HubSpot (HUBS) 2 Nov 222022 Q3 Earnings call transcript

Good afternoon and thank you for standing by. Welcome to HubSpot Q3 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Today's conference is being recorded.

like of the Investor I'd Chuck over time, Head MacGlashing, Relations. this to conference hand to At

So, please go ahead, Chuck.

the Today, Thanks, to operator. issued be after call. closed. that HubSpot’s welcome in discussing we’ll third quarter the press Good XXXX earnings was afternoon, release results announced and the market conference

Shah, this Chief CTO; and and Bueker, our With call Yamini our Co-Founder afternoon me on Chief our Rangan, Officer. Financial is the Executive Officer; Dharmesh Kate

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

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

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

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

differ will press from SEC of Please cautionary the language XX-Q, in materially expectations. and uncertainties with this risks the actual filed and refer to our cause Form today’s which results afternoon for to discussion be the release a could that

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

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

We to XXX,XXX QX year-over-year. added year-over-year call HubSpot Thank to currency. much, joining new XX% net customers in growing with over quarter, revenue XX% you solid growing today. us on nearly and for Chuck, globally, another customer constant in was the base representing everyone so the welcome X,XXX quarter our growth

results These focus innovation execution. strong and reflect our on

is for value they efficiencies, HubSpot of connected a customers. total ownership connected customers, cost during Our continues especially our look driving period the mission-critical of to the stay lowering to customers their uncertainty. us platform on as for while platform to they as be with increase depend clearly

automation strong multihub On the I last about with down our momentum Free and the call, year. plays, our start-up customer the of marketing adoption and in quarter. drove launch initiatives, go-to-market spoke CMS combined These moving into focused

had as connect many attendees community. a tens with over It some of remember to us. our and recent online broadly, Before we event in of of opportunities as thousands for seeing in hosted incredible well of in-person was in clearly I I reflect well. from week attended and get into September. fantastic and all speakers partners you the as join know the milestone on to want you a our was annual more which as INBOUND trends Boston year, HubSpot, we're know, the inbound This I customers, with world to business

becomes drive you long-term Through we thank future. customers growth. my more HubSpot's conversations left ever than that So about partners, and us. well-positioned to feeling for are I again energized INBOUND it with more joining durable even clear

for reasons this. And there are three key

of disconnected disconnected and with help the customer data, spoke solving all systems, connect platform. HubSpot building and we've with our place. To seamlessly with been we with I of be a a solve at this our to from to their other, result facing customers customers opportunity disconnection. each what the INBOUND about That's unique crisis, our our peers. able First, customers customers are one as customers crisis have connected disconnection to at prices their in need exactly their connect

We their office. entire already being front from to getting connect customers value are able the see

just financial more grow services implementing is platform, deal platform. manual needed Financial, boost their revenue now and data-driven the GrowthLab of better insights data and shorten Financial get hour’s growth HubSpot's manually example have and CRM with team the HubSpot, Service of optimize significant leverage GrowthLab great spent doubled time to was to consolidated This can limited a central Marketing they decisions. platform Sales eliminating a take example, company. revenue tracking so growth. scaling how For conversion with by saved Their Hub, a and tasks. prospects on and a They Hub. to attribution, and onto disconnected CRM insights HubSpot Since connected didn't CRM Without Hub tools one they GrowthLab the uses their automation their cycles, can make amount companies CRM. legacy

grow large, reason is opportunity is The this to XXXX. Within billion second $XX are we're and have levers durable that underserved markets multiple our well-positioned market, expanding long-term to to operate market in that over we forecasted We drive by massive underserved. growth.

