Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- HubSpot Inc (HUBS, Financial) reported a 20% year-over-year revenue growth in constant currency for Q3 2024.
- The company achieved a significant operating margin growth, expanding by over 200 basis points year-over-year to reach 19%.
- HubSpot Inc (HUBS) added over 10,000 net new customers in Q3, bringing the total to 238,000 customers globally.
- The company's AI innovations, particularly in the Content Hub, have driven rapid growth and increased customer adoption.
- HubSpot Inc (HUBS) successfully launched several AI features at their INBOUND conference, which were well-received and increased AI awareness and usage among customers.
Negative Points
- Average subscription revenue per customer decreased by 2% year-over-year, reflecting a headwind from lower initial price points.
- The company continues to face a value-conscious buying environment, which is expected to persist through the end of the year.
- Net revenue retention held flat sequentially, with continued headwinds across various upgrade motions.
- Despite strong customer growth, the company is experiencing pressure on addition upgrades, cross-sell, and discount upgrades.
- HubSpot Inc (HUBS) anticipates a slight headwind to expenses from the recent acquisition of Cash Flow.
Q & A Highlights
Q: How is HubSpot investing in AI, and what impact does it have on R&D expenses?
A: Kathryn Bueker, CFO, explained that AI is a top priority for HubSpot, with investments reflected modestly in cost of goods sold. The company has consistently invested in R&D to drive innovation, with AI being a significant focus area.
Q: How is the usage and engagement with the new Breeze AI products developing?
A: Yamini Rangan, CEO, noted that AI awareness among customers increased by 13% quarter-over-quarter. There is repeat usage among enterprise and Pro customers, indicating that the AI features are adding consistent value, particularly in content and service use cases.
Q: What is HubSpot's strategy for AI and its impact on pricing?
A: Yamini Rangan emphasized that HubSpot's strategy is to embed AI across its platform, focusing on delivering value before monetizing it. The company plans to introduce consumption-based pricing for AI agents once they consistently deliver value.
Q: How does the acquisition of Cash Flow fit into HubSpot's strategy?
A: Yamini Rangan highlighted that the acquisition accelerates HubSpot's vision of integrating customer and transaction data. Cash Flow will enhance subscription management and CPQ capabilities, making it easier for customers to manage transactions within HubSpot's platform.
Q: What are the drivers behind the strong multi-hub wins?
A: Yamini Rangan attributed the momentum to customers consolidating their tech stack and HubSpot's innovation across its hubs. The platform's ability to provide insights across the front office and the pace of innovation in hubs like Content and Service Hub are key factors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
