Financial Data and Key Metrics Changes - Revenue grew 18.4% year over year in constant currency, reaching $810 million, with an operating margin of 20% [4][18] - Subscription revenue increased by 21% year over year, while services and other revenue rose by 19% [18] - Net income was $140 million in Q3, translating to $2.66 per fully diluted share, with free cash flow at $147 million, or 18% of revenue [19] - Customer dollar retention remained in the high 80s, and net revenue retention was flat at 103% [18][19] - Calculated billings were $804 million, growing 19% year over year in constant currency [19] Business Line Data and Key Metrics Changes - Total customers increased by 10,900 in Q3, bringing the total to 279,000, a 17% year-over-year growth [18] - Multi-hub adoption is evident, with 43% of Pro Plus customers subscribing to three core hubs, up 4% year over year [5] - Deals over $5,000 in monthly recurring revenue grew 35% year over year, indicating strong up-market momentum [6] Market Data and Key Metrics Changes - Domestic revenue grew 17% year over year, while international revenue growth was 20% in constant currency [18] - International revenue represented 49% of total revenue, highlighting the company's global reach [18] Company Strategy and Development Direction - The company is focused on platform consolidation, multi-hub adoption, and up-market momentum as key growth drivers [5][15] - AI innovation is central to the company's strategy, with new features launched across all hubs to enhance customer experience [8][9] - The introduction of the Loop playbook aims to guide customers in leveraging AI for growth, with significant engagement metrics reported [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve durable growth, emphasizing the strength of core growth drivers and emerging levers [25][17] - The company anticipates a step-up in net revenue retention in Q4, with expectations for a couple of points improvement for the full year of 2025 [18][19] - Management highlighted the importance of AI as a multi-year tailwind for growth, with ongoing investments in product innovation [24][17] Other Important Information - The company repurchased 780,000 shares of common stock under its share repurchase program, representing $375 million [19] - The acquisition of XFunnel aims to enhance brand visibility in AI-generated answers, integrating it into HubSpot's platform [14] Q&A Session Summary Question: Path to 20% Growth - Management believes it can grow faster than current levels, focusing on durable growth through strong core drivers and emerging growth levers [22][23] Question: Impact of AI Overviews - Management sees AI overviews as a significant opportunity for customers to enhance visibility and engagement through new marketing strategies [26][27] Question: Platform Consolidation Drivers - Customers cite total cost of ownership, unified data access, and AI adoption as key reasons for consolidating on HubSpot's platform [29][30] Question: Billings Growth and Revenue Inflection - Management noted that billings growth is influenced by various factors, including mix shifts and duration, and expects revenue growth to follow net new ARR trends [31][32] Question: Customer Adoption of AI Products - The company is seeing strong adoption of AI features, with positive trends in credit consumption and customer engagement [38][39] Question: ASP Growth Challenges - ASP growth has been impacted by new customer pricing and robust starter additions, but there are tailwinds from large deals and multi-hub adoption [45] Question: Customer Data Quality - The state of customer data varies, with higher quality observed among those using multiple hubs, and the introduction of Data Hub aims to improve data quality [52][54]