majority land for to with customers And have expand Our expansion motion before with treat our diversified working the and our breadth product added is we purchasing. of and have product. a depth trying in pathways our

companies future commerce, have for continue INBOUND, new the number payment by in We're private up buying which processes easily at of in and launching sell opportunity into online. product BXB beta, help avenues we We're Even like and long-term also including to new the schedules will categories growth native invoicing. transform HubSpot. exciting features their since and a weeks payments to open encouraged new

to enhancements give data and over them a product journey highlights Finally, connection. XX Two the experience, together for positive tool thrilled businesses feedback meet product our optimize help customers INBOUND campaigns We're where are customer's to view X.X unified our new our at to bring customer far. insights. from needs crafted analytics, their deeper and evolving for both of more so data and see product cranking. innovation is announced We new

serve our innovation, of emerge stronger platform to maintaining customers, and customers connected markets value of ourselves look the mid-market. energized to I'm by choice we’re product to even have, set the apart. the order for pace continue for focused mega as the we so we in of solve more ahead, innovation the can of opportunity As for and the disconnection drive pace on drive crisis we

talk Next, demand I involved including and lengthening want reiterate were deal in through see more the Last about environment, of business quarter, about of end demand talked the we managing to July, it. a the cycles, in the for seeing through today playbook deals. trends decision-makers we and I our

our hand, longer deals incrementally conversations. prospect involved, are in approval more There to and are one are trends two Since see more more layers We then, this On close. has macro taking tighter. the clear challenging. become based environment budgets on environment decision-makers and customer

across this segments and We the geographies continue we to serve. see

other as a is the choice hand, these On platform to times. of get HubSpot help emerging customers uncertain through

to more conversions with they experience. customer it need do leads, better Our better less. But and need customers all

proposition tech easy customers Our easy-to-buy, as consolidate stack. to are more to and value of even their easy-to-use looking build, resonates now

softer macro cycle. for growth playbook environment, the HubSpot's confident in I'm Despite resilient through the

is repeating. and principles through playbook We that volatility on again, last served this about pandemic well during the there quarter, us Our these principles macro was year. the but talked based core three

is thing first we're of solve one even The customer is the uncertain the for is solving times, for that, certain customer, good during business.

a it on CMS. We it we and of even get consolidating total end. that, right helping What down plays These We're lower at online ownership. platform this also CRM with the customers, functionality providing our cost have customers can connected to in marketing value are resonating like more the early-stage understand helping moved onto the means is with and impact of features and their our three can businesses high-value results. see automation, starter, you and are now

being prudent as continue with discretionary committed emerge our stronger. innovation innovation. but We're to to investing Second, more spend, well hiring we in will in remain to invest as

in to fact, product that in being as Magic so In platforms this marketing leader Gartner BXB a resulted past for automation thrilled quarter. the we're Quadrant recognized HubSpot our see by investments

and optimized connection. forward, to companies for functionality scaling innovate help Moving invest to continue customer and we'll

focus. Lastly, we execute with

cross-sell controllables. additions in the customer For us, the at end about driving quarter. with bimodal and momentum hubs customers, strategy and ASRPC larger this the percentage among within net it our driving nicely customers grew ARR strength and on double-digit is motions of growth. upsell X-plus lower expansion We're controlling We're from on both through focused with all executing

and And energized. we're measured control of continuing end hiring spreads. to tighter discretionary feel more of Heading into the balance growth profitability and I through year, the

clear a opportunity to have customers. We value our for ahead drive

drive environment. to focused and playbook place Our uncertain this have on growth in teams are in the we right execution,

that, hand to With I'll over Kate. it

Thanks, Yamini.

our XXXX Let's to turn financial results. QX

XX% as-reported XX% and grew currency revenue in as-reported grew basis. other XX% year-over-year an QX revenue decreased quarter on basis. and an XX% on constant year-over-year, while services subscription revenues Third

customer of net growth customers revenue as international QX. in International XXX,XXX, and Domestic XX% revenue total and reported. revenue quarter in represented emerge to revenue of while new the XX% grew constant our was of a year-over-year XX% to added We XX% driver of currency over customers uncertainty. the bringing total strength X,XXX XX% quarter, choice QX, in big in in starter count HubSpot was this year-over-year. continues nearly suite adopting times A as CRM as the up platform certainty

growth macro per to products. primary more enterprise rate in retention as-reported an adopting maintained as revenue to multiple the and be XXs to grew of increased continues a basis and XX% platform constant customer we this professional environment, drive to Average the The customers healthy in efficiencies. on strength X% HubSpot year-over-year subscription challenging $XX,XXX. driver high customers currency look Despite

in revenue Net in end Calculated as XX% growing reported. result QX, a in was net $XXX retention year-over-year. a upgrades, million, particularly September motion. increase contact year-over-year marketing were of currency revenue XX% expansion XX% million constant as as quarter-over-quarter $XXX billings in seat of and down the Deferred and was QX, of XXX% slower the

