HUBS - Earnings call transcript Q2 2024

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Operator

Good afternoon, and welcome to the HubSpot Q2 2024 Earnings Call. My name is Harry, and I will be your operator today. [Operator Instructions].

I would now like to hand the conference over to Senior Director of Investor Relations, Ryan Burkart. ahead. go Please

Ryan Burkart

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

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

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

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

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

we'll defined by Regulation During refer certain as of measures G. the to course today's non-GAAP call, financial

such press the reconciliation fiscal second used measure of to year found within of website. or a our and of Investor financial measures XXXX financial non-GAAP be comparable measure directly most earnings our section in GAAP can The the Relations release differences between quarter discussed each

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

Yamini Rangan

highlight early winning playbook everyone launches. long reiterate discuss welcome spotlight spring driving wins and the and product Ryan, to strategy in XXXX short results, from Today, I'll on for trends and our our both share call. and QX our momentum you, the also Thank I'll term. our

Let's dive in.

revenue margin of was quarter currency. operating continuing operating wild XXX QX solid XX% basis growth of We leverage HubSpot I'm year-over-year expansion constant operating with another margin are delivered growing year-over-year, driving deliver quarter we really points for with in XX%. margin to happy to driving growth. our the a with

net execution focus to momentum consolidating customers I'm Total to for customer driven demonstrated customer of and XXX,XXX choice in quarter. customers grew by becoming XX,XXX scaling companies. on our in innovation see teams by customers platform consistent the the HubSpot, thrilled the have globally, and over additions on we

the started of improvements. to on fuel and volume Our continues market, the year end driven by pricing product low

trends for to driving It in customer it decisions the and We visibility business made have customers growth this streamlined started can delivering removed functionality HubSpot. checkout friction they better on with owners seats easy process, But value for we're meeting the compelling most make so about environment. need. and importantly, clear customers focused and have on get now

a As and free strength result, ads. sign-ups seeing in starter we're

of In deals. or X up we in tiers hubs, hubs. customers The with customers to were expand in start is marketing the and deals Marketing and front Service wins in in led Within upmarket into polls higher large from popular QX. multi-hub hubs, Hubs, we launch adopting have markets, our more marketing saw driven doors, content more business Hub using and Content customers our and resulting deal innovation momentum. momentum new by multiple in main came Service larger multi-hub sales combinations. X from XX% We momentum driving our QX Hub larger Hub or hubs April. multiple saw sales and mix of sales results with Over after customers

and their to tech want their and choice. our focused consolidate innovation investments make off top Upmarket serve simplify our their to customers stack pace needs of and

Okay.

Let's that and early pricing model changes introduced it's progressing. we March our in talk about how

to As a with we the seat reminder, HubSpot upgrade to who reduce customers edit minimums for a lowered CRM to to price seat and get records. point started friction created removed core want

and few ASP, HubSpot enablement. we happen grow continue to progress make to and declines made to we expected to make to ASP changes, it lower this easy of to and did the driving buy the expansion and over to expect customers more we these as When QX, next upgrades months time. in offset this we In on higher initial We on easy volume higher with. volume focus lead to

We what with for continue month on as they need multipoint retention trends in net at expansion more. see and when buy exactly they solid rate customers a increase pricing revenue new to they the expand X model

the and Spring product decision change customers the pricing our our the Overall, QX, right for spotlight have out that round talk to HubSpot. therefore, and conviction driving how we they're let's is for we with drove continue To launches about high innovation momentum.

unlock. customer spring year-over-year We and a and XXX-plus In The service wins the introduced to It Content major first launched of up on service grew of part platform. spotlight, now saw customer Hub with was single success supports April, Hub. update updates teams support we number a Service XX% year-to-date. seats and both as our unified big XX%

a help XXX% In desk closing the portals since in saw ticket relaunch. increase in we addition,

Hub, content. Content AI-powered content to and of terms an In marketing provide help can goal is that manage solution create our marketeers

like solutions features remix, like Content attach The since XX% for fantastic. all launch This nearly Hub tripled Wide now is been is Hub content using Morehouse Brands HubSpot wins. and new to AI marketing College, high and blogs attach The innovative grow. Nature content hub has rate by response driven rate and the voice. for Fund being brand Marketing AI has to World Tripadvisor, for the are And

to our for customers. thrilled product value our drive innovation we're see Overall,

trends seeing that many committees, involved Okay. often On continues decision-makers buying The QX, environment. firm and or slower the bar same year Board value includes When decisions CEOs, approval. and are last more spending. high. for business decision-making, scrutiny CROs, on times BCP CFOs, and before to by the made case macro to and require as be We're

platforms help to on see We We're clear in them consolidating also this playbook that executing growth grow. fewer proven drive can companies on environment. our and

for dots and success. Let me the and year connect step short us back momentum long-term both and this we are this where our seeing on up how sets playbook,

in easy an stay for drive we ahead. pace are HubSpot and the serving, to playbook our make solve macro We grow customers them that who is clear. when can customers customer know Excel it exactly platform never been for more Our AI-powered providing and executing clear. by we any have help we innovation

determined resulted and for delight on momentum in customer deep to We companies have our marketing growth in and them at sales listening scaling solving service and to customers are in professionals This focus grow. acquisition. help clear

