Earnings call transcript Q1 2023

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Operator

Good afternoon and thank you for attending today’s HubSpot Q1 Fiscal Year 2023 Earnings Conference Call. My name is Danielle and I will be the moderator for today’s call. [Operator Instructions] It is now my pleasure to hand the conference over to our host, Chuck MacGlashing, Head of Investor Relations. Mr. MacGlashing, you may proceed.

Chuck MacGlashing

operator. Thanks, welcome quarter and call. earnings HubSpot’s to afternoon XXXX first conference Good we results issued that close. the be after in market Today, discussing release announced will the press the was our this and Co-Founder and Kate Financial is call Shah, Chief CTO; the our on Officer; Dharmesh me 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 within of XXA and our During the this business to other the call, meaning XXXX considered be Section Exchange than related Act of we’ll Exchange statements of that forward-looking and fact those our of amended impact statements, Securities amended. including expected fiscal are of the growth, make may as All as of of XXXX. statements regarding Act statements XXXX the Securities historical full restructuring, future for movement guidance forward-looking quarter including expenditures, operational outlook, operational and and business year expected the acquisitions of second performance the FX financial management’s financial and XXE

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

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

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

Yamini Rangan

XXXX, share for AI and and perspective to welcome macro current on observations joining our to environment much, to what and I customers. want on us provide so means focus generative call. our HubSpot the Thank Today, the start everyone you some Chuck on on

the We margin to revenue our Let’s of delivered currency X XX% customers results. margins customers results than to to fueled that by year-over-year, These pleased with and points constant gear by XXX,XXX XX%. in our operating growing start more net high bringing bimodal our year-over-year. Total the momentum QX the globally, in a year that with team. expansion X,XXX the and additions strategy coming We solid XX% by our with quarter. customer is the show over focused is had product in grew over over of go-to-market year execution working. into I’m HubSpot innovation start

We to focus driving the continue market. upmarket. market with our value to drive of volume remains in want segments increased bimodal Our end while lower momentum gain the strategy the we QX, In both at clear. of

lower saw our a in the optimization ran pricing strength we in by sign-ups customer we starter plays and end, additions. our This On driven net in was edition. free significant uptick

are increasingly we HubSpot the for companies. yet becoming scaling and In easy to addition of that, to platform powerful, use, is choice

to is and provides hubs installed up proposition connected two journey HubSpot’s over environment. for ARR savings and in or value and hubs. source full customer a cost across looking XX% are delivers starting our things: both. clear that increasingly entire see Looking Upmarket we continue enterprise customers their single with visibility on customers market, of platform truth More our this base are multiple resonating. more X of professional multi-hub now

were Sales marketing an the drive an Hub marketplace, Specifically, tighter BXB After Take they look Sales more eliminate example. e-commerce able and to gain as continued build Hub across customers efficiency other overall their get better a marketing and comp, Liquidity saving between budget. to and momentum in by X were to sales to office. driving adopting to multi-hub, customers, conversions drive QX front their as They XX%. and of example our Services and and alignment with a connect Marketing insights sales data to reducing in tools, effectiveness. is while growth increase This time great their cost able campaign

Hub in connect especially Operations the saw systems, a also demonstrate value, We processes focused more value come that They in customers economic deals as environment. consolidation. automate can of clear and see up on this solution

connected QX our top are Ops and customers XX from efficiency leveraging our Hub, seeing fact, hubs am value over In deals I excited in boost our multiple adopted two-thirds platform. the of closed by

strategy see, you pace of will our innovation. product and is continue we working, As our bimodal can to maintain

to I Overall, woods seeing we gears a continue not environment macro in yet. and out want the environment. what and in operate we’re we the Next, of to are shift tough share

they’re sales While conversations cycles. my on we These in scrutiny. It this with tighten by their terms based the contact see under see on and Decision-makers clear sales remain to optimization and seats, and portals. our cycles can in focused involved are patients optimization budget, cautiously. spend customers is budget we that norm of continue top-of-funnel executives tiers have belts activity long continuing remain across budgets with to multiple in improving, committee and become

growth. solid on a execution. executing Now focused for innovation challenges, playbook and consistent remain product sustainable despite We these we and have driving

product side, the cranking. On we’re

innovation marketeers to driving Hub, strong Marketing that analytics moved we general me the today. we’re and become remain journey with order and in to In share availability One in to get for QX, the adoption delivering and service of usage customer leader and needs on are is focused marketing, gives sales features that objectives serves companies seeing there. of strategic scaling we depth our we meaningful confidence market

and sequences for advanced with functionality With upmarket tools enhanced we permissioning Sales beta. customers Hub, treating e-mail selective significantly removed and AI generative the to

with dual on our the from we making are become able progress We a been request need moved to customers private with audiences, introduced key multiple commerce, also product and various Hub products or subscriptions And brands. feature knowledge to who This to the launched I’m to invoices number bases. Enterprise a top scaling one payments we companies. Service upmarket payable thrilled journey has be support CRM for and in beta.