The comments non-GAAP will measures. my to remainder refer of

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

the Third $X.XX million fully was a X from income X%, quarter point $XX margin including was quarter margin impact diluted in headwind foreign of exchange. third share. or Net per the operating

the X up over end and the At X,XXX of year-over-year down sequentially. we third points employees, had quarter, XX%

our in growth with further XXs. the expect in to high QX moderate We to exit mid- headcount year and hiring the to

of As cash in revenue quarter, and million or including or revenue-generating R&D year focused quarter the X% remainder was $XX will we was the X% discussed costs, and headcount. sales the capitalized flow development million in of software be $XX free for in QX last of revenue. CapEx hiring

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

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

As macro more approval the in become elongate. process environment decisions, make taking difficult incrementally through There tightened. cycles to Yamini people budgets deal in and causing has October. involved longer remarks, to It's described customers more her the are have

year. that macroeconomic remainder weaker persist guidance Our these the assumes through conditions the of

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

We reported representing expect foreign forecast. fourth previous exchange to as an be to relative $X revenue growth headwind a incremental quarter, to our headwind million the X-point in

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

foreign diluted net We Non-GAAP $X.XX exchange a expect the in income per $X.XX. be expected to X-point margin quarter. and to to between headwind operating is fourth be profit share

XX.X now revenue is year assumes be year-over-year diluted shares This And range total the the of outstanding. full midpoint. for XX% reported the $X.XXX $X.XXX billion, in million expected billion XXXX, up to to of fully at as

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

million. is million and operating $XXX between $XXX expected income now to be Non-GAAP

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

your you models, As the keep following. in adjust mind

a from of million strengthening reflective as of free X%, roughly our incremental be prior to relative forecast. the dollar about headwind percentage the CapEx for flow expect the year to continue of of expect US to cash $XXX and full revenue be now We to XXXX, the

current formal to it spot While as it's rates, helpful $XX quantify revenue year foreign or rates to thought headwind material impact we too growth revenue. of moves would XXXX X-point expect to year, XXXX, the full exchange million a the early on for in guidance this we provide At for XXXX. of the reported be exchange given foreign

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

that operating to Thank much, built strength. I Kate. evolving the position connected is you robust our by of platform customers. a emphasizing customer We've needs HubSpot so want that of meeting a from is close

incredible an to We allows have culture a retain company attract strong and sheet that and balance top team talent. and us

We're comparably one HubSpot thrilled be for month. among to large happiness in number top ranked employee last companies just rated by

competitive a be to continue HubSpot. people advantage and culture for Our

the our to platform mission one our adapt Thank we CRM the for of our customers. sight continue will become companies. much scaling ahead, Looking our to losing realities and employees of the to shareholders. you so environment number without partners, to

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

Brian [Operator you. James. first Instructions] Raymond have we question The Peterson Thank comes from of

Your Brian. open, now line is

my Thanks and really for question, the quarter. congrats strong taking on

a that maybe maybe as got It So HubSpot Would appreciate a heard macro was we've the fourth Yamini, companies thinking of the how you're incrementally the worse number taking over any macro step the of sounds changed like from that well. back quarter. color the impacting course quarter guidance? for case on about and what's here,

deal bit cycles for that question. same many talked we in in saw seeing are intensified the trends saw just Brian, we It we QX. lot, customer a more base of Yes, We about Thanks our in that the QX. was QX. longer a Yes. the in

involved more for Marketing more approval. needed. Typically, decision will talk getting the and approvals deals Sales we saw VP to makers of We in

