HUBS - Earnings call transcript Q1 2022

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Operator

Hello and welcome to HubSpot Q1 2022 Earnings Call. My name is Elliot and I will be coordinating your call today. [Operator Instructions] I would now like to hand over to our host Chuck MacGlashing, Head of Investor Relations at HubSpot. Please go ahead.

Chuck MacGlashing

Thanks, operator. to quarter welcome call. earnings and afternoon HubSpot's XXXX first conference Good we'll announced after was results discussing the the closed. Today, the that in be press release market issued our call and Co-Founder and Kate Financial is on Shah, Chief CTO; this our me Officer; Dharmesh the Yamini With Rangan, Officer. Chief Bueker, Executive our afternoon

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

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

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

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

pleasure to call to my the turn Yamini? Chief Executive Yamini Officer, over Rangan. Now HubSpot's it's

Yamini Rangan

HubSpot go I first Russian everyone. in deeply quarter Thank devastating the results. want joining off, situation and war more you by mission results talk a and XXX,XXX total ongoing continues the fundamentally in prove invasion growing is HubSpot's continue first our of and live quarter uncertainty. to revenue to through let's us exact way great results. Ukraine. across consistency that XXXX transformation These that Chuck, XXXX of and saw performance our markets, now to and of at buy the quarter pandemic currency the constant we customers. we To strong Ukraine. focus for sell. as Thank HubSpot hearts review accelerated to people With the time acknowledge start XX% HubSpot's than customers customers to in backdrop, digital for globally. and transformed year-over-year could year first that be out in growing critical pandemic companies you, for that volatile business HubSpot We're clear welcome today year-over-year the saddened a it's in The With and first this reason. with XX%

creating disconnected hybrid significant challenge. growth Our faced work, decentralized are with systems, and customers teams a

the priorities We've for companies. platform to on XXXX, grow helping on previously have a to a unified to guiding becoming use continuing easy That's customer customers connected order grow. enables choose they're strategy. clear As In in our single to paths to important provide a executing number we're growth our the platform focus our We CRM of it's shared one realizing continue result, growth. to HubSpot. our customers strategic and view more that even four scaling the why

Now, you those I progress through meaningful the of want walk in over we made the quarter each to past areas.

this in front hubs. office on important We front. new our deliver two recently platform by and is priority hubs to emerging innovating crossed strategic Our anchor world-class investing milestones first a with

world-class surpassed $X and Hub over First the that off, to automation past easy I'm that's have quarter. annual We've These serve that the marketing in built onboarding this use. drive customers billion the thrilled to functionality recurring introduced of world-class platform revenue first the couple incredibly across powerful operates anchor milestone higher starter HubSpot a out solve we user significant our the in replicate billion HubSpot. in Marketing products advanced ahead automation And ARR and Hub, very and see of of units now Marketing $X hubs. the We've we've scale report to with Hub made simple our and for better investments and business all significant to to markets scale. enabled of opportunity And and have the market, build reporting like that rolled years, free of to success experience we and customer all investments capabilities deeper I'm tiers. enhanced our achieve serve about insights. the we segments. when we TAMs. large To end in for Marketing excited opportunity

We relaunched up we is expanded service and exceptional service. of kind small functionality. expect that The world, to enable today's that's experience deliver second recently and businesses Hub that to human Service milestone exceptional. build In service with customers hybrid features a medium

and Our deliver Service a Hub strategy center, modern powered is build omnichannel support drive threefold: automation and insights. AI support

customer quality To the richer mobile of provide are service I'm customers this in automation more and them is and we excited to products. to feedback customers features to since power pleased a back we customers authentic Sales of Service provide holding in insights, and service the to calling believe customer by we center. Hub. early name also ticket our surveys empower was a level of service introduced Hub new week. that customer support, legacy live providing that an manufacturing their inbound from a level will is email from with Facebook as system We Dake, and One that now the this the seeing of Their generally feedback a available added share customers about metalworking workspace service the our trusted agreements, modern from I'm fuel in support helpdesk part relaunch real-time. messenger functionality. portals, and added omnichannel chat, matched that As they're support XXXX. even we March, and automation. value to service our hearing And

Sales connected manual to productivity. inboxes the they as throughout started Hub with to it incredible friction value ton the illustrates Dake expanded saw possible makes a and This Hub Service an of now Dake from Marketing result. increases Hub, customer points and leverages up remove shared which a Service deliver into of tasks So HubSpot visibility use improved score XX platform and a experience. Dake and automation streamline this by XX%. interactions has of to journey With gain all customer satisfaction Hub, their to customer all their to how

Now, priority, let's is second our strengthen to both strategic about our which segmentation approach talk and go-to-market. product across

want the want market is lower the robust end to for here. are here investments products We end higher to features easy on needs. drive of approach the fuel sophisticated and customers twofold. volume easy few key that and we made with QX, a buy use value we with to at Our to In with

automation I mentioned end, for lower as free started tiers the earlier. simple we and On introduced

pricing adoption focused direct on the sales like both channel are and These pay to resulting addition running our investments In our multi-hub are and experiments strong self investments upmarket are Starter off. are team partner are of we our optimization driving Within guided page in to that, beginning sales and we suite. demos. segment, making

