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HUBSPOT INC (HUBS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered revenue of $714.1M (+16% as-reported; +18% cc) and non-GAAP diluted EPS of $1.78; both beat Wall Street consensus, with FY25 guidance raised across revenue, operating income, and EPS, and a new $500M share repurchase authorization as incremental catalysts .
  • Non-GAAP operating margin was 14.0% (vs 15.0% YoY) due to anticipated early-year cost timing (401k match), while GAAP operating margin remained -3.8%; operating cash flow was $161.6M and non-GAAP free cash flow was $122.3M .
  • AI-first execution remained the key narrative: customer agent adoption doubled to >2,500 customers, copilot users rose to >660k, and multi-hub consolidation continued (37% of Pro+ customers using 4+ hubs, +7pts YoY); management emphasized value-based consolidation, upmarket traction, and credit-based AI monetization expansion beginning June (no material FY25 revenue impact) .
  • FY25 outlook raised: revenue $3.036–$3.044B, non-GAAP op income $558–$562M (18% margin), and non-GAAP EPS $9.29–$9.37; Q2 guide: revenue $738–$740M, non-GAAP op income $124–$125M (17%), and non-GAAP EPS $2.10–$2.12 .

What Went Well and What Went Wrong

  • What Went Well

    • Multi-hub/platform consolidation accelerated: 37% of Pro+ customers by ARR now use 4+ hubs (+7 pts YoY); large deal growth +23% YoY with new enterprise-grade functionality and more customers landing full-platform .
    • AI adoption surged: customer agent doubled to >2,500 customers with avg. 50%+ resolution; copilot users more than doubled QoQ to >660k; Spring Spotlight rolled out 200+ features and new agents (Knowledge Base Agent orchestration) .
    • Financial execution strong: revenue +16% YoY as-reported (+18% cc), operating cash flow $161.6M, non-GAAP free cash flow $122.3M; FY25 guide raised; $500M buyback authorized .

  • What Went Wrong

    • Margin compression: non-GAAP operating margin 14.0% (vs 15.0% YoY) and GAAP operating margin -3.8%; management flagged a 1-pt margin headwind in Q1 from increased 401(k) match timing .
    • ASRPC declined: average subscription revenue per customer fell to $11,038 (-4% as-reported YoY; -2% cc), with management guiding ASRPC to be approximately flat near term as starter cohort laps normalize .
    • NRR eased sequentially: net revenue retention was 102% in Q1 (down 2 pts QoQ as expected), though management continues to expect NRR to be up a couple of points for FY25 on seat-based pricing tailwinds .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$669.7 $703.2 $714.1
Non-GAAP Diluted EPS ($)$2.18 $2.32 $1.78
GAAP Operating Margin %-1.4% -1.5% -3.8%
Non-GAAP Operating Margin %18.7% 18.9% 14.0%
Cash from Operations ($USD Millions)$159.5 $194.1 $161.6
Non-GAAP Free Cash Flow ($USD Millions)$129.2 $163.0 $122.3
Revenue YoY Growth (as-reported)20% 21% 16%

Segment breakdown:

Revenue Components ($USD Millions)Q3 2024Q4 2024Q1 2025
Subscription$654.7 $687.3 $698.7
Professional services & other$15.0 $15.9 $15.4

KPIs:

KPIQ3 2024Q4 2024Q1 2025
Customers (#)238,128 247,939 258,258
ASRPC ($)$11,235 $11,312 $11,038
Net Revenue Retention (%)104% 104% 102%
Non-GAAP Subscription Margin %88.3% 88.2% 87.1%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Billions)FY 2025$2.985–$2.995 $3.036–$3.044 Raised
Non-GAAP Operating Income ($USD Millions)FY 2025$543–$547 $558–$562 Raised
Non-GAAP Diluted EPS ($)FY 2025$9.11–$9.19 $9.29–$9.37 Raised
Weighted Avg Diluted Shares (Millions)FY 202553.9 53.3 Lowered
Total Revenue ($USD Millions)Q2 2025—$738–$740 New
Non-GAAP Operating Income ($USD Millions)Q2 2025—$124–$125 (17%) New
Non-GAAP Diluted EPS ($)Q2 2025—$2.10–$2.12 (53.2M shares) New
Free Cash Flow ($USD Millions)FY 2025~$560 ~$570 Raised
CapEx (% of Revenue)FY 2025~5% ~5% Maintained
Share Repurchase Authorization12 months—Up to $500M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI initiatives & agentsINBOUND showcased Breeze and 200+ innovations; AI embedded across hubs . Content Hub attach tripled; customer agent early traction; >75k weekly Copilot users .Customer agent doubled to >2,500 customers (avg. 50%+ resolution); copilot users >660k; new Knowledge Base Agent; 200+ Spring Spotlight features .Accelerating
Platform consolidation35% of Pro+ customers used 4+ hubs (+7% YoY); multi-hub adoption rising .37% of Pro+ customers use 4+ hubs (+7 pts YoY); more customers landing full-platform .Up
Upmarket momentumLarge deals +21% YoY; enterprise-grade feature delivery .Large deal growth +23% YoY; new data centers and enterprise capabilities .Improving
Seat-based pricing & NRRNRR 104% in Q4; expected seasonal downtick in Q1; seat upgrades the primary driver .NRR 102% (down 2 pts QoQ as expected); FY25 NRR expected up a couple points; seats upgrades continue .Seasonal downtick; FY uptrend expected
Macro/value focusImproving sentiment; purchases remain value/committee-driven .Uncertainty persists; elevated value focus across cohorts .Unchanged
Regional mixInternational was 47% of revenue in Q4 .International 47% of total revenue .Stable
Compliance/upmarketHIPAA qualifications enabling mid-market momentum .Continued traction without segment-specific concentration .Stable
R&D execution velocityOngoing AI rollouts; enterprise features; upmarket workspaces .200+ feature releases; agent-to-agent orchestration; new workspaces .Accelerating