On the been the HubSpot. has of cost on ownership of communicating total for side, value strategy go-to-market to customers our and focus

Our customers resonating more to look to connected value time clearly quick is and as become message and efficient. effective platform

are We our driving partner focused channels and enablement across both value-centric keenly direct are we conversations. and on

product to and to Looking navigate continue ahead, innovation we’ll playbook macro following strong our by this environment consistent execution. drive

on AI our are thinking well customers. click value I more for and want share add why to double Now about we and even to how innovation we’re generative positioned

AI fundamental Activities ways. It the the businesses landscape language. X stages is scaling that and will We a will are unprecedented generate enable SMBs to time, of and more in changing took early all longer once SMBs shift. in rapidly and generate AI. expertise be code, relevance. insights massive record them for money helps serve natural speed content, no customers, This them a deep using transformative do Generative with with reach opportunity this shift companies. at And generate Gen

can the CRM, for and and more So block can professionals we we Salespeople this use insights foundational really AI mean models our e-mail of more social contextual for sales believe customer era and teams use together of write with guided we growth drive customers Gen help the will data go-to-market and guide use does effective. simplest AI In effective to better This new AI to in guide Marketers guide results. offer what marketing for deep go-to-market them fuel power can poles, customers. When a better resolutions service it deliver bring campaigns them terms, can will professionals? prospecting relevant suggest support. in e-mail them teams and HubSpot AI to anticipate and to make creating content. service more the proactive needs, Gen

go-to-market We will drive believe guide better them replace teams. to AI outcomes. won’t It

ability excited there While benefits, customers. even to more we’re gains be effectiveness drive growth efficiency about for the guided will and

in stages While of Gen HubSpot early AI, differentiators. has unique the we are

First, making to relevance. we easier data CRM broad and for data it HubSpot ingest unique unified AI have cohesive and drive and is distribution.

the gets Second, center we’re our where work is HubSpot at workflows. done. customers’ of

insights to office. relevance So we across front the and content entire generate can bring

We’re not another AI point solution.

an all-in-one are AI. platform CRM by We powered

daily we made beta over we’ve with or users an Assistant Third, with our assistant for with has seeing leveraging progress up e-mails, March, in are and and content feedback QX in approach always has a at have alpha. human to in XX,XXX customers had spot We of we of ChatSpot, and early positive. companies it advantage sign more. chat very in public marketing blog a landing pages ton creating launch human-centric launches in date, users and the had a Since thousands AI. the feedback for loop public Content been posts, of

our entire across We’re ambitiously CRM integrating platform. AI

more benefits. transformational AI don’t I creating the incredibly have value customers. is become to deliver So to to our expert for excited AI the reap even our that opportunity am customers

made to progress the Reflecting quarter, on we scaling platform CRM on the I our pleased am becoming path choice companies. of for a with

innovation strong Our fantastic pace the teams of drove execution, see. which was to and maintained just product

to With through QX more take in to the over call Kate you turn that, I’ll detail. results

Kate Bueker

Yamini. Thanks,

. and our results. as-reported represented XX% currency XX% XX% Subscription while growth was basis. year-over-year reported. revenue and on on in revenue Domestic an revenue. revenue increased other total while basis. International XX% financial XXXX constant grew as-reported grew of XX% to services in turn QX Let’s grew year-over-year, currency year-over-year, an XX% international Revenue XX% and revenue revenue XX% constant as

X,XXX year-over-year strong revenue acquisition to on year-over-year. We in customer Average added constant again total XXX,XXX, new grew count subscription Starter customer $XX,XXX. in to XX% net currency customers fuel our net continued X% adds over as-reported and over bringing quarter, X% QX. in the an customer up basis per to our

customers by volume the enterprise by bimodal we at was growth of the ASRPC driven of starter and our Our end strategy. adoption customers, professional offset by our added low multi-hub large continued

well the by customer Gross slower across points and seats, the tiers was high X spend for contact portals. sequentially, Net down retention retention of HubSpot driven healthy expansion XXX%, optimization remained in revenue as as quarter. XXs further

to While net retention revenue retention refer can above The in growing we non-GAAP we my currency net near XX% Calculated remainder constant we in were comments the million measures. expect quarter, year-over-year and as in persist, of pressure to to continue believe $XXX term the on will reported. XX% billings XXX%. maintain revenue

in our the of Net Free hiring including head diluted XX% X impacted Operating and restructuring period. the benefited margin or marketable or points $XX million in actions of was XX%, March. billion January, pause per the $XX year ago and at facilities compared to cash our up at was a revenue, cash margins end million count Operating of costs, we and $X.X income flow QX. temporary $X.XX fully share. totaled which overall implemented was end from securities

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

what optimize to we half As Yamini in highlighted, new customers become environment while macro decision a we committee tight, the are continue spending to customer second saw are in for similar existing Budgets cautiously by ways difficult and that to operate XXXX. looking on behavior norm, spend. with of has products the is

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

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

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

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

for the cash in roughly a of flow adjust free free about you flow your following: XXXX, be X% percentage revenue cash QX. to we expect full as be stronger seasonally $XXX year CapEx in with of models, As to and keep mind million the