We’re our seeing hubs. of grow three adoption now multi-hub XX% using enterprise customers with and professional more or

businesses for making focus we’ll an continue ahead, scaling upmarket. choice to HubSpot, and on easy multi-hub adoption Looking driving

third to commerce. Our invest priority strategic payments is and in

a which ACH first, U.S. grow. a their that for in object the dashboard interactions, enables and unified solution top because that addition customers of critical shared an commerce requested recurring all share become already see objects, view to of BXB customers’ digital On currently data last beta. become SMBs for As generally delivering are more even the HubSpot their is payments journey. native customers. call, in I’m Payments the really CRM businesses with expanded functionality we’ve having just more payment offering is had it our in I available of payments feature to and pleased to

to feedback help payments them a and said, we on with to hear journey building the need businesses continuing We’re confirming see enabled early the to we’re grow. our remains That focus positive in customers from CRM. our opportunity commerce our customers features empower functionality and

released Moving on of build part our is to from XX% report our XXXX. priority Today, points journey celebrate that developing of we XX how as and as diverse over final employees up fourth and An years. company. In up points company. the strategic diversity and BIPOC, we’ve want of employees or the past five to the annual come quarter, identify a XX% last important hiring a talent. globally U.S. In seven is I non-binary, identify far sustainable women HubSpot as

quarter. I’ll give proud that XX% Kate incredibly of team, have take Additionally, our four of color. we particularly or identifies a the how Board to of I’m over leadership work Kate, company away. women it towards financial that. reflects our building on diversity it we’ve of of far And for a With customers. and to the turn continue proud we’ll person as our results woman that, come our of an to overview executive

Kate Bueker

Yamini. Thanks,

financial to turn XXXX quarter our results. Let’s first

trends the revenue we’ve end grew constant as Average international to to driven billings an total overall growth million as currency Consistent QX. per were adoption total while X,XXX QX, in base a on our and enterprise a seen X% a decreased duration. in while the XX% year-over-year. XX% year-over-year QX, as was constant quarter the currency year-over-year Calculated prior XX% an reported. one We over XX% growing as subscription strong subscription tier. reported of revenue install up Domestic and net XXX,XXX, to billings currency in constant increase continued year-over-year constant just XX% XX% will in revenue $XX,XXX, mix other lower on measures. quarter revenue Deferred XX% to primarily increased quarters, XX% reported. count growth QX International the our grew basis. in in currency XX% of multi-hub non-GAAP First bringing was percentage revenue strength revenue result XX% quarter revenue remainder selling year-over-year. currency as refer primarily grew customers by a as customer QX, exceeded million, of $XXX $XXX new and comments in customer and with in growth year-over-year in and and by my point revenue The constant XX% revenue revenue year-over-year basis. grew billing XX% year-over-year, as March of over in services of reported in added

XX%. negative up was in Subscription services margin point one gross other XX%, margin margin while year-over-year. gross XX% QX, quarter was and First gross was

margin to up first employees, compared operating $X.XX income in was X,XXX cost of of diluted quarter the X%, XX% quarter the revenue. and two million XX% was year. year-over-year. First first software revenue the free we fully $XX share. capitalized development quarter points At million $XX QX was the Net or last per was quarter, up million or $XX in including CapEx, or X% flow in had cash of end

$X.X at our securities Finally, totaled of and the billion cash end marketable March.

approximately February to strengthened outlook, and incremental provided expect the At a wanted and The up and operating reported a sharply the operating headwind that, expectations XXXX on of percentage impact foreign dive has And from meaningful, as dollar negatively to results. of full by our XXXX. spot guidance the throughout for Before with U.S. headwind non-GAAP created revenue let’s profit we profit our now point. I a non-GAAP This points I to relative create as of guidance growth and turn a five QX we our prior on headwind call. year to to revenue translation into second currency May. our year to full quarter of a reported our earnings financial impact to three-point highlight current into half margin rates, FX

million, of the the For year-over-year the to second up $XXX at quarter, range total be in to is $XXX as midpoint. XX% expected reported revenue

reported the be expected as between to to reported is diluted to to income second the expect of growth net This shares in billion And per to $X.XX. six income $XX million. XX% range the billion, operating Non-GAAP $X.XXX is fully year be in point. assumes XX.X expected of be revenue million be total for FX full million revenue expected and and now a headwind quarter. $X.XX as at between We $XX diluted up year-over-year $X.XXX to the share Non-GAAP XXXX, outstanding. point mid is

representing growth to five-point As as I now Non-GAAP of from reported million. operating This diluted percent be margin to mentioned, an be to full to is per million XXXX $XX reported revenue $XXX is income XXXX, prior or forecast. diluted as and year the FX our now be expected FX incremental million to This revenue XX we shares for headwind expect incremental a the headwind and headwind. Non-GAAP expected approximately million impact between fully half $XXX XX.X a includes now $X.XX. between income $X.XX from share net outstanding. assumes million

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

continue remarks. from the revenue dollar to over that, of anticipate XXXX, relative percentage We hand a things year prior now XXX to strengthening free be a her for of X% as I’ll expect full Yamini cash million U.S. headwind of estimate. back to about And the $XX CapEx about million for to closing our to flow of the roughly be including and with

