Hello and welcome to today's HubSpot Q2 2022 Earnings Call. My name is Elliot, and I'll be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I would now like to hand over to Chuck MacGlashing, Head of Investor Relations at HubSpot. The floor is yours. Please go ahead. Thanks, operator. Good afternoon, and welcome to HubSpot's second quarter 2022 earnings conference call. Today, we'll be discussing the results announced in the press release that was issued after the market close. With me on the call this afternoon is Yamini Rangan, our Chief Executive Officer, Dharmesh Shah, our Co-founder and CTO, and Kate Bueker, our Chief Financial Officer. Before we start, I'd like to draw your attention to the Safe Harbor statement included in today's press release. During this call, we'll make statements related to our business that may be considered forward-looking within the meaning of Section 27A of the Securities Exchange Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended. All statements other than statements of historical fact are forward-looking statements, including those regarding management's expectations of future financial and operational performance and operational expenditures, expected growth and business outlook, including our financial guidance for the third fiscal quarter and full year 2022. Forward-looking statements reflect our views only as of today, and except as required by law, we undertake no obligation to update or revise these forward-looking statements. Please refer to the cautionary language in today's press release and our Form 10-Q, which will be filed with the SEC this afternoon for a discussion of the risks and uncertainties that could cause actual results to differ materially from expectations. During the course of today's call, we'll refer to certain non-GAAP financial measures as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between such measures can be found within our second quarter 2022 earnings press release in the investor relations section of our website. Finally, I'm excited to announce that we'll be hosting our annual Analyst Day at INBOUND on September seventh. I look forward to seeing many of you there. The event will be live-streamed on our IR website for those who can't make it in person. If you have any questions, please reach out to ir.inbound@hubspot.com. Now, it's my pleasure to turn over the call to HubSpot's Chief Executive Officer, Yamini Rangan. Yamini? Thank you, Chuck, and welcome to everyone joining us on the call. Today, I wanna focus on the Q2 results, what's driving performance, and HubSpot's playbook for driving durable growth over the long term. First, let's kick it off with our results this quarter. Q2 was a solid quarter for HubSpot, with revenue growing 41% year-over-year in constant currency, and total customers growing 25% year-over-year to more than 150,000 globally, with more than 60% using multiple HubSpot products. These results were driven by strong product innovation, a deep understanding of what our customers need in order to grow today, and focused execution. As I talk to our customers, it is clear that SMBs need to do more with less as they navigate the current macroeconomic environment. They're looking for ways to consolidate their fragmented tech stack of point solutions, improve inefficiencies, and get better visibility into their customers' journey. As a result, HubSpot's connected, easy-to-use platform is mission-critical for our customers. Let's start with product innovation in the second quarter. We're focused on delivering a world-class front office platform by investing in our anchor hubs of marketing, sales, and service, and by innovating with our newer hubs. We made important strides in both areas in Q2. Last time we talked, I shared the exciting news that Marketing Hub had just surpassed $1 billion in annual recurring revenue. In Q2, we unlocked marketing automation features in the starter tier so that marketeers can deliver a personalized touch without draining personal time. Teams can now engage and convert customers faster by personalizing and segmenting marketing efforts and automating routine tasks. This unlocks tremendous value for the starter tier. On the upper end of the market, we're increasing Marketing Hub Enterprise pricing in September to match the additional value we've been delivering to customers over the last few years with more sophisticated functionality like revenue attribution reporting, AI-powered A/B testing, and more. These changes are consistent with our pricing and packaging strategy of driving high-value features down to starter while fueling innovation at the higher tiers. During our last call, we had also just relaunched Service Hub, and over the past quarter, we've been pleased to see customer usage of features like tickets and inbox tools increase. In Q2, we further enhanced Service Hub by launching inbound calling so that customers can provide real-time service and engagement over the phone. With these developments, we are making meaningful progress with Service Hub to empower our customers to deliver an exceptional customer experience at scale. Another big product milestone in Q2 was the launch of CMS Hub Free. Why free CMS now? Well, every business today starts with a website to connect with their customers. Too often, they're forced to choose between free content management systems with limited customization or robust solutions that are cost prohibitive, especially in this environment. What differentiates CMS Hub from other website-building tools is that it's powered by a free CRM platform. That means companies can easily build a beautiful website to attract visitors and leverage CRM to nurture that business across their entire front office, all on HubSpot. That combination is powerful and unique. As part of the launch in June, we also introduced CMS website themes in our marketplace to give business builders the tools and the assets to get started online. As a result, we have seen nearly 4,000 CMS free sign-ups in the first month since launch, and a 110% increase in marketplace transactions. I'm really excited with these results and the large green space opportunity to drive premium growth with CMS free. This pace of product innovation in the second quarter demonstrates that HubSpot is making meaningful progress to become the platform of choice for scaling businesses. Okay, shifting gears, I wanna acknowledge that we, like a number of