Welcome to INBOUND 2024! I'm Yamini, and I work for HubSpot, and this is my favorite week of the year. I just love seeing people connect. You know, the hugs, the high fives, all of those selfies we take, but more than anything, I just love seeing everybody leave this week inspired, and we need that inspiration, especially when technology is changing everything around us. Now, in the last year, I don't think you could have got hit with any news without getting hit with AI hot takes, right? Look at these headlines from 2023. The Wall Street Journal said , " Generative AI is promising an economic revolution." The Washington Post proudly announced the AI gold rush. Meanwhile, New York Times kept it super down to earth, asking questions like, "How could AI destroy humanity?" Really. Now, look at where we are just one year later.
Wall Street Journal says, "The AI revolution is losing steam." The Washington Post says, "The AI bubble is deflating," and my favorite one from New York Magazine: "Whatever happened to the A I apocalypse?" Now, do they sound a bit disappointed? So what is the truth? Is AI just false hype or a true revolution? Are we at the peak or at the trough? You know, the fact is, these are not the most important questions to ask or answer.
You know why? Because these headlines are not the lines in your head. When you, our customers, wake up in the morning, your first thought is not some big, sweeping reflection about the state of AI. You're thinking about your job. You're thinking about your team, your next deadline. You're thinking about how you can get your kids out of bed and off to school, so you can start your day already.
Or maybe that is just me with my teenage boys. You know, the real question you're thinking is: how do I drive growth? Because lately, as we've all probably felt, it has just been harder to grow. So let's focus on the right questions. Why has it been so tough to grow? What is changing with your customer's journey? And most importantly, where do we grow from here? Now, to answer this question, you have to understand what changed and how we're going to fix it. The fact is, the growth formula is just broken. It is harder to attract customers to your website, it is harder to convert them when they engage, and it is harder to retain them even after you have won them, and we can all feel the shift, and the numbers reflect it. You know, traffic is down.
The number one challenge for marketers today is generating traffic and qualified leads. Conversion is down. Win rates have declined from 23% to 19% in just the past two years, and retention is also down. What does this mean? It means growth is down. Only 50% of reps are actually making their quota this year, compared to 66% just two years ago. The only thing that's up here is our anxiety. So what has changed? Well, three big things: search, social, and all our customer channels. You know, search has fundamentally changed. It used to be that your customers would ask questions, and search engines would serve up blue links, and they would click on those blue links, and they would get to your website. But now, with AI Overviews and soon SearchGPT, your customers are getting answers without leaving search.
And the same thing is happening with social. I mean, social platforms, they are holding on to your customers much longer. The fact is, they just want to create a sticky user experience. That's why when your post includes an external link, it just gets way less reach. Now, all of these social platforms, they used to be there just to distribute your content. Now, they have become customer destinations themselves, and you know this is true. Just look at your screen time report every week. Or if you really dare, look at your kids' screen time report. Now, that is my scariest data for the week. You know what? This is what it looks like when my teens are playing Minecraft on the laptop, watching Shark Tank on the big screen, and streaming Dude Perfect all at the same time. What does this really mean for you?
It means fewer website visitors. Search and social used to be open, feeding you visitors. Now, they are closed, keeping your visitors, and that is a huge change, and it's only going to continue. You know, search volume is set to drop by 25% in the next two years. But that's not all the change. There is another big change that's coming and is here. People want to talk to people, not brands... and in fact, seven in ten customers just trust people over companies. They trust funny people, they trust relatable people, they trust aspirational people. They just don't trust you. And so your customers end up going to G2. They go to Reddit, they watch YouTube videos, they talk to peers, and by the time they do get to your website, your customers know more about you than you know about them. Just think about that!
So now, when your sales reps connect with your customer, the bar is incredibly high. That conversation needs to be so tailored and insightful, and if it's not, conversion will go down. The same thing is true with service. All of the easy questions are answered by chatbots and search results, and so your support rep also has a high bar to clear, and if they cannot clear it, well, retention is down. I mean, there is no wonder why this growth formula is just completely broken. Now what? Well, we have seen time after time that technology is profound when it can solve old problems in new ways, and now we need new ways to access insights to be able to solve the age-old problem of growth. And AI has the potential to do that. Well, how do we know? Because we went straight to the source.
We surveyed thousands of customers who have embraced AI in some way, shape, or form. We spent hours talking to them about their use cases, their mindsets, their fears, their hopes. You know, I just absolutely love this part of my job. I really love talking to customers, and I just love learning from them, and here's what we learned: today, our customers are using AI for acceleration, and soon they will be using it for transformation, so what's the difference? Acceleration is taking what is possible today and making it fast. It means you are just automating specific tasks, maybe summarizing a call or drafting an email, and AI is working with you to drive growth, and it's happening right now. When we spoke to customers, we found example after example of leading growth professionals who are already using AI to accelerate their work, but transformation?
Transformation is taking what is impossible today and making that possible. It means you are reimagining your goals and stringing together new tasks. It means AI is working for you to drive growth, and if acceleration is happening now, transformation will happen next. So the question is: how does this all apply to marketing, to sales, to service, right? Let's actually start with marketing. You know, fundamentally, marketing is just about attracting customers, right? And we just need to have great content to be able to do that. And this is what we found. These are the three top use cases that our customers are using to accelerate content marketing with AI: they're creating content, they are personalizing content, and they are distributing content. You know, 65% of HubSpot AI users are already creating content with AI. So the question is: how do you do it well?
It starts with understanding what AI is good at. AI is very good at researching topics. It is good at delivering decent first drafts and iterating for different audiences. But humans, we are much better at taking those drafts from good to great with original, authentic, creative insights. AI is also good at personalizing content. You know, this year, our amazing marketing team... I want to shout out to our marketing team. They are awesome! Now, our amazing marketing team got great at sending personal messages with AI, and the conversion rate improved by 82%. So when a prospect came to our website and filled out a form, we didn't just send back a generic email. We used AI to research that prospect's company, their role, and then we mapped the most relevant academy content and then sent a personal message to them. How slick is that?
That's why conversion went up by 82%. It's not surprising at all because everybody who got that message felt like it was written for them, and it was. Now that you have created and personalized content, the next step is you got to distribute the content. You know, this year, when we launched Content Hub, one AI feature saw incredibly fast adoption: Content Remix. This allows you to take a single piece of content, like a blog, and convert it into social posts, into short-form videos, into emails. That's the way you can take great content and put it out there with your customers. So how does this all look like in practice? Well, let's actually hear from one of our customers, Emily from Sandler.
For marketers like us, we're always looking for ways to be more efficient, be more scalable, and AI has really been our ticket to do that. In terms of executing campaigns, we start with a landing page, and as we start to write the gist of the copy that we wanna get out, HubSpot AI is able to step in and help us make it better. It kind of trickles down to all of the other pieces of the campaign. So whether we're writing the social copy, we're creating the LinkedIn ads or the Google Ads, it's all using that same campaign and messaging that we've already built. Typically, our sales cycle was 90 days, and now with these experiences that HubSpot AI has helped us to build, that has gone down to 30-45 days.
We had people spending a minute or less on our experiences and our pages. Now, they're spending three to four minutes, and that is a huge return on the investment that we've made.
Wow! So their sales cycle went from 90 days to 30 to 45 days. That is what acceleration looks like. What's the transformation that's coming next? Well, it's all about agents. No, no. No, no, no, no, it's not James Bond, although Daniel Craig is welcome to attend INBOUND whenever he wants to. You know, I'm just talking about AI agents. This is software that uses AI and tools to be able to really reimagine and accomplish multiple steps of the goals, and they can work for you. In the world of marketing, a content agent will work for you to create, personalize, and distribute content. A social agent will analyze all your social posts and tell you when, where, and how you can share it. And a campaign agent will analyze your campaigns and tell you how you can amplify it. Okay, that is what transformation looks like.
What lessons can marketers take from all of these different use cases? A few big ones. AI creates, and people curate. The counterintuitive insight here is that AI can help you with better content, not just more content, and that is exciting. Where are my salespeople here? I know you're here. I wanna hear some noise. Come on! Yeah. Look, I have worn so many different hats in the last 25 years in tech, but the one that I truly love is sales, because sales is this beautiful art of engaging with customers. For the longest time, you know the one single metric that we have not been able to move as an industry? It is time in front of customers.
You know, I spent years trying to move this single metric in sales, and if we can get just 5% improvement in productivity in one year, that is a winning year, but it's so difficult, right? My sales leaders here and my RevOps leaders here, you know that. You know, the average salesperson spends two hours a day selling. Two. What are they doing for the rest of the time? No, I know what you're thinking. You're thinking that they're playing golf and sipping martinis. Well, that's not true. They are buried in prep work, or they're drowning in follow-up, and nobody has been able to help them shrink that time, until now. AI can help shrink that time spent in discovery and follow-up, and that's exactly what our customers are doing.
They're using AI to research prospects, and when they research it, they score the highest intent prospects, and they're using AI to generate personal images and personal messages to connect with the reps. Across our customers and HubSpot, we have found that using AI in discovery can shrink the time spent by 30%. That is big! Next, they're streamlining the fast follow-ups. They're using AI to summarize all of the calls, and they're identifying new objections within those conversations and generating insightful responses, and that has resulted in 20% faster follow-ups. Super exciting. Let's actually hear from another incredible customer, Tillman from Aerotek, who is doing all of this.
AI helping our sales team is really about making things more efficient, more cost-effective, so without having to go into Google or LinkedIn, our sales team, they're able to add a company very quickly and start doing some preliminary research. They are able to understand a competitive analysis that HubSpot provides us, so when you think about having all this research done with just a couple of clicks, you go into that first meeting with the prospect, you have a lot more information. And for a sales rep to be perceived as having done a ton of research, that bodes very well with customers because it shows that we are not only interested in who they are as a company, but the problems that they're trying to solve. We had a 15% win rate when it came to new business. We're now at 25%.
One out of every four new opportunities that come in our pipeline, we're winning, and a lot of that is attributed to our adoption of these tools.
Wow! So their win rate improved from 15% to 25%. Anybody want that?... Yeah, I do! That is what acceleration in sales looks like. So what's the transformation that's coming next? Well, prospecting agent. Just imagine you are logging in on Monday, and your agent has already found promising leads for that week, and your agent asks you: "Do you want these leads? Do you want me to create a message for these leads? Do you want me to set up a meeting with these leads?" And you say, "Yes, yes, and of course, yes." And then you use your time for a great quality connection with your customers, because that is the fun part. So what have we learned in sales? AI offers context, and people offer connection.
AI does all of that busywork so you can focus on your best work, and that is the way to improve your conversion and quota attainment. And who does not love that in sales? All right, let's finish up talking about customer service. I know you're here. I can see you. So customer service is this beautiful art of delighting customers, and the North Star here has always been the same. We want to be strategic thought partners to our customers, but guess what we're stuck with? Being human Band-Aids. You know, solving problems reactively, too little, too late, and we all know how it feels like to be on the other side of that call. You know, for me, this happened last summer when we were on vacation. We went to Johannesburg, but our bags did not.
And so I got on this phone with Kathy from customer care, and she's just lovely, but she cannot help me. "Where are our bags?" "Don't know." "When will we find them?" "Don't know." So Kathy and I are on the phone for what seems like half my vacation, and she's now my BFF. And here I am, now, of course, feeling sorry for ourselves because we're wearing all these, like, oversized clothes that we picked up from the airport gift shop. But, you know, as a CRM professional, I'm also feeling really sorry for Kathy. I mean, why does she not have all this information at her fingertips so she can help me? And I was also thinking, "What CRM are they actually using there?" Maybe, you know, I can do an upsell.
But, you know, the question, you know, really is, and the most simple thing is, we just want people to get our context and fix our problems right now. That airline is off my list, and just like that, every single conversation can make or break you. So how can AI help? AI can help answer customer questions and fix your problems now. One of our customers, Kaplan, has been doing exactly this with AI. They've used AI to manage their tickets, and they're sending faster responses and sharing information with their customers, and they have been able to reduce the average response time by 30%. And they're resolving 30% of their chats using AI, and when they need a human touch, they kind of, like, do a nice follow-up, and all of this in just one year. That is acceleration.
So what is the transformation that's coming next in service? By now, you've already guessed it. It is another agent. You know, imagine a support agent, and the support agent knows your context, knows your data, can answer your questions 24/7. And pretty soon, a knowledge base agent . A knowledge base agent can... AI can actually research and update your knowledge base articles, allowing your team to spend the rest of their time on customer experience. So what have we learned in service? AI handles simplicity, and people handle subtlety. AI can handle all of those typical questions, so you and your team can focus on the tricky ones, and that can help you increase your retention. So let's step back and put all of this together. The way to think about AI is not to underplay AI or to overhype AI.
It is to understand AI and to co-create with AI, because co-creation is what can catalyze growth. Across go-to-market functions, AI creates, people curate. AI offers context, people offer connection. AI handles simplicity, and people handle subtlety. The real way to think about AI is how it can power people and help us scale. That is the biggest unlock. Now, if you want to reimagine that growth formula and raise it to the power of AI, just imagine the kind of growth that you can drive. AI provides all of that content to drive your traffic, and it can provide the insights to drive your conversion and retention, and if we can be laser-focused on just that, we might be able to fix that growth formula, and that brings us to our mission at HubSpot.
Look, we exist as a company to help you grow, and we are doubling down on that mission and reimagining CRM to help you grow. In order for you all to co-create with AI, you'll need support not just for structured data, but for unstructured data. Data in 10-Ks, 10-Qs, recordings, transcripts, conversations, just all of it. You will not only need support for text, you need multimodal support for text, audio, video, images. You will not only need your apps to work well together, you will need your apps and agents to work well together with the same context, and you'll need the ability to control your data and decide when you wanna share it or not share it, and that is exactly what we are building at HubSpot. Now, we don't just wonder what is going to change two, five, ten years from now.