More has it importantly, consistently customer led retention the to XXs. with retention dollar in high strong

app doubling teams AI-powered CRM, best-in-class partners. As focus grow. which solution The energized our and unifies data a an we're and grow and which on engagement help by platform, are customers our way providing with hubs includes and about is them customer Smart down connected company, ecosystem we customer a helping them

drive data. is driving active that with by over June, active app of and X This Customers from customers working XX growth. using together customers app we or In more more more Pro+ more HubSpot million HubSpot cost XX% consolidate more insights bringing platform strategy installed integrations and data as crossed lower them on integration. than to are within

smart In CRM, we embed beginning addition, in made our choice to this within and strategy is of a work. all and to our AI hubs

at The the personalization with sales early customer we by where prospect strategy to increasing just Hub Customers Sandler, working. teams, helping focusing rate Cub of insights brand AI our and powered have to with actionable growth efforts. been appetite and traction messaging, engagement and marketing game drive new both more scale change Hub one are AI, XX%. Marketing with changer that's example According groups our to by the of and HubSpot Content our an has create is attach for a step Content our

opportunity HubSpot's sensitive customers In addition, sensitive support moved support compliance their in it like customers data, more manage compliance expanded to data easy we protect regulations to QX. sensitive industries services financial beta GDPR. information complex and care, into expands health to serve for insurance, like customers makes for in with to personal This for it easy which our processes. makes solution and

higher Early rates conversion features sensitive selling are seeing prices customers. adoption and looks using customers and promising, existing average with to we're data, new new enterprise manage

we is platform be crucial our innovation our term. has growth are solving pace And to our and Reflecting on focused help working. apart focused set been hope durable and to and the Our progress execution This is term our and execution. abundantly it run grow clear prioritizing value. for long us our our innovating long-term will our continue and results create strong on now to for and that what drive will have customers, shareholder strategy long continue is to that in will business of been us I the and success priority.

results. With that, take I'll QX Kate? to Kate turn the you call through our over financial to

Kathryn Bueker

Thanks, Yamini.

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

of year-over-year strength net basis. was Average constant in We quarter continues in momentum at X% total by multiple the we've volume count offset several enterprise from by quarter, and as-reported customer in positive year. XX% number customer a headwind per customer and growing added revenue offsetting net the revenue strong customers this down retention professional over end. continued XX,XXX from low Again, the XXs lower with year-over-year. both QX held and additions in XXX%. $XX,XXX, increasing an ASP currency the high acquired adopting ASRPC customers was the subscription be ending over starter the customers to on driven a Gross at stable retention by of of driven an impact last factors, nicely the was hubs, XXX,XXX,

rates strong While QX. customer trends, remain we challenged, continue and similar to to dollar see retention downgrade upgrade customer

billings growing basis. we'll revenue behavior current were of Calculated currency constant this around in to remainder both the and half my net expect as-reported non-GAAP in $XXX We in comments the on of an levels. XX% million continue refer to QX, holding year The year-over-year measures. with retention back

up in was QX $XXX Free share. diluted QX QX and Net flow margin or continued was to income efforts. in XX% million infrastructure cash year of XX%, our optimization was operating X the by ago fully million impact per the of period, driven compared go-to-market $X.XX points efficiency revenue. or $XX

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

With quarter that, of guidance and our full third the review year XXXX. for let's

Yamini As difficult challenging in get half And back shared, assumes we external materially persists through does to guidance and demand environment volatile the operate the a not the continue but of worse. year, our that environment.

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

We and revenue $XXX expect as shares million. is $X.XX. income growth be million slight outstanding. $XXX is assumes quarter. in between the diluted diluted per Non-GAAP fully to be expected XX.X between reported to share exchange to $X.XX net foreign expected be profit a headwind million and This operating to Non-GAAP

to impact between to $XXX million as billion, of now $X.XXX year. to expected total foreign range Non-GAAP full midpoint. the profit at And reported revenue and in the expect full growth have We XX% $XXX for of billion the up now is be now is reported as neutral be a revenue for expected exchange year operating $X.XXX the XXXX, to to year-over-year million.

