HubSpot, Inc.

Good afternoon, ladies and gentlemen. Thank you for joining today's HubSpot Q323 earnings call. My name is Tia, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to your host, Chuck McGlashan. Please proceed.

Thanks, operator. Good afternoon, and welcome to HubSpot's third quarter 2023 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, Darbesh 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 timing and benefits of the proposed Clearbit acquisition, expected growth, FX movement, and business outlook, including our financial guidance for the fourth fiscal quarter and full year 2023. Forward-looking statements reflect our views 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 in our Form 10-Q, which will be filed with the SEC this afternoon for discussions of 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 third quarter 2023 earnings press release in the Investor Relations section of our website. Now, it's my pleasure to turn over the call to HubSpot's Chief Executive Officer, Yamini Rangan.

Thank you, Chuck, and welcome to everyone joining us on the call. Let me start with our performance in the quarter, share my observations on the macro environment, and wrap up with our vision for our customer platform powered by AI and data. Let's jump into our Q3 results. We had another quarter of solid execution with revenue growing 24% year over year in constant currency. We delivered another exceptional quarter of operating margin growth with 700 basis points of margin expansion year over year, driving our operating margin to 16%. Total customers grew by 22% year over year to over 194,000 customers globally, driven by over 9,100 net customer additions in the quarter. I'm pleased with our team's focused execution and the progress we are making to become the number one customer platform for scaling companies. Our Q3 results highlight two consistent teams this year. Our bimodal go-to-market strategy is working, and our product innovation is in high gear, especially coming out of inbound in September. In the lower end of our segments, we saw strength in net customer additions driven by free signups and growth optimization plays in our starter edition. Our value proposition of an easy-to-use, easy-to-scale customer platform resonates within the segment. In upmarket, we continue to see multi-hub adoption as customers consolidate on fewer platforms and drive better visibility across marketing, sales, and service. A great example of a multi-hub customer who is seeing results from consolidating on HubSpot is Knowledge Academy. They are the largest provider of online instructor-led training globally. They started with Sales Hub to get better visibility into their pipeline and then added Marketing Hub to optimize their marketing budget and also added Service Hub to get a complete view of their customers. Since implementing HubSpot, Knowledge Academy has grown leads by 4x, boosted sales by nearly 2x, and increased their average order value by 25%. As you've heard me say before, our hubs are powerful on their own, but the real value for our customers comes from using them together. And we can see this in our results with over 50% of our install base now on three or more hubs. Turning to product innovation, we continue to be in high gear and our launches at inbound are driving momentum. While we have launched over 200 new product enhancements this year, The two big moments at Inbound were the Sales Hub relaunch and HubSpot AI launch. So why did we relaunch Sales Hub when we're already seeing momentum within this hub this year? Well, simple. We want to deliver the best prospecting and deal management solutions that are deeply connected, especially for our upmarket customers. The new prospecting workspace, which is now generally available, gives reps one place to organize their leads and tasks. so that they can spend less time looking for information and more time connecting with customers. In deal management, we introduced AI-powered forecasting to help sales leaders improve accuracy in revenue projections, very important in any environment. We have a compelling vision to drive sales productivity, and we are hearing positive feedback from our customers, particularly in the market, about the newfound power and sophistication of Sales Hub. Another highlight at Inbound was the launch of HubSpot AI. We believe that every scaling organization deserves an AI-powered customer platform, and that is why we are deeply embedding AI across all of our hubs and our entire platform. We announced a number of features across AI assistance, AI agents, AI insights, and chat spots. While I'm certainly excited about our pace of innovation, what we are really focused on is driving usage and value for customers. 40% of enterprise customers have already used HubSpot AI features, along with 20% of pro customers. About two-thirds of AI users are leveraging AI assistance to craft marketing emails and blogs. Social publishing is proving out to be a sticky use case. drawing in engaged users. In short, when we embed AI into the flow of work, it works. I'm pleased to see usage beginning to grow, and we know we're still in the early stages of a major technology shift. Looking ahead, we're focused on driving discoverability of and differentiation with AI features. We will drive adoption both in product and via customer education. We will drive differentiation by bringing more sophisticated use cases that are more deeply connected with HubSpot data. To summarize, I like the early adoption trend and our well-defined AI roadmap to bring innovation to our customers. Okay, let's shift gears and talk about what we are seeing in the macro environment. Overall, we continue to operate in a choppy and challenging environment. Sales cycles remain lengthy, budgets are still under scrutiny, and buying urgency remains low. It is clear, based on my conversations with customers, that they still need approvals from multiple decision makers and are continuing to optimize PEM. Despite these headwinds, HubSpot's connected value proposition continues to resonate with customers looking to optimize PEM and boost productivity. As we look ahead, we will continue to navigate this macro environment by following our playbook to drive product innovation and consistent, strong execution. I want to dive deep into our vision for our customer platform and talk about how our recently signed agreement to acquire Clearbit accelerates that vision. Our vision is to give millions of companies the best possible data about their customers in HubSpot. Today, we pull in data from website visits, marketing emails, sales calls, support tickets, and more. And we unify all of that data on a beautiful, simple customer record. This is arguably the biggest advantage with HubSpot. With Clearbit, we will be able to bring in even more external data that can help our customers connect better with their end customers. So, what can we solve for our customers with more unified data? Well, we can help our customers identify great fit customers and provide clear signals on buying intent, both keys to increasing their go-to-market effectiveness. Our customers want company data, not just the name of the company and employee count, but they want rich attributes about companies, including demographic data, like who is the CIO, and technographic data, like which automation products are they using. In addition, they want a real-time way to monitor buying intent, not just based on direct engagements within HubSpot platform, but also based on customers' activities outside of HubSpot and around the web. This is exactly what Clearbit is good at. They have 100 plus attributes for more than 20 million companies from more than 250 plus public and private data sources. We can take all of this data from HubSpot and Clearbit to power generative AI tools to create even more personal messages and insights for customers. Our differentiation will be to bring together unified customer data with powerful AI tools that can consume that data and our market-leading engagement hubs to supercharge our customers' go-to-market efforts. Finally, why Clearbit and what are our plans going forward? Clearbit has world-class data, and they share our commitment to helping customers grow. They also have a deep bench of B2B data experts with a bold mission to leverage AI to power insights. In all our conversations with Clearbit, it was clear that the team would be a great addition to our culture. And most importantly, this does not take away from our approach to building great products with cohesive user experiences. We use Clearbit data on our product today, and we have a very clear vision for how we can integrate their data to provide immediate value for our customers. In addition, we can leverage our product-led, partner-led, and sales-led distribution engines to get this into the hands of our customers post-close. I'm thrilled by the prospect of acquiring Clearbit and our shared vision of solving for the customer. We'll share more about our future plans after the deal has closed. So reflecting on the quarter, we doubled down on product innovation in our core hubs, and we established leadership in AI with our customers. Our teams are focused on consistent execution. And we have a clear vision for taking our customer platform to the next level with AI and data to deliver even more value to our customers. With that, I'll turn the call over to Kate to take you through Q3 results in more detail. Kate?