HUBSPOT INC — Call Transcript 2026

All right. Hi everybody. Thanks for joining us. I am honored to have the CEO of HubSpot, Yamini Rangan, with us. Yamini, thanks so much for making the time to come down to beautiful Newport Beach, and appreciate you joining us. I think I'll kick off with probably the question everybody's been asking you, which is. Okay the AI strategy at HubSpot is resonating. You had the Spring Spotlight, you showcased a lot of new products. What's the main message or two that you want us to take away from the Spring Spotlight, and what resonated most with your customers? All right. Samad Samana, thank you so much for having us here, and it is a wonderful day. It's turning out to be beautiful outside. Thanks a lot for having us here. Spring Spotlight for HubSpot, and maybe just a step back, our AI strategy is to help our customers become much more productive with our platform and also deliver work for our customers. The second part, which is delivering work for our customers, comes in the form of many first-party agents that we deliver for our customers. At Spring Spotlight, we launched AEO. We'll talk about AEO Agent, we'll talk about Prospecting Agent and Data Agent. Just to step back, the set of first-party agents that we're delivering to our customers are, one, to help them resolve their support tickets. Two, on the sales side, is to help them drive much better outreach so that they can continue to build their pipeline. Three, on the marketing side, is to build awareness using new tools like AEO. One of the things that we have learned is that you need to have great context. Context delivers better outcomes, otherwise, AI is just going to deliver an output that looks like a slop, and there's a big difference between AI outputs and AI outcomes, and that's the set of innovation that we delivered at Spring Spotlight. Where are we seeing adoption and initial kind of reaction? I think AEO, we'll probably talk a little bit more about AEO. We announced a standalone product as well as capabilities of AEO built into Marketing Hub Pro and Enterprise. We're seeing a strong adoption in early trials there and continued adoption of the agents that we talked about, Customer Agent and Prospecting Agent. Great. Then, I think there's a lot of either confusion or still learning where we are in terms of the relationship between the LLMs and between the existing software platforms. What relationship does Hubs have with the LLM? Sam mentioned you by name on stage. Dario was at UNBOUND last year. This year's lineup for UNBOUND, hopefully everybody's there. I forget what the rebranding of the name is. UNBOUND. UNBOUND. There we go. Yes. I just didn't want to screw that up. That's all right. You have all these disruptors. Is it a complementary or competitive relationship? Just help people understand what they're misunderstanding. Absolutely complementary. I think for the last couple of years, every single time we've gotten the question about LLMs and HubSpot in particular, applications in general, we've maintained that it is a complementary relationship. Here's how I would say, if you think about an LLM, LLMs are trained on publicly available data on the internet, petabytes of publicly available data. HubSpot has the data and the context of how go-to-market teams operate in 300,000 customers. That is why it's complementary. You need the combination of LLM capabilities with the context of how sales or marketing or service and support functions within a company in order to deliver more growth and better leads. Ultimately, our customers don't care about AI for the sake of AI. They care about more leads, better awareness, closed pipeline, and better customer outcomes, and you need that context from HubSpot to be able to drive that. Here's the thing. We are partners with all of them. We have a deep partnership with Anthropic, with OpenAI, with Gemini, and we continue to work very closely with them. We understand where they're going in terms of their roadmap. They talk about us as the SMB partner, and so it is a very complementary relationship. The question in the market and the broader narrative is, are LLMs going to get so good in terms of capabilities that they just destroy the value of the application layer? This is where we have a point of view. The point of view is that you need probabilistic output of LLMs, but you need deterministic output within sales. If you are running sales and you are a CRO of a company, and you just run an LLM and you get a probabilistic answer of what your next forecast is going to be, it's not going to cut it. You're not going to be able to drive that. There's a combination of having both probabilistic as well as deterministic work. The other part is all of the workflows, the logic is within applications. What do I mean by that? You can go to an LLM and say, "Write me a blog." Pretty easy to write a blog. If you go to an LLM today and say, "Draw a campaign for me across five different channels, YouTube, LinkedIn, pick your channel, and I'm going to give you $1 million, and I want you to run this campaign across 10 million contacts that I have, and then make sure that the campaigns are attributed with the right revenue that they're driving," it has none of those capabilities. That's the logic that exists within applications. LLMs can call on those logic, they call it really well, but they don't have that logic, and that's again why it's complementary. The third thing that I would say is LLMs are single player. It's easy for one person to use an LLM and to share that output. Applications that drive growth are inherently multiplayer. If you have a sales team and the sales team has 50 reps, every rep's pipeline change every single day needs to be represented as a team pipeline roll-up, and that is not what an LLM does. Again, very complementary. Where I think is that LLM capabilities will continue to improve, but what HubSpot delivers on top of that is a growth context, knowing deep domain expertise within marketing, sales, and service, but also contextualizing it to the business that we serve. That's why it continues to be very exciting and also complementary. Bless you. There's another thing that you'd mentioned in a meeting I heard earlier, and I think it's important, which you were asked about the pain points that HubSpot solves that maybe are underappreciated that an LLM can't. I know you mentioned the context side, but I was wondering if you could dig a little bit deeper into the pain points that HubSpot uniquely solves that maybe an LLM can't today, like permissioning. Yeah, absolutely. The conversation that we were having is what are inherent value that HubSpot customers buy us for? The example that I would give is a marketing automation, right? Think about a team within marketing that has to figure out what are the set of campaigns that they need to drive in a particular quarter, across what channels, by allocating how much resources, and how many contacts is that going to reach in multiple languages across multiple regions. Think about the complexity of all of that. That is exactly what our solution provides, and that is not something that is easily extractable or easily done by an LLM. The second thing that I mentioned is also the permissions. You think about a sales rep that has access to run certain sequences and is part of a sales hierarchy. You need to know their role. You need to know their permission. You need to know which team they belong. If they change roles and go to another team, you need to know where they're now going to roll up to. All of those permissions, the security, the governance associated with the actions they can take, that belongs to an application layer. You think about the content, the conversations that applications have. That's the growth context. You think about the workflows and the logic that applications have. That is not immediately replaceable. You think about the multiplayer mode that we support with the right permissions. You put all of that together. This is why, again, going back to the point of is it one day that there's just one application which is an LLM. That does not seem like the right approach to think about what is happening within the space. Look, I'm old enough to remember when the hyperscalers are going to do everything, and I think we have more software than ever out there. Exactly. I think another area that's been a big focal point, and I think it was maybe even more so early last year, is on the disruption to SEO. Yeah agentic search. Sure. I know HubSpot recently, we mentioned AEO earlier. I was wondering if you could double-click into that. Yes. Explain why that's important, and how maybe customer behavior is changing and what the value of AEO is now in an LLM-centric world. Absolutely. The leads that used to get generated were from people searching on Google, clicking blue links, and coming to the website, and the industry calls it content leads, leads based on content. That as a source for the top of funnel is actually declining. An interesting statistic for HubSpot customers, we track all of the content leads. This year alone, the top of funnel content leads have dropped by 27% across HubSpot's customer base. You can begin to see that the content leads declining, which is basically SEO, is having a huge impact. Every B2B marketing person out there is now looking to diversify their sources to other areas. That is the same playbook that we've been on. We've diversified our set of sources. We had even more content leads, inbound leads that were part of our top of funnel. For the past two years, we've been on the journey to diversify our lead sources from inbound to using social media with YouTube presence, with LinkedIn presence, to newsletters, to podcasts, and now to AEO. The first big trend that's happening in marketing is diversification of top of funnel lead sources. That is the playbook that we launched with Loop. That is the set of products that we have within Marketing Hub. What is new and interesting is answer engine optimization, or AEO, which is how does a product or a brand show up in an LLM with citation? That is what AEO is. What we have found is that if you show up within an LLM answer, the conversion is 3x better. Not 3% better, like 3x better because the person that's actually doing the prompting is deeper in their search. They have much more specific questions, and whatever the answers they get, they tend to act faster from that, and so the conversion rate is higher. That is the reason why we launched a standalone tool for AEO. This was part of our spring Spotlight release, and what it does is for our customers, it'll say, what's their AI visibility? Basically, give it a set of prompts, and it'll say, "What is your share of voice? If someone asks this question in LLM, how many times do you show up?" That's the first thing it does. The second thing it does is it'll give you recommendations. You're not showing up in Reddit