companies, saw lengthening of deal cycles and more decision-makers getting involved in deals in June. While we cannot predict how the macroeconomic environment will evolve in the second half, I wanna share the HubSpot playbook for how we will navigate through the uncertainty in the short term while driving the business towards strong, durable growth over the long term. In a few minutes, Kate will talk about how we are planning to continue to grow profitably in this softer demand environment. One of HubSpot's strengths is that we focus on near-term execution while driving a clear long-term strategy. During times of uncertainty in the past, we have continued to place strategic bets that will help us and our customers emerge stronger. We did this successfully throughout the pandemic by following three core principles, solve for the customer, sustain investments in product, and execute with focus. We're taking the same approach to drive durable growth now. Let me unpack each of these core principles. During the pandemic, solving for the customer was all about helping businesses become digitally enabled. Now, it is about helping customers become digitally powered by helping them consolidate on a single platform to drive efficiencies. For example, take Sando Design, a digital design and branding agency. Before HubSpot, their front office consisted of multiple point solutions that were cobbled together by different departments. Our team helped them consolidate all of their point solutions and moved their entire front office onto the HubSpot platform. Before implementing HubSpot, it took them months to create landing pages and email campaigns. Now it just takes a few days. Additionally, Sando Design has saved thousands of dollars by getting rid of point solutions. This is exactly how our customers are reducing costs, increasing efficiency, and growing better by consolidating on HubSpot. The second principle in our playbook is to sustain investments in product. Throughout the pandemic, we maintained our investment in product innovation. This enabled us to create levers for long-term growth with platform and payments, and now we're continuing to build on that foundation. In the second quarter, we enhanced our platform for our customers with more sophisticated needs by releasing new Sales Hub features that enable CRM customization and crafted data management. We also continued to expand HubSpot's app ecosystem with our integration catalog growing nearly 40% year-over-year. Moving forward, we will continue to invest in our developer strategy to drive customization and extensibility of the HubSpot platform. We also made meaningful progress in payments by launching new features, including paid meetings, forms, and links, in addition to recurring ACH and a payments object. These features are helping our customers unlock the power of a commerce-enabled CRM. Take the nonprofit trade group, International Carwash Association, as an example. Their disconnected payment and fulfillment paths were creating customer friction and lots of manual processing. They were already using HubSpot's marketing, sales, and service hubs when they decided to implement payments to connect the buyer's journey. Since adopting payments, they have increased e-commerce sales by 400% and sped up the fulfillment process by nearly twofold. This is a powerful example of how B2B businesses can sell online and create new revenue streams with HubSpot. Looking ahead, we plan to sustain key investments in product so that we can emerge stronger as a platform of choice. The third and final principle is to execute with focus. Like every business, there are many factors outside of our control due to uncertainty in the macro environment. We will control the controllables. We're focused on driving both direct and partner enablement, reaching our customers with relevant TCO playbooks, and continuing to build a foundation for excellent execution. These principles have helped guide HubSpot to the position of strength we are in today. The long-term drivers of our business remain solid as HubSpot continues to be mission-critical for our customers, and we are making meaningful progress towards becoming the number one CRM platform for scaling companies. With that, I'll hand it over to Kate to talk about our financial results and our strategy for driving profitable growth. Thanks, Yamini. Let's turn to our second quarter 2022 financial results. Second quarter revenue grew 41% year-over-year in constant currency, and 36% on an as-reported basis. Q2 subscription revenue grew 37% year-over-year, while services and other revenue decreased 10% on an as-reported basis. Domestic revenue grew 35% year-over-year in Q2, while international revenue growth was 49% in constant currency and 37% as reported. International revenue represented 46% of total revenue in Q2. We added approximately 7,100 net new customers in the quarter, bringing our total customer count to over 150,000, up 25% year-over-year. Average subscription revenue per customer grew 14% year-over-year in constant currency and 10% on an as-reported basis to $11,200. This was driven by continued strength in multi-hub adoption. We saw healthy net revenue retention rates in Q2 on a continued strong foundation in customer dollar retention and nice cross-sell and upsell activity. Deferred revenue as of the end of June was $474 million, a 31% increase year-over-year. Calculated billings were $433 million in Q2, growing 39% year-over-year in constant currency and 30% as reported. The remainder of my comments will refer to non-GAAP measures. Second quarter gross margin was 82%, up 1 point year-over-year. Subscription gross margin was 85% in Q2, while services and other gross margin was -42%. Second quarter operating margin was 7%, down 2 points year-over-year. There was approximately a 1-point headwind to operating profit margin from FX in the quarter. Net income in the second quarter was $22 million or $0.44 per fully diluted share. At the end of the second quarter, we had just over 7,000 employees, up 41% year-over-year. CapEx, including capitalized software development costs, was $19 million or 4% of revenue in Q2, and free cash flow in the quarter was $22 million or 5% of revenue. Finally, our cash and marketable securities totaled $1.4 billion at the end of June. As Yamini highlighted, we saw a softening in demand in June, marked by lengthening deal cycles and more decision-makers