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Date
Wednesday, Nov. 5, 2025 at 4:30 p.m. ET
Call participants
Chief Executive Officer — Yamini Rangan
Chief Financial Officer — Kathryn A. Bueker
Co-Founder and Chief Technology Officer — Dharmesh Shah
Director of Investor Relations — Charles MacGlashing
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Risks
Kathryn A. Bueker stated that dominant headwinds affecting average subscription revenue per customer (ASRPC) growth include "robust starter additions and the lower ASM associated with new customers post our pricing change in 2024."
"Billings, as you know, is a bit noisier. It shows impacts of FX. It shows impacts of the mix of net new ARR, and it shows duration pretty acutely," according to Bueker, indicating potential volatility in billing metrics due to currency, booking cadence, and contract mix.
Takeaways
Revenue -- $810 million, up 18.4% year over year in constant currency for Q3 2025.
Operating margin (non-GAAP) -- 20%, a one-point improvement year over year and a three-point sequential increase for Q3 2025.
Total customers -- 279,000, up 17%, with 10,900 net new customers added during Q3 2025.
Subscription revenue -- Increased 21% year over year as reported in Q3 2025; services and other revenue rose 19%.
International revenue contribution -- International revenue grew 20% in constant currency and 25% as reported, comprising 49% of total revenue in Q3 2025.
Average subscription revenue per customer (ASRPC) -- $11,600, up one point in constant currency and three points as reported compared to the prior year in Q3 2025.
Net revenue retention -- Flat sequentially at 103% in Q3 2025, with expectations for a step-up in the fourth quarter.
Calculated billings -- $804 million, up 19% year over year in constant currency and 18% as reported in Q3 2025.
Net income -- $140 million, or $2.66 per fully diluted share (non-GAAP basis) in Q3 2025.
Free cash flow (non-GAAP) -- $147 million, representing 18% of revenue in Q3 2025.
Share repurchases -- 780,000 shares repurchased for $375 million in Q3 2025.
Guidance for Q4 2025 -- As-reported revenue expected between $828 million and $830 million, up 16% in constant currency and 18% as reported; non-GAAP operating margin forecast at 22%.
Full-year 2025 guidance -- As-reported revenue expected between $3.113 billion and $3.115 billion, growing 18% in constant currency and 19% as reported; non-GAAP operating profit expected at $574 million to $575 million; diluted non-GAAP EPS between $9.60 and $9.62.
Multi-hub adoption metrics -- 43% of the Pro Plus installed base by ARR subscribe to three core hubs (up 4 points year over year), and 39% own four or more hubs (up 6 points) as of Q3 2025.
Large deal momentum -- Monthly recurring revenue deals over $5,000 increased 35% year over year in Q3 2025, highlighting strong upmarket traction.
AI feature adoption -- The ChatGPT connector was activated by over 47,000 customers, with 55% from the Pro Plus tier; prospecting agent activations reached 6,400, up 94% from the prior quarter in Q3 2025.
AEO tool usage -- The AEO grader tool has been used by 70,000 customers since launch (as of Q3 2025).
New product launches -- More than 200 new updates/products launched at the Inbound conference, alongside the introduction of Data Hub and the announced acquisition of xFunnel.
Free cash flow guidance -- Full-year free cash flow is expected to be about $580 million for FY2025.
Summary
HubSpot (HUBS 1.54%) delivered 18% constant-currency revenue growth in Q3 2025, driven by customer expansion, multi-hub adoption, and strong upmarket wins. Management highlighted a disciplined approach to balancing growth with operating leverage, maintaining high customer retention and stable net revenue retention at 103% in Q3 2025. Emerging growth levers—core seats, credits, and embedded AI—show early signs of monetization in Q3 2025, as customer adoption of AI-powered features accelerates across the installed base. Executives forecast a significant step-up in net revenue retention for Q4 2025 and reiterated confidence in sustained improvement from the pricing model change and increased sales capacity.
Bueker said, "we saw less of a benefit of expanding duration versus what we saw in Q2," clarifying that billing growth variance in Q3 2025 was primarily due to a shift toward existing customer selling and shorter contract durations.
Management confirmed international revenue now represents nearly half the business, underpinned by 25% as-reported growth in Q3 2025.
HubSpot introduced a universal usage-based pricing system (credits) in Q3 2025, which is already driving incremental monetization from customer agent, data hub syncs, and prospecting agent usage, with further expansion expected.
Rangan stated, "Our strategy is simple. Embed AI into hubs our customers use every day," emphasizing a platform-first orientation as a differentiator for future growth.
Executives reported that ASRPC turned upward in Q3 2025 and is expected to continue improving, supported by upsells, multi-hub attachment, and the ongoing rollout of new pricing.
Industry glossary
Hub: A primary suite or module within HubSpot's CRM platform, such as Marketing Hub, Sales Hub, or Service Hub, representing distinct product areas customers can subscribe to in combination.
Core seat: HubSpot's primary per-user license that grants edit access to the unified Smart CRM and includes embedded AI/data capabilities.
Credit: HubSpot's usage-based pricing unit, consumed for AI agent actions, data hub syncs, and certain automation/AI-powered features; designed as a universal metric for tracking and monetizing product usage.
AEO (Answer Engine Optimization): Tools, strategies, and product features focused on improving customer brand visibility in AI-generated search results and LLM outputs.
LLM (Large Language Model): An advanced AI algorithm, such as ChatGPT, Gemini, or Quad, used for conversational, search, and data summarization tasks within platform integrations.