or this community, so make sure that your content is actually available, and that's the second. The third, which is coming pretty soon, is you can immediately use our content management tools to be able to drive content actions based on those recommendations. That's the AEO solution. There is going to be a time where every B2B company has to have AEO solutions. There's no other way because that's where the industry is going. We have a standalone tool, so customers can start with that, and it's also available as part of our Marketing Hub Pro and Enterprise. We think that this could be a new front door where people get started with AEO, and then when they begin to need to take like content actions, they can upgrade to Marketing Hub Pro and Enterprise. Pretty excited about that opportunity. Thanks for that. We've had all this technology transformation. You guys are driving the charge, but it's also led you some bold choices on the business side. Yes business decisions. Let's talk about the pricing model change. Yeah. There's been a lot of conversation around that. What were you seeing that drove you to move to outcome-based pricing for your Agents, and what are the early results that you're seeing from the change? Just to provide context to our pricing model, we have a combination of seats and credits. That's our pricing model. What we do is for anybody that gets a core seat or a sales or service seat, we provide included credits, which means you begin to start using AI features as well as agents. In addition to that, they can buy packs of additional credits. Credits could be bought in packs of like 100,000 and beyond. The way we think about credit consumption is that our first-party agents, the agents that HubSpot builds and we deliver work as outcomes, will be based on outcomes that we deliver. Makes logical sense, right? If our Customer Agent is resolving tickets, then we'll only charge when we resolve a ticket. That is literally the change that we made. If our Prospecting Agent is delivering a qualified lead, we will only charge when we deliver a qualified lead. I think that basically shows the confidence that we have within our product strategy and the level of outcomes that we are delivering for our customers based on that product strategy. We made those changes to really align our pricing mechanism to the product strategy and where we are going. In addition to that, there are other parts of our product as well as platform that will consume credits. A number of our customers build custom agents on top of HubSpot. Those are all just going to be based on credits consumed. Again, you'll have seats that have included credits. Credits can be consumed by first-party agents that deliver work. They can also be consumed through second-party and custom agents and other things within the platform. The combination of core seats and credits are kind of the emerging way in which we are monetizing AI across HubSpot. Yeah. Along with the model change, and I think there's just a lot of movement happening. Yeah you guys made some choices on the go-to-market side. Yeah concurrent with that. Yeah. Why was April the right time to invest in that? Yeah sales enablement, how should we think about that helping to accelerate AI traction in the quarters ahead? Yeah, absolutely. Let me unpack what we did and why that has a near-term impact in terms of net new ARR, sets us up. Coming into this year, we in general, we plan for a virtual kickoff in the first quarter and enablement in the second quarter. That has always been the model. It's not a new timing in terms of April. What was different this time is that we spent a lot of time transitioning our go-to-market teams to be able to position agents and therefore credits and really driving the AI adoption. There is a sales motion change that's happening, and we're ahead of that. Specifically, if I unpack it, in Q1 this year, we saw our customers really wanting proof of value of agents that are delivering work. What does that mean? It means that if they want to use Prospecting Agent, they want to make sure that the emails that the Prospecting Agent are writing is really what their BDR or their sales rep or their team would actually write, and they want to feel comfortable with that output. What we did was we actually gave a 28-day trial period for those types of agents. AEO Agent, Prospecting Agent, Customer Agent, we've given them trial periods. It has an impact of elongating sales cycles in the short term, but we intentionally made that choice in order to seed our customers with these agents so that they can continue to grow. That's like choice number one. The second thing is we did take our sales team, we drove a lot of enablement and helping them communicate the value of agents and credits, and that has a short-term impact in terms of the quarter. Also getting them to understand the pricing model and where we are going with outcome-based pricing and getting comfort in that. Now, look, it has an impact near term, and we are very transparent and clear about that. The rationale is this, we are in the very early stages of AI transformation. It's like mile three in a 26.2 mi of like a marathon race that you're running, and what is important at this stage is removing blockers for customers, seeding the right agentic use cases, and making sure that the outcomes that we deliver are super clear. When we do this in the early stage, we know that the right adoption will result from the changes that we're making. A set of intentional changes to drive AI adoption over the following quarters. Very helpful. I know we've talked a lot about the innovation that you're doing on behalf of customers. Yes The company itself is internally transforming. Yep how you operate, and I know Dharmesh also speaks a lot to this in different forums as of you. I'm curious, just as you guys are thinking about drinking your own champagne. Yes I'll use that terminology, what type of transformation are you seeing from an internal perspective from AI? What tools is HubSpot unleashing for its own workforce? Yeah. As much as we have driven AI transformation within the product and the platform, we are driving internal transformation with AI, and we're probably bleeding-edge adopters of AI. That has two benefits. One is as we experiment, iterate, and scale with AI, those translate into product in terms of the feedback directly in go-to-market. Second, we are much more authentic in communicating what works and what doesn't work with our customers. That's why we are constantly on the bleeding edge. Specifically in go-to-market, I would point to a handful of areas where we have seen really good results. The first is in the marketing side, if you go to our website, 82% of web chats are handled by AI, and we have increased that percentage pretty significantly over the past few quarters. That is something that, again, translates into product that we can deliver for customers. The second is AEO, which we talked about even before we launched this AEO product. For the last probably six quarters, we have experimented with AEO. Our leads coming in from AEO has really grown. Pretty small base, but grown significantly over the past few quarters, and we have continued to be number one in CRM in terms of AI visibility. Those two are areas. In sales, Prospecting Agent, using intent sources and then driving emails so that our BDR teams and sales teams can actually have broader outreach as well as assistance in terms of deals closing, as well as summarizing. All of that we are doing, which has increased the productivity on the sales side pretty meaningfully over the last few quarters. On support, I'll say that we've not hired a single tier 1 support agent since 2024, and we've been able to use that productivity in other areas of the business. In go-to-market, we are really in the bleeding edge of leveraging both agents as well as assistants on top of HubSpot's agentic platform to drive our own productivity. I'd say more importantly, three and a half years into leveraging AI on the bleeding edge, it's one thing to get individual productivity with AI, right? We are seeing that. You're using an LLM. I use LLM to write a whole bunch of things, and of course, that improves it. There's a difference from going from individual productivity to institutional productivity, and that requires reimagining teams, reimagining workflows, providing a common context and a set of areas that we can go deep, and that's the learning, and that's kind of the vision of where we are going next. We are driving the next level of transformation internally within HubSpot to be able to reimagine how we get work done. Listen, it's something that we're grappling with every day. Yeah a little side chat. Yes We've gotten five new tools, but the hours in my day haven't increased, and I think that's something we're all kind of struggling with right now to unlock that productivity. Exactly We are seeing, you mentioned not having hired in support for some amount of time, and certainly the leverage is there, right? Yes. Recently, the company took up its full year margin forecast. How are you thinking about the productivity gains and letting that margin flow through versus reinvesting, given just the big opportunity ahead? How do you balance that from the CEO's perspective? Yeah. You balance it very carefully. I think the way we think about it is that our revenue growth continues to grow, and there's a gap between net revenue growth and headcount growth. We've been very, very disciplined in terms of where we hire and what kind of talent we hire, and how do we drive a level of AI fluency within the talent so that they can drive higher productivity, and that's exactly what you saw. At Analyst Day last year, we provided a midterm target range in terms of non-GAAP operating margin of 20%-22%, and we reached it a year ahead. That is at the same time when we are investing in agentic coding and our gross margins have gone down, right? We mentioned in Q1 that our gross margin went down. At the same time, we increased the full-year operating margin guidance for the year, and that is what we are doing. The way we are accomplishing it is we'll continue to invest in AI innovation. We'll continue to invest in agentic coding that drives our developer productivity. At the same time, we're going to find through disciplined hiring as well as transforming our internal productivity and tools to get the operating margin leverage, and we're more confident now in terms of setting better operating margin targets for both the midterm as well as the longer term, and you'll hear more about this at our upcoming Analyst Day at UNBOUND. Awesome. Well, Yamini, thank you so much for joining us. Like you mentioned, I look forward to seeing you in a couple of months at UNBOUND. In the meanwhile, we hope that HubSpot does really well. We're big fans. Thank you. Thank you for joining us. Really appreciate the support. Thank you, everyone.

