HubSpot, Inc. · NYSE:HUBS
HubSpot — Investor Day (September 2023)
100 slides from HubSpot's investor day presentation, Sep 6, 2023
Slide 1: Analyst Day 2023
Analyst Day 2023 Ryan Burkart Investor Relations
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 for future financial and operational performance and operating expenditures, expe
Slide 3: Today's Agenda
9:40 a.m. Welcome and Safe Harbor Ryan Burkart | Investor Relations Short Break 10:00 a.m. INBOUND Spotlight Today’s Short Break 11:30 a.m. HubSpot’s Vision for Durable and Efficient Growth Yamini Rangan Agenda 12:00 p.m. Customer Platform Value Kipp Bodnar | Chief Marketing Officer Lunch Break Wedn
Slide 4: Thank You
Thank You
Slide 5: HubSpot's Vision for Durable and Efficient Growth
HubSpot’s Vision for Durable and Efficient Growth
Slide 6: Mission and market, Product and growth strategy, Balancing growth
Mission Product and Balancing growth, efficiency and market growth strategy and culture
Slide 7: Our Mission
Our Mission Why Help millions of organizations grow better How Become the #1 Customer Platform for scaling companies What • Engagement Hubs • Smart CRM • Connected Ecosystem
Slide 8: We are in massive markets
We are in massive markets $77B 1000 – 2000 $51B 100 – 999 employees 1 - 99 2023 Software TAM for Marketing, Sales, Service, CMS, and Ops 2028
Slide 9: What matters to our customers?
What matters to our customers? Acquire Make Improve Increase Thrive with AI customers data-driven customer efficiency decisions experience Quality rather Being smarter Winning where Don’t scale We want to show than quantity. with our data. winning matters. chaos. up like people, not bots. Sr. CRM Ma
Slide 10: Why we win
Easy to use Why we win Easy to grow Easy to run
Slide 11: Our foundational choices
Our foundational choices • Focus on SMB • Move from app to suite to platform • Build products organically • Deliver value before you monetize
Slide 12: Two Major Transformations
TWO MAJOR TRANSFORMATIONS
Slide 13: We are in the early stages of major transformations
We are in the early stages of major transformations Small and Mid-market App Suite Platform Small
Slide 14: Aspiration: #1 Customer Platform for Scaling Companies
Aspiration: #1 Customer Platform for Scaling Companies AI-Powered Lead generation Prospecting Help Desk Content Creation Advanced Reporting Payments & Subscriptions Marketing Deal Self Service Content Process Automation Management Management Automation Billing & Invoices Smart CRM Unified Customer D
Slide 15: Every organization deserves a great CRM
2014 2023 Every organization Every organization deserves a great CRM deserves an AI-powered Customer Platform
Slide 16: HubSpot AI: Powering all Hubs and Platform
HubSpot AI: Powering all Hubs and Platform AI Assistant in Text Editors Content remix to ads + social AI Assisted Report Creation AI Assistants AI Content Recommendations Generate campaign + social copy AI Powered Content Ideas AI Powered Image Generation Generate marketing + sales emails AI Knowled
Slide 17: Approach to AI Monetization
Increase market share across all tiers Approach to AI Monetization Drive value with Pro and We plan to communicate pricing when Enterprise tiers features hit GA by early 2024 Expand with add-ons
Slide 18: Engagement Hub strategy: AI-powered system of engagement
Engagement Hub strategy: Become the AI-powered system of engagement AI-Powered Lead generation Prospecting Help Desk Content Creation Advanced Reporting Marketing Deal Management Self Service Content Automation Management Process Automation CMOs and Sales reps Support reps Marketers and Ops teams an
Slide 19: The power of connected Hubs
The power of connected Hubs Multi-hub journey Land and expand journey MH, SH, SvH, CMS MH, SH, SvH, CMS, Ops, Full CRM Consolidated from 5 tools to 1 Decreased Cost Per Lead by 75% 10% increase in website visits, leads, Boosted conversions by 200% conversion
Slide 20: Commerce Strategy
Commerce Strategy: Customer Need: Build the single source of truth for • Convert closed opportunities to commerce and CRM revenue quickly • Unify commerce and customer data to drive growth
Slide 21: Commerce Hub + Smart CRM = Connected Experience