Revenue and Customer Growth - Subscription revenue accounted for 98% of total revenue for the three and nine months ended September 30, 2025 and 2024 [116]. - As of September 30, 2025, the company had 278,880 customers across more than 135 countries [115]. - Subscription revenue for the three months ended September 30, 2025, increased by 21% to $791,678,000 compared to $654,738,000 in 2024, and for the nine months, it rose by 19% to $2,234,937,000 from $1,882,241,000 [143]. - The total revenue for the three months ended September 30, 2025, was $809,518,000, a 21% increase from $669,721,000 in 2024, and for the nine months, it reached $2,284,520,000, up 19% from $1,924,365,000 [143]. - The number of customers grew from 238,128 as of September 30, 2024, to 278,880 as of September 30, 2025, contributing to the increase in subscription revenue [144]. - Average Subscription Revenue per Customer for the three months ended September 30, 2025, increased to $11,578 from $11,235 in 2024, driven by higher demand for Professional and Enterprise products [144]. Financial Performance - The company expects to break-even from a profitability perspective in the next 12 months [120]. - The company reported a net income of $16,536,000 for the three months ended September 30, 2025, compared to $8,146,000 in 2024, while for the nine months, it recorded a net loss of $8,515,000 compared to a loss of $355,000 in 2024 [142]. - The company reported a net loss of $8.5 million for the nine months ended September 30, 2025, compared to a net loss of $0.4 million in the same period of 2024 [185][186]. - The effective tax rate increased to -209% for the nine months ended September 30, 2025, compared to -102% in 2024, reflecting a significant rise in income tax expense [176]. Cost and Expenses - Total cost of revenue for the three months ended September 30, 2025, increased by 34% to $133,518,000 from $99,324,000 in 2024, and for the nine months, it rose by 28% to $370,786,000 from $289,928,000 [148]. - Subscription cost of revenue for the three months ended September 30, 2025, was $117,025,000, a 38% increase from $85,066,000 in 2024, and for the nine months, it was $323,925,000, up 31% from $247,408,000 [149]. - Professional services and other cost of revenue increased by $2,235 (16%) to $16,493 for the three months ended September 30, 2025, and by $4,341 (10%) to $46,861 for the nine months ended September 30, 2025 compared to the same periods in 2024 [153]. - Research and development expenses rose by $36,529 (19%) to $227,714 for the three months ended September 30, 2025, and by $120,150 (21%) to $685,151 for the nine months ended September 30, 2025 compared to the same periods in 2024 [156]. - Sales and marketing expenses increased by $45,340 (15%) to $355,268 for the three months ended September 30, 2025, and by $117,834 (13%) to $1,021,844 for the nine months ended September 30, 2025 compared to the same periods in 2024 [159]. - General and administrative expenses grew by $2,819 (4%) to $80,747 for the three months ended September 30, 2025, and by $25,000 (11%) to $244,380 for the nine months ended September 30, 2025 compared to the same periods in 2024 [162]. Investments and Future Plans - The company plans to continue investing in research and development to introduce new products and applications, with a focus on enhancing customer experience [120]. - The company has invested in AI-enabled tools for guided selling and content generation to improve conversion rates and drive efficiencies [120]. - The company plans to continue expanding its sales force and marketing efforts to increase customer base and revenue [120]. - The restructuring plan included a workforce reduction of approximately 7% to reduce operating costs and enable investment in long-term growth [138]. - The company continued to invest in AI functionality and new product development, contributing to increased subscription and hosting costs due to customer base growth [151]. Cash Flow and Financing - Cash and cash equivalents increased to $614.4 million for the nine months ended September 30, 2025, compared to $410.1 million in the same period of 2024, representing a 50% increase [182]. - Net cash provided by operating activities was $513.3 million for the nine months ended September 30, 2025, up from $404.5 million in 2024, indicating a 27% increase [182]. - Cash used in financing activities totaled $900.5 million for the nine months ended September 30, 2025, primarily due to $485.3 million for stock repurchases and $459.8 million for repayments of the 2025 Notes [192]. - The company repurchased 1.0 million shares at an average price of $501.67 per share, totaling $500 million under the 2025 Share Repurchase Program [195]. - Net cash provided by investing activities included $1.9 billion from the maturity of investments, offset by $1.2 billion in purchases of investments for the nine months ended September 30, 2025 [189]. Other Financial Metrics - Net Revenue Retention is a key metric indicating the stability of the revenue base, calculated by dividing Retained Subscription Revenue by Retention Base Revenue [124]. - Interest income decreased by $7,528 (35%) to $14,252 for the three months ended September 30, 2025, and by $7,771 (13%) to $53,106 for the nine months ended September 30, 2025 compared to the same periods in 2024 [168]. - Other (expense) income showed a significant decline, with a loss of $2,346 for the three months ended September 30, 2025 compared to a loss of $565 in 2024, marking a change of $1,781 (315%) [172]. - The total obligation for operating leases was $328.2 million as of September 30, 2025, with $58.1 million expected in the next twelve months [194]. - The company has $2.7 million in letters of credit outstanding as of September 30, 2025, expected to remain in effect until 2029 [197]. - The company does not currently hedge its interest rate exposure, and a hypothetical increase of 100 basis points in interest rates would not have a material impact on the value of cash and cash equivalents or investments [203].

