HubSpot(US:HUBS)2023-05-04 01:08Financial Data and Key Metrics Changes - Revenue grew 30% year-over-year in constant currency and 27% on an as-reported basis [5][39] - Operating margin increased by 4 percentage points year-over-year to 13% [5][28] - Net income was $62 million, or $1.20 per fully diluted share [28] - Free cash flow was $85 million, representing 17% of revenue [28] - Subscription revenue per customer grew 6% year-over-year in constant currency and 3% on an as-reported basis to $11,400 [12] Business Line Data and Key Metrics Changes - Total customers grew by 23% to over 177,000, with net customer additions of over 9,900 in the quarter [5][27] - Subscription revenue grew 27% year-over-year, while services and other revenue increased 12% on an as-reported basis [39] - Gross retention remained in the high 80s, while net revenue retention was 104%, down 3 points sequentially [40] Market Data and Key Metrics Changes - Domestic revenue grew 27% year-over-year, while international revenue growth was 33% in constant currency and 26% as reported [39] - International revenue represented 46% of total revenue [39] Company Strategy and Development Direction - The company aims to become the market share leader in marketing, sales, and service for scaling companies, focusing on product innovation and a bimodal go-to-market strategy [6][7] - The bimodal strategy targets both lower-end market volume and increased value for upmarket customers [5][6] - Generative AI is seen as a transformative opportunity, enabling SMBs to generate content, insights, and code more efficiently [9][10] Management's Comments on Operating Environment and Future Outlook - The macro environment remains challenging, with tight budgets and cautious spending from customers [13][22] - The company expects weak macroeconomic conditions to persist throughout 2023 [13] - Management remains focused on product innovation and consistent execution to drive sustainable growth [22][24] Other Important Information - The company expects total as-reported revenue for the full year of 2023 to be in the range of $2.08 billion to $2.088 billion, up 20% year-over-year at the midpoint [41] - Non-GAAP diluted net income per share is expected to be between $4.80 and $4.85 [29] Q&A Session All Questions and Answers Question: How does the company plan on monetizing generative AI? - The company focuses on delivering customer value first, with monetization to follow as they iterate and improve use cases [32][33] Question: What is the impact of free products on margins? - The free tools strategy is designed to create a wide top-of-funnel, leading to increased conversion rates from free to paid customers [48] Question: How is the company performing in terms of vendor consolidation? - The company is seeing customers consolidate multiple tools into HubSpot, which is expected to drive long-term growth [72] Question: What is the performance of direct versus partner business? - Both direct and partner businesses are executing as planned, with a healthy balance of sales coming from both channels [82] Question: What is driving the average revenue per customer higher? - Multi-hub adoption among professional and enterprise customers is driving growth, offset by the volume of starter customers [103]