Yamini Rangan

team by sharing exciting Board. developments leadership Thank Kate. out HubSpot’s I two you so on close to and want much,

sales recently is a Adobe from Officer. his across Chief centric His joined through phase Claire leader and we operations former tremendous Rob this Stripe, past DocuSign. this has HubSpot’s Hughes of board meaningfully welcome next HubSpot our thrilled scale, as multidisciplinary seen Rob Giglio Customer strategy go-to-market time expertise growth. also quarter. Johnson, help customer who of We're First, new that and scale our will at COO marketing, a

to so will to we the from execute businesses, and our organizations about especially Claire both excited helping expertise have payment Rob grow. right much millions of on really our space. the of vision business. in confident learn I'm have I'm have impact on We And scaling the team her

priorities for open call Looking ahead, some please strategic value for focused is XXXX our to continue employees and questions. driving our up partners, execute four plan in shareholders. and customers, stay to the that on our operator With

Operator

Instructions] you. Thank [Operator you. Thank

Our first J.P. Mark Murphy question Morgan. from today comes from

Your go open. ahead. line Please is

Mark Murphy

very Yes. Thank much. you

constant pipeline is of SMB just and of I impact. terms questions one in But that the actually do is Yamini, clearly can is or wanted your you We the what is you overall just built, FX that of raising in a interest health currency. So absorbing in amount for you're pressures that for I and actually confidence think rate ask see Kate you're to tremendous guidance sense hesitancy fairly your any instance, customers? picture think inputs business Or Europe of there of steady?

Yamini Rangan

demand are to the We're paying question. your We're all Look We're Thanks else in watching Hi, trends. inflation. trends like Mark. everyone lot for rates. we watching more of attention macro broadly. interest watching

In customers, delays of pockets Mark, we the terms Europe. impact, some saw in mostly of in purchasing among decisions

environment our a Now a in macroeconomic as more we're having I'm know, a very, bet they And to And into hybrid operate CRM investing could while and this during now the said made big not what secular our of And and ago customers productivity it software as and to change, to change fundamentally, very few lean And front-office seeing that and where customers. headwind you technology has drive material specifically, we growth into are working. business. in customers productivity. growth. their the I leaned pandemic been drive seeing a that more stay to end bet is years think that is they're continuing to technology connected the world

we're quick seeing Our this launched within with customer on as customers is innovation and to in proposition innovation we base. heard we're adopt our we that and and are you me features HubSpot product to quarter, easy easy talk to is about – because our resonating the value gear we relaunched just the consolidates we use are high implement,

Mark Murphy

you. Thank

formation? purchasing wondering that pocket a we've new customer was And – that were Are are ads there because kind business think customer delays that bigger elsewhere slower just anywhere And was I counteracted are the volatile kind are was number world you Europe. and in the in given saying a clarify I than more a Yamini, so, seen of of am you while. little of of – in sort signaling there ads the environment just just possible how a to

Kate Bueker

the is happy jump above to were sort quarter. new customer Maybe back the and to of pop we that quarter we And starter level. we're the quarter-over-quarter growth a customer X,XXX tier. as saw and are see at positive The really the uptick within seeing – additions gross in Mark driven the obviously for net at starter I'll up specifically talk we edition being

Mark Murphy

you. Thank

Operator

comes Our next from from question Gabriela Sachs. Goldman Borges

line Your is open.

Gabriela Borges

Hi, taking good afternoon. for question. Thanks the

upgrade, up win re-release comments change or the curious Service the of the see For on go Yamini, follow your rate the the up has or what some set of and feedback functionality. starting I'll based features broader the and if Since been conversion maybe pipeline rate on you're and to on Hub.

Yamini Rangan

thanks Hub we launched. Hey, for the about that list relaunch features question. excited new Gabriela, and the I'm very of that Service long

it's powerful. but to be just changing combination entire game it's Service for marketing Hub, platform Hub think more even I changing game be sales going the becomes a Service more CRM importantly and for because of going the to

I'd omnichannel Service when be Hub our quarter deliver saw this say focus to deliver exceptional simple. is to SMBs that, able relaunched just want And service. support So what our we a We just three you strategy, pronged and intelligence. a deliver routing support and and and powered build smart just insights is predictions like to a AI provide automation ticket modern product is which conversation center,

We overall, Service of a SMBs. big pretty going for well demand see usage. very, features in feature kind we it Hub So, been movers launched has reaction positive. of for trends that needle ton The both be as are as to very

I that features gone accelerate ticketing begin since relaunch that of see getting our are if shows that value fact, customers opportunities back, relaunch. this I that has three lot we usage to big with released. the the and step In up And from a

install opportunity the think, this of I base. cross-sell we all accelerate within First,

I Marketing see from Hub. value So platform, Service Hub lean our seen Sales customers, Hub can into who've customers,

Service lever should this Service I've alleged mentioned, milestone bolster for important an plus hub mid Second, door. is for and big is pretty relaunch become our multi-hub adoption Hub deals. to ability then us as three And sell Hub term, longer a to front

So feedback customers. overall, about as as hearing excited good community very also partner well but this from our our very relaunch,

Operator

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

Samad Samana

one for marketing congrats dollar Maybe growth Yamini, this Hi, to good great what results. Can a And going the to fastest marketing get largest businesses afternoon It's for the ARR. made the not software. it's you be yet strong crossed to still mark growing on in first hear forward? be that and hub one driver investments billion there? of need durable

Yamini Rangan

Hi, Samad, yes, a milestone. important excited the that pretty question. thanks We're lot for about

I'd operates mega market market. a off like large penetration. a say and First still single-digit in is marketing very TAM a This with low