We also ask ourselves the question: what is not going to change? You know, customers will always want things to be easy. Two years from now, nobody is gonna wish for things to be harder. That's why we are working hard to make it easy. You will want fast time to value. Five years from now, no one is going to wish for things to take longer to realize value. That's why we are laser-focused on immediate impact with every single use case. You'll always want unified data. Ten years from now, nobody is going to wish for data to be in silos. We already know how painful that is. That's why we're bringing together customer and context data to drive insights for you today and into the future. Our mission is to help you grow. Our passion is to make it easy, fast, and unified.
With that, let me close where we began. What gets you going first thing in the morning? I know it's not AI hot takes, but I hope you take away all the new ideas, the inspiration, the big transformation that's happening right now, and that helps you get going. You know, as far as me, I'm totally not a morning person, certainly not in the East Coast. I don't drink coffee. I don't just jump out of bed excited about some new AI hot take. I'll tell you what, I wake up and I look at my calendar, and if I get to have some conversations with customers about growth, that fires me up. I am excited. I know that'll be a great day because the businesses that we support are the backbone of economies.
The ones with fewer resources and not enough time are still finding a way to grow, and what is truly motivating for us is the promise that AI has to help businesses scale like never before, and with AI, we know that we can help all businesses play big. With that, it is my absolute pleasure to welcome Andy Pitre, who is our EVP of Product, to come and show you how you can grow better with HubSpot. Thank you so much and have a fantastic INBOUND! See you, everyone. Go crush it.
You did a great job.
Thank you.
That was so good. Woo! Hello, INBOUND. How's everybody doing? Now, my name is Andy, and I work on the Product team here at HubSpot, and we just heard Yamini talk about how go-to-market strategies need to change. She made it clear that easy, fast, and unified are the essential ingredients for growth, and I could not agree more, but the problem is, so many companies are facing a much different reality. Their tools are way too hard to use. The average company switches between 15 separate tools just to manage their customers. They need more from their tools, and they need it fast. 80% of leaders say that they're not getting enough value from their tech stacks, and to top it off, they're working in silos. Seven in ten businesses have disconnected data. Something needs to change.
Go-to-market teams have too much at stake, and they need a better way to grow, and this is where HubSpot comes in. Instead of disconnected tools, we give you a customer platform. Every feature is easy and works together, including seventeen hundred apps in our ecosystem. When it comes to value, HubSpot doesn't just deliver, we deliver fast. It's our job to make sure you're getting value in days and not months. And finally, we obsess over making the customer platform unified. Everything works together in harmony, and you always get a complete picture of your customers. Now, I wanna talk about easy for a second. Last year, I stood on this very stage and talked about all of the possibilities with AI. This year, AI got real.
You just heard from HubSpot customers about some incredible things that they're doing, and get this: in the past year alone, HubSpot customers have created almost one million pieces of content with AI. How awesome is that? But I have a hunch that it's not all smooth sailing. By a show of hands, how many people are still struggling to get value from AI? It's okay, you can be honest, even if your boss is here. How many people are finding it hard to know exactly where, when, and how to use AI? That's what I thought.... Now, when it comes to AI, we've really only scratched the surface, and we believe that businesses will really start seeing the full potential when it's easy to use. We've spent the last year leading up to this point, and today, we're here to put the wind in your sails.
INBOUND, I am excited to introduce Breeze! Breeze is our AI that powers the entire customer platform. It's easier than ever to use, it works everywhere, and it will take your efficiency to the next level. It includes Breeze Copilot to assist with your day-to-day work, Breeze Agents to automate work and transform your growth, and Breeze features that you can use for specific tasks across the customer platform. Now, I have one more question: Who wants to see some demos? First up is Breeze Copilot. Think of Copilot as your AI companion. It's there whenever and wherever you need it to assist with day-to-day tasks, so you can work better. Let's take a closer look at how a sales team might use Copilot. Let's say you're a BDR, and you need to research new prospects. Just give Copilot a simple prompt, like, "Find SaaS companies in Boston," and boom!
You've got results in seconds. From there, Copilot can even add a company right into your Smart CRM. In this case, I'm going with my favorite company, HubSpot. All you, when you're ready to reach out, just give Copilot a few prompts, and voila, your outreach email is complete. All you have to do is add your contact details and hit Send. Thanks, Copilot. Now, your prospect just got a personalized, relevant message, and it worked. You've been emailing back and forth with your prospect, and it's time for your first call. Copilot will summarize your emails and help you prep for that call faster and easier than ever. And the best part is that Copilot works everywhere: in HubSpot, in the browser, and on mobile. I'm excited to tell you that Breeze Copilot is available in beta now. Who's ready to meet their new work BFF?
All right, now your productivity is through the roof with Copilot. But do you remember those agents that Yamini was just talking about, the ones that can make the impossible possible? We built those. With Breeze Agents, it's easier than ever to amp up your growth. If the Copilot works with your business, agents work for your business. They string together tasks and get jobs done from strategy to execution. And guess what? You get an agent, you get an agent, you get an agent! That's right, we've got agents for marketing, sales, and service. Let's check them out, and marketers, we're gonna start with the content agent. Gone are the days where you spend hours making content for different formats. Content agent can create blog posts, landing pages, help you edit podcasts, even generate case studies. Now, you can spend less time creating content and more time being strategic.
It's every marketer's dream come true. Marketers, we've got another one for you. The social media agent is your new social team member. It knows your company details, your audience and industry. It even understands what's trending on social and how that matches up with your business. The social media agent uses all of this to create incredible content for different platforms. Your posts are gonna be super relevant, and your social engagement is going to skyrocket. Sales, this is your prospecting agent. It can engage with INBOUND leads so you can connect with prospects quickly. The prospecting agent will even handle that backlog of leads that you haven't had time to check in with yet. It's okay, we all have them. It pulls the latest context, personalizes the outreach, and sends it for you. Your outreach is gonna be on point and on fire.
Now, last but not least, service teams, the customer agent is your newest team member. The customer agent responds directly to customer questions, and it's always working. Seriously, the customer agent works twenty-four seven to take care of simple questions so you can help your customers be successful. Now, just imagine putting these together. You're not only making your team faster, you're making your customer experience better. Breeze Agents are available in beta now, and it's time to put those agents to work! So that's Breeze. I don't know what feature I'm most excited about, if I'm being honest, but my favorite part is that it's easy, like AI should be. After all, you don't need to be an Einstein to use AI. Who's ready to make growth a breeze? Now, making AI easy is great, but we're not stopping there.
Breeze needs to know everything it possibly can about your business and your customers, so you get the full value, and that all comes down to one thing: It's all about the data. But here's the problem: data about your prospects and your customers is all over the place. It's scattered across the internet like puzzle pieces, and unless you can put them together, you're not getting the full picture. That means you can't personalize outreach, you can't feed your AI with the context it needs, and really, you can't help your business grow. Now, the good news is, your customer picture is already great with the Smart CRM, but we think it's time to finish the puzzle. This is Breeze Intelligence, our new data enrichment and buyer intent solution to give you the most unified customer picture, and it starts with the Breeze Intelligence dataset.
We're bringing together more than 200 million company profiles and buyer intent signals. We're constantly updating this so you have the latest and greatest information at your fingertips. Let's check out some of my favorite features, and first up, we're gonna look at data enrichment. Today, just your go-to-market data isn't enough. Breeze Intelligence makes sure you have all the customer data you need. It enriches your records with details like location, industry, and revenue right in HubSpot. It can even enrich a ton of records at once and do it fast. With bulk enrichment, you'll be adding new customer details faster than you can say, bulk enrichment. Now it's time to get to the real secret sauce of Breeze Intelligence: finding the highest quality leads with buyer intent. Breeze Intelligence makes it simple to create your target markets, but even better than that, understand their intent.
Like, if someone is spending time on your pricing page, it's a pretty good sign that they're into you. Breeze Intelligence will look out for those signs and automatically tag prospects as high intent. It'll even let you know who's already in your Smart CRM and who's a brand-new prospect, so you can give them a little extra TLC. And that is the power of unified data on the customer platform. Now, you've gone through all this trouble to reach high-intent buyers, and it's time to capture those leads. Wouldn't it be a shame to lose out on a qualified lead all because your form was too long? We've all been there, right?
We've all abandoned something online because we get to the form and say, "There is no way I am filling this thing out!" Well, I'm here to tell you that with Breeze Intelligence, you will never lose a lead to a long form again. That's because Breeze Intelligence automatically completes the form with information we already know. All your prospect sees are the fields where we need their input. If you can believe it, Breeze Intelligence just made forms easy and fast. It's like magic. Breeze Intelligence is available in public beta. Knowing everything about your customers should be easy, and now it's a breeze. Now, speaking about knowing your customers, I know one group that does this like no other. Can all the marketers in the house make some noise? Hi, everybody.
Now, you don't know this, but I was actually a marketer back in the day, and so I have a lot of love for marketers, and so does HubSpot. It's where we got our start almost twenty years ago. And on that note, marketers, come on a journey with me. Let's go back five, ten years ago to a time when marketing was fun and easy. You were the heroes of your company. You were bringing in leads and getting more budget. Those were the days! But as we just heard from Yamini, this doesn't feel like the reality anymore. So HubSpot is here to help. We just took a trip down memory lane. Now let's take a journey into the future with Marketing and Content Hub.
Our new features will help you reinvent every step of the way, from segmenting your audience to measuring your impact, so you can feel like you're in the driver's seat again. Our first stop is segmenting your audience. This is our brand-new lead scoring for Marketing Hub. Lead scoring helps you understand your prospect's digital body language with engagement and fit scores. Your engagement score measures behaviors like how many times a prospect has visited your page or opened your emails. And guess what? The fit score is AI-powered. It learns about your prospect behaviors and combines it with information from your Smart CRM. Just like that, you can figure out which prospects fit your ideal customer profile. And my favorite part is that these scores work better together, just like marketing and sales. You can use a combination to get the hottest leads right to your sales team.
Now, when it comes to segmenting your audience, you might think that we're stopping there, but guess what, marketers? We know you love data. So we've got even more insights for you, thanks to our new partnership with Amplitude. Amplitude is a fan favorite for marketers who use HubSpot, so we're bringing together their amazing analytics with the Smart CRM so you get the best information about your customers in one place. Now, I wanna show you my personal favorite, which is obviously product usage data. This is something our customers love about the Amplitude integration. Now you can understand how your customers are using your products, which features are getting the most love, and then you can use all of that to segment your audience better than ever right in HubSpot. All right, marketers.
You just used lead scoring and Amplitude to build audiences better than ever, and we've come to our next stop: creating campaign content. I know, I know, this part has been a real struggle to keep up with lately. The average marketer is using five tools just to manage their content, so we're making it simple with Content Remix. Content Remix helps you build multi-channel campaigns in seconds. Just give it a single piece of content, and Content Remix generates everything you need for your campaign: emails, social posts, ads. Actually, I wanna talk about ads for a second. It's been a bit of a bumpy road in the last few years. New privacy regulations, the cookieless rollercoaster, but through it all, one thing is clear: marketers need control over their first-party data. And so that's why we're introducing Google Enhanced Conversions in HubSpot.
With HubSpot, you have all this rich information about your customers right in your Smart CRM, but you need to be able to connect that data to the ad networks in a way that's privacy-safe. This is exactly where our work with Google Ads comes in. With Google Enhanced Conversions, you get more accurate reporting for better campaigns with higher performance. And what marketer wouldn't love that? Now, your ads are on fire, thanks to the new Google integration, but you have more content to create. And in fact, we haven't even talked about everyone's favorite format: video. 91% of businesses used video for marketing in 2023, and guess what? Your customers want even more. As a marketer, you need to be ready, and now with Content Remix, you are.
You can turn a single video into a full campaign with clips, audio for podcasts, and content like blogs. What about editing, you say? No problem. We make it easy to trim your videos just by editing the transcript. And when you're ready to publish, you can now schedule posts for YouTube and Instagram Reels right in HubSpot. "But Andy, what if I don't even have the resources to create video at all?" Have no fear. I had a little extra time backstage, so I put together a little something, thanks to our new HeyGen integration. Hey, AI Andy, can you help me out?
Hey, Andy, I can take it from here. With HubSpot's brand-new HeyGen integration, all you need is a single piece of content, like a transcript or blog. HeyGen uses the power of AI to create videos with avatars who act as influencers. All you have to do is sit back, relax, and get studio-quality videos with ease.
Now. Yeah, there we go. I just wanna make it clear, that was not an actual video of me. That was completely AI-generated. We are working with some crazy stuff here. Now, look at how far we've come. Building an audience and creating content are in the rearview mirror, but now it's time to plan your campaign cadence, and this part can get really tricky. We've seen marketers do tons of complex things with their workflows, and so we're here to make it simple with AI-assisted workflows and workflow suggestions. Now, you can just tell Breeze what workflows you want, and we'll build them for you. Seriously, that's it! Your campaigns might be complex, but your planning doesn't have to be. We just made it faster and easier than ever. Marketers, now your campaign is crushing it.
You've got amazing content, your cadence is set, and your email is on cruise control. But if you're not careful, this is where it can all break down. One in every six emails never makes it to the inbox. You need to give your customers more control, or your content becomes spam. So we're here to help you deliver with personalized subscriptions. Personalized subscriptions help marketers create email preferences for different contact segments. This way, your customers and prospects can choose to receive the emails they actually want. No more unsubscribes, just a better email experience for your leads. Now, last but certainly not least, we need a way to measure all this goodness, and that part has been easier said than done lately. The new buyer journey is all over the place, and measuring it is like herding cats. So we're here to help with the Marketing Analytics Suite.
