HubSpot, Inc. · NYSE:HUBS
HubSpot — Investor Day (September 2024)
100 slides from HubSpot's investor day presentation, Sep 18, 2024
Slide 1: Analyst Day
Analyst pay 1 September 18, 2024 7
Slide 2: Safe harbor statement
Safe harbor statement This presentation includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding management’s expectations of future financial and operational performance and operational expenditures, expe
Slide 3: Agenda
Agenda Time Subject Presenters 11:30 a.m. Vision for Durable and Efficient Growth Yamini Rangan, Chief Executive Officer 11:55 a.m. Executing Durable and Efficient Growth Kate Bueker, Chief Financial Officer 12:20 p.m. Executive Q&A Session Yamini Rangan Dharmesh Shah, Co-Founder & Chief Technology
Slide 4: HubSpot's Vision for Durable and Efficient Growth
HubSpot’s Vision for Durable and Efficient Growth Yamini Rangan, CEO, HubSpot
Slide 5: The Headlines
We are positioned to win in a large and 1 growing market 2 We are a platform company and have strong momentum The Headlines Our go to market strategy across digital, 3 partner and sales-driven is scaling 4 We are balancing growth, efficiency and culture to build an enduring company
Slide 6: Mission and Market Opportunity
Mission and Market Opportunity
Slide 7: Our mission: Help millions of organizations grow better
Our mission Help millions of organizations grow better
Slide 8: We zigged when others zagged
To fulfill our mission We zigged when others zagged
Slide 9: Zig 1, Zig 2, Zig 3
Zig 1 Zig 2 Zig 3 Serve small and medium Move from app to suite Organically craft businesses to platform our platform
Slide 10: Why do something nobody else was doing?
Why do something nobody else was doing?
Slide 11: Why do something nobody else was doing?
Why do something nobody else was doing? Precisely, because nobody was doing it.
Slide 12: Our Customer is a Growth Leader
Our Customer is a Growth Leader
Slide 13: Easy, fast, unified
eeasy mfast eeunified
Slide 14: Easy to use, fast time to value, unified data
easy fast unified to use time to value data What it means What it means What it means Intuitive and efficient Immediate impact All your data in one place Why it matters Why it matters Why it matters Shortens the learning curve Drives greater adoption Makes HubSpot more and painless to use and value i
Slide 15: We have the right to win in a large and growing market
$128B We have the right 2029 to win in a large $76B 2024 and growing market Source: IDC and HubSpot estimates Note: Includes <2,000 EE for Marketing, Sales, Service, Content, Operations, Commerce, and AI markets.
Slide 16: Product Strategy
Product Strategy +
Slide 17: Our Aspiration: #1 AI-powered customer platform
Our Aspiration Be the #1 AI-powered customer platform for scaling companies
Slide 18: Fueling growth with the Customer Platform
Fueling growth with the Customer Platform Engagement Hubs Unified data Smart CRM Embedded AI Copilot Agents AI Features Ecosystem Marketplace Academy Network
Slide 19: Embedded AI, Unified Data, Engagement Hubs, Ecosystem
Embedded AI Unified Data Engagement Hubs Ecosystem
Slide 20: Our AI Strategy
Our AI Strategy Embed AI into every hub and across our entire platform
Slide 21: AI usage is increasing
AI usage is increasing Marketing usage with AI Service usage with AI 176k 180k Blogs created Call summaries 633k 100k Emails created Conversation summaries 120k 700k Landing pages published Help desk conversations 200k Social posts published
Slide 22: AI value is increasing
AI value is increasing Content Hub Sales Hub Service Hub 91% 76% 84% Users say content created Users say AI helps Users say AI helps with AI performs better them spend more them respond faster time selling to customers
Slide 23: Launching Breeze!
Launching Breeze!