Speaker 1: All right. Hi everybody. Thanks for joining us. I am honored to have the CEO of HubSpot, Yamini Rangan, with us. Yamini, thanks so much for making the time to come down to beautiful Newport Beach, and appreciate you joining us. I think I'll kick off with probably the question everybody's been asking you, which is. All right. all right Hi everybody. hi everybody Thanks for joining us. thanks for joining us I am honored to have the CEO of HubSpot, Yamini Rangan, with us. i am honored to have the ceo of hubspot yamini rangan with us Yamini, thanks so much for making the time to come down to beautiful Newport Beach, and appreciate you joining us. yamini thanks so much for making the time to come down to beautiful newport beach and appreciate you joining us I think I'll kick off with probably the question everybody's been asking you, which is. i think i'll kick off with probably the question everybody's been asking you which is

Speaker 2: Okay Okay okay

Speaker 1: the AI strategy at HubSpot is resonating. You had the Spring Spotlight, you showcased a lot of new products. What's the main message or two that you want us to take away from the Spring Spotlight, and what resonated most with your customers? the AI strategy at HubSpot is resonating. the ai strategy at hubspot is resonating You had the Spring Spotlight, you showcased a lot of new products. you had the spring spotlight you showcased a lot of new products What's the main message or two that you want us to take away from the Spring Spotlight, and what resonated most with your customers? what's the main message or two that you want us to take away from the spring spotlight and what resonated most with your customers

Speaker 2: All right. Samad Samana, thank you so much for having us here, and it is a wonderful day. It's turning out to be beautiful outside. Thanks a lot for having us here. Spring Spotlight for HubSpot, and maybe just a step back, our AI strategy is to help our customers become much more productive with our platform and also deliver work for our customers. The second part, which is delivering work for our customers, comes in the form of many first-party agents that we deliver for our customers. At Spring Spotlight, we launched AEO. We'll talk about AEO Agent, we'll talk about Prospecting Agent and Data Agent. Just to step back, the set of first-party agents that we're delivering to our customers are, one, to help them resolve their support tickets. All right. all right Samad Samana, thank you so much for having us here, and it is a wonderful day. samad samana thank you so much for having us here and it is a wonderful day It's turning out to be beautiful outside. it's turning out to be beautiful outside Thanks a lot for having us here. thanks a lot for having us here Spring Spotlight for HubSpot, and maybe just a step back, our AI strategy is to help our customers become much more productive with our platform and also deliver work for our customers. spring spotlight for hubspot and maybe just a step back our ai strategy is to help our customers become much more productive with our platform and also deliver work for our customers The second part, which is delivering work for our customers, comes in the form of many first-party agents that we deliver for our customers. the second part which is delivering work for our customers comes in the form of many first-party agents that we deliver for our customers At Spring Spotlight, we launched AEO. at spring spotlight we launched aeo We'll talk about AEO Agent, we'll talk about Prospecting Agent and Data Agent. we'll talk about aeo agent we'll talk about prospecting agent and data agent Just to step back, the set of first-party agents that we're delivering to our customers are, one, to help them resolve their support tickets. just to step back the set of first-party agents that we're delivering to our customers are one to help them resolve their support tickets Two, on the sales side, is to help them drive much better outreach so that they can continue to build their pipeline. Three, on the marketing side, is to build awareness using new tools like AEO. One of the things that we have learned is that you need to have great context. Context delivers better outcomes, otherwise, AI is just going to deliver an output that looks like a slop, and there's a big difference between AI outputs and AI outcomes, and that's the set of innovation that we delivered at Spring Spotlight. Where are we seeing adoption and initial kind of reaction? Two, on the sales side, is to help them drive much better outreach so that they can continue to build their pipeline. two on the sales side is to help them drive much better outreach so that they can continue to build their pipeline Three, on the marketing side, is to build awareness using new tools like AEO. three on the marketing side is to build awareness using new tools like aeo One of the things that we have learned is that you need to have great context. one of the things that we have learned is that you need to have great context Context delivers better outcomes, otherwise, AI is just going to deliver an output that looks like a slop, and there's a big difference between AI outputs and AI outcomes, and that's the set of innovation that we delivered at Spring Spotlight. context delivers better outcomes otherwise ai is just going to deliver an output that looks like a slop and there's a big difference between ai outputs and ai outcomes and that's the set of innovation that we delivered at spring spotlight Where are we seeing adoption and initial kind of reaction? where are we seeing adoption and initial kind of reaction I think AEO, we'll probably talk a little bit more about AEO. We announced a standalone product as well as capabilities of AEO built into Marketing Hub Pro and Enterprise. We're seeing a strong adoption in early trials there and continued adoption of the agents that we talked about, Customer Agent and Prospecting Agent. I think AEO, we'll probably talk a little bit more about AEO. i think aeo we'll probably talk a little bit more about aeo We announced a standalone product as well as capabilities of AEO built into Marketing Hub Pro and Enterprise. we announced a standalone product as well as capabilities of aeo built into marketing hub pro and enterprise We're seeing a strong adoption in early trials there and continued adoption of the agents that we talked about, Customer Agent and Prospecting Agent. we're seeing a strong adoption in early trials there and continued adoption of the agents that we talked about customer agent and prospecting agent

Speaker 1: Great. Then, I think there's a lot of either confusion or still learning where we are in terms of the relationship between the LLMs and between the existing software platforms. What relationship does Hubs have with the LLM? Sam mentioned you by name on stage. Dario was at UNBOUND last year. This year's lineup for UNBOUND, hopefully everybody's there. I forget what the rebranding of the name is. Great. great Then, I think there's a lot of either confusion or still learning where we are in terms of the relationship between the LLMs and between the existing software platforms. then i think there's a lot of either confusion or still learning where we are in terms of the relationship between the llms and between the existing software platforms What relationship does Hubs have with the LLM? what relationship does hubs have with the llm Sam mentioned you by name on stage. sam mentioned you by name on stage Dario was at UNBOUND last year. dario was at unbound last year This year's lineup for UNBOUND, hopefully everybody's there. this year's lineup for unbound hopefully everybody's there I forget what the rebranding of the name is. i forget what the rebranding of the name is

Speaker 2: UNBOUND. UNBOUND. unbound

Speaker 1: UNBOUND. There we go. UNBOUND. unbound There we go. there we go

Speaker 2: Yes. Yes. yes

Speaker 1: I just didn't want to screw that up. I just didn't want to screw that up. i just didn't want to screw that up

Speaker 2: That's all right. That's all right. that's all right

Speaker 1: You have all these disruptors. Is it a complementary or competitive relationship? Just help people understand what they're misunderstanding. You have all these disruptors. you have all these disruptors Is it a complementary or competitive relationship? is it a complementary or competitive relationship Just help people understand what they're misunderstanding. just help people understand what they're misunderstanding