in deals. In light of this increased macroeconomic pressure, we are taking several actions to drive a continued balance between growth and profitability. We had a strong first half of hiring and have a talented team in place to execute against our strategic goals, which gives us the opportunity to slow our hiring in the second half of the year. We will continue to maintain investments in product and engineering and grow revenue-generating sales headcount in the second half, but we will moderate headcount growth in other areas of the business. In addition, we are taking steps to pull back T&E, facilities, and other discretionary expenses in the second half of 2022. Before I turn to our outlook, I want to highlight the impact of foreign currency translation on our as-reported financial results. The U.S. dollar strengthened sharply throughout Q2 and into July, creating a meaningful incremental headwind to our 2022 as-reported revenue and non-GAAP operating profit relative to the guidance we provided on our May earnings call. At current spot rates, we now expect FX to negatively impact full year 2022 revenue growth by 6 points, up from our prior expectation of a 5-point headwind. Finally, our guidance assumes continued macroeconomic headwinds throughout the remainder of the year. With that, let's review our guidance for the third quarter and full year of 2022. For the third quarter, total as-reported revenue is expected to be in the range of $425 million-$426 million, up 25% year-over-year at the midpoint. We expect FX to be an 8-point headwind to as-reported revenue growth in the third quarter. Non-GAAP operating income is expected to be between $31 million and $32 million. Non-GAAP diluted net income per share is expected to be between $0.50 and $0.52. This assumes 51.0 million fully diluted shares outstanding. For the full year of 2022, total as-reported revenue is now expected to be in the range of $1.69-$1.695 billion, up 30% year-over-year at the midpoint. As I mentioned, we now expect FX to be a 6-point headwind to as-reported revenue growth for the full year of 2022. Non-GAAP operating income is now expected to be between $143-$144 million, which includes an incremental $5 million FX headwind versus our prior forecast. Non-GAAP diluted net income per share is now expected to be between $2.28 and $2.30. This assumes 51.1 million fully diluted shares outstanding. As you adjust your models, keep in mind the following. We expect CapEx as a percentage of revenue to be roughly 5% and free cash flow to be about $200 million for the full year of 2022, including an incremental headwind of approximately $10 million from the strengthening of the U.S. dollar relative to our prior forecast. With that, I'll hand things back over to Yamini for her closing remarks. Thank you so much, Kate. I want to close by saying we are confident in HubSpot's future despite the headwinds we are seeing from the macro environment. We have a clear strategy to drive long-term durable and profitable growth, an award-winning culture, and an incredible team solving for our customers every single day. I want to thank our employees globally for their adaptability and commitment to our mission. Lastly, I look forward to seeing many of you at our Analyst Day as part of our INBOUND 2022 event on September seventh. With that, operator, please open up the call for questions. Thank you. For our Q&A, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question today comes from Samad Samana from Jefferies. Your line is open. Please go ahead. Hey, good afternoon. Let me start with maybe just saying, you know, if we step back, it's just an awesome performance to deliver the constant currency growth that you are with everything that's going on with the macro backdrop. I mean, 39% for billings and 42% for revenue growth is extremely impressive. Just wanted to get that out of the way. Maybe, Yamini, I wanted to double-click on your commentary around what's happening with what you've seen in the demand environment. Just it's shifted for HubSpot and a number of other companies since you gave the guidance for Q2 and you updated that full year guidance. Can you maybe walk through the linearity of demand trends that you saw in the quarter and what you're maybe seeing more broadly across your business in real time today? Yeah. Thanks a lot, Samad, for that question. We are seeing two trends. First off, deal cycles are lengthening and more decision-makers, specifically CFOs and CEOs, are getting pulled into deals for approval. Now, in early May, we were one of the first companies to transparently share that we saw deals taking longer in Europe. In June, we saw these trends become more broad-based across our segments in the geos that we serve. Now, while these trends will have impact in the short term, and it is reflected within our guidance, we are confident in HubSpot's long-term growth opportunity for a couple of reasons. First off, while these deals are taking longer, they're coming down to platform and multi-hub decisions. SMBs are figuring out how to spend effectively, and they're looking at HubSpot as the platform to run their front office. We see deals close favorably, but taking a little bit longer. Second, we're not a discretionary point solution. We're the backbone for small and medium businesses. All these businesses still need to market. They need to sell. They need to service their customers. HubSpot is the system of record and engagement for customer data. We're mission-critical, and we're sticky. While we're seeing the demand trend soften a bit in the short term, we are very confident in our strategy and long-term growth. Thanks a lot for that question, Samad. Very helpful. Kate, maybe if I could ask you a quick follow-up, just as I think about, you know, Yamini talked about what you're seeing in terms of deals, et cetera. Maybe could you help me get some color on what you're seeing in terms of retention trends within the installed base and if there's been any change or anything worth calling out what you're seeing with your existing customers and maybe what you're assuming in the guidance around retention? Yeah, sure thing. As you know, we think about retention in two ways. We have a gross retention that is, you know, the base of what we then ultimately have as net revenue retention, which happens after the net upsell. Net retention in our quarter was comfortably above that 110 target that we've