Commerce Hub + Smart CRM = Connected Experience Commerce Powered Insights Customer Experience Channels Invoices Payment Links Quotes B2B Checkout Subscriptions Billing Taxes Payments HubSpot Payments 3rd party payments: Stripe & others Instant Payouts Smart CRM Customer Data including commerce Custo
Slide 22: Commerce Hub: Clear momentum across key metrics
Commerce Hub: Clear momentum across key metrics Are we adding Are customers Is transaction customers? returning? volume growing? 60% 50% 240% activation growth growth in transactions/ GPV growth YoY YoY merchants/month YoY
Slide 23: Smart CRM
Smart CRM Strategy: Become the AI-powered system of record Smart CRM Unified Customer Customization Customer Data Intelligence & Extensibility
Slide 24: HubSpot Customer Platform
HubSpot Customer Platform AI-Powered Lead generation Prospecting Help Desk Content Creation Advanced Reporting Payments & Subscriptions Marketing Deal Self Service Content Process Automation Management Management Automation Billing & Invoices Smart CRM Unified Customer Data Customer Intelligence Cus
Slide 25: Our bi-modal strategy is working
Our bi-modal strategy is working Drive value Lower end: • Acquire customers early • Make the product easy to use • Build a competitive moat Upmarket: • Scale multi-hub and full suite • Drive Pro and Enterprise adoption Drive volume • Be the #1 platform for the mid-market
Slide 26: Our focus is on driving broad and efficient distribution
Our focus is on driving broad and efficient distribution Who is buying Digital, sales and partner-driven Large Digital and sales-driven Medium Digital-driven Small How we are serving
Slide 27: We are scaling GTM motions for long-term durable growth
We are scaling GTM motions for long-term durable growth Digital-driven Partner-driven Sales-driven Scaling from acquisition Expanding and moving upmarket Focusing on consistent to activation and retention execution 85% ~50% 32% of Starter customers of services are delivered of new ARR in Pro & purch
Slide 28: Build a company future generations will be proud of
Build a company future generations will be proud of
Slide 29: We are balancing growth, profitability and culture
We are balancing growth, profitability and culture Drive diverse Focus on multi-year Scale a diverse and levers for growth efficiency initiatives sustainable culture
Slide 30: HubSpot is positioned for long-term, durable growth
HubSpot is positioned for long-term, durable growth Mission Help millions of organizations grow better. Aspiration Become the #1 Customer Platform for scaling companies. Product Strategy Power our Engagement Hubs and Smart CRM with AI. Go-to-Market Strategy Scale breadth of distribution with multipl
Slide 31: Thank You
Thank You
Slide 32: Customer Platform Value
Customer Platform Value Kipp Bodnar, CMO
Slide 33: Today's Agenda
Today’s Agenda Why CRM is not enough: Value of Value of Value of a Connected Customer Platform Smart CRM Engagement Hubs Ecosystem
Slide 34: Why Customer Platform?
™) Why Customer Platform?
Slide 35: Why CRM is Not Enough
Why CRM is Not Enough How it started… How it’s going… CRM for Sellers: A simple CRM with multiple duplicate We are at a breaking point system of record for sellers to records and outdated track customer relationships versions of customer data
Slide 36: The Customer Platform That Helps Your Business Connect and Grow Better
HubSpot: The Customer Platform That Helps Your Business Connect and Grow Better Engagement Hubs that connect your front office with customers across the entire journey Smart CRM that combines customer data with artificial intelligence to power the entire platform Ecosystem that extends the customer
Slide 37: The Customer Platform That Helps Your Business Connect and Grow Better
HubSpot: The Customer Platform That Helps Your Business Connect and Grow Better Customer Platform AI-Powered Lead generation Prospecting Help Desk Content Advanced Payments & Creation Reporting Subscriptions Marketing Deal Self Service Automation Management Content Process Billing & Invoices Managem
Slide 38: What is the value of HubSpot's Customer Platform?
What is the value of HubSpot’s Customer Platform?