Speaker 2: Absolutely complementary. I think for the last couple of years, every single time we've gotten the question about LLMs and HubSpot in particular, applications in general, we've maintained that it is a complementary relationship. Here's how I would say, if you think about an LLM, LLMs are trained on publicly available data on the internet, petabytes of publicly available data. HubSpot has the data and the context of how go-to-market teams operate in 300,000 customers. That is why it's complementary. You need the combination of LLM capabilities with the context of how sales or marketing or service and support functions within a company in order to deliver more growth and better leads. Ultimately, our customers don't care about AI for the sake of AI. Absolutely complementary. absolutely complementary I think for the last couple of years, every single time we've gotten the question about LLMs and HubSpot in particular, applications in general, we've maintained that it is a complementary relationship. i think for the last couple of years every single time we've gotten the question about llms and hubspot in particular applications in general we've maintained that it is a complementary relationship Here's how I would say, if you think about an LLM, LLMs are trained on publicly available data on the internet, petabytes of publicly available data. here's how i would say if you think about an llm llms are trained on publicly available data on the internet petabytes of publicly available data HubSpot has the data and the context of how go-to-market teams operate in 300,000 customers. hubspot has the data and the context of how go-to-market teams operate in 300,000 customers That is why it's complementary. that is why it's complementary You need the combination of LLM capabilities with the context of how sales or marketing or service and support functions within a company in order to deliver more growth and better leads. you need the combination of llm capabilities with the context of how sales or marketing or service and support functions within a company in order to deliver more growth and better leads Ultimately, our customers don't care about AI for the sake of AI. ultimately our customers don't care about ai for the sake of ai They care about more leads, better awareness, closed pipeline, and better customer outcomes, and you need that context from HubSpot to be able to drive that. Here's the thing. We are partners with all of them. We have a deep partnership with Anthropic, with OpenAI, with Gemini, and we continue to work very closely with them. We understand where they're going in terms of their roadmap. They talk about us as the SMB partner, and so it is a very complementary relationship. The question in the market and the broader narrative is, are LLMs going to get so good in terms of capabilities that they just destroy the value of the application layer? This is where we have a point of view. The point of view is that you need probabilistic output of LLMs, but you need deterministic output within sales. They care about more leads, better awareness, closed pipeline, and better customer outcomes, and you need that context from HubSpot to be able to drive that. they care about more leads better awareness closed pipeline and better customer outcomes and you need that context from hubspot to be able to drive that Here's the thing. here's the thing We are partners with all of them. we are partners with all of them We have a deep partnership with Anthropic, with OpenAI, with Gemini, and we continue to work very closely with them. we have a deep partnership with anthropic with openai with gemini and we continue to work very closely with them We understand where they're going in terms of their roadmap. we understand where they're going in terms of their roadmap They talk about us as the SMB partner, and so it is a very complementary relationship. they talk about us as the smb partner and so it is a very complementary relationship The question in the market and the broader narrative is, are LLMs going to get so good in terms of capabilities that they just destroy the value of the application layer? the question in the market and the broader narrative is are llms going to get so good in terms of capabilities that they just destroy the value of the application layer This is where we have a point of view. this is where we have a point of view The point of view is that you need probabilistic output of LLMs, but you need deterministic output within sales. the point of view is that you need probabilistic output of llms but you need deterministic output within sales If you are running sales and you are a CRO of a company, and you just run an LLM and you get a probabilistic answer of what your next forecast is going to be, it's not going to cut it. You're not going to be able to drive that. There's a combination of having both probabilistic as well as deterministic work. The other part is all of the workflows, the logic is within applications. What do I mean by that? You can go to an LLM and say, "Write me a blog." Pretty easy to write a blog. If you are running sales and you are a CRO of a company, and you just run an LLM and you get a probabilistic answer of what your next forecast is going to be, it's not going to cut it. if you are running sales and you are a cro of a company and you just run an llm and you get a probabilistic answer of what your next forecast is going to be it's not going to cut it You're not going to be able to drive that. you're not going to be able to drive that There's a combination of having both probabilistic as well as deterministic work. there's a combination of having both probabilistic as well as deterministic work The other part is all of the workflows, the logic is within applications. the other part is all of the workflows the logic is within applications What do I mean by that? what do i mean by that You can go to an LLM and say, "Write me a blog." Pretty easy to write a blog. you can go to an llm and say "write me a blog." pretty easy to write a blog If you go to an LLM today and say, "Draw a campaign for me across five different channels, YouTube, LinkedIn, pick your channel, and I'm going to give you $1 million, and I want you to run this campaign across 10 million contacts that I have, and then make sure that the campaigns are attributed with the right revenue that they're driving," it has none of those capabilities. That's the logic that exists within applications. LLMs can call on those logic, they call it really well, but they don't have that logic, and that's again why it's complementary. The third thing that I would say is LLMs are single player. It's easy for one person to use an LLM and to share that output. Applications that drive growth are inherently multiplayer. If you go to an LLM today and say, "Draw a campaign for me across five different channels, YouTube, LinkedIn, pick your channel, and I'm going to give you $1 million, and I want you to run this campaign across 10 million contacts that I have, and then make sure that the campaigns are attributed with the right revenue that they're driving," it has none of those capabilities. if you go to an llm today and say "draw a campaign for me across five different channels youtube linkedin pick your channel and i'm going to give you $1 million and i want you to run this campaign across 10 million contacts that i have and then make sure that the campaigns are attributed with the right revenue that they're driving," it has none of those capabilities That's the logic that exists within applications. that's the logic that exists within applications LLMs can call on those logic, they call it really well, but they don't have that logic, and that's again why it's complementary. llms can call on those logic they call it really well but they don't have that logic and that's again why it's complementary The third thing that I would say is LLMs are single player. It's easy for one person to use an LLM and to share that output. the third thing that i would say is llms are single player. it's easy for one person to use an llm and to share that output Applications that drive growth are inherently multiplayer. applications that drive growth are inherently multiplayer If you have a sales team and the sales team has 50 reps, every rep's pipeline change every single day needs to be represented as a team pipeline roll-up, and that is not what an LLM does. Again, very complementary. Where I think is that LLM capabilities will continue to improve, but what HubSpot delivers on top of that is a growth context, knowing deep domain expertise within marketing, sales, and service, but also contextualizing it to the business that we serve. That's why it continues to be very exciting and also complementary. If you have a sales team and the sales team has 50 reps, every rep's pipeline change every single day needs to be represented as a team pipeline roll-up, and that is not what an LLM does. if you have a sales team and the sales team has 50 reps every rep's pipeline change every single day needs to be represented as a team pipeline roll-up and that is not what an llm does Again, very complementary. again very complementary Where I think is that LLM capabilities will continue to improve, but what HubSpot delivers on top of that is a growth context, knowing deep domain expertise within marketing, sales, and service, but also contextualizing it to the business that we serve. where i think is that llm capabilities will continue to improve but what hubspot delivers on top of that is a growth context knowing deep domain expertise within marketing sales and service but also contextualizing it to the business that we serve That's why it continues to be very exciting and also complementary. that's why it continues to be very exciting and also complementary

Speaker 1: Bless you. There's another thing that you'd mentioned in a meeting I heard earlier, and I think it's important, which you were asked about the pain points that HubSpot solves that maybe are underappreciated that an LLM can't. I know you mentioned the context side, but I was wondering if you could dig a little bit deeper into the pain points that HubSpot uniquely solves that maybe an LLM can't today, like permissioning. Bless you. bless you There's another thing that you'd mentioned in a meeting I heard earlier, and I think it's important, which you were asked about the pain points that HubSpot solves that maybe are underappreciated that an LLM can't. there's another thing that you'd mentioned in a meeting i heard earlier and i think it's important which you were asked about the pain points that hubspot solves that maybe are underappreciated that an llm can't I know you mentioned the context side, but I was wondering if you could dig a little bit deeper into the pain points that HubSpot uniquely solves that maybe an LLM can't today, like permissioning. i know you mentioned the context side but i was wondering if you could dig a little bit deeper into the pain points that hubspot uniquely solves that maybe an llm can't today like permissioning