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

Yamini Rangan

to commitment so you growth our long term. durable, much, want with profitable Thank Kate. I close to driving

scale. ahead, focused Looking remain us that foundational we help will investments on

emerge better we better last right journey. have deliver even the for As our systems performance, for for high doubling environment all partners and down I and better shared and enable the I These stronger. our right navigate to customers, long support employees, customers. call, our will continued development our and our earnings the shareholders automation this strategy value on during and believe employees us this internally. and hybrid want our I more team initiatives people, over connection on thank our drive we efficiency more to and the world term are to

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

Operator

the [Operator Please comes question first of BMO. line Instructions] The of Bachman from proceed. Keith

Keith Bachman

Hi, wanted on many I thanks guide. just to generative AI. and congrats question quarter on and focus solid my a

of thanks. in about You Many wanted look from a words, on to of some you and to that video you the is, enjoyed the AI might monetizing do I will some be begin it over out these part environments? financial benefits about But of activities think as other when do certainly some think Is time monetization? it see is So In plan moved And ago. talked activities How skew? results? do you hear how you your horizon? as investors it of the when a pricing activity? to Dharmesh’s beta production

Yamini Rangan

a AI AI. when was people up Keith. about happening transformative. kind if think is is market to how question. was is very shift us how generative to how buy. customers a Thanks on and of customers to is there big HubSpot to your excited about This cause market and you really fairly in we back and And And this Hey, that for Very lot helping our led And Yamini. got like started sell. sell. going as that It coming step generative they transformative. And think

lot And potential. of think exciting there is so a we

pretty question, in monetization clear terms monetization. comes we customer very delivering value the focus to first principle a on, And terms this there we think well of and we are iterating and and innovate value our first just have is on of these as as Having assistant from monetizing. early it are follow. technology. we when In for will feedback, We fast, getting cases days said monetization transformative that are that with of tons them help improving so more we talked get much customers ChatSpot use to we we content especially continue about can this with really that,

products They do drive we are features our the we become just this, table within As of adoption some core and part engagement just of the customer to will be going of part core stakes. product. and how

and how into longer term, and higher there are value will it specialized maybe our use monetization. if additions Now, like more co about increase cases, thinking then ASP goes that’s we’re enterprise and

focus delivering on for value product. we to First, want the

quickly the hands in to asked we and which was last You Well, question, do alpha when launched March. customers? of plan get the market this pretty the It’s we within data. into

getting a pretty are and the of the excited. teams lot We’re feedback

of are of and a working cases are list We internally, on. long lot teams use having a is there that our Hackathon

not where I our think introducing So us see accelerate and you’ll innovation, be even of in pace we features weeks, maintain or will quarters. months

exciting lots here. developments of So

Operator

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

You may proceed.

Mark Murphy

that HubSpot free free Yamini, execution of products at Congrats free I’m this free is form noticing free great templates. just point. business quarter. CRM, a huge during list you. There CMS, has on the Thank builder, the such

that of are you multiyear are look and of free, and you your project your on-ramp it just much visibility for funnel. of into starting probably have comment expanding kind despite to is just but sprout So an from that. because I’m could turn at there, energetic revenue. free would you if customers the margins that on is seeds these like how then millions are Kate, at how boosting top it large forward of And the little feels it kind is that wondering can

Yamini Rangan

tools the strategy get customers digital for and gets value. getting the lot mean to value. presence value something about, a growth with to and that’s are There got we our HubSpot that this started. want of tools of ton continue of that That small, question a When can to free company When talked value talked of Hey, in as a because tools. the the add CMS. just adoption deliver then I other creates number work had really and of way, top a the strategy. strategy our that the really funnel. to possible get – widest as the is Kate clearly by answer. which adds much a about like free I’ll heart from businesses you continue started, wide conviction of tying tools maybe the And have the I this scaling possible as well started it that is free deep I love And bimodal Mark, funnel, part the medium most as strategy. we question get really then to to the have to which and we and a is free you what getting

so the to over number and quarters. customers the free from And increases. been starter customers of pay looking sign-ups conversion the this we’ve And past few at

with We’re terms get how how continues that and our of even continue from And they to very in customers, pro happy starter value to happen. conversion enterprise.

delivering strategy part really address Kate, it’s the question of the So for our maybe to that want you works. there. second value And

Kate Bueker

Yes. Sure Mark. thing. Thanks,

scale of I low the against them. we not moat, of creates a it’s I customers business And visibility pretty strategy That our growth. It enhances for also over think overall value the is it of of talk nice it reasons on lot the platform a us low-end customers which that really disruption, one really to life lot just dramatically end. early of of about. creates dynamics economics, the interesting there said, great the above their just think based and product-led can at a competitive low-cost is a over love a the I to way increased using really would cycle. long-term say of get HubSpot our lots in

upgrade over starter will of portion some customers Pro and those to time. Now Enterprise

I that cycle growth think one many know faster that. a of bit motions you our happens time. this But really is already that with we a over Oftentimes, just sales drive like. also will of that

Operator

Thank Samana you. The Samad from next of Jefferies. question comes

proceed. may You

Samad Samana

key a more of portfolio I an I like has the guys. that about how Hi. couple, maturity that’s the of been and think And you’ve been that talked more product to tier Great of lot next for attracting curious seems sales think if part customer customers up even those an be bigger customers talking this unlocking unlocking size. that customers. quarter, the more you’ve the I’m feel marketing kind Yamini, larger to larger just and is last hubs integral really market of you maturity than about. and much

