HUBS - Earnings call 3 2023

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Operator

Good afternoon, ladies and gentlemen. Thank you for joining today's HubSpot Q3 '23 Earnings Call. My name is Tia, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to your host, Chuck MacGlashing. Please proceed.

Charles MacGlashing

operator. Thanks, welcome Quarter and Call. Earnings HubSpot's to afternoon, XXXX Third Conference Good we'll announced after was results discussing the the closed. Today, the that in be press release market issued our call and co-Founder and Kate Financial is on Shah, Chief CEO; this our me Officer; Dharmesh the Yamini With Rangan, Officer. Chief Bueker, Executive our afternoon

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

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

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

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

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

Yamini Rangan

us joining to welcome and Chuck, on everyone the you, Thank call.

up with vision the Let our share and platform the observations customer start with our performance our in AI quarter, my wrap for data. by on me and environment macro powered

another the to We operating for jump Total QX revenue currency. points with over are pleased customer exceptional Let's our of quarter delivered constant growing XX%. We and we driven by year-over-year, solid growth scaling with to another year-over-year of XXX,XXX XX% quarter platform over globally, with XXX in driving execution of become results. progress operating focused year-over-year execution our expansion by margin margin customers XX% our basis customer margin into X,XXX in companies. customers grew the the #X quarter. team's additions net to making I'm had

two highlight themes this results consistent QX year. Our

end high Our in in in is strength sign-ups growth our lower our optimization and working, plays of customer and net bimodal go-to-market of gear, In product strategy saw the our is especially coming inbound September. starter driven addition. we segment, additions out innovation free in by

resonates Our of customer value easy-to-scale segment. an platform within proposition the easy-to-use,

view pipeline Hub globally. get started budget sum complete A to great fewer visibility and service. the of multi-hub seeing They into Hub Academy. with marketing, of we as visibility example to upmarket, results and customers. optimize better see added are They marketing from largest consolidate adoption training of In platforms sales provider also HubSpot sales get their their multi-hub who's drive is Marketing Service consolidating customers a their a customer better across instructor-led online to then to on and on Knowledge and continue added

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base over for but we our real together. from now can hubs. this with our powerful or on value are on hubs the of own, our three And in before, see installed our using results say me heard comes you've more customers As their them XX%

product to Turning innovation.

continue INBOUND at are be momentum. driving our in launches and We to gear, high

year, launch. moments enhancements have product XXX the two new and big HubSpot AI While at over Sales inbound, launched we this Hub where relaunched the

did seeing year? Simple. connected relaunch are and momentum Sales why that we deliver hub are management best Hub this this already So and within to the upmarket our deal solutions we We for especially prospecting deeply want customers.

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positive compelling power a about found and and drive productivity, particularly sophistication customers, our sales have feedback vision in We Hub. Sales the of new hearing to from market we are a

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product in education. We will drive customer both and via adoption

We more road To our cases adoption our and data. like I are trends. deeply more summarize, will map that well-defined use the HubSpot by with innovation bring AI early sophisticated to drive connected to bringing differentiation customers.

Okay.

spend macro what low. budgets talk clear It environment. continue and cycles environment. decision customers gears scrutiny that conversations to on Sales need from Despite seeing the and under based with operate optimize productivity. and Overall, urgency and remains optimize continuing buying are and these are resonate to multiple shift proposition boost Let's continues choppy a spend. is remain we value HubSpot's approvals to connected my in customers about with headwinds, still makers in they we're challenging lumpy, still looking to

ahead, consistent continue innovation will look to drive execution. macro product to strong and playbook by we this our navigate we environment following As

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to direct XX not buying want They of customers tools HubSpot data are just web. but is a Clearbit companies within than the count, which attributes customers' companies good to real-time platform name is exactly and what Our employee monitor addition, intent. sources. customers. power company products more XXX-plus We they generative Clear from This they they have but automation the using? technographic all bit like the about activities outside to at. and like and for rich take based on AI for public of data, XXX-plus and HubSpot engagements want In from messages more and CIO million of including create those want private more the who attributes just also personal around on data, data data can insights and than based company Not even HubSpot way is demographic

our will differentiation with data customers' that engagement that together customer hub and market-leading bring tools to be to Our go-to-market data efforts. AI our powerful can unified consume a supercharge