So remained a to drive there opportunity and And here. the looking business grow needs more go-to-market, for Hub, omnichannel more us us to not now and therefore Marketing like have I cohesion sales marketing and with static. static. effectiveness plenty more also more for is more runway there company support channels. feel of for rest I and ways of not every looking dollar marketing, the innovation significant as that is campaign customers, It's see including clear service. remaining and is visibility build becoming multi-billion And much marketing Almost in is to marketing, a to it but runway is for growth to we talk

still. And so, we're sitting not

almost marketing, our one the become yet but de-facto was in testament Marketing product Hub the drive within on just use. segments side, Products building advanced more earned standard conversation a a is recently XX the need which customer easy I on. great most is within marketing. automation and Samad, We're maintaining this to more that automation that that Loved TrustRadius And And about. front, front in our a we're focused of to use excited in doing marketing in that type door, something the fact, customers lot of while a Marketing it's XXXX. to we're is That's segment. On powerful in more platforms this It's the and that our great number becoming then very spot the importantly go-to-market omnichannel of reporting. ease focus all drive Hub every

left So we to there a to There marketing is other is grow. of follow. playbook hubs plenty definitely positive feel great the runway very for anchor for and also

about happy So, results. the

Samad Samana

a retention And seen increase curious see far Great. the And up currency in to for really did follow guide. maybe the to and Kate, net trend maybe in maybe so It's net constant you've May how you. retention? XQ I'm that through end what for early impressive

Kate Bueker

over interesting month. the for install quarter where the retention it's question a become the of you to to more Yes, has shape have Samad curve up kind in third Dip] an time natural within base renewal of [Audio a tend

the so finish quarter month in And lower have QX. a much revenue so, third what of opportunity, bit more and bit upsell as saw a happens there higher retention the a is a bit you of net a very you we retention and of gross is what in that

Samad Samana

color. the Thanks. appreciate Great, additional

Operator

Our next of question America. Brad Bank comes from from Sills

Your line is open.

Brad Sills

my question results. so here. I the Thanks in much guys quarter keep ask for about real taking great. and hearing business. about to there. upmarket wanted on obviously It's a the strength We real nice congratulations Oh,

color to tremendous there is just what what's environment space, there of Are hodgepodge coming underserved the customers could an where ask the You several like customers little landscape now running there. segment the of look driving growth up wanted – there, here, lot what row, the quarters of so currency on a a white a constant Maybe I bit tools. our is success a accelerating these – for are traction what from? different in and is of see like? ASP

Yamini Rangan

area. that a hitting the thanks Brad, think for I And on you're right lot question.

and don't don't the work disparate They any mid-market huge journey don't don't they their the very the time, They that a stitch together, is sales, challenge service, a the from they from clear to upmarket, well. being back that also technical able there to and peel have budget, team sitting companies a across for have you onion look they if at and grow to get have So have entire need be challenge. marketing, of around in visibility able fundamental environment. to that's from challenge systems

is happening choice. that those and I so HubSpot is clearer of think, fundamentally, challenges and it's becoming easy solving is platform And both a what

love provide we experience fact front customers cohesive the that Our all across a of office.

we and hub And one figure the begins. out ends can't one other where sometimes look, say, they'll

So it's in And we've very, very seamless. platform. the invested

We platform have more than made upmarket integrate when an those thousand they us easy have choose integrations choice with for that others. even customers to

overall And you're that. seeing so I think

other I'd the and planted gone time to product would the means broad be And have The deep. support portfolio. over powerful along. we And say has ourselves to I the at is of the planters last we've months, call that the part look of we breadth features we upmarket seeds have customers the along. able XX seed portfolio have planted seeds and our sophistications same

And upmarket of two also lower high to lead so, the combination rates. those adoption ASPs graduation and higher and

Brad Sills

may. I Yamini. That's if more then one hear. And Thanks, great to

quarters Thanks the you so quarter was Or Just several demand this on something starter a else the is strongest something this of – Was edition side? net ads quarter. this kind volume seen behind going on there in much. is This that? business, of the mentioned we've and in one-time thing? strong

Kate Bueker

for question. Thanks Brad Yes. the

year I over seen primarily tier in new on bit in – we new had a began what starter during nicely a what cohorts those last bit time as enterprise big shift lapped that really of think, we were you a saw into – know, of customer is that out additions we customer that March starter XXXX. of and professional focused more XXXX and we've

clean towards But Mark the this so, is else. growth the And is addition when of versus something much we question, factor very but not that's I where like up road as mentioned, the quarter this first that. comp, a asked a on have anything ticking

Brad Sills

much, Thanks so Kate.

Operator

Please question from comes Brian Raymond from James. next go ahead. Peterson Our

Brian Peterson

you my strong Thank on the congrats number. net echo I'll and add

How adoption a of also other momentum I'd been with that? that door Hub, impressive. has to And be curious the tier? going new I'm relaunch front single big front adoption about really relative could of products curious starter that of on or So with momentum, hub the some door? be the a how product they're Service the the the starter is we think as multi through more do starter

Yamini Rangan

great question. Great Yes. question,

about And if if that talk at So, our we have like tiers and almost volume the have end the motion have – is of that is it the strategy. a at we the motion way lower we mentioned, priority I a I of the a high we end which we bimodal describe tiers. value