Full Conference Call Transcript
Charles MacGlashing: Thanks, operator. Good afternoon, and welcome to HubSpot's Third Quarter 2025 Earnings Conference Call. Today, we'll be discussing results announced in the press release that was issued after the market closed. With me on the call this afternoon is Yamini Rangan, our Chief Executive Officer, Dharmesh Shah, our co-founder and CTO, and Kathryn A. Bueker, our Chief Financial Officer. Before we start, I'd like to draw your attention to the Safe Harbor statement. 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, operational expenditures, expected growth, FX movement. 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 third quarter 2025 earnings press release in the Investor Relations section of our website. Now, it's my pleasure to turn over the call to HubSpot's Chief Executive Officer, Yamini Rangan.
Yamini Rangan: Thank you, Chuck, and welcome, everyone. Today, I'll share our Q3 2025 results and the key trends driving our performance and how we are reimagining marketing for the AI era. I'll wrap with our growth formula and how both our current and emerging levers. Let's dive in. Q3 was another strong quarter for HubSpot. Revenue grew 18.4% year over year in constant currency, reaching $810 million. We delivered solid operating leverage with an operating margin of 20%, reflecting our ability to balance growth and profitability. Total customers increased by 10,900 in the quarter, bringing our global customer base to nearly 279,000.
Our results were powered by three drivers that continue to show up quarter after quarter, compounding, and reinforce the strength of HubSpot as we scale. HubSpot is winning as a truly unified customer platform. Companies are consolidating their go-to-market stacks on HubSpot to reduce total cost of ownership, gain a unified view of their customers, and accelerate AI innovation. Multi-hub adoption has become the norm across both new and existing customers. 43% of Pro Plus installed base by ARR now subscribe to our three core hubs, up four points year over year. And 39% own four or more hubs, up six points.
This expansion shows the value customers see in growing with HubSpot, and it is clear proof that our platform-first strategy is working. Our upmarket segment is humming. Larger companies are choosing HubSpot for its power, sophistication, and speed to value. Deals over $5,000 monthly recurring revenue grew 35% year over year, reflecting the payoff from years of product investment, strong partner alignment, and rising brand awareness amongst upmarket decision makers. A great example is QS, a global education services company with over a thousand employees. They replaced a twenty-year-old legacy CRM and chose HubSpot to power their AI-first transformation citing our AI strategy approach to agents and pace of product innovation as key reasons for signing a multiyear, multi-hub agreement.
AI innovation took center stage this quarter. The highlight was, of course, our annual inbound conference. It was great to bring together 13,000 people in person and another 550,000 online from across our ecosystem. We launched more than 200 new updates and products that were well received by our customers and partners. The energy and feedback from inbound reinforce that our AI strategy is resonating and customers see HubSpot as the platform to help them grow and win with AI. Our strategy is simple. Embed AI into hubs our customers use every day. Build agents that do work and create brief assistant and connectors that turn data into insights.
At inbound, we launched new features in every hub, from AEO strategy tools in Content Hub to AI-powered email in Marketing Hub, and AI Meeting Assistant in Sales Hub. We introduced Data Hub, which helps customers bring their data together in one place to get more value from AI. We enhanced our featured agents, customer agents, prospecting agents, launched a new data agent, and opened up Breeze Studio so customers can build and customize their own agents. And we became the first CRM to connect directly with the three leading LLMs: ChatGPT, Quad, and Gemini. These innovations are delivering real results for customers.
Customers who use our embedded AI features in Marketing Hub get better results, higher click-through rates, and over 50% higher. Similarly, customers who use AI features in Sales Hub are winning almost 10% more deals. Prospecting agent has been activated by 6,400 customers, up 94% from last quarter. And customers have used it to engage over 1,000,000 prospects. Data agent is new, but already has 700 customers who have activated it. Brief assistant is the digital assistant for every go-to-market employee, and we have seen weekly active usage increase by 56% in the past six months as customers use it to summarize records and uncover insights that drive performance.
A key part of our AI strategy is our LLM connector approach. And the momentum we're seeing here is impressive. Our ChatGPT connector has been activated by more than 47,000 customers, with 55% of them being Pro Plus customers. And our cloud connector is already being used by over 6,000 customers. We believe that LLMs and HubSpot are powerful together and complement each other. Why? Well, there are three reasons. First, LLMs create insights. HubSpot provides the context that makes insights possible for go-to-market teams. LLMs are great at generating ideas from public data or a user prompt. But HubSpot is where the full go-to-market context lives.
Every interaction, sales conversation, support ticket, marketing campaign, that context is necessary to turn generic AI output into insights that are accurate, relevant, and actionable. Second, LLMs generate ideas. HubSpot turns them into action within a business context. On their own, LLMs can tell you what to do. With HubSpot, you can actually do it. HubSpot is where companies build sophisticated workflows, launch multichannel campaigns, and take actions to drive growth. And third, LLMs are great at single-player tasks. And HubSpot is built for multiplayer teams. HubSpot remembers each user, their role, preferences, team, what they have permissions to access, and where they can take action.
Now stepping back, HubSpot houses AI and is the customer platform where intelligence and context are applied, acted on, and shared across teams. Platforms were sticky pre-AI, they will be even stickier in the AI era. Okay. Let's talk about how we are reimagining marketing for the AI era and the opportunity it creates for HubSpot. The marketing landscape is changing fast. Search traffic is declining globally as AI overviews provide answers. Customers are spreading their attention across channels and visiting fewer websites. At the same time, AI is creating entirely new opportunities via LLMs, like answer engine optimization or AEO. At HubSpot, we saw these shifts coming early.