We're bringing together everything you need to measure, like ad performance, lead gen, and traffic insights, and my favorite part is you don't even have to build reports from scratch. We give you templates like customer journey and attribution reports, and you can use all of this to make your campaigns better and get results faster. Marketers, guess what? We're about to have some fun again, and we're helping you do it from start to finish with Marketing and Content Hub. Now, I know a few minutes ago, I said that I was taking you on a journey into the future, but everything I just showed you is available today, and don't worry, there's enough fun to go around for everybody. We just looked at some of our newest features: Breeze, Breeze Intelligence, our updates to Marketing and Content Hub.
But if you can believe it, we've made updates across the entire customer platform. Sales Hub, Service Hub, the Smart CRM, Operations Hub, Commerce Hub, new integrations in the ecosystem. In fact, we have over 200 new features to show you. Some of my favorite are Sensitive Data, new and improved dynamic forms, sales guided action s and Meeting Assistant, AI insights for reports, bidirectional sync for Snowflake, customer health scores, and the new customer success workspace. But you can see it all for yourself because we've packaged it into a dynamic web experience that we call Spotlight. Check it out, and let us know what you think. Now, whether you're a marketer trying to reinvent, a sales rep trying to close more deals, or you're managing customer success, you all have one thing in common: you hold the key to growth in your businesses.
And if you remember one thing from my time today, it's this: the only way to grow is with a platform that's easy, fast, and unified, period. Our promise to you is that we will keep prioritizing these things because we are as obsessed with your growth as you are, and that is why you use HubSpot. Now, I am happy to introduce someone who is constantly thinking about how we innovate and grow. Give it up for HubSpot Co-founder and CTO, the one, the only, Dharmesh.
Wow! You know, every when I watch those credits with the 200 features, I tear up like the ending scene of Amélie. It's... I'm very proud of the team. It's been amazing. Greetings, everyone. I'm Dharmesh. So, HubSpot turned 18 years old this past June, and since then, I've had the honor of sharing a number of memorable moments on the INBOUND stage with you over the years. 13 years ago, I shared the launch of my son, Sohan. Back then, he was a tiny language model. Now, he's a middle schooler, so he has a teenage language model, which I will confess, I have not completely decoded yet. Parents in the room know what I'm talking about. Now, I can't show a current image of Sohan because he's revoked my licensing rights to use his image. No cap, no cap.
Ten years ago, we launched the HubSpot CRM. Many of you in the audience were here. Applaud if you were here for the launch of INBOUND CRM. Yep. My lovely wife, Kirsten, she was here. Yep. By the way, she's the one that got me the rocking shoes just for you. I know you can't see them on stage. You'll see them later. Yeah. Thank you, honey. So one year ago, we launched our first products with generative AI, including ChatSpot. ChatSpot started as a labs project and now has graduated to become Breeze Copilot. They grow up so quickly, it's... So this is the year of AI agents. When we look back at this event, years from now, you're going to remember it as the year of AI agents. Now, agents are all the rage this year, but you know what was the rage in the 1980s?
Corduroy pillows. They were making headlines everywhere. I'm gonna give that one a couple of seconds. Just... Okay. Here's what I'd like to do. First, I'll give you a debrief of what has happened in the world of AI since we last spoke. Then I'll try and demystify AI agents because they can be unnecessarily mysterious. And finally, I'll show you some software that's in development, and as is permitted in my speaker's contract, I'll sneak in some dad jokes. I apologize for nothing. I bring my full dad self to the stage. Speaking of dad jokes, I'm building a Dad Generator Agent. This is true story, and I collect all of them. I've got 2,000 in what I call a database.
And so this is basically feedback for the training agent, so thank you for laughing, for those that laugh, as we go along, but anyway, so here we go. So a lot has happened in the past year. I'll focus on just the highlights, things that matter to you and your company. First, AI models are getting bigger, bigger in terms of the number of parameters, which sort of defines how big their neural network is, and also their context windows, which defines how much information we can pass to the model at the time we give it a prompt. Bigger models are generally more capable. They can reason better, they can write better, they can follow instructions better. But models aren't just getting better, they're getting better faster. So years ago, Gordon Moore, the CEO of Intel, coined what's called Moore's Law.
It states that computers double in power every eighteen months. That's an exponential curve. That's why a computer that used to fill a room now fits in your pocket, so Moore said computers would double in capacity every eighteen months. Then AI came along and said, "Hold my beer." AI models are doubling every six months, and this growth is partly what's causing all this excitement around AI, and it's not just that the models are getting bigger and better, but we're seeing innovation along multiple dimensions. We now have multiple, highly functional frontier models that are good at different tasks. OpenAI's GPT is really good at reasoning. Claude 3.5 is really great at writing. Google Gemini is really great at supporting huge context windows with millions of tokens, and Llama is really great at being open source and having a cute name.
We have some breaking news on the AI model front. For almost a year now, the industry has been abuzz with the anticipation of a new model from OpenAI. Those are the folks that make ChatGPT. The model is codenamed Strawberry. Word on the street was that it was going to be berry impressive. What's not berry impressive is that joke. I did not write that joke. I will not take credit. OpenAI launched that new model this past Thursday, and I've been up late nights, even later than usual, every night since. The model is called GPT o1. Now, the reason to be excited about GPT o1 is because of its ability to reason. It's shockingly good, like graduate student, PhD-level reasoning. It even shares the kind of chain of thought it had in terms of how it came up with the response that it gave you.
It sort of lets you inside its brain. Super cool. Now, this level of reasoning means we can have agents now, they take on much more sophisticated goals than what we could even do a week ago. That's how fast this stuff is moving. The lesson here is that when things are moving this fast, we shouldn't go to where the AI is. We should go to where AI is going. Hat tip to Wayne Gretzky. We're going to be in a very different place three months, six months, 12 months from now. Okay, we have a variety of great models. They're also becoming increasingly multimodal. We've moved beyond text to the model supporting images, audio, and video, too. This means the models can take image as input, not just the prompts that we give it.
This is like we're giving these AI models the sense of sight. That's like when your teenager can first start seeing the clothes on their bedroom floor. It's amazing. When it happens, it's amazing. So this is what AI models used to see when you sent them to a webpage. This is the webpage for School of Rock, long-standing HubSpot customer, and I'm the parent of a recent customer of School of Rock. So this is what the models used to see, and this is what the models can see today. They see the same webpage as we do. So, quick recap of the debriefing. Models are getting bigger and better. We have different models for a diversity of tasks, and AI models now have multimodal support.
This makes it possible for the first time to create AI agents that can take on a wide variety of assignments. But agents can seem a bit mysterious and complicated, so let's try to demystify them. Let's raise your AIQ. Now, Agent IQ. Speaking of IQ, I read somewhere that talking to yourself is a sign of intelligence. I've said that to myself hundreds of times. Now, first of all, you might be wondering, like, "What is an AI agent anyway?" And there are a lot of definitions out there. The one I prefer is the one Yamini shared: "An AI agent is software that uses AI and tools to accomplish a goal that requires multiple steps." That's it. Yes, some agents can be able to run autonomously, some have executive planning capabilities, but those are niceties, not necessities, to be an AI agent.
There are a range of agents in terms of the complexity of the goals they can take on, everything from complex goals, like the four agents that Andy just demonstrated, all the way down to very simple goals. The thing I want you to remember is that an agent's an agent, no matter how small. Now, whether big or small, all agents share some things in common. An agent uses one or more AI models. If it doesn't use AI, you can't officially call it an agent. Then it's just sparkling automation software. Thank you. Yeah, bye. Next, an AI agent has the ability to use tools, so it can access things like the HubSpot Smart CRM and take action on your behalf. Finally, agents have a memory. They can remember things across tasks.
Otherwise, it's like me walking up to the refrigerator, opening it, and then forgetting why I opened the refrigerator. All right, so let's dig in and talk about what's in development. I'm gonna share with you what I've been cooking on late at night, 2:00 A.M., every night. My wife can attest to this. And by cooking, I mean coding. I can't actually cook, not in a literal sense. And I also don't stand at my standing desk, which doesn't sit well with my personal trainer. I actually don't have a personal trainer. I used GPT. By the way, it suggested that I maybe do, like, lunges, and I think that would be a big step forward.
Having the honor of being up on stage at INBOUND and sharing the stuff I've been working on is the favorite time of my whole year, and I've probably spent fifteen hundred hours working on the next fifteen minutes that I'm about to show you. Before I do that, before we dig in, a quick disclosure and warning: the upcoming segment is rated X. X for experimental. Everything Andy showed you are part of real products that we sell at HubSpot, products you should buy. By the way, if sales team is hiring, that's my sales pitch right there. What I'm about to show you is an experiment. Viewer discretion is advised. The product I've been staying up late every night working on for many moons this year is Agent.ai. Thank you. Agent.ai is the number one professional network for AI agents.
It's also the only professional network for AI agents. Now, at this point, some of you might be thinking: "Wait, what? Why do agents need their own professional network?" Reasonable question, because I predict that in the future, our teams are going to be hybrid. They will consist of humans, like you, and AI agents, like me. Just kidding, I'm not an AI agent yet here on stage. That likely won't happen until far into the future, like INBOUND 2025. By the way, inspired by Andy's references to Back to the Future, I was going to tell you guys a joke about time travel, but you didn't like it. So here's the homepage for Agent.ai.
We see a listing for some of the agents on the network, and every agent has a profile, so we can click into the profile, we can follow that agent, we can hire that agent and start using it, it's free, and we have, and we can add the agent to our team. And we have a bunch of agents around marketing, sales, customer service, operations, and the new agents are being added every week. So I invite you to check it out. You can sign up for free, get one hundred credits. It's awesome. So it's time to meet some of these agents. Now, we're gonna look at agents that help us with marketing, selling, and how to delight customers. Now, the number one challenge for marketers today is generating traffic and qualified leads. I'm not making that up.
One of the most clueful people I know in our industry said this circa forty-three minutes ago, so it's even more important that we take the website traffic that we have coming right now, those website visitors, and convert them to leads at the highest rate possible, and the way to do that is with conversion rate optimization. Now, here's the website for School of Rock that we saw earlier. It's a great website. Is there anything that can be tweaked or improved? Yes, always. But is it a pain in the butt to figure out what to change? Yes, always, because you have to review the copy, you've got to check the CTA, you've got to tweak the headlines, review the testimonials. There's just so much to do, and conversion rate optimization is a very specialized skill. Thankfully, we've reduced this down to a few easy clicks.
Here's the Conversion Rate Optimizer Agent. It's super easy to get started. All you do is you type in the web link for a webpage, any public webpage. It can be your homepage, it can be a landing page, it can be your pricing page, and the agent goes through and looks at that entire webpage, and it has decades of domain expertise in conversion rate optimization and will come up with a list of suggestions. It's like, "You're saying something this way on the webpage. I'll bet you you'll get higher conversions if you change it to this," or, "You're missing a call to action," or, "Maybe you should add imagery." It comes up with really, really good suggestions. I encourage you to try it. So it's, it's a simple agent, but it's a profitable one. I encourage you to check it out.
Now, Yamini also mentioned how the average sales rep spends only two hours a day with customers, and a large part of their time is spent in prep, and a large part of their prep time is spent researching companies. Now, the reason this takes so much time is you have to go to Google, you go to the company's website, you go to Crunchbase to look up their funding, you go to YouTube, go to their social media channels, you go to Glassdoor. You're jumping all over the internet on this adventure hunt with all this unstructured data. We built a Company Research Agent that picks up all of those pieces all over the internet and puts it together for you with just a few easy clicks. Let's look at how easy this is. We start by entering the website's domain.
I'm going to enter OpenAI.com, my favorite AI company, and we get a beautiful multi-page report broken out into sections. So we can click on any of these sections, so let's say we click on Founders to see who the founders of the company are. We can click on the News section and see if there's anything new that's been published about the company. We can click on their web traffic information or their organic keywords. A bunch of different sections brings it all together in one place. But the coolest part is this Research Questions s ection. You can type in any question you want. It's like, let's say you're selling payment software, and you want to know whether this company sells a subscription product.
The agent will crawl the company's entire website, crawl the internet, and come up with an answer for you, and it says, "Yes, OpenAI sells a subscription product." But what's really cool is you can add that question to the agent, so every future report that you run will automatically answer all your custom questions. So let's say, yes, OpenAI is a good fit. With a single click, we can add this company to the HubSpot Smart CRM, and we can see that company record and can do all the things you can do inside HubSpot Smart CRM. And finally, let's say we're interested in this company. We can click the Track button and type in English what we want to track.
It's like, okay, if they launch a new product, if they raise a new round of funding, if there's an exec change, describe it in English, whatever it is you're interested in tracking, and now this agent works on your behalf and will track all of those things automatically for you and notify you if something interesting to you happens. So that's the Company Research Agent, by far the most popular agent on the network right now. Thank you. Yep. Now, what if I told you agents can use other agents? I'm telling you, agents can use other agents. We can use existing agents as building blocks for building new, more powerful agents. It's like agent composition. I haven't had this much fun since I played with Lego, so this weekend, basically. Okay, so let's say I'm a customer success manager, and Canva is one of my accounts.
Love Canva, by the way. Shout out to Canva folks. Yeah, I know, wonderful company. So now, as a customer success manager, before hopping on a call, I'd like to kind of update myself what's been going on with this company, both within the HubSpot Smart CRM, but then all over the web: news, funding. Now, this sounds familiar. A lot of that work, the Company Research Agent already does. So we built a simple agent that takes all of this information and reduces all that work, in terms of creating an executive briefing, into a few easy clicks. Let's see how easy this is. So here's the Executive Briefing Agent.
