HUBS - Earnings call transcript Q1 2024

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Operator

Good afternoon, and welcome to the HubSpot First Quarter 202 Earnings Conference Call. My name is Harry, and I'll be your operator today. [Operator Instructions]

And I will now hand over to Ryan Burkart, Senior Director of Investor Relations, to begin. Please go ahead.

Ryan Burkart

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

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

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

All regarding operational the realize benefits the historical financial of management's business ability of expenditures, including anticipated acquisition, the expected the our full including expectations and statements guidance of year and fiscal movement than for those and growth, second statements, future XXXX. statements and outlook, performance FX fact to are other Clearbit financial forward-looking quarter operational

our these by revise law, Forward-looking statements no required except or undertake update views And today. reflect to obligation statements. we as forward-looking of as only

XX the Please the which could Form on a file we to to expectations. today's the with language cause risks of differ for and May results release uncertainties XX-Q and actual expect Friday, discussion cautionary refer press from to our SEC in that materially

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

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

Yamini Rangan

everyone up highlighting to demand results, customers. seeing product to and accelerate innovation our on what launches wrap from by our our begin sharing you Spotlight and call. us by and update perspective are for from efforts QX Thank you, a ongoing XXXX the the Spring I'll welcome on joining Ryan, we recent our

customers preferred off XX% quarter. XXX of constant grew the year I year-over-year, to customers our kicked year-over-year of over Total with another currency. operating net growth on basis XXX,XXX see the XX%. consolidating customer We operating solid driven customer year-over-year margin revenue expansion good points to XX% growth. for quarter more We by thrilled by margin platform in as over their driving margin to customers am HubSpot in with XX,XXX of additions globally, delivered growth

in by customer Our to Customers driven free because consolidating Starter easy pro is to end QX why in value. HubSpot of easy upgrading across saw are plays, pricing strength seats use, Starter all results consistency customer highlight continued lower and our net delivers it fast additions and time we scale users we In change, optimization driving and growth. the to on our to win. including segment, model segments

consolidate in emerging at quarter we Hub INBOUND. on of platform clear In Hub features upmarket, Sales were winner the multi-hub by as the customers as launched their continued is HubSpot themes and strength a the driven choice. of innovative big Sales as

a way prospecting adopting sales. sequences between Our customers are better and workspace the advanced alignment and new as drive marketing to

deliver which customization, like Navigator, Sales our sync with deeper capability opened have up the we Smart driving to up-market and broader permission governance addition, integrations and CRM momentum. In support UI is LinkedIn

momentum. of return we return and partner-sourced over from to The top scrutiny deal on as that a not leads. innovation. where to of to more we At QX, customers of to we flows deals the growth involved we on customers budgets, see cases, front and into in going more more decision-makers see of Sales X drive conditions have saw now weaker demos down Pro+ a validation expand strong in XX% multi-hub quality strategy main QX HubSpot. getting our strategy higher lower innovate. the in suite gears or QX. to proof-of-concepts did continue rep for as lower and lead shift saw and similar Sales to clear signing into Marketing the is saw a QX. multi-hub This working, away before customers. And demand thrilled progression have X purchase plus it's doors our hub, continued room consolidate where saw from first on Instead, slowed shift some and leads Hub, push in are huge original the XXXX. to December funnel, and in for and, app buyer is carry experienced land we Our urgency we hubs, what we in we Over we of finish and Hub quarter, that a We're macro. After buyer for a momentum need to and inbound and the we out platform to more decisions. urgency working. Switching customer quality source higher Hub,

which to see our XXs, delivers While unified our the dollar customer the in under close upgrade for that we and rates strong deal pressure, remain underscores value platform retention customers. customer high continue

get Now we seats In HubSpot and pricing for to seats. a the the Professional for friction to early edition. customers points based remove lower from March, to introduced pricing change started upgrade update Starter on with price to on an

business and persist for HubSpot, for our negative While that we on model impact the on months. very will likely to be in a couple caused continue the the excited March our a of about timing change speed of change customers

higher customers this we reminder, time. expected a over As of to rates upgrades higher lead initial ASP, lower change and to volume of

of positive take lower April, a in customers. months it's of In March, model more in slower additions the new higher price. volume going lower adoption volume the seeing a which customers, for to to the a of more few we immediate by seats but but led offset saw the faster We're of impact ASPs, pickup to trends initial

clear be is that to decision we as we platform, our get align easily have the that right over want customers scale for conviction I the pricing high HubSpot the that, and as as to it onto AI-powered started with our our seats to retention revenue our us HubSpot. grow Smart creating And for rate them right more will more said CRM. many with it and time from customers is allow change Having more decision pricing will it value are allow net customers add bring seats

Okay.