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

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

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

Yamini Rangan

for out, Thank Kate. well we so scaling have large a companies. our on To of you to close and platform we becoming way ahead us, customer the much, are opportunity #X

the thank world confidence an you our is innovation sharing and and customer their many all I of around to our to and solving we we've year every you high of huge the customers, for building focus Analyst our forward Day have HubSpotters AI for at on day. progress and September seeing and enduring look in our pace INBOUND made and partners investors usage thank company. on huge, I continued on XX a want and at with our Our is staying support, platform to value for clear. focused driving single this the customers

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

Operator

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

Samad Samana

the above to great XX%. and growth It's see sustain stabilize

One things has portfolio last the growth we where about is most the curious X of in that are changed particularly months. over the the

and if i.e., rates an how growth bit. we slowed doing like a hub look main back business particular all hubs have Is better manner. So that in did equal maybe peel expected? than across the can there or the has reaccelerated growth Just curious is they where new a little

Yamini Rangan

going build one going the strategy, on a the that build And with customer hub. were as for I'd to I answer said to And is a we're of platform that quarters, we becoming last I all that data few we're companies. of importantly, in sit that always. hubs. platform support you're say multi-hub engagement most point scaling appreciate to strategy your our momentum. unifies starts to those we it best-in-class across if But our seeing when insights thing the

doors from approach And to are past sales more I wins multi-hub are of that remarks, of much choice. struggling the a a we control platform, the to able front for and platform to customer they're prepared maybe certainly, of insights all integrate I more cost. combinations point this they of And quarter, said and acquired and primary that starting service. with to content we're customers information looking a of those back ways by we common this then And into bunch attached followed the actionable to hub of seeing, perspective, marketing are solutions, points data marketing hubs. there saw if this into step sales, and during our our And single get that and be all better

the across It's a of really hub. of all the in power connect we data the across And sales, single to marketing, in just across across hubs the not specific is able We're platform. platform. service in deliver into HubSpot that insights multiple a

story multiple quarters. gaining there momentum take few is really away, the so to And if is there's hubs across that a past

Operator

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

Mark Murphy

you're of way that you and kind any ability build related to add seeing made, your track maybe wondering is the evolving? that I'll it phenomenon simple beyond the actions. can payment produce in the payments that moving I it And nice you wondering platform update there was other kicking across on how or whole point monetization of just in difficult off continuing wondering quote, what characterize on payment described, execution congrats just terms of CRM that is you processing a just just product. volume you that customer my the the in very environment. evolving that, Is with see became of line Since Yamini, kind behavior activity And you your into if to there HubSpot I'm traction if on X payments? could primary colors. the then and

Yamini Rangan

thanks Mark, for lot that a question.

to the transaction in commerce payments add our customers. be CRM exactly are to hypothesis it can in journey, that we I of journey. about data, think posed it connected that value a we we for of way out to When the we key platform. terms the which way the Everything in to part payments customers, data, think the valuable payments play started seeing data comes very got question, is the that. had of certainly and into terms down you We're the going that bringing is is is

of payments expanded this The driving to our has and able international for you know, and last product-led opportunity customers processes focus certainly, their And be to other up bring bigger growth support our more to of like come we innovation. stripe. a payments having And impact opening processes platform. to the bring year own more area have our for customers, that us As had our year, been has we customers drive to continued payments. perspective, for on from functionality

this product. see can you our And our within navigation, can it you see within

You the has discoverability our that bar payments continued navigation payments. now, directly from improve can of access and to

In really we've payments payment terms of volume, seen volume. good

higher seen they're monthly HubSpot the much very what flowing have is had customers into seen grow momentum percentage and transacting HubSpot, And the than expected. revenue pleased customers there. the the that we're when other We we that we the have thousands, that with transact with thing of through is the

-- be progress this are really the the a Now are value to willing commerce. progress, all but bet, very as of see feel and to strategically is continue it good we we within back a we customer platform I good, patient strategic and continue is of of would come it that while our to this hubs bet longer-term within that. remind But with as we each as would to the again, our well is

Operator

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

Bradley Sills

delays progress see kind a causing that company more great becoming now go much challenging. I causing this more the And back fact multi-home seeing seeing on deals. that some you're to platform requiring macro that's reason was other comment that's that that Great. how environment guess the larger is multi-department seeing in I to In multi-hub macro here guess delays also related is approval, fact deals. to board-level more the the the of the that words, upgrade wanted of also -- the I of behind this that of call is I is that been in guess of a HubSpot deals multi-hub is delay? that's these made be also to note, earlier due you're some some more the with of deals, more strategic the deals. that's and the deals, could sign-off in multi-departmental versus it