So and those on products and at motions packaging across go-to-market, we're HubSpot. broad two really pricing, focused

suite is starter a exceptionally So done it a motion, a make seeing lot is here a what you're which full valuable. perspective, From to motion. product we have

there. You saw me talk about automation down

are more page optimization. in We pricing terms also much doing of

that entire into lot a there's So adoption, And suite starter suite. lower into the goes end. therefore, it translates high volume of

our very us. all value Service play where is a the Hub multi then that. different. about of it talked hub hub in with one earlier is And certainly, question helps journey, might actually customers start the multi There where and about motion much Pro Now upmarket more with a go on I with journey

product type our couple a on overall been those tiers innovation strong cadence over years think of every has of the us last help of just strategy. one I a that execute across bimodal that

Operator

next Our go Michael from KeyBanc. question ahead. Please Turits from comes

Michael Turits

what that do – higher up the those ended around adds year sure very headwind there whether on last and on or much one, things, a time we'll see about saw dynamics? a as thanks you we in being do, ASRPC on motion see impact make we churn. make that How – eventually similar that this how do the Two what starter – Hi, we package you get not starter first guys. is continuing

Kate Bueker

in question, increase I balance a uptick liked quarter. the one this lot that quarter that the in additions for within the things net about and across was the ASRPC actually, KPIs saw the of we Thanks the the

we and think that comfortable bimodal something out. we're in let's is as I year is call I are comfortable plus those laying in it, strategy about remain that growth that reflective what continue said is the on in Historically, around, levels. low being have quarterly focused Yamini X,XXX that's digits. at I And to that balance of this ASRPC that a net And this double adds.

Operator

question Wells Please Michael from Fargo go comes from Securities. next Turrin Our ahead.

Michael Turrin

us Hi, job industry appreciate quantification given there. through I in Thanks. you Good the maybe just and commentary the current afternoon. of can environment, hoping FX diversifiers on the exposure across certainly especially team Nice or side. help I executing, well. as was the think

broad-based some to across even more of diversification set. I investors us Maybe some from businesses macro as overall HubSpot of that can modern. the seeing some tied perspective are your your helping we're just industries you. still think the digitize traditional and think to We've customers overall of more a withstand as expanded up fairly perspective. just HubSpot the Thank you your you've ability demand an of from help frame product shocks picked

Kate Bueker

what to – and the much you as most it found was despite the the early Yes, lot of a a our I of can our was relates very associated industries. of appreciate question. the deep other of digging navigated hard popular And We of categories we industries the base the imagine dive customer did into base as we as with customer days the very pandemic. all customers

I spot us. – have is tend would If say BXB company be for industries. services I out call broadly were we a to diverse we the think and across I to are that software sweet anything,

Operator

Please ahead. Our from next Lane go comes Parker from question Stifel.

Parker Lane

last Thank my of you hub. on you year. I partner uptier sales teams versions internal get that taking we with know as success are I the well for channel? front update What the you. kind of if Hi. question. on wonder operations launched seeing some the Yes. as Thanks can your that in

Yamini Rangan

thanks last when of volume coming same which higher we the We're sweet as as saw really ops specifically, see I attached continues hub. a expectations level lot we that customers tier hub ops motion we And of part was great. of in through of the March, just December, we talking about. saw much a of that nicely to was in Yes, hub starter hub. tiers ops Parker. our Hi, It on question seeing adoption strong for all original customer perform ops launched the year. the And across

So is and is the the the pro peers, that's through great coming certainly majority that case of ARR see. enterprise also seen. been to the which we've And

It sales I done it's is hub makes doors, call it we Now operations it hubs. thought lot as think well and service, ops a the whole from of all customers hubs come of of That's It we about ops a the and and we're have the gaining not sauce partners other hub is supercharger. just increases different as together. think Unlike very which for value we hub the that innovating. really front what marketing traction other really as is. makes And with and taste nice. meal us

of enterprise On the creating partners that to and product library power that tier, a And we cases, a in bunch enterprise resources code to so custom things within our the go-to-market and improve actions, really use side, get training data on familiar reps more enablement launched on the invest in side, terms case triggers, and we're sales studies of scheduled continuing that more with recently tier. quality, on. more of features

are from And with pleased of but we hearing really as well full we customers as so, suite. and partners that both is the are helping adoption early overall, this the very

Operator

from from Alex Zukin Wolfe next ahead. Research. comes Our Please go question

Alex Zukin

maybe Thanks more guys. wanted key for to question. net I taking on Hi, in my one Kate retention. time

for given I've year? the expecting be above of year, said you've the sustainable I the got quarter? macro course the And net think, retention was previously up. XXX%. are you follow quick what to And over the then Yes, for still that picture a Specifically, the

Kate Bueker

Yes, sure thing.

net really Day XXX last very XXX in I above plus. at much of gross strong same QX the that plus for upgrade You retention that and seat expansion, Analyst nicely And again the fundamental drivers fall retention, are addition then right. strength, shared and target guess, that were was we at the comfortable remain upgrades. XXXX. We with do retention being we cross-sell revenue trending drivers The XXX