Speaker 2: Yeah, absolutely. The conversation that we were having is what are inherent value that HubSpot customers buy us for? The example that I would give is a marketing automation, right? Think about a team within marketing that has to figure out what are the set of campaigns that they need to drive in a particular quarter, across what channels, by allocating how much resources, and how many contacts is that going to reach in multiple languages across multiple regions. Think about the complexity of all of that. That is exactly what our solution provides, and that is not something that is easily extractable or easily done by an LLM. The second thing that I mentioned is also the permissions. You think about a sales rep that has access to run certain sequences and is part of a sales hierarchy. You need to know their role. Yeah, absolutely. yeah absolutely The conversation that we were having is what are inherent value that HubSpot customers buy us for? the conversation that we were having is what are inherent value that hubspot customers buy us for The example that I would give is a marketing automation, right? the example that i would give is a marketing automation right Think about a team within marketing that has to figure out what are the set of campaigns that they need to drive in a particular quarter, across what channels, by allocating how much resources, and how many contacts is that going to reach in multiple languages across multiple regions. think about a team within marketing that has to figure out what are the set of campaigns that they need to drive in a particular quarter across what channels by allocating how much resources and how many contacts is that going to reach in multiple languages across multiple regions Think about the complexity of all of that. think about the complexity of all of that That is exactly what our solution provides, and that is not something that is easily extractable or easily done by an LLM. that is exactly what our solution provides and that is not something that is easily extractable or easily done by an llm The second thing that I mentioned is also the permissions. the second thing that i mentioned is also the permissions You think about a sales rep that has access to run certain sequences and is part of a sales hierarchy. you think about a sales rep that has access to run certain sequences and is part of a sales hierarchy You need to know their role. you need to know their role You need to know their permission. You need to know which team they belong. If they change roles and go to another team, you need to know where they're now going to roll up to. All of those permissions, the security, the governance associated with the actions they can take, that belongs to an application layer. You think about the content, the conversations that applications have. That's the growth context. You think about the workflows and the logic that applications have. That is not immediately replaceable. You think about the multiplayer mode that we support with the right permissions. You put all of that together. This is why, again, going back to the point of is it one day that there's just one application which is an LLM. That does not seem like the right approach to think about what is happening within the space. You need to know their permission. you need to know their permission You need to know which team they belong. you need to know which team they belong If they change roles and go to another team, you need to know where they're now going to roll up to. if they change roles and go to another team you need to know where they're now going to roll up to All of those permissions, the security, the governance associated with the actions they can take, that belongs to an application layer. all of those permissions the security the governance associated with the actions they can take that belongs to an application layer You think about the content, the conversations that applications have. you think about the content the conversations that applications have That's the growth context. that's the growth context You think about the workflows and the logic that applications have. you think about the workflows and the logic that applications have That is not immediately replaceable. that is not immediately replaceable You think about the multiplayer mode that we support with the right permissions. you think about the multiplayer mode that we support with the right permissions You put all of that together. you put all of that together This is why, again, going back to the point of is it one day that there's just one application which is an LLM. this is why again going back to the point of is it one day that there's just one application which is an llm That does not seem like the right approach to think about what is happening within the space. that does not seem like the right approach to think about what is happening within the space

Speaker 1: Look, I'm old enough to remember when the hyperscalers are going to do everything, and I think we have more software than ever out there. Look, I'm old enough to remember when the hyperscalers are going to do everything, and I think we have more software than ever out there. look i'm old enough to remember when the hyperscalers are going to do everything and i think we have more software than ever out there

Speaker 2: Exactly. Exactly. exactly

Speaker 1: I think another area that's been a big focal point, and I think it was maybe even more so early last year, is on the disruption to SEO. I think another area that's been a big focal point, and I think it was maybe even more so early last year, is on the disruption to SEO. i think another area that's been a big focal point and i think it was maybe even more so early last year is on the disruption to seo

Speaker 2: Yeah Yeah yeah

Speaker 1: agentic search. agentic search. agentic search

Speaker 2: Sure. Sure. sure

Speaker 1: I know HubSpot recently, we mentioned AEO earlier. I was wondering if you could double-click into that. I know HubSpot recently, we mentioned AEO earlier. i know hubspot recently we mentioned aeo earlier I was wondering if you could double-click into that. i was wondering if you could double-click into that

Speaker 2: Yes. Yes. yes

Speaker 1: Explain why that's important, and how maybe customer behavior is changing and what the value of AEO is now in an LLM-centric world. Explain why that's important, and how maybe customer behavior is changing and what the value of AEO is now in an LLM-centric world. explain why that's important and how maybe customer behavior is changing and what the value of aeo is now in an llm-centric world

Speaker 2: Absolutely. The leads that used to get generated were from people searching on Google, clicking blue links, and coming to the website, and the industry calls it content leads, leads based on content. That as a source for the top of funnel is actually declining. An interesting statistic for HubSpot customers, we track all of the content leads. This year alone, the top of funnel content leads have dropped by 27% across HubSpot's customer base. You can begin to see that the content leads declining, which is basically SEO, is having a huge impact. Every B2B marketing person out there is now looking to diversify their sources to other areas. That is the same playbook that we've been on. We've diversified our set of sources. We had even more content leads, inbound leads that were part of our top of funnel. Absolutely. absolutely The leads that used to get generated were from people searching on Google, clicking blue links, and coming to the website, and the industry calls it content leads, leads based on content. the leads that used to get generated were from people searching on google clicking blue links and coming to the website and the industry calls it content leads, leads based on content That as a source for the top of funnel is actually declining. that as a source for the top of funnel is actually declining An interesting statistic for HubSpot customers, we track all of the content leads. an interesting statistic for hubspot customers we track all of the content leads This year alone, the top of funnel content leads have dropped by 27% across HubSpot's customer base. this year alone the top of funnel content leads have dropped by 27% across hubspot's customer base You can begin to see that the content leads declining, which is basically SEO, is having a huge impact. you can begin to see that the content leads declining which is basically seo is having a huge impact Every B2B marketing person out there is now looking to diversify their sources to other areas. every b2b marketing person out there is now looking to diversify their sources to other areas That is the same playbook that we've been on. that is the same playbook that we've been on We've diversified our set of sources. we've diversified our set of sources We had even more content leads, inbound leads that were part of our top of funnel. we had even more content leads inbound leads that were part of our top of funnel For the past two years, we've been on the journey to diversify our lead sources from inbound to using social media with YouTube presence, with LinkedIn presence, to newsletters, to podcasts, and now to AEO. The first big trend that's happening in marketing is diversification of top of funnel lead sources. That is the playbook that we launched with Loop. That is the set of products that we have within Marketing Hub. What is new and interesting is answer engine optimization, or AEO, which is how does a product or a brand show up in an LLM with citation? That is what AEO is. What we have found is that if you show up within an LLM answer, the conversion is 3x better. Not 3% better, like 3x better because the person that's actually doing the prompting is deeper in their search. For the past two years, we've been on the journey to diversify our lead sources from inbound to using social media with YouTube presence, with LinkedIn presence, to newsletters, to podcasts, and now to AEO. for the past two years we've been on the journey to diversify our lead sources from inbound to using social media with youtube presence with linkedin presence to newsletters to podcasts and now to aeo The first big trend that's happening in marketing is diversification of top of funnel lead sources. the first big trend that's happening in marketing is diversification of top of funnel lead sources That is the playbook that we launched with Loop. that is the playbook that we launched with loop That is the set of products that we have within Marketing Hub. that is the set of products that we have within marketing hub What is new and interesting is answer engine optimization, or AEO, which is how does a product or a brand show up in an LLM with citation? what is new and interesting is answer engine optimization or aeo which is how does a product or a brand show up in an llm with citation That is what AEO is. that is what aeo is What we have found is that if you show up within an LLM answer, the conversion is 3x better. what we have found is that if you show up within an llm answer the conversion is 3x better Not 3% better, like 3x better because the person that's actually doing the prompting is deeper in their search. not 3% better like 3x better because the person that's actually doing the prompting is deeper in their search They have much more specific questions, and whatever the answers they get, they tend to act faster from that, and so the conversion rate is higher. That is the reason why we launched a standalone tool for AEO. This was part of our spring Spotlight release, and what it does is for our customers, it'll say, what's their AI visibility? Basically, give it a set of prompts, and it'll say, "What is your share of voice? If someone asks this question in LLM, how many times do you show up?" That's the first thing it does. The second thing it does is it'll give you recommendations. You're not showing up in Reddit or this community, so make sure that your content is actually available, and that's the second. They have much more specific questions, and whatever the answers they get, they tend to act faster from that, and so the conversion rate is higher. they have much more specific questions and whatever the answers they get they tend to act faster from that and so the conversion rate is higher That is the reason why we launched a standalone tool for AEO. that is the reason why we launched a standalone tool for aeo This was part of our spring Spotlight release, and what it does is for our customers, it'll say, what's their AI visibility? this was part of our spring spotlight release and what it does is for our customers it'll say what's their ai visibility Basically, give it a set of prompts, and it'll say, "What is your share of voice? basically give it a set of prompts and it'll say "what is your share of voice If someone asks this question in LLM, how many times do you show up?" That's the first thing it does. if someone asks this question in llm how many times do you show up?" that's the first thing it does The second thing it does is it'll give you recommendations. the second thing it does is it'll give you recommendations You're not showing up in Reddit or this community, so make sure that your content is actually available, and that's the second. you're not showing up in reddit or this community so make sure that your content is actually available and that's the second The third, which is coming pretty soon, is you can immediately use our content management tools to be able to drive content actions based on those recommendations. That's the AEO solution. There is going to be a time where every B2B company has to have AEO solutions. There's no other way because that's where the industry is going. We have a standalone tool, so customers can start with that, and it's also available as part of our Marketing Hub Pro and Enterprise. We think that this could be a new front door where people get started with AEO, and then when they begin to need to take like content actions, they can upgrade to Marketing Hub Pro and Enterprise. Pretty excited about that opportunity. The third, which is coming pretty soon, is you can immediately use our content management tools to be able to drive content actions based on those recommendations. the third which is coming pretty soon is you can immediately use our content management tools to be able to drive content actions based on those recommendations That's the AEO solution. that's the aeo solution There is going to be a time where every B2B company has to have AEO solutions. there is going to be a time where every b2b company has to have aeo solutions There's no other way because that's where the industry is going. there's no other way because that's where the industry is going We have a standalone tool, so customers can start with that, and it's also available as part of our Marketing Hub Pro and Enterprise. we have a standalone tool so customers can start with that and it's also available as part of our marketing hub pro and enterprise We think that this could be a new front door where people get started with AEO, and then when they begin to need to take like content actions, they can upgrade to Marketing Hub Pro and Enterprise. we think that this could be a new front door where people get started with aeo and then when they begin to need to take like content actions they can upgrade to marketing hub pro and enterprise Pretty excited about that opportunity. pretty excited about that opportunity

