Earnings call transcript Q4 2022

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Operator

Good afternoon. And thank you for attending today’s HubSpot Q4 and Fiscal Year 2022 Earnings Conference Call. My name is Daniel, and I will be your moderator for today’s call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions]

pleasure MacGlashing, the Head my our over now Chuck host, of is to conference hand to It Investor Relations. is floor the yours. Chuck,

Chuck MacGlashing

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

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

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

historical regarding and future forward-looking than XXXX. growth, All are guidance year statements, business fact FX other the movement expenditures, fiscal operational and those including the financial our first and impact and quarter expected statements restructuring, statements for financial including of full expected of expectations operational of outlook, management’s the performance

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

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

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

Yamini Rangan

on Chuck, the results, you, Thank our us to want I reflect joining on going strategy QX and for growth Today, focus call. XXXX share on everyone and welcome driving profitable forward. to our

but get we and talk one a will the and in in ways we made restructuring This lightly, we best is approximately rationale ago, impact the was XXX where not further just the to we one weeks two interest acknowledge over to decided announcement I the believe we took Before the the history with long-term. about decision HubSpot’s difficult company of the want started, part HubSpotters. in most minutes. few I

Now our to grew results. currency year-over-year on currency. revenue XX% XX% grew constant XXXX and constant in QX full year in revenue

XX% Our margin and operating the full was QX profit for XX% year. in

Total XX% globally. XXX,XXX to customers grew over

net adds automation. driven saw Free, continues clearly Our more We bimodal customer by X,XXX CRM Suite, strategy to QX strong is our in value up strong quarter channels, is delivering Starter a which and CMS of which distribution open the Hub free through working. better of sign-ups,

for larger time, upmarket same are customers. momentum the also clear value At we we where have delivering

These large customers. fastest for that fact, in business the connected, In HubSpot’s area were powerful critical our is QX. results deals our mission of platform growing easy-to-use, demonstrate

seeing and increased the in makers scrutiny. about decision I deal demand November what including are of terms environment, In longer more talked we customers, cycles, budget with

throughout persisted While QX, worse. did not they get materially these trends and macro pressures

how product mix with customer we for solve our demonstrating we I to this can becoming environment against throughout to HubSpot navigate more multi-hub am innovation, three XXXX. deliver and shifting choice. continue hub priorities are by executing pleased strategic deals platform value the of to the with five the more even We saw increasingly deals. continue the We while and with

like our longer experienced decision Much truly it XXXX, uncertain a tighter a budgets storm of perfect was roller-coaster peers, on cycles. macro, and reflecting we Now making a year. customer of

increasingly compared doubling back. shifts talk are few customers, pre-pandemic. clear. SMBs a not built are on digital to As down our businesses They on to turning I are are digital. now Their

But value later understand in and by solutions. always a understand mode, has of easy-to-buy, mode. deliver resonated customers a buy in they operating first, now with we instead because HubSpot cautiously deeply are easy-to-manage value easy-to-use

average focused this Now quick with in to customers are eight value time efficiency weeks drive and innovation taking our value. with see environment, we on on a under to helping activate customers and

had Throughout fast our pace XXXX, driving of results. innovation areas maintaining two focus; we consistent of product key while

relaunched meet Hub, our and Hub side, new cranking. evolving customer’s hundreds was product just Service innovation Free needs. of added launched CMS the We to On enhancements

Three drove payment schedules. our WhatsApp omni-channel more insights integration; Campaigns ACH customer launches execution X.X; areas more like with recurring want connected journey and I intelligence commerce payment analytics and with to and more and subjects, highlight; with we

software record in company innovation a in by product one the of number was and the year as Sales. rated both and It XXXX capped by off being Marketing global number one GX

awesome are Just and testament to driving a the recognition we innovation. on progress strong making

are early of Hub product past over drove brain the Experience. customer-centric. happy Pitre had CRM and an was has Andy who our one Operations and is platform that product behind at to the exceptionally the HubSpot. years influence incredible leaders He Product XX lead promoting am vision, our organization of User we is I announce Also, on to Andy the very product as EVP

HubSpot the very made personal Chief be the step held her Steph as for to who I a Steph down role at wish will want decision Officer contributions to filling thank Andy best. of XXXX. formerly Product the Cuthbertson, end by to and her

more behavior the terms and We better even execution, adopted. into got XXXX, we in heavily tremendous total at cost customer go-to-market leaned HubSpot. of communicating as ownership of shifted In value of

personas waters. short, the messaging up the selling In part that choppy navigate We process. did team the and well more stepped are and executed delivered helped now and our clear customers of challenge, multiple buying we buyers to to

gears shift XXXX. to let’s Now

confident to normally maintaining ability is executing I Our navigate driving continued profitable am but times our uncertain stronger. focus to emerge growth, on efficiently. also in agility and

Here the decisions to of help growth. some profitable drive have are made we long-term

and plans reduce this workforce needs. our facilities. consolidate thoughtfully announced our X% by made First, in people align business We strategic to we to decision to January, resources and our