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Kathryn Bueker

Yamini. Thanks,

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

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

was quarter-over-quarter. the by retention volume end enterprise and last up adoption we and growth offset over at the the our by driven remained quarter, strategy retention bimodal net by healthy low revenue quarters. added ASRPC customers was the professional of multi-hub large Our in high few for XXs slightly of Gross the starter our continued customers,

spend, points innovation, additions and see infrastructure million, concentrated Operating were million Net confident and we and revenue we XX% constant was $XXX to year-over-year We diluted and period. upgrade income margin motions, non-GAAP from net tiers, discretionary to AI margin on pressure continued hiring QX including reported. in X Nevertheless, continue net ago was term. short optimization to product the more comments in compared Calculated seats, remainder areas up in share. and and T&E such key can as per in persist contact and The portals expect other my growing XXX%. quarter systems lower internal above $X.XX the $XX refer the benefited XX%, and fully as Operating data. maintain measures. QX year or will currency remain this that retention XX% in to billings of

of end September. XX% flow marketable October agreement entered and million of Free definitive of securities for $XX to expect XX, cash to cash we acquire totaled On our before million a including conditions, approximately the and was and billion $X.X regulatory into or revenue, customary the year. closing cash. acquisition in close $XXX the transaction end Clearbit the to The is we subject at approval

with we customers Yamini, data Clearbit's about and Like create am customer the excited team look the HubSpot's HubSpot. our welcoming combination can AI-powered Clearbit platform, of I the I forward for value and to to world-class

Okay.

quickly wanted the Before environment. touch to we dive into guidance, I macro on

spend. ways Budgets Yamini deals and indicated, are to the to to under continuing urgency half for QX a low close, buying their scrutiny challenging similar to look we longer As saw taking are operate to in are we optimize customers the year. what continue in first felt is environment. of still

Our guidance assumes QX. these persist weak that conditions in

review fourth the Now of full let's year XXXX. guidance and quarter our for

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

expect reported is be between to diluted profit X-point as be to assumes per to XX.X Non-GAAP $X.XX. million between and to share shares to reported We income growth quarter. $XX foreign XXXX, operating exchange range year-over-year the And million $XX expect expected net million. in diluted as $X.XX This midpoint. a be up full revenue outstanding. no expected the revenue $X.XXX to the XX% and for $X.XXX foreign fully of of for the the tailwind exchange in growth is billion impact Non-GAAP expected on We to as reported year. material now have total at billion, year be full now revenue is

and Non-GAAP be operating is now share expected now XX.X assumes income be million. profit to diluted $XXX per $X.XX shares net million between is million $XXX Non-GAAP to and fully This expected diluted $X.XX. outstanding. between

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

foreign expect will over reported that, remarks. closing as I things X-point And her hand we Yamini to to Looking growth. a to forward to exchange XXXX, for back headwind be X- with to revenue

Yamini Rangan

much, enduring AI platform to and a to and and culture, innovation scaling growth. so to driving Thank our high-performing, to and by sales close building We're culture committed company. diverse remain efficiency growth, we you want to drive and commitment marketing distribution. great Kate. focused HubSpot on rapid We're customer profitability And improving reiterating our balancing I a with build culture. on sustainable an

hosted let's A our for strategy. HubSpot's support continued operator, we Summit, together leaders trainings call to open It a this and huge results. our quarter, fantastic . thank across shareholders you please top to their and up future. This and Global With globe dedication all on journey. driving energized our just questions. and about for which and was that, our left customers first-ever their the partners to the week for Leadership brought me performance, workshops, on for employees leadership

Operator

Absolutely.

begin now the of first Q&A comes Arjun session. line Instructions] [Operator will Blair. question the The with We William from Bhatia

Arjun Bhatia

in your And into do a that Yamini, that's slowdown like of if customers kind holiday worse, maybe seems it path, get take result similar we're fundamentals, another is the the despite of how adjusting of in are down more strategy heading or the continue upsell what are tougher environment, anticipating the -- bimodal this we you something are better? that bit mid-market about new out the quarters, season. not QX called seeing get this and are know new seeing I net out you kind prior the as go-to-market that? thinking do Or the revs lean called that really in you one you something but there signals strong. between this new the things heavily existing way Is hold strong, to headwinds. challenging a you're that little you're heavily are macro