been talking about, despite really the more difficult environment that we saw towards the end of the quarter. I think the good news there is that underneath that, the gross retention remained really solid in the high 80s, which is the range that we've been talking about for a year or two now. on the net retention side, you know, we had another quarter of really strong add-on-based selling, which, in particular, add-on upgrades and cross-sell really led the way for us here in Q2. you know, in the back half of the year, it's a good question. You know, I would expect that net revenue retention will hang in there. I would call it around 110 for Q3 and Q4. Great. Really appreciate it. Again, very impressive results in a tough backdrop. Our next question comes from Arjun Bhatia from William Blair. Your line is open. Perfect. Thank you so much for taking my questions. Maybe just to follow on to that, can you talk a little bit about what you're seeing in terms of additions to the pipeline and velocity of deals that are being added? Understandably, it's taking a little bit longer as companies are scrutinizing spend more. Is the shape of what's coming into the pipeline changing at all? Are the products that customers are looking at changing? If you can give any color on that'd be super helpful. Yeah. Thanks a lot, Arjun, for the question. Look, I think the best way to think about is the more discrete changes are deal cycles elongating and more decision-makers kind of getting involved as they assess their budget, as they do a double-click and scrutinize their investments. This is not just happening in, you know, one part. It's kind of happening across geo segments and industries. There's not anything more specific that we see in terms of pipeline as it flows through from the top of the funnel all the way down. Now, having said that, as I talk to customers, hear from customers around the quarter, there are a couple of themes, right? Customers are looking for clear revenue impact. The closer, you know, the solution is to driving the impact, the faster the customer decision. From our perspective, we are leading with a clear impact from having marketing, sales, service tied together. The other part that's changing is that customers wanna be able to do more with less. That means they are okay giving up on point solutions, and they're looking for more platform-level solutions that are very cost-effective. We're leading with our CRM platform as well as multi-hub value proposition to have very clear TCO savings decisions for our customers. That's how I would think about the color. Perfect. That's very helpful. Thank you very much. Operator, I think we'll take the next question. It appears that we're having some technical difficulties here. Just, hang with us. Hey, Gabriela, it looks like your line's open. Can you hear us? Oh, great. Hi. Good afternoon. Yeah, I can hear you. Yeah. Fantastic. Looks like I'm gonna be moderating the call from here on out. Okay, great. Ask your question. I have one for Yamini and one for Kate. For Yamini, the comment that you were just making on driving to a clear revenue impact, I'm curious if you could share with us any nuance you're seeing within the front office categories. Are there some areas that you feel are more ripe for consolidation than others in the context of perhaps some of your company-specific product cycles? The follow-up question is for Kate. You mentioned earlier the continued macro headwinds being incorporated into guidance. Could you share a little bit about what you're assuming about the trend? Are you looking at June and extrapolating that things get worse? Are you looking at June and assuming things stay the same at the squishy June levels? Any color there would be helpful. Yeah. Thanks a lot, Gabriela. I'll start with the first one, which is, you know, is there any color specifically around products or segments? Look, I will say broadly, as we look at how customers are focused on spend, you know, they are deprioritizing spend that is not closely tied to revenue. Examples of that could be like event spend, brand spend, ad spend. Those are areas that they're deprioritizing. They're prioritizing spend that clearly drives pipeline and is closer to revenue. Examples of that are, you know, sales and marketing that continues to help them grow. I think it's really a question of where they are prioritizing. I think more broadly speaking, there is a look at, you know, how many point solutions do we have? Do we need all of these? Is there an opportunity to eliminate some of these point solutions and consolidate on a platform like HubSpot? That's certainly a value proposition that we're leaning into for both multi-hub sales as well as our entire suite sales. I'll pass it to Kate for the second half. Yeah, sure. In terms of guidance, I mentioned in my prepared remarks that we're factoring in a continuation of the current weaker environment. That really means, like, we saw a weakness through June and July, and we're assuming that that continues through the rest of the year. Gabriela, we're also assuming that foreign currency rates stay in and around current spot rates, which, as you know, is a 1-point incremental headwind to our growth for 2022. We feel really good about our ability to deliver against that guidance and, you know, the continued weaker environment we see today or even in something a little bit worse than that. That makes sense. Congrats on the quarter. Our next question comes from Alex Zukin from Wolfe Research. Your line is open. Please go ahead. Hey, guys. Can you hear me okay? We can. We can. Perfect. I guess I wanna ask about just the magnitude of incremental deterioration that's kind of assumed in the guide maybe for subscription constant currency subscription revenue for the year? Then is there anything in payment terms that you're seeing lengthening that's impacting cash flow this year or and/or, you know, linearity or seasonality of billings in the second half? Yeah, maybe I'll dive in there. You know, when we guided in May, Alex, the midpoint of our guide was 32.5% growth for full year revenue and on an as reported basis. Our update is for 30% as a midpoint, on an as reported basis, which is a 2.5% slowdown. One point of that is from FX, and then the other point and a half is associated with macro and business performance. I would like to remind you that our guidance includes six points of FX impact for the full year, up