We needs with enable workforce. future. invest to optimizing in the that of our estate our also our innovation help align for are us and better changes the drive hybrid to growth real long will These customers portfolio into us profitable more solves

We the are taking steps drive over more also efficiency long-term. to

are marketing. looking we sales within at areas Specifically, multiple and

investing sales are On internally. the in rep direct productivity systems automation side, improve we to and

our Starter and on Pro to with Enterprise to both our manner. journey growth, end demand in for scale drive are continuing We product-led of more and efficient the a low business

On structure important the changes to incentives partner partner customer value. side, our commission we with align are making to

partners better and who will that lead to a co-sell margin into efficient demand, with source leaning profitable us are engage set partner up led are expansion. alongside product sales deeply direct, who and our motions customers. more us We initiatives and reward and multiyear growth These for

I our want strategic for up wrap objectives XXXX. sharing by to

platform While goal may be uncertain, companies. we in of CRM environment pursuing are number the operate one our the and scaling massive becoming for markets confidently

become first marketing, the and market sales is Our in to objective share leader SMB service.

HubSpot easier markets mega and adopt better on we capabilities. extensibility and to greater will upmarket customization, are laser-focused these governance We with enable customers more three

changing journeys greater by omni-channel will will of the we and rep lean expanding effectiveness. We into to And our our help improved through serve customers. customers channels customer needs drive revenue

macro Our been on next journey our BXB launched environment. strong interest HubSpot and objective the a a to We Payments ago is to despite year have commerce. transform over continue customer little early

and continue we as need. and flexible to commerce adding capabilities year, This will key awareness ramp, greater focused while our be on customer payment that native functionality flexible like increase driving adoption, of processing invoices, our we customers billing

bimodal will down our on strategy. double Third, we

of of while customer the is value low the working. Our end of on focusing customers volume strategy at upper adds the at expanding end,

edition demos, moved These CMS optimized landing Starter the beyond. the over down sign-ups. We and automation last results, CRM and expanding customers Starter Suite launched majority new self-guided on with Free, XX,XXX added to drove we net and initiatives year, our introduced

for to find make started of platform We will HubSpot to even out get get with and easier our customers quickly. ways to value continue it creative

high Our performing, final sustainable is and to build a objective equitable company.

on that better for and top us culture, better systems connection. includes focused coaching That foundational performance can and help talent, investments hybrid development are better better better. scale We

we when HubSpot. our for in employees’ and will customers our know for growth invest We outcomes we drive better

clear place a opportunity we and value ahead have to drive to for We in our customers strategy drive the growth. right profitable have

through With over will I our financial Kate to our it results. you take operating and CFO, that, Bueker, to hand

Kate Bueker

Thanks, Yamini.

basis. and turn our QX XX% as-reported year-over-year, grew year-over-year while Fourth full subscription X% financial an other constant XX% Let’s results. increased to and and basis. XX% quarter services year as-reported on in an revenue on revenue currency grew XXXX revenue QX

on year-over-year, XX% decreased Full grew constant subscription as as-reported year other services while revenue revenue and XXXX grew revenue year Full in again XX% basis. an and XX% currency both reported. year-over-year X%,

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

quarter, XX% We adds Starter total customer XXX,XXX, new to QX. net the in customers added again year-over-year. our to in continued bringing our net over Suite X,XXX up count CRM fuel strong

in customer multiple X% rate driver maintained and primary continues customers. year-over-year to retention healthy view We this QX currency customers hubs constant to as-reported of the professional gross adoption on in basis per the by and as grew as X% XXs HubSpot’s high of The Average to mission-critical. be subscription $XX,XXX. revenue in strength enterprise an continue platform a

driven retention was spend. optimization X QX, of XXX% sequentially, down by in points HubSpot Net customer revenue continued

remain a environment. result continue have few I last to mentioned quarters, As in to challenging as revenue we of pressured expect net the retention the macro

of to Deferred refer Calculated currency of charges. of $XXX growing million, year-over-year. million The remainder year-over-year $XXX XX% were to restructuring reported. end as XX% non-GAAP constant comments XX% QX, in a in was revenue December measures, by my relating comments and will except as billings increase the

was gross up Subscription other points gross margin in QX, margin margin QX up was other while negative margin X XX%, year-over-year. and margin XX% XX%, XX%. and services negative margin XX%, Subscription Full was was again X was gross gross year-over-year. year while gross gross points XX%. was services

$X.XX spending QX QX or full fully XXXX. the from was margin XX% million and second up margin reduced per half in in diluted benefited operating implemented the of discretionary XX%, compared $XX of operating both QX share. we that year income XXXX. operating margin hiring was Net slower to and impact was

employees. end employees, not This of At of approximately include XXX we workforce had slightly up quarter, recent up reduction the our the and X,XXX XX% approximately year-over-year sequentially. does fourth

X% CapEx, million $XXX $XX or million including was for capitalized XX% year. or in flow or software QX in quarter or $XX the the cash million costs full $XX revenue XX% million and Free the for of of full revenue revenue year. and development was of X% of revenue