Yamini Rangan

Thank you, Samad for that question.

them We’re really to happy a Sales Marketing billions, of grow ability think of I product billion-plus and multibillion And Sales unlocks well that go multiple market. it plan. at Hub $X is million-plus business both $XXX Hub as that’s of with what got is going are to Hub as the kind up and kind into line can

super that. with We’re happy

we’ve Sales think looking record. the system on the true past that a we’ve Now functionality steady a specifically upmarket to of at Hub, the business And few over reached as I have point. build years been needs to march that

We have upmarket for hit critical that an mass customer.

is reasons, to are actions within legacy enterprise of to now viable right? legitimate front this a couple door and We is market Sales HubSpot. Hub alternative a other And a the

these are that admin. side, product aimed and at more CRM The us are objects now you’ve from customization, and the deeper hearing of use and our larger steady On upmarket just product for all TAM, releases more custom drumbeat expanding sophisticated serving we’re features permissioning, customers been cases.

All of working. is that

our areas that ability talked serve all sequencing. quarters, last right? also something I sales In that, customers needed the the do addition to couple just upmarket of cases, to more much are in to over use forecasting, these product. addition adding within sophisticated intelligence of have more about That’s to ability we’re

innovation to of huge for the kudos product keeping So, upmarket that really team serves customers the pace well.

the In working. the reps have go-to-market partner as made is addition in investments well upskilling to side, ecosystem we that, as our our that

breathe live Our and single every teams our sales in product day.

this show and the Hub drives much their easy actually very own of that going Sales very Marketing productivity partners and journey for it’s are with and upmarket. demo Hub works So in enrolled how

the customers customers. of are how So meeting we’re with and we what able seeing moment, deliver really down to this for comes momentum needs the our very look, and to our in we’re happy

Operator

of Thank you. comes from Porter Stanley. next line of the The Elizabeth question Morgan

You may proceed.

Elizabeth Porter

much. around demand a of sense impressive so kind you net kind and Thank a is beyond for on the X,XXX wanted get customer quarter. really Great. I incremental for hit initial adds that where to of better coming the from expectation

So and deployments other actually Thank that are that landing you can displace seeing end low the trend? a durable vendors? is you’re still is just at how there greenfield Or lot of HubSpot this you.

Kate Bueker

Thanks, Yes. Elizabeth.

companies our these general, are that free part, trying and large small, really in are, into early-stage converting think tools in I from free tools starter.

that of are quarter-over-quarter most a healthy quarter-over-quarter them the from adds, at we tier. think customer we place would majority of is The like the there I about greenfield trend Yamini look new a driving couple of displacing I so are ads. our are of excited coming HubSpot that seeing else. than in result sign-ups And coming are free a top-of-funnel things And volume about the vast X,XXX If very someone demand. more the as strong net increase obviously talked at starter it. are

test optimization frankly, about also not a customer continuing like that to to advise to adds net regular on working. X,XXX do, pricing X,XXX I we expect also always there has to strong. QX continuing the is good the tended do That I couple but being start to quarters, at biggest with over how ads, of seasonally remain range variable addition going do levers strong. as would feel next we pace. and stay are X,XXX to We be said, that basis, we’re

Operator

The of Please the line of Company. from & next Joshua comes Needham Reilly you. question Thank proceed.

Joshua Reilly

stronger the comment job the are last versus additional And you. was what or you last of that there? quarters taking Thanks direct just us Can the Hey, couple performing how quarter a of question. the Nice my the think you give here. on here? for business performing partner into year, Thank the is over there. partner the sense color made dynamics downturn. the I business

Yamini Rangan

you years, executing partners. as being of to This question. to want and gone up for servicing with past transitioned able that lot the of platform, planned. shared a well spent in be the partner strategy our as thank time ecosystem from selling both as with we efforts the And we Both as to last scale marketing we’ve Josh, have and partner that as working. we direct journey. as to market Hey, have as a are couple energy strategy automation And is and in is company well We’ve a really bring really a them is that CRM partners with our along Yamini.

the you and top bit your as at them like of you hear us partners, talk as well as a upmarket. When partners, well. ecosystem I leading about talk you’ll QX, know So look to deployments partner multi-hub performed many little

high want, they co-selling. just So you more they lot clear joint think journey. and and decisions, is and this returns And do The And helping as and that. risk back is about change implementation are side they in management really if us therefore, step executing in with partners with customer low there are going make a that having what environment along migration and direct jointly want working. plans

really our well. installed of is And rest direct about healthy coming so balance XX% our there the partners are and the and of still executing from both from base is our

Operator

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

Rishi Jaluria

to from on execution. for wanted generative think taking about Nice missing. with be generative kind just may you to end strong AI the do those functionality some that AI, ask you another continued the of HubSpot, question use do features to prepared move and want your some perspective, so how but to see back ability maybe of to to about I want functionality faster generative code. and my go customers use to to gap iterate to narrow ability people see question. upmarket on talked and potentially for the features your of Thank I players the remarks, business Wonderful. back to your you you AI in generate much and maybe

should Thanks. how about we Just think that?