Speaker 1: Thanks for that. We've had all this technology transformation. You guys are driving the charge, but it's also led you some bold choices on the business side. Thanks for that. thanks for that We've had all this technology transformation. we've had all this technology transformation You guys are driving the charge, but it's also led you some bold choices on the business side. you guys are driving the charge but it's also led you some bold choices on the business side

Speaker 2: Yes Yes yes

Speaker 1: business decisions. Let's talk about the pricing model change. business decisions. business decisions Let's talk about the pricing model change. let's talk about the pricing model change

Speaker 2: Yeah. Yeah. yeah

Speaker 1: There's been a lot of conversation around that. What were you seeing that drove you to move to outcome-based pricing for your Agents, and what are the early results that you're seeing from the change? There's been a lot of conversation around that. there's been a lot of conversation around that What were you seeing that drove you to move to outcome-based pricing for your Agents, and what are the early results that you're seeing from the change? what were you seeing that drove you to move to outcome-based pricing for your agents and what are the early results that you're seeing from the change

Speaker 2: Just to provide context to our pricing model, we have a combination of seats and credits. That's our pricing model. What we do is for anybody that gets a core seat or a sales or service seat, we provide included credits, which means you begin to start using AI features as well as agents. In addition to that, they can buy packs of additional credits. Credits could be bought in packs of like 100,000 and beyond. The way we think about credit consumption is that our first-party agents, the agents that HubSpot builds and we deliver work as outcomes, will be based on outcomes that we deliver. Makes logical sense, right? If our Customer Agent is resolving tickets, then we'll only charge when we resolve a ticket. That is literally the change that we made. Just to provide context to our pricing model, we have a combination of seats and credits. just to provide context to our pricing model we have a combination of seats and credits That's our pricing model. that's our pricing model What we do is for anybody that gets a core seat or a sales or service seat, we provide included credits, which means you begin to start using AI features as well as agents. what we do is for anybody that gets a core seat or a sales or service seat we provide included credits which means you begin to start using ai features as well as agents In addition to that, they can buy packs of additional credits. in addition to that they can buy packs of additional credits Credits could be bought in packs of like 100,000 and beyond. credits could be bought in packs of like 100,000 and beyond The way we think about credit consumption is that our first-party agents, the agents that HubSpot builds and we deliver work as outcomes, will be based on outcomes that we deliver. the way we think about credit consumption is that our first-party agents the agents that hubspot builds and we deliver work as outcomes will be based on outcomes that we deliver Makes logical sense, right? makes logical sense right If our Customer Agent is resolving tickets, then we'll only charge when we resolve a ticket. if our customer agent is resolving tickets then we'll only charge when we resolve a ticket That is literally the change that we made. that is literally the change that we made If our Prospecting Agent is delivering a qualified lead, we will only charge when we deliver a qualified lead. I think that basically shows the confidence that we have within our product strategy and the level of outcomes that we are delivering for our customers based on that product strategy. We made those changes to really align our pricing mechanism to the product strategy and where we are going. In addition to that, there are other parts of our product as well as platform that will consume credits. A number of our customers build custom agents on top of HubSpot. Those are all just going to be based on credits consumed. Again, you'll have seats that have included credits. Credits can be consumed by first-party agents that deliver work. They can also be consumed through second-party and custom agents and other things within the platform. If our Prospecting Agent is delivering a qualified lead, we will only charge when we deliver a qualified lead. if our prospecting agent is delivering a qualified lead we will only charge when we deliver a qualified lead I think that basically shows the confidence that we have within our product strategy and the level of outcomes that we are delivering for our customers based on that product strategy. i think that basically shows the confidence that we have within our product strategy and the level of outcomes that we are delivering for our customers based on that product strategy We made those changes to really align our pricing mechanism to the product strategy and where we are going. we made those changes to really align our pricing mechanism to the product strategy and where we are going In addition to that, there are other parts of our product as well as platform that will consume credits. in addition to that there are other parts of our product as well as platform that will consume credits A number of our customers build custom agents on top of HubSpot. a number of our customers build custom agents on top of hubspot Those are all just going to be based on credits consumed. those are all just going to be based on credits consumed Again, you'll have seats that have included credits. again you'll have seats that have included credits Credits can be consumed by first-party agents that deliver work. credits can be consumed by first-party agents that deliver work They can also be consumed through second-party and custom agents and other things within the platform. they can also be consumed through second-party and custom agents and other things within the platform The combination of core seats and credits are kind of the emerging way in which we are monetizing AI across HubSpot. The combination of core seats and credits are kind of the emerging way in which we are monetizing AI across HubSpot. the combination of core seats and credits are kind of the emerging way in which we are monetizing ai across hubspot

Speaker 1: Yeah. Along with the model change, and I think there's just a lot of movement happening. Yeah. yeah Along with the model change, and I think there's just a lot of movement happening. along with the model change and i think there's just a lot of movement happening

Speaker 2: Yeah Yeah yeah

Speaker 1: you guys made some choices on the go-to-market side. you guys made some choices on the go-to-market side. you guys made some choices on the go-to-market side

Speaker 2: Yeah Yeah yeah

Speaker 1: concurrent with that. concurrent with that. concurrent with that

Speaker 2: Yeah. Yeah. yeah

Speaker 1: Why was April the right time to invest in that? Why was April the right time to invest in that? why was april the right time to invest in that

Speaker 2: Yeah Yeah yeah

Speaker 1: sales enablement, how should we think about that helping to accelerate AI traction in the quarters ahead? sales enablement, how should we think about that helping to accelerate AI traction in the quarters ahead? sales enablement how should we think about that helping to accelerate ai traction in the quarters ahead