Now are as Board. are risk and much CFO, CEO and generally the now. the Product longer even averse tight more taking the to sometimes we're talking budgets buyers are evaluations

So what just heard you've incrementally look, lot from QX. things more other are overall seeing of think that a environment quarter, this it line challenging very I the in than in is much was with companies we're

Now we value for case and resonates this really want environment. proposition clear in Customers having case to continue and clear efficiency. to said that, want win business value driving they well Brian, a our

and customers then contact We're to to So to our suite present we're Board. case, the C champions. and with with able articulate working business our the point with we're able be working the to of

of in the combination to matters want lead ease use customers those of to this value, ease implementation, and Our that's of because two time what environment. and

of important now, ease really those, both differentiator a environment. to differentiators in of it's and and they continues ease for both core of historically Now HubSpot use implementation, be and this been

looking eliminate data and that budgets have to standardize must-have solutions. a becoming looking their I'd to are no nice finally, and solution, be they're a They platform, to longer for looking to They're to more then point our mission-critical we're able customers. a we're say customers are platform. to And bring on looking to solution us have now just reduce single

our So all you of customer our within those within see base, and results. are resonating can that

conditions possibly and to waters have all will into focused XXXX. walked of expect Now through. persist position looking crystal don't we We're look, forward, a in a QX and remain ball, through choppy from we but the strength on exceptionally even these playbook navigating just of these executing that I

terms was the guys. Service whether Great. I where in products cross-sell appreciate Hub. this of the on there to Were you particular follow color. the Hub of love strength that value or the of maybe that's a marketing of saw quarter? the platform. Maybe in quarter, top to really understand certain successful Thanks up, I'd kind Sales

from sales better leads, they expecting becoming right? for organizations. better exceptionally Yes. Brian, less, now. lead I the are much pipeline customers, more visibility and are of sales to better more they all think marketing expecting quality, is talk They right marketing this conversion, their I into for and want When more of the combination important and

means we're value definitely hub And and seeing connected having that solution customer a what base. our is the marketing really of key that's within sales

of kind Hub we and And involved, about of so, we're helping through this and our our well. get talk now multihub, multi-hub Sales as have Marketing customers environment Hub when most to

question from The of Chase. lines phone next you. Thank we from the Murphy JPMorgan Mark comes have

now Your is Mark. line open,

environment. execution thank in I'll my very much. on tough you have the Yes, congrats a

thresholds enterprise as bands are end perhaps So, Could of those kind for increase about you're even changing for custom enterprise of encountering? share do you that the what counts up, upper macro think to or I'm these I mostly Sales MRR speed for Hub gravitate continue with how building upper features, to if some started you, as the which we HubSpot, is despite the sophisticated even you the you're to objects. out wanted ask more wondering

Yes, X,XXX strategy, for on much a question. the segmentation from segment. to Mark, we're thanks focused very Look, lot a X your

XXX person So continued company. that thing upper X,XXX of is the within our bounds The fair be market. employee for winning segment we're to share to the us, only

over environment. a years, we we objects rightly of with across for entire announced number and are driving out, permissioning, you these platform to going as data features really better the customization, management, upmarket the invested XX than at UI and inbound the enhancements features And advanced pointed custom couple control ability and have of admins like new past more features better granular enhancements

up a going that is just have care better of customers, to our enabled about, but things care cost-effective I one we solution. environment, about time win of visibility, better us So talked lot in share and value the as to about also and the market this fair see features they

the to really and fundamental were market. exceptionally that value easy back in use, have HubSpot to going proposition tough very So of features, competitive we but that makes us powerful

So and our market. fair share we're the winning to that of remaining true segmentation

And in cycle But hearing you I I follow-up, on just friction in just in in September elsewhere. of July we're see a signs August that and some generally the trying the Thank did if because are terms to that's and Kate, what would maybe you, we're strain. somewhere clarify month of fact, as I think trying saw, a of just in October the bit think was based of you convey to because feel you tougher you understand selling save quick the the what Yamini. where we incremental results wondering understand. I could or