It knows which company I'm going to- which one's assigned to me, and it will come, and it will say, "Okay, I'm gonna look at the CRM, I'm gonna look at the last calls, any issues, I'm gonna go look at the Customer Research Agent, and I'm gonna pull it all together into a very brief executive briefing, and I'm gonna convert it to an audio file so you can just kind of listen to it on the commute to work if you want to," right? Just pulling all that information together and giving it in the form that you want. All right.
So given the agents that Andy has demonstrated, given the agents I just showed you, and the two dozen other agents on the Agent.ai network already, and more coming every week, I could make the prediction that most of you will be using agents this year, and that's an easy prediction to make. So I'm going to make that prediction: most of you will be using agents this year. But I'm not going to stop there. I predict that many of you will be building agents this year, and not just the introverted developers like me. Anyone can build an AI agent. You can build an agent. You can build an agent. You can build an agent. Yes. By the way, if... You know, I could have my, like, Steve Ballmer chant right now.
It's like, "Agent Builder, Agent Builder, Agent Builder!" But I do not have the dancing skills of my friend Brian. So we'll just enjoy him for a few seconds. This is him on the INBOUND stage years ago. Hi, Brian. By the way, thankfully, Brian does not drive a hard bargain in terms of using his image in my presentations, which I'm grateful for. So announcing Agent Builder, which lets you build agents. Why should I have all the fun? So let me show you how easy it is. So here is the Agent Builder for the agent I just showed you, the Customer Briefing Agent. So it goes through five steps. It says, "Okay, go talk to the HubSpot CRM and figure out which account has been assigned to me. Now, go do the research agent, collect all of that information.
Now, go pass all of that context to a large language model, generate an Executive briefing, and then generate the audio file so I can listen to it on my iPod or my music player." And that's it. It's drag and drop. So I'll give you a sense of if we click on the plus button, there are other actions we could add. Let's say we wanted to add another step to this, and we have access to all sorts of data inside the HubSpot CRM. We can build UI, we can do all sorts of things. It's awesome. So the coolest part about Agent Builder, it has access to all the frontier models, so it has access to GPT, to Claude. It has access to all the image generation models, DALL-E 3, FLUX.1, Ideogram, Playground, name it.
It has access to all the HubSpot CRM, has access to be able to create blog posts, create web pages. It has Google, it has YouTube, Twitter, everything. You can mix it all up and build an agent with drag and drop in the same way you build workflows in a marketing automation product like HubSpot. All right, I'm gonna take a breath. This is a cue for me to breathe so I don't pass out on stage. Thank you. You're welcome to join in and take a breath as well. This is not a moment of Zen. We have work to do, so we're... All right. So that's Agent.ai, the number one professional network for AI agents, also the only professional network for AI agents. Now, normally, for labs projects like this, if I get a few hundred users before the launch date, I'm happy.
That gives me feedback, gives me signal. If I get a few thousand users before launch date, I'm like: "This kid's got potential. This one's gonna grow up and be something special." And I am thrilled to announce Agent.ai already has 47,000 users. They grow up so quickly. Thank you. This makes it the second most successful innovation project we've done at HubSpot, the first one being HubSpot CRM. All right, and what's equally exciting is we have 1,700 people signed up for the wait list for the Agent Builder, and I'm approving people literally every night, so I'll be doing that in the hotel room later tonight. So sign up. It's fun. All right, and remember, you don't have to be a coder to be an Agent Builder. You just have to be curious. All it takes is a few easy clicks.
So we started by building a UI, a user interface. This part of it is probably a little geekier than it needs to be for a mainstream audience. I'm a little geekier than I should be for a mainstream audience. It'll be okay. This will be quick. Then we layer it on with an application programming interface. This allows applications to be able to talk to HubSpot. The next evolution of this is what I call the AUI. That's the agent user interface, and the reason this is important is this is what you need for agents to be able to talk to each other and be able to collaborate. And the cool thing about Agent Builder is every agent that's built on Agent Builder automatically has an AUI. Now, this may not make sense to some of you.
That's okay, but your developers are gonna love it, I promise. A movie reference, that's a really subtle one, but we'll let it go. Okay, so now some of you are wondering: why is a customer platform company like HubSpot building an agent network? It's my belief that the next-generation customer platform needs to have three things. It needs a Smart CRM that has unified store of structured and unstructured data. Yamini talked about this, and that foundational AI has to be built into the core CRM. The batteries have to be included, right? Otherwise, it's not a Smart CRM. It needs smart engagement apps. You saw Andy talk about this, where we're infusing AI into all the engagement apps at HubSpot. And finally, you need an agent ecosystem, just like we have an app ecosystem. Now, shout out to all the app partners that are out there. Thank you.
Alright, so at HubSpot, we like to dream big and iterate small, and our dream has always been to help millions of organizations grow better. We do this by demystifying, democratizing, and delivering on the potential of new technology. If you're a Fortune 1000 company with a fortune to spend on AI, there are lots of good options out there for you. But for those of you that just wanna get growing with AI, HubSpot's here for you. Our focus is not just to make it exceptionally easy to use agents, but exceptionally easy to build agents and share agents and distribute agents. That's the idea. Now, since our founding 18 years ago, we've been inspired a lot by Apple. Apple changed the world years ago with the introduction of the iPhone, but what was equally impactful was the launch of the App Store.
Their vision was embodied in the phrase: "There's an app for that." Our vision for the future is: there's an agent for that. For every marketing, sales, customer service use case imaginable, including use cases we can't imagine yet, there will be an agent for that. Agents are the new apps, and we expect someday for there to be thousands of agents available. We want a thousand agents to bloom. Only a small fraction of them will be written and built by HubSpot. Most of them will be built by our partners, by all of you, the community. So we see a world where agents and humans that hire them are connected on a network and can collaborate in this vibrant marketplace. Now, if we think of agents as tools, we will get wonderful tools, but we should skate to where the puck is going.
If we think of agents as future digital teammates, we will get wondrous transformation for our businesses. Now, it's natural for this to cause some anxiety because it's not natural to think of a world where agents are members of our team. Deep down inside, we may be worried that AI will replace us as humans. As a human myself, I will humbly submit that AI does not reduce your value. It raises it. Even though I use AI every day to help me code, help me develop presentations, help me write dad jokes, I think I'm no less valuable now. I'm more valuable with AI, and the same is true for all of you because humans are more than the sum of the tasks that they do. There is an inexplicable magic in us made from the experiences we've had.
AI may be faster than us, AI may be smarter than us, but it can't be more human than us. It can't be, because it has not had human experiences, like the thrill of starting something new with a friend. Thank you. Or the profound joy of sparking someone new with the love of your life. Thank you. Or the deep, deep gratitude one feels towards a new friend that is helping continue the dream and vision. AI will not have those feelings because AI cannot have those human experiences. It can read books, it can inhale the entirety of the internet, but that's not the same as having those human experiences. Having said that, although AI has its limits, it's not going to replace us as humans. AI agents can be wonderfully helpful.
So we should let agents automate the mundane and amplify the magic, the magic that makes you, you. It is always an honor to be here. Thank you so much for coming out to INBOUND. Thank you for all the support on behalf of Yamini, Andy, and the global team of 8,000+ HubSpotters. I appreciate you. Thank you.
Please welcome to the stage, Ryan Burkhardt.
Good morning, everyone. I'm Ryan Burkhardt, Senior Director of Investor Relations, and it is my pleasure to welcome you to HubSpot's Analyst Day at INBOUND. Now, it is a special Analyst Day for us. In just a few weeks, we are gonna celebrate our tenth year anniversary as a public company, and this is the tenth time we've hosted Analyst Day here at INBOUND. Really exciting day. Thank you to all of you for joining us here in person. Thank you to everyone who has joined us on the webcast... and a very special thank you to all of our shareholders and all of our analysts who have covered us and supported us in our first ten years as a public company. We really appreciate you, and we feel like we're just getting going. So I hope everyone enjoyed the Spotlight. I know I did.
I thought it was fantastic, as usual, and really highlighted some of the awesome innovation that we've delivered this year, which you're gonna hear even more about in just a few minutes. So let's move on to the second part of our program today, beginning with our very exciting safe harbor statement, and you can find this and the entire presentation on our website, ir.hubspot.com. It'll be posted shortly after the conclusion of today's event. Now that we've all digested that, this is the agenda for the rest of the day. In just a few minutes, we're gonna hear once again from our CEO, Yamini Rangan, who will take us through HubSpot's vision for durable and efficient growth. Immediately following Yamini, we'll hear from our Chief Financial Officer, Kate Bueker, who will walk us through how we're executing on that durable and efficient growth.
Then finally, we'll wrap the day with a Q&A session with the entire Executive team, including Yamini, Dharmesh, Andy, and Kate. I wanna thank you all again for being here and taking time out of your busy schedules. We really, really appreciate it. Now, without further ado, let's get going.
Is it too honest to say that right after they announced them at INBOUND, I was banging on HubSpot's door for your new AI tools?
By bringing in AI into HubSpot, I think you've really done a great job of meeting users where they need to be met.
It's incredibly easy to use for pretty much anyone at any experience level with technology.
It's as simple as typing in an initial thought sometimes and clicking the button.
Once I figured out this is a super-duper time saver, there were moments where I was just like, "Oh, my God! I just saved myself five hours." Been a HubSpot fan girl for on the other side of ten years now.
We call it pain in the SaaS. Quite frankly, it's a pain in the SaaS if you've got all these different SaaS products. We now have a complete 360 view of our customers from a marketing standpoint, sales standpoint, and service.
What we've been able to produce on HubSpot, we just never would have been able to do it on any other software.
We needed to be able to lift this thing up and implement without IT resources, get it up and running within three months, and HubSpot was the only tool that we could confidently pursue that and.
With HubSpot, we do see a fast time to value, especially as we're onboarding a new team in the system or just continuing to manage our customer relationship.
We've been on a journey with you guys. There's always the time taken in order to address our needs, so it's lovely to feel that we're not just a number. Just continue, you guys are great.
Again, HubSpot is always growing, it's always evolving. It's never stagnant and just makes me excited, as even, you know, we look at INBOUND this year. Like, there's so much potential, so what's next? That makes me very hopeful and excited.
Hello, everybody. Welcome. Welcome to Analyst Day and INBOUND. It is just so fantastic to see so many of you here in the room, and if you're joining us online, welcome, and thank you for joining us. I hope you enjoyed the Spotlight. How was it? Good, and I really hope that you got to see the level of innovation that we have here at HubSpot. Over the next half hour, I wanna lay out our vision for durable and efficient growth. Now, I know many of you like to cut right to the chase, so let me start with some of the takeaways that we hope you get from this presentation. We have a fantastic product, and that adds unique value, and we are positioned to win in this large and growing market.
We are a platform company, and we have strong momentum as a customer platform and with our AI innovation. Our go-to-market strategy is working, and we are scaling our digital, partner, and sales-driven motions, and we are balancing growth, efficiency, and culture in order to build an enduring company. Now, in the next few moments, I'm gonna talk about each of these. But let me start with our mission and market opportunity. We are a mission-driven company, and we care really deeply about helping our customers grow. From the beginning, we have been different. We've zigged when others have zagged, and three choices in particular have been really important for us. First, is our focus on small and medium scaling businesses with 2 to 2,000 employees.
Second, is our choice to go from app to suite to customer platform, and third, is the level of conviction we have in organically building our products. Now, the question we keep getting asked is, "Why are you doing something that no other CRM company is doing?" Well, precisely because nobody is doing it. From the beginning, we had two insights. Scaling companies were struggling with patching together these point solutions or with clumsy Enterprise-class solutions, and neither of those worked for them. So we focused on serving those companies with two to 2,000 employees. Now, second, we found that CRM companies were growing through acquisition, and that was their playbook, and left all of the messy integrations for customers to deal with. We took a fundamentally different approach, organically crafting our platform in order to better serve those customers.
Now, those choices have been our strategic anchors, and they have unlocked a huge opportunity for HubSpot. Within that opportunity, we are focused on delighting our customers. So who is our customer? Our customer is a growth leader. They may be a VP of marketing, they may be a CRO, they may be a business owner, they may be in a two-person startup or a 2,000-person scale-up, but they are focused on growth, innovation, and driving change. And over the past twelve months, we have spent a lot of time talking to our customers and identifying key attributes that they need within a customer platform in order for them to be successful. The energy behind customer focus at HubSpot is just stronger than ever, and I couldn't be more thrilled. Then the next question we asked ourselves is: so how do we uniquely serve these customers?
The answer is clear: by being easy, fast, and unified. We craft products that are just easy to use, and because they are intuitive and efficient, they shorten the learning curve for our customers, and that helps drive fast time to value and immediate impact. Our customers see great adoption and value in weeks, not months. And we also offer unified data in a single customer record. That unified data makes HubSpot easy, as well as intuitive and accurate. Now, we are doubling down on all three attributes in order to add unique value to our customers. But don't just take our word for it. Let's actually hear from customers.
You can't get a unified customer experience unless it's easy to use. If it's not, then you're having to force people to use something they don't like.
Why would I waste my money on something if I don't see a value from it? And especially as a small business owner, where costs are important, right? That's a big deal to me. That is a big deal.
We could take a small, small slice of the pie, and we can experiment quickly with HubSpot and then keep on iterating to make it much more sophisticated. I was able to bring the system up and running within three nights.
I got everything set up in HubSpot in less than 48 hours. I surprised myself because I did not expect it to be that easy.
That is like the holy grail of anything, right? Just to be able to make it so you can go to one place to understand what your customer is doing across the business, and then breaking down the silos so you don't create duplication of effort or confusion to the customer.