Slide 24: AI powers the entire Customer Platform
AI powers the entire Customer Platform ● CRM record summaries ● Content creation (email, landing pages, blogs, etc) ● Search summaries ● Company research ● Brand voice ● Browser extension ● Image generation ● Call analysis ● Mobile app ● Social Agent ● Prospecting Agent ● Content Agent ● Customer Ag
Slide 25: Value > Monetization
-—? —— =@ "8 Value > Monetization = ae a
Slide 26: Our strategy is working
Our strategy is working Higher attach rates for hubs Higher upgrade rates with Pro and Ent tiers More adoption of Core seats Higher customer additions
Slide 27: Unified Data
Unified Data
Slide 28: Launching Breeze Intelligence!
Launching Breeze Intelligence!
Slide 29: Breeze Intelligence Strategy
Breeze Intelligence Strategy Provide our customers the best possible data about their customers
Slide 30: Breeze Intelligence Core Use Cases
Breeze Intelligence Core Use Cases Company and Contact Buyer Intent Form Shortening Enrichment Enriches over 200M data points Audience and intent data to Increase conversion rates to within the CRM identify and prioritize prospects connect with the right prospects
Slide 31: Bundled CRM to Smart CRM
Bundled CRM to Smart CRM Smart Content Hub CRM Commerce Hub $2B Operations Hub CRM CMS Hub Clearbit Acquisition Service Hub Sales Hub $1B Marketing Hub $500M PieSync Performable $250M Acquisition Acquisition $100M $50M ‘06 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21 ‘22 ‘23 ‘24 ● Revenue
Slide 32: Smart CRM
Smart CRM Unifies data, your team and tech stack. Flexible Custom Sensitive data Smart features objects
Slide 33: Engagement Hubs
Engagement Hubs
Slide 34: Our Hub Strategy
Our Hub Strategy Build a system of engagement for the entire front-office
Slide 35: Momentum in Engagement Hubs
Momentum in Engagement Hubs Use cases Marketing Hub Sales Hub Service Hub Content Hub Operations Hub Commerce Hub Collect payments Generate leads Build pipeline Scale support Create content Manage data and subscriptions Automate marketing Close deals Drive retention Manage content Activate data Auto
Slide 36: Our focus
Our focus Usage with use cases
Slide 37: Our focus: usage with use cases, value with multi-hub
Our focus Usage with use Value with multi-hub cases
Slide 38: Ecosystem
Ecosystem
Slide 39: Our ecosystem strategy
Our ecosystem strategy Build a trusted network of partners that can extend our reach
Slide 40: App Ecosystem
App Ecosystem 1700+ over 10x in last 5 years
Slide 41: Proof that we are a platform
Proof that we are a platform Pro+ customers use 8+ active integrations!
Slide 42: We are a Customer Platform company
We are a Customer Platform company
Slide 43: We are a Customer Platform company
We are a Customer Platform company + Embedded AI + Breeze Intelligence + Strengthened Smart CRM + Best-in-class Engagement Hubs + Thriving and expanding ecosystem = Momentum as Customer Platform
Slide 44: Go To Market Strategy
Go To Market Strategy
Slide 45: GTM Strategy
GTM Strategy Be world-class at driving volume at the low-end and value at the high-end
Slide 46: Scaling Distribution
Scaling Distribution Digital-driven Partner-driven Sales-driven
Slide 47: Digital-driven motion is scaling
Digital-driven motion is scaling Freemium tools Help Founders Help business connect get started Customer Growth Community and Starter customer content platform Help business grow
Slide 48: Partner-driven motion is gaining momentum
Partner-driven motion is gaining momentum Acquiring and activating Scaling with Driving more value more partners partners with partners 75% 72% 82% of customers onboarded growth in co-selling higher ASPs by partners Pro and Enterprise
Slide 49: Sales-driven motion is scaling effectively
Sales-driven motion is scaling effectively Enhanced Sales and Partner Training 38% 28% of Pro+ customers of new ARR Streamlined Sales are 3+ hubs from larger deals Execution
Slide 50: Driving efficiency at scale
Driving efficiency at scale
Slide 51: HubSpot runs on HubSpot and we are a testing ground for AI
HubSpot runs on HubSpot and we are a testing ground for AI
Slide 52: Leveraging AI to scale go-to-market
Leveraging AI to scale go-to-market Marketing Sales Service 80% 30% 30% Website chat answered by AI Less time in discovery Digital resolution of tickets and automation with intent scoring and personalization 40% 20% 500k Pipeline increase due Faster response with deal Emails / month: analyzed to bet
Slide 53: Balancing growth, efficiency and culture
Balancing growth, efficiency and culture
Slide 54: We are building two products
We are building two products One for our customers. One for our employees.