QX. in are being very QX more an approval delivered and specifically, And time are the for What challenging to is bit be that, approval more carefully incrementally was longer, saw just spending we saw case a approval their fee than every in should and to a It tight going of board. value what considered. are getting we processes sometimes Yes. even because level environment little clear. the customers budgets And

to continuing that see pressure. we're So,

We're training also adoption plans. demos, and And seeing deliver more plan user rigor, value, more which to the implementation is all the understand times conversations. to just plans, lot means need for more more means a more understand of there a crystal plans, time care this that to

So, we challenging environment more a definitely perspective. are macro seeing from incrementally

the we've on proposition bottom continue Having strength said value our multi-hub where about, is being in talked plays which net we at to like from in is focused some and resonating. end, place and work adds that, see you the customer the put those

through we'll so And continue to work environment. choppy this

you Thank Excellent. much. very

Samad you. you're have when now Thank We Jefferies. Samana ahead ready. go from Please

or Hi, Yamini, great. getting job. what sets you. top I change macro secret interest. And know for cycle, op longer by more I'll is and incrementally the organization maybe the one approval. But mention the didn't you on talked Thank funnel work focus about first maybe the worse, great the inbound spotters whole of in you. you a

-- you the are terms inbound Just funnel So, just the just on, the cycles? shed because of funnel interest had could of top maybe top in the deal customers or into in help versus this any some us you're closings seeing the that uptick the reaching are is changes of in you maybe seeing and light out you or the even quarter? levels, at coming just that of what understand terms

tough and entire the a emphasize, in for company, entire thanks a I will and product lot, congratulations environment. the macro the flywheel down I in company think, Samad, both and to very double and executing

the inbound. you was consider Look, primarily demand side, a year ago, on if it all

qualified. lot us hands mostly of coming with raising a and to So, people

kind into convert of customer to so And it take a that fairly was win. quick and a lead qualified it

now, sales that and customer are our changed. of customers has of that, a that going we through And success conversations level is HubSpot. right What prospects combination our having it's going organization, new inbound team, to and about to and beginning see

that it's of people hands bit. down has their to raising So, a a combination it us. And of and coming slowed little part

back installed conversations going on base our more how we to having So, and value. it's can us add

what we half more pipeline. a a shift Having from just a that approvals see last to So the demos needed say from is certainly, year. somewhat and first more of to there's a are I'd perspective, demand the bar more and big action. like pretty higher of conversations, year action from get that, to said the within shift There's

it by it for in takes it conversations And demand way, would customer us slowed. environment. and and is so characterize, having close, focused the and very longer compensated going the to be has much to executing to We've base, very, I we out continue this on proactively

is Analyst Very point make assumed I margin Kate, hear revenue, FX should And did said that X that helpful. headwind, at if Day, two, maybe, you think I well? XXXX you that had follow-up, stand – could ask or a quick the today where sure, things a to I just that that the correctly? you I wanted one, level then for as flat gave we And rethink the when guidance was

asking. I communicate. for point do Thanks Yeah. to think really it's for important a us

As the has those one been QX. that within XXXX, even you throughout like but things frankly, know, of pretty has half of exchange back foreign dramatically moved

of you sort foreign we so X-point to growth, about a rates, nominal are would headwind. headwind right, exchange million that's revenue XXXX $XX a given And and have current

Foreign exchange couple in months. get did the of last harder

relative you an that. $X saw us million to of guidance the talk trends heard we incremental our similar guided headwind should time as QX You that XXXX last about having to assume

so much. Okay. Thank you

we incorporate talked about today. as Samad, as did far rates far we as X% at that where Analyst it margin stand the as the did – Day,

a clarifying. Have for day. you great Thank Perfect. Okay.