Yamini Rangan

a question. lot the Brad, for thanks

macro budgets, of trends consistent and certainly we requiring in cycle, QX. And slower deal buying terms very of we described lead Board what scrutiny and about we to committee of approvals. decision-making, the in talked environment, customer the is saw does and lengthening as So with what other That high that.

play want that customers, talk counter and platforms that to HubSpot is that the they for fewer becoming platform. as is to on consolidate we Now

by value add that a we fact, more providing see lot in So can platform. customer that an we organic there's

so up that speeds actually the deal. And

we from we macro terms trend the counterbalancing in the there's impact what to of consolidating see So platforms. to of like that see fewer

on So X I even they those each when the necessarily after a quarters they a few and we now back are come not decision, play or see HubSpot would off Broadly, and to say make of other. ready customers, even few consolidating to not that no, HubSpot. it's mostly a talk a always value not and for when months

Operator

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

Aleksandr Zukin

separately, at cash can really, flow and cash sales kind the just with look walk is line, environment. solid I today, your in of because want where saw it just side, the margin think, on from, then so on you ask if guys it if really difficult particularly, generation. free of leverage maybe that where a improvement or so some go? that execution Congrats to the strong sequential occurs you've that coming you billion position marketing best, that $X posted. X-parter to I margin And look at me And a I ever through

how that assets opportunity more continue of kind plethora private Yamini, given of broaden proposition? think tools your of the that consolidation about and and look environment the value and this stack, does you set at As there, spot to market available to viewpoint maybe,

Kathryn Bueker

in. question, Yamini, and Maybe you then margin start, can Alex. dive I'll with Thanks, the

was expected. violations some note X will little margin sharp in We that a margins very pleased in the the performance in with were little bit rule. I question came year-over-year a had back FX. the drivers QX bit we little a come we side. better, modest into year. QX. of improvement X a better including Operating really leverage -- were had Although the things. did than One shift Revenue of And margin primary we That had on said, the expenses the the down then from of gross half the help from

So product strength nice wins services our some go-to-market are continuing also would you're our core note and you've see And and I to on we some team efficiency. infrastructure, in has starting to as make the driving particular progress there. support. optimizing noted, there impact really here had

Yamini Rangan

Look, philosophy of plan our down terms it our in as we well platform how crafted to we as want sheet strong And comes it. for Yes. customer to balance beautifully position and customers. build that really use to

been playbook experience traditional have always way think the is that growth, we acquiring your has growth. customers for prioritized growth. we customers' Now customer and to detrimental and

so We'll potential will expand at look we without can is experience make on and we organically. to are our that seamless. we look will innovation, us we making sure and faster talent also at doing sure as which we'll to customers allow So that ways technology it move disrupting in product certainly continue platform, do really but that

Clearbit like certainly time back spent promise we've we experience. as the really to well done the have But in into both cases, [indiscernible]. on deliver customer platform integrated of customer things the So to as

And so to us that. can you to do continue expect

Operator

of Sandler. question of is next Piper the Brent line Our from Bracelin

Brent Bracelin

base the around to here. wanted touch and go AI journey Generative back I

additional a platform. But know I into talking on, year. early and might about was ago, costs. we fears margins, it past the margins drag if think as about they've the I actually you that, first year integrating look take you margins, started a gross had at on be guys that on in I AI

that it's HubSpot less platform what optimism? the you've for AI are into other think you of do opportunities to in you to opportunity the parts you going of work parts the AI as And leverage AI? AI So have learned strategy what confident the integrated there's

Yamini Rangan

twofold. March It a I launching has started and in think last been year It's AI has we innovation been And strategy year. a our plus, great question. our

into we're first AI not going that our is, or we SKU. is into charge one separate cost AI and build platform to a that separate hubs a whole for embed The the would

was to then much day-to-day you that working that their behind Hub. strategic of remove for is is the Content best that if as friction rationale that, point And strategy to can I the our say strategy, And kind choice working. it adoption. like at introduce innovation drive to is customers look that work And and

we as are all launched we features know, of as at of attach well -- the you the features. it's higher as you And Content Hub just So if part Content driving adoption that Hub, AI spotlight. as look rate

our beautifully our Remix piece partners can you customers our reps, save and like customers. e-mails social a Content take one a love actually of videos written into Remix poles And it so into to content, immediately ton time. adopt get showcasing that they of customers content into maybe and Content beginning to excited and does when they're blog remix convert and because see

finding we're our Hub into strategy the well. of so and And that working embedding platform is

we is monetize tiers, value that enterprise The see and second out. to playing in begin we we is separately. we to usage pro traction customers, a add of bet of want of what to we have driven and are adoption. definitely seeing that is ton And we before value which said want also where Part is repeat

about going value But be value very that making begin before also sure we the to monetize. to is principled we're repeat

in takes we while and for very place, quick with our application innovation developing are I layer, it the same are this back AI starts are it patient is just maybe of Look, And a models, the take shape language for so Internet think if that networking to take terms terms how and strategically and of in did innovation, kind a but large way those say, step things of seeing starts technology infrastructure developing. with it's customers. a working. I transformation take There's