Operator

Our next BMO. go Please ahead. question comes from Keith from Bachman

Keith Bachman

meaningfully was for the very quarters light and in COVID, if [ph] fact, the what will kind of and duration. particularly of I get question. prepared work psychology many after your ask an at get during the on in you course fact, of accelerated to the Hi, September wanted have question the of that marketing one whatnot. a you. downturn, and negatively Alex revenue particularly short-lived December impacted thank And the that segue it wanted look happened in what during nice COVID of, weren’t at HubSpots to challenge onslaught response investor kind I is pervasive in might because longer is budgets HubSpot SMBs, enhance A of home economic whole the from model from

or great just just Kate sounds so tremendous but a sneak as do see what and one, if for see Many the quick prolonged to you up capacity, them economic you could is, It were more go there I to COVID different it what’s be or today we expect to was that of wanted And what that’s happened kind ads similar whether sevens, otherwise back if thanks. to different face challenge, clarify it Europe you quarter. me. and than but during like this one build to

Yamini Rangan

I’ll the macro maybe watching. economists Kate But certainly Thanks one. do then than not specific have Keith. are you. and lot, can start Yes. any a ball the crystal better we and take with broader a we we’re Look, of not question

that talk and all no able we sales marketing customers structural And to that. to and there big across see do very, there of we the channel we just, is watching to it service. customers thing recession, We’re our trends to is say really when is need be need before a front across adopting to office change software a that are look, I to would think is a that was able one if The be and I clear. this digital becomes massive very immune

growth. hybrid front point And we to basics, to need the customers to with is be accelerate that insights disconnected tailwinds which spreadsheets, struggling couple we They maybe even growth. they things the don’t drive really for is talked and transformation talk And productivity digital and we operate spreadsheets, office I drive able And like it though were are to Now years. Google of this need me that teams. is in continue over, in last environments two start have to over gushing. solutions, that still as the It’s year, the not not customers, stand out to I over.

just able months is that in was time this to going to that around if then in the provide off second easy I And class put really pretty of platform we’re so matter long is and strategic to environment. people right now bets we smart, a is cost disability and the be driving some a because want They said a CRM earlier, paying about continuing ago, having important implement effective. that world to made weeks, not And really can which implement. technology to type implement in every platform. And thing, HubSpot, time And solutions. want think like we’re of quick you almost

of we’ve in so And more become platform this a choice environment.

look, I vets do economy if I but play continuing to all there negative, the are turns So are out. that changes off completely are think structural

world priorities we a class really continue that scaling can we’ll CRM so build our to so And lean and focus for businesses. on in

Kate Bueker

don’t here to we’re ads. customer I want on like the net Keith, And Yes. hairs splitting feel

to, in number. shared substitute past. a the you this, my eight, we versus guardrails you’ve seven around the seven I we’ve plus happy of consistency comments say manage to that giving metric precise some As we’re isn’t think business don’t what terms is particularly this to K around before heard I’m us in

Operator

from go Our Needham. question next from comes ahead. Please Ryan MacDonald

Ryan MacDonald

Can now of are months. you. Thank payments them touch how trending us guys and a had on been give sense transaction to the your general volumes from customers compared you’ve having conversion to in the available additional for far five Wanted you pilot generally this uptake with expectations?

Yamini Rangan

great. going is payments Yes,

new want last which introducing want online clear customers a rep customers recurring within transaction well on experience BXB is to discovers been when very the help customer focused mile of the assisted of a have We vision transactions. application, all And completing sell improve maybe to as and the sale. a as improving to an link payments, product we then to starting functionality, and we in the terms from of a the we’ve way payment

this really will sales our a as for of so a really and launched pickup bringing and we’re same payments prior object us very, early ton valuable. vision we launched. And and the more been with and going CRM calls lot volume, having having encouraging, to to and big payments we CRM ask, very seeing heard, the dashboard campaigns, And a support payment have ACH, that has into been campaigns enabled hypothesis feedback from definitely capture talked has It payment position be CRM you which that thing object the into I’ve customers good usage. a context recurring just is validated. in brings and commerce about into lot that marketing to calls, a And and gross

is exactly they Our customers are that saying want. what

happy make And so feedback point. broader traction that And from look, and getting. overall the a I’ll very with we’re our we’re customers

now. and same in the sales planted think of that think and getting in are we with we with seeing Brian we’ve some we terms right grow can plant always And vein. We Dharmesh And nice payments I service seeds multiple that seed planters. ourselves of commerce are big done and times hub we And trees. as giant growth therefore these into of seeds benefit a think years nice this the few back. hub,

We’re planting the nurturing seeds, we it. are

We’re getting really good feedback.

pace innovation. go this provide We’re forward. we that’s shade us continuing going something is of lot And of to to our maintain a as

Operator

Morgan Keith Our next comes from question Weiss from Stanley.

Your line open. is

Elizabeth Porter

Elizabeth Hi, average Porter I a this to just Keith on on wanted per Weiss. is the little revenue subscription for ask bit customer.

an it acceleration growth. of bit So a and was

Starter drivers customer were more the that of you just So ads the Thank suite. given sounded especially of that of new what this some that, unpack you. if some could

Yamini Rangan

so the Yes, for much question. thanks

second seeing Those the two ASRPC. two really we’re would traction adoption catalysts tier. I that think of enterprise ASRPC growth the are at the we’re for main I customer the One across drivers the things that continuation of is just in multi-hub And it that the base. call growth. primary is our seeing

Operator

Our next go Arjun comes Blair. from from question ahead. Please Bhatia William

Arjun Bhatia

Perfect. Yamini, wanted back to go to Thank maybe you. I Europe.