much. when Please Thank Blair. Bhatia you Arjun. you’re ahead. Please of so now ready, ahead, Arjun have go We William go

team that creates to Yes, more to Yamini, the strategic C-suite the how in buyers have approval exposure, mention in years? taking congrats What more have in the much But little equipped do you this the broader maybe did the getting you're do perfect. this environment. a as And sales access does tougher pay to HubSpot on to for buyers questions. make my those a didn't as for understandably selling your you partner you in Board. at make prior Thank a get and a think pitch sale I'll that the buyers to to quarter. that that you as levels organization higher-level is involved platform higher ability to more process yourself to more point? my bit

the more Yeah. And characterize than there Really good are CEOs, the talk question. are CFOs, the is take it have to conversations. while the past. conversations way, in longer, – Certainly, that them. C is to that we written customer it organizations, our matter we we've CTOs with really dealt And I'd good when they a few things

First is to their time how going going to get about care and impact. they're value are quickly value. the They really to to teams how see

well And part of C-suite. value the articulation cost to us savings so having a of as it clear as

really up years, The value couple buying point of solutions companies a -- second over platform. past a There these them. lot and consolidated is about that's disconnected of the the ended have of talking costing

value point with how And can consolidated of consolidating a and help so platform them we that resonates. eliminating CFOs, seeing CEOs about certainly the these when and some conversations talk we have we of solutions and with and

Now, second down the value rolled question, out doubled can organization. as of part team on savings. that partner they playbook these we're as well. enablement And process. as how something and we're sales for of doubling the the down conversations the as get that bring part as team talk about for doubling our we've enablement customer that cost proactively help well value in this them terms TCO to we earlier playbook time that down, as on so can meant has your can in well We've our of as execution success well sales is to They

the all within see pipeline. those absolutely of So,

up, your something then not customer peers and where other your helpful. Okay, adds new with I that we're perfect. the seeing, is think, Very headwinds. seen actually greater part, have this customers ticked And new

may as than you starter opportunity to curious, the seen where greenfield customers a of are in, out coming replacement suite at are past? more wanting look customer CRM more have even in rip the you cohort solutions seeing new versus you existing opportunities that's in I'm that

Yes. dive Maybe question. the Thanks for I'll in.

than right. and particularly The These a the strength here, are we was are quarter net expected. in the These where starter at using. in customers we largely really replacing. starter You typically are better are even came that the adds first tool for where customers And had are that not the working saw that HubSpot CRM is they suite. little

think that couple really to contributed talked Free inbound, nature at quarter you little we But is into added a that a that were We Starter. there's strength and that about quarter starter Marketing a the may we proposition leaned Hub tier. the really of customer-first starter we And bit that launched this to the of actions we them. automation tier. value things remember, last took in in and One CMS at pricing to on packaging and continue experiment bunch

we output. increase And additions quarter-over-quarter. customer these it's an It's really It's in the the something for. drove not combination solve of three believe actions we net that

short-term at long-term really both really additions worked the quarter, customer the really goal that the this end. Our drove business. growth focused is customer additions to drive But and and low in plays

the is the thing the that ASRPC. net equation. one additions, One about The add pieces that two is there's customer is other of would KPI I just

see strength to as currency. likely would And a QX in will be encourage see customer And net ASRPC adds, result, less like is side really you at XX% when particularly that strong you're what constant like you in terms quarters so little of in on one going Starter, in this the like more to the a what growth. a see other I ASRPC is

the of add adds. the way, word that, part helps we kind of But kind get starter third-party for have, our to like has driver customers the which to applications historically. thing build nice other more more it And we been our mouth, on in to from we're to SMB. bimodal that's partners it strategy, standard one for And defacto as X,XXX the obviously, helps just HubSpot platform of more new of a that tier a piece is customers, more it's up – is And partner customers. is customer growth kind I'd which attractive that, brand second solutions to is the on with have is and that for of of those the platform CRM the with strong build in revenue looking our a

just really been it's that started but it's positive for driver it's around, us. all So strong – years, a net a

The from Rishi. Rishi next Jaluria Please question from ahead, comes go you. RBC. Thank

now line open. Your is

Nice Thanks solutions. I back to want so much point questions. macro. the of commentary spite the opportunity the in to execution for to to continued Wonderful. about taking consolidate my go see

think point I wondering, sort particular areas of already CRM interest quick I've seen? sort could within follow-up. existing that there of And of to And already a that from you Martech if that a in theory, was makes within the got customers? you're that lot are any of that or if I then examples Stack behavior sense seeing you've

where look that, right? Yeah. super constrained, conversations. example many gets Rishi, again, of having kind foreign of one solutions remarks prepared are of the place we're is budget consolidating, more And an our there in elimination as a the like customers to that customers their of