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

wanted our Now I I bit recent more restructuring. dive before context into guidance, regarding provide to a

decision with this align Yamini As position will it indicated, wasn’t company. HubSpot we needs and our agile is a our a strategic lightly, efficient but people more as help better one and we believe that made

number product innovation headcount including a invest Our us strategic and continue better world. to systems reductions to needs, scale hybrid against of in allow to automation business a and

also leases, by consolidating better are Davenport to optimize We real in hybrid building portfolio serve our to estate base headquarters taking including our our Cambridge. steps employee

million the As X-K to connection weeks of a in with expect in $XX incur $XXX ago, in we million to a outlined few the we filing range restructuring. charges

These to majority be first be non-GAAP and operating quarter, operating from severance lease the costs to and be our results. incurred incurred free in We expected flow expenditures XXXX. costs the of consolidation while expect cash related profit, cash flow throughout cash will excluded employee are charges the

the that, XXXX. for And guidance with quarter of our first full review and let’s year

behavior taking involved to macro remains customer the approval The very budgets, process. environment the is longer similar discussed, to and have tighter in more seeing we deals we close challenging. today As are QX, people

throughout weaker persist these XXXX. that assumes guidance Our macroeconomic conditions

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

foreign first as-reported headwind quarter. growth in exchange to revenue the to expect X-point be a We

between $XX is Non-GAAP profit and expected to million million. be operating $XX

outstanding. X-point a is share to per in headwind quarter. $X.XX. net expect assumes operating income the profit fully million foreign margin Non-GAAP This XX.X diluted We between $X.XX to be to shares exchange first diluted and be expected

the the in up XX% year-over-year $X.XX billion for of of year is or expected total midpoint billion, foreign $X.XX year. the to XXXX, the including a in exchange currency, of And revenue as-reported for range XX% X-point headwind constant to full at be full

income year per profit $XXX is $X.XX assumes of to be Non-GAAP exchange net XXXX. fully and operating million be outstanding. $X.XX. XX.X full expected shares a headwind between diluted operating profit margin share diluted million We $XXX to million. Non-GAAP expect be to the slight to now as-reported between is for foreign expected This and

Most operating realized through in in margin models, from the you guidance. expect XXXX increase of following. As your we in is be restructuring included mind keep of QX adjust and will our our the QX

margin We between quarters, second expect third and X% first fourth be in in non-GAAP operating and the the quarter and to profit high-teens low-double in XX% the digits quarter.

as be year X% be and flow QX $XXX We roughly a cash of the of million and expect to revenue full XXXX seasonally QX. CapEx about flow with stronger cash free in to percentage for free

that, to remarks. for Yamini with hand closing And I over her back will things

Yamini Rangan

so you much, Kate. Thank

number strategy platform scaling As become I in to look have and on vision. to a progress ahead, one CRM the XXXX make clear we long-term focused a vision for companies that

to them and depend more we on grow. motivated ever help than to continue Our customers are HubSpot

growth have efficient a company. we build a making changes and are strategy also long-term profitable drive thoughtful We more to to clear

All employees adaptability partners to continued for customers. on confident in our HubSpot’s support. focus shareholders want our and your I thank their I our for thank solving for me makes future. of customers, this our want and to our

the open With for up questions. call that, Operator, let’s

Operator

[Operator line Please Jefferies. from comes of Instructions] of Samana Certainly. proceed. Samad first question the The

Samad Samana

macro The what also environment. about XXXX initial yeah? very should think the we guidance FY is considering healthy -- How

Chuck MacGlashing

Yeah.

the the us? you hear we Thanks. first of yeah, missed over didn’t of we Could first that. Sorry, maybe -- part start for part

Samad Samana

Yeah.

Sorry. Yeah.

we very areas about was shareholder what’s it saying to circumstances the times recent will considering environment. initial and macro in tougher XXXX think deemphasized was be Sorry, XXXX is compare letter the in guidance that under How the about it should we it potentially when the also does the I considered guidance tough and the comments the impressive factor an that, in to letter, your healthy impact employees following ahead the layoff? from

Yamini Rangan

lot Thanks your for Hey, Samad. a question.

color strategic Maybe demand will Yamini. Kate of bit start can So a then question and maybe is guidance. with in -- give for little on I layoff of this then the the rationale and the answer terms

long-term was This most lightly. did we the this we In realignment difficult had step investments something a profitable terms our this HubSpot’s the people not simply strategic drive is in we a layoff, and take make growth. decision of not And back, short-term of decision. so can was history if and that to cost-cutting we

we why And this there are to decision. two reasons got

services, grown business that that faster the The areas like we we even first when within is had and areas XXXX than revenue, where we headcount consider and recruiting had growth, had excess capacity.

aligned to and wanted clearly people resources the our that XXXX So we in ensure and our strategy in are our growth to XXXX.