a major innovation, for are years pace few Innovation industry theme and me and a going AI, is ability of growth. over through full-time the years. keeping we in been to sales that are accelerated our of consistent our with durable in scaling high shift. happening Marketing, product pace Let's a innovation talk about in up past has months or service job setting that The gives in which confidence be and has with innovation teams itself. companies. But and days weeks, technology and not drive can

Spotlight. not launches to our each easy decided year, and to Spring stay have to So we've it but big X ahead, customers X for INBOUND make

new all over be our and double XX year. to out we to Spotlight have presence Spring releases April, our and engagement it HubSpot INBOUND to innovation marketing. saw reinventing Super that million content seen each for create features. better into And channels on Content our compared transforming and In impressions rate way Spotlight big from love Hub, powered taking we the by product exciting. I AI. across entire over you: and highlight We're comes launched Hub XXX and Service customer about with XXXX. marketing, Hub, and of Content innovation with social we earned doing want are again now Spring X nearly AI Hub, used CMS which to media that You AI grow customers over HubSpot INBOUND INBOUND XXX first content manage marketeers journey. the and it featured digital the a give by areas website to

content of make based brand As has to easy content consistent a to easy it that voice. creation brand launched remix full it Hub, to voice content make single it create asset. easy part Content to And to generate create content. make multilingual to pipeline of AI Content on we

is the future goal into the to AI content want of We simple. every Our power way and light content case marketing. use

Let's excited acquiring Service I'm talk about current believe important about more delighting that really Hub. the even here. customers new customers. We innovation than is

To support customer more and Hub we're together. Hub teams Service scale and success advanced relaunching SLAs, now So customer tools. help support management includes robust support, bring routing to customers Service

health CSM workspace scores handle drive help we retention, To customer can and see clear pipeline success customer track launched steps. teams that next task, their their help success a with customer new

embedding chatbot, Service real-time tools more valuable a Hub to summaries speed platform. dozen than resolution. even customer unified AI-powered GPT-powered recommendations call more delivering and Hub a We're make AI to Service and includes now like up

are using Adoption has Pro with all with XX% across over of to hubs customers AI As platform, that customer getting one continued confidence of teams of along the enterprise they we're them customers marketing and what sales giving our AI on and with the features keenly guesswork on innovation portal bringing leaders driving of set for we and XX% "By our embedded said, need." As removing together [indiscernible] service HubSpot, usage. the adoption increase over focused our pace and we are portals.

Customers becoming facto drive HubSpot scaling innovation summarization a AI. Overall, drive and the a customers are in ability grow transforming growth. durable pace are repeat in leveraging and platform. go-to-market me confidence AI de AI. the standard generation, is productivity to room gives from This on we're customer for laser-focused are of setting growth. to still we our to to We're drive and call early are and companies, their content for long-term of with a more we suite personalized innings the with helping There motions automating our lot usage,

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

Kathryn Bueker

Thanks, Yamini.

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

the over the XXX nearly fueled quarter, customers year-over-year, net continued XXX,XXX, XX,XXX from This Clearbit. including over strong customer in count onetime growing added additions. of our customers total of addition the by brings customer our new acquisition XX% Starter We to

year-over-year subscription Average up flat an on basis. revenue was X% and as-reported per in constant $XX,XXX, currency customer

and offsetting ASP low of the Starter impact We continue professional to on enterprise see adoption in new a customers impact multi-hub ASPs periods. cohorts of large from positive customers, our of recent

a addition, Clearbit approximately to ASP X in added benefit In point QX.

expect to down constant around XX,XXX we February, XXXX low digits throughout in single quarter maintain net with As ASRPC customer shared I additions per in currency.

was Clearbit retention high remove revenue you if in XXX% impact held the quarter. XXs the QX, in in net XXX% Gross or the retention of and

While more downgrade have last a upgrade couple challenged QX. rates in we customer quarters, seen rates over in the stabilization of were

to similar XX% period. QX, compared term in X holding We ago non-GAAP comments around continue operating my throughout year XX%, near point million billings $XXX trends growing remainder refer measures. QX up was will XXXX. currency expect the and The margin XX% levels year-over-year Calculated to to revenue in net the as current reported. of were with constant retention in

$X.XX progress per We was margin our the intermediate continue income solid business. Net $XX or share. operating targets to across in million fully diluted see QX towards

million $XXX of QX was flow cash or Free in revenue. XX%

of cash of connection goods in sold the an and credit securities our discovered quarter a calculation in we the related our calculate end our hosting $X.X March. In totaled to Finally, billion of at agreement AWS. close, with with marketable we cost how error

overstated million a $X a in in of XXXX. Calculating since pickup operating QX resulted goods this QX our result, million As credit QX of we income to subscription XXXX. by sold each cost of correctly $XX of total in XXXX, a

revenue, which the or ARR, for you guidance. remainder should in no in update current As and is had contribution positive of our prior the a you periods. operating assume year, cash flow impact cash to your free the flow income This included models, $X on operating million

purposes We XX. in periods and have not on to correcting we upcoming Friday, concluded we'll the to it relevant XX-Q, file be May was which financial for comparative material our expect prior statements