decision if of did curious I’d earlier be whether terms insight curious spreading that it Western granular, of and, decisions. outpaced you that, given you’re into purchasing in war Europe small uncertainty but delays that more I at does is there. there all impact have that’s the how Europe think of you’re impact a in geopolitical some was growth, seeing you I Eastern pockets that, thinking growth this onto just international or see the follow Europe, granular year? your to had or there that, of the given investment to domestic international said

Yamini Rangan

for Thanks question. Yes. that

millions on specifically people I my have there, through really some and Ukraine organizations the community heart ground. work will of that been doing are and are Russian out the the that relief supporting we important and to goes by off, HubSpot our providing First invasion say that, impacted

we don’t have In into in but employees, that contractors passed terms Russia. some direct of all and impact, region we sales have we

there, good and across scoping, terms grew In your QX Ukraine, about direct than from combined for a question Europe are customers Belarus you Mostly saw can’t things very will decisions. if international any year-over-year ARR worsens, was that two international results, material one us, more basis. but in is a constant it’s this of really again we once of less Then what growth on a then small few have purchasing took not controllables. XXX delays broadly or so impact in that, we very currency XX% on the And And conversations, Russia, X.X% we but and saw controlling at it point. – reiterate, region. as I of additional the and mentioned this from all terms was that of of quarter the we control of I

look look of long don’t bets. terms the priorities are this And term bets. laid at We we We we the the in terms as investing quarterly at have in priorities. efforts I priorities. as always focused out it of

in do that region longer of for the haul. the investments and international the how we in we presence kind So make the grow region grow to our are continue

Operator

question Please from Our from ahead. Materne comes next Evercore. Kirk go

Kirk Materne

you’re be Yamini, hubs. made actually area if much there’s terms U.S. the seem Greenfield for versus international say wondering you haven’t talk would or customers decisions in upmarket markets just in all, question. an where to Yes. opportunity seeing, across was where about that’s as many Thanks taking of very the anything many for Europe the Europe as bundling, different could more I potentially you there’s if

plays was of the there’s sort versus any just bundle internationally out difference U.S.? how I the strategy of curious if real Thanks. kind So in

Yamini Rangan

do about, a I think in market, remove is that That’s we segmentation as it good about think when play about we would to driving friction say more play our from of from place everything I for we end broadly, our value question. do that talked and the the volume and that as of the the lower is we value product, the strategy our strategies the North America, Europe. similar a we that experience, set perspective from in we do in everything upmarket, customer drive customers. go-to-market upmarket that And in it’s

market little transformation. of digital we point, terms behind, Now, European bit the to do a in that think your is

partner opportunities a more that and to opportunities, looking there Greenfield enable is or our to great sales channel conversations side customer’s that. are maybe for to approach point of they’re direct to but our market, within are have drive more drive certainly are the fantastic well there solve see as we And are our and currently value the continue play solution, as have that they spreadsheets where our growth. So products, biggest problem overall build multi-hub channel using

Operator

question Bracelin from Sandler. Our Brent comes Piper next from

Yamini Rangan

comment. your add ahead, go Dharmesh,

Dharmesh Shah

developers on the uptick partners app is add regional to seen One going markets. upmarket in our specifically local thing platform of just our international. also kind in these was we’ve usage an I with terms and in of Yes, recently a comment integration

number focused kind been in application think as far for our of I growing X,XXX. are terms of number up of we’ve adoption. very been That’s on really And up seen which us partners of kind are the over that’s XX% year-over-year integrations integrations. but increasing we’ve a specifically growth as market local overall, that region in So of helping nicely, those

Operator

Brent Please line go is open. ahead. Bracelin, your

Clarke Jeffries

the hiring I tuck-in or the is additionally, you’re then wanted terms what to for pursue on of Brent. to seeing are environment, right potentially M&A you acquiring by of the experience you innovation that now? hubs initiatives Thank but on talent. Clarke as wouldn’t the an appetites in running internal you accelerate about new kind And impact weighing I you. want hubs. ask how of features, acquisitions [indiscernible] innovation This poorly versus to now right bolting number to have Jeffries maybe opportunity that about appreciate integrated user accelerate

Yamini Rangan

that. We we definitely Maybe look, Yes. the on and start view and competitive. talent it’s hiring I’d market say but Thanks phenomena. the not that, question broader M&A take a is a lot. necessarily I’ll then with the see new question how

you saw, ended and headcount QX, we hired more the at As we in XX% X,XXX.

listening, able incredible the product. been market learning, big in talent, we a I of we And some and think to have. part of culture strong culture. real have point we a evolving. we’ve That of And would very, the as So that to even competitive is that culture as really, hire very important

we pay to side, employee that we lot go we when the and we lot things, hear continue sure the a of and the side. to And as so back that make a evolving to we pay on we’re attention to on the able promoter attention we the And net of then culture means net to promoter product of score it scale. and score kind that culture’s certainly listen

It’s in And not a that. retain really, helped done. so will and and is really our this top environment has to commitment talent do hire key us to really continue our people and one

it of on think question M&A, you broader terms In right. the I said

path our taken a we’ve customers. And to like is almost very, us it crafting segment times CRM proposition value different a time, this, in in real that a For of resonates solution. many times, very within

ton Our hobble spend want customers of able to to ton IT, money, be don’t ton time, to of a together. of resources, ton things of

And continues resonate. so our experience has resonated to crafted and platform and

– really accelerating we’ll and the primary about more deeply certainly and So when we about our is something at be look experience. care that in. and to HubSpot it’ll we of maybe new look framework think color enhance to which adding believe it. at at of one so And colors, But is our continue or M&A, but when experience from maintain want look perspective within we primary crafted do we a customer it and M&A, the the

Operator

Our next from question MacWilliams comes Ryan Barclays. from

Your line is open

Ryan MacWilliams

Thanks for taking the question.