Slide 39: Smart CRM = Data + AI
Smart CRM = Data + AI Legacy CRM is unified by force Smart CRM is unified by default Legacy CRM is hard to configure Smart CRM is easy to customize Legacy CRM gives you information Smart CRM gives you intelligence
Slide 40: Custom Objects Specific to Your Business
Custom Objects Specific to Your Business
Slide 41: CRM Customization to Extend Your Data
CRM Customization to Extend Your Data
Slide 42: Value of Engagement Hubs
CO) Value of Engagement Hubs
Slide 43: Outcomes
Activity Armageddon Outcome Obsessed Outcomes “Smart System” Activity Obsessed “Spam System” Activity
Slide 44: Engagement is Core to a Great Customer Platform
Engagement is Core to a Great Customer Platform Engagement Pre-AI Engagement Post-AI Era Data was a nice to have Data is a must have across several systems in one place Email was king Omni-channel rules Human activity drove Agents + Humans drive connection personal connection
Slide 45: Workflows to Automate Email Outreach
Workflows to Automate Email Outreach
Slide 46: Prospecting Workspace to Easily Engage with Leads
Prospecting Workspace to Easily Engage with Leads
Slide 47: HelpDesk to Quickly Reach Your Customers
HelpDesk to Quickly Reach Your Customers
Slide 48: Value of a Connected Ecosystem
Value of a Connected Ecosystem
Slide 49: Philosophy on a Connected Ecosystem
Philosophy on a Connected Ecosystem Invest in Build for platform customization our marketplace
Slide 50: State of the app ecosystem
State of the app ecosystem Number of Marketplace Integrations Number of Active Marketplace Installs 1500 2,121,449 787,132 54 2017 2018 2019 2020 2021 2022 2023 2020 2021 2022 2023
Slide 51: State of the app ecosystem
State of the app ecosystem Analytics Development Vertical Industry Content Other/Uncategorized Commerce IT Infrastructure G2 Categorization of Customer Service Marketplace Listings % of currently listed Office integrations Collaboration Marketing ERP Sales
Slide 52: LinkedIn CRM Sync to Save Time and Craft Better Conversations
LinkedIn CRM Sync to Save Time and Craft Better Conversations
Slide 53: Academy Expansion
Ecosystem is more Than Apps: Today, we have: Academy Expansion 100+ courses 6 languages 38% of our install base consumes that content monthly
Slide 54: How one of HubSpot's biggest customers customizes the customer platform
How one of HubSpot’s biggest customers customizes the customer platform
Slide 55: Chatbots Built with OpenAI to Augment Human Support
Chatbots Built with OpenAI to Augment Human Support
Slide 56: Value of Customer Platform
easy to use easy Value of to grow Customer Platform easy to run
Slide 57: Thank You
Thank You
Slide 58: Executing Durable and Efficient Growth
Executing Durable and Efficient Growth Kate Bueker Chief Financial Officer
Slide 59: Durable levers for growth, Balancing growth, Long-term shareholder value
Durable levers Balancing growth Long-term for growth and profitability shareholder value
Slide 60: Durable levers for growth, Balancing growth, Long-term shareholder value
Durable levers Balancing growth Long-term for growth and profitability shareholder value
Slide 61: Strong revenue growth
Strong revenue growth $2.1b1 33% CAGR $675m 2019 2023 2019 2023 1 Represents the mid-point of FY '23 guidance on an as-reported basis as of August 2, 2023
Slide 62: Strong customer growth
Strong customer growth 185k1 30% CAGR 73k 2019 1H’23 2019 2023 1 185K represents customer count through June 30, 2023.