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

carry over a As and buyer December saw Customer we in budgets decision-making urgency remain the Yamini external to operate in tight. environment not QX. continue measured and we shared, did challenging into is

Our these XXXX. guidance assumes conditions through that weak persist

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

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

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

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

total full year-over-year be for at of the to billion prior expected with $X.XX and to billion, as year And reported is of $X.XX XXXX, in up midpoint range the revenue guidance. consistent XX% the our

roughly exchange revenue We be for to to a full now expect year. as-reported foreign growth the point X headwind

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

the be seasonally flow in QX. And for closing a year revenue your with mind CapEx with percentage hand I free things please be her $XXX full over flow will X% of million free to remarks. models, to for that, roughly cash cash adjust following. stronger as you XXXX, keep to As expect the still about of back We and in Yamini

Yamini Rangan

today much, what you by for close customers. ourselves is so not I and grounded the want changing will what but on Thank sharing Kate. change We not keeps crown to future. excited our about what us

that Our help them can need easy-to-use customers grow. solutions will

they customers we This focused AI. can to will need exactly that of drive is Our us what the in with companies are so bigger innovation age compete on.

platform customer and organizations opportunity is more momentum front multi-hub, a help focused to they and remain with on like Sales Our Hub millions grow. massive of gaining doors

a our huge single for to solving you staying their support. our day. thank HubSpotters to the all every on around thank for world want continued for partners I And investors and Okay. focused customers customers,

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

Operator

Samad line And Jefferies. of of [Operator Instructions] our question the first from is Samana

Samad Samana

able to healthy have the XX% vendors growth struggled been A that durable great plus to Hubs It's for has and maintain SMB lot HubSpot. other software growth. see of

to market weakness? share with larger market the of customers in durable Can rest you that's good employee of see how keep SMB the that of XXX help segment think understand that. So we it's offsetting to can growth? powering much us through if the as case, more traction is XXXX, gains X,XXX this And that

Yamini Rangan

That's our choice been very I are faster the of Look, think so you we across why customers a that, operating have buying cautious soft and time the base. customer to And on see platform from for platforms, of thank for said playbook this the leaned we are within in consolidating that's and environment. within we Samad, environment. still the segments much question. total Having perspective. continuously of environment, within throughout kind lower to cost macro that a of caution we're continue our all value, fewer in the customers ownership, value, period higher on

see of right? the segment in lower we to asked X,XXX you both, environment, seeing are Now In of kind lower we removing kind the friction. we're what strength versus in environment, XXX the cautious

And exceptionally the customer, entire gain platform you to value. are adds the is the we proposition, suite compelling why increasing look if is lowering a which we it deliver customer for continue that there. the we strength Starter see net an are We and value price at

And look they more that we dollar what people XXs buy when importantly, retention. is with customer HubSpot, for see stay we HubSpot, in really high which

fast and with is number in care end The and to happens platforms, innovation, in teams segment, of time with months, delivering win. using In upmarket running the waiting doubling months, getting doubling but customer of down we conversations few reason are X it that about have for in their we legacy is a upper terms XX that value. of what of time they the instead where I a also to product value. weeks the getting customers down which platform And up is other

terms platform. So across segments, suite we continuously a of platform. to are of terms we environment, into but the to and things embedding to in are growth, all hot a it think on app focused focused all doing the we be the it AI with going of and continues of from durable We're innovation it's -- right in

Operator

Mark is question from Our line the of today JPMorgan. next of Murphy

Mark Murphy

So during and if bit the just if then and year-to-date, inflation? of any does driver in feel terms picked the you it to behavior how rates year up of have I'm urgency of line the oscillation it were weakening a buyer And there. QX, a interest seems it quick trend buyer curious sense December to of a changes like underlying having you X compare for little when we closer ago the in

Yamini Rangan

Mark, Thank question. for Yamini. the is this you

different saw mentioned. time, some the got QX. the decisions. more saw what you And to Let very that budgets, specifically, across before environment we we me demos. in more tight concepts more of share And We choppiness and customers even first periods make of in decision-makers, proof meetings, maybe kind for contrast provide saw the more ready purchase

before, saw and like mentioned I an very than back more felt like what a as environment. the QX anomaly QX, cautious And felt between buying in in accounting and even are December differences was for seasonality December, this we we different to QX it

Now could rates what terms environment. certainly interest mentioned, just in in it of be caution you is the which

December we So like felt an it XXXX, saw like felt throughout what anomaly. more and

in the the the the product so deliver these which built we with in consistently and that's for the innovation, value, segments. different, value environment communicating why map, to have communicating of our road might continue driving playbook quarter-to-quarter, lowering and consolidating look, is which look leaned a know needs that we TCO So is, we the case, is same on business month-to-month, across customers the playbook,