So recently, on environment, some other opportunity hub here possibly relaunch, Thanks. service of but tier in and advantage professional a take a of is price been noticed as the service of this the the we products? price enter we hub more of there inflationary may have an increase your part to

Yamini Rangan

the packaging those our you’re and A We look, strategy the per with strategy we features when going at to hub And that philosophy tremendous pricing then and and to make changes, amount to will that the you that of to features pricing we professional mentioned. did customers. and customers keep deliver have on into pricing is that are is know then increase all a we when add innovation remain we that’s pricing the powerful we with And just the we consistent And philosophy. continue value we’ll what just features we And value part packaging added features, starter stay our focused received our think, our pricing. and addition is so value, pricing we top that’s to bringing have the innovation. tier, other pricing we look exactly of want just are pour I strategy. I’d based will Yes. and question. packaging change enterprise overall from customers down re-launch. did in service say, of Good, that on we service that of great right. mind exceptionally hub all when terms And doing. from can and per absolutely that customers XXX of and And get to to We month question consistent we the month pricing functionality changes high-end XXX to want our to our value build value

Operator

Truist from Please comes from question go Securities. next Our Terry Tillman ahead.

Connor Passarella

afternoon, one good ask Connor is just ecosystem. Thanks the Passarella question. taking wanted team. on for around partner my Terry. This I to for Hey,

multi a you as impacts direct hub stronger strategy the between what with ecosystem market your I continue communication customers synergies seeing are the are you. kind push Thank of team? customers partner then up strengthened adopting kinds and people enterprise a of and sales experiencing you to motion. co-selling So from see

Yamini Rangan

a ecosystem continues thanks overall XX% The has that contributed for question. partner to lot our about ARR, of be case. Yes, the and the

we CRM a have to we And a in business both there. really We’ve that synergies have is as pretty our strong company which transformed automation being to enrolled marketing small being from a a big with and investment. transformed really company, of we mid-market from very platform, us as So company to transformations. come made enabled ton ecosystem and partner of have are transformation. them along really these And we’ve a

So overall CRM I partner to partner to really clearly And ecosystem do our the have that some is a the servicing with that lot strategy hear we and scaling we know as I partners scale well. going ecosystem. what I from going that to I you And is want is well. well. it’s platform selling that think communicated and of talk

able partners platform revenue see clearly and are customer customers, to help. definitely partners multi-hub dollar need a with adoption the When engaged our the and improves. our customers improves, retention, Our get retention improves for

for partners for customers. for and a win HubSpot. it’s so And a it’s win It’s therefore win a

about with excited is coming ecosystem us. along pretty I’m So how the partner

Dharmesh Shah

the those make our not kind that about is lot, around, which integration of partners, allows Yes, come value partners life. quick One, app platform itself but different three create. for help the integrations those to that the note our the just partners of we dimensions creates Yamini value is a talked that we’ve also solutions and company developing platform applications, to a have just

platform. dimension the HubSpot second work within around value that The of is creating assets

hub CMS So we have now. templates

of the investments to solutions more the So with dimension customizing bring values a there. other third a which works particular therefore time HubSpot value for is and more template of down creates CMS could industry partners kind our bring design one enjoyment. and kind been making this driving extensible. around a customers firm web our opportunity, hub, create platform, And to of that we’ve another of And more continuing platform really that to can make wave in that the

all but partners all hear is and We So HubSpot more more time for platform unlocking the are the them of of exciting. three time. from over value those kind things

Operator

UBS. Our question Taylor from final McGinnis comes from

open. is line Your

Taylor McGinnis

so my thanks Hi, squeezing question. Yes. much for

with And spoke earlier so double in low you digits. about Kate ASRPC remaining the comfort growth

tougher net quarter, comps the strong about, Starter could some comfort of just the this giving get there. metric, And you made imagine like you of the ads a this with throughout the to some metric, just, a as as what’s mix role being with and has you talk second versus the So go past for durability we as, maybe earlier just comments premium just it’s would part Starter year. question in this maybe this of tiers the I of given is

mix the throughout year. thinking that you’re about how evolving curious So

Kate Bueker

a lot at pouring our been a nice of into team Yes. about question I the to a the over talked strength to product that deliver lot you’ve new opportunity find our of ASRPC the go say, incremental tier. Thanks balance that introducing and we’ve innovation last would we’ve to about provides in that the motion Yamini us the for That and a natural the, quarters. to install creates the sales high a based any tailwind seen more heard and in to talk the end selling hubs them. base lot that or three into is for customer value uptick opportunity Starter four

Operator

hand I Rangan, going back remarks. further to questions. CEO have to closing We for no am Yamini

Yamini Rangan

off much to we talking look We partners, Well, support. you quarter. I forward again it. our to HubSpot Thank as well for want of next our by you as to customers, all appreciates investors. And really your the thanking finish it. employees, appreciate so

Operator

for your like We’d thank concluded. now you to has call Today’s participation.

disconnect may You now your lines.

HubSpot (HUBS) 6 May 222022 Q1 Earnings call transcript