HubSpot, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the HubSpot Q1 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. If you ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Chuck McGlashan, Head of Investor Relations Thank you. Please go ahead, sir.

Thanks, operator. Good afternoon and welcome to HubSpot's first quarter 2020 earnings conference call. Today, we'll be discussing the results announced in the press release that was issued after the market closed. With me on the call this afternoon is Brian Halligan, our chief executive officer and chairman, and Kate Beeker, our chief financial officer. Before we start, I'd like to draw your attention to the safe harbor statement included in today's press release. During this call, we'll make statements related to our business that may be considered forward-looking within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements, including those regarding management's expectations of future financial and operational performance and operational expenditures, expected growth, and business outlook, including our financial guidance for the second fiscal quarter and full year 2020. Forward-looking statements reflect our view only as of today and, except as required by law, we undertake no obligation to update or revise these forward-looking statements. Please refer to the cautionary language in today's press release and our Form 10-Q, which will be filed with the SEC this afternoon for discussion of the risk and uncertainties that could cause actual results to differ materially from expectations. During the course of today's call, we'll refer to certain non-GAAP financial measures as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed and a reconciliation of the differences between such measures can be found within our first quarter 2020 earnings press release in the investor relations section of our website. My pleasure to turn over the call to HubSpot CEO and Chairman, Ryan Halligan.

Thanks, Chuck. Good afternoon, folks. Thank you for joining us today. We're on this call to talk about HubSpot's business, but I want to take a moment to recognize the toll this pandemic has taken on so many people around the globe. Being closer to home right here in the HubSpot community, these are tough times. I hope all of you on the call are staying healthy and managing through this as well as you can. Now, let's talk about HubSpot's first quarter earnings results. We came into this year with strong tailwinds. Boxing currency revenue growth was 33% in Q1, and non-GAAP operating margins were just over 7%. Total customers grew 30% year-over-year, surpassing 78,000, while multi-product adoption continued to grow nicely, representing nearly 32,000 customers. On the product front, we kicked off the year with an exciting relaunch of the enterprise tier, Marketing Hub. Marketing Hub Enterprise has always been easy to use, but the relaunch made it more powerful than ever before. With better attribution reporting, account-based marketing, advanced chat targeting, and much more. We have an excellent offering that delivers great value to our enterprise segment now, and that's borne out by customer reviews. This product is number one in six separate enterprise categories from G2, the main tier-based software review set. Now, those tailwinds, they continued through much of the first quarter. However, in the middle of March, they were met by strong headwinds as the world felt the impact of the pandemic. Now, rather than fight against that wind, we're trying to move with it through a series of plays designed to help our customers and partners bridge the gap to better time. When the health crisis hit, our immediate focus turned to helping our customers and partners navigate this sudden economic downturn. With that in mind, we expedited Q1 commissions to all solutions partners, and we offered a six-month commission prepayment to Platinum, Diamond, and Elite partners. To help customers and prospects needing to rapidly move their go-to-market strategies online, we took several steps. We lifted email and calling limits and added a collection of features including meetings, bots, and one-to-one video into our free CRM. We also reduced the price of our starter growth suite by over 50% late in the quarter. We did this to alleviate the financial strain for our customers on the starter product and to enable more companies under financial strain to get started with HubSpot. This resulted in a five-fold increase in the run rate of that offering at the end of the quarter. Finally, We gave our team a lot of leeway to offer discounts and flexible payment terms to certain customers under more severe short-term financial straits. The way I like to think about the pandemic for HubSpot is that it's like a big storm that blew into our business in the middle of March. The first few weeks, it was largely just a big 200-mile-an-hour headwind that hit the new business and retention side of our business at the same time. But... Over the last few weeks of April, the winds have shifted. I'd say we have a 150-mile-an-hour headwind now, but that's coupled with a 100-mile-an-hour tailwind as business has been picking up. When I take a step back, that tailwind makes sense. The world is seeing a surge of companies with historically offline, old-school go-to-market models lean into a new-school, online go-to-market model for the first time. The very platform we sell and methodology we teach was designed to help companies make this shift. These trends represent a long-term tailwind for HubSpot, and I think it's one that will outlast the near-term volatility that we're all experiencing in the current downturn. We have not stopped building for the future. In April, we introduced a new product line, CMS Hub. Similar to Marketing Hub Enterprise, we wanted to combine the ease of use growing companies want with the power they need. The result was a content management system designed to help growing businesses overcome the notoriously painful experience of managing websites at scale. Many companies think they only have two options for managing their websites, a basic CMS with very limited functionality or a technically complicated one with tons of administrative pain. CMS Hub is a better fit for growing companies that need features like dynamic content, adaptive testing, and 24-7 security monitoring. and even some tooling, it starts to blur the gap between websites and web apps, all without the heavy maintenance. We've been really pleased to see the positive reception that CMS has had with our customers and our partners, despite the macro environment. In fact, given this rare moment in history when humans are shifted into creating digital experiences that rival in-person ones, CMS might have come along at just the right time. As I said before, These are indeed tough times. Having said that, HubSpot's in a good position to help our customers in the market writ large weather the tough times and come out stronger on the other side. To that end, we're continuing to invest and innovate, and we expect to be in an even stronger position when we come out the other side. Now, before I hand it over, I want to share some news that our longtime president and chief operating officer, J.D. Sherman, has decided to leave HubSpot. J.D. has been instrumental in driving HubSpot's global growth over the last eight years and has left an indelible imprint on our customers, partners, and employees. J.D. will stay on until July 1 and will continue as an advisor until the end of the year. He will leave behind a well-oiled operating system and a world-class team that will serve us exceptionally well in the years to come. While I am sad to see him go, I'm proud of the work we've done and eager to see him become a great CEO wherever he lands. So on behalf of HubSpot, the Board of Directors, and our employees around the world, I want to say thank you, JD. We've all grown better because of you. Okay. With that, I'll turn it over to Kate now to take us through the financials and our guidance.