Yamini Rangan

thanks Look, low. what It's better. urgency in closing, half more customer conversations optimization similar budget are both and be the as more and but not second XXXX. very more gotten yes, are the and with Deals customer is half customers, said Arjun, not we said, choppy looking as Kate we when see for saw to we have spend. I first challenging gotten we speaking, demos of to that involved worse. at environment continues question. in broadly trends what we it and conversations, seeing remains decision-makers it's More continued And of and definitely in takes process, and our pipeline are scrutiny, more more time. the

Now and things point the a count. said they're this platforms I second look can have for customers, they going spend, are fewer on focused into is on are when of environment. consistently they executed increasing proposition conversations our couple type this focused the because customers And in with to increasing helping. we've solutions are think One and to that, pipeline choppy really when time QX, exactly productivity, and the quick And I challenging value not stand customers. is really value is with with consolidating eliminate is of out. consolidate on having I scale helping head ease which our especially we where products HubSpot's again, resonates, And at

environment, this assuming I and bimodal QX this our to that are executing will think that continue environment into strategy. we we going very on in remain changes laser-focused So are don't

to within has continue and to at at win value be product to bimodal that to have consistently the environment. to drive strategy continue top is and on increase volume been In been this innovation able we'll the fact, what we bottom executing good a deliver

Operator

comes Jefferies. of next Samana line the Samad from The question with

Samad Samana

you. Great. Kate, maybe for

think line encouraging. you maybe be weeks I and in is the by first you what looks you slide value. the where pieces assuming maybe two what quarter help and NRR increase just quarter-over-quarter the you fourth us understand trend about what through the the those for really think consumption like saw of trends? guess at were things what may the quarter-over-quarter few the I changing, Can if Day, you versus broke Analyst

Kathryn Bueker

Yes. Sure Thanks, thing. Samad.

to seasonal dollar customer X step-up customer quarters did QX. You net revenue retention the retention talking to Analyst We new here. The frankly, be been up ones the last highlight rightly that at slightly Customer same little of is in XXs. much Day sort retention continues in of see a that dollar holding QX. and X about dollar drivers the was in this arrow nicely retention. indicated, typically year. high very we talked net see were We we've that again in for about the

downside a motion, this is and to see more in that The downgrades. upgrade it's here we net both continue on challenge

spend more same motion also that continuing customers Day. So at with upgrading. all less HubSpot to we it's volume optimize talked of about and And the their Analyst customers

On the as of as well downgrade side, And is additions. fewer tiers. seats it seats and motions it is contact adding the customers consumption-based and contact

QX. to in Nothing revenue of the retention net trajectory terms in a change in report

As at for really in here. flex going us think customers of add we first to see I'd see would to is starting external starting to to lessening we reiterate to show in I effect more want Analyst pressure the follow-on environment and improve, in add then contact said which downgrade and see a would order here, up that the really we

it's So around. external function a largely the environment of turning

Unknown Executive

retention clarify, Yes. And talked I not being we slightly just up new about that net sequentially, want revenue to ARR.

to we're sure make clear that So . that. just want on I

Operator

of comes next The Mark JPMorgan. question line Instructions] the from [Operator Murphy with

Mark Murphy

you we're walk way. referring is of Smart rationale the some decoupling from how we're a unlock us by Hub it, a that partners the the major strategic and to development through positive future the Can hear to decoupling continue Sales we CRM big is Yamini, for opportunities. that

opportunities engage that to companies up some how HubSpot? and open new rationale the with was might for what Just

Yamini Rangan

Thank that of it just hubs. just you, that picked out the Mark. And up And Hub, clearly particular, Sales in that the the I Smart you you're but love from strategy. explaining separation CRM calling maybe

we really went product our into said, leaders absolute in Andy Product, service he going and year, Head when of And focus deal we I use improves and but become marketing management we that, And and So with reps Petri, picked increases cases deal to per we're effectiveness management. of on hub we hub one, Sales thought this sales prospecting productivity And hub. credit are management big in the two three and terms sales specifically because and for of came two to AI our prospecting he or want these Hub, obviously of said the this important to and and leaders. hub. sales, forecasting

those and reinvented significant And look deal gotten relaunched and prospecting we the like, so two And inbound, pretty traction. things. we that's what were at Hub Sales management

customized, clear other reason now, the expand the be unified the where each we So out CRM and people information in of extended it's that this, value from is been The hubs. that customer our of for multiple it now HubSpot, in that Smart can is to engagement continue did thing become use and investing separated can kind of bring can we and and quarters a hubs. engagement from smart be CRM we've it's record different clearly

love the it customer out adoption of And more now I so think Customers separated clarity, and platform. it's it. the going even overall we drive to and have partners