We've been diversifying marketing channels and experimenting with AEO, and that strategy is working. At inbound, we introduced the loop, our new playbook for growth in the AI era. It gives customers clear step-by-step guidance on how to drive growth by combining human creativity with AI efficiency. And the response has been incredibly strong, with 270 million impressions on loop content and over 100,000 views of the loop Playbook experience. We also launched new products to help customers put the Loop into action, including Data Hub, which makes it easy to build ideal customer profiles, and Marketing Studio helps marketers personalize content based on buyer intent. A key part of the loop is helping customers show up in AI-generated answers.
Our AEO grader and AEO strategy tools launched at Inbound make it easy for businesses to come up with a strategy and improve their visibility in LLMs. And last week, we announced an agreement to acquire xFunnel, one of the first and most complete platforms for tracking and improving how brands appear across LLMs. xFunnel shows when and how often your brand is mentioned in AI-generated answers and provides clear guidance on how to strengthen that presence. We'll natively build xFunnel into HubSpot, giving our customers even more ways to understand, improve, and grow their brand visibility in the AI era. Now let's talk about our growth formula and how we are unlocking new levers for HubSpot.
Our core growth levers continue to perform: platform consolidation, multi-hub adoption, and upmarket traction. At the same time, emerging levers are gaining momentum, including seats pricing change, core seats, and credits. We introduced the core seat last year to give customers edit access to the smart CRM, the unified record that powers our platform. And that strategy is working. At Inbound, we made the core seat even more valuable by adding AI and data capabilities like Breeze Assistant, Smart Starts, projects, and enrichment data, and by unbundling the smart CRM so customers can start right there. Our vision is to make the core seat essential with AI and data value for every go-to-market employee. Credits are another powerful emerging lever.
They are our universal usage-based pricing system, covering AI agent actions and data hub syncs, and soon will extend across the entire platform. Credits tie our growth directly to customer value, and as customers use more data, use more AI, and automation inside HubSpot, they'll grow with us. Together, core seats and credits expand how HubSpot captures value, building on our durable foundation, and creating a long runway for growth. As a wrap-up, I want to share our conviction that HubSpot is positioned to lead in the AI era and drive durable long-term growth. We are innovating rapidly, transforming into an agentic customer platform, and operating efficiently at AI speed.
We have durable differentiators and growth levers, and we deeply understand our segment and what small and medium businesses need to grow with AI. We are uncovering new ways to drive efficiency and finding signals to show our customers what's possible with AI. I'm more confident than ever in our strategy and our ability to deliver value for customers in this new era. Thank you to all our customers, partners, and shareholders for your continued support. And a huge thank you to all HubSpotters around the world for staying focused on solving for our customers every single day. With that, I'll turn the call over to Kate to take you through our Q3 financial results in more detail.
Kathryn A. Bueker: Thanks, Yamini. Let's turn to our third quarter 2025 financial results. Q3 revenue grew 18% year over year in constant currency, and 21% on an as-reported basis. Subscription revenue grew 21% year over year, while services and other revenue increased 19% on an as-reported basis. Q3 domestic revenue grew 17% year over year. International revenue growth was 20% in constant currency and 25% as reported, representing 49% of total revenue. We added 10,900 net new customers in Q3, bringing our total customer count to 279,000, growing 17% year over year. Average subscription revenue per customer was $11,600 in Q3, up a point year over year in constant currency and up three points on an as-reported basis.
While we're happy with the strong net adds in Q3, we continue to expect net additions to be in the range of 9,000 to 10,000 in Q4 and for ASRPC growth in constant currency to be up roughly a point. Customer dollar retention remained in the high 80s in Q3 and net revenue retention was flat sequentially at 103% as expected. As I shared last quarter, we expect to see a step up in net revenue retention in Q4, resulting in a couple point improvement in net revenue retention for the full year of 2025. Calculated billings were $804 million in Q3, growing 19% year over year in constant currency and 18% on an as-reported basis.
The remainder of my comments will refer to non-GAAP measures. Q3 operating margin was 20%, up one point compared to the year-ago period and three points sequentially. Net income was $140 million in Q3, or $2.66 per fully diluted share. Free cash flow was $147 million or 18% of revenue in Q3. Our cash and marketable securities totaled $1.7 billion at the end of September. In Q3, we repurchased 780,000 shares of common stock under our share repurchase program, representing $375 million. With that, let's dive into our guidance for the fourth quarter and full year of 2025.
For the fourth quarter, total as-reported revenue is expected to be in the range of $828 million to $830 million, up 16% year over year in constant currency and 18% on an as-reported basis. Non-GAAP operating profit is expected to be between $183 million and $184 million, representing a 22% operating profit margin. Non-GAAP diluted net income per share is expected to be between $2.97 and $2.99. This assumes 52.7 million fully diluted shares outstanding. For the full year of 2025, total as-reported revenue is now expected to be in the range of $3.113 billion to $3.115 billion, up 18% year over year in constant currency and 19% on an as-reported basis.