HubSpot allows for so much efficiency between so many departments. It allows so much connectivity and so much availability of information, and to me, that just makes sense.
That is how we add unique value, and that means we have the right to win in a large and growing market. We're not opportunity constrained. The market for CRM and commerce within 2 to 2,000 companies is going to grow from $76 billion this year to over $128 billion by 2029, and we have great product market fit within this large market, and that means we can go from single-digit market share to many times that. Now, in order to do that, we are laser focused on driving the pace of product innovation, and that brings me to our product strategy. Our aspiration is to be the number one AI-powered customer platform for scaling companies, and to do that, we have great hubs with a unified data in a single layer, embedded with AI and powered by the ecosystem.
We believe this can fuel our customers' growth, and this is exactly what we are building with our customer platform. Over the past few quarters, we have ramped up R&D. We've increased the pace of our innovation, and we have gained solid momentum as a customer platform. So I wanna walk you through four key areas that have advanced our product and platform forward. We've embedded AI into every hub and across the entire platform. We have unified data into a single layer. We've innovated with each of our engagement hubs, and we have expanded our ecosystem. Let's dig into each of these, starting with AI. Our AI strategy is super simple. We just wanna embed AI into every hub and across the entire platform.
Now, the reason we're doing this is because we wanna remove the friction for customers in terms of buying, and we wanna make it super easy for customers to discover AI features, adopt it, and get value from it. That is our strategy, and we are positioned to win. We have the context of over 230,000 customers globally. We have a wealth of marketing, sales, and service content and a commitment to AI-first innovation, and our usage is beginning to increase. Now, at the spotlight, I talked about the variety of use cases that our customers have today, but it's not surprising to me that marketing and service are the initial areas of usage. Our customers have created more than 1 million pieces of content across emails, blogs, landing pages, social posts, and they have summarized more than 1 million conversations within Service Hub.
But what is really important is they are beginning to get real value. Within Content Hub, 91% of HubSpot AI users say the content that they create with AI performs better, and within Sales Hub, 76% of our AI users say it helps them spend more time in front of customers. And within Service Hub, 84% of our users say that it helps them respond to customers much faster. Now, this is great, but it's still early days, and most of these features have been generally available just this year. So we are going to stay laser focused on building awareness, repeat usage, and value with AI. Now, we do think that this awareness and adoption is going to increase with the launch of Breeze. Andy launched Breeze today. It is super exciting! But let me explain to you what Breeze is and what it does.
Breeze is HubSpot's AI that powers the entire customer platform. We wanna drive a level of consistency and awareness of AI features within our product, and we wanna make it super easy for customers to identify a new AI feature and get value from it, and that's why we're calling it Breeze. We announced a ton of innovation today. Let me highlight a few. Breeze Copilot. Think of this as the assistant, AI assistant. It knows your job, it knows your business, it knows how to help you with tasks. So if you're a sales rep, it can help you with researching your prospects, summarizing your call, and it does all of this in the flow of your work within HubSpot, on a mobile device, or within the browser. Now, Breeze Agents, on the other hand, they work for you just like an employee would.
We announced four new agents today: social agent, prospecting agent, content agent, and customer agent. And as the name suggests, a social agent will analyze your social posts. A prospecting agent will help you build a pipeline with new leads. A content agent will help you create, prioritize, personalize, and distribute that content. And a customer agent is very specific for your customer and answers questions specific to that customer. Now, as I look ahead, the roadmap for innovation with AI is just robust. We are building an AI platform for developers to build agents and apps. We are strengthening our trust and security and providing control to our customers about their data, and we're gonna continue innovating with copilots, agents, and features.
So the question on your mind is, "Okay, how are you going to monetize AI?" And maybe the real question is: Is HubSpot going to be a winner with AI? The answer there is, of course, we are positioned to win with AI, and our philosophy in terms of monetizing has remained very consistent. We care deeply about driving value for customers before we monetize, and we are committed to that approach, and it's working. Embedding AI into Content Hub has 3x 'd the attach rate to Marketing Hub. Embedding AI within Service Hub has increased the number of multi-hub wins, and 65% of our AI features are in Pro and Enterprise tiers, and that will continue to improve the upgrade rates.
So if you step back and think about how we have embedded AI across all of the hubs and the platform, that will drive customer additions and add Core Seat adoption. Now, in the future, as these agents begin getting used and add consistent value for our customers, we will look at usage-based pricing, but again, only after making sure that our customers are getting consistent value out of it. Okay, that is our AI strategy and momentum. Let's actually talk about unified data and how we're bringing together data into a single layer to strengthen the value of our platform. AI is only as good as the data that powers it. Last year, we acquired Clearbit, and since then, we have been busy at natively bringing that Clearbit data into our platform, and that's why I'm super excited that we launched Breeze Intelligence today.
Now, our vision with Breeze Intelligence is to provide our customers the best possible data about their customers, and our solution does three things: It enriches company and contact data with more than two hundred million data points right within our platform. It then allows for intent signals to be recognized by our customers so that they can identify and prioritize prospects. And when those prospects visit our customer's website, we improve the conversion by filling out the fields and shortening the forms, and our customers can do all of this right within HubSpot. Smart CRM with batteries included. Now, let's actually talk about Smart CRM. Back in 2014, we launched free CRM, and at that time, it was part of all of our hubs. But since then, we have been driving the pace of innovation.
Now, this layer is easy to customize, extend, easy to integrate data with, and if you talk to our customers and you ask them where they're getting value, where they spend a lot of time, they will tell you it is from having that single unified record of the customer. That is why it is now a distinct part of our platform. So what is the Smart CRM? It is a platform layer that unifies customer data, that provides admins control over that data, and helps admins bring together the data from their entire tech stack together. And in the past few quarters, we have made huge strides. We have expanded the number of custom objects that we support, enabling more customization. We've added support for Sensitive Data, opening doors in markets like healthcare, financial services, insurance, markets that have nearly $12 billion in market potential.
We've added a ton of smart features to make it better to set up, store, and improve the quality of data. All of that innovation makes our Smart CRM smarter. Let's talk about the innovation within engagement hubs. Our vision here is to create a system of engagement for the entire front office, across marketing, sales, service, support, and operations teams, and we've been driving the pace of innovation. You can see that momentum within the slide. We've built great front doors with Marketing Hub and Sales Hub. We're consistently driving multi-hub wins because of the level of innovation we have in Service Hub, Operations Hub, and Content Hub. And Commerce Hub has had a year of great momentum. We processed more than $1 billion in GPV this year, and we have doubled the number of enrollments compared to 2023 . So we're gonna continue doing that.
In addition, we have focused in two big areas. The first is a focus on usage. Now, every hub has, you know, a job to be done. Think of that as the use case. For example, Marketing Hub has a core use case of lead generation marketing automation, and we are world-class at it. But in addition to that, we are focused on driving usage and customer value because of that. That's why we are now tracking the usage at that individual use case level, and we are communicating the value of each of those use cases, both within our product as well as via our customer success teams. This is a big area of focus for HubSpot, and I'm really excited about how much value this is going to drive for our customers. The second area of focus is really on the power of multi-hub and platform.
Now, every single hub is powerful on its own, but the real value for customers comes from the fact that all of these hubs are connected, and we are focused on driving that value. So this brings me to the final area of our product, which is our ecosystem. We have built a trusted network of partners that can extend our reach. We have over 6,500 solution partners and nearly 1,400 application partners that are helping our customers with expert guidance as well as connection, and our app ecosystem is thriving. Now, back in 2019, we had just about 170 integrations, and in the last five years, we have 10x'd the number of integrations to over 1,700. That's big, but the proof that we are a platform is customers use us as a platform.
Plus customers have more than eight active integrations, connecting HubSpot to ERP, CPQ, product and project management, and that shows that they are bringing together data into HubSpot. Okay, to sum it up, our product strategy is clear, and our pace of innovation is exciting. We are a customer platform company. We have embedded AI into every hub and across the entire platform. We launched Breeze Intelligence, bringing together Clearbit data natively into HubSpot. We have strengthened the value of Smart CRM and made it a distinct layer. We have great use cases, and we're not only making our engagement hubs better, but we are amplifying the value of our hubs through multi-hubs, and our thriving ecosystem is expanding. And all of this makes us a platform of choice for scaling companies. So let's talk about how we are scaling our go-to-market. Now, our go-to-market strategy is very simple.
We want to deliver world-class volume at the low end and drive value at the high end. At the low end, we want more and more customers to start early in their digital journey with HubSpot and scale with HubSpot. And to help them do that, we're making HubSpot easy to buy, easy to use, and easy to upgrade. This not only supports our customers' value, but it strengthens our competitive moat at that low end. And in terms of the upper end, we're really focused on driving multi-hub adoption and platform adoption because that increases value. That is our go-to-market strategy. Now, let's talk about how we are scaling distribution across digital, partner, and sales-driven motions. Our digital-driven motion is scaling. We offer a set of freemium tools that helps businesses get started.
These tools, like a Signature Generator or Campaign Assistant, they expand the funnel at the top, and they have helped us increase our sign-ups by nearly 27% this year. Next, we offer a compelling value at that Starter tier so customers can grow their business. Earlier this year, in July, we relaunched that Starter tier with clear use cases, and we have streamlined the checkout process. Those changes in the product and checkout process, in addition to the seats pricing change that we made, have helped us acquire customers at scale. Now, it's not just about software. We help founders and business builders with great content and a thriving community to support them. So we offer compelling value for customers at the low end, and that's how we are continuing to scale our dig ital motion. Let's talk about the partner motion.
This is a strategic channel for us, and we have a growing network of more than 6,500 solution partners that extend our reach, help us win customers up-market, and drive nearly 40% of our ARR. Over the past few quarters, we have continued to upskill our existing partners while acquiring and activating new partners, and you can see that in the results. 75% of our customers are onboarded by HubSpot partners, and more up-market wins are with partners. Now, in addition to that, we are continuing to scale with partners. We have enabled them to source, to co-sell, and to service jointly with us, and you can see that in the result. Co-selling grew by nearly 72% year- over- year. If you step back and look at our partner motion, it's scaling.
ASPs are higher, win rates are higher, revenue retention are, is higher. All of that, tremendously valuable to us. Let's talk about sales-driven motion. This is scaling as well. Now, as you know, in the last few quarters, it has been a big shift in terms of our customer buying behavior, more towards committee buying and consolidating onto fewer platform choices, and our go-to-market teams have swiftly adapted to those changes. In particular, I wanna highlight two things. One is we have continued to upskill our reps so that they can drive team selling with partners, and we have enabled them to communicate the lower TCO and higher value of our customer platform. How we sell is why we win. Next, we have continued to streamline our sales execution with clear roles, clear expectations, a global sales methodology, and our focus on all of this has helped drive success up-market.
And you can see that in the results. Nearly 38% of our Pro+ customers are on three or more hubs, and nearly 28% of new ARR comes from large deals, and both of these have been consistent themes over the last few quarters. Okay, so it is not just about setting ourselves up for growth, but it is also about driving efficiency, and in the past few quarters, we have streamlined our partner-driven motion, we have enhanced our support and service efficiency, and we have leveraged systems in order to drive sales and marketing efficiency. I wanna highlight how we are internally using AI to set ourselves up to scale even further. Now, HubSpot runs on HubSpot, and we are a testing ground for AI.
We are actively experimenting, iterating, innovating with AI, and when we see what works, of course, we are gonna share that with our product teams, but more importantly, we're sharing those best practices with our customers so we can help them scale, and AI is helping us scale. Within marketing, AI has helped us improve the effectiveness of chat and email. Today, 80% of our INBOUND chat is automated through AI, and only 20% moves on to human agents, and because of the better routing, we see those human agents have higher pipelines, and all of the email personalization that I talked about in the spotlight, that's leading to better conversion rate. We see between 70%-80% improvement in our conversion rates.
Now, in sales, reps who are experimenting with AI and leveraging AI see 30% shorter time in terms of discovery and 20% faster follow-ups. Both of those are just keys to sales productivity. And in service, 30% of our tickets are just managed by AI, and that number is growing. And we're using AI to analyze all of our customer emails every single month to improve revenue retention. Now, I'll still say it's early days. We have a lot of work to do to be able to scale these efforts internally, but we think we are on the right path to leverage AI to drive efficiency even further. Now, it's not just about growth and efficiency. We care deeply about balancing growth, efficiency, and culture in order to build a great company.
We're focused on building two products, one for our customers and one for our employees, and we take this pretty seriously. In fact, just last quarter, we launched version 38 of our Culture Code, and within the version 38, we're focused on communicating why someone should work at HubSpot, how they can do their best work at HubSpot, and who will thrive at work at HubSpot. Huge thanks to Dharmesh, 'cause he drove a lot of this effort in terms of the Culture Code. We are a company of go-getters. We care deeply about being customer first, and I'm so happy that we're doubling down on that customer centricity. We have a growth mindset. We say it as "learn-it-alls " are much better than "know- it- alls" internally at HubSpot, and we care deeply about accountability, urgency, and ownership, and we just love being masters at our craft.
I'm really delighted that our teams are aligned, motivated, and really focused on solving for our customers. So let me close by saying why I am excited about HubSpot's future. We have a great product that offers unique value, and we have the right to win in a large and growing market. Our momentum as a customer platform is just palpable, and the level of innovation is just exciting. We're scaling distribution and building moats with a clear go-to-market strategy, and we are focused on growth, efficiency, and culture to build a great company. With that, it is my absolute pleasure to welcome Kate Bueker, our CFO, who will share how all of this translates into durable and efficient growth. Thank you so much for your support, and I hope you enjoy the rest of INBOUND.