Slide 55: We are a company of Grow Getters
We are a company of Grow Getters A customer first culture Learn-it-alls > Know-it-alls Expect accountability, ownership and urgency Love being masters of our craft
Slide 56: We are positioned for long-term durable growth
Right to win in a large and expanding market Strong momentum as a platform with fast We are positioned pace of innovation for long-term durable growth Scaling distribution and building moats Balancing growth, efficiency and culture with a customer focused and resilient team
Slide 57: Executing Durable and Efficient Growth
Executing Durable and Efficient Growth Kate Bueker, CFO, HubSpot
Slide 58: Agenda
1 Track record of growth and profitability Agenda 2 Platform enables durable growth 3 Business delivering consistent leverage
Slide 59: Track Record of Strong Revenue Growth and Profitability
Track Record of Strong Revenue Growth and Profitability
Slide 60: Strong revenue growth
Strong revenue growth $2,570M 31% CAGR $675M 2019 → 2024e 2019 2024e 2024e represents the mid-point of FY '24 guidance on an as-reported basis as of August 7, 2024. CAGR = Compound Annual Growth Rate.
Slide 61: Strong customer growth
Strong customer growth 228K 73K 29% CAGR 2019 → 1H’24 2019 2024e Projected growth for 2H'24 228K represents HubSpot’s total customer count through 1H’24. Projected growth for 2H’24 is an estimated illustration of the net new customers we expect to add in the second half of 2024 and is not to scale.
Slide 62: Strong margin expansion
Strong margin expansion 17% $439M Operating Profit Margin (%) 52% CAGR 8% 2019 → 2024e $55M 2019 2024e Operating Profit Operating profit and operating profit margin are non-GAAP metrics. Please refer to the appendix for a reconciliation of GAAP to non-GAAP figures. 2024e represents the mid-point of FY’24
Slide 63: Strong free cash flow and balance sheet
Strong free cash flow and balance sheet 15% $380M $1.9b Free Cash Flow Margin (%) cash position 51% CAGR 10% 2019 → 2024e $65M 2019 2024e Free Cash Flow Free cash flow is a non-GAAP metric. Please refer to the appendix for a reconciliation of GAAP to non-GAAP figures. 2024e represents FY’24 guidance as
Slide 64: Early in large and expanding TAM opportunity
Early in large and expanding TAM opportunity <10% $76B Penetration across all products $128B 2024 2029 Includes Total Addressable Market (TAM) for software in HubSpot’s core product groups including Marketing Hub, Sales Hub, Service Hub, Operations Hub, Content Hub, Commerce Hub, and Breeze Intellig
Slide 65: World-class engagement hubs
World-class engagement hubs Marketing Hub Sales Hub Service Hub 13% 24% 28% YoY Growth YoY Growth YoY Growth Content Hub Operations Hub 30% 57% YoY Growth YoY Growth YOY growth represents Install Base ARR and year-over-year growth rates as of Q2’24. Please refer to the appendix for a definition of AR
Slide 66: HubSpot's platform journey
HubSpot’s platform journey Platform Suite App
Slide 67: HubSpot is a platform company
HubSpot is a platform company Cust % Count of Total by # of Customers Hubs (All Editions) with: 71% 2+ Hubs 50% 43% 3+ Hubs 36% 5+ Hubs 10% 3% Q1’19 Q2’24
Slide 68: Platform Adoption Increasingly Important Business Driver
Platform Adoption Increasingly Important Business Driver
Slide 69: Platform enables durable growth
Platform enables durable growth Acquisition Retention Expansion Innovation
Slide 70: Acquisition: Volume at the low end
Acquisition: Volume at the low end 47% 28% 2019 1H’24 % of Total Customers Starter Customers
Slide 71: Acquisition: Value at the high end
Acquisition: Value at the high end 28% 1.8x 15% $3k+ MRR deals % New ARR 2019 → 1H’24 2019 1H’24 Please refer to the appendix for a definition of ARR.