Operator

line of Brian Raymond with from James. comes The Peterson next the C. question

Brian Peterson

came of week you to road HubSpot. my And product this the some this interesting is AI out event How out coming relates map? influencing announcements it that inbound question discuss the congrats. anything earlier me. XXXX echo of Can OpenAI I'll as your of that for year? Maybe a

Dharmesh Shah

the for question, Brian. Thanks

adoption put it oriented comments, their right use the launch features particularly thrilled of out marketing we're works. INBOUND. cases. AI the we're opening One as Yamini some can the the do usage we've where is And HubSpot work, thing mentioned And So of learned with its at if with repeat people of in after getting pleased of we're AI you really that kind these

do seen that super HubSpot leave we're so kind #X priority from into and road double the we're map And spot, we're of going it and that. one take the going to product to through And we're the AI is excited. is entire on on far, going adoption thing the platform. the continuing the literally a to down We're XXXX. lessons we've so taking chat --

and add HubSpot. So within a smart smart CRM kind the of we have interface natural language and

So on high list. that's the kind of

recent terms conference exciting of had ago Monday. In in their just days on they OpenAI Super X things.

LLM that relevant on been Here called the version thing has window. without that they launched a context that's And #X much we've getting them ask which new what the tokens, that's from name how a working can pass, thing of was their XXX-page more The implies, X And exciting it window the is when much is are prompt question. you things a about just is tokens. context the is you which to that data are XXX,XXX they of put information how releases you faster. in went they book. as that Turbo, too you when and expanded got context, with But X,XXX default preview equivalent announced. GPT And defines most before of to the geeky, much model a --

time in that to job the real e-mail best want does when take this that's the to that unified we're do HubSpot now data particular pass a LLM important an Now for we record the generating, we all that and sales When this so message, the let's say, CRM can Smart that it "Oh, in take that's customer", on why it sales information context crafts says, and to possible. all here's HubSpot. upgrade it

in the this these together one that prompt really, it What all bring has data, can me so XXX all effective the of we now, messages. really have can single pointed LLM data, take all we intent to we kind where into this it's the just and future, in time data crap that information and all we all information, even CRM Clearbit excited, these more have imagine have not that attributes, real

going So super into XXXX. exciting

cost is going all that one one model did that down. they for latest of invocation for of And the thing is is kind Kate announce their this here then

once XX% are estimates Our this somewhere into usage around GA. goes on based our XX% to

lots So be massively for into going excited question. AI Thanks to the exciting about is XXXX.

Operator

of the with comes The from question Jaluria next Rishi line RBC.

Rishi Jaluria

we bit just exciting heard good with little to Including wanted Wonderful. company. is about Apollo's along you things is relationship very speaking I dive and And saw actually serving governance little that event I about I up with some earlier might come something that, acquisition. HubSpot, deeper some with the is Apollo, really clear is to data. privacy HubSpot bit is alongside think concerns this just a at maybe a players important. ZoomInfo, talk into impact a which you the in other today. of very, maybe do going how user space? the privacy a that know about Can bit obviously your dealing popular to use How

Yamini Rangan

we're the bringing competitive how the for doing will that platform. data and engagement about then take vision we're together customers powerful accelerate grow with Maybe and question. that they'll we're Clearbit hubs, and that tools excited our about privacy. this consume connect AI better. we're landscape start and and And how then help that can customer world-class data and is what vision our us I'll the Rishi, thinking super and help multipart Look,

of our in services is more And with prepared accelerating and it intent else makes the sense this our is to much it they want we to And And and that terms of in customers. I entering with us the us powered And pre-fill that's have especially makes us the a them. want is for just in rich database. if up, about makes a complete they box landscape, each and vision. we powered set solves is to. to problem it's the about world these can mentioned And absolute Clearbit smart data, we articulated could contact competitive open think to, by rationale back up products a the about companies data not customers age-old data, on have to empty. platform that we And as remarks, are for sell want data, we'll of and have ecosystem. vision in we to That's well And connect our and a by Apollo, by customers ecosystem. if with have you company who AI what continue work that, who that their really the accelerating. attributes us, platform very choose it million it XX buy pre-fill very us platform with Like welcome word looking a open means for with to step we'll is sense, data day company customer powered continue Zoominfo helps They the X. and And grow. else to our This customers hubs operate open problem we when and as profiles sense. And our CRM for CRM huge engagement why AI. this

