So we’ve covered HubSpot a lot on 5 Interesting Learnings, but there’s a good reason — it’s the SaaS leader the most like most of us. Most of us use HubSpot. Most of us are building products in some category HubSpot plays in, from sales to marketing to support to CMS. So it’s a very … tangible leader for us.
And as HubSpot has now passed $2.5 Billion ARR, it’s still seeing some headwinds and challenges. But it’s also … still a machine.
It’s still growing a super-impressive 21% at $2.5B+ ARR.
5 Interesting Learnings:
#1. Customer Count Still Growing 23%, Even at 228,000 Customers
The most impressive metric of all to me. HubSpot’s new customer count isn’t slowing. This is how you truly scale in SaaS. Your new customer count has to keep growing 20%+ if you want to stay a growth stock. You can’t just keep relying on the existing customer base.
#2. Balancing Growth and Profitabilty — But Non-Gaap Earnings Now Very Strong
HubSpot has gotten a lot more profitable (on a non-GAAP) basis the past few years, as has almost every leader. But it hasn’t pushed it so far to sacrifice growth. Operating profit margins have hit 17%-20% the past 5-6 quarters.
#3. Slowly Driving Down Sales & Marketing Expense
HubSpot isn’t planning on getting even more efficieny by cutting product or engineering. Instead, it’s planning slow and steady decreases in sales & marketing spend, from 45% of revenue in 2022 to 30%-35% in the long term.
#4. ACV Actually Down a Smidge, to $11,225
HubSpot as the leadership likes to say targets the “M” in SMB. It serves more and more tiny customers now, with new offerings, but the sweet spot is folks that can pay $11,000+ or more a year. HubSpot is seeing something similar to Shopify — even as it goes more enterprise (which both are), the SMB segment continues to grow at just as fast a pace. As so ACV … as an average … isn’t going up, even as HubSpot closes more enterprise customers. Because it’s also adding even more smaller ones. Even with 228,000+ customers already. And HubSpot actually lowered some of its pricing to get more entry-level customers in the door.
#5. 45% of Its Pro+ Customers Use 3 or More Hubs, I.e. Products
A reminder of how important going multi-product is at scale for 99% of us.
And a few other interesting learnings:
#6. 100+ Seat Deals Up 55% Year-over-Year
HubSpot continues its slow march more into the enterprise. 100+ seats remain a relatively small amount of revenue but are the fastest growing (like at many SaaS leaders), up 55%. Also a reminder that pre-sear pricing isn’t dead 😉
#7. No Change to the Macro Environment
Many are looking for greener shoots or easier times in B2B2B. But HubSpot like most B2B2B leaders is just seeing … more of the same. The same challenges this year as last.
#8. International Revenue Remains Strong, at 47% of Total Revenue, Growin
Nothing new here at HubSpot, but a reminder both of going global as early as you can, and a reminder that markets outside of North America aren’t necessarily softer today. At least, they aren’t for HubSpot.
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Jason Lemkin, Khareem Sudlow