Slide 72: Acquisition: Value at the high end
Acquisition: Value at the high end % of New ARR (Pro & Enterprise Only) 69% 2+ Hubs 49% 38% 3+ Hubs 21% 2019 1H’24 Please refer to the appendix for a definition of ARR.
Slide 73: Retention: Platform driving improving C$R
Retention: Platform driving improving C$R Share Gain C$R 88% (2019-1H’24) (1H’24) 84% 3+ Hubs +32% 90% Enterprise +9% 93% 5+ Integrations +26% 93% 2019 1H’24 Customer Dollar Retention (C$R) Please refer to the appendix for a definition of Customer Dollar Retention (C$R).
Slide 74: Retention: Net revenue retention supported by platform value
Retention: Net revenue retention supported by platform value 104% 102% FY’23 Cancellations Downgrades Seat Upgrades Upgrades excl. 1H’24 Seats Please refer to the appendix for a definition of Net Revenue Retention (NRR).
Slide 75: Expansion: Edition upgrade rates remain healthy
Expansion: Edition upgrade rates remain healthy 43% CAGR 38% CAGR ARR ARR ‘19 TTM 1H‘24 ‘19 TTM 1H’24 Starter to Pro Any Edition to Enterprise Marketing Sales Other Service Please refer to the appendix for a definition of ARR.
Slide 76: Expansion: Significant opportunity for multi-hub adoption
Expansion: Significant opportunity for multi-hub adoption $44k 69% ARR per Customer 2.7x <3 Hubs $16k higher for 3+ Hub customers 3+ Hubs 31% Q2’24 Q2'24 % of Customers ARR per Customer Pro and Enterprise Tiers only, excludes Starter. Please refer to the appendix for a definition of ARR.
Slide 77: Expansion: Seats pricing model recap
Expansion: Seats pricing model recap Seats make it easier to get started & pay as you grow with HubSpot 1 Starter is simpler with per-user pricing 2 No Seat minimums for Sales & Service Hubs 3 Introduced Core Seat to monetize the Smart CRM
Slide 78: Expansion: Seats pricing model impact
Expansion: Seats pricing model impact More Better Customers Retention Easier to get started Buy only what you need Simpler Starter pricing Healthier customer base No Seat minimums Faster upgrade rates New monetization lever via Core Seat
Slide 79: Expansion: Existing customers Seats migration glidepath
Expansion: Existing customers Seats migration glidepath up to 5% ARR uplift at renewal 50% to 60% Existing ARR on Seats model Q1’24 Q4’25 Pre-Renewal ARR Post-Renewal ARR The expected amount of existing ARR on the Seats model by Q4’24 is our best estimate as of September 18, 2024. Please refer to th
Slide 80: Innovation: Planting seeds for durable growth
Innovation: Planting seeds for durable growth AI Commerce Breeze Intelligence
Slide 81: Innovation: Commerce continues to gain momentum
Innovation: Commerce continues to gain momentum 5k+ 90k+ $1B+ Monthly Transacting Transactions Payment Volume Customers per Month in 2024
Slide 82: Innovation: Introducing Breeze Intelligence
Innovation: Introducing Breeze Intelligence Company and Contact Form Use Cases Buyer Intent Enrichment Shortening Opportunity Top Priority Low CSAT High Spend Pricing/GTM Disruptive Pricing Usage-based Sales / Digital GTM
Slide 83: Acquisition, Retention, Expansion, Innovation
Acquisition More multi-hub Retention Higher usage drives higher retention Expansion Multiple paths to grow Innovation New functionality built into existing workflows
Slide 84: Balancing Growth & Profitability
Balancing Growth & Profitability
Slide 85: Philosophy on balancing growth and profitability
Philosophy on balancing growth and profitability Drive durable revenue Generate operating leverage growth at scale as we scale toward long-term margin targets
Slide 86: Delivering operating leverage