our of privacy about security think privacy. side question, I partners which do terms we of in that's know very and deliver our look a terms how way same thoughtful to it manner, the but do the customers help of will in been feedback as the we I and the week. X-part Look, And part final which data our really trust is from customers your to having how governance look this and in integrating think in excited. last at e-mail vision. go super customers our to will has at that we accelerating level road in value asset. to e-mails, security, the really, of the data we we deliverability, in have privacy of took positive the as not right When change practices. we Overall, say And came into commitment our it

Operator

of The from next line Research. question Alex Zukin from comes Wolfe the

Aleksandr Zukin

Maybe X-parter for me. just a quick

at macroeconomic our that we're I we mind time, keep guiding for get our for we're thinking next fair models at should start we point, about anything starting for continue. but ready type of one of or that planning to this models kind tuning about persist of and kind environment, in Is as year. think As think environment quarter to know you're assume year, this about. or this next it a And we to

You don't the environment super either know around But for just from anything mentioned would maybe an next helpful. numbers, as into FX -- retention and anything the headwind there just or the billings year. there. the or putting about any be in And thoughts I adjunct, clear but the

pathways, monetization Anything As more product there? premium hubs? we think about it AI new into up it modalities? around tiering more Is is helpful

Kathryn Bueker

how will Yamini to in through environment. a guidance. talk Certainly, believe a it a of and this to that, and early start year. I'll that too remarks, -- external setting prepared environment be bit challenging do economic about of It's this think year. continues the end I environment frankly in the the the challenging through Maybe said next we continue talk to very We be about little

know, We will formal on QX guidance you give, as our call.

have that say early turn. about focused things we In that on have next when should remain really really how the like challenging, That's productization, areas. we feel the we're economy through And sets focus Yamini on at well. least you good heard us does expectation really very is We're clear up year. February, what We're focused executing AI. is

Yamini Rangan

that early at your question really to availability we at on the most through with and on about share delivering what QX, are think map, the last getting either no the We're we walked road or features specifics you consistent overall by we general I even monetization perspective, AI of all Day. AI, of but now shared that's focused INBOUND announced from you available from change Analyst Day. And when part that what an more generally at Analyst really with we'll close

Operator

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

Bradley Sills

I the challenging what just then it's in customers could offering up AI just has that there ask that of with Is plans strength do you a think simply or to be starting strength. customer? question or wanted through going it holding that some here. the why be been are Pro Great. you Is out of The cohort And the starting of we the with around higher-priced add the is, real like enterprise Clearly, larger to net about Pro. do been a you've a to with coming nicely of environment, go net in might think in starter into challenging prone better a customer that starter cohort macro is there macro. question think? that, version. you might quarters nice on adds. since see It's uptake a some from Maybe cited acceleration. four macro, features three starter

Kathryn Bueker

new will maybe the customer you level customer also very quarter-over-quarter new Yes, Brad, the additions starter of were the increase I are We in additions is happy much you by with quarter. the right, start. addition. driven the very much. very thank for

strategy talk Yamini about And bimodal the one about the bring heard talked to that bimodal Analyst volume on that's the the You goal at customers working Day, really of end we as strategy low the platform. for maximize of to us. is being of really we of as things the can the

certainly into watch to starter our as so a to to tier. experiments feel drive of we We cohorts constantly those really upgrade. volume sure And their result, make characteristics that the good an retain are about ability to try we running

lean experiments users were of no we really starter of was that to well packaging ran There different. into quarter number we ran across number and conversion of and that free plays a a pricing into as activation This customers. as

about feeling we're So good really it.