Dharmesh Shah

Just see X the these OpenAI developments and announced right? cost for note of continuous OpenAI Open about relatively we're with AI talking has Cloud now. Source just So this seen to we've in we reduction are flagship the close is They models in dramatic flagship margins, led industry another reduction team comparable quick add to models, since XX% the in kind to And model price. that's GPT. out a field. XX% overall

increase the So rolling features. cost dramatic seeing actually we're of these decreases in AI -- out

to any margin anticipating impact the not we're in So term. near

Operator

Our line next is from question Sachs. Gabriela today of of Goldman Borges the

Gabriela Borges

of achieving you much wanted TAM the expands percentage how a HIPAA way access customers around Is to to to financials? up prepared and think compliance milestone this didn't color wouldn't you I have helpful. invited opportunity is. be would the about you on deals HubSpot compliance. meaningful perhaps or health because how for you HIPAA to us current this those that Yamini, remarks follow understand Help there be have because now what Any

Yamini Rangan

information excited thank Gabriela, Yes, fairly you support GDPR are this. for this our making we And regulations big step protect and take about HIPAA. a we're excited, to able for just about compliance it pretty like partners is are back, super yes, excited customers personal so be what to we to QX much customers that sensitive that And our announced in maybe question. milestone easy with are to

authentication services our addressing needs kinds at we of customers importantly, of for solution and means that it care, insurance. the verticals recommendations, But really will better those we that a those with use that opportunity, going super in like great us going is help health logging, think and what And need. HubSpot exciting and to verticals And make more longer-term financial cases. is customers it's things to open and even TAM up all those of features, audit now customers account security that is be support this

have our of are customers, the because sensitive surprising from needs QX, momentum has of managing enterprise which out been see. in gate the terms customer of is they in the of and And the interest activations the very most data. really sophisticated not Majority terms good to

pickup, rates as terms those have terms We areas. in seen well conversion of both as ASP in healthy of

even to come, fit it better an in n. the market. larger us more lot certainly a but there's so And of portions makes

Operator

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

Elizabeth Porter

improved to sequentially pricing benefit bit new see adds we the higher in last net we're new under quarter, does quarter. sounds the of starting from back out and like like logos wanted When some to the about it the adds new I from ask clear customer look it model.

is, about think should roughly And new the my for volume unlocked So new under quarter question model? the through customers XX,XXX pricing the per how initial the adds of the we view change year? any to

Yamini Rangan

Yes. Thanks, Elizabeth.

by really to which end, healthy additions X from encouraged that call me strength by strong the customer really prepared at is are again that trend quarter of heard it, now the another low for, additions. of a X driven remarks another And really in quarter that seeing was We we've quarters. you been

have for I addition mean, it's customer from said it is from net a It around us. been And is you've that metric. an metric before, input before, not trend output quarter-to-quarter. an We heard me moves

low quarter. there plays Given kind given at be any about is be we would experiments may running you any think like be optimizing the base. Star optimizing end, quarter, be may from in and experiments really would things funnel in typically if within multiple the And plays. customer of activation, volume There demand purchase flows, that the pricing packaging

could another, on. so tease many hard And how given just X from be of going kind out to it's impact different things

we highlight associate which with impact QX, the assume step-up would a it's the additions, I What to would customer be seats tease more particular, in is new nice the to did for out would model. associate would see pricing In model. Pro of I hard directly able I or that

the about as have couple from are the up ago cohorts year, will going we of that said, the quarters. next that come back pretty start for of in renewal large of all Now a year a half to I to number think

of from my combination are net expectation and fact half business, myself, you've in of to Yamini up And we quarter. weakness, that the is both of back and cohorts renewal macro those heard particularly sort that that in small to X,XXX see of coming per for continue the given XX,XXX the adds year the for large

Operator

Tillman Truist. question next line the of is The today from Terry of

Dominique Calampiano

on for This is Terry. Dominique Calampiano

about I'm So curious the at foreign just some additional at And moves you're just your exchange outlook thinking significant all? looking currency as of whether recently. if changed hedging strategies? any has to