ERP a North in We organization America. software have solution

six started Marketing Hub help we them of looked as manual So tools initially stack. extended was that and were efforts, well as to to had sales with then multiple multiple marketing time, siloed we're over marketing and using eliminating so and their extremely they tools of a go-to-market we their and us. to sales period conversations And as for in and consolidate looking all

this marketing only also improved their efforts, but overall led And so to reducing that spend. not

customers. a number of So

and or about not saying Now, have saying stack. their I'm our we customers not quick engage are do the when start and sales, consolidate to happening these either not strategically these with within that, are them how with that help easy. But we this entire talk stack environment. because can their opportunity that's we marketing I'm

We of now you. Thank Zukin Research. go ahead, ready. have go Please ahead. Alex Wolfe Please you’re when

Hey, guys.

notional how some retention just gross that down incremental about level do numbers to your questions retention, think does stabilize environment, we which when maybe then doesn't QX commentary So me. gross we revenue the retention for XXX%, of go And given I net think denting for I it QX? on want understand, two – and we also about be today. macro at to guess kind demand seem like and guess, for beyond? do assumptions and I the

profitability. that how about the side, is at the reiterating fair of balance the the growth and is to for Day? year? see that for you us – just you the you margin that levers continue question, first you're assume of And the to next of then you remind what – Analyst margin are have context gave it on think macro if the guess Again, And deterioration, do in kind I XXXX to guide the

then Why and have that I don't comments to have Yes. extent in. to page add, start on don't the the you dive please to

thought and right, retention. we sort retention difficulty that fell at the We both Alex, the XXX%, We that to we retention in Day prepared talked of Analyst net in earnings see factors that about result gross quarter as You're environment in talked revenue for this the remarks, result really XXs. retention remained growth upgrade net really and would it I that of about net about it a the this. the on data was we're on last We've that near-term, again a seeing shared lower points revenue high motions the macro there. Net of from pressure talked call.

retention for that seeing would like net we reasons would to the expect same that in are So, all see you QX. I be QX revenue continue pressured

eliminating QX doing think that as customer the with cleaning think it us into really we seats. really in into are news October, new we nice of start like a see retention economy this seat stick lean the are customers XXs, I is rate. the that potentially contacts and upgrading the up the puts optimize staying But in turn in position a things good with to we They're into have really like our growth They to recovery. at that lower all dollar again and seen high to HubSpot. our

think -- Over be will plus. retention will continue the net revenue QX, question, we But still fostered. we to long-term, about feel good continue to XXX% in your

margin things margin that really And Analyst few about about I think XXXX profile that Day, the it having driving the your we the at to a a then margin as take if the that are step on question, look, relates as for I talked year. XXXX back, just

we We in efficiency a hired about the think first first full XXXX. to is the associated from going pretty see And the realize But XXXX, these pretty we into to productivity aggressively hired want of The XXXX. when aggressively cost hires. half you you're year of that with hiring.

say back continue number spending we're XXXX. and of hiring as move into that back have things significantly pretty a thing year in this T&E would second of and going the taken do to reduce reduce like in that steps facilities, half actually overall to discretionary and to we I pulled we and The is

XXXX. And then real a point margin. foreign talked about headwind X this XXXX. It's There is about on FX bit finally, an incremental operating in year point the XXXX. impact It's in we exchange little to and

But a to And -- those prudent a of going that in XXXX. and in retain to in really I bunch to and we're think headcount or so near-term be of both if of and just revenue-generating the about long-term. taking certain step will back R&D investment preserve things, areas to sort spending actions do and we continue of all growth doing we're like bunch our into

we will a said, that delivering announce X% said you share to with all specific our We're we guidance X%. QX we committed results. very So, when and