a innovative are systems company. the efficient from emerge even manual The to in there wherever invest of We thoughtfully stronger and profitable in customer and our to drive to processes areas in invest drive as the more product we decade. outcomes We is and find be that next we key we over growth business second can invest rationale innovation to want we can cycle. want own internally so want automation so the

the we difficult got this why decision. two reasons those were to So

mentioned you QX environment and of comment letter the have employee QX. shared remained what we made consistent Look, the terms with Now demand in we the in demand very environment. in that

and the We saw we of deal it did QX get get demand saw not is and will materially into saw decision-makers better, worse lengthening. We involved. so more remain challenging not more approvals. deals assumed cycles have budgets did but We before XXXX. scrutiny going that what environment

Kate Bueker

with we with and The which get remains doesn’t it in about doesn’t And just with guidance guidance. what the is very QX. consistent throughout stays comments Yeah. materially consistent of baseline description we assumption it will I It our around saw but how materially difficult, is, worse. Yamini’s it better get Samad, environment, follow-up Yamini’s XXXX thought

of always Now set that the guidance variety said, outcomes we same as that try did this thing and to you know, time. contemplates we a

good we about here. we gets our if feel so worse also a environment And even set with external little feel bit that assumptions, about but case base good of that the from guidance guidance

Operator

the you. The Murphy line JPMorgan. comes Thank proceed. question next Please from of Mark of

Mark Murphy

am will have my pockets, change on noticed ability the four to three Basically cooler overall as months. buyer or margin just in the started if up and much think see Yeah. I take we more I echo saying just inflation do the of wondering, the on congrats the as Thank QX, summer this that time? do could in months be will that conversations. I think last in any the be perhaps the that, data, spring behavior out you curious to navigate you any am there. since might are was development changing if we might I environment and very know or you some but tough CPI loosening in you head sporadically environment you into anything some

Yamini Rangan

I Yamini. has environment Mark, a not it’s better gotten for materially Thanks your Yeah. this and is worse. look, demand It’s think, lot the question. remained And gotten not consistent. overall,

pipeline, current tend As continuing are and at of quarter, quarter, margin, are just tend deals, velocity. our be we to right? be that our the typically are Short-cycle next in couple created segments and month the they closed our pipelines lower a in maintain now to that in ones we end at of seeing looked months to things are there

So reasonable we there. see velocity

taking looking deals of because kind at involved, of is that typically just to of close, a budget. again, Longer-cycle tend the little in more decision-makers are be more to caution upmarket and this longer terms

would deals. the or minor of maybe that’s of say so I And shift that change types the in terms

kinds lot see about of pipeline, have the look there I care time customers in characteristics value. to I into and a QX more of lot customers been few pipeline, QX, talking within if we to what a at are Now QX, going

what we in that can value weeks, migrate, get to going resonating and the quickly can matter and of we get, there how I number is I The not is months. how value get, because quickly is we one am a deliver question HubSpot

The clear about between productivity so we matter that in across thing people driving and is second seeing driving that customer’s better marketing is where the to tight This and the and the sales. care begin pipeline. we alignment marketing and much visibility productivity on and are a sales getting year see

what driving platform I we how on towards then, action finally, But bar remains. a and team pleased It’s conversations costs, solutions view seeing. customers. point that’s cost eliminating of amongst am on a environment. with focused this really are lot high savings, That And bar high consolidation and for is the down a executing in with

Operator

you. Thank Please from comes question the The next Bracelin Sandler. of proceed. line of Brent Piper

Brent Bracelin

follow the you to and it’s business. of wanted on fastest Thank This the afternoon. growing good cohort. large sounds part customer like up I the

than We have the really consolidate willing ahead getting to consolidate you change wanting vendors of to seen HubSpot? Enterprise. seen the ever. year. more a an survey into be pulled it up the consolidate which are size I to feel relative the spiked to more on Have like in our vendors, does because large Enterprises you customers of ask than the appetite seem to

So in just us refresh upmarket lane? can staying you to mid-market on versus swim your ambition core the move

Yamini Rangan

lot Look, for remain a focused. Thanks we Yeah. very the question.

the XXX we and we deeply the segment about segmentation that care Our employees. segmentation to about. care is That’s that X,XXX

larger and in to X,XXX consider see I XXX we and a that the And are certainly that, what QX mentioned, continuing saw upmarket momentum is deals more we customers. segment Within lot now. we as to

that. better think these and think are and They and leads. larger more customers, back this, you they want year. visibility They of marketing step of better They about HubSpot expecting their about spend you out this lot rep want if pipeline. more want as sales a effectiveness, think delivers I

are delivering we We solution hubs are clearly front-office connected is and marketing and value, see our which that. a why sales

that thing is The consolidation. mentioned also second around you platform

key the and of becoming drive is point all of of priorities Sales Martech One look the and to considerations, in cost is ways choice. at year HubSpot at those platform the of solutions the Stack this to look Stack savings and eliminating

able and the the of entire because of in partners we our are because product we we market. value certainly the has the with in momentum work that’s to go-to-market proud that for it’s where be are these to organization customers adapted drive doing really upmarket our is have, terms Now of

Operator

of from The comes you. proceed. next the of Thank question Terry Please line Truist. Tillman

Terry Tillman

they just I question some congrats maybe of my help the these related percentage it or time, And But But you or big partners? us partners are bit unpack over instigating partner if of all you update have grown businesses you work Yeah. influence all some pretty I or the on doing up me kind can Thanks little for Thank benefits what an of kind partners. execution. on we bit a can partners? you I little mean partners. and about could a scaled up question and with terms out have it, funders like curious that from in a with changes and taking more you mean, had of come there’s I what’s as evolution the sounds outcomes if to from as well become and with up of scaled am you. strong Yamini, there just get incrementally of themselves.