Operator

next from today is Alex of question Research. Zukin of Wolfe Our line the

Aleksandr Zukin

if change revenue SMB at bit quarter? market. you like pricing maybe urgency, little POCs a sales on you and upper demos, the that in you think in then dig Any the Kate. by Clearbit versus a maybe to versus billings wanted parsing micro, just buying cycles, separate I about of -- guess you elongated I did sales Are all? maybe to feel idea question And clarifying and cycles contributions for macro

Yamini Rangan

take of Alex, and parsing Yes. first terms in I'll macro question, pricing. that

of and seats And in led launched driving to So the what in saw we by that And a the to pick and saw We that faster where to in And the to up change. said the meetings, beginning was decrease. actually -- saw requires able decision. the cautious. compared we we that we to kind about slightly customers faster it get ANZ adoption ASP, we and specifically talked saw more environment model. is right more in the environment buying seats seats from velocity exactly is what of like change decline calls pilot, see macro than faster saw a be before that changes we changes, and adoption conversations to we're we you the March. macro offset to ASP more our compared the The different what

out, impacts Kate, part think very, the for of both I the quarter. hard the within kind of had they so very to slightly it's second question. And parse different but these

Kathryn Bueker

growth about of revenue Alex, about points billings growth we drove sure. the Clearbit first still Clearbit and provide full X.X point year. will growth Yes, and for to in quarter, that expect the X

Operator

Valenti is of of from question the next Our Carolyn today Sachs. Goldman line

Gabriela Borges

environment wanted So the guidance got little same, you, full and macro? Kate, This revenue of the through a it the is the full Gabriela. impact for ask worse guidance to year bit on sounds macro how think like about is to quarter. the year I

degradation positive for year? we there about bit as have a full a assume to think always the is Or dynamics the you little macro of So room company-specific [indiscernible]?

Kathryn Bueker

thanks for question. Yes, Gabriela, the

us and are that our things holding do are are We there leaving a that. to few year guidance, full

and as longer, their Yamini as that behavior both are this cents Yamini's are the tighter call. and comments one script heard that ], I early cycles [ XXXX. first The will about in from right? guidance of some is still throughout on continue our and this are Customers you well foundational in cautious assumption Deal budgets

of incremental guidance the $XX of headwinds over then when and the expectations. headwind $XX the pressure about we quarter-over-quarter seat of pricing FX And from in set or last timing period the million also time. macro of dollar the model from QX this so U.S. is There's combination the another causing strengthening million

particularly are retention downgrade There That great we're contacts. some for in we're there and said, quarter. seeing. are seats in remains strong that some the activity Gross improvements marginal things that seeing,

we want guidance high guidance put a the We to today. confidence degree think hasn't that philosophy changed. achieved have and that we what we of in we Our share forward in

Operator

line from question next of of Our today BMO.. Keith Bachman is the

Keith Bachman

outset. for question and a second, I the back wanted come really for on and Yes. the that seats background and to at apologize I to the pricing. noise last focus

because full happened was get a But Does actually there's through quarter, that, but mentioned Kate, adoption the maybe the get you But headwind as we just the rate during see year? turn quarter-over-quarter. that million the that as to you the a that of transition exit year? reflect into what talk so does year? $XX transitioning And run as maybe greater tailwind about you do how think seat-based we pricing how for the

Yamini Rangan

is this Yamini. Keith,

Let explaining the this and impacts part we Kate me expect, and guidance with start maybe take the then changes our for how can XXXX. of what second what

to customers make make fewer to upgrade to much removed the back, easy get price and of make period to why Pro started model. of to minimums we time. it for This lowered and a So step more for seat change? Enterprise. We the upgrades Starter just easy to real downgrades HubSpot. is it is benefit why We so leads it the over it But this customers did like to of with we

cohorts, can and this healthier to good is for a need pricing customer more allows with good it that in HubSpot. nutshell, start it. what us can who And they for it's customers change exactly really acquire they buy because when more to So want customers leads

pilot. what is adopt X mentioned in we we us the as remarks, seats prepared of surprised customers in in Now we higher saw what to percent compared the saw that month a

offset expected immediately. of because to But we're we it's a adopting other to take the down, up and of volumes going and ASP to sharper additions to the model, seeing and go are more the that for volume customers up in ASP customer months a decline So ASPs, catch decline. each offset go couple

but for therefore, short-term a is thing a this is there thing and right are all that This HubSpot, very of So we you investors. trade-off, it's for right is right thing convinced for customers. as

said Having about talk point. let I'll Kate, that, the you guidance

Kathryn Bueker

Yes.

