Financial Data and Key Metrics Changes - Q2 revenue grew 18% year over year in constant currency and 19% on an as-reported basis, with subscription revenue increasing by 19% year over year [28][29] - Q2 operating margin was 17%, flat compared to the previous year and up three points sequentially [31] - Net income for Q2 was $117 million, or $2.19 per fully diluted share [31] - Free cash flow was $116 million, representing 15% of revenue in Q2 [31] Business Line Data and Key Metrics Changes - Total customers grew to 268,000 globally, with over 9,700 net customer additions in Q2 [29] - Sales Hub seat upgrades increased by 71% year over year, while Service Hub seat upgrades rose by 110% year over year [9] - 61% of new Pro Plus customers landed with multiple hubs, and 42% of the installed base by ARR now uses all three core hubs [8] Market Data and Key Metrics Changes - Domestic revenue grew 18% year over year, while international revenue growth was 19% in constant currency and 21% as reported, representing 48% of total revenue [29] - The company saw a significant increase in leads from diversified channels, with YouTube leads up 96% year over year and newsletter leads growing by 50% [16][17] Company Strategy and Development Direction - The company is focusing on AI integration across its platform to enhance customer experience and operational efficiency [20][25] - HubSpot is adapting to changes in marketing dynamics, emphasizing the importance of content across various channels as traditional SEO becomes less effective [100][101] - The strategy includes a hybrid pricing model that combines seat-based monetization with credits for AI-driven services [80][102] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain macro environment but expressed confidence in their proven playbook to navigate these conditions [33] - The company expects net revenue retention to improve due to faster seat upgrades and anticipates strong customer additions in Q3 and Q4 [29][90] - Management highlighted the importance of adapting to AI trends and the evolving landscape of customer engagement [42][106] Other Important Information - The company launched AI feedback summaries and AI ticket sentiment features in Q2 to enhance service team efficiency [24] - HubSpot's cash and marketable securities totaled $1.9 billion at the end of June, including the impact of share repurchases [31] Q&A Session Summary Question: Changes in inbound marketing due to AI - Management noted significant shifts in buyer behavior, with organic search being disrupted and more customers asking questions of LLMs rather than traditional searches [38][39] Question: Core seats and customer personas - The core seat is seen as a growth lever, expanding opportunities beyond traditional sales and service roles to include admins and operations [50][51] Question: Engagement with agents - Customer agent usage has shown strong weekly engagement, with resolution rates consistently around 50% and significant ticket deflections [55] Question: Billings growth and revenue outlook - Management indicated that the gap between billings and revenue growth is due to larger deals and longer billing terms, which should normalize over the next few quarters [67] Question: AI monetization strategy - The company is focused on delivering value before monetizing AI features, with positive indicators for future monetization as customer adoption grows [72][80]

Financial Data and Key Metrics Changes - Q2 revenue grew 18% year over year in constant currency and 19% on an as-reported basis, with subscription revenue increasing by 19% year over year [27][28] - Operating margin for Q2 was 17%, flat compared to the previous year and up three points sequentially [31] - Net income for Q2 was $117 million, or $2.19 per fully diluted share [31] - Free cash flow was $116 million, representing 15% of revenue in Q2 [31] Business Line Data and Key Metrics Changes - Total customers grew to 268,000 globally, with over 9,700 net customer additions in Q2, reflecting an 18% year-over-year increase [27][28] - Sales Hub seat upgrades increased by 71% year over year, while Service Hub seat upgrades surged by 110% year over year [7][8] - 61% of new Pro Plus customers landed with multiple hubs, and 42% of the installed base by ARR now uses all three core hubs [6] Market Data and Key Metrics Changes - Domestic revenue grew 18% year over year, while international revenue growth was 19% in constant currency and 21% as reported, representing 48% of total revenue [28] - The company saw a significant increase in leads from diversified channels, with YouTube leads up 96% year over year and newsletter leads growing by 50% [14][15] Company Strategy and Development Direction - The company is focusing on AI integration across its platform to enhance customer experience and operational efficiency [18][24] - HubSpot is adapting to changes in marketing dynamics, particularly the decline in organic search traffic and the rise of AI-driven search [12][13] - The strategy includes diversifying lead generation channels and enhancing the value of the core platform through AI capabilities [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and innovation pace, despite a volatile macro environment [26][33] - The expectation for Q3 revenue is in the range of $785 million to $787 million, reflecting a 16% year-over-year increase in constant currency [33] - For the full year of 2025, total as-reported revenue is expected to be between $3.08 billion and $3.09 billion, up 17% year over year [34] Other Important Information - The company has launched AI features that are gaining traction, with over 4,000 customers adopting the customer agent [18][19] - The company is becoming an AI-first organization, with AI handling nearly half of support chats in Q2 [25] Q&A Session Summary Question: Changes in Inbound Marketing Due to AI - Management acknowledged significant shifts in inbound marketing due to AI, with organic search being disrupted and a need for companies to adapt their strategies [38][40] Question: Core Seats and Customer Personas - The core seat is seen as a growth lever, expanding opportunities for various customer personas beyond traditional sales and service roles [50][52] Question: Engagement with AI Agents - Early data shows strong engagement with AI agents, with high resolution rates and significant ticket deflections [56][57] Question: Billings Growth vs. Revenue Growth - Management noted that billings growth outpacing revenue growth is a positive indicator of business momentum, driven by larger deals and longer billing terms [70][72] Question: Customer Adoption of AI Agents - The company is seeing good adoption of AI agents, with predictable value leading to potential monetization in the future [78][79] Question: Marketing Hub Evolution - The Marketing Hub is evolving to help customers navigate changes in marketing dynamics, focusing on content distribution across various channels [108][110]