Slide 63: Early stages of large TAM opportunity
Early stages of large TAM opportunity $77b 1 $51b 1 <10% Penetration across all product and customer segments 2023 2028 1 Includes Total Addressable Market for software in HubSpot’s core product groups including Marketing Hub, Sales Hub, Service Hub, Operations Hub and CMS Hub. Does not include Comm
Slide 64: Multiple levers for growth
Land Multiple levers for Expand growth Innovate
Slide 65: Multiple levers for growth
Land Multiple levers for Expand growth Innovate
Slide 66: Balanced growth drivers
Balanced growth drivers 57% 40% 50% International Partner New 43% 60% 50% U.S. Direct Install base U.S. vs. International; Direct vs. Solutions Partners; New vs. Install Base are calculated based on a % Net New ARR from end of December 2022 to end of June 2023. See definition of Net New ARR appendix
Slide 67: Expanding multi-hub lands
Expanding multi-hub lands Balanced front doors1 More multi-hub deals Other 63% Marketing Only 49% Multi-Hub 2+ Hubs2 32% 21% 3+ Hubs3 2019 1H’23 Sales Only 1 Professional and Enterprise Tiers only, excludes Starter. 2 Designates new ARR associated with 2+ Hub 3 Designates new ARR associated with 3+
Slide 68: Driving volume at the low end
Driving volume at the low end Strong Starter customer growth 79k 47% CAGR 21k 2019 1H’23 2019 1H’23
Slide 69: Driving value at the high end
Driving value at the high end Growing percentage of large deals 26% 1.7x 15% $3k+ MRR deals % New ARR 2019 1H’23 2019 1H '23
Slide 70: Multiple levers for growth
Land Multiple levers for Expand growth Innovate
Slide 71: Platform driving increased customer dollar retention
Platform driving increased customer dollar retention +3% 87% 84% 90% 3 Hub+1 customer dollar retention 2019 1H '23 1 Customers subscribed to three or more Hubs.
Slide 72: Diverse upgrade and downgrade drivers
Diverse upgrade and downgrade drivers Marketing contacts More macro sensitive Consumption-driven Seat expansion Edition upgrades Value-driven Less macro Cross-sell sensitive
Slide 73: Components of Net Revenue Retention
Components of Net Revenue Retention Value and churn more resilient 110% Consumption 104% Churn Value Churn 100% Value Consumption FY'19 FY'22 1H'23
Slide 74: World-class Engagement Hubs
World-class Engagement Hubs Marketing Hub Sales Hub Service Hub 20% 30% 40% YoY Growth YoY Growth YoY Growth CMS Hub Operations Hub 25% 100%+ YoY Growth YoY Growth
Slide 75: Significant opportunity for multi-hub adoption
Significant opportunity for multi-hub adoption 33% 50% #Hubs #Hubs of Customers of ARR 5 4 3 2 1 Customers1 ARR1 1 Professional and Enterprise Tiers only, excludes Starter.
Slide 76: Upgrade motions remain resilient
Upgrade motions remain resilient 53% CAGR 45% CAGR Starter to Professional1 Any edition to Enterprise1 Other Sales Marketing 2019 TTM1H’23 2019 TTM1H’23 Starter upgrade rate holding Expanding and diversifying steady, driving increased ARR upgrade motions to Enterprise 1 ARR from upgrades
Slide 77: Meaningful opportunity for seat expansion
Meaningful opportunity for seat expansion 1.7m Active users 1.1m Paid seats 140k Sales or Service Hub customers 2019 1H ‘23
Slide 78: Multiple levers for growth
Land Multiple levers for Expand growth Innovate
Slide 79: Driving value in existing Hubs
Driving value in existing Hubs Add value first before extracting value Key value additions Sales Hub price increase • Custom objects • Reporting • $150 per seat (up from $120) • Conversation intelligence • Playbooks • Effective 11/1/231 • Prospecting • Forecasting • Crafted data management • Pipelin
Slide 80: Planting new seeds
Planting new seeds Generative AI Commerce Robust product pipeline Payments Commerce Hub AI embedded everywhere Transaction-based monetization Monetization framework Multi-billion dollar TAM opportunity • Driving adoption at the low end • Differentiated value add features in higher priced tiers
Slide 81: Durable levers for growth, Balancing growth, Long-term shareholder value
Durable levers Balancing growth Long-term for growth and profitability shareholder value
Slide 82: Philosophy on balancing growth and profitability
Drive durable Philosophy revenue growth at scale on balancing growth and Generate operating profitability leverage as we scale toward long-term margin targets