Kathryn Bueker

Thanks Yes. question. much for so the

time. the a of tailwind over neutral guidance been sorry, has a -- are currency, the We from we provide at or tried bit and this here a in to year. year You a for the incredibly currency quarter, the period full or are expecting bit volatile basically time to some absolutely from right. of guidance last of were our to headwind year we last perspective some I'm Currency

In terms XX-Q, has very in of some that cash hedging, hedging do our you'll have see overall started revenue. flow on impact we modest to

Operator

is the Lane of question next of Stifel. The Parker from line

J. Lane

cohort number being X XX%. bunch the service I Yamini, was if healthy of about customers. features side all or if that out the given talk at seat you relaunch of came including as on brought composition the the the X that changed of a cited could up appealing customer the really are metrics larger maybe you of wondering the to And of you competitors business, those features most table? part XXX-plus the of the has to

Yamini Rangan

I'm three relaunch also innovation Hub Service adoption. I probably within in Service customer April. Yes. that happened Hub, and spotlight Thank with excited things to you, and am the see for very excited that about big There were the Parker, question.

team. time, is know and first our a customers. are first brings success that together the within the customer success customer right retention. for We success lot leaders now persona about we actually The serving support care And that customer

managers customers. we of manage to new And welcome track able customer to and be by business, that and workspace very is for why certainly their success a that's launched book specifically our

has unified in increase and closing conversation of seen increase are an tickets. the have help interface. complete that unified XX-plus the and closing second a number desk, portals, desk help in portals tickets we The interface, did And we of new XXX% that the is overhaul now in ticket and with new help a which desk

of So that there. kind continuing drive we it's to showing are the usage

more just I for then routing, sophisticated better feature, And a pointed serving And is rightly teams. needs the their have to earlier support SLAs, is last launched who what need teams customer about. that platform. would in Hub and marketing much our seats. see set whole not of support out, this it's momentum that aimed upmarket together really maybe all management, leading which have my are is robust specific enterprise is of at you we as work features just Hub-specific is is It single that Service The that back will that also service a I of sales comment not view we But say, having customers of like value the it's XXX-plus tie really more we the pleased and momentum. their Hub to about Service X advanced but thing unified

Operator

from Wong Ken the of is Oppenheimer. of question line next The

Hoi-Fung Wong

on shift last saw called you where up a circle to lower out guys guys you dynamic wanted a quarter leads. quality towards Just

leads? wondering if running that is you partner normalized that's an issue to Just guys are still into? source Or back

Yamini Rangan

as now. much. It's to just so we right QX, take a the context. Yen,thank sourced you we're of step that more a we with shift And more in maybe bit shared engage progress a QL to source leads seeing is definitely the time. in that just top good the more of leads are mix the as normalized a And qualified of There Yes, we partners. couple well funnel rep really and to from at partner saw little healthy which it tend ways place on maybe in back, back. partner side. And

deals, doing bring work other first up the sourcing actually of where where sales the HubSpot has of QX. is core by teams together, has up co-selling, we team the been the closely partner this more in actually The been is well bit where that and selling saw motion partner half partners it year, really weakness this in consistently and was a and The motion XX%. a is and first

plays we've in in of would development both see that what rolled And well have what and we seen HubSpot, based that, early saw are with. clear and we back laser-focused all shift execution. QX, within of partner out terms been enablement as as partners soon we normally to we happy to on as resources we But mix as that

into as the into back well mix about we So demand going the second as I as go feel good the pretty second trends of half half of the year.

Operator

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

Johnathan McCary

pricing McCary say have process? of curve This to relatively you to for a on of Was reps model, is months there a how seamless team? curious after from related last the learning kind that? a that would adjusted question, I'm sales the into in was that few any Maybe transition Or there Johnathan now sort still but Brian.

Yamini Rangan

Thanks lot. Yes. a

I think settling there price of minimum remove are and lower started any friction that is then teams Pro a we the learning get so to HubSpot a curve upgrade seat this and have feed the to And launched that our point as seat pricing can motion. part partner was that into create we our sales as customers teams the as core Enterprise customers. without changes with as change said, well to for and the

ASP time. And the slightly you down go sales go and customer wins our velocity And higher is all of and a expected for pointed up of to motion then upgrades we this that, to It is as different a out, volume reps. better over motion.

been can And how reps really the the can progress on and the qualification take, volume on do overall quickly. the see they that they So focused we've we're ASP. to deals they beginning steps enabling the offset our that

with But motion. wanted the it's have bit of really pleased the little with overall, in to. I'm as how responded we're teams progress, so sales and a time, to happy taking we but change our And progressing it's