Dharmesh Shah

is for that Dharmesh. Rishi. Thanks Yes. question, This

the things. on to gives generative gives is us of us to So kind HubSpot making make of part It the a couple market we’re platform, put That of things investment because HubSpot. the now One generative generative framework. of two our with application AI the short-term AI to we’re teams suite HubSpot. we the features think within core in AI has product but hubs ability why across all entire of building the can from speed benefit

we models very, thing that about other companies the of kind all So can us times gets web many having have. versus exactly HubSpot one with have about can context be We something normalized. page becomes generative iteration, they of actually what the interacted of the know the the and records. know users, feedback us get very model. support know and to you who interactions on to It’s kind that’s to not It’s having of so And not. sales data loop kind able users’ a a and context companies of ones that millions excited. points grew ticket in. you that how an get of really to provide kind believe all data of to is have. the use service do take in value customers AI in terms you that individual has stored an for And we We get or AI, this – that they need existing benefits AI say, from this that the be feedback one We generative data as all in platform HubSpot in the to tens if generative can with something gives win. of hands advantage use hands all hub us. of we I organically SMB that that for customer in and get it And of this like important where is rapid can very the cohesively they up very because are tight and believes a team built the We order know have

generative in framework position levels So our And is colors. HubSpot building AI there. the way primary platform incumbents playing of and that uniquely the to AI benefit the we the track from and think kind given organic field of to generative are the we terms think HubSpot we approach

Operator

next Sachs. from question Goldman comes line you. of Thank of the Borges Gabriela The

may proceed. You

Gabriela Borges

you on Good AI follow-up the trade-off to or ask I wanted Dharmesh term, people incremental you. afternoon. your the I topic on seats crowdedness for the model, monetizing and comments bear directly less sense. field. between down how either And case longer the think thoughts you Thank this leveling Yamini. in the functionality wanted the way makes what about Do has then efficiency you. go for are that Thank more and office think and become risk seat-based about competition the leads playing salespeople to on do stay HubSpot potential productive on over marketing on or will while less if I front stack? to generative up, that your effectiveness, on a if you’re the

Yamini Rangan

for of for it join free feel We Thanks Maybe and start, think SMBs. here. question, playing as Great I’ll do leveling the to field, that. especially Gabriela. certainly then Dharmesh

with to for been it have effectively really consistent about are same will One trying AI. of compete SMBs. we’ve the generative powerful experts exactly AI we of typically be we that to very customers taking the in to sophisticated is bring that democratizing use. with SMBs that’s do allow technology our teams within power and want technologies, market. and things And don’t that of to and And large sitting the ease able what

is who what It’s early I belief And to a second create even of think X jobs AI next predict our in are Having But in about you’re very jobs. humans. that with we’re and to efficiency. term. how said exactly replace jobs who think maybe the From is going same don’t too of replace perspective, use asked to and our At seeing use the question it’s automated. versus skills. lot to the think you longer more probably the time, hard humans effectiveness our relevant AI, was little what or really better happens and that’s helping and that long-term strategy. years, business will AI X not humans around predict new the terms in AI more less a some look, humans the AI become of going will use much I to we

one real our our commoditized taking how AI it the and be like and platform safe of The and And customers help effectiveness people drive our first next is lot our human really this and stage generative and content to just colors like strategy stage the assistant happening of better think can of is that the to you just going in more focus. already making Dharmesh across see value to from to perspective. last from It’s intelligence. terms it outcomes, really is applicable we primary can about ChatSpot that’s framework And repeatable outcomes, a time. talked about drive come better with mile tasks of empowering not a

add? for So we drive outcomes to to within are office. is you want that going the to that of anything front Dharmesh, this the else better would everybody mindset

Dharmesh Shah

are block And of to met use to models attention Right HubSpot using of eventually generative and terms Yes, AI opportunity of in will we be of natural add I it host kind for a think and I the just video. that and overall. cases take consume, an to on to or in see for a where companies image actually convert create language we the codes natural going kind them of like XX% is XX% computers. long-term is the generative calories something language want view now, human comps

we we custom action these Hub, of all historically a like now people percentage portion that data users of these and and Ops all were creating reports we workflow the can and only sophisticated expand things that take can a write the small HubSpot, larger custom that report workflow creating can look to at within a actions things. company, in where like so and things cleansing So in do generate examples definition a can acceptable

customers. So hands many in of just put power tools more the

just democratize kind and ability what for. very known kind excited which of we’re easy, to spot’s always that make So about been is of things

Operator

Piper of Bracelin next [Operator is you. Brent from Sandler. line the Thank of The question Instructions]

You may proceed.