Let the me a shared. story that to add couple specifics of overall Yamini

We part ANZ. customer expected is of seat the ran This model in fall in to ASPs quickly what fall happened Because we change. by XX% as with see that the March. to of saw in very the it saw ASPs pace, we And we pilot consistent XX%.

deal the we in saw lower the ASPs. velocity roughly increase In also offset that pilot, an

And because basically was of was see offset of so ASP. the And the pace end new velocity to of neutral. adoption, ARR sort we result that lower the March did customer not step-up the sharp there enough in

are of make not up be new Now which customer we leading And April April kind actually pilot, deals, ARR to encouraging. highly to which but neutral. to see, is would look what enough a the similar very short-cycle better the was to indicator

good of to retention about ANZ. on is for the on to similar is saw upgrade very piece in It's are in seats X- and model a that healthier rate new depending in that pilot revenue we the X-point net what improvement other The addition. news the customers the

to a ARR seat to now out. take longer we we be going is as initially to little So a for neutral overall bit change model that what result, XXXX. the is And motion than for expect It's that going accretive. to play the just thought is

Operator

of Our next the is question from of Jaluria RBC. line Rishi

Rishi Jaluria

us I into any dive apologize is for your traction can going? strategy? wanted integration noise. product you're bit from data sense the Can all deeper Clearbit. the Clearbit with you little AI give how a how broader I to play that into maybe getting the and background for a And

Yamini Rangan

the question. since really It's early into lot got Rishi, it's It's days quarters integrated thanks team the been with HubSpot. X.X a well. going but Clearbit, for

so vision play to drive back, our us step the our data AI vision. for is a And that we take that really this accelerate we way insights have type is if think platform. seeing platform customer that can we into and tools of are bring Now entire We that powerful to customer overall a out. enrich that

integration early that And about into well. days. bringing Phase the was use the really so instance bring natively But contact data, really, we Clearbit that it enrichment can HubSpot, all again of going to of data power thing installed data into are customers. company cases. hands excited our So X enrichment and is the the the is It's product base natively the

you on the the then so see like this information look And we can about tools supercharged. that about the thinking world campaign, way is When apply operating. your AI and already a companies top of start you you have your be the customers that that campaigns can

we of we that and platform in good is customer AI, where are feel really terms very data, enrich vision. and about a powerful, of combination the unified So going

Operator

the is question Our of Stanley. next of today line Morgan Porter from Elizabeth

Elizabeth Elliott

the the in any attracting go-to-market pick that of pickup you double wanted to to model logos was model? of some just up the education to then customer And changes any availability about the were think I willingness kind new new volume side? seat address change. customers, Is and the of from again less customer the new some What great maybe question side. by -- wanted willingness new to the factors to just existing new but solutions? gating or on of it of the I click -- pricing see It faster ask on to a the seats of

Kathryn Bueker

March. moved seats over time. don't will model just in begin the pricing only The to seats of back Why for the some I start, -- half at the That's XXXX. Elizabeth, beginning of take to we with of bit the to new clarification. existing a migrated customers going a customers being model The

at their quarter, same they time. about on And when at renew talked the at cap subscription on increase -- are currently ARR the we any last customers to we're As following migrate they platform. which X% will we their going our then

Yamini Rangan

is model, they're it, -- and But Customers a is there the the your something look, model. terms go-to-market big you to resistance like doing. about actual of be And need change of think the a I there it in that adopting else we step back and motion. think or is in if terms

to customers need even versus are able And get to motion of kind with be to which They reps a takes need ones velocity. seats. like seats drive Starter customers with Our that us X Pro settled. it or X faster to minute more say

of have our that, driven enablement entire motion. ton of a we Having said go-to-market

partners needs their We have provided this reps. how by get approached as clarity of to well in terms as

think So for it's in, we're adoption. model going thing, to a is customer most settle to minute I which important take the seeing but the

Operator

today question of Materne next line from Our of Kirk ISI. the is Evercore

S. Kirk Materne

of of definitely year? be can it's AI that any of around to can your know that it's with that you the I a rates a is curious broadly. about multiyear by there dynamic of terms I there move in just help a Or course playing concepts the You're a how of year. I going a proof more upgrade out Yamini, chance guessing the the interest functionality you're how realize is lot bit and far? Is end bringing kind thus AI? see but bear but just of kind game, curious of dynamic? the mean, seems I into of on partners, production was it longer-term journey, to over

Yamini Rangan

great a question. Yes, it's

very, looking perspective. usage question a like concept function proof adoption. concept. part of be our and to parts of X of They dynamic. of the cautious say AI part is is I would platform. so very is And the One are buying a Customers want on from maybe where we sure. the at are proof And to just consolidating cycle other your