from five. Our constant currency revenue growth has moved from 37.5% to 36% growth for 2022. In terms of payment terms, we really haven't seen anything of note. I think the thing that we've seen most in sort of new deals is exactly what Yamini was talking about, which is a bit of a lengthening in the sales cycle and more decision-makers really getting involved before things are signed. Our next question comes from Brent Bracelin from Piper Sandler. Your line is open. Please go ahead. Thank you, Yamini, for being here. The growth equation has benefited from both strong new customer adds and strong ASRPC growth over the last couple years. As you think about entering a new period here where customer growth starts to slow just on these lengthening sales cycles, can you continue to drive ASRPC growth higher? I ask that because we are in a period here where we're starting to hear more narrative around vendor consolidation, which might play to larger deal bundles. Just trying to think through that equation as a potential offset to slowing customer net adds. Yeah, maybe. This is Kate. Maybe I will dive in around KPIs. I think, you know, you've heard us say over, you know, a long period of time that we see a lot of opportunity both in continuing to drive new customer acquisition and also in our ability to sell more of HubSpot into our install base. I think that the KPIs we saw in Q2 really demonstrated that balance pretty nicely. We added, you know, 7,000+ new customers, and we were able to grow double digits both in constant currency and on an as reported basis, our ASRPC. You know, that being said, I think, you know, as you look forward, and we've talked a lot about the moderating macro environment, we'll probably see a little bit of a moderation, similar to what we're seeing in revenue across our KPIs. We don't, you know, really give guidance there, but we do think, we would anticipate kind of back half of the year something that looks like 6,000-7,000 new customers added, in Q3 and Q4, and ASRPC growth that looks closer to the 10% end of the double digit in constant currency. Our next question comes from Keith Bachman from BMO Capital Markets. Your line is open. Yes, thank you. I wanted to segue on that. Could you talk a little bit more about the price increases? I don't think you mentioned a percent. You know, is there a range that you could share with us on how prices are increasing? Where would that be? And then how would that flow into both the ASRPC and/or revenues more broadly? Sure. Keith, I'll take the first part of the question, and then I'll have Kate comment on the second part, which is impact. Look, from a pricing perspective, we will stay very consistent with our pricing and packaging philosophy that we have talked to you all about. We pour innovation and build powerful features within the enterprise tier, and over time, we will bring those high-end features down to professional starter and premium editions. That's been our pricing and packaging philosophy for a while. When we have added tremendous value, then we look at pricing changes, and that's been very consistent. What I mentioned in the prepared remarks today is that with Marketing Hub, we've innovated, we've added tons of incremental value over the last few years, and the last time we increased price for Marketing Hub Enterprise was INBOUND 2018. That was, like, four years ago, and we certainly added a lot of value. What we did in July is that we announced an upcoming modest increase in terms of pricing that will be effective 9/1. For new customers, it's kind of in the 12% range. That announcement has gone out. We are tracking the feedback from customers, and it has been, you know, fine so far. Broadly, we'll continue to stay focused on driving a lot of value with our products. When we do deliver value to customers, we look at pricing and packaging decisions and changes. Kate, I will pass it to you. Yeah, sure. In terms of impact, I think it will take time for us to recognize the full impact of the incremental price on Marketing Hub Enterprise as customers go through the renewal process and as we add new customers. Any impact for 2022 is incorporated in the guidance we shared earlier. We now turn to Michael Turits from KeyBank. Your line is open. Please go ahead. Hey, I think I'll start with Kate and then with Yamini. Kate, just, the cash flow guide came down more than the EBIT guide came down. Is there some impact there from, call it, those lengthening decision cycles, in terms of working capital? Yamini, just really high level question, but, you know, we sort of all agonized over, "Oh, front office was great. Oh, no, it was a pull forward. Oh, no, now it seems to be back," and at least in core, you're doing well. I'm wondering how you're really thinking about how demand for front office for your customer set has evolved, or let's call it, over the last two quarters. Yeah, Michael, I'll start. You're right. The reduction of the free cash flow estimate for the full year incorporates two things. One is an incremental $10 million headwind from foreign exchange on cash flow, and the other is as in the demand environment reflected in our revenue guide. Michael, I'll take the second part of the question in terms of how we see the demand for front office evolve. Look, I mean, coming straight out of the pandemic, it was just massive tailwind. Every small, medium business that needed to get connected to their customers needed some kind of digital marketing or sales or support. I'd say that was just acceleration for adopting new solutions. I think now it is much more about driving productivity and making sure that it is very close to revenue impact, and it's also very, very cost effective. I think the nature of the conversations, and therefore the nature of the demand has shifted. Broadly, you know, our SMB customers, they are continuing on their path to digital transformation. The conversations and certainly the rigor with which they look at a purchase decision has changed. Our next question comes from Rishi Jaluria from RBC Capital Markets. Your line is open. Oh, wonderful. Thanks so much for taking my question. First, I just wanted to start on going back to the price increases. Number one, you know, what has just been the general feedback from customers you've talked to about the upcoming price increases? You know, I know it's baked into guidance, but should we expect there to be any potential pull