Strategy & Positioning - The company aims to be the number one AI-powered customer platform for scaling companies[3] - The company is positioned for long-term durable growth, driven by multi-hub deals, downmarket acquisition velocity, and strong platform retention[14] Financial Performance - Q3 2025 - Total revenue reached $810 million, a 21% increase year-over-year[16] - Subscription revenue was $792 million, a 21% increase year-over-year[16] - Professional Services & Other Revenue amounted to $18 million, a 19% increase year-over-year[16] - Operating profit was $161 million, a 29% increase year-over-year, resulting in a 20% operating profit margin[16] - Free cash flow was $147 million, a 14% increase year-over-year[16] Financial Guidance - Q4 2025 total revenue is projected to be between $828 million and $830 million, an 18% increase year-over-year[18] - Q4 2025 operating profit is guided to be between $183 million and $184 million, a 38% increase year-over-year, with a 22% operating profit margin[18] - Full year 2025 total revenue is expected to be between $3,113 million and $3,115 million, a 19% increase year-over-year[21] - Full year 2025 operating profit is projected to be between $574 million and $575 million, a 25% increase year-over-year, with an 18% operating profit margin[21]

Financial Performance - Total revenue for Q3 2025 was $809.5 million, representing a 21% increase year-over-year on an as-reported basis and an 18% increase in constant currency compared to Q3 2024[6] - Subscription revenue reached $791.7 million, up 21% on an as-reported basis compared to Q3 2024[6] - GAAP net income was $16.5 million, or $0.31 per basic and diluted share, compared to $8.1 million, or $0.16 per basic and diluted share in Q3 2024[6] - Non-GAAP net income was $140.3 million, or $2.67 per basic and $2.66 per diluted share, compared to $116.6 million, or $2.27 per basic and $2.18 per diluted share in Q3 2024[6] - The company generated $187.4 million in cash from operating cash flow, an increase from $159.5 million in Q3 2024[6] - Customers grew to 278,880, a 17% increase from September 30, 2024[6] - Average Subscription Revenue Per Customer was $11,578, up 3% compared to Q3 2024[6] - Total revenue for Q3 2025 reached $809.5 million, a 20.9% increase from $669.7 million in Q3 2024[16] - Subscription revenue was $791.7 million, up 20.9% from $654.7 million year-over-year[16] - Gross profit for Q3 2025 was $676.0 million, compared to $570.4 million in Q3 2024, reflecting a gross margin improvement[16] - Non-GAAP operating income for Q3 2025 was $161.5 million, up 28.9% from $125.2 million in Q3 2024[18] - Net income for Q3 2025 was $16.5 million, compared to $8.1 million in Q3 2024, indicating a significant year-over-year improvement[16] - Cash provided by operating activities for Q3 2025 was $187.4 million, compared to $159.5 million in Q3 2024[17] - The company reported a non-GAAP net income of $140.3 million for Q3 2025, up from $116.6 million in Q3 2024[19] - Non-GAAP diluted net income per share for Q3 2025 was $2.66, compared to $2.18 in Q3 2024, showing strong earnings growth[19] Future Projections - For Q4 2025, total revenue is expected to be in the range of $828.0 million to $830.0 million, up 18% year-over-year on an as-reported basis[12] - Non-GAAP operating income for Q4 2025 is expected to be in the range of $183.0 million to $184.0 million, representing a 22% operating profit margin[12] - Forecasted non-GAAP operating income for the year ended December 31, 2025, is projected to be between $574,000,000 and $575,000,000[24] - Non-GAAP net income for the year ended December 31, 2025, is expected to range from $511,000,000 to $512,000,000, with a non-GAAP net income per diluted share of $9.60 to $9.62[25] Expenses and Investments - Research and development expenses increased to $227.7 million in Q3 2025, compared to $191.2 million in Q3 2024, reflecting ongoing investment in innovation[16] - GAAP expenses for the three months ended September 30, 2025, totaled $117,025,000, with a GAAP expense as a percentage of revenue of 14.5%[20] - Non-GAAP expenses for the same period were $105,456,000, representing 13.0% of revenue[20] - For the nine months ended September 30, 2025, GAAP expenses reached $323,925,000, with a GAAP expense percentage of 14.2%[20] - Non-GAAP expenses for the nine months were $292,033,000, accounting for 12.8% of revenue[20] - The GAAP subscription margin for the nine months ended September 30, 2025, was $674,653,000, with a GAAP subscription margin percentage of 85.2%[21] - Non-GAAP subscription margin for the same period was $686,222,000, with a non-GAAP subscription margin percentage of 86.7%[21] - Non-GAAP free cash flow for the three months ended September 30, 2025, was $146,937,000, compared to $129,231,000 in 2024[22] - Non-GAAP operating cash flow for the same period was $191,780,000, up from $164,008,000 in 2024[23] Strategic Initiatives - The company plans to continue its AI strategy, having released over 200 new product innovations during the annual INBOUND conference[7] - The company issued $460 million of convertible notes due in 2025 with a coupon interest rate of 0.375%[31] - Restructuring charges related to severance and facility costs are expected to be in the range of $9-10 million, with cash payments of approximately $31.0 million for abandoned facilities through 2027[32] - The company plans to exclude restructuring charges and related cash payments from non-GAAP earnings, operating cash flow, and free cash flow metrics to provide clearer insights into operational performance[32] - A fixed long-term projected tax rate of 20% will be used for non-GAAP items to ensure consistency across reporting periods[32] - The exclusion of stock-based compensation and amortization of acquired intangible assets is intended to provide a clearer picture of operational performance compared to peers[30] - Acquisition-related expenses and disposition-related income are excluded from non-GAAP measures to better reflect operational performance[30] - Strategic investments in privately held companies are recognized but excluded from fundamental operating activities for clearer performance comparison[32] - The company expects to incur incremental restructuring charges related to abandoned facilities as part of a consolidation plan initiated in January 2023[32] - Revenue generated from intangible assets is included in non-GAAP income measures, despite the exclusion of amortization expenses[30] - The company believes that excluding non-cash interest expenses from operating results allows for better comparisons with prior periods and peer companies[31]