Operator

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

Michael Berg

different on model This wanted the is Michael on than Berg is the I new pricing ask for to slightly enter. Michael Turrin.

several I'm you time. One and is new since you motion this launched. seeing curious what out amount has starter referred call model playing of meaningful the any has just if in on pricing over that to that today are motion? the how And up times picked been points upgrade

Kathryn Bueker

to rates. think last quarters. consistent starter starter upgrade cohorts the attention last seen question. few that is news that obviously even pay rates with continue we've have I upgrade for to so Yes. with Thank We And the good over a what seeing you the the much been healthy we a our the healthier really pretty lot years, over volumes few of

Operator

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

Tyler Radke

macro little one full bit that in type well. But flipped a for the if sort guide the this Obviously, just and it of model beat the like or more currency with revenue pricing there as you your the currency year moving help pieces positively. factor just it the Kate. was a incremental the Can Maybe of quarterly compare prior next softness guide relates any the as unpack to is -- in sounds we guide?

Kathryn Bueker

is with like results pleased Yes. I very QX. mean, what we're you I in the would tell

challenges, we in similar prepared -- And guidance a half achieving -- year, environment persist, we're took peer the know but broader worse, we sentiments of of And say look to has do. announced. it with in the demand part our set back more We the always already guidance. guidance on macro our right? You seeing and at companies look confidence been that but materially we of gets there of heard recently we continues I forward. hearing that As and the economic that what remarks been range assumes look process, concerns step the Yamini I already consistent we not scenarios a as that lot assume have also in of does from both difficult that weakness it that back who've the

Operator

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

Arjun Bhatia

you're see AI one first? more AI Can just you on first pricing seeing is what anything at to And Yamini, do all going you Hub little this then baking to or to you, back And self-service portfolio, ask wanted of kind maybe the a contemplating? understand Service you're it for shift help Service your product adoption Hub. seat-based that customers, where need or there? you if model also in are capabilities that in I might specifically bit. you where your to change is in there from

Yamini Rangan

then which of where the the we've take Multi-parter. Okay. first the and separately. I'll Hub is of Service question, the part take adoption momentum seen kind

our I use the leading if the And with of users highest about specifically, lot look teams I content talked Content already leveraging AI. been adopters content features. So cases XX% Hub. a at AI marketing our adoption have of have customers,

everything you was in but we of customers, and on content content the the to is strategy important changed. terms in that reasons down how Hub. has And of why distribute kind content create terms attract that we hub One of -- content of is the you Content know doubled how that

language from editing, generating audio usage writing AI, of terms text are we in seeing translation, summary. blog, So repeat for e-mail

meaning customers So that ones our the their that it's indicator use daily into in. are of lot a cases are is the workflow. important built And the more becoming maybe content just

case, rate activated well XX% #X. do seeing that's are rate AI chatbot repeat XX-plus for portals when comfortable improvement. area So we're percent times consistently, AI driving resolution in they are using improving We've service as as pretty customers resolution have And usage chatbot. use is that AI chatbot. self-serve the with next a I getting leveraging think seen via

of these value there So know, all a to in are that have Service Hub is Dharmesh, service I you has early if as indicators comment on room well. terms and continuing lot value. don't drive more a

Dharmesh Shah

Yes.

engineering AI we think impacted think Just XX% entire seats across year. roles saw last of measurable is across engineering rolled a productivity improvement by think possible want. it around team. question The differently quick note the on kind of to the Generative we And in of pressure. way seats different team the we reduces that we're number don't a going that the will Generative And AI. engineers we And be we

want we long what to there. is a road multi-decade vision have We map and do

interactions, persona kind On service to people orgs of of kind kinds kind success. optimizing as of and towards And of how the those how many things. lots fixed necessary service note, we're of can manage we towards a customer number of are Yamini this customer heard, managed many moving currently tickets are shift handle you side,

customer say, out kind of to customer are interactions. going we the teams that be optimizing more productivity how more provide. can over overall that that term interactions plays lift we to for valuable think not We're these and going is this and have So we're long value the

overall long add it we yes, fair share as of that that that, thinking kind is so think value. term our may we share but will reduce And our of value the headcount, we

play value focused out productive. making think nicely. over AI, will customers still simply of driving fullness we're We that with more more So the on our time,

Operator

next of Mizuho. is The question from the of Panigrahi Siti line

Sitikantha Panigrahi

being to net for pricing going to changes, this you seat-based the year. previously neutral talked And back ARR new about the model

this wondering provide is of price there? still if seeing neutral a terms versus volume ARR what in impact are August. So net dynamics could in still you the And and until the you And expectation? QX update