Management Commentary

  • “We saw further proof that our AI-first strategy is working—customers are seeing results, and Customer Agent is a great example of the value we’re delivering.” — CEO Yamini Rangan .
  • “Q1 operating margin was 14%, down 1 point YoY due to a 1 point headwind from an increased company match rate for our 401(k) contributions… Net income was $96M… Free cash flow was $122M.” — CFO Kate Bueker .
  • “Starting June… Customer Agent will be available through our existing credit-based system… Pro and Enterprise customers will receive a monthly allotment of credits included in their subscription… we do not expect a material impact to our 2025 revenue from this change.” — CEO Yamini Rangan .
  • “Our Board has authorized HubSpot’s first ever share repurchase program of up to $500 million over the next 12 months.” — CFO Kate Bueker .

Q&A Highlights

  • Guidance mechanics and FX: Management flowed ~$50M FX tailwind into FY guide but did not flow Q1 outperformance due to macro uncertainty; M&A OpEx impact is “very small” .
  • AI monetization: Credit-based pricing vector anchored to value outcomes (e.g., conversations, meetings); packs improve predictability; no material FY25 revenue impact expected; hybrid seats+credits over time .
  • Seats model & retention: Migration progressing; 50–60% of ARR to pass first renewal by end-2025; seat upgrades driving NRR uplifts .
  • Customer adds moderation: Net adds to ~9,000 per quarter near-term; ASRPC growth approximately flat over the next couple quarters .
  • Internal AI efficiency: Support AI resolution rates increased to ~41% in Q1; ~11k sales meetings booked via AI; marketing email conversion up to ~80% with personalization .

Estimates Context

MetricQ3 2024Q4 2024Q1 2025
Revenue Actual ($USD Millions)$669.7 $703.2 $714.1
Revenue Consensus Mean ($USD Millions)*$647.3$674.0$700.4
EPS Actual ($)$2.18 $2.32 $1.78
Primary EPS Consensus Mean ($)*$1.91$2.20$1.76

Values retrieved from S&P Global.*

Implications:

  • Q1 2025 revenue and EPS were modest beats vs consensus; consecutive beats in Q3 and Q4 strengthen estimate-revision risk positively into Q2, especially with raised FY25 guide .
  • With ASRPC near-term flat and net adds moderating, outperformance likely hinges on continued upmarket wins, multi-hub consolidation, and AI adoption/value translating to expansion.

Key Takeaways for Investors

  • Raised FY25 guide and a new $500M repurchase provide support for sentiment and potential multiple defense amid macro uncertainty .
  • Near-term margin cadence: expect stronger margins post-Q1 timing headwinds; Q2 guide implies 17% non-GAAP operating margin .
  • Growth drivers remain durable: multi-hub consolidation (+7 pts YoY), upmarket large deals (+23% YoY), and embedded AI features/agents accelerating adoption .
  • Watch AI monetization ramp: credits go live in June; while FY25 impact is limited, seats+credits mix could become a medium-term revenue tailwind as value becomes repeatable .
  • Expansion thesis: seat-based pricing migration, first-renewal uplift (up to 5%) and seat upgrades underpin FY25 NRR improvement expectations .
  • Risk checks: macro/value-focused buying patterns persist; ASRPC flat near term; monitor pipeline velocity and international mix stability (47%) .
  • Tactical: Q2 setup features raised FY guide and AI catalysts; beats/misses likely driven by large-deal execution and multi-hub land/expand efficiency .