Speaker 2: Yeah, absolutely. Let me unpack what we did and why that has a near-term impact in terms of net new ARR, sets us up. Coming into this year, we in general, we plan for a virtual kickoff in the first quarter and enablement in the second quarter. That has always been the model. It's not a new timing in terms of April. What was different this time is that we spent a lot of time transitioning our go-to-market teams to be able to position agents and therefore credits and really driving the AI adoption. There is a sales motion change that's happening, and we're ahead of that. Specifically, if I unpack it, in Q1 this year, we saw our customers really wanting proof of value of agents that are delivering work. What does that mean? Yeah, absolutely. yeah absolutely Let me unpack what we did and why that has a near-term impact in terms of net new ARR, sets us up. let me unpack what we did and why that has a near-term impact in terms of net new arr sets us up Coming into this year, we in general, we plan for a virtual kickoff in the first quarter and enablement in the second quarter. coming into this year we in general we plan for a virtual kickoff in the first quarter and enablement in the second quarter That has always been the model. that has always been the model It's not a new timing in terms of April. it's not a new timing in terms of april What was different this time is that we spent a lot of time transitioning our go-to-market teams to be able to position agents and therefore credits and really driving the AI adoption. what was different this time is that we spent a lot of time transitioning our go-to-market teams to be able to position agents and therefore credits and really driving the ai adoption There is a sales motion change that's happening, and we're ahead of that. there is a sales motion change that's happening and we're ahead of that Specifically, if I unpack it, in Q1 this year, we saw our customers really wanting proof of value of agents that are delivering work. specifically if i unpack it in q1 this year we saw our customers really wanting proof of value of agents that are delivering work What does that mean? what does that mean It means that if they want to use Prospecting Agent, they want to make sure that the emails that the Prospecting Agent are writing is really what their BDR or their sales rep or their team would actually write, and they want to feel comfortable with that output. What we did was we actually gave a 28-day trial period for those types of agents. AEO Agent, Prospecting Agent, Customer Agent, we've given them trial periods. It has an impact of elongating sales cycles in the short term, but we intentionally made that choice in order to seed our customers with these agents so that they can continue to grow. That's like choice number one. It means that if they want to use Prospecting Agent, they want to make sure that the emails that the Prospecting Agent are writing is really what their BDR or their sales rep or their team would actually write, and they want to feel comfortable with that output. it means that if they want to use prospecting agent they want to make sure that the emails that the prospecting agent are writing is really what their bdr or their sales rep or their team would actually write and they want to feel comfortable with that output What we did was we actually gave a 28-day trial period for those types of agents. what we did was we actually gave a 28-day trial period for those types of agents AEO Agent, Prospecting Agent, Customer Agent, we've given them trial periods. aeo agent prospecting agent customer agent we've given them trial periods It has an impact of elongating sales cycles in the short term, but we intentionally made that choice in order to seed our customers with these agents so that they can continue to grow. it has an impact of elongating sales cycles in the short term but we intentionally made that choice in order to seed our customers with these agents so that they can continue to grow That's like choice number one. that's like choice number one The second thing is we did take our sales team, we drove a lot of enablement and helping them communicate the value of agents and credits, and that has a short-term impact in terms of the quarter. Also getting them to understand the pricing model and where we are going with outcome-based pricing and getting comfort in that. Now, look, it has an impact near term, and we are very transparent and clear about that. The rationale is this, we are in the very early stages of AI transformation. It's like mile three in a 26.2 mi of like a marathon race that you're running, and what is important at this stage is removing blockers for customers, seeding the right agentic use cases, and making sure that the outcomes that we deliver are super clear. The second thing is we did take our sales team, we drove a lot of enablement and helping them communicate the value of agents and credits, and that has a short-term impact in terms of the quarter. the second thing is we did take our sales team we drove a lot of enablement and helping them communicate the value of agents and credits and that has a short-term impact in terms of the quarter Also getting them to understand the pricing model and where we are going with outcome-based pricing and getting comfort in that. also getting them to understand the pricing model and where we are going with outcome-based pricing and getting comfort in that Now, look, it has an impact near term, and we are very transparent and clear about that. now look it has an impact near term and we are very transparent and clear about that The rationale is this, we are in the very early stages of AI transformation. the rationale is this we are in the very early stages of ai transformation It's like mile three in a 26.2 mi of like a marathon race that you're running, and what is important at this stage is removing blockers for customers, seeding the right agentic use cases, and making sure that the outcomes that we deliver are super clear. it's like mile three in a 26.2 mi of like a marathon race that you're running and what is important at this stage is removing blockers for customers seeding the right agentic use cases and making sure that the outcomes that we deliver are super clear When we do this in the early stage, we know that the right adoption will result from the changes that we're making. A set of intentional changes to drive AI adoption over the following quarters. When we do this in the early stage, we know that the right adoption will result from the changes that we're making. when we do this in the early stage we know that the right adoption will result from the changes that we're making A set of intentional changes to drive AI adoption over the following quarters. a set of intentional changes to drive ai adoption over the following quarters

Speaker 1: Very helpful. I know we've talked a lot about the innovation that you're doing on behalf of customers. Very helpful. very helpful I know we've talked a lot about the innovation that you're doing on behalf of customers. i know we've talked a lot about the innovation that you're doing on behalf of customers

Speaker 2: Yes Yes yes

Speaker 1: The company itself is internally transforming. The company itself is internally transforming. the company itself is internally transforming

Speaker 2: Yep Yep yep

Speaker 1: how you operate, and I know Dharmesh also speaks a lot to this in different forums as of you. I'm curious, just as you guys are thinking about drinking your own champagne. how you operate, and I know Dharmesh also speaks a lot to this in different forums as of you. how you operate and i know dharmesh also speaks a lot to this in different forums as of you I'm curious, just as you guys are thinking about drinking your own champagne. i'm curious just as you guys are thinking about drinking your own champagne

Speaker 2: Yes Yes yes

Speaker 1: I'll use that terminology, what type of transformation are you seeing from an internal perspective from AI? What tools is HubSpot unleashing for its own workforce? I'll use that terminology, what type of transformation are you seeing from an internal perspective from AI? i'll use that terminology what type of transformation are you seeing from an internal perspective from ai What tools is HubSpot unleashing for its own workforce? what tools is hubspot unleashing for its own workforce

Speaker 2: Yeah. As much as we have driven AI transformation within the product and the platform, we are driving internal transformation with AI, and we're probably bleeding-edge adopters of AI. That has two benefits. One is as we experiment, iterate, and scale with AI, those translate into product in terms of the feedback directly in go-to-market. Second, we are much more authentic in communicating what works and what doesn't work with our customers. That's why we are constantly on the bleeding edge. Specifically in go-to-market, I would point to a handful of areas where we have seen really good results. The first is in the marketing side, if you go to our website, 82% of web chats are handled by AI, and we have increased that percentage pretty significantly over the past few quarters. Yeah. yeah As much as we have driven AI transformation within the product and the platform, we are driving internal transformation with AI, and we're probably bleeding-edge adopters of AI. as much as we have driven ai transformation within the product and the platform we are driving internal transformation with ai and we're probably bleeding-edge adopters of ai That has two benefits. that has two benefits One is as we experiment, iterate, and scale with AI, those translate into product in terms of the feedback directly in go-to-market. one is as we experiment iterate and scale with ai those translate into product in terms of the feedback directly in go-to-market Second, we are much more authentic in communicating what works and what doesn't work with our customers. second we are much more authentic in communicating what works and what doesn't work with our customers That's why we are constantly on the bleeding edge. that's why we are constantly on the bleeding edge Specifically in go-to-market, I would point to a handful of areas where we have seen really good results. specifically in go-to-market i would point to a handful of areas where we have seen really good results The first is in the marketing side, if you go to our website, 82% of web chats are handled by AI, and we have increased that percentage pretty significantly over the past few quarters. the first is in the marketing side if you go to our website 82% of web chats are handled by ai and we have increased that percentage pretty significantly over the past few quarters That is something that, again, translates into product that we can deliver for customers. The second is AEO, which we talked about even before we launched this AEO product. For the last probably six quarters, we have experimented with AEO. Our leads coming in from AEO has really grown. Pretty small base, but grown significantly over the past few quarters, and we have continued to be number one in CRM in terms of AI visibility. Those two are areas. In sales, Prospecting Agent, using intent sources and then driving emails so that our BDR teams and sales teams can actually have broader outreach as well as assistance in terms of deals closing, as well as summarizing. All of that we are doing, which has increased the productivity on the sales side pretty meaningfully over the last few quarters. That is something that, again, translates into product that we can deliver for customers. that is something that again translates into product that we can deliver for customers The second is AEO, which we talked about even before we launched this AEO product. the second is aeo which we talked about even before we launched this aeo product For the last probably six quarters, we have experimented with AEO. for the last probably six quarters we have experimented with aeo Our leads coming in from AEO has really grown. our leads coming in from aeo has really grown Pretty small base, but grown significantly over the past few quarters, and we have continued to be number one in CRM in terms of AI visibility. pretty small base but grown significantly over the past few quarters and we have continued to be number one in crm in terms of ai visibility Those two are areas. those two are areas In sales, Prospecting Agent, using intent sources and then driving emails so that our BDR teams and sales teams can actually have broader outreach as well as assistance in terms of deals closing, as well as summarizing. in sales prospecting agent using intent sources and then driving emails so that our bdr teams and sales teams can actually have broader outreach as well as assistance in terms of deals closing as well as summarizing All of that we are doing, which has increased the productivity on the sales side pretty meaningfully over the last few quarters. all of that we are doing which has increased the productivity on the sales side pretty meaningfully over the last few quarters On support, I'll say that we've not hired a single tier 1 support agent since 2024, and we've been able to use that productivity in other areas of the business. In go-to-market, we are really in the bleeding edge of leveraging both agents as well as assistants on top of HubSpot's agentic platform to drive our own productivity. I'd say more importantly, three and a half years into leveraging AI on the bleeding edge, it's one thing to get individual productivity with AI, right? We are seeing that. You're using an LLM. I use LLM to write a whole bunch of things, and of course, that improves it. On support, I'll say that we've not hired a single tier 1 support agent since 2024, and we've been able to use that productivity in other areas of the business. on support i'll say that we've not hired a single tier 1 support agent since 2024 and we've been able to use that productivity in other areas of the business In go-to-market, we are really in the bleeding edge of leveraging both agents as well as assistants on top of HubSpot's agentic platform to drive our own productivity. in go-to-market we are really in the bleeding edge of leveraging both agents as well as assistants on top of hubspot's agentic platform to drive our own productivity I'd say more importantly, three and a half years into leveraging AI on the bleeding edge, it's one thing to get individual productivity with AI, right? i'd say more importantly three and a half years into leveraging ai on the bleeding edge it's one thing to get individual productivity with ai right We are seeing that. we are seeing that You're using an LLM. you're using an llm I use LLM to write a whole bunch of things, and of course, that improves it. i use llm to write a whole bunch of things and of course that improves it There's a difference from going from individual productivity to institutional productivity, and that requires reimagining teams, reimagining workflows, providing a common context and a set of areas that we can go deep, and that's the learning, and that's kind of the vision of where we are going next. We are driving the next level of transformation internally within HubSpot to be able to reimagine how we get work done. There's a difference from going from individual productivity to institutional productivity, and that requires reimagining teams, reimagining workflows, providing a common context and a set of areas that we can go deep, and that's the learning, and that's kind of the vision of where we are going next. there's a difference from going from individual productivity to institutional productivity and that requires reimagining teams reimagining workflows providing a common context and a set of areas that we can go deep and that's the learning and that's kind of the vision of where we are going next We are driving the next level of transformation internally within HubSpot to be able to reimagine how we get work done. we are driving the next level of transformation internally within hubspot to be able to reimagine how we get work done