Kathryn Bueker

Yes.

that We will change model to growth expecting seat are still for be the neutral XXXX.

progress As with to expecting QX. we and the we're new sales you make from Yamini, sequential continue motion, heard in there another improvement

they need shared that they seat-based what and added retention us a And in for they're seeing get last new The customers fact when revenue purchasing on talked that the multi-point are month net at that solid model time. from the just we're expansion our real started is about that quarter. really confidence increase customers in trends. they're that upgrading thing to other We net we retention as gives increase in X in X a revenue result X-point of

Operator

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

S. Kirk Materne

that very related? pick Kate, did change, to should read anything as if it's AI I just we well. to up but that I'm directionally a kind but it anything, is mean, is very a little from we just X%. read you thinking bit actually I was absolute X% that realize of small curious, a curious how I'm CapEx nuance there as into there's number, start XX% about

Kathryn Bueker

actually this there's tick our from in couple you in outsized X%. is The capitalized part and that way Yes. engineering what CapEx things are question. of noticed quarter X% investing been a that No, an And driving product organization. I we to the largest that our appreciate have One is of that up software.

itself, would, that increase. an to so And lead in

that other that combination spending teams the and The teams that increasing. . CapEx. new that in engineering seeing is product little we're driving that is are And features and on functionality of thing share time it's actually increase developing that's

Operator

of Coughlin The is Eamon next line from question the of Barclays.

Eamon Coughlin

And existing has the you and seats can this this And the on just maybe for rolls change price the pricing tiering change of to XQ, from changed through net then XQ? could retention as cross-sell? In contribution touch base?

Kathryn Bueker

retention I'm Yes. And revenue reminder, retention in for consistent a step maybe really flat as revenue Thanks talk a net general. was revenue net we're take retention net at just quarter for -- we like the of a saw XXX. to and that question. influencing for back QX. about The going the Maybe trends set

that continue strong the is to gross XXs. really see retention The high in we first

been finally, been downgrades. a the with stabilization seeing seeing we particularly upgrade the we've challenge few over we then continue those you saw expansion And the season And though with contacts. about. talked our into we on seat-based we've continue last have that Second, with that and new a QX, quarters signs with in pricing early seen Even to model positive quarter challenge motion. motions, see here

back to net So is revenue really or a remain new half take of net-net, around maturing or it's seeing to that few XXX that the think year would going external net take an the of point improvement going the retention up. before and start and a environment something we that's trend in ARR we seat-based give model quarters more

Operator

question the next of McGinnis UBS. is Taylor from The line of

Taylor McGinnis

it quarter? would might guide little lower. the I to some Because constant use little the last rounding constant a and how now currency some XXXX guess Kate, is currency the growth like guide you half offer there constant be currency half rounded growth compares the growth bit rates are to revenue second suggest able numbers, given second it of Since a more on revenue implied color in XXXX you numbers,

on like So XQ of driving the and be you some that a the driving seeing of to really And at what start if of the July be that's comment what XQ. might back are you maybe might if conservatism true, looked anything be extra month, solid that. can on that

Kathryn Bueker

Yes. the I appreciate question. No,

is if I here. roughly right. a bit me math see your Let little can clarify

by full And of half year the $XX updated Our more bit at is this FX $XX a year. midpoint. in benefit the million than includes of back guidance up million the

high incredibly the So has uncertainty and exchange take an remains a challenging. There remarks forecast reiterate macro based in volatile. volatile. has we the a knowing sort I'll both when is foreign step environment market been external in degree of and highly that been you And FX comments that the latest of and made the on some back earlier question, prepared of

to achieve. confident always And forward our we always really what guidance this as we want a different that bunch set again feel of to we we ability that's And so in And do, scenarios run a of our half evaluated did guidance. we as we I quarter. think put back

Operator

the of the in Jackson today question KeyCorp. from the is line And final Ader of queue

Jackson Ader

on, the from seat-based the and My New think we've question lapped is model pilot Australia I program Zealand. on initial

after And that that their first these upon so I'm just when contracts, is year. curious what the behavior behavior have some of might signed is customers what annual renewal

Kathryn Bueker

I the the they retention need we They're at in And we that are is strong net last pilot they we X base see I quarter points still customer ANZ upgrading that revenue what under see mean, buying XX model. higher want. month X as it. what to see is than legacy we over healthy a have on and the holds look, shared because program which what think people

Operator

HubSpot the Thank to This QX Call. conclude will Earnings who XXXX you. is able us today. Thank you to everyone join

disconnect now your may lines. You

HubSpot (HUBS) 7 Aug 242024 Q2 Earnings call transcript