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Earnings Call: Q4 2024

Feb 12, 2025

Yamini Rangan
CEO, HubSpot

Training our team to focus on solving more complex issues. Similarly, our AI sales bot is resolving over 80% of website chat inquiries, making our chat teams more efficient while delivering great customer experiences, and we're transforming sales prospecting. AI-powered and automated communications generated over 10,000 meetings for our sales teams in Q4 alone. AI is helping us work smarter, serve customers better, and lead by example, and this is just the beginning of an exciting journey of transformation with AI. Okay, our AI efforts are gaining momentum, but the bigger question is, how will HubSpot lead and win in an AI-first future? The answer is clear. We will win for three key reasons. First, we unify structured and unstructured data. Second, we provide complete context across the entire customer journey, and three, we have the industry's most active AI agent ecosystem connecting AI builders and users.

First, agents rely on great data to succeed, and HubSpot is uniquely positioned here. The need for structured data, customer company contact records, and the need for access and reporting on that data does not go away. This is where HubSpot already excels. But agents also need unstructured data, the 80% of data in calls, emails, and transcripts, which reveal deeper insights into customer needs. So, for example, imagine an agent creating a list of sales calls that made reference to a specific competitor. That is using unstructured data. Now, you can filter that list and only include the deals that were won. That's using structured data. Now, you can use the transcripts and summarize the key points that seem to be most effective in winning against that competitor.

The combination of structured and unstructured data is a game changer, and our acquisition of Frame AI takes this to a whole new level by doing this in real time. Second, AI agents need more than just data. They need context. Siloed agents that solve task-specific problems will fall short, just like siloed point applications did. Now, HubSpot's all-in-one approach, unifying a system of records with data, a system of engagement with hubs, and a system of action with AI-powered execution, ensures that agents have the context they need across the entire customer journey. Finally, we've been investing in creating a vibrant agent ecosystem. We think the future is about hybrid teams consisting of both people and AI agents working together. To realize this vision, we've been incubating Agent.ai, a project to create a network of AI agents.

We've grown the user base of Agent.ai over 10x in six months, from 50,000 users at INBOUND to over 500,000 users, and empowered over 5,000 builders to create agents with our low-code tool. By combining the best structured and unstructured data, providing complete context about the customer, and following an ecosystem-centric approach, we are helping our customers seamlessly shift to the age of AI. Okay, let me wrap up by highlighting our strategy and the levers for growth that will drive long-term success. We are entering this year with more clarity on strategy, more alignment on outcomes, and more urgency in execution than ever before. We will double down on our customer focus and make our products easy, fast, unified, and AI-first. On the product side, you can expect to see us make meaningful progress with Breeze Copilots, agents, and the AI platform layer that will power all AI offerings.

We will continue to build deeper up-market functionality while making onboarding and everboarding easier within our product. We are excited to unveil a host of new capabilities at our Spring Spotlight in April and later at INBOUND in September. Now, in terms of growth, we will focus on four key levers: rep-driven growth with targeted headcount investments that match the opportunity. Improved retention and downgrades driven by more product usage, building on the progress we made in 2024.

Operator

Thank you. If you would like to ask a question, please dial in.

Dharmesh Shah
Co-Founder and Chief Technology Officer, HubSpot

Hold on, hold on, Ryan. We had some technical difficulties at the start, and I guess the webcast didn't start on time, so some folks missed some of the beginning comments. So we're going to turn it over to Yamini to give us her comments again. So she's going to start from the top right now. So I'll turn it over to Yamini now. Yamini?

Yamini Rangan
CEO, HubSpot

Okay, thank you, Ryan, and sorry about the technical difficulties. We'll start the call now. Thanks, and welcome everyone to the call. I'll begin with our Q4 and 2024 results and the consistent themes driving those results. Then I want to switch gears and highlight our strong momentum in AI, how we're positioned to lead and win with AI, and the multiple growth levers we are activating to drive long-term success. Let's dive in. We had a solid finish to 2024, highlighting our leadership as a platform company. Q4 revenue grew 20% year-over-year in constant currency, and full year 2024 revenue grew 21% in constant currency. We delivered another quarter of standout operating profit growth with an operating margin of 19% in Q4 and 17.5% for the full year, up 200 basis points year-over-year. We're consistently balancing growth and profitability as we scale.

Our customer base expanded to 248,000 customers globally, with over 9,800 net customer additions in the quarter. These results underscore the trust our customers have in our platform as they consolidate on HubSpot and rely on our innovation to scale in any environment. Now, beyond the results, what truly excites me are the consistent themes driving our performance. Our momentum in 2024 was driven by growing Multi-Hub adoption, strong up-market and down-market success, improvements in retention, and product innovation. 2024 was a defining year, one that cemented our position as a leading customer platform for scaling companies and marked a transformative leap in our evolution as an AI-first platform. We made significant strides as a unified customer platform, with Multi-Hub adoption reaching new heights.

Over 35% of our Pro+ customers by ARR now use four or more hubs, up 7% year-over-year, clear proof of the value of our unified customer platform. In the up-market segment, momentum was driven by product innovation, growing awareness of HubSpot as a platform, and strong execution with partners in our ecosystem. Large deals grew 21% year-over-year, driven by key product advancements like sensitive data support, UI extensions, and CRM development tools for deeper customization, and enterprise-grade service hub capabilities that resonate with larger teams. Awareness of HubSpot as a customer platform improved by seven points globally, and our partner ecosystem is driving success, with co-selling increasing by 68% year-over-year. In the down-market segment, the pricing model change we introduced, combined with AI innovation, laid a strong foundation for growth.

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