Hello, everyone. It is great to see you here at INBOUND. I am excited to share some insights on how our product strategy and our go-to-market strategy translate into strong and durable financial results for HubSpot. In terms of our agenda, I'll start by discussing our business performance over the last year and share some progress on our journey to become a platform company. Then, I'll show how our customer platform enables durable growth for HubSpot. And finally, I'll talk about how we're balancing growth and profitability. First, let's quickly reflect on the strong financial performance of our business. HubSpot has a strong track record of delivering consistent top-line growth. Since 2019, our revenue has grown at a compound annual growth rate of 31%. We expect 2024 revenue to be nearly $2.6 billion, representing growth of 18%.
This revenue growth has been enabled by consistent and strong customer growth. Over the last five years, we have grown our customer base at a compound annual growth rate of 29%. At the end of Q2, we had over 225,000 customers, growing 23% year over year. Over the past five years, we have delivered strong top-line results and strong bottom-line results. We have grown our non-GAAP operating profit at a compound annual growth rate of 52% and expect to deliver nearly $440 million in operating profit in 2024. This represents 900 basis points of margin expansion since 2019. Our growth has also translated into strong free cash flow and a strong balance sheet.
Over the last five years, we have generated nearly $1 billion in cumulative free cash flow and expect 2024 free cash flow to be approximately $380 million. As of the end of Q2, we had $1.9 billion of cash on the balance sheet, which gives us the flexibility to continue to invest in high-return investment opportunities in our business. We're still early in capturing a meaningful share of the large and growing markets we serve. As you heard from Yamini, our core market of 2 to 2,000 employee companies is growing from $76 billion this year to $128 billion in 2029. We still have mid-single-digit penetration of our large TAM, and we have single-digit market share across all of our products.
Turning to our hubs, as you heard from Yamini, we continue to innovate across all of our engagement hubs, and this is translating into solid growth across the board. Marketing Hub is now a $1.5 billion business, growing 13% at the end of Q2. In terms of our other core hubs, Sales Hub is growing 24% year over year, and Service Hub is growing in the high 20s%. Finally, Content and Operations hubs are growing at 30% and 57% respectively. While this hub lens is the way that we have historically looked at the business, it increasingly does not reflect the dynamics of our business today. We've been on a journey for many years, from a marketing application company to a front-office suite to a customer platform. Single hub purchases now represent the minority of new ARR.
On our journey from app to suite to platform, we have become a platform company, and you can see it in the steady growth of customers who are leveraging the broad capabilities of our platform. About half of our total customers are leveraging three or more hubs, and more than a third of customers are leveraging five or more. You heard from Yamini, our strategy is to build the customer platform of choice for scaling companies, and this strategy is enabling multiple paths for durable growth for HubSpot. Specifically, the platform and our go-to-market strategy that endeavors to drive volume at the low end and deliver value at the high end is shaping all of our motions across acquisition, retention, expansion, and innovation. Let's start with acquisition. Our Starter product delivers a full set of front-office capabilities.
This compelling value proposition at the low end of our platform is fueling continued strong customer acquisition. Starter customers have grown fivefold in the last five years. They are the majority of our new customers in any given quarter, and they now total almost 110,000 customers at the end of Q2. At the high end, we're seeing more of our customers use HubSpot across their front office. This is translating into more large deals and more multi-hub new customers. Let's take a look. A growing portion of our deals in Professional and Enterprise tiers are at more than $3,000 a month in recurring revenue. This is a threshold we use internally to define a large deal.
The volume of our $3,000+ deals has grown almost twice as fast as our overall net new ARR, and $3,000+ deals represented 28% of new ARR in the first hal f of 2024. The share of our new Professional and Enterprise customer ARR that is multi-hub has also grown steadily over the last five years. In the first half of 2024, nearly 70% of new customer ARR came from customers who are buying more than two or more hubs, and almost 40% is coming from customers who are purchasing three or more HubSpot products. Turning to retention, from 2019 to 2024, our customer dollar retention has improved by approximately four p oints, from 84% to 88%.
Now, as I've said in the past, we believe that customer dollar retention is the metric that is most closely tied to the value that our customers see in our product. We have seen consistently that customers who use more of the product retain at a higher rate. For example, customers who use three or more hubs, Enterprise customers who are leveraging more sophisticated features and functionality, and customers who are deeply integrated with our ecosystem partners. These segments of customers all use more of the platform, they see more value from HubSpot, and they retain at a higher rate. And all of these groups of customers represent a growing share of our overall install base, which gives me confidence in our ability to continue to deliver strong customer dollar retention.
Over the past year, we've seen our net revenue retention contracted by two points to 102%. Now, as you see on the chart, if we move from left to right, we've actually seen a benefit to net revenue retention over the last year from customers who are downgrading and canceling a little less. We've also seen positive early momentum in Sales and Service seat upgrades under our new pricing model. That said, the biggest driver of the decline in net revenue retention is non-seat upgrades, which does remain under pressure. While we obviously don't like to see this contraction, we do still feel comfortable that net revenue retention will remain over 100% in the short term. In addition, our platform enables a number of upgrade drivers that can help to grow net revenue retention over time as the environment improves.
I'm gonna dive a little bit into a few of them, including upgrades, add-on upgrades, cross-sell, and seats. Starting with add-on upgrades. We see two common add-on upgrade paths for our customers, and both of them remain healthy. At the low end, we are seeing a consistent and sustained rate of upgrades from Starter into Professional tiers, and this is translating into higher ARR because the Starter cohorts we've seen over the last six quarters are a bit larger. Upmarket, our Enterprise upgrade rate has grown at a compound annual growth rate of 38%. Notably, the upmarket innovation in Sales Hub and Service Hub over the last few years is translating into outsized growth in the upgrade rate for these two hubs. Moving on to cross-sell. Significant additional opportunity remains for cross-sell within our installed base.
Today, as you look at the left-hand chart, you can see that only about a third of our Professional and Enterprise customers are using three or more hubs, so there's lots of room for additional multi-hub expansion. And as you see on the right-hand chart, customers who use three or more HubSpot products spend nearly three times as much with HubSpot. So as customers adopt more products, there's lots of room for ARR expansion as well. All right, finally, let's talk about the opportunity to continue to expand through seat upgrades. I wanna start with a recap of the seats pricing model that we introduced in March.
Our goal was to make it even easier to get started and grow with HubSpot, and we made three big changes: We simplified the Starter tier, and we lowered the price of Starter, we eliminated seat minimums, and we introduced a new Core S eat for customers who require edit access to the CRM. We expect there's gonna be two big changes to our business as a result of the new pricing model. First, we're gonna add more customers. Our pricing addressed a couple of key customer friction points that will allow faster deals and higher win rates at both the Starter and Professional tier. Now, as we talked about on our most recent earnings call, we do expect that this increased deal velocity is gonna be offset by lower initial ASPs, but our overall new ARR is going to be roughly neutral.
We've made some very nice progress since our global launch in March, and ASPs are performing a bit better and deal velocity continues to move up. Second, the new model will result in higher net retention. There are a few reasons that we believe this. First, customers under the new model are healthier because they buy what they need up front, and we are seeing higher seat assignment rates for new customers. Second, upgrade rates under the new model are gonna be higher with the elimination of seat minimums, and we are starting to see positive early trends in Sales and Service seat upgrade rates. Finally, the introduction of the Core Seat allows us to monetize our Smart CRM, and this should result in higher paid seat ratios. So far, what we've seen is that paid seat ratios have roughly doubled under the new model.
All of these factors contribute to our expectation that the new model is gonna result in higher net revenue retention. Okay, the other question that we get is around the timing of the migration and renewal of our existing customer base onto the new pricing model. We have started to migrate a small number of less complex customers over the last couple of months. As a reminder, we will migrate customers at a neutral ARR, and they will receive up to a 5% price increase at the first renewal following their migration. Our expectation is that between 50% and 60% of our existing install base will go through the renewal process before the end of 2025 . For this reason, the new pricing model will have a multi-year impact for HubSpot. Okay, let's turn to our final lever for growth: innovation.
We innovate where we think we can add the most value for our customers. This can be improving existing hubs, or it can be introducing new products, and this results in a mix of innovation that can drive growth for the long- term. Andy and Yamini both spent a lot of time talking about our AI innovation, so I'm gonna talk briefly about commerce and our new Breeze Intelligence product. Okay. Last year has been an exciting one for commerce. We made meaningful improvements in the product, and we saw a step function increase in the amount of customers transacting on the platform. We expanded our TAM internationally by enabling our customers to leverage multiple backend payment processors. We launched meaningful new functionality and subscription billings, and we made a major improvement in our integration with QuickBooks.
As a result, we saw nice growth in our commerce business over the last year, with over 5,000 monthly transacting customers, generating more than 90,000 transactions a month, and processing more than $1 billion of gross payment volume over the platform. It is still early for our commerce business, but I'm pleased with the momentum we have and the value that we are delivering for our customers. Let's turn and talk about our exciting new Breeze Intelligence product. As you heard from Yamini, there are three core use cases for Breeze Intelligence that we're launching today: company and contact enrichment, buyer intent, and form shortening. I wanna talk about the opportunity and pricing for Breeze Intelligence. We believe the data category is a multi-billion-dollar TAM opportunity, and we see positive signals for opportunity within our existing install base. First, data enrichment.
Data enrichment is a top priority for our customers. Second, our customers are generally dissatisfied with their current enrichment solutions, with an average CSAT score of, in the high twenties, and finally, the average HubSpot customer spends about the same amount on data as they do on their HubSpot subscription. Turning to pricing, customers will be able to buy Breeze Intelligence in capacity packs of 100, 1,000, or 10,000 as we move into general availability in Q4. We believe our pricing offers significant value relative to other solutions in the market. Okay, I wanna wrap up this section by summarizing our numerous levers for durable growth that are enabled by our successful platform journey. In acquisition, we are enabling more multi-hub purchases, which is fueling volume at the low end and value at the high end.
In retention, the higher usage and value of our platform is creating an even stronger foundation for customer dollar retention. In expansion, the breadth of the platform enables multiple paths across edition upgrades, cross-sell, and seats, and to innovation, we are delivering new functionality that is embedded into existing workflows. Next, I wanna shift gears and talk about our long-term model and how we are balancing growth and profitability. I wanna start, as always, by reminding you of our philosophy on balancing growth and profitability, which remains the same. We are committed to building a big and profitable company, and we're gonna do this by continuing to invest to drive long-term revenue growth at scale. At the same time, we are committed to consistently expanding margins over time. Before I dive into our margin framework, I wanna go through a quick reminder of the progress we've made in recent years.
Over the past five years, we have delivered an average of 180 basis points per year of operating margin expansion. You can see we've made particularly strong progress over the last couple of years, and I'm pleased to report that we are tracking ahead of our interim margin target. The largest drivers of our recent margin expansion are product infrastructure optimization, efficiencies in customer support and services, and our new partner commissions model that better aligns commissions and customer value. These factors have driven higher gross margins and a reduction in sales and marketing expense as a percentage of revenue. This has been slightly offset by our investments in R&D, where we continue to invest to drive innovation and long-term growth. Given our strong progress, we are updating and increasing our interim margin target. Let's walk through the specifics.
Our latest 2024 guidance implies an operating profit margin of 17% for 2024. This is obviously close to our current interim margin target of 18%-20% by 2026. Given the progress we've made to date and our confidence in our ability to continue to deliver leverage, we are raising our interim target to 20%-22% by 2027. Now, for many of you who've followed us for a while, you will likely notice that this new interim target for 2027 falls within the range of our long-term operating margin target of 20%-25%. So in addition to raising our interim target, we are also raising our long-term target to 25% from our previous midpoint of 22.5. Okay, how are we going to get there?
Let's start by looking at our major expense buckets, how we stack up against peers, and how we think about future investment, starting with COGS. Gross margin in our most recent quarter was 86%, which is truly best-in-class. Our strategy here is gonna be to continue to invest in resilience and security of our platform, while continuing to drive infrastructure optimization. This should allow us to hold gross margins around current levels, give or take. In terms of R&D, we are above our peer company average for R&D spending as a percentage of revenue, and that is by design. We will continue to invest disproportionately in R&D to drive innovation and fuel long-term growth. That said, R&D spending as a percentage of revenue should remain near current levels.
Sales and marketing is where we have the most opportunity, and I'm gonna come back and talk about the levers here in a second. In terms of G&A expense, today, G&A expense as a percentage of revenue is 8%, which is in line with similar software peer companies. Here, we're focused on really building a foundation that can scale as we grow, and over the longer term, we should see some modest leverage in G&A expense as a percentage of revenue. Okay, sales and marketing is where we see the most opportunity to drive further leverage in our business. Yamini talked about our three strategies across digital-driven, rep-driven, and partner-driven. We're committed to finding scale and efficiency across all three of these motions. In our digital-driven motion, we are introducing more free tools, and we are using AI to drive more and higher quality demand.
We are expanding our successful starter acquisition model to other lower ASP segments, and we are going to reduce friction across the entire customer journey. In rep-driven, we are leveraging systems and AI to help make reps more efficient at discovery and more effective at conversations with customers and prospects. And as we make progress in our digital-driven motion, our reps can even more focus on high ASP and multi-hub deals, which should drive higher productivity. And finally, in our partner-driven, this is a highly valuable motion today. It's got higher win rates, higher ASPs, and higher retention when partners are involved. We are going to continue to expand the number of our up-market customers where we are attaching partner sales and service. All of these are multi-year initiatives that will help us meet our medium-term targets and our long-term target margins. Okay, bringing it all together.
We are confident in our ability to deliver 20%-25% operating profit margins by 2027, and 25% over the long- term. Let me close with my three key takeaways from today. First, we are the platform of choice for scaling companies in a large and growing market. We are driving innovation throughout the platform, and this is fueling durable and diverse growth opportunities for HubSpot. And finally, we are delivering and expect to continue to deliver strong financial results and consistent leverage. Thank you for your time today and for your continued support of HubSpot. If you could just give us a few minutes, we will set up for Q&A.