Brent Bracelin

pretty impressed feels here consolidation, to a question the wanted Obviously, with which and here. into challenging backdrop. afternoon. Good obviously you. a slight Thank around a like net number vendor there longer-term longer-term of maybe I really is adds tailwind ask

customer about installed talked the and to Hub of opportunity Sales cross-sell are one Where combo You the base. relative we at consolidating tools, cross down eight Marketing Hub. in that to hub

starter volume longer-term, feels but quite low end opportunity. increase not there seeing is in the given we’re seeing We’re it like with the at yet ARPU

vendor Thanks. meaningful ‘XX, be to So that PON how address you looking could ‘XX? as consolidation, just ‘XX, a out can

Yamini Rangan

that Yes, I couple of a last our from. trend like do think we see. and that And maybe come longer-term are years is about it’s back customers step if you a beginning And kind are of think the to question. great this

or in able took that. both And the that is a cost themselves visibility enterprise-class their because becoming backdrop HubSpot, really we cost of becomes perspective platform very solutions, Either a companies. the as the if across and addition, clear customers to surprising scaling simple And different kind we at point they all is terms SMBs paths. look corner. is are is they is strength entire journey they well and that is customer of they of customers that you to now, into powerful, do of Our went something well of that not even when as customers the as in have I tax current a This a legacy couple for quoted like effective. it macro a why provides lot hard overall manage the solutions want of from talk had be with complexity which maybe as to

out, base service when And marketing we of drive customers. this days pretty at very early question want of type the that well consolidation. asked value we in installed it’s how you for to as build Now to as our can early solutions lay to we sales best-in-class the look it’s when talk days prospects,

innovation. seeing the play have of a product terms to pace we’re of way this long through. still keep to go going so consolidation And And I in think that we

Operator

you. next Sills comes of America. the Brad of of Thank question line from The Bank

You may proceed.

Brad Sills

start called it out wanted Yamini, Thanks here. strength. I the Hub. an you to Operations taking as to year ask Great my question. area Wonderful. for about of

get your from perspective. We platform. To that the are hearing certainly like seems channel, me, the this love would to

are You more hubs. or running two

to are across starting are You glue. – point are you hubs, need more you two glue more running are Is automate the where that Hub? other now getting different workflow customers success the why see to or Operations the with running they that hubs customers using words, to In Operation Hubs. need

Just Operations any color driving what’s on that Hub strength?

Yamini Rangan

It hubs, I the think this I question, more sales, Hub It’s if Brad, you and brings love Operations gave that does, are that marketing, front glue together mean perfect and like sets. brings other really the also macro-driven from that automate but give about actually the like multiple data to it data the insights we it head. what sources. from I workflows able right. value, it better sophisticated hit just the unification. And a is you answer. is office We think seeing on

product of seeing for in have in customers, this And Maybe of points expanded Hub terms of so area, well as value on quality. go-to-market nail couple a as data we how color Operations around you in head attraction. been efforts our hit our is an terms efforts the the particularly why more have

may Operations with customers. pretty data data portability. around that us quality And a last pro enterprise center quality big has remember and been particularly hit late launched Now, and Hub our capability, some we year, major talking command you about updates to

addition ramped advanced we have our also that, own around up capabilities. In enablement to efforts

custom have in products technical the absolute selling By always customers. one direct things of value my much the we way, code to is warehouse of these is for code Now, custom continue actions actions connectors of Ops like But showcase value our that to is like one features workflows like partners and data done sophisticated difficult. and features. favorite enable the and new so teams Hub,

on still but the and I we momentum of innings saw that so it’s an very am Operations happy QX. super path, in with Hub, it’s terms in And exciting early

Operator

the from of Alex Thank of Zukin next question you. The line is Research. Wolfe

proceed. may You

Unidentified Analyst

great on is congrats quarter. and for question Alex. This guys. Hi Ryan a for on taking Thanks the

my could quarter how when and At is XXX% So, it are of retention. can with the around that And quarter, it Thanks. tough, if expectation, this the it still your above is level you normalize? that stay thinking did faster what’s XXX%? question than is confidence last environment decelerate about

Kate Bueker

the Thanks Yes. for very much question.

net refer we There customer retention talked of general that stability dollar internally. Customer retention, two to to is I think types of pay lot retention in high-XXs. we the the really past. we as have or revenue of and a retention attention customer pieces about that see continue dollar Gross retention. retention this to dollar we in in

zone that expect for retention gross is rest to XXXX. We in the of going in, that hang that

we and particularly are seeing step talking pressure are you step HubSpot. reasons On of That notable of seeing contacts seats. for QX There the been the net all we have from that spend last revenue few in we side, across retention is did a that really we a down into are down about see is right. from quarters, their QX. the right, same our that optimizing customers And X points

their the consolidate leveraging seeing of to We customers of portals also multi-portal are now up-market HubSpot. some features some our in

And and we to going are in we slower to we where upgrading. than where see to trends a pressures QX. In of balances see customers at we that seats continue solid But – seeing upgrading trends, into going we see we see are couple addition, some think contacts other have are we that going in rate those we past. a the to think continue

rates. from pretty volumes upgrade the see starter into professional You at consistent

XXXX. of And revenue can retention net confidence of a are solid really gross We that for the our we from is gives adjustments. recent that retain in some bit that benefit XXX high-XXs us in with combination pricing seeing above what retention

believe right environment. us the still the more long-term, retention over going normal net that’s benchmark to in XXX that revenue macro we for is Now, require of but a terms

Operator

from comes Oppenheimer. Thank you. The Ken question of Wong next

You may proceed.

