Results:

For the most part, the numbers look good, but the lower NRR and average subscription revenue per customer were negative surprises. On the other hand, the customer base grew by 8,000 to 158,905 (+24% YoY). Here's why:

For the first time I can remember, management specifically called out adoption of the CRM starter suite as a strong growth driver - this is the $45/month step above a free trial. Hubspot is big on land-and-expand, so the idea is to hook customers with starter packages. So they were able to acquire a lot of customers, but many are starting with extremely basic packages. On the other hand, management noted that fewer upgrades were the primary cause of the low NRR. With fewer upgrades, the average subscription revenue per customer figure came in fairly flat year over year. So while these metrics don't look great, much of this can be attributed to a difficult environment.

Management gave a bit of commentary on this difficult environment, noting that dealing with more decision-makers, longer product evaluations and tight budgets are the main contributors to longer deal cycles. Many software companies are experiencing this, but the Hubspot team believes their products are mission-critical for their customers, specifically the marketing and sales hubs. I agree that CRM is vital, especially when deals are difficult (and take longer) to close, but the lack of upgrades last quarter suggests that customers may be hesitant to spend on expanding right now.

Looking at the rest of the numbers, revenue growth was solid, net income continues to grow and their cash pile sits at a healthy $1.4 Billion. All things considered, this was another strong quarter for Hubspot. I'll add a bit in the coming days.