Yamini Rangan

Terry. transitioning is said, working, to and look, partner and marketing scale we Yeah. ecosystem ago, we our to and export Look, CRM with we vision selling that, Happy to platform Absolutely. partners. few our are went our automation and a partner to servicing strategy take is to years

and to partner or That ARR overall. MRR XX% is the our compared influenced working about is

direct between MRR. and partner-influenced So it’s split good a

momentum. have We

better are are years We co-selling and much us. last three behind the over partners

additions. is mention partner Now ago. This structural XX we that the was change years commission couple HubSpot set and I like just when hub up our initially a had making to a did one back, we step of commission. If are

the you portfolio. years, our couple we over of as know, then expanded all have last And product

CMS and more we Hub, to added Operations we the added added have additions have Hub We have hub.

partners deeply at with along it partners of it customers, us a step we looked now incentivize things. with and want close our who this involved rates our to customers. are retention couple we and drive We we engaged with be to strategy, better leads and to as So partner do leads better back to commission journey coming that. want to get want first When to them we

second, And more co-sells. as enabled incentivize to as on want multi-hub, to them we be driving well

we few the came we announced just structure, where partner to again, announced, a our well them with so the changes to just I customers. have And connection commission today, yesterday, kickoff which from as incentivizes as deeper

And I continue have it, they a they top of evolving partners been we change understand a terms that number get going the weeks to multi-hub past within talking to in they this to and our of the few over are understand to that we are invest company ecosystem.

overall, by the excited partner change, evolution as So, the the of as well strategy.

Operator

Sachs. question next Goldman comes The Please of Gabriela you. from proceed. Thank Borges

Gabriela Borges

afternoon. the Good of perhaps bit on and how being the have understand XXXX to to headwind think for you vertical growing Kate little and to the Give for you. was in question? technology specifically in us retention will a a from going a number. exposure net much be and sense the you. of Thank with more scaling on customers hiring Thank on Questions the do vertical, a you shift technology trough XXX% what’s looking that

Kate Bueker

expectations we couple that which prepared that fourth shared quarter the let in I mean is retention revenue QX. in from it facts, shared but give with net the in the start down much XXX%, just was which me QX, A really a bit was in Gabriela, line little very our shot. with but of questions there, remarks maybe Yeah. the a I in

that’s really One we what you think high that the gross there’s XXs. big there of hung or very and is know, retention. two And in net really resiliently dollar components I customer call retention revenue in

that a that of the number which some talking and edition upgrades, upgrades, is are seat upgrade rate some upgrades, are piece of other tier The about, net includes motions, contact cross-selling. you

but it’s are challenged of upgrading, that rate has environment upgrade the HubSpot. sharper which economic been net slowing customers both in have spend with also as at their a bit And they on overall the really eye a that motion are

and upgrade both on side. pressure seeing downgrade side also are we so the on the And

revenue about likely And But in remain. good QX. to net that to down ability pressure the We actually in hold feel retention expect that, we net really revenue is we again near-term, that think tick will retention above XXX%. our

of term, continue believe the that Over deliver any longer healthier can we revenue XXX% environment. macro retention in net we to

Operator

Thank you. The Jaluria Please RBC. proceed. next Rishi of question comes from

Rishi Jaluria

Thank is Oh! from dig against that you. the of in incumbents think resilience to kind the business my feedback need to about so far. post-relaunch. to Thanks of you already competitive Wonderful. you or that that any or nice a so you It’s see has there when far? in question. gotten be more have for that’s momentum I features the be further more model. little some have wanted really, kind the customers functionality some with And are enterprise-grade importantly, bit of something Are order What you happening? other seen the taking to momentum Service Zendesk so Yamini, of into developed much Hub the been like continued seeing likes of

Yamini Rangan

Service in see we the were of we a was in that and question. and Thanks Look, of move are the Rishi. that about lot a year. there did features the terms Hub needle a big pretty Hub. for Hey, go-to-market. Last excited in relaunch year We the number momentum Service terms very of

Now prepared deals as and hub multi-hub is about lot in wins as customer part strength seeing Hub. that little are momentum, of three, we five bit Service well the and of I the more remarks a a mentioned that

be are our one And to omni-channel we strategic to continue service to driving in workspace, calling functionality, going leadership SMS. is XXXX Service it, to of objectives Hub in terms going it’s evolving focus to on improved knowledge And are support of and are Hub. we in go deep we even Marketing through more base, Sales Hub,

that feedback The a pretty are positive big launch was win and there. we in from of recent WhatsApp got our a more share to we excited pretty lot QX, customers and

satisfaction. we back the customers step more improved it, when are do more to customers, we value As customer begin these things, we use delivering are getting are we we and and listen, multi-hub driving

of And is, the for Service yes. those each Hub, answer questions in

it, drive a year So strategic Service pleased thought will this Hub. objective we with it are be to leadership to within continue and

Operator

Thank Wolfe from of you. The Alex next question Research. comes Please Zukin proceed.