And like of concepts there. some additional so there's proof

right? it's though, terms this In of of have is our -- Last first we year, about a about been are when we now of most AI, products. time launched And GA. products the in year set

set we And adoption launched are in And are that call But see value, customers there Hub adoption, out within of additional customers adoption and we can well either are of every what in of single and experimenting like who new at see the who then fact, first AI going summarization In of are and seeing getting are terms terms fast. then how of leverage adoption, part the see that April, can getting we out as looking terms just there of is a AI? service whole function are AI set in Spotlight, leading of as our of can . And They're of saying, case use features. department of or about we cases I that AI. content take time. use can with those we customers features. to figuring XX as that Sales deflection in terms in is go-to-market moving

focused perspective, our perspective, are are how all usage. we go-to-market this used. product drive well on on is focused is as a driving year productivity about From a So we can driving usage. repeat as focus data benefits customers, growth being repeat educating From Where their benefits. they

are leading really we innovation the for as to of so little usage, the adoption. but take AI level it's happy with And customer as well a going while

Operator

question today of next is from Stifel. of the line Parker Lane Our

J. Lane

of the addressing Yamini, top funnel.

flow those quality shift characteristics, particular retention source worse showing lower you lower from of leads, worse would that partner Is INBOUND that lead? with to of combination characterize a source there? a away quality to saw it lead you up leads high-quality leads. of how a or characteristics all Is rep With type source source customer rep said that? You that's partner

Yamini Rangan

I you take Parker, Maybe for what asking me a meant. great explain this I'll question. question. to Thank minute

a in was partner source mix So source what we shift to INBOUND leads. and leads saw rep QX more from

customers when are hands more are more quickly. Partner move prospects and us These have source partners with a and purchase. want have ready a lead of say in, . and we leads raise qualified lead. bring our to that to had INBOUND to we conversations come leads and and need tend be kind their types two Now qualified

beginning mix by compensated the those leads. year, the that Now in sources, saw we X down a from of rep and shift source we

calling customers, to talking customers. reps Our

immediate demand. difference to purchase customer the rep into the more to Now and calls not interest It that takes takes that's sales and coming source the ready more is the pipeline. leads in more It's progress pipeline. time an only

like deals. it So longer, characteristics larger especially progress to the that takes is

focus activated part in that are retention characteristics, they And so same, of right? much the it's customers terms usage. kind of they Once on we But pretty and get get dynamic. saw we of the HubSpot, onboarded and

Parker, explains shift you, Thank that question. hopefully, So I that made. mix comment for the

Operator

the Brad today is of Merrill Lynch. next of question line from Our America Sills of Bank

Bradley Sills

into wanted of I base you've map here. Obviously, to highlighted the a here the innovation ask a that's that question product. road around going lot AI

you're just finding versions. the into use kind the cases could think are that you've premium-only could if interesting that said I further what that looking could some And ASP think it's go past, of curious for do that? be be and Just of some that premium that of features out, a at you I'd in but mix catalyst? that thoughts catalyst I dynamics, any would on think, are be being great. those growth? I your know you're a just

Yamini Rangan

question Maybe through all in that step back, we're for AI what how to lot of a just thanks is we're in entire and AI and to Hubs exactly it. doing. our like terms thinking embed vision that's platform. Brad, about And our

moving very a announced features and to are just launched those of of robust roadmap full Spotlight kinds features. was and We build AI that we quickly of Spring

it AI beginning think is monetization our we're you actually to drives to Hubs exposed terms CRM, threefold. embed that full all When adoption. of adoption. see overall our get entire about and across more if platform. in They seeing AI, across strategy, And the with We're and lift people start it we

talked features beginning nearly features the of tiers. we generally are we be The XX% XXXX, and more that fact, and being more we said in half where are to tiers. will about in have in the you're second thing, And available of the Enterprise adoption. and And becoming at that's that The absolutely also first Pro right, Enterprise pro see

prepared when well the at talked cases, as features XX% and use features. the selling of bucket it into AI customers I leveraging service of falls content of using Enterprise use customers remarks, cases. AI Pro you look experimenting that, In And and as guided are XX% about use cases

rates path. as It's that early Pro the of to that all Enterprise. in on kind terms we're going shows when we days. upgrade of still we that, as well the So see right And of do are

adopt our easy super so making usage, and our it repeat focus and And innovate is it's to customers with usage AI. for

Dharmesh Shah

is quick Dharmesh. note. one This Just

order So is a on our year where game you platform. year, -- AI, what goals. abstraction we that year software have that's ChatGPT think of if of XXXX level of functionality we to to through higher And was think kind we're the of the even with that we value to were take going can can and that's product. higher and Agent chatbot year be towards, early move marching AI we last higher the chatbot, to and we This add

Operator

from the Michael today Fargo. Turrin Our Wells question next of of is line

Michael Berg

wanted competitive capacity in are upmarket? Michael You like on of the this AI AI. particularly Berg Michael got very for approach in landscape ask any landscape, here. on to competitive clip Turrin I meaningful in and It the a Has at to moving guys upmarket. realm seems you just moving of differentiated kind fast helped

Yamini Rangan

everybody different at INBOUND, look back XXXX said the let So have XXXX, And AI-powered our we a a go you like great question. needs have year CRM. AI. approach approach, to And me you great you has have if that. to to Look, a Thank we at very for if said for everybody take last we CRM.