Delivering operating leverage Average margin expansion 2022-2024e 300 2019-2023 Infrastructure Optimization 180 Support & Services Efficiencies Partner Pay for Value bps / year bps / year Bps per year represents the non-GAAP operating profit margin leverage for the respective years. Please refer to t
Slide 87: Tracking ahead of interim margin target
Tracking ahead of interim margin target 18-20% 17% 2024e 2026 Old Interim Target Range 2024e represents the mid-point of FY’24 non-GAAP operating profit margin guidance as of August 7, 2024. Forward-looking targets reflect our current operating plan as of August 7, 2024 and are subject to change as fu
Slide 88: Raising interim margin target range
Raising interim margin target range 20-22% 18-20% 17% 2024e 2026 2027 Old Interim New Interim Target Range Target Range 2024e represents the mid-point of FY’24 non-GAAP operating profit margin guidance as of August 7, 2024. Forward-looking targets reflect our current operating plan as of August 7, 202
Slide 89: Raising long-term margin target
Raising long-term margin target 20-22% 25% New Long-Term 17% Operating Margin Target 2024e 2027 New Interim Target Range 2024e represents the mid-point of FY’24 non-GAAP operating profit margin guidance as of August 7, 2024. Forward-looking targets reflect our current operating plan as of August 7, 20
Slide 90: Investing in durable and efficient growth
Investing in durable and efficient growth Current vs. Peers Strategy Gross Margin Best in class Optimization R&D Above average Innovation S&M Above average Efficiency G&A In-line Scale
Slide 91: Levers for S&M efficiency
Levers for S&M efficiency Key Initiatives • Expand low CAC freemium funnel Digital-Driven • Reduce friction in purchase and upgrades • AI & systems-driven productivity growth Rep-Driven • Higher ASP through platform selling • Grow upmarket partner sales and service attach Partner-Driven • Aligning p
Slide 92: Confident in our ability to deliver more leverage over time
Confident in our ability to deliver more leverage over time 20-22% 25% 2027 Long-Term Margin Target Margin Target Forward-looking non-GAAP operating profit margin targets reflect our current operating plan as of August 7, 2024 and are subject to change as future events and opportunities arise.
Slide 93: Key takeaways
Key takeaways 1 2 3 Platform of choice in Innovation fueling Delivering strong large and growing TAM durable and diverse financial results growth opportunities
Slide 94: Thank You
Thank You + + +
Slide 95: Appendix
Appendix
Slide 96: GAAP to non-GAAP reconciliations
GAAP to non-GAAP reconciliations
Slide 97: Stock-based compensation
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Slide 98: Non-GAAP income from operations reconciliation
Forecast 2019 2020 2021 2022 2025 2024 % of % of %of % of % of % of $'000s Revenues $'000s Revenues $'000s Revenues $'000s Revenues $'000s Revenues $'000s Revenues Loss from Operations Loss from operations (46,991) -7% (50,828) 0% (54,799) -4% (109,101) -6% (208,056) 10% (94,452) -4% Stock-based com
Slide 99: Free cash flow reconciliation
2019 2020 2021 2022 % of % of % of % of 2023 % of $'000s Revenues $'000s Revenues GAAP net cash and cash equivalents provided by operating activites 118,975 18% 88,915 10% 238,728 18% 273,174 16% 350,972 16% Purchases of property & equipment and capitalization of software development costs (53,846)
Slide 100: Definitions
Definitions Customers: We define our Customers at the end of a particular period as the number of business entities with one or more paid subscriptions to our CRM Platform either purchased directly with us or purchased from a Solutions Partner. We do not include in Customers business entities with o