forward of business, you know, with the expectation of an upcoming price increase? Then I've got a follow-up for Kate. Yeah. I'll start with that. I mean, look, I think, in terms of the price increase and the feedback, as I mentioned, you know, Marketing Hub Enterprise has gone through a very, very fast pace of innovation. We've added tremendous number of features there. I mentioned revenue attribution reporting, but that's just the first of many. We've done a lot in terms of omni-channel marketing and building just a world-class marketing solution. Innovations have gone in there, which means, you know, our customers understand. They use it, and they are leveraging it, and we have not increased prices for the last four years. The feedback from our customers as well as partners has been, "Got it. We get it given the level of innovation. We'll keep tracking, you know, the feedback from our, you know, our partners as well as customers. Kate, I don't know if you wanna add more in terms of how we think about flowing this. Yeah, I mean, look, I think that all product announcements carry with it some positive impact and momentum, if not in, you know, internally and externally, but it's not a huge needle mover for us given the timeline. You know, as I've said, it's all already there in the guidance. Okay, great. That's helpful. Kate, I just wanted to look at the, you know, SBC line. You know, historically your stock comp, I think, has been pretty responsible and relatively low for a company of your growth profile, but it looked like it spiked up a lot this quarter to 19% of revenue. I know there's obviously a lot of moving pieces there. Any one-time impacts that led to that big spike? Maybe taking a step back, can you walk us through philosophically how you think about stock comp at HubSpot and kind of the balance of stock versus cash? Thank you. Yeah. You're right. Q2 stock comp expense every year is a high watermark for us as a percentage of revenue because we do a catch-up in expense for two quarters. That 19% in Q2 will be the high watermark for 2022. The increase is driven by a few things. One, there's an impact. We had a bunch of notable executive hires over the last six months, and that impacts. The other big change is that we made a shift in our RSU vesting from four years to three years for all of our employees. We think it was an important change for us to make. It increased the attractiveness of the RSU. It increased the retentive value of the RSU. Those are really the two big drivers of the SBC increase. That's, you know, even with those changes, we pay a lot of attention to stock comp as a percentage of revenue. We also pay a lot of attention to dilution, and we look at our management of those relative to our peer companies, and we still compare very well against the software companies in general. Our next question comes from Keith Weiss from Morgan Stanley. Your line is open. Great. This is Elizabeth Porter on for Keith. Thank you so much. Just given the more volatile macro environment, I wanted to see if there was anything you guys are doing to adapt the go-to-market strategy just to more uncertain times. You know, any incremental focus on different customer segments, geos or departments that might have more durability in spend, for example. Thank you. Yeah. So Elizabeth, thanks a lot for the question. You know, in terms of what we are seeing, it's very, very consistent with what I said earlier. There are, you know, we saw broad-based shifts in terms of the time it takes, but really not that much more. Now, in terms of our go-to-market strategy, I think that was an earlier question, in how we are adapting. The place to start is always what are the customer conversations focused on? The customer conversations are focused clearly on revenue impact or TCO cost savings. That's how the nature has changed, which means from a go-to-market strategy perspective, we're focused on both campaigns as well as arming our direct sales team, the partner organization, and our customer success organization with those very specific value messages. Now, more broadly, a time of shift like this is, you know, doubling down on direct and partner enablement, doubling down on the right kinds of messages where we can deliver value to our customers and overall additional rigor within the sales process and sales execution. That's how I would, I kind of look at it. I don't know if, Kate, you have anything else to add. No, I think you got it. Yes. We now turn to Brad Sills from Bank of America Securities. Your line is open. Please go ahead. Oh, great. Thanks so much, and I'll echo the congratulations on very solid execution in a tough environment. I wanted to ask about Service Hub first, please, if I could. It's a major new revamp here, and we're hearing real positive feedback from the challengers. To get your perspective on that cycle, please. And then also, with the move into higher levels of the organization for approvals, could that mean that perhaps we see larger, more strategic deals as those deals close? Hey, Brad. Thanks a lot for both of those questions. I'll start with the Service Hub 1. We're very happy with the traction that we're beginning to see following the relaunch. Just as a general reminder, we've launched a number of features in both Q1 as well as Q2, including SLAs, mobile help desk, inbound calling, you name it. Like, there was a very long list of really needle-moving features. The focus for us with Service Hub has been providing a modern help desk that provides omni-channel support and great AI-powered automation. The question that we ask after a major relaunch of a project, product like that is, are more customers buying the product? Are more customers using the product? Are more customers happy with the product? All three are trending positively and in the right direction. In the past quarter, we've seen customer usage of features like tickets and inbox tools increase. Overall, the feedback from Service Hub has been very positive. Our partners are beginning to see this as traction in terms of the conversations they're having, and so is our direct sales team. I think that's one. The second part of your question, which is, you know, does more decision-makers mean more strategic deals? It certainly means more platform and multi-hub deals. That's exactly what we're seeing in conversations. As you get, you know, a CEO or a CFO getting involved in these deals, the