features Hubs, approach for the features our grow easy start features AI make it continue with with AI and customers embed our of been the And features. all the into platform into and embed to super so to has all

think competitors AI path different a the to it's strength on of engagement. getting to are with from or our a And easy of very lot strategy, services leans one a differentiated features that's of I use, time for started value. very fast that into that the charging

is And the much same recognized about They They can way age where this, old problems. too that front gathering age we collecting want handoff. old one -- have it much time information AI had information. customers go-to-market They fundamentally of go-to-market problems being to much over we spend our they've spend things be of at are for decades. time then creates is looking a too multiple customers. AI do instead and part the teams to spend easy of of solving time too new a that to in approach it capturing And adopt. in

help don't so if going approach I our more think Dharmesh, differentiated customers to it is add know do I our our adopt and approach you And is that faster. have to there.

Dharmesh Shah

Yes.

Just one quick note.

our time for platform. been of long a unified core one differentiators has our customer So HubSpot,

to place. of where in you this unified. get-go, the all all X sense. space everything and get order makes We of step in And very data it sort AI, got it's data get makes the out of other differentiated is to players have from to in the together kind value HubSpot first figure already out your sure how make already From together, one

make very available that's usage what that of thousands quickly. possible across learn of get for platform, adoption companies embed kind makes it and to the And entire so we hundred very, feedback and from us because it to AI

democratizing platform. So customer it fast then I usage think and the and on making leveraging we learning data kind based on AI, really have a take our HubSpot-specific accessible very of

Operator

of from Our Wong the next is line question today Oppenheimer. of Ken

Hoi-Fung Wong

assume guess, to downgrade of dive I fair secondarily, any I strong think customers to on that to that caused With upgrade? purely in kind second is some out from of pressure embedded a wanted of retention, that's kind to maybe half is might reason potential there base licensing the stable, ahead just byproduct upgrade rolling it have in on that was And NRR. pause any the behavior? the hesitation seat then of

Kathryn Bueker

the add for organic held XXX%. us one? in you we trends take customer of high retention and A positive don't the XXs, dollar in Clearbit, the there. that has quarter Yes. that retention seen of . was it saw QX. And impact XXX% in couple that revenue strongly We've was when Net business. Why in I again really consistently the for

and upgrade that of been particularly we've that signs the a thing been early this that said, rates of expansion with contacts. not in some downgrades, over think saw you've other in Even new see in The rates. couple last quarter. model, with positive the the that quarters pricing in stabilization significant That seeing I pressure we seats hearing are and were only we is ones the challenging we still the did upgrade seat in from, particularly

Operator

line Tillman from of is Truist. of the Our next Terry question

Robert Dee

Bobby a several to opportunities or the as customer This was Officer early success, more drive And alignment success for the the following evolution What be leaving between thought marketing announced Dee to process result? customer role in unfilled? more and sales on learn could April. promotions is Chief the Terry. there Customer Curious of about on

Yamini Rangan

Bobby, that we role. we -- to Customer well marketing has Officer, for were really the . Maybe that right. that going marketing thank I report ago, probably that sales directly remember that Chief X.X April. to marketing, Officer and success decided you needed so and the we have role more joined success you're bring We years organization announced our customer much that that, for the flatten success needed and sales the together I to and we organization absolutely back role, been you was a in Rob, sales, left customer early Yes, And question. set that a at and importantly, Chief working customer ago, few say very bringing And strategy. the I'd together that me. unified first step to years took time HubSpot. setting strategy And Customer

are have And a the He Now is executive time AI. significant our have long for it's time, thrilled speed we years. is as within press directly release has X-plus well earlier as really been leading experience in I'm we April, stepping very CMO mentioned and up in of voice Bodnar, our who stepping as up into a lead. Kip a execution, and he lead there. very go-to-market deep who HubSpot leaders that we and the for to with And bench

sales he our And in lead a years And Officer. couple amazing who's to organization Kinnear, stepping to been is time, leader up the with the the international years thing to lead stepping for Jon to X-plus who of same deeply about Christian is has team, customer for and Sales HubSpot full used and lead for passionate the very He's long then in at sales. an journey. customer on marketing perspective, has Chief our success been Dick, a ago goes up global us about

step So that we to of leaders, a we're full each we is directly. we the really in have to strategy. where are deep that this those fortunate And the of right terms up terms and leaders for decided clarity of bench in going have time of

forward to excited each of their and pretty looking contributions. So

Operator

Our Radke is from line the next question of Tyler Citigroup. of

Tyler Radke

Yes. Kate. this direct Maybe I'll at

year full guidance. on operating raise just color the assumptions were But the income guide constant, guide. the obviously, to able So year impacting despite the FX you holding full

any just could So about there's you whether And there? you saw incremental talk of too? that impact that, some the FX incremental on savings

Kathryn Bueker

thanks Tyler, for Yes, the question.