All right, that was a quick turnaround.
That was very fast.
We are back with everyone's favorite part of the day, Q&A. Couple of ground rules before we get into it. First, we have about 40 minutes. Please try to limit yourself to one question. I know that can be tough with this group, but please do your best, and before you ask a question, if you could just state your name and your firm, that would be helpful as well. We will get going in a second. We'll start with sell-side folks, and then go from there. We have two mic runners, Jenna and Joe, back there somewhere. I can't see because of the light, but they'll be running around, so just raise your hand and we can get going.
Thank you. Tyler Radke from Citi. Great to see you all. Fantastic presentation and keynote this morning. Kate, I wanted to go back to one of your slides. I thought it was very helpful, all the colors, particularly around NRR. I guess the thing that surprised me was the drag from kind of the non-seat expansions, and I guess in some way you could say, "Hey, it's been a tough macro," but you've seen things like retention actually improve year over year. So I guess the question is, as you think about that headwind, how much of that is coming from the macro? How much of that is things more in your control in terms of execution? And what are you doing to kind of improve that into next year?
Yeah, thanks for the question. Maybe I'll start, and then, Yamini, if you wanna add in. I would say this is not a different story than the one that we've been talking about on the last few earnings calls, right? I think that, you know, over the last couple of years, what has happened is initially we both saw headwinds from expansion rates and also from downgrades and cancellation. And what's been nice is, over the last, you know, five or six quarters, we've seen downgrades and cancellations actually become a modest tailwind for us in terms of retention. But what we're seeing is that budgets are really still tight, we've been talking about that every quarter, which is holding back the overall expansion motion within our existing installed base.
That said, like, you asked a great question, which is what's in your control, and I think that's, like, where we focus as much as humanly possible. And, you know, what we tried to do today is outline all of the things where we think that we can be focused on to drive expansion of net revenue retention and growth in general, and that's about continuing to drive strong customer acquisition, continuing to drive strong usage from our customers, which is gonna further, you know, solidify that customer dollar retention. And then to take advantage of the value of the platform in the expansion motions, like multi-hub adoption, like edition upgrade, and importantly, to execute very well on this change to the seats pricing model that we launched in March.
Nailed it. Great.
Here, Siti Panigrahi from Mizuho. Great presentation. I wanna go back to the AI. That's a topic du jour right now. So, Yamini, now internally, you guys, you are using AI as well, and some of the companies are using. What are you seeing in terms of the efficiency and productivity, where it's going? And if you think about this five years down the line, do you expect this to be more deflationary in the sense number of sales and marketeers in the firm? And do you think the software is going to get the value from out of that?
Yeah. Thank you, Siti. Good to see you. Thanks for the question. So I'll say that internally, we started experimenting way early, right? Like, as soon as, you know, we found we started, like, using our product, and we were also internally experimenting, and I walked you through the different areas of initial, you know, kind of improvements that we have seen. Now, maybe I wanna take a step back and share how we have been experimenting in sales, particularly. So in sales, it is: how can we reduce the time for discovery? How can we reduce the time for faster follow-up? And both of those are pretty big keys for improving sales productivity. The thing that people miss is that when sales productivity improves, you can actually grow faster and you can grow better.
You know, if we can scale the impact that we are having internally across everybody, every region within sales, then we'll actually hire more salespeople. We're not gonna, like, reduce the number of salespeople. So I think, like, everybody talks about the deflationary pressure of AI. In development and in sales in particular, if we get benefits, if we can scale those benefits, and if we can consistently achieve those benefits, then we're gonna be hiring more engineers and hiring more salespeople.
Now, I do think on the service side, you know, it remains to be seen, but if a lot of our tickets can be managed by AI as well as automation, and then our reps are going to really go to the higher value-added, you know, tasks, and we likely will see a shift in terms of balance of where AI is used and where we use human agents. But at that point in time, both internally as well as kind of across the industry, we're gonna balance how we get value for it, and our consistent approach to pricing has been if the number of seats decrease, that means we are adding more value, which means we're gonna be able to monetize that value. I think that's how we approach it internally as well as externally.
The thing I would say is that it's still pretty early days. Internally, there is work to be done to scale, you know, the productivity as well as the growth benefits of AI, but we are on the path to really leveraging and iterating with AI. So pretty happy with that.
Great. Hey, guys, Jackson Ader at KeyBanc Capital Markets. Thanks for taking our questions. On the pricing model, and it seems like that's one of the nice things that can help in expansion, both from expanding seats and also help solve that issue of non-seat expansion being a headwind. So I was just, I guess, surprised to see that only 50%-60% of the existing base, right, by the end of next year. So I'm just thinking to myself, if it's this really nice tailwind, why aren't you, like, sprinting toward having your existing base, you know, be finished by next year instead of just, you know, a little over half? Thanks.
I mean, there are some practical reasons for that. You know, the migration requires, like, all of the customers to move from the existing model onto the new model. It is something that we've never done internally, and we wanna make sure that the experience for our customers is the least disruptive as it possibly can be. The other practical reality is that we will migrate customers, and then there may be some gap, and it could be a couple months, or it could be a bit longer between when we migrate the customers and when they actually are up for renewal, right? And so we will migrate the least complex customers earliest, and then we will tackle the harder and harder customer scenarios, and then, you know, when they come up for renewal, we will see, you know, that price increase.
If I were just, though, to take a step back and think about where's the benefit of the seats pricing model change over the next, call it one to two years, you really see it very strongly in new customers, right? That's where you see that benefit in net revenue retention and just healthier overall customers. And that will feather in over time, at the same time that our current install base will be migrated over.
Hey, thanks. DJ Hynes from Canaccord. Maybe you guys could talk a little bit about Commerce Cloud, or Commerce Hub, excuse me. It was the first time that you guys included it in the TAM analysis. I noticed. I assume there was some intent behind that. Does that mean there's gonna be more emphasis on that business? What still needs to happen from a product perspective, to get that ready for mainstream?
Yeah. Maybe I'll start, and Andy, you know, jump in with that. I think, we are excited about the progress, but it's still very early days in terms of commerce. Now, to step back and think about why did we go into Commerce Hub, there are two key challenges for our customers. First off, from the point of quoting to getting to the cash, that process is just completely broken. There are too many, you know, manual steps and things that our customers need to do, and they were looking to us to solve that problem, and the second, which is probably an even bigger thing, is that our customers want to have the transaction data, commerce data, within the CRM platform, and that is the reason that we went into commerce, and in the last couple of years, we have validated our hypothesis.
Customers are, you know, valuing what we provide in that single unified layer of commerce, and you can see the number of transactions that they do per month, as well as the overall transaction volume continue to increase. And I think, like, you could talk a little bit about the roadmap and where we are continuing to expand there.
Yeah, so if you look back at Q4 of last year, we launched a bunch of updates to Commerce Hub. We renamed it, we allowed people to bring their own payment providers. We made a bunch of updates to payments and billing and subscriptions. We added the QuickBooks integration, and we saw a big inflection in the number of HubSpot customers that were adopting our commerce tools. And so now, we're looking at those customers, and we're looking for the next things that they need, and it's really around, like, billing and subscriptions is where they need us to build more robust solutions for them. We're continuing to innovate in Commerce Hub. We're building out those things, and we're continuing to see steady adoption from our customer base, and all of that adoption is product-led adoption.
So those are all people who are HubSpot customers, who are discovering the tools, who are setting up the tools, who are using the tools. So we have a lot more innovation that we can do on Commerce Hub, and we feel really bullish about it.
Hey, you got Parker Lane from Stifel here. Yamini, earlier you talked about driving value through your AI as opposed to monetizing it through a consumption-based model. I was wondering if you'd talk about the benchmarks or signals you're looking for to tell you when a consumption-based pricing model would be appropriate or a reality for you guys?
Yeah. Thanks a lot, Parker, for that. So if you step back, the way we think about AI features is there are a set of features that are just table stakes. It just needs to be in every hub. It just needs to be throughout the platform. There cannot be CRM without AI features, and so there's table stake features. The next set of features, what we call as like differentiated features, where we are doing a lot of monetization already, right? So if you... The example that I gave, I think, last earnings as well as, you know, today, is like Content Remix .
If you think about our Content Hub that we relaunched in April during our Spotlight, you know, we could have called it an AI hub because the number of features there in terms of, Content Remix, AI blogs, Brand Voice, all of those are AI features that are required in today's content marketing to really scale how you think about, how you think about content. And when we did that, we saw fast adoption for a number of features, and that has actually driven the attach rate, and we said that it's gone up by 3x, right, in terms of Marketing Hub. We'll continue to see that. The same thing with Service Hub.
A lot of the innovation that has happened, probably in the last couple of quarters, have been AI innovation that have helped us drive multi-hub wins, as well as larger seat wins in terms of, you know, Service Hub. I think what I mentioned is that for agents in particular we, you know, we just launched agents, it's going in beta. It'll start getting generally available towards the end of this year and next year. We want to see daily, weekly usage, and we wanna see a level of value within agents, you know, as we see in the rest of our product. And that has consistently been the approach. And so we will track the usage really clearly, and when we begin to see that type of, you know, value being accrued by our customers, we are going to go and look at, like, usage-based pricing.
I think in the future, we expect pricing to be hybrid, and it'll be usage-based, it'll be, you know, certainly seat-based in some areas, and we're gonna be balancing both of those as we go into the future. Thanks for that.
Thanks so much. Brad Sills from Bank of America. Great to see you all, and thanks for hosting another wonderful event. A lot of great innovation on display today and in AI with Breeze, Breeze Intelligence, and the Agent Builder. Very impressive. Question is on that topic. When you think about the proliferation of AI, that's clear where you're headed right now, that's the focus today, is just to get AI in the hands of customers with the products you have. What are the gating factors to that, if you will? Is it, is there some go-to-market hurdle, where you have to get customers, you know, more comfortable with the data governance and understanding the ROI and the value to this new technology?
Is it more on the product side, we just need more copilots, more agents, in order to see that proliferation? Thank you so much.
Go ahead.
You want me to start?
Yeah.
You want me to jump right in?
Jump right in.
I mean, I think for us, on the product side, the thing that we just keep thinking about is, like, you know, innovation when it comes to bringing AI into more places in the product. So we've been working on this for, you know, multiple years now. We launched a bunch of great things today that we're really excited about, but there is still so much surface area in the product where we see opportunities to make HubSpot easier, faster, and more unified for our customers, and so obviously, AI is the technology, but at the end of the day, what we're trying to do is just provide our customers with the best possible tools for how to grow their business.
Like, right now, in my head, there's, you know, huge surface areas in HubSpot where it's like there's so many obvious places where we can make things easier, faster for our customers, give them more powerful tools. So I think as we continue to build those things, we're gonna see... You know, there's gonna be a day where it's impossible to use HubSpot without AI because it's so deeply embedded in everything we build. And that kind of goes back to Yamini's question around the pricing of AI, is like, for us, we want AI to, or HubSpot to be like an AI-native solution, right? Every new product that comes out, there's not gonna be like: "Oh, here's the non-AI version, and here's the AI version that you're gonna pay extra for." It's just gonna be every product, it's a given that it's in there.
So we have a ton of innovation to do on the product side. And then I think when you look at our user base, you know, you definitely see the innovators and the early adopters who are using the technologies, you know, every single day at this point. It's changed the way they're doing their job. And then you see, you know, the late adopters and the late minority who are still trying to get comfortable with AI in general. So I think we've got a ton of innovation we're doing in the product. It's gonna bring AI everywhere, it's gonna drive more usage of our product overall. And then I think overall, in general, over the next few years, you're gonna see, you know, just generally, people in general becoming more comfortable with it.
I think both of those are gonna come together, and that's what I think the future looks like inside the product.
Hi, guys, this is Peter Burkly with Evercore. I'm here on behalf of, excuse me, on behalf of Kirk Materne. So really interesting with the Breeze Intelligence. I'm curious, you know, and I think, Yamini, you sort of answered this in an earlier reply, but just philosophically, sort of that approach between, you know, driving usage and adoption versus capturing, you know, monetization from a pricing perspective. But then also, Kate, maybe I'm curious if you could just sort of dimensionalize maybe, you know, sort of magnitude and/or timing of when you might see some monetization flow through from that product? Thanks.
Yeah, I'll start with the vision, and Andy, you should just jump in here as well. We're so excited because last year, when we acquired Clearbit, we wanted to do exactly this. We wanted to be able to build Clearbit data right into our product and really light up every single marketing use case. And if you see the initial set of features that we launched in Breeze Intelligence, it's all marketing, right? It's audience tracking, it's intent tracking, it's really enabling all of that. So I think we are gonna add a lot of value, and a big part of the vision goes to Andy, like-
Yeah
... for thinking through this.
One thing, as you were talking about, it just made me think about is, like, we acquired Clearbit, like, less than a year ago.
Yeah.
That was, like, our big, ambitious goal for Clearbit. It was like: "We're launching a product at INBOUND next year!" And so I'm actually pretty impressed that we were able to pull it off, and it's a very good product. But for us, like, the, so taking a step back from, you know, Breeze Intelligence and Clearbit, the thing that we want inside the product is we wanna be the absolute best source of unified data for our customers. And so there's a bunch of stuff that we already do in HubSpot outside of that, like we capture when people are on your website, when they're opening your emails, we integrate with people's inboxes and automatically suck things into HubSpot. So there's a bunch of places where we were already doing, I think, really innovative work there.