Non-GAAP operating profit is now expected to be in the range of $574 million to $575 million, representing an 18% operating profit margin. Non-GAAP diluted net income per share is now expected to be between $9.60 and $9.62. This assumes 53.2 million fully diluted shares outstanding. As you adjust your models, please keep in mind the following: We now expect CapEx as a percentage of revenue to be 6% for the full year of 2025, driven by higher capitalized software expenses. And we still expect free cash flow to be about $580 million for the full year of 2025. With that, I will turn the call back over to the operator for questions.
Operator: Thank you. If you would like to ask a question, please dial star followed by 11 on your telephone keypad now. If you change your mind, please dial star followed by 11 again to exit the queue. When preparing to ask your question, please ensure your phone is unmuted and limit yourself to one question per person. One moment for our first question. First question comes from the line of Samad Samana from Jefferies.
Samad Samana: Hi, good evening and thanks for taking my question. So, Yamini, my question is for you. I think the core focus of investors is HubSpot getting back to 20% growth. And I think investors are pretty excited, and myself included, seeing that accelerating ARR slide at the Analyst Day. We might have gotten ahead of ourselves, but how do you think about the path to get back to 20% growth? Can the current focus on that 2,000 and below segment support that level of growth? Or do you think that hitting the gas on enterprise is necessary? Maybe just help us think through that. And, again, always, appreciate you taking my question.
Yamini Rangan: Yeah. Thanks a lot, Samad. Appreciate it. Look. We believe we can grow faster than where we are today. And we are focused on doing it in a durable, disciplined way. The thing I would point out is that net new ARR is the leading that we shared with you, and revenue is the lagging indicator with gold flow through. Now if I step back and look at the foundation, our core growth drivers are strong, and they are proven. We have a playbook that works which is platform consolidation, moving upmarket, and multi-hub momentum.
And you can see that in our customer retention numbers, the seat upgrades that are consistent, and the large deal momentum that are compounding quarter after quarter. And we're gonna continue to expand our sales capacity as well as productivity across all of our segments to capture that opportunity. Then we have a set of emerging growth drivers that strengthen that outlook further and put us on a path of durable growth. And we shared that at analyst day, but I'll kind of walk through it. The pricing changes that we drove last year is a tailwind. We are seeing seat upgrades pick up.
And as the change rolls through our install base this year and next year, we'll continue to see growth from that. And AI is a multiyear tailwind. We are in the very early stages of this whole innovation cycle playing out. And we are acting with urgency to cement a leadership position and set ourselves up for long-term growth. And specifically, with AI, we see the opportunity to monetize both through seats as well as credits. Now core seats, which we talked about at Analyst Day, is becoming more valuable and it is embedded with AI data platform value, and that opens up a large opportunity. Credits, they consume more AI and agent-driven actions.
So look, we are very excited about the emerging drivers, the strength that we see within the emerging drivers, and we're really excited about the upmarket momentum. We think we have plenty of time to be able to drive and grow faster than where we are. Most importantly, we have a track record of consistent execution and helping our customers grow. And that gives us confidence that HubSpot can be a durable growth business for years to come.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Mark Murphy from JPMorgan.
Mark Murphy: Yamini, several of your partners have said that they're pretty encouraged about their own growth potential moving into 2026. I'm curious if you see any signs that Google's AI overviews are actually driving an extra wave of interest for HubSpot to try to use your loop concept and your, you know, your engine optimization tools. So that they can gain their own kind of visibility in AI-generated answers. Is there anything tangible there that you can speak to?
Yamini Rangan: Mark, thanks a lot for the question, and thanks always for talking to our partners to uncover the underlying trends. Look, I would say marketing and the trends that we are seeing within marketing is a big opportunity for our customers and for HubSpot to grow. And, specifically, you talked about what is happening with the marketing, but, really, we see it as a couple of things. One, AI overviews are providing answers, which means website visits are declining. And that means there is a need for a new playbook to diversify the channels that you are present in, including AEO. And that is exactly what we launched at inbound.
At inbound, we launched the playbook, which you referenced, which is the loop. And I would say that the response from customers and partners has exceeded our expectations across every metric. In terms of impressions, we had 270 million impressions. Playbook impressions, number of conversations that's generating. And, specifically, there are three parts of the playbook that are resonating with customers as well as partners. The first one is diversifying channels. And the number one thing that you can do to counter SEO volume decline is to diversify your channels into YouTube and Insta and podcasts and newsletters, and that is resonating. The second is how do you actually use AI for deeper segmentation and personalization?
Look, there's just a lot of talk about AI driving disruption. But the bigger story is how AI can be helpful in using intent data to drive better conversion, and that is resonating. And then, of course, building visibility in LLMs through answer engine optimization that you mentioned. And all of that is resonating, and we're seeing, you know, lots of conversations within AEO. AEO is early. We got in earlier, and we have an AEO grader out in the market that has been used by 70,000 customers already. Our AEO strategy tools are getting used in order to look at this nascent channel.
And last week, we announced xFunnel, which completes our platform of providing visibility to customers on which LLMs they're showing up and how to improve their presence within that. And so look, if I step back, SEO is a big disruption. But this is also one of the biggest opportunities for our customers to figure out how to grow, and it is one of the biggest opportunities for HubSpot, which is why we have the playbook, we have products, and we have the whole partner ecosystem activated to deliver on that. And it's, you know, we're super excited about the opportunity.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Parker Lane from Stifel.
Parker Lane: Good afternoon. Thanks for taking the question. Yamini, you continue to point to platform consolidation as one of the key drivers of the business. Traditionally, cost savings were one of the things that drove people towards that consolidation. How often are you seeing with the launch of Breeze and these new agency brought the platform that a desire to really embrace agents and have a unified data source is the reason for consolidation versus just traditional cost savings?