Ken Wong

Great. the is one not but environment last Thanks for my towards Kate. better, taking macro worse. is believe I you, you kind geared not of This question. characterized quarter,

into thinking outlook? right the guess what’s of I As what’s terms QX, in exit you the baked

Kate Bueker

Yes. set that. throughout it to and of does we tried remains the guidance remain just you in have prepared my thing as external I for and The that a scenarios. environment in color really variety the a in difficult, way. very difficult assume a that question. remarks, Thanks share tried we bit know, contemplates really consistent QX of XXXX. to That approached We whole guidance did said, same around

of deliver still feels want like remainder half has the a feels has volatile, or baseline been that back year. assumption FX get really even little very baseline and in of XXXX early It’s is against Our that QX, if with the guidance to we worse. like environment assumption last volatile. the things and the it been year, external bit

Operator

Thank question you. the line Fargo. of next The comes Wells Michael from of Turrin

proceed. You may

Michael Turrin

some getting questions the Thanks. results many instead questions would there. will there with picture pieces because some taking to of but are the big on. a the to in it’s the in assumptions you Appreciate question change There I question. Hey something ask, go are on and we guide. I good Look, like currency metrics terms so respect are into moving

basis. for QX the currency touch year, in constant currency rest the like second looks for revenue and of the half change number currency constant it down might the the come on And we if actually assumptions so look a at a

some split movements just through I just what your QX change fundamental thinking So, to you accurate. great there. with versus in the maybe for that results, the clarity guidance. interpretation and across of out the looking any us board is And understand just Obviously, the want job help if just on are currency Thanks. contemplating rest

Kate Bueker

and QX by the the you. pointed raised Yes. full full beat, challenging with we volatile, happy you which challenging. the have macro the from It’s remains the I, that And macro. does in to as I very as year we despite of you are amount confidence But the execution including in both we out, the executed, business. speak think Thank the Yamini FX. heard QX We

early not woods we are top on that, of in are And the the still We yet. of year. out

the And took into when this guidance for set we account year. of the we all so

the same. remains philosophy guidance on Our

in of to high degree put across We confidence are a a have variety out scenarios. aiming guidance that to being able achieve of we

Operator

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

may You proceed.

Brian Peterson

the on Thanks for congrats taking the and quarter. strong question

to a hit average it’s that just driving per bit. amazing figure of little wanted and higher? on up you I But kind the adds that see still net I revenue to customer unpack is what’s So, know year-over-year. the X%

up-market enterprise, the ROI cross-sell maybe is would cycles to or better X%. the vendor getting sales are just that love I those actually customers? in to happening So, consolidation or what’s understand be for figure growing

Kate Bueker

ASRPC, two Yes. you right. is one. There in happening that really Thank things again for

sort sort QX. headwind that We double-digit end. that adoption enterprise up see If currency. constant by currency volume the customers. offset from seeing is the is digits that of starter continued in of And moving from ASRPC at customers of continued to across are in multi-hub be volume the constant we ASRPC broadly to our in at enterprise, just level to low the professional the and X% that double It’s and we professional look

Operator

from The you. Thank question comes Bhatia of Blair. Arjun next William

proceed. You may

Arjun Bhatia

comment hang bit could maybe you still happening, more kind that the contacts, from little questions. seats, some am – is another on point out about or do features of just other? to seeing Perfect. you. headwinds specific upgrades one capabilities, any we size, optimization, I Thanks customers versus where a etcetera. there amongst wanting Is customer Kate, for those a trying the characteristics around there the being you for can that right, vertical specific are one maybe reconcile to customers still a taking more you versus

Kate Bueker

question. for it’s mean I These are a not Yes. trends us. new good

their use have that. consolidating over the and seeing with of doesn’t dynamics They that customers more is quarters. and expansion. we in last up seeing multiple for comes with been pressure our few comes get that are an It have us mean are But believe they same don’t seeing are they products. type cleaning doing in in are I within what more of and the more features the of form HubSpot. the seats. spend initiative that the out customer that the for. is what of is a up to are offset. focus them the unused we We continuing we our And And base most our cleaning to Well, using contacts, are consolidate portals, all their when cleanup on That conjunction in signed up alone

Operator

question you. comes Parker Thank Lane The of from next Stifel.

You may proceed.

Parker Lane

know relationship need some the ecosystem, you earlier to the HubSpot. and made year they Yamini, do Thanks partner financially Circling Hi. levels this of to to changes taking around the what for partners with Yes. question. continue compensation back there I

them guys to some that then to be them Do selling expect behind position effectively base? exactly to consolidation get going doing more And a the you to You XXXX, partners servicing in and are there customer what want servicing partners. Thanks. channel be you is in up-skill those in scenes the XXXX?

