about much, what your continue going the easier after might Brian, but customers has your Enterprise Hub. do expect out of would I versus sort of grow of Hub, think Sales is grown the be might customers, historically with sort that

and is So about rip it with how I thinking balance very about those go leaders about you talk cycles just with existing trying to sales imagine kind guess I already because the you Is are different sales with thinking and your the replace. customers it conversations? are two you? expanding of to about when

Brian Halligan

few it. there to Yes, layers is

that think on case John; lowest here, the I customers those retaining longer. layer

really as the We like big just them us to more things go model and us; our us thing our outgrow third we're our reason market scale when is we [ph], HubSpot we're customers, to in to cake answer I the is they them a really happen and buy so, Then what functionality and HubSpot doing doing people about got it's scaling and is conversation. going it exciting reps, they XXXX a are the side and it's business the are third People I certainly it's have winning well. the what the then a customers on growth on companies they that replacing XXX the And deals to when would excited But to one. partners somebody on good is project, probably which But from think that hesitate if and layer grow attractive. will happen. do. for side custom why layer in really more It's it's reason ripping getting hear and they're between much up, going the happening more sales vary, harder yes now retaining about the lot cake. that's maybe

Kirk Materne

helpful. as sort then this data this. question and one That's as of of Does level CRM platform sort CMS you, more of And when sort the for the you when big sort and talk for of level to it around well you just why technology company. to concept the a company data customer higher at customers discussion a your in know small meaning, plus space M&A up customer maybe seen others all we've continues marketing want solve broader another via enterprise and come of of a centricity maybe sort

with to to able that existing coming others you you're of up that kind something are now is willing partner your with on? conversation guys, technology is at you do that or So that and get

Brian Halligan

the report that. People as systems over That's you integrate will wanted one stores to them back [ph] get it reasons their have by the there, on back it acquired do we all of we the and your then data think them time, and forth. you possible HubSpot, all HubSpot to take [indiscernible] and central all of is in

top Google they're whether little itself start anything building see in you is us their want create they HubSpot off enable tools term and it's use from the be on over for to of So XOOM stuff. customers, if I or tool our to haul, on long experiences, yes, center to that plugging other the their too that what HubSpot AdWords want use I gravity to that of really

Kirk Materne

congrats and on quarter. That's helpful. Thanks the

Brian Halligan

Thank you.

Operator

Your next from from of comes the Koji line Please go question Ikeda Oppenheimer. ahead.

Koji Ikeda

Great, a quarter. really taking thanks my great Congratulations questions. on for

added First now. to for thank that that ad up Radio head Brian off, picture that wanted my I bringing right Shack

applications you methodology. -- the Thank work, bit look custom that wanted about sales what does additional or customs it's I maybe that object guess like maybe any the the at could it longer it real stay from So have HubSpot you means HubSpot the to us ecosystem It box sounds game-changer customer within the as for was just version I outside lens? up. to ask a on object. before to about business especially look scales replace a version, the bringing specifically that to talk features? customer they maybe for Enterprise you little Does the for enables enables existing

Brian Halligan

prospective that student leads call customers. when say you're are using you impact is University let's you The just would paying HubSpot you your way and that I students call you're year describe it are and them call warning you just your

unnatural. is this Just

the going What and got student go the HubSpot system a lasts way month. a match means It's with into is to You're or four is model office whole unusual different typical model. your customer works CRM your front business to convenes system your jamming to rigid way do object years. business pretty a works. university is want and because an the That you've student than student you

HubSpot. inside object of custom it's So

whole kind firm is run. in noticed want of do they model super and in just on the they're a moves they irritated create a jam enables the when everything now they of they talking marketing about in, got so going that it we get What you is buy use plug comes have let's ways employees, the But happy just it heck sales that to ways, lot product the workloads business in company certain to because a comes gets report in company You in and and say product complicated with because HubSpot want there HubSpot. company as XXX starts XXX around on to in the employees here their it certain person a a you more. to

sort will makes model As That's evolves their sense? scale way works. it business them with That and the of HubSpot with evolve them.

Koji Ikeda

Thank you deployments? you whereas one totally for just CMS about but right Hub you to source the competitive and Yes, you Drupal question. compete that. taking to Hub, vision more the makes wanted I word follow-up sense. my for CMS what open mentioned against with Can maybe Drupal? ask be Thanks Drupal on here longer-term trust, for now the

Brian Halligan

around nicely the of can kind A somebody and live a do we developers We're they're but while in problem. like the couple of both pressing pretty think pure modern projects. White No out WordPress CRM like big very they took enterprises been It's really is people having kind they run in my building If runs going to more do do Drupal. on having approach with mid-market and products the powerful different very next on source enable where upmarket together that general. of far but is have Drupal approach years. it, open House integrate keep Drupal the it. been we stuff line enough where head the They've amazing we're loves box WordPress to over few that I of a of not a power and more to Drupal WordPress. to vision to the We CMS

core So I competitive our to from. going is think come advantage where that's

Koji Ikeda

Got it. my questions. Thanks for taking

Operator

from comes question from next Please ahead. Mizuho. Siti Your go Panigrahi

Unidentified Analyst

Siti Hey, for on dive Panigrahi. in International. quarter again. on this Michael want on is to once quickly great our Congrats a I

forward, quarter. a is to type success the now Moving that you are shutdown? abroad? expect with Can maintain ongoing nice can we the in strength in driving saw point they acceleration even the that anything You of particular

Kathryn Bueker

you that or that question, the actually Yes, we the is think some much out. pretty so in for broad-based. Thanks called reacceleration interesting saw the growth. international I it's acceleration performance that

domestic reacceleration in We growth. also saw a

really So geographies Hubs, across saw strong it's I think performance. across we

Operator

Your go next Piper line Sandler. Please from from Brent of the ahead. comes question Bracelin

Unidentified Analyst

market the the was customers early and wondering Brent. since long of in kind for funnel? This more I'm customer, digital the in customers the enterprise they looking on at on is of products terms our and our were Jefferies engagement whether in were end finally higher the to of I this wondering make how even have these QX sort alone? go professional the traditional of the traction engaging or pandemic of quarter converted then in that a QX to Just of kind trying are they to there enduring are half the in customers converting change with in quarter year. that these customers and the are new that in and you're the pain understand there out back

Brian Halligan

it's a Honestly, a lot looking are There's then bit have little that time. who lot both. of of a long people a people -- at for of

the there and by on up cycle is year. short a of month came MRR not It's is short funnel some short lot. MRR cycle they within bought that into the purchase cycle we Finally, The short month. within up caught our

particular earlier think, I about going of I is on think stuff thinking momentum their the that it's to is normal all year. a think of little if digitizing bit with world that -- more the also certainly said broad-based is than really -- I like market. our all in I kind just even part this go

night have the We world. in happening with nothing the

good I be having think year. we'll a really

really well. set are up We

think little bit That I a my So it's of it. on both. be would take

Operator

was At call Brian That the to turn this I last CEO over question. for closing our Chairman time, comments. Halligan, will and

Brian Halligan

to all forward Look of joining to for you talking to you us today. Thanks soon.

Operator

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

now may disconnect. You

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