Speaker 1: Listen, it's something that we're grappling with every day. Listen, it's something that we're grappling with every day. listen it's something that we're grappling with every day

Speaker 2: Yeah Yeah yeah

Speaker 1: a little side chat. a little side chat. a little side chat

Speaker 2: Yes Yes yes

Speaker 1: We've gotten five new tools, but the hours in my day haven't increased, and I think that's something we're all kind of struggling with right now to unlock that productivity. We've gotten five new tools, but the hours in my day haven't increased, and I think that's something we're all kind of struggling with right now to unlock that productivity. we've gotten five new tools but the hours in my day haven't increased and i think that's something we're all kind of struggling with right now to unlock that productivity

Speaker 2: Exactly Exactly exactly

Speaker 1: We are seeing, you mentioned not having hired in support for some amount of time, and certainly the leverage is there, right? We are seeing, you mentioned not having hired in support for some amount of time, and certainly the leverage is there, right? we are seeing you mentioned not having hired in support for some amount of time and certainly the leverage is there right

Speaker 2: Yes. Yes. yes

Speaker 1: Recently, the company took up its full year margin forecast. How are you thinking about the productivity gains and letting that margin flow through versus reinvesting, given just the big opportunity ahead? How do you balance that from the CEO's perspective? Recently, the company took up its full year margin forecast. recently the company took up its full year margin forecast How are you thinking about the productivity gains and letting that margin flow through versus reinvesting, given just the big opportunity ahead? how are you thinking about the productivity gains and letting that margin flow through versus reinvesting given just the big opportunity ahead How do you balance that from the CEO's perspective? how do you balance that from the ceo's perspective

Speaker 2: Yeah. You balance it very carefully. I think the way we think about it is that our revenue growth continues to grow, and there's a gap between net revenue growth and headcount growth. We've been very, very disciplined in terms of where we hire and what kind of talent we hire, and how do we drive a level of AI fluency within the talent so that they can drive higher productivity, and that's exactly what you saw. At Analyst Day last year, we provided a midterm target range in terms of non-GAAP operating margin of 20%-22%, and we reached it a year ahead. That is at the same time when we are investing in agentic coding and our gross margins have gone down, right? We mentioned in Q1 that our gross margin went down. Yeah. yeah You balance it very carefully. you balance it very carefully I think the way we think about it is that our revenue growth continues to grow, and there's a gap between net revenue growth and headcount growth. i think the way we think about it is that our revenue growth continues to grow and there's a gap between net revenue growth and headcount growth We've been very, very disciplined in terms of where we hire and what kind of talent we hire, and how do we drive a level of AI fluency within the talent so that they can drive higher productivity, and that's exactly what you saw. we've been very very disciplined in terms of where we hire and what kind of talent we hire and how do we drive a level of ai fluency within the talent so that they can drive higher productivity and that's exactly what you saw At Analyst Day last year, we provided a midterm target range in terms of non-GAAP operating margin of 20%-22%, and we reached it a year ahead. at analyst day last year we provided a midterm target range in terms of non-gaap operating margin of 20%-22% and we reached it a year ahead That is at the same time when we are investing in agentic coding and our gross margins have gone down, right? that is at the same time when we are investing in agentic coding and our gross margins have gone down right We mentioned in Q1 that our gross margin went down. we mentioned in q1 that our gross margin went down At the same time, we increased the full-year operating margin guidance for the year, and that is what we are doing. The way we are accomplishing it is we'll continue to invest in AI innovation. We'll continue to invest in agentic coding that drives our developer productivity. At the same time, we're going to find through disciplined hiring as well as transforming our internal productivity and tools to get the operating margin leverage, and we're more confident now in terms of setting better operating margin targets for both the midterm as well as the longer term, and you'll hear more about this at our upcoming Analyst Day at UNBOUND. At the same time, we increased the full-year operating margin guidance for the year, and that is what we are doing. at the same time we increased the full-year operating margin guidance for the year and that is what we are doing The way we are accomplishing it is we'll continue to invest in AI innovation. the way we are accomplishing it is we'll continue to invest in ai innovation We'll continue to invest in agentic coding that drives our developer productivity. we'll continue to invest in agentic coding that drives our developer productivity At the same time, we're going to find through disciplined hiring as well as transforming our internal productivity and tools to get the operating margin leverage, and we're more confident now in terms of setting better operating margin targets for both the midterm as well as the longer term, and you'll hear more about this at our upcoming Analyst Day at UNBOUND. at the same time we're going to find through disciplined hiring as well as transforming our internal productivity and tools to get the operating margin leverage and we're more confident now in terms of setting better operating margin targets for both the midterm as well as the longer term and you'll hear more about this at our upcoming analyst day at unbound

Speaker 1: Awesome. Well, Yamini, thank you so much for joining us. Like you mentioned, I look forward to seeing you in a couple of months at UNBOUND. In the meanwhile, we hope that HubSpot does really well. We're big fans. Awesome. awesome Well, Yamini, thank you so much for joining us. well yamini thank you so much for joining us Like you mentioned, I look forward to seeing you in a couple of months at UNBOUND. like you mentioned i look forward to seeing you in a couple of months at unbound In the meanwhile, we hope that HubSpot does really well. in the meanwhile we hope that hubspot does really well We're big fans. we're big fans

Speaker 2: Thank you. Thank you. thank you

Speaker 1: Thank you for joining us. Thank you for joining us. thank you for joining us

Speaker 2: Really appreciate the support. Thank you, everyone. Really appreciate the support. really appreciate the support Thank you, everyone. thank you everyone