[Operator Borges go We from you’re Thank when next the ahead, Instructions] question you. Gabriela have Sachs. Goldman Please of ready.

this or appreciate in costs things Do structural catalyze about or lands? couple HubSpot shift implications HubSpot understand demand demand Thank new the new in comments. in thank change for you. the the are Is of is the in question, installed the is temporary And of So earlier a to customer the is I stable the inbound but acquisition think more What merchant to the term? want in you the on on to earlier cheaper comments And sell to to acquire still it longer and ask or color. worse dynamic that my lower it getting clarification looking customer I'm for at mission. $X base demand for as well, nature? orphan you/ afternoon XQ, One from would in Good level? then there, rate I

sure Gabriela, jump there. multiple in and questions answer Kate can those, there as to I'm try well. I

environment from demos. we approval, a of new saw more talked an demand incrementally In see we to a It things the in It's did the about, more than terms level, QX conversations, QX. time an more challenging perspective demand, in it's QX, environment more of that is all than get incrementally more and challenging we demand worse. not getting

All incrementally of to challenging adds that environment. that

all to digital And year, I we did you their when everything that the coming now, Right almost talked not is about in, transformation. that where was last tailwind had kind continuing, of commentary inbound peers the from at within can of some the the digital is metered demand, industry. hear of the macro of kind other a trends. is even it trend abating we in that hands coming us, wanting just customers inbound of macro the by It's but cyclical combination was

save or journey. it's or partly, our on nature. to I customers consolidate in engage to the think so identify them platform And with And and go for continue a digital our cost yeah, have cyclical teams on opportunities

from digital in do has a structural currently digital to think our environment happening transformation have add you the changed. cash based that for I want And overall question? what part perspective. the macro on belief anything customers the latter need Kate, and it's the on not is of

at drive I different to motions on And during I a number Analyst Gabriela, new investments are leverage in sales and continuing over we the to is motions I Day think, that tried the don't do least going to real we the acquire to long of Why communicate marketing are side. that of that – Yeah. have those all customers. we make think what term

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invest We're lot bets our drive leverage investing nice product-led number in motion. opportunities we to of for We've commerce, of continuing will and there's think our years, in impact And been linear right? freemium a to And P&L, are of growth in still us so all runway that there. we're time that go-to-market. long-term a for the those ultimately will by but take doing

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them relevant and sales playbooks in invested customers a both with have in also enablement. engage at success sales pretty our We the moment. teams aggressively teams customer helps We're really way TCO arming that

see And partner been important drive deals. efficiencies upmarket demand we're the sort organization at it's channel looking multiproduct investment. always our even a more top-of-funnel channel into that's marketing we really leaning when successful to We're of and own more in complicated

into environment. those So all more believe sales productivity we of can things higher even difficult this translate in

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Yes.

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constant revenue grew international QX. pretty That's currency So, environment in in like this. macro in XX% good the

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really So, now. a difference in EMEA for notable North not versus America

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open. is line Your

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Parker, good really Yes, question.

macro no look, is to immune seeing. one the headwinds we that think, I are overall

I will So, also VPA see think if it. partners

about revenue. they about and said Now, have partners contribute our of X,XXX we XX% our overall having ecosystem within that,

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thanks to shout out and them. So, huge

have ready. We ahead you. Thank Please now you're Hindlian Sarah go when from Macquarie.

that's stumbling or social to more where little of be a know marketing seem it. conversations you curious meetings and want Thank much of question. Maybe to some about and TikTok, away inbound Great. that moving appreciate in about the to squeezing little you're you seeing I what would in. you're a year-on-year bit marketing? move When helping the an more now right to so predominant to strength me from you're I is drive ask perhaps really access C-suite, I around be speaking desire their platforms really for how bit

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remarks. Thank hand any you. I back to like for now it Yamini final would to

so want out big are to call just globally. I do Well, HubSpotters on to focused executing. a They

all to to talking look thanks year. call partners all the heart employees to my thank So and next and investors, customers, forward things to you

day, and joining. Thank conclude Have you disconnect call. lines. lovely This you today's for now does a your may