And the thesis behind Breeze Intelligence and Clearbit acquisition in general was basically like: Okay, we have all this data, but what if your CRM could, like, crawl the entire internet, find out information about your customers that wasn't already in your CRM, and pull that data into your CRM? And we were like, "That would be a pretty awesome way to get unified data for our customers." And so Clearbit, you know, already was, you know, the top provider on the market, especially when it came to company-level data. We were using them, you know, every major company was using them in some way, and so they became the obvious target for us.
Then with Breeze Intelligence, that's the vision that we're trying to manifest: basically like, you're gonna have all your customer data inside of HubSpot, and then every single day, every single hour, every single minute, we're gonna continue to make that data better and better so you know everything about your customers.
And I think just to close out, you know, we're going to disruptively price that market, right? And the value doesn't come from just pure data. It comes from data powering the AI tools with.
Yes.
Innovative world-class engagement hubs, and if we can do all of that right out of the box for our customers, then it's going to be, it's gonna open up a really big opportunity. Now, I think the approach that we're taking, again, stays very consistent: add a ton of value, and then as we can, you know, drive that value consistently, we'll continue to monetize it, so.
Great. Elizabeth Porter here from Morgan Stanley. So you guys have a lot of factors to drive the expansion, whether it's the tiers, the seat upgrades, the cross-sell, and if I think back about the Analyst Day a couple years ago, there was a slide in there that had a pretty balanced mix of all the different factors. The macro and the new pricing model have changed the equation a bit. So as we look forward, kinda getting into a little bit more normalized macro, hopefully, how should investors think about the weighting of these different drivers? Are there any of the ones that we should be paying particularly close attention to?
Yeah, I think it's a great question. Thanks for asking. I think one of the advantages of having a broad and deep platform is that we do have that diversity in upgrade drivers. And, you know, when we looked at the pie chart, you know, a couple years ago, it was almost, like, 25% each, right? I think you're gonna see it ebb and flow a little bit. You know, if you were looking at that pie chart today, you'd see a little less in contact tier than you had seen in the original version. If I look at it in 12 months, you know, given the pricing change we've made with the seats model, I think you'll see a little bit more in seats.
Hey, everyone. Ken Wong from Oppenheimer. Hiding over here. It's very, very impressive margin targets, both interim, longer term, bumping those up. I just wanna maybe touch on how we should think about it from a more near-term basis. The keynote was chock-full of very impressive product innovation, typically leads me to think maybe a heavier investment year coming up. What's the right way to think about the path to the interim and the long term?
Yeah, thanks for asking, and I guess I am not surprised at all that people are trying to get early signals for 2025. I am not gonna fall for that. What I would tell you and what we tried to do is to reiterate our desire to drive a balance of growth and profitability over time. I think you've seen us do that consistently over the last five years. I think the last couple of years are pretty standout for us. We certainly have a variety of opportunities to continue to drive leverage in the business, but if I take a step back and think about what we wanna do, is grow the business as fast as we can in a responsible way.
So you should expect that we continue to deliver leverage over time. We tried to put out an interim and long-term target that would give you some guideposts, but again, it's not gonna be a straight line between now and either one of those two things.
Hey there, Josh Reilly from Needham. Thanks for a great presentation today.
Right here.
Sorry, I didn't see you.
So after some discussions with partners last night, it seems they're even more optimistic this year about the outlook going forward versus even last year, which I think, given the change in the commission structure, is positive feedback for you guys. How do you maintain this momentum with partners while also managing a more efficient direct sales approach, including AI and other tools, in the direct sales process and not create too much friction between the two channels?
Yeah, thank you for saying that. I'm glad that you did partner checks, and I'm glad it's coming out okay. That's great. Look, I think we had a phenomenal partner day yesterday, and we had, you know, room completely full, and we talked about our product roadmap. Andy did his product pitch again, and we talked about our platform roadmap, and we also talked about how we are investing back into the ecosystem. Look, we have a thriving ecosystem, and specifically with partners, we made a commission change very, you know, intentionally because we wanted to align the value to customer value, and we wanted to align our partners' commissions to customer value. What we launched yesterday and what we introduced is the ways in which we are reinvesting within the partner ecosystem.
You know, and we're doing that through certainly increased MDFs, marketing development funds, that they can co-market and co-sell with our sales reps. We are certainly doing that by increasing the commissions that we are providing for co-sell, and we actually launched a $10 million Partner Growth Fund to invest in the right type of growth partners, the ones that are sourcing the most, the ones that are driving revenue retention the most, and the ones that are driving most of the value for our customers. So they see us walk the walk in terms of taking, you know, where we were before and doubling down and investing in growth partners. But I think, like, stepping back, the biggest excitement that I hear from app partners as well as solution partners is the momentum as a platform. We've been talking to them about this for years.
We've talked to them about going from app to suite to platform and what that means as an opened-up opportunity for them. And as our product vision and our platform vision just kind of continues to really drive the innovation forward, we see a lot of excitement with partners, and so, I'm thrilled with the momentum, and yes, it was a fantastic day yesterday.
Awesome. Yeah. Hi, Taylor McGinnis with UBS. Thanks so much for taking the time today, everyone. So you spent a lot of time talking about all the new and emerging expansion opportunities. So I'm just curious, when you look over the medium term and which one of those could be most impactful to NRR, whether that be the Core Seats opportunity, some of the levers with AI and driving, you know, upsells and cross-sells, I guess, which are those, and how does that materialize into how you're thinking about NRR, your aspirations around NRR in that timeframe, too?
Yeah, I think, Taylor, what we have shared in the past is that our long-term vision for Net Revenue Retention is that 110-type number. That is still our vision for the long term for Net Revenue Retention. You know, we've obviously been operating in an environment that's been choppy here over the last few years. But as I think about the places that we're gonna drive investment, you know, again, I think it's diverse, right? We're gonna start with that foundation of customer dollar retention and feel very good about our ability to continue to deliver strong customer dollar retention, just given our ability to drive increased usage of our customers of the entire platform.
And then, that also enables us to really take advantage of this sort of set of upgrade levers, that we see across addition upgrades, across seat expansion, and really across multi-hub. I would say, again, in the nearer term, I think you're gonna see more impact from seats because we're gonna be working through, that seats' pricing model change, but all of them can be meaningful levers to the business over time.
Thank you. Arjun Bhatia with William Blair. Dharmesh, I wanted to get you in here. In your keynote, you talked about how Breeze was an evolution of ChatSpot. Can you talk just about what has changed that has enabled you to deliver copilots and agents, and you know, how much of that is the underlying LLM versus changes that you've made at HubSpot? And then, sorry, last one, Ryan, but the value prop that customers will get at the end of the day from agents and copilots versus your prior AI features, is that night and day? Is that an exponential increase, or is that just a kind of a gradual move up the curve? Thank you.
Yeah, I'll start. I think it's important to understand, so you know, ChatSpot graduated, as we mentioned, into copilots, and agents are the you know, the talk of the year. One thing, you know, we didn't get a chance to talk about this in the keynote, excuse me. So HubSpot's a platform company. We've said that repeatedly, and we're on this journey, and I think one of the strongest kind of moats that we have in business. I've been in software for thirty years, is this network effect between, for a platform, between developers and customers. So customers wanna go to platforms that have the most number of apps, most number of developers building on it, and developers wanna go to the platform that has the most number of potential customers.
What we're seeing now with agents, this is—I think this is going to play out, is that it's, there's a reset button on the moats that have existed before. Because now we're gonna see lots of new agents being developed, and those Agent Builders and developers are going to want to go to platform where the customers are and where there's a good, positive developer experience. So our kind of motivation for kind of driving some of that innovation in agents is to capture that developer mindshare early. So that's kind of thing number one. Thing number two, and this is what AI has really been contributing to, it's lowering the bar on what it takes to develop software. So we think we're going to see more developers that may not have classic coding experience.
And so we're gonna see thousands of these, kinda smaller software companies, new generation software companies start, and we want them to start on HubSpot. That's the idea is to capture that mindshare now, and we are already kind of the crowd favorite when it comes to startups and scale-ups. We've seen that kind of transition over the last five years or so, I'll say. So that's what makes it exciting, is like we're building this network, we're building this kind of platform, and the Agent.ai network is the first step in building a platform for this kind of new agent-based AI world. So that's, in terms of your kind of, first question, you know, ChatSpot eventually kinda, you know, morphed into what is Copilot, and that, you know, transition has been great.
We see something similar happening with Agent.ai right now. It's running as an experiment, as a labs innovation-style thing. Increases the kind of cycle time and how fast we can learn, and then we will figure out how we kinda move it into a kind of core team.
Yeah, I agree with that.
That's good. That's good.
Are we...
No.
We might have been out of questions. That would've been an all-time first.
Hi, Sonak Kolar here for Mark Murphy at JPMorgan. Thanks for the time and taking the question. Kate, you double-clicked during the presentation on the monetization opportunity, specifically for Breeze Intelligence. So I just wanted to understand, relative to the other announcements today, if we think about the broader Breeze platform with Agent and Copilot, as well as Agent.ai is that the one that you double-clicked on potentially because it's the largest near-term monetization opportunity? Or alternatively, is it the largest long-term monetization opportunity? Just trying to understand why focus on that one specifically.
I guess the reason that I double-clicked on it is probably answer number C, which is I wanted to double-click on it because it was a new and different monetization path than we have seen through some of the other innovation, and Yamini was covering AI pretty thoroughly. That said, I do believe that we have a big opportunity with Breeze Intelligence. You know, we've talked about it internally as just this no-brainer attach to Marketing Hub, which, as you know, is a big business for us, and so I think, you know, over the near term, there's really strong opportunity for Breeze Intelligence within the installed base.
The one note that I would say is I would remind you that we bought Clearbit with a legacy install base of customers and a legacy product, and that will be slowing down and will continue to slow down over time, and so in the near term, that's a little bit of an offset in the data space for us, but you know, I think it's a great long both near-term and long-term opportunity for HubSpot.
Yeah, no, I think that, you know, data is kind of known. There's, you know, everybody knows how to buy data, how to use data, how to leverage data within marketing, sales, service, all of that, and so I think it's very easy for our customers to understand the value of having data that powers AI, that works with our engagement hubs, and we're making the pricing pretty disruptive and easy to kind of start with. And so that is, you know, Breeze Intelligence. Now, in terms of our AI products, features, and all of that, as Andy said earlier, we certainly see a lot of adoption in early adopters, early majority. They're using the product every day. They're getting the value. But we wanna make sure that it's not just a certain set of customers.
We wanna get it to a broad set of customers, and, you know, we do believe that AI is early in a transformative shift, and we wanna be the winners in AI. We want our product to just be AI-native product, and as we see that value, we will, you know, increase, and so I think those two are slightly different, one very known, the other very transformative, both adding up to kind of long-term, durable levers.
We're coming up on the top of the hour here, so maybe time for one or two more.
Hey, guys, you have Darren Baker here from PRIMECAP, one of your shareholders. Thank you for the time today. I wanted to ask, Yamini, you started, the very first comment that you made in your presentation here was, "We're well-positioned in a large and growing market," right? You've put up some TAM numbers that clearly are several orders of magnitude larger than your revenue base today, right? When we've talked on recent earnings calls, you know, you've continued to emphasize, hey, there's a lot of scrutiny out there on spending, right? People are being cautious about the way that they're engaging. Sales cycles take longer and so on and so forth.
Yep.
Right? And as a result, perhaps, Kate, you know, we didn't hear much in the way of kind of quantitative guidance, or commentary, about your growth rate. So I'd love to hear if, you know, if you feel that we are in a more challenged environment right now, similar to the one that we've seen for the last year or two. As you talk with customers, what do you think is on their minds?
Yep.
... that could possibly encourage them to kind of get back to a place where they're more focused on growth, they're maybe more open to kind of incremental spending, or to go back to your comment from the Q4 call, I think, feeling a little more sense of urgency around investing in the products that you guys have clearly worked hard to produce here? Thank you.
Yeah. I love that question. It's great. Look, I think the macro is macro, and you all are much better at looking at it. I don't know what happened to interest rates today, but, you know, you all will figure that out. But we focus on, you know, really controlling what we can control, and everything that we talked about today, everything that we launched today in terms of the Spotlight, is driving that innovation, and you can see that, you know, pace of innovation pick up. I spend a lot of time talking to customers. I look at our pipeline daily, probably obsessively. You know, when we look at customers, they entered this year with a little bit of a wait-and-see mode, and we saw that in Q1. We saw that in Q2.
We're just gonna assume that's there, but what is on their mind is they wanna consolidate on fewer platforms. Back in 2021, 2022, when there was a party, everybody bought a ton of point solutions, and they now look at their tech stack, too many point solutions, not enough value, and so what is on their mind when we talk to customers is they wanna consolidate on fewer platforms, both to reduce cost, but also to get the right visibility on customer insights to be able to drive growth, and so that is exactly what we are focused on, delivering value with a great platform that can help them consolidate their costs and then improve value.
Then the next thing, to your point, is, as they begin to hear these stories of, you know, customers' win rate going from 15% to 25%, which is the use case that Aerotek, you know, shared with us today, other customers are gonna look at it and say, "Wow, I also need to increase my win rate by 40%, and so I need to start leveraging AI as the next part of the initiative that I wanna drive." And so we're showcasing the value. We're, you know, training and getting our customers, you know, prepared for how to bring their data together and how to get value out of AI, and I think that is going to be a tailwind for, you know, many quarters to come. Again, the question is, what can we control?
We can control innovation, we can control being AI first, we can control our execution, and then we help our customers drive growth in any environment.
I think that's a great place to wrap. Thank you very much, Yamini. Thank you, Kate. Thank you, Dharmesh. Thank you, Andy, for your time.
Yeah.
Thank all of you for being here.
Thank you.
Thank you.
Thank you so much.
We really appreciate you.