Core Insights - Clara Shih has been appointed to HubSpot's Board of Directors, bringing her expertise in AI from her role at Meta [1][2] - HubSpot's stock has declined by 34% this year, contrasting with the Nasdaq's 22% gain, indicating investor concerns about AI's impact on future business [3] - The company is actively integrating AI into its operations to enhance efficiency and growth potential [4] Company Developments - Clara Shih joined Meta to lead its AI product team, focusing on tools for businesses, including the recently launched Business AI [2] - HubSpot is acquiring XFunnel, a platform aimed at optimizing business presence on AI search engines, and has already introduced its own AI tool for brand awareness analysis [7] - HubSpot's CEO highlighted Shih's leadership and experience in AI product development as crucial for the company's growth strategy [5][6] Market Context - The tech sector is experiencing varied impacts from the AI boom, with HubSpot facing challenges as investors express concerns about AI's future business implications [3] - Analysts predict a slowdown in HubSpot's revenue growth this year and in 2026, reflecting broader market apprehensions [3]

Core Viewpoint - HubSpot (HUBS) is positioned well to continue its trend of beating earnings estimates, particularly in the upcoming quarterly report [1]. Earnings Performance - HubSpot has a strong history of exceeding earnings estimates, with an average surprise of 2.80% over the last two quarters [2]. - In the most recent quarter, HubSpot reported earnings of $2.19 per share, surpassing the expected $2.12 per share, resulting in a surprise of 3.30% [3]. - For the previous quarter, the company reported $1.78 per share against an expectation of $1.74 per share, achieving a surprise of 2.30% [3]. Earnings Estimates and Predictions - Recent estimates for HubSpot have been increasing, indicating a positive outlook for future earnings [6]. - The Zacks Earnings ESP for HubSpot is currently +0.23%, suggesting analysts are optimistic about the company's near-term earnings potential [9]. - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [7]. Earnings ESP Explanation - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [8]. - A positive Earnings ESP indicates that analysts have updated their estimates favorably just before the earnings release [9].