question they're asking is, what can be eliminated and what can be consolidated? Therefore, for us, it has been leaning into our platform's message, as well as the value proposition, which is we deliver a very cohesive, a connected, easy-to-use platform. Now, in the prepared remarks, I gave you an example of Sando. That was exactly the nature of the conversation. You know, if you're already on a couple of hubs from HubSpot, what does it mean to have HubSpot as the platform, and how does it drive both direct revenue impact as well as cost savings? That's the nature of the strategic conversations we are having. That's great to hear. Thanks, Yamini. We now turn to Ken Wong from Oppenheimer & Co. Your line is open. Great. Thank you for taking my question. A couple of quick ones here. I just wanted to maybe dive into that 1.5-point growth headwind due to macro. I think we saw some, like you guys tossed out softness, tossed out longer sales cycles in terms of some of the headwinds. Just wanted to double check to see, are you seeing? Is it just purely sales cycles lengthening, or are customers walking away trimming deal sizes as a reflection of the softness? What's the right way to think about that movement? The second piece around pulling back of spend, is that more of a near-term tactical response to macro or a broader shift in the growth and profitability algorithm? Hey, Ken. Thanks a lot for the question. In terms of the way to think about this, it's really more conversations and elongation of the sales cycle. When you have additional executives get involved, we're spending the time on making sure that there is clarity in how our solution actually impacts revenue. Most of the time, like I said in my prepared remarks, it actually comes back and we see it, you know, and then in, you know, in the first or next couple weeks, those deals can close. I think the way to think about it is that elongation and more scrutiny in terms of the budget and more scrutiny in terms of the decision making, but it results in favorable closing for HubSpot, and we'll continue to execute in a way that it goes forward from there. I think the second question that you had is there more near term tactical response or is more change to long term? You know, from a HubSpot perspective, you know, we will reflect what our customers need at this moment, and certainly we'll have some changes, you know, in the near term in terms of how we're responding. Longer term, the secular trends for our customers remain really consistent. We are in the middle of going from a marketing automation company to a CRM platform. We are in the middle of not just serving the smaller end of SMBs, but really going upmarket. Both of those continue to remain strong and they both provide durable, longer term growth levers for us, and we'll continue to have those kinds of conversations with our customers. Our next question comes from. I'm sorry. Just one quick thing to add on demand is, you know, we just had our product strategy meeting, which is, you know, we spent eight hours talking about what customers are asking for, what partners are asking for. One continuing trend we've seen is that customers still have ideas. It's not like they've kind of crawled into holes like, "Okay, we're done here." They're still asking for new features, they're asking for new developments. There's years and years of innovation left across the front office. This is not a static industry where everyone's kind of said, "Okay, well, we're done here." We're seeing just as much kind of demand in terms of innovation from our customers and partners as we have in the past. That has not slowed down. The list of things that we wanna do over the coming years is just as long as it's ever been. Our next question comes from Michael Turrin from Wells Fargo Securities. Your line is open. Please go ahead. Hey there. Thanks. I appreciate you taking the question. Kate, I know it's not necessarily the best metric to focus in on for your model, but billings grew 39% in constant currency on a tough compare. Remind us the plus and takes of that metric. I mean, maybe it is seeing some impact, but why isn't that showing more impact given some of the later cycle characterizations we've heard across software companies? Then just any dynamics for us to be mindful of there given some moving pieces in assumptions and what you're seeing here currently is helpful. Thank you. Yeah, I mean, I guess what I would say is that, you know, billings growth in constant currency and revenue growth in constant currency, generally speaking are gonna track one another, and you're seeing that in the results that we put up in Q2. You know, the difference there is really just 1.5 points, which is not, you know, particularly large. You know, I think we would expect the relative trend over the back half of the year to kind of remain as it is. Our next question comes from Siti Panigrahi from Mizuho. Your line is open. Please go ahead. Thanks for taking my question. Yamini, thanks for sharing your playbook to how to navigate uncertainty. When you compare contrast last, you know, 2020, post-COVID versus now, one thing you said digital enabled versus digitally powered now, does it. I know in 2020 you were more focused on acquiring more customer with that promotion. Could you double click on how what's your strategy going to be now if you this slowdown, is it more retaining? You know, we saw downgrades, subscription downgrades, you know, post-pandemic. Could you double click how you're trying to be different in your strategy this time versus last, you know, what we saw in 2020? Yeah. Siti, thanks a lot for the question. I would say that going into the pandemic, the conversations with customers and what the focus was was just getting digitally enabled. There was, I would say, almost a beeline towards multiple point solutions and getting digitally empowered, right? Now, as I have conversations with our customers, two things have shifted. First off, you know, the conversation is much more about what is the level of revenue impact and what is the level of cost efficiency I can get. That is, you know, front and center in a lot of the conversations. From our playbook perspective, going into the pandemic, we literally turned around, had our sales organization, customer success organization, all focused on helping small and medium businesses get online. Now, our playbooks are turning around, and it's really