Slide 83: Substantial margin expansion over the last five years
Substantial margin expansion over the last five years 14% Operating Profit 52% CAGR 8% OP 2019 1H '23 600 bps margin expansion 2019 2023
Slide 84: Long term financial targets remain unchanged
Long term financial targets remain unchanged Long Term 2019 20231 Target Model Gross Margin 82% 85% 81% - 83% R&D 18% 20% 20% % of revenue S&M 45% 43% 30% - 35% % of revenue G&A 11% 8% 8% % of revenue Operating 8% 14% 20% - 25% Margin 1 Long-Term Target Model: These estimates reflect our current ope
Slide 85: Long term financial targets remain unchanged
Long term financial targets remain unchanged 2026 Target Key 2019 20231 Model Variables Gross Margin 82% 85% R&D 18% 20% % of revenue S&M 45% 43% % of revenue G&A 11% 8% % of revenue Operating 8% 14% 18-20% Margin 1 Long-Term Target Model: These estimates reflect our current operating plan as of Sep
Slide 86: Long term financial targets remain unchanged
Long term financial targets remain unchanged 2026 Target Key 2019 20231 Model Variables Gross Margin 82% 85% 84% +Infrastructure optimization +Services & support leverage -Reliability, speed, security -Commerce R&D 18% 20% % of revenue S&M 45% 43% % of revenue G&A 11% 8% % of revenue Operating 8% 14
Slide 87: Long term financial targets remain unchanged
Long term financial targets remain unchanged 2026 Target Key 2019 20231 Model Variables Gross Margin 82% 85% 84% +Infrastructure optimization +Services & support leverage -Reliability, speed, security -Commerce R&D 18% 20% 20% Invest in R&D to fuel growth % of revenue S&M 45% 43% % of revenue G&A 11
Slide 88: Long term financial targets remain unchanged
Long term financial targets remain unchanged 2026 Target Key 2019 20231 Model Variables Gross Margin 82% 85% 84% +Infrastructure optimization +Services & support leverage -Reliability, speed, security -Commerce R&D 18% 20% 20% Invest in R&D to fuel growth % of revenue S&M 45% 43% 36% - 38% Digital a
Slide 89: Levers for S&M efficiency
Levers for S&M efficiency Today Goal 2026 Target Key Long Term 2019 2023f Model Variables Target Model • Starter acquisition • Grow top of funnel demand Gross Margin Digital-Driven 82% 85% • Commerce 84% • All +Infrastructure customer segments optimization 81% - 83% +Services & support leverages • C
Slide 90: Long term financial targets remain unchanged
Long term financial targets remain unchanged 2026 Target Key 2019 20231 Model Variables Gross Margin 82% 85% 84% +Infrastructure optimization +Services & support leverage -Reliability, speed, security -Commerce R&D 18% 20% 20% Invest in R&D to fuel growth % of revenue S&M 45% 43% 36% - 38% Digital a
Slide 91: Long term financial targets remain unchanged
Long term financial targets remain unchanged 2026 Target Key 2019 20231 Model Variables Gross Margin 82% 85% 84% +Infrastructure optimization +Services & support leverage -Reliability, speed, security -Commerce R&D 18% 20% 20% Invest in R&D to fuel growth % of revenue S&M 45% 43% 36% - 38% Digital a
Slide 92: Durable levers for growth, Balancing growth, Long-term shareholder value
Durable levers Balancing growth Long-term for growth and profitability shareholder value
Slide 93: Strong balance sheet and financial discipline
Strong balance sheet and financial discipline Track record of financial stewardship $1.7B 2-3% In cash, Q2 ‘23 Gross dilution outlook $684m FCF 1H ‘23 SBC2 moderating as a % of revenue
Slide 94: Strong shareholder value creation
Strong shareholder value creation 33% Revenue CAGR1 38% Annualized Shareholder Return1 600bps Margin Expansion1 >2.5x S&P 500 >2.0x NASDAQ Composite >2.0x Software Sector2 $684m FCF1 1 Period from 1/1/2019 - 6/30/2023. Source: HubSpot and Bloomberg 2 Software sector returns based on returns of iShar
Slide 95: Key takeaways
Key takeaways 1 Customer Platform driving strong and diverse growth 2 Early in a massive opportunity 3 On path toward long term financial targets 4 Delivering shareholder value
Slide 96: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations
Slide 97: GAAP to Non-GAAP Reconciliation
GAAP to Non- GAAP Reconciliation
Slide 98: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation
Slide 99: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation
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