Group 1 - Deep-pocketed investors have adopted a bearish approach towards HubSpot, indicating that significant market movements may be imminent [1] - Among heavyweight investors, 37% are bullish while 50% are bearish, with notable options activities showing 6 puts totaling $1,220,118 and 2 calls amounting to $78,710 [2] - Significant investors are targeting a price range of $480.0 to $510.0 for HubSpot over the past three months [3] Group 2 - The average open interest for HubSpot options is 43.67, with total volume reaching 1,515.00, indicating active trading within the specified price range [4] - Recent options trades include bearish puts with significant total trade prices, such as $515.0K and $504.5K for different strike prices [9] - HubSpot is currently trading at $490.44, down by -0.3%, with an anticipated earnings release in 2 days [14] Group 3 - HubSpot provides a cloud-based marketing, sales, and customer service software platform, expanding from its initial focus on inbound marketing [10] - Analysts have set an average target price of $602.67 for HubSpot, with individual targets ranging from $550 to $658 from various firms [11][12]

Core Insights - HUBS (HUBS.US) has been upgraded from AA to AAA in MSCI ESG ratings as of October 7, 2025 [1] Group 1 - The upgrade reflects an improvement in the company's environmental, social, and governance practices [1]

Core Insights - HubSpot is leveraging AI advancements to enhance its marketing tools, particularly through its AI assistant, Breeze, which automates various marketing functions [1][7] - The company reported strong financial results for Q2 2025, with revenues of $760.9 million, a 19% year-over-year increase, and subscription revenue of $744.5 million, also up 19% [9] - Despite a year-to-date stock decline of 35%, analysts remain optimistic about HubSpot's ability to compete in the evolving AI landscape, with a Strong Buy consensus rating [10][11] Company Overview - HubSpot, established in 2006, offers a cloud-based marketing software platform that addresses challenges in CRM, social media, content management, and SEO [2] - The platform is popular among inbound sales teams, direct marketers, and customer service professionals [2] AI Integration - HubSpot is utilizing agentic AI to allow users to create and modify their own AI tools, enhancing flexibility in online marketing [7] - The company is developing various AI agents, including prospecting, closing, personalization, and data agents, to automate time-consuming tasks [7] Financial Performance - In Q2 2025, HubSpot's revenue reached $760.9 million, exceeding expectations by $20.8 million, with earnings of $2.19 per share, surpassing forecasts by 7 cents [9] - The company had $1.9 billion in liquid assets at the end of Q2 [9] Market Position and Analyst Outlook - Analysts, including Ryan MacWilliams from Wells Fargo, believe HubSpot is well-positioned to monetize agentic AI and maintain a competitive edge due to its established customer base and data [11] - The stock has a price target of $685, indicating a potential upside of 51.5% over the next year, supported by a Strong Buy consensus from 29 analysts [11]

Core Viewpoint - HubSpo is transitioning from a SaaS-based marketing software company to an AI-driven intelligent CRM company, aiming to enhance its service delivery beyond just software solutions [7][14]. Financial Performance - In Q2 2025, HubSpo's revenue grew by 19.4% year-over-year, reaching $760.9 million, with subscription revenue increasing by 19% and other revenue by 21% [4][5]. - The company's gross profit was $650 million, with a gross profit margin of 85% [5]. - Operating profit was $129 million, maintaining an operating profit margin of 17% [5]. - Free cash flow (FCF) reached $116 million, reflecting a 26% increase [5]. - HubSpo's GAAP profitability improved, with net profit margin rising to 0.43% from -2.27% [4]. Market Expansion and AI Strategy - HubSpo's total addressable market (TAM) is projected to grow nearly 70%, from $76 billion in FY2024 to $128 billion in FY2029, potentially translating to an additional $4.4 billion in revenue if market share remains stable [8][12]. - The company launched its AI platform, Breeze, which has seen significant user engagement, with over 342,000 active users weekly as of September 2025 [7][8]. Valuation Analysis - HubSpo's current non-GAAP P/E ratio is 60.84, significantly higher than the industry median of 24.89, indicating a potential overvaluation [12]. - Based on projections, if HubSpo's TAM expands as expected, the stock price could reach $11,723.10 by FY2029, representing a potential upside of 128.57% from its current price of $512.88 [12][13]. Conclusion - HubSpo presents a unique investment opportunity in the AI sector, with its ongoing internal AI applications likely to drive significant growth without incurring excessive costs [14].