Operator

comes Golman Gabriela Board with Sachs. The next from question the of line

Unknown Analyst

Gabriela. on want quarter. a Jake ask on This Congrats is question for I great Titleman adds net slightly differently. the to

trended you forward? adding sustain annually. that year. going HubSpot to drivers Before as XX,XXX closer cyclical? have lead view can structural there new the shift are believe Since of net over you Or adds customers adds Do pandemic, HubSpot was this level each net to XX,XXX then, this

Kathryn Bueker

question. the for Thanks

is purposeful. I it think that very

of heard -- when us potential really customers the for the we lower sensitive have early the to entered starter. talk about you've we a how dramatically pricing we pandemic, to that from stages fact point frankly were packaging and surprised made a price the pricing And So we work. perspective change at that

couple and really leaned what into end better experiments at the that and And been through strategy, but referring drive at so better running it. that bimodal we've getting as to we we taken range to we are been customer X,XXX we've quarters. that it of learning low to ability have of the volume, to at that about high feel and adds, continue last talking X,XXX the that our end for about to deliver call good

Yamini Rangan

the see to to choice continue that testament the for success they we is us, early of a Part deliver maybe is a strategy us add that of here in as value is scale. with And to platform point becoming started to the companies SMBs. get digital their journey

needed strategy scale, to proposition is what easy of buy to and and And and resonates. making so value to easy use clear that it that

it. year. into we're we'll pleased And that next with think bimodal so continue I with And strategy

Operator

comes from The Wood Derrick Cowen. line of with question next the

James Wood

fragmentation market intelligence are Yamini, at of do used play? things efforts. deal sales more being of enterprise, end I'm different And enablement, the Or and focus mid-market? upper tools CRM greenfield you a management, revenue for this a SMB more like curious, that talk is sales a about this prospecting is in replacing the the see and the you lot in of prospecting, there manual kind of consolidation when on

Yamini Rangan

It's that. like of I Derek, those. all

sales in solution, think are it that platform a segments solutions get fact through have certainly, solution serve. gone route on be I consolidate a the the a but only market see, point with they And single want tightly there plays the we of better to it's able who've integrated that that to customers well marketing not the within is visibility. we market-leading market-leading and we to

consolidation. solution point it's so And

been to deeply few it exactly is quarters, to much also Sales from there's integrate terms spend that. it last of looking Hub. past fact, management, is We've X-plus sales improving it And right part the sophisticated And obviously pretty optimize their jumped make momentum resonates. of and of with XX% look productivity. environment deal clear other year year. we XX% it to prospecting at a able percentage in forecasting the in solution this Sales more over where as hubs Hub people when The one And marketing, that are now, but does while our

on leadership momentum clear the So market. based that we have within the

Operator

from line Stanley. the comes question next Weiss with of Keith Morgan The

Keith Weiss

announced I earlier really conference on difficult of nice quarter at Excellent. functionality the a lot Congratulations to level things about the SKUs up was to talked ability functionality. in the and whatnot, people product user higher ask guys AI X-parter the back new a new September. pull environment. of that for wanted you and one a sort and to a particularly And of

of to So as perhaps as or have start yet. on you of part one, impact any that yet of average numbers pricing seen

the on the distribution Part expansion or this marketing innovation? definitely basis? investment year One be is of that durable past all more to we expecting going investment was should all above been margin has or quarter, points in of go-forward whatnot? a year-on-year product, increased XXX definitely Is two, this there highlights be that behind Or the expectations. basis behind

Yamini Rangan

started question. get I'll maybe on X-part the

the first to the and to pricing product ease is that innovate we perspective, part, power philosophy announced both product just use. that our of our On philosophy everything to And From stays and and easy drives overall consistently are deliver powerful inbound, we use. same. on a at continue tools

march a the we're earlier, mentioned Keith, features as still availability. in the bit towards general on data a lot Specifically of I little to AI, from getting

in year. next we and be what focus we've seen will And into to terms adoption yet usage that not driving continue that we'll as on and impact go of so pricing,

it Analyst they distribution number over way you terms you look, that we and next in investments, we we'll about a is the of more But want impact the moat. talk balance strategy then is led, growth we're efficiency. area And QX the of want efficient year where you're years, the exactly Kate partner we ability do great And looking the the on driven. the we time. biggest the And scale next and on terms And case. a that. And think is we trends at our that how about articulated will at get and Day. hear led how moat -- marketing of product we and a profitability areas seeing at profitability. And to have to early look articulated pricing have So scale in and distribution as sales about then few sales AI ASP in to in that and do in to

investments. And so to we'll make continue

manner. we increase So we do distribution mode, in an our but it efficient

Operator

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

Michael Turrin

second I to go and want ask to Kate on the part last one margin. the of just back

a shown pace. quarter, looks modest It inbound uptick. in You've we're meaningful head even count are at back, with also this seeing adds expansion like coming this a more year more bit albeit

to adding walk still those you're more we're margin forward remains heads like the you can into just this investing And in the kind as what elongated growth and challenged? you between of side through So and turn what leads pushing macro. dials going more sounds us product trade-offs if evaluating