Alex Zukin

the how for taking question for of congrats versus we on to potentially term it in and trough, the quarterly like standpoint customer over that curve quarter. obviously XXX%. adds basis? meaning versus from Is my activity solid Thanks the the XXXX -- XQ a XXXX is guys. from little think of shape think Hey, of guess, about growth net that started, Where I about but get comp similar, guess, of if this you would what’s year some slightly to expect clarify there XXX% it past momentum the given if this How ASRPC, comment revenue of you keep -- that the seeing? start a does return you were retention, it short then, different? that to meaning when rebound bit? to a on that upmarket or be would expect And to to like has are I you just there as changed -- us help you see -- where where

Kate Bueker

will very do will I to of all best. Thank Yeah. hit my try you. I your questions.

much knew. question. very retention of your just wish I environment. the me the To answer view short with tied it’s revenue I to is, Let like, macroeconomic The start me

when and net recover, environment, like as see that to -- the think much start start are the to when will tied I we revenue rate, recover. on net to of And think very about I and the areas that’s retention solidify external I think see you they pressure upgrade

question KPI will adds. try then I address ASRPC to and around your net

This net things end. is think quarter are low of at adds astutely the a bit little second noticed I our you strong shifting here. really customer that now

really into sign-up it’s volume sign-ups Starter really the nice CRM, of of and net resonate free our adds. in seeing are that are seeing we We tier driving that free real sort is CMS customer converting strength our a

consistently, fueled digits adds Now the our Enterprise after below is there’s and it’s drove you QX we push period like know, dipped of net what end being across in that constant pretty up And bimodal. ASRPC and -- that the real ASRPC in as you in XX% by pull at in strength of double a growth. when low saw currency ASRPC customer

is are the ASRPC XXXX And success end more look like from that single the going continue and XXXX we into that in low-to-mid pressure to to expect low at we is going growth digits. that seeing

Operator

apologies. Please Bhatia Please William from from The proceed. Michael Turits of question you. next question My of Key next Capital. The comes comes Thank Blair. Arjun proceed.

Michael Turits

Yeah. Thanks. everything, especially the on Congrats Yeah. margins. Thanks. on

-- So balancing an are expansion the adds? the maybe where adds topic that as that margin with extension opposed the To relatively as you impact that, a easy on growth, Alex’s driver, how does Kate. of of less extent that of to should a question cost be arguably of extent -- you more act with margin a as leverage went I as will so getting out you to lot ASRPC focused take ASRPC that out to easy

Kate Bueker

our we Yeah. have talked I like adds. in goal ARR in guess, your maybe customer answering versus to like time, just I past, metrics growth about on growth start new ASRPC over this is are of drive one and the the will or focusing on topline consistently focusing by ASRPC. comment, not think foundational is, other I to output or in adds These which drive

when expansion balance customer just probably, base be and in to strategy, the consistently naturally that going in we net adds, other of as time of moves And there’s more that’s in investing where bimodal some expansion versus ASRPC around. sort and have installed us see in new of periods you times more

X, We We was full and question QX and guidance in provided balancing leverage improvement. basis ongoing margin to of Over committed demonstrates asked. you me, for and financial profit XX% operating year of the profitability we year another shows continue XXX time, I other you that that framework against commitment our at and excuse The margin had points our have remain this to profitability. delivered results that. we implies growth delivering a our around guide growth to nice glad between am reflects and balance and

Yamini Rangan

Yeah.

I input marketing net well our ASRPC. thing led have rep is, to would as Kate about then think think all I as sales we are The result think and say of sales long-term the our on the these growth, look, adds growth, product led all we as of it’s in engines efficiency, and that growth partner hit especially one there. as and we and mid- about this like points

more become reps And we structurally more systems, are three our driving think so that make more can changes investments so we more and and so some led growth, driving initiatives making of can efficient. that we these we as sales the even more more get we even we partner productive; are we can talked are led about of we growth, about each more things; automation, led efficient; product growth,

balancing about have then initiatives as growth profitability. to we we how we really and think are balance have growth we and so and committed we initiatives profitability, medium-term And short-term and both

Operator

Thank Raymond from Peterson you. next of James. The proceed. Brian Please question comes

Brian Peterson

on landing for Is I’d will a time on perspective higher understand there’s the with understand taking tiers more of adoption spend multi-hub or I the But you and lot like base, because a hubs the function a the on existing on a quarter. Thanks that have motion strong new the to net obviously of looked well, love Hi. and congrats success there. success seen Starter to having cross-sell love think got echo and question lot the that’s I’d more attach the we rates are sell. for I of in net what down as has secular there? on kind of cross-sell the where

Yamini Rangan

Yeah.

let cross-sells. lands, Look, seeing strong from and think I maybe multi-hub step And we back this well look are I as great a customer that’s perspective. question. the as think, at both me

to customers, couple things a of talk becoming very we As are clear.

this has of The As is you and has sales all about a driving they it tricky. alignment. are and between marketing Whose pipeline getting handoff marketing quality sales lot good pipeline? and think been XXXX, is about

want activity think So tracking from better needs, customers, effectiveness, growth perspective. they sales campaign about they to if more to this want a want want you they up line of all more they and

multi-hub the in in sale. that Operations initial therefore, see starting starting Marketing example, are our and Hub, and more conversations, for Sales there more points, with And points we

happening that’s So within new land.