in from our to before, the be against going profitability, hiring . But try coming think to comfortable and me going We XX% good a more year show target to to this normal year. profitability. longer-term targets. back return cadence to of target hit we where continue we're profitability XXXX, we're to a XX% then to I this is XX% balance the a and strike throughout by but remain that you've XX% and to position progress heard between we always to our growth really a XXXX

plant for do at We to really And growth. growth disproportionately -- year about that want from plan investing we long-term the to to are to perspective. the expect to in drive We end XX% continue R&D. a seeds headcount innovation and

You leverage addition Spotlight. through optimization continued estate there to funding our organization, recent this driving just across CS saw footprint. the commission, in and our go-to-market And of our continued some Spring marketing real in we're particularly partner in the of fruits

be expect point the leverage of year that more deliver And to so able back X than half. we in concentrated we'll this

Operator

the Blair. today next is Our Bhatia question Arjun of of from line William

Christopher Madison

worsen? least guidance any highlight heard in made of sources at during Chris some to was some were we've the if front of conditions on continue I consistent Are the about to some confidence to of sounds space. these return with there conservatism unexpected. in from wanted pretty you It was Arjun. in demand of to like office first it's is areas like seems This for to or peers the quarter like It somewhat that softening there that commentary demand. what you'd

Kathryn Bueker

I just sort about of approach we talk don't guidance. how Why Yes.

to guidance endeavor put that we that we can always, confidence As forward meet. of a degree have we high

rigorous a forecasting have We process.

reflects we've achieve. the using land in rigorous that been to And see. We consistently for that do process risks scenario we upsides our analysis to We and we time. lot have a very feel guidance long ability to frankly, a of the of confident all that guidance a that try on

Operator

line the Our Brian Peterson next from of is Raymond James. today of question

Johnathan McCary

on for This Brian is today. McCary Johnathan

as increased We sales on-ramp, the as front Hub a last So little in heard an bit marketing, that Service and this of heard specifically and mentioned doors you well. I've the as some strength quarter. quarter partners in traction from of

if a seeing the XX So you're had last for in conversation days? you curious just Hub trend Service the still that's

Yamini Rangan

certainly. Yes,

I we look service. sales marketing, when front the and X is multi-hub, think that in doors, then we it if see think -- Sales at we doors, about And front most common combination marketing, Hub you and multi-hub.

multiple to of we're start hubs. customers kind our beginning So with adopt platform see the and full

officially And to Kudos Hub, right? made our it's Hub specifically, part well for this We product progress in there. terms received. quarter, Spotlight, making been of we progress as extremely relaunched excellent and excellent of team Service Service

the the making Spring And this very aimed tier really tools, serving a tiers at launched Hub We Spotlight, specifically advanced make has Pro to Service big powerful. and of And customers. support work year, and we management And last Hub, for competitive ton all year SLAs, of look you a year of focus was are all routing Service upmarket on these been robust powerful. if Pro. did more and the at our very

just tier even that got better. So Enterprise

time also, teams This them a sales for we unified entire their and persona, then And to be customer conduit also or customer the the is manage connecting want launched CSM together. be and workspace. provide teams to the success able and book success for we workspace support for first our to for

I So think huge area. a that's another

adopt with features And within see our customers Service we certainly and we do capabilities, AI about Hub as Hub. AI our like how always, leapfrog thinking we've been Service

as with both from as So we Service product very momentum perspective overall, there. a well the customer I'm perspective the Hub, in see with from and adoption really pleased a happy traction

Operator

the line is Vidovic question next Michael Our KeyCorp. of of from

Michael Vidovic

is This on Jackson Mike Ader. for

quickly on channel partners. and your Just the partnerships

source on direct more it you seeing between, having partner I channel relates the quarter the motion as fewer call what seeing sales direct guess change? to deals But dynamics this about it, and sales talked rely motion pricing are terms of your sourcing. to sales different and You your in

Yamini Rangan

Yes.

I think change, on direct sales. the in of overall, pricing change nothing specific terms well partner as the as between

a earlier with of partner means comment together, our seen the co-selling as our for great And is source year-over-year. direct that Now we in partners XX% as work and success motion selling core up we've motion. what is terms side, well that as what sales, on made partner reps

the on partners when sourcing then that Now side, motion time, time own spend deals. less of and is generating in little really strong, flip co-selling a bit their

co-selling as balance right sourcing, the to partner want we now. what right And on between as that so have which we well exactly always are is focused

we're enablement. out So partner rolled

that co-selling rolled resources our in as partners direct the balance, teams to out is ton partner well as QX. in seeing the both sourcing We have of a that we're work our sure a way where certainly make and and in

Operator

you you. all Thank HubSpot any questions, will for joining. And conclude Quarter further Call. no this for XXXX First Earnings Thank the time with

lines. now may your You disconnect

HubSpot (HUBS) 8 May 242024 Q1 Earnings call transcript