Kathryn Bueker

question. and this targeted that you last back We beginning in very that on at do been we've did in Yes. focused lot profitability. risk for we is a year. on back We hiring the A year the and pretty the strive where and real year, half Thank adding of pulled this dramatically balance investment. very of continue we're profitability a of much the delivering of to growth fact result we for are the a

to to that we next Analyst years talked the at Day. to internal going automation capacity that and seeing, service And over continued demand about is seeing and continue continue in into X long product the over and we to in introduction to continue product going internal are we're and invest term sustainable engineering investment some to -- of going in you're innovation. the AI drive invest place to have X to we efficiency first and continue to make systems, to that to The these to translate product add We're drive go-to-market growth. as sure time, we're the

Operator

the from & Needham comes of Company. Josh question next Riley line with The

Unknown Analyst

Josh. Rob Marelli is This for on

has deeper seats broad. If in if greater a lag take look take at fairly nontech, is been your in of customers Or taken current have it you over similar customers? economy need cooling you continues to where to there calling the seen compared to a customers another cycle? already tech a by tech to cuts And spread, cycle seats this weakness the broader non-tech

Kathryn Bueker

and base, our customer the talked for that remains about question. in the true. just past Yes. of Thanks diversity the We

high in the highly in base is not installed our of base teens percentage seen We the have of composition ARR. sort our a time. And but across of we mid- customer remains software not industries which meaningful of over very to largest, diversified shift any ARR have terms

Operator

KeyCorp. of The question Turtis the with comes Michael from line next

Michael Turits

terms guidance, So can but ARR of obviously, bit first, something no is of next Clear for around us kind give a Kate, you millions year, low terms -- of in contribution. it double-digit in

Just something whether there's some dilution there. any sense that us give on

parts. the add don't you can appeal new simplicity out the for do you Yamini, that alienate if plus I then base products roll and market. up as you two of How that And such sophistication you balance

Kathryn Bueker

but of start post I'll to signing you, -- X our are sorry and disappoint Clearbit. week Yes, of we I'm the acquisition

have We not closed. yet

year, We that are own very of a expecting close XXXX. but Clearbit in obviously we this that short we the end means that for period will by will

And minimis de in margin so not surprisingly, impact. of or contribution any terms revenue

we've once on financial XXXX, targets In or terms more call likely in of explicit of implications QX. some it, like the our with be we'll acquisition closed

Yamini Rangan

Yes.

at we products to want at you In UX us our amazing they and want to and a really products the the is consumer-like terms have answer feel have conversations of always ease, the with do it to part end". that. really on lower and yes. carefully. end "Hey, And just your second have for SMB, we but like, sophistication we leaders the power you the And a are how we do question balance top want you of of

not So in that asking of what feature, you bug is a do. terms we're a to

XX and minutes very in and happened to in CRM their early get simple, is have someone we very a that set just unbox implemented for we want we understand our what It up so And started bimodal has digital needs and it, going journey. on to to open to as strategy take XX intuitive get order minutes experience. up website, super be that take

keep we'll improving experience. fact, In that

a And that features. customization. we lot And actually sophisticated we to plays continue build opinionated internally, about as talk

organization. we but of up over. And simple, really intentional. add. And is the kudos because opinionated takes free ends customization customization really unwieldy something talk deliver UX opinionated Dharmesh, super how and really, do to and lot Huge a our internally, So becoming feel you software that's to about typically that And product powerful.