And adopted, for to of then which a the VP VP conversation then, or Sales see similarly, what driving value have with becomes example, is Service. we see is or when dialogue cross-sell they Marketing adoption, Sales the of of easier an our it has easy-to-use, the and HubSpot, proposition easy-to-manage, customer

have do And first look the at the kind that of purchase, get additional and customers a find high visibility in hubs so we of propensity across year to HubSpot customer base.

very And so as wins perspective. five-hub lead those from combination of to the both healthy as well a three-hub, customer of

Operator

you. of comes of from proceed. Thank Please Brad America. next The Sills Bank question

Brad Sills

the where on Service Payments? add the three strength tough Maybe year congratulations incremental a Yamini, across nice some and love on the Oh! mean deals? finish there, where seeing five-hub deals real is like any obviously, to So there’s get in bit you if could that It across and my CMS, topic a to are strong, will Marketing, a stack? environment. color Great. Sales in the I core. and drill little multi-hub same strength these stack I larger incremental would just anything there Hub these sounds you and on

Yamini Rangan

end pleased, multi-hub upmarket, low at in it very strength because we lot, it performance strength QX, our a and it Thanks are look of Brad. shows Starter strength our Yeah. in Look, think, if adds shows Suite. in you shows in I

strategy. bimodal our is this And

lower even strategy scale HubSpot, they to Pro of tiers HubSpot bimodal value Enterprise working. to is and Our and upgrade they and at and the as from customers that continue see within and we more as add strategy bimodal volume value want to end they get

areas doors area Hub that’s seeing certainly, Marketing we more Sales that become are are Marketing see pleased Sales front and A door. Sales talked And tying and to a are and in on have terms conversations front legitimate about. of we we strength, which and very core an product lot

other And And perspective Marketing have it talked comes and deeply integrate then when organization, they Hub Hub. an about systems and Ops in. Ops how they want and within we to reporting value and providing on the buy Hub, building Sales from with and drives integration and Service that connect

across core all pretty we our of So momentum. good seeing hubs, are

In term that’s terms a commerce, longer bet. now of

and with It’s strategy early well year, pleased more as activation, merchant We as look are as super it’s this go, lot I there’s stages, the just and at a early, our to levels clear. the of transactions.

to and a Service, Brad. in deep Marketing, those little Sales of that which to commerce the go want strategy, maintain in working. do you we by is want gives continue and and hope bit bimodal we focusing more on to both have to I the that We want momentum we color,

Operator

comes Company. question Josh The you. Needham next proceed. Reilly of Thank & from Please

Josh Reilly

there. Hey, Thanks for my taking question.

in regardless or magnitude macro prior the upgrades would the the customers characterize year recovers. cycles? postponing to at in Starter customers migrate the Thank of the what last percent of time to need as demand past slowdowns? highlighted when due of of thought where a you have these and pent-up a How Day And is Pro you. to which seen mix kind Enterprise mix macro I customers today points migrate customers, paying to market Analyst is versus of interesting the the the large creating was of there total point you potentially of One the

Kate Bueker

that. a is strategy us. for adds Thanks in an Yeah. great We customer interesting It’s feel long-term Starter question. do like the the momentum for

cohorts pretty today are rates. started have we what Starter actually upgrades, seeing around In of healthy that us with newer are at terms the upgrading

drive actions a down, seeing that the volume to really We for year are customer continue We free and things experiment lower the talked that took solve introducing we packaging. CMS around at like last a end. about number automation to of bringing and we to pricing marketing

nice with in have they patterns All are of past. to are pretty at their has healthy resulted their that of seen Starter upgrade that time, and in and usage the that closely are consistent we make customers and cohorts number we joining us. like the consistent sure what the those of watch But same a expansion really

Operator

Keith next Thank question you. Please proceed. BMO. Bachman The of from comes

Adam Holt

Hi. This is Adam for on Keith.

deeper to taking little First, a questions. guidance. thank revenue into you wanted I XXXX my dig for the

on contribution to growth Payments Payments expect think contributions enterprise we still. your early commented you and from that But relatively for being then comments the have year I hear next I So I ongoing price you know margin of hike. kind previously

for I So those Thank year? each wondering we could you. parse to if the was out benefits next of

Kate Bueker

the much question. Yeah. for Thanks so

term just would I Payments here. Payments. Yamini’s in reiterate details hitting as investing on early, the I we comments. for the Payments, of say we are will are all -- You long is