Core Viewpoint - Bank of America Securities analyst Brad Sills maintains a Buy rating on HubSpot, Inc. with a price forecast of $740, focusing on the potential of the Breeze AI platform despite not expecting material revenue until fiscal 2027 [1][2] Group 1: Breeze AI Platform - The modeling exercise for Breeze AI aims to demonstrate its potential to contribute to growth without requiring overly optimistic assumptions, leveraging HubSpot's existing customer base [2] - Breeze AI's most compelling use cases are in sales and marketing, similar to Salesforce CRM, with the potential for increased sales productivity and revenue uplift [3] - HubSpot's Breeze agents need to address more complex workflows to encourage adoption, as customers in the small to medium-sized business market are already utilizing third-party tools like ChatGPT for basic tasks [4] Group 2: Data and Automation - HubSpot manages over 200 million company and buyer profiles, which allows Breeze to perform meaningful workflow automation over time [5] - The acquisition of Frame AI enhances Breeze's capability to process large volumes of unstructured data [5] - HubSpot has expanded the use of credits for Customer Agents across various hubs, with Pro and Enterprise customers receiving a baseline credit package [6] Group 3: Revenue Projections - In a base case scenario for Customer Agents, Sills estimates revenue contributions of $30 million and $84 million for fiscal 2026 and 2027, respectively, translating to 1% and 2% points of growth [6] - Projected sales for fiscal 2025 are $3.04 billion, with an EPS of $9.33 [6] Group 4: Stock Performance - HubSpot's stock (HUBS) is currently up 1.08% at $540.26 [7]

Core Insights - HubSpot reported first-quarter revenue of $714.1 million, a 16% increase year-over-year, surpassing the consensus estimate of $700.4 million [1] - The company achieved earnings per share of $1.78, exceeding the consensus estimate of $1.76, and grew its customer base to 258,258, a 19% increase year-over-year [2] - HubSpot announced a new $500 million share repurchase program and ended the quarter with $2.2 billion in cash and cash equivalents [3] Financial Performance - First-quarter subscription revenue was $698.7 million, up 16% year-over-year, while professional services and other revenue reached $15.4 million, up 13% year-over-year [1] - Calculated billings for the first quarter were $766.8 million, reflecting a 20% year-over-year increase [2] - The average subscription revenue per customer decreased by 4% year-over-year to $11,038 [2] Future Guidance - For the second quarter, HubSpot projects revenue between $738.0 million and $740.0 million, representing a 16% year-over-year increase, with earnings per share expected to be between $2.10 and $2.12 [4] - The full-year revenue guidance was raised to a range of $3.036 billion to $3.044 billion, up from the previous range of $2.9 billion to $3.0 billion [4] - Full-year earnings per share guidance was also increased to a range of $9.29 to $9.37, up from the previous range of $9.11 to $9.19 [5] Market Reaction - Following the earnings report, HubSpot's stock declined by 7.63% to $610 in after-hours trading, with a 52-week trading range of $434.84 to $881.13 [6]