Dharmesh Shah

go. to proud a thing that Yes, up is we're one is thing the of month here a we that that or wake most one -- add didn't

end. So to nice deliberately those easy-to-use power And it chose be shows around strategy XX We've more have bimodal we years kind SMB. an been we've as this to product. ease had years to top and that for it of it, the XX use maintain add up. conviction is really We of wouldn't working of where even the

not It there, would of that bimodal ourselves was have work. of optional kind use we is just have this right? an like, keep not an We could that and "oh, to easy-to-use ease product". would thing, our kind strategy So it be not force the hand discipline if make of nice because we

continue to years to super kind by top XX end. [indiscernible] I'm team association product while on it's to of the that the ease of continuing of drive So effort use

Operator

Thank with you. Citigroup. from The line question of the Radke next Tyler comes

Tyler Radke

upmarket I'm enterprise the curious on momentum and you're seeing. that

customer contrast an seeing to of you seeing relative issues at seeing you're what just relates of QX, if comment incumbent. and to large could you're as kind seeing base. Are core and it and you cycle on kind some compare If what But could especially market similar you're renewals sales you that just your challenges for up expansion.

Yamini Rangan

good a Tyler, I think question. it's

of platforms upmarket have upmarket, at come a few more when look In perspective. terms product as is pipeline, product think for which better, and especially for broadly, order look them gotten a more it what we've both is features. been and needs the quarters, with I our to upmarket to and our customers, more the consistent consolidate optimize on thing But demos, a the few more into maybe on customers engagement, it's lot of there's decision-makers if from we has We step with looking admin a spend. more of momentum, are conversations, go-to-market as of said, picture, upmarket the from trends focused much a in than lot I are the meeting at a as upmarket few approval. fewer broadly customers back their few there's well more customization, we very does take interest, more customer about get

product more In even The be clearly market easy That's improved. powerful. coming of that's that fact, up helps perception also and differentiator. a has there's our

We other are also ability to and upmarket to marketing partners our gaining coal organization, of organization customers great. value momentum, with not the just is parts the and sell but within deliver

as up product continue see but in there is as HubSpot the side as trend momentum seen track. market similar we the we to So both have very driven, a well on customer customer

Operator

Canaccord. Thank comes of from line you. The question the David next Hynes with

David Hynes

how sense ton potential pricing color appears on Maybe not volume-based. that range another a you your give one a a might I on customer bit? if be interesting. like Clearbit. of guess, adopt is of like, And were Can for us HubSpot? be convention, to There's to their color average website. that spend generate The pricing fold clear you they would to plan current it into Any there

Yamini Rangan

It I'll is start. process. still weeks Well, This to you. or the approval Thank can deal go regulatory longer. the needs Yes. take few a Yami. through

phases been digging nothing of we'll where and now Once an we're deep integration integration customer to changes. So the have couple pricing They is closes, not But in there, Clearbit more expect closing, you lot it a our look our the a that And HubSpot. about strategy. can app get share between our with with data Clearbit already initial market. base. They've already we'll working customers. into phases, already

into So And And medium accelerate and longer our I products how integrate will more with have. our with seamlessly their data. continue this use customer to platform will cases. they think really term we what HubSpot's vision then term is do it naturally currently data again,

so lot of the And strategy, once a we'll more And very we'll both has closed. in pricing also but be go-to-market. terms deal and thoughtful share

Unknown Executive

Thanks, Yamini.

I think the bunch maybe we've of in queue, one got but have more. for I know more question. one people we a time for time

Operator

question from MacWilliams is with line The Absolutely. Barclays. last the Ryan of

Ryan MacWilliams

constant contract gap billings your about in force contracts? point growth you And sales you your also growth currency ecosystem from direct currency growth? the from X your seeing any contribution then on constant any channel Just and the monthly the customers between the are asking duration, this compared this just differences year quarter Just seeing are revenue to prior. to versus quarter at

Kathryn Bueker

Yes. Thanks the for question.

we quarters number we're duration talk about very with a a billing about is seeing for QX is seeing reduction we quite a we consistent what been bit base. what which have talking slight have now saw what We in been for quarter, of of now, billings. as this And the time of in overall customer duration

So nothing new . there.

the of just to are I'll will Partners to in similar. so. around In contribution, in business. for terms of continue partner channel and I'll of versus XX% important to continue out the an contribution -- close again, They the be us -- represent very terms direct and

Operator

I additional will hand remarks. Thank left questions Yamini now time. are this back it no closing for at to

Yamini Rangan

year. new employee the thank I appreciate speak for support. We'll really everyone. partners, by Thanks, effort your you all and the to our in all you

Operator

call. conference today's Thank you. concludes That

disconnect. now may You

HubSpot (HUBS) 8 Nov 232023 Q3 Earnings call transcript