As XXXX. in going or is I it Day, not a material contributor to Analyst be -- shared at profitability with our growth to

Hub Enterprise continue a not to XXXX. price hear driver the Again, the On of change, feedback it we is results the material in on Marketing change. positive

Operator

Thank from you. Morgan Porter comes of next Elizabeth The proceed. question Stanley. Please

Elizabeth Porter

Great. Thanks much. Yeah. so

and top at You broader the is the lot curious what you landscape. shaping scrutiny, deals talked around are taking the these up that are help funnel clearly faster are should factors know I and and investments seeing are highlighted to across Thank convert I which longer tailwinds just you more the to look of a how hearing was for more pipeline after about we sales and macro on medium outside in near-term? we us partners, just anything of that XXXX? you.

Yamini Rangan

about it’s Look, interesting. going things SMBs it’s deeply SMBs we great there customers, are are to are question happening was whether very about the to and survive thrive going are question. -- downturn. a Elizabeth, SMBs time. whether during to two to same question this Yeah. pandemic. a talk at digital When There’s committed the

this SMBs are that and hear their They in this in their digital to digital. to to conversations over we are They be able my are digital. continuing leverage committed build solutions the customers I touch on pipeline. to continuing in with customers. But businesses what stay over to we find within And is see and with

about time, buy cautiously want is understand at we more longer the little same to deal have what talking translates into value that they that, to been a Now they want bit and cycles. deeply,

change going are execution? seeing. and as based how things our like indicators we, leading dynamic how at monitor I and on does else, to look think we are our have few continue what we adapted to I go and a to we that continue we think everybody

leading with are We value.

the customers teams, terms in see conversations can Every partner enabled time proposition that value, organizations these savings conversation about the resonates. delivering well cost as our value is And our well have consolidating really to platform. value, on sales quick as of about the our are as and as to

us really for go-to-market the adopted. has So

strength. product a we a of And from place perspective, in are

mid-market become platform are GX. talk choice us In we looking number number Marketing, And they as are savings, are in in cost options, are conversations. in one GX, driving heard driving just they and about been we one at have productivity companies rated that of those a whether companies scaling You we or have for Sales.

strongly. to So of economic all overall, point, turn. our conditions, positions I as as the us macro going really the cycle then, feel the combination even product we cycle, And execution some me, well innovation, given go-to-market this as expect is at

right And and so part of the focus of team cycle is, we thoughtful make to now turns. when strong stronger in decisions the do position terms leadership the ourselves how to emerge

we about think year beyond. and So that’s how this then

Operator

Wells Thank comes next from question Fargo. you. Michael of The Please Turrin proceed.

Michael Berg

on seasonality Hi. This in -- consolidation half that the Berg back to the wanted When XXXX? is out earlier call. Michael those great on any seen of laid double Michael about from this beyond to year, expected click on thinking is benefits from am the quarter. you into are number or a on I margin that’s be Turrin. Congrats I estate real the baked benefits your there

Kate Bueker

accrue restructuring will business to So the QX the question. in -- you There and there -- the is thank benefits of QX. the for

spread across half have in As from is quarters. back real workforce to seasonally of the half the of some those pretty benefit is amount back There know, tend the estate year we you stronger reduction benefit margins evenly anyway. and the

Operator

Thank of Blair. proceed. will of the William Please you. final Arjun And line Bhatia come from our question

Arjun Bhatia

of launch on should more see the of or as to roadmap roles, if how hubs restructuring for little is I the guys impact the if am curious there maybe you question. the a taking to a playing maybe support this type purely any Thank bit. restructuring result back product one impact to you, the we that for Yamini, focused just out? new Perfect. going was

Yamini Rangan

question, Arjun. Good Yeah.

Just about to kind we thought of how share of this. some perspective

as long-term was we within the scalability costing investment this drive innovation, strategic short-term We times, have as a our that so decision. well was mentioned of a This this can couple realignment of organization. not

economic our and teams across excess our cycle. those we is like so step align this we look the as back, fact areas from were on And emerge to stronger capacity and that have So company best the can strategy how with pulled we that the we people, aggressively. we services to recruiting resources back

looked to us also We and areas for opportunities work efficient. much there was more at duplicate be where

internally very the product, we process, carrying as of about reinvesting as direct we we product of as quota areas in have couple said as are innovation, throughout Now well roles. can in scalability. well drive as careful so And a that we were protecting fact, times,

ability terms of objectives innovation have and very to fuel feel strategic of we continue we good So to had. the pace that in our

Operator

for closing the you. I now to like conclude management that, our remarks. with today’s we Thank call. would to team the will session over And for question-and-answer conference pass

Yamini Rangan

to HubSpot to so you quarter. as partners appreciate have all employees, Look forward Thank their navigated much next A your customers, We resilience talking for these of everybody. really thanks to you huge they times. support. all

Operator

conference that, with will we And today’s call. conclude participating. Thank you for

You may now line. disconnect your

HubSpot (HUBS) 16 Feb 232022 Q4 Earnings call transcript