HubSpot, Inc.

Hello and welcome to today's HubSpot Q2 2022 earnings call. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I would now like to hand over to Chuck McGlashan, Head of Investor Relations at HubSpot. The floor is yours. Please go ahead.

Thanks, Operator. Good afternoon and welcome to HubSpot's second quarter 2022 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 Yamini Rangan, our chief executive officer, Dharmesh Shah, our co-founder and CTO, and Kate Bucher, 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 third fiscal quarter and full year 2022. Forward-looking statements reflect our views only as of today, and except it is 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 in our Form 10-Q, which will be filed with the FCC this afternoon for discussion of the risks 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 second quarter 2022 earnings press release in the investor relations section of our website. Finally, I'm excited to announce that we'll be hosting our annual analyst day at Inbound on September 7th. I look forward to seeing many of you there The event will be live-streamed on our IR website for those who can't make it in person. If you have any questions, please reach out to ir.inbound at HubSpot.com. Now, it's my pleasure to turn over the call to HubSpot's Chief Executive Officer, Yamini Rangan. Yamini?

Thank you, Chuck, and welcome to everyone joining us on the call. Today, I want to focus on the Q2 results, what's driving performance, and HubSpot's playbook for driving durable growth over the long term. First, let's kick it off with our results this quarter. Q2 was a solid quarter for HubSpot with revenue growing 41% year-over-year in constant currency and total customers growing 25% year-over-year to more than 150,000 globally with more than 60% using multiple HubSpot products. These results were driven by strong product innovation, a deep understanding of what our customers need in order to grow today, and focused execution. As I talk to our customers, it is clear that SMBs need to do more with less as they navigate the current macroeconomic environment. They're looking for ways to consolidate their fragmented tech stack of point solutions, improve inefficiencies, and get better visibility into their customers' journey. As a result, HubSpot's connected, easy-to-use platform is mission critical for our customers. Let's start with product innovation in the second quarter. We're focused on delivering a world-class front office platform by investing in our anchor hubs of marketing, sales, and service, and by innovating with our newer hubs. We made important strides in both areas in Q2. Last time we talked, I shared the exciting news that Marketing Hub had just surpassed a billion dollars in annual recurring revenue. In Q2, we unlocked marketing automation features in the starter tier so that marketeers can deliver a personalized touch without draining personal time. Teams can now engage and convert customers faster by personalizing and segmenting marketing efforts and automating routine tasks. This unlocks tremendous value for the starter tier. On the upper end of the market, we're increasing Marketing Hub enterprise pricing in September to match the additional value we've been delivering to customers over the last few years with more sophisticated functionality like revenue attribution reporting, AI-powered A-B testing, and more. These changes are consistent with our pricing and packaging strategy of driving high-value features down to starter while fueling innovation at the higher tiers. During our last call, we had also just relaunched Service Hub, and over the past quarter, we've been pleased to see customer usage of features like tickets and inbox tools increase. In Q2, we further enhanced Service Hub by launching inbound calling so that customers can provide real-time service and engagement over the phone. With these developments, we are making meaningful progress with Service Hub to empower our customers to deliver an exceptional customer experience at scale. Another big product milestone in Q2 was the launch of CMS Hub Free. Why free CMS now? Well, every business today starts with a website to connect with their customers. But too often, they're forced to choose between free content management systems with limited customization or robust solutions that are cost prohibitive, especially in this environment. What differentiates CMS Hub from other website building tools is that it's powered by a free CRM platform. That means companies can easily build a beautiful website to attract visitors and leverage CRM to nurture that business across their entire front office, all on HubSpot. That combination is powerful and unique. As part of the launch in June, we also introduced CMS website themes in our marketplace to give business builders the tools and the assets to get started online. As a result, we've seen nearly 4,000 CMS-free sign-ups in the first month since launch, and a 110% increase in marketplace transactions. I'm really excited by these results and the large green space opportunity to drive premium growth with CMS3. This pace of product innovation in the second quarter demonstrates that HubSpot is making meaningful progress to become the platform of choice for scaling businesses. Okay, shifting gears, I want to acknowledge that we, like a number of companies, saw lengthening of deal cycles and more decision makers getting involved in deals in June. While we cannot predict how the macroeconomic environment will evolve in the second half, I want to share the HubSpot playbook for how we will navigate through the uncertainty in the short term while driving the business towards strong, durable growth over the long term. Then in a few minutes, Kate will talk about how we are planning to continue to grow profitably in this software demand environment. One of HubSpot's strengths is that we focus on near-term execution while driving a clear long-term strategy. During times of uncertainty in the past, we've continued to place strategic bets that will help us and our customers emerge stronger. We did this successfully throughout the pandemic by following three core principles. Solve for the customer, sustain investments and product, and execute with focus. We're taking the same approach to drive durable growth now. Let me unpack each of these core principles. During the pandemic, solving for the customer was all about helping businesses become digitally enabled. Now, it is about helping customers become digitally powered by helping them consolidate on a single platform to drive efficiencies. For example, take Sando Design, a digital design branding agency. Before HubSpot, their front office consisted of multiple point solutions that were cobbled together by different departments. Our team helped them consolidate all of their point solutions and moved their entire front office onto the HubSpot platform. Before implementing HubSpot, it took them months to create landing pages and email campaigns. Now it just takes a few days. Additionally, Sando Design has saved thousands of dollars by getting rid of point solutions. This is exactly how our customers are reducing costs, increasing efficiency, and growing better by consolidating on HubSpot. The second principle in our playbook is to sustain investments in product. Throughout the pandemic, we maintained our investment in product innovation. This enabled us to create levers for long-term growth with platform and payments, and now we're continuing to build on that foundation. In the second quarter, we enhanced our platform for our customers with more sophisticated needs by releasing new sales hub features that enables CRM customization and crafted data management. We also continue to expand HubSpot's app ecosystem with our integration catalog growing nearly 40% year over year. Moving forward, we will continue to invest in our developer strategy to drive customization and extensibility of the HubSpot platform. We also made meaningful progress in payments by launching new features including paid meetings, forms, and links, in addition to recurring ACH and a payments object. These features are helping our customers unlock the power of a commerce-enabled CRM. Take the nonprofit trade group, International Car Wash Association, as an example. Their disconnected payment and fulfillment paths were creating customer friction and lots of manual processing. They were already using HubSpot marketing, sales, and service hubs when they decided to implement payments to connect the buyer's journey. Since adopting payments, they have increased e-commerce sales by 400% and set up the fulfillment process by nearly two-fold. This is a powerful example of how B2B businesses can sell online and create new revenue streams with HubSpot. Looking ahead, we plan to sustain key investments and products so that we can emerge stronger as a platform of choice. The third and final principle is to execute with focus. Like every business, there are many factors outside of our control due to uncertainty in the macro environment. So we will control the controllables. We're focused on driving both direct and partner enablement reaching our customers with relevant TCO playbooks, and continuing to build a foundation for excellent execution. These principles have helped guide HubSpot to the position of strength we are in today. The long-term drivers of our business remain solid as HubSpot continues to be mission critical for our customers, and we are making meaningful progress towards becoming the number one CRM platform for scaling companies. With that, I'll hand it over to Kate to talk about our financial results and our strategy for driving profitable growth.