Yamini Rangan

Parker. Thanks lot Yes. Hey the a for question.

are with more customers and our adapt understand back, appreciate. more consistent step they behind to at partners sell giving partners them we to to which And terms will channel. I just the to and to response commissions, really to announcement, with our a start announcement we we our of and the partner are have be the even talking why engagements pleased the able and question. of the partners think I and that before looked do of incentivizing spent lot changes really am I since then the first part partners of diamond the maybe partners, there. in two And change. And meet partner change, multi-hub. to our they time with [ph] lot more have and time also us a the parts with cross-sell we I answer from the made second

changes as of of increase with customers result day, therefore, that margin, some And we for our at actually HubSpot. our made we partners good partners this. be are as as And the their our the well engagement the a end the and so, to of seeing at going for a win are the customers

not probably partners, The do it changes, or will. some And consolidation, And second to it’s it’s lead we that, definitely we partners are going that therefore, part we enable consolidating of either to moving partners scale. serve the do are top And increase to high. out are elite the focus to continue question customers. think as is, partners of how already of notice to commission think partners is better to And able really going I to of well to the to the up-market, guiding we needs do scale figuring as the level is because transition of be as up-market the enablement serving as it’s we because the our and necessarily multi-hub up-market percentage partner but beginning ways our customers. needs from from are driving on we we

partner and have technical behind where more ecosystem. to lot is them is really to coming within partners, response our upcoming partner to drive certification happy are There on and our the We the drive for we up going. been Overall, enroll journey the will and a certifications. putting an level that, this really with continue capabilities we ecosystem that’s week of

Operator

Thank Terry The you. from Truist. Tillman next comes question of

You may proceed.

Unidentified Analyst

or Great. Thanks Terry. on the you Thanks. is seeing are for taking on strength quarter. the Bobby so for globally question weakness This what and congrats geographies? terms of across much De in Curious

Yamini Rangan

seeing consistent Overall, fairly our Hey lot for international markets. well of in as a we Bobby. terms Thanks that. in America North what are as

customers. well. North and in and We we international. of reasons XX% across longer weeks, international that the of our makers value, is most a a customers deal they divergence base see also cycles is platforms. the much trends. terms fewer Kate decision is is not their why really the in There consistent. HubSpot America is costs about months time As of not reasonably just deliver terms or customers quick and is in And important value terms what we of of the all of consolidating time, in want see more and our quarters. mentioned, which growing of about across is to overall What matter are And And what care with

conversations, both consistency. high is as see lot as in both markets customers, and we bar so of consolidation platform action in multi-hub international across are kind regional there to with a executing but all And And markets. well we a more

Operator

comes The next you. Michael of of Thank question the line KeyCorp. from Turits

You may proceed.

Michael Turits

This the in the direct is taking so have wanted year quarter. drive move-up about increasing had on in market the how which what approaching are you channel engagement? perspective? – how question. margins, and from force I you direct terms you for Thanks you a Great. And in to costs RIF. managing to investing are a are channel that? ask – the you sales Great and But doing sales of direct the are more

Yamini Rangan

a free employee the and segment. why to savings Maybe with growth X,XXX this deeply will environment, to about to employee segment. they lot care for if they feel are with within costs both I there, of what on there. team the question. Kate, macro the back think HubSpot HubSpot, up-market about think focused is up-market doing working Thanks up-market of very, still and And navigating what very cost is us, start deeply you And Yes. the care for while in those. we we step helps with X sales about we for XXX and and driving resilient customers X,XXX and add terms up-market the If is about the are and

We and resonating are still within implement, very use very, up-market. powerful that’s easy that’s is and to what easy solution to

the internally our we talked have thought and we sales efficiency, about As this. about have driving teams own

more hands driving are We the of into direct our reps. data sales

the and I we We terms are are very marketing have delivering are between messaging. focused. cost in ownership value that total as of of as kind very, is well and right level tightest of teams products, them messages with sales of the seen our This the arming alignment key

think an there. consistent alignment all favor standpoint, driving I so in internal And from execution are messaging automation, systems, of

Operator

comes of question line of McGinnis UBS. the from Thank you. next The Taylor

You may proceed.

Taylor McGinnis

XQ much was really really Hi. on congrats Thanks particularly quarter. The squeezing great me margin in performance a so strong, for and sequentially.

down help think that we the in break to trajectory to of efficiencies how the or of able much the was the and the just Like the restructuring on and and drivers durability us you business, about are that quantify seeing? margin are uplift? So, hiring progress future

Kate Bueker

good really our a upside margin was to versus restructuring. it the QX primarily The Taylor, expectation question. in related is Yes.

underestimated in regularly and a the FX decline with this as QX point the to going are on well increases to sequential typical through pattern XXXX. annual some It’s bit hybrid impact rates. us and slightly. came in revenue than frankly, a in favorable return That connection. hiring a a return that margins better margins from operating pattern hiring seasonal this on investment we as for planned merit in would is and returning means sort said, of have hiring cadence. expect high in our restructuring to on some expand going half our really overall So, we, are through the normal said, the of to back What where to That expectations that are provided the feeling are year last teens with good to we we resulted really we will now. But little plan delay about our QX, we quarter. in in margins low-double expect operating consistent digits with QX what

Operator

we with closing to And conference time any that, Thank for remarks. question-and-answer. I would you. like our Yamini over back will of to the Rangan, conclude hand now CEO,

Yamini Rangan

much for engaged you again well the connecting all Thank in look Mike? forward and the questions as few to as back so a months. support

Operator

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

You may now line. disconnect your

HubSpot (HUBS) 3 May 232023 Q1 Earnings call transcript