focused on driving revenue impact as well as cost savings for our customers and ensuring that they get the most out of the spend that they've had over the last couple of years. When we talk about our playbook and solving for the customers, really everything centers around what is their current top priority and how can we be very helpful in terms of helping them meet their challenges. We now turn to Terry Tillman from Truist Securities. Your line is open. Please go ahead. Great. Thanks for taking the question. This is Robert Dee on for Terry. Appreciate the International Carwash Association case study on payments, but curious to get some feedback on what you've heard from customers using it, and where customers are seeing other quantifiable impacts from embedding the feature in the CRM. Thanks. Yeah, that's a great question, Robert. I mean, look, I think from a payments perspective, we've said this is a strategic bet, and we are patiently nurturing, and we think it's a very big growth opportunity for us going into the future. It is actually worth reiterating that payments and commerce for us is based on two very solid hypothesis. The first one is that B2B businesses can grow revenue by selling more online. It kind of seems very obvious with what we have seen in B2C, but B2B businesses are kind of slower in terms of doing that. That is number one hypothesis. The second part of our hypothesis is that commerce context within CRM will help businesses grow. Why? Because when you bring payments object and data into a marketing campaign or in a sales conversation, or you have the support conversation, and it's grounded in terms of what the customer has paid and what they have, you know, purchased from us, then it really helps them grow. Those are our two main hypothesis. Over the past year, our conviction in terms of those two hypothesis has only grown. The feedback from the customers that we're working with is that, yes, you know, we have now found new ways to sell online. This was the example that I gave in the prepared remark. Yes, bringing payments dashboard and connecting it with CRM provides us more visibility into our customer, not just before they become a customer, but after they become a customer, and they continue to grow with us. We'll certainly share more examples as we go in the future, but broadly speaking, both of those use cases and hypothesis are validated, and we are continuing to focus on driving great customer experience. We found the fit. Now we have to drive great customer experience from the time that they discover payments within HubSpot to the time they close the transaction and continue to grow with us. We're happy with what we are hearing from customers there. Our next question comes from Kirk Materne from Evercore ISI. Your line is open. Yeah, thanks very much. Yamini, sorry if you touched upon this, but just to be clear on the deals that are getting elongated, is there any, I guess, split towards, you know, either expansion with existing customers or new customers? It sounds like it's just multi-product deals that are bigger in nature from a spend perspective that are getting pushed. I wasn't sure if that was impacting perhaps expansion more or net new. If you could add any color there, that'd be helpful. Yeah, Kirk, it's a good question. Look, I think in terms of what we are seeing both in elongation and more people, it's kind of across both, install base as well as new. Having said that, I think in the shorter term, we'll see the mix between install base and new move around. You know, first off, as I mentioned a couple of times here, we're seeing consolidation on fewer platforms. If they already have Marketing Hub or they already have Sales Hub, they're looking at HubSpot to further consolidate, and that drives more of an install base mix. The second part of it is that our product portfolio has expanded both in terms of breadth as well as in depth, and our install base has grown pretty significantly in the last couple of years. Our direct and partner teams have leaned, you know, more into kind of our broader value proposition as well as installed base. While we see this mix between installed base and new logo a little bit around month-to-month, we see a very healthy balance as we look into the future, both based on what our customers are telling us as well as our product innovation cycle there. Our final question comes from Taylor McGinnis from UBS. Your line is open. Please go ahead. Yeah. Hi. Thanks so much for squeezing my question in. Maybe going off on, you know, Michael's question earlier. I believe, you know, duration and co-terming has impacted billings from one quarter to the next. So any thoughts that you can provide on the impact that that might have had on a year-over-year basis? And I guess just given the strength of, you know, this metric, does that mean the lower constant currency rev guide is more reflective of what you're seeing in the pipeline today as maybe, you know, post the quarter? And is there any conservatism, you know, embedded in the guide that the slowdown could worsen and maybe just wanting to be mindful of that? Thanks. Yeah. You know, there's not a ton that I would add around the billing side. We have been consistently seeing a little bit of a shortening of duration over the last couple of years, and that just continued into Q2. I would say not new news there, just a continuation of the trends that we've been seeing. In terms of the guidance, and, you know, I tried to cover this in Gabriela's question. You know, we assumed in the guidance that we were gonna continue to see the softness in the macro environment that we saw through June and July, and that would sort of sustain through the back half of the year. We are not assuming that we're gonna see another step change down in the overall environment, nor are we assuming that we're gonna see a recovery here. It's really just like a status quo from what we saw over the last couple of months. This concludes our Q&A. I will now hand back to Yamini Rangan, CEO of HubSpot, for final remarks. Well, I wanna end by thanking all of our employees for their commitment to our mission as well as just incredible work. I also wanna thank our customers, partners, and investors for the support. Honestly, I look forward to seeing many of you at the Analyst Day at INBOUND in a couple of months. Thanks a lot, everyone. Today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.