Financial Data and Key Metrics Changes - Q1 revenue grew 18% year over year in constant currency and 16% on an as-reported basis [7][26] - Subscription revenue increased by 16% year over year, while services and other revenue rose by 13% on an as-reported basis [26] - Domestic revenue grew 16% year over year, and international revenue growth was 19% in constant currency and 15% as reported, representing 47% of total revenue [26] - Average subscription revenue per customer was $11,000 in Q1, down 2% year over year in constant currency and 4% on an as-reported basis [27] - Net revenue retention was 102% in Q1, down two points sequentially as expected [28] - Q1 operating margin was 14%, down one point compared to the year-ago period [28] - Net income was $96 million in Q1 or $1.78 per fully diluted share [29] Business Line Data and Key Metrics Changes - Total customers grew by 19% to over 258,000 globally, with over 10,000 net customer additions in the quarter [8][27] - Large deal growth was strong, up 23% year over year, with significant momentum among the installed base [9] - Free to start conversion improved year over year, driven by better onboarding and product improvements [10] Market Data and Key Metrics Changes - The macro environment remains uncertain, with a heightened focus on value from customers [12][30] - The company is seeing strong demand across all segments, with no significant changes in demand patterns by industry or geography [51] Company Strategy and Development Direction - The company is focusing on AI adoption and has embedded AI across all hubs, aiming to create a unified customer platform [7][14] - The board has authorized a share repurchase program of up to $500 million, signaling confidence in the business and growth opportunities [8][29] - The strategy includes expanding customer agent capabilities and enhancing multi-agent orchestration [22][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing macroeconomic uncertainty but emphasizes the company's resilience and ability to deliver value [12][30] - The company expects net additions to moderate to roughly 9,000 and average subscription revenue per customer growth to be approximately flat in the coming quarters [27] - For the full year of 2025, total as-reported revenue is expected to be in the range of $3.036 billion to $3.044 billion, up 16% year over year [32] Other Important Information - The company has launched over 200 new features at its Spring Spotlight event, focusing on AI integration and customer journey enhancements [21][22] - The company is expanding its customer agent capabilities beyond the Service Hub to all Pro and Enterprise customers [20][81] Q&A Session Summary Question: Update on Agent.ai and multi-agent orchestration - Management discussed the progress of Agent.ai and the use of model context protocol for agent communication across hubs [38][40] Question: Contextualizing revised guidance and margin impact from M&A - Management explained the guidance reflects macro uncertainty and highlighted that the impact of M&A on operating profit is minimal [44][48] Question: Customer segments and hesitance in spending - Management noted that there have been no significant changes in demand patterns across segments, emphasizing the platform's essential role for customers [51][52] Question: Pricing for AI solutions and customer adoption - Management detailed the credit-based pricing model for customer agents, aiming to provide predictability and control over spending for customers [70][72] Question: Stability of gross retention and net revenue retention trends - Management confirmed strong momentum from the seat-based pricing model change, with consistent seat upgrade trends [76][78] Question: Expansion of Customer Agent beyond Service Hub - Management expressed confidence in the success of Customer Agent, noting its use across various customer interactions beyond post-sales support [81][84]

Financial Data and Key Metrics Changes - Q1 revenue grew 18% year over year in constant currency and 16% on an as-reported basis [5][23] - Subscription revenue increased by 16% year over year, while services and other revenue rose by 13% on an as-reported basis [23] - Domestic revenue grew 16% year over year, and international revenue growth was 19% in constant currency and 15% as reported, representing 47% of total revenue [24] - Average subscription revenue per customer was $11,000 in Q1, down 2% year over year in constant currency and 4% on an as-reported basis [24] - Net revenue retention was 102% in Q1, down two points sequentially as expected [25] - Q1 operating margin was 14%, down one point compared to the year-ago period [26] - Net income was $96 million in Q1 or $1.78 per fully diluted share [27] - Free cash flow was $122 million or 17% of revenue in Q1 [27] Business Line Data and Key Metrics Changes - Total customers grew by 19% to over 258,000 globally, with over 10,000 net customer additions in the quarter [6][24] - Large deal growth was strong, up 23% year over year, with significant momentum among the installed base [7] - Free to start conversion improved year over year, driven by better onboarding and product improvements [8] Market Data and Key Metrics Changes - International revenue growth was 19% in constant currency, indicating strong performance in global markets [24] - The company noted a heightened focus on value among customers due to macroeconomic uncertainty [10][29] Company Strategy and Development Direction - The company is focusing on AI adoption and has embedded AI across all hubs, aiming to create a unified customer platform [11][12] - The strategy includes launching new features and enhancing existing ones to drive upmarket scalability and customer engagement [19][21] - The company has authorized a share repurchase program of up to $500 million, reflecting confidence in long-term growth opportunities [6][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic uncertainty but noted that business trends have not shifted dramatically [10][29] - The company expects net additions to moderate to roughly 9,000 in the coming quarters, with average subscription revenue per customer growth expected to be flat [24][29] - For the full year of 2025, total as-reported revenue is expected to be in the range of $3,036 million to $3,044 million, up 16% year over year [30] Other Important Information - The company has introduced a credit-based pricing model for AI solutions, allowing customers to start using features without additional costs [17][69] - The company is expanding its customer agent capabilities beyond the Service Hub, indicating strong early adoption and success [81] Q&A Session Summary Question: Update on Agent.ai and multi-agent orchestration - Management discussed the progress of Agent.ai and the use of model context protocol for agent communication across hubs [36][39] Question: Contextualizing revised guidance and margin impacts - Management explained that the revised guidance reflects increased macro uncertainty and that the impact of M&A on operating profit is minimal [42][48] Question: Customer segments and verticals showing hesitance - Management noted that they have not seen significant changes in demand patterns across industries, maintaining a broad and resilient customer base [49][50] Question: Share gain momentum in the mid-market - Management highlighted that they are seeing momentum across all segments, with a clear value proposition for mid-market and upmarket customers [56][58] Question: Differences in AI adoption between market segments - Management indicated that the sales pipeline remains healthy across all segments, with no significant changes in pipeline quality or velocity [60][62] Question: Pricing for AI solutions and customer adoption - Management clarified that the credit-based system is designed to provide predictability and control over spending for customers [66][69] Question: Stability of gross retention and net revenue retention - Management confirmed strong momentum from the seat-based pricing model change, with consistent seat upgrade trends [74][76] Question: Success of Customer Agent expansion - Management expressed confidence in the early success of Customer Agent, noting its use beyond post-sales support [80][82]