Yamini Rangan: Yeah. That is a that's a fantastic question. I think equal parts. I would say three reasons why customers talk to us about consolidating on a platform. The first one, as you said, is total cost of ownership. And remember, we've come from a period of people buying a lot of point solutions and tools and TCO kind of, like, bloating up. And that, you know, continues to be the number one reason. The second reason is actually getting all of the customer data and context into a unified platform. Whether they're leveraging AI or they're just, you know, getting their whole digitization journey going, you need data, and you need customer context across the whole journey.
And if you have a lot of point solutions and a lot of point agents, you just do not have the visibility to drive insights. And then I would say the third reason is really AI and wanting to adopt AI. And while AI is not always the primary driver, it is a clear pull in terms of the conversations.
And what we hear from prospects, from customers is that they want one platform that has all of the data, and they want to be able to have a clear road map so that they can our AI strategy, which is embedding AI across all of the hubs and making it easier for our customers to build on that road map. So I see all three reasons probably kind of split equally.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Alex Zukin from Wolfe Research.
Alex Zukin: Hey, guys. Thanks for taking the question. I guess, Yamini, I'll be a little bit direct. If I look at the magnitude of the beat this quarter, it was a little bit lower than I think some people were thinking about. But at the same time, the raise for Q4 is what I think the strongest raise on a constant currency that you guys have ever done. So is there any moving pieces that you can comment on? And billings, I think, was a little bit of a decel. But then net new ARR as you showed us that slide at the Analyst Day, was really, really strong in the first half and seemingly in Q2.
So any commentary on a forward-looking metric basis around how net new ARR performed in 3Q, maybe to disentangle some of the in-quarter versus guide confidence dimensions?
Kathryn A. Bueker: Yeah. Alex, it's Kate. Maybe I'll take this in if Yamini has more to add, she's welcome to do at the end. We did outperform in Q3. We executed really well. And the outperformance was driven by all things you heard Yamini talk about, continued strength of market, continued strength with multi-hub, and continued strong seat expansion. We also saw some incremental FX tailwind versus what we expected when we guided last quarter, and we've fully flowed that through our revised 2025 guidance. I think you heard from Yamini, and I've talked about it in the past as well as at Analyst Day.
It will take some time for our strong net new ARR growth to translate into an inflection in revenue growth. Just given the scale and size of our install base. But we've seen stability here over the last few quarters. All that said, our approach to guidance was consistent this quarter.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Keith Bachman from BMO.
Keith Bachman: Yes. Thank you very much. Actually, it's a good segue from Alex. I wanted to ask a similar question, but I'll phrase it differently in that billings growth is one metric. But the constant currency billings growth is generally in the last six quarters been in a range of the highest 21%, the lowest 19%. So in that range for six straight quarters. And so a, you've talked about a lot of goodness that's coming through the model, but what's the offset? What's been constraining? And particularly this quarter with 19%, which was a little bit lower beat than you've had in the past quarters. What's not going as well that's constraining it?
And then also, Kate, per your last comment, you've mentioned that net new ARR has been strong, but it takes a while maybe you could put a little more context around that in that the stock's down pretty materially here in the after-hours. How should investors think about when will the net new be fulfilling enough, if you will, to then translate or show up into the revenue growth? How you know, what is the any timing expectations that we should put, in consideration? Thank you very much.
Kathryn A. Bueker: Yeah, maybe I'll start with the billings question because, you know, I wanna make sure that we are sort of aligned with the and our expectations for billings. My baseline expectation is that constant currency revenue growth and constant currency billings growth are going to track each other really closely. And that's because more than 90% of our billings come from revenue. In period. Billings, as you know, is a bit noisier. It shows impacts of FX. It shows impacts of the mix of net new ARR, and it shows duration pretty acutely.
And when you kind of look at what's happening in these facts this quarter versus last quarter, we had a bit of a mix shift towards install base selling, which has lower month up front. And we saw less of a benefit of expanding duration versus what we saw in Q2. And so as a result, what you're seeing in billings growth is something that is still above revenue growth in constant currency, but just a little bit closer than what we saw in Q2. And for Q4, there's always going to be some variability here. But I would expect that constant currency billings and revenue are going to track each other.
Yamini Rangan: Kate, do you want to address the net new ARR question as well?
Kathryn A. Bueker: Yeah. I mean, I think that what we have said, and said it yourself, is like, net new ARR is the leading metric. Revenue is the lagging metric, and it will take repeating quarters of net new ARR growth above revenue for revenue to inflect. Net new ARR hit a low point in 2023. We saw a steady increase throughout 2024. And since 2024 through 2025, as we shared at an Analyst Day, it has been above revenue growth. And so what we have seen is that our installed base ARR has started to inflect, and then revenue will follow the inflection of the core install base. It just will take time to get there.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Elizabeth Porter from Morgan Stanley.
Elizabeth Porter: Great. Thank you very much. Wanted to follow-up on some of the emerging drivers. You called out the customer adoption of HubSpot agents has been strong, and credits are gonna be a lever for growth in the future. So although some of the subscription plans currently include some usage credits, among your early adopters, what are customers using up those credits and kinda where are we on the path for customers to purchase additional ones? Just overall, some of the trends you're seeing in credit consumption or usage intensity. That can give confidence for that lever to become a larger impact in the near to medium term? Thank you.
Yamini Rangan: Hey, Elizabeth. Thank you. Thank you for that question. We launched HubSpot credits. And as everybody knows, that is our universal usage-based pricing system. Today, it includes agent actions for any agent that is out in general availability. And it also includes data hub syncs. Those are the two things. And as we go into the future, we'll add more and more usage-based features into that system. Now we have a clear framework for how we monetize credits. We focus on product and feature activation, then we drive repeat usage, then consistent customer value, and from then on, we monetize.
And having this disciplined structured approach ensures that when customers start paying for usage with credits, it's because they are getting clear value and repeatable value. Now in terms of the patterns that we're seeing for our credits monetization, it's been just about a quarter. But customer agent is the strong growth driver of credits. It's delivering value. It's highly retentive. So when customers adopt customer agents, they continue to use it. We're seeing positive signals on credit growth. Which is they start with the included credits, and they continue to grow beyond that included credits with customer agent. The second one is data hub syncs.
This is where when you bring in data and when you use that data, then it consumes credits. That's the second area where we're beginning to see credit consumption. And then the third is prospecting agent. This is one where our customers use it to research accounts and scale their outreach campaigns, and we're beginning to see clear trends. And I shared some of the adoption trends metrics, which is also driving credit adoption. Look. It's early days, but we are very pleased with the progress so far in terms of credit consumption. The one thing that I will point out and it's an important point, is that credits are just one way for us to monetize AI.
Broadly, if you step back and think about it, credits monetization does not equal AI monetization at HubSpot, and that's because we have embedded AI. And when that embedded AI drives value, then we see it in attach rates as well as seat upgrades. Which we have been seeing now for a few quarters. We're also driving AI value within core seats. And we will see the monetization there as we shared in analyst day, and we'll continue to monetize usage-based components with credit. So overall, we feel very good about our AI strategy and the monetization strategy. And this is a solid foundation for credits to emerge as a lever for growth.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Tyler Radke from Citi.
Tyler Radke: Yes. Thank you very much for taking the question. One clarification and then sort of a product question. So just on the clarification, I know there's been a lot of questions just around the net new ARR trends. I guess the clarification is, did the growth rate in net new ARR that you observed in the first half, did that continue or perhaps accelerate or decelerate into 3Q? And then, Yamini, you talked about a lot of customers, I think, 47,000 customers using the ChatGPT connector. Just curious if you're seeing any interesting, you know, usage or, you know, expansion trends for customers that are using that versus customers that are not. Thank you.
Kathryn A. Bueker: Yeah. Tyler, I'll start with a short answer to your question on net new ARR growth. In Q3, net new ARR growth did remain above constant currency revenue growth.
Yamini Rangan: Yep. And then on the second part of the question in terms of the LLM connectors and what kinds of use cases and what types of trends we are seeing there. Look. I think, we'll start with why we build these connectors. It's because our customers and prospects are spending a ton of time in LLMs, and we wanna bring the insights from HubSpot regarding their business and growth opportunities there. And the more, you know, deeper reason is this. You know, LLMs are basically the new AI operating system. And just like you had browser wars and mobile wars, there will be a clear winner in the AI operating system.
Now that has just a lot of implications across the but there's a very specific implication for our customers and our ecosystem. Which is that LLMs will be a way in which companies will be found. And that means it will become an AI referral source for companies. We see this in our AEO efforts. We're seeing this in our customers' AEO efforts, and that is why we wanna be the best platform that enables that growth. And so that's the reason. In terms of the traction, I shared some numbers. ChatGPT Connector is our fastest growing app in five years. 47,000 installations.
And if I look at the patterns, I see a lot of directors and about using it for meeting prep. So they're using it to understand pipeline trends before they go into a weekly meeting or a board meeting. They are using it to get insights on what changed week to week or month to month. The second pattern that we see is doing deeper research and then being able to take actions within HubSpot. For example, we were talking to customer basement group. They used a prompt from our library to identify the highest converting persona and then they built a nurture campaign in HubSpot and that campaign open rates actually jumped from 8% to 40%.
So huge improvement in terms of conversion rate. So we're seeing customers ask questions, get insights, and then begin to take the action within HubSpot. And that's the pattern that we wanna see. Get insights and then drive actions to drive growth within HubSpot. And very, you know, encouraged by the patterns there.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Brad Sills from Bank of America.
Brad Sills: Wonderful. Thank you so much. I wanted to ask a question about ASP growth. You know, it's been kinda bumping along at this kinda flattish level for several quarters. And, you know, historically, you know, before, we entered into some of these macro pressures, it was more in the 12 to 15% range. So my question is, what would it take to get ASP growth back to, you know, back in the green and moving up north? You know, what are some of the unlocks there? I think in the past, Kate, you've talked about how you're still seeing some pressure on those upgrades. So maybe an update on that trend as well. Thank you.
Kathryn A. Bueker: Yes. Thanks, Brad, for the question. I think, you know, you know that there are a number of factors that drive ASRPC and you know, it is also a lagging indicator because revenue is the numerator for ASRPC. It's impacted by the volume and mix of our customers. It's impacted by new ASPs and, as you rightly point out, upgrades. Continue to see, you know, a number of headwinds and a number of tailwinds. Around ASRPC growth. They're all, you know, gonna sound very familiar to you. You know, the headwinds are, you know, robust starter additions and the lower ASM associated with new customers post our pricing change in 2024.
In terms of tailwinds, we continue to see momentum in large deals, multi-hub adoption, and then increasingly seat upgrades and, you know, credits. We did see a bit of inflection in the third quarter with constant currency growth of ASRPC up one we expect to see that continue into Q4.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Rishi Jaluria from RBC.
Rishi Jaluria: Wonderful. Thanks. It's Rishi Jaluria from RBC here. Thanks so much for taking my question. I wanted to dive a little bit deeper into kind of the existing traction that you're seeing with your current AI products and agents, right, including the most recent announcements out of inbound. Obviously, you've seen some really good traction there. As we kind of think about, you know, new products that you're gonna be working on and getting out into the market, totally understand it's gonna take a while before this turns into direct monetization, whether through credits or any other way.
But how do you internally gauge the success of newer AI offerings and working directly with your customers, to not only make sure that it's delivering kind of the value that I think they expect out of you, but also that the way they're using it is aligned with future contemplated pricing mechanisms that you have in place. Thanks.
Yamini Rangan: Hey, Rishi. That's a great question. And, I think that, you know, I'll kind of start with our strategy, the momentum, and then how we are driving customer adoption because that is the right question to be digging into. If we step back, our strategy for AI has been consistent and clear, which is we want to embed AI into all of our hubs and platform. We wanna build agents that deliver work for our customers. And we wanna deliver a brief assistant and connectors that convert data into insights. And the strategy has just been consistent across the board.
So when we look at momentum as well as traction in terms of the strategy, we look at all factors there. So the first thing is, is the embedded strategy working? And the answer for us is very clear because embedded features are being used across marketing hub, sales hub, service hub. They are improving the outcomes for our customers. Things like conversion rate that I mentioned before, win rate, an improvement in 10% win rate in sales, I mean, previously, before AI, I don't think that types of, you know, outcome would have been possible with Sales Hub. I think that's a huge improvement for our customers.
And, similarly, Service Hub customers who are using AI see much better ticket closure as well as much better customer center. So all of that translates into much better attach rates for us, which we have seen with Content Hub, we have seen with Service Hub, as well as adoption of sales seats as well as Service Hub seats. The second part of the strategy, which is probably earlier in the journey, is the agent journey. Right? All of us within the industry, know we're building agents that do work. And the adoption is, you know, slightly less than the embedded products.
And for us, the three featured agents that we launched which is customer agent, prospecting agent, and data agent, we look at what are the signs in terms of adoption as well as repeat usage. And, you know, customer agent is the most mature there. It has been in GA the longest. 6,200 customers with 62 plus percent resolution rate and credit consumptions that are really in the pattern that we expect. So really clear trajectory in terms of the agents. And, you know, you asked broadly about customer adoption. Part of what is happening is that when you look at, you know, AI, people have road maps but they're on very different portions of the adoption journey.
So we work with our partners. We work with our customer success managers. We work with our customers to help them build a road map. And they like our strategy. They like that they're getting a platform that is future-proofed, and all of that leads to traction. I continue to believe that AI is early. And this is going to play out for the next five years, ten years. And we are setting ourselves up to be leaders within this and doing it in a way where we focus on small medium businesses and helping them grow with this new technology. So very confident there.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Gabriela Borges from Goldman Sachs.
Gabriela Borges: Hi, good afternoon. Thank you. For either Yamini or Dharmesh, I would love to hear you talk a little bit about what you see in terms of customer data states and the quality of those data states. Yamini, you mentioned a handful of times this idea of converting data into insights. How would you describe customer readiness from a data hygiene standpoint? Is there a period of time where they have to work to clean up their data and or work to standardize on HubSpot? Think you have a really unique position because of how your hubs are organically connected together. So just a little more on what you're seeing in the environment with respect to that. Thank you.
Yamini Rangan: Yeah. I'll start there, Gabriela, and I'm sure Dharmesh can add to it. That's a very broad question in terms of the state of data. And, you know, I would probably, you know, say that it's multiple the state of data maturity a customer depends on how mature they are. You know, within their stack. And I would maybe talk about, the first is if they already have data, is it high quality? And, you know, within our customer base, if they have adopted all of our hubs, then it tends to be in higher quality versus having point, you know, solutions that they're trying to bring together.
But partly, we also have Data Hub that we launched at inbound that helps with improving data quality. That is exactly what, you know, the purpose is for Data Hub. The second is it's not just about data quality. Can you get data across the customer journey? And can you build a context layer on top of that data that enables you to do more with AI? And this is where I have a very strong point of view that platforms that bring together data that the and helps build a context, they're going to be able to get much more done with AI.
And then the third, which you didn't ask in the question, but comes up in all our customer conversations is unstructured data. You can do a lot more with sales conversations, with service conversations, pulling unstructured data together. And that is exactly where HubSpot shines. Our ability to bring better quality data, to bring data across the entire customer journey, and to add both structured and unstructured data those three things are the foundation to get anything done with AI. And that's one of the reasons why we brought DataHub to the forefront at inbound.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Taylor McGinnis from UBS.
Taylor McGinnis: Yes. Hi. Thanks so much for taking my question. Kate, maybe I'm for you. I think if I heard you correctly, you reiterated the outlook for NRR to be a couple of points higher this year than last year. And if I look at what that potentially implies for 4Q, it looks like it could be closer to 106. So one, just wanted to check if I'm doing that math right. And if that is right, that would be probably the biggest uptick in NRR that you guys have seen over the last several quarters.
So is that an indicator of some of what you're talking about of, like, seat expansion activity and, you know, the new pricing model to throw through, like, evidence that you're starting to see that materialize into numbers and that alone potentially is a leading indicator? Or maybe you can just talk about like what are the puts and takes in that number and how to think about it going into next year. Thanks.
Kathryn A. Bueker: Yep. I appreciate the question. Thank you. And you are you right. I did reiterate that we expect net we continue to expect net revenue retention to be up a couple of points this year. And it does imply a nice step up in NRR into Q4. The drivers of net revenue retention are the same as they've been all year. We continue to see healthy customer dollar retention. We've seen very stable downgrades, which is a nice indicator that customers have rightsized. And then we've seen strong seat upgrades across both sales and service seats as well as core seats.
And we have also seen a benefit and we'll continue into Q4 to see the benefit of the pricing increase for customers post their migration onto the new model.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Raimo Lenschow from Barclays.
Damon: Hey, guys. This is Damon calling on for Raimo Lenschow. Thanks for taking the question. I guess, piggybacking off the last question, I know it might be a little early for 2026. Would you be able to help tell us a little bit about how you're thinking about net retention? Stronger pricing, healthier renewal rates on new seats model, multi-product adoption, is there any reason to believe that this metric does not improve? Thank you.
Kathryn A. Bueker: Yeah. I appreciate the question. I'm sure that you're not surprised when I'll start by saying that I'm not gonna make any specific comments around 2026. That said, we do think that there's a path for further improvement on net revenue retention over the longer term. We talked about some of the drivers, but I'll reiterate them for the sake of completeness here. Like, we are very confident that we can continue to support really healthy dollar retention. We've talked about the fact that we've seen downgrades stabilize nicely over the last year or so. And actually, cancellation and downgrades together were a benefit to net revenue retention in 2024.
The pricing model change is resulting in both stronger seat upgrade motions, but also we will expect to see a continued tailwind to net revenue retention from the pricing changes on the remaining 50% of our installed base. That will go through their renewal post-2025. And then finally, you know, Yamini talked a lot about the core seats and credits as emerging drivers, and they will begin to contribute in a more meaningful way in 2026. So again, nothing specific on 2026, but I do believe that this is a business that's capable of delivering higher net revenue retention.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Steve Koenig from Macquarie Capital.
Steve Koenig: Great. Hey, thanks for taking my question. You know, some of your peers have also talked about the expectation of net new ARR growth. It's higher than revenue, but it's more of an anticipation than historically seeing that. And predicated on sales capacity expansion as being an important driver. I'm wondering, you touched upon many of the drivers that you see for potential acceleration. But I'm also curious to what extent is your sales capacity, or, you know, execution tactics aside from the, you know, the pricing model change? To what extent, are you lined up for further acceleration? Or, you know, or changes to that strategy might be helping you. Thanks for taking my question.
Yamini Rangan: I really like that question. I think that, you know, it's really good to ask us about the sales capacity and how we're teed up. And look, we have been investing on two fronts. One, in headcount, and we have consistently hired sales capacity in regions, in segments where we see clear opportunity, and that has continued. And that will likely continue into 2026. We see further opportunities for expanding sales capacity. The second thing, which I'm really excited about is all the investments that we have made of AI to transform our own go-to-market has had a clear impact in terms of sales productivity.
How we are using intent data to drive our prospecting, how we are using data during the deal process, we call it guided selling. So internally, every sales rep knows, you know, the insights that they need. They prepare better for meetings. They follow-up faster for meetings. They have much better competitive insights during the call and post-call. And all of that has had a measurable impact in terms of sales productivity. So both sales capacity and sales productivity are, you know, really humming, and we see that continue going into 2026. So we feel pretty good about that.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Brian Peterson from Raymond James.
Brian Peterson: Thanks for taking the question. So I'd love to understand from your perspective what you're seeing in terms of demand trends, maybe a little more by geography. We saw international was a little bit stronger this quarter. We picked up in some of our partner checks. But as we think about the growth opportunity going forward, anything you'd call out in terms of international versus North America in terms of growth expectations? Thanks, guys.
Yamini Rangan: Yeah. I appreciate the question. Look. We have not seen any material changes in terms of segments or industries or geographies. It continues to be very consistent with prior quarters. Now, you know, if I look at our pipeline, we see a handful of trends that is not geo-based, but generally based on the products that we have launched and the momentum we are seeing. Saw very positive response from inbound. Specifically, customers are excited about the loop. They are excited about DataHub, and I explained why data hub is almost important and critical for value from AI.
And I see a lot of our customers and prospects talking to us about customer agent, prospecting agent, all of that has landed really well. I continue to see multi-hub adoption as well as upmarket momentum. The large deal momentum this year has been consistent and compounding, and we see that both in Q3 as well as entering into Q4 in terms of the pipeline, and that has been, you know, a consistent driver. So not as much as segment or geo change, but really consistency in what is driving the demand across all of these regions.
Kathryn A. Bueker: And Brian, just one small point to make on the domestic versus international growth. You will just remember that the legacy Clearbit business is about zero five point of headwind to our growth in 2025. All of that business is domestic business. And so it's about a one-point headwind to domestic growth this year.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Jackson Ader from KeyBanc Capital Markets.
Jackson Ader: Great. Thanks for taking our questions, guys. Was just curious to ask on two things as far as the fourth quarter is concerned. Number one is, is there anything kind of seasonally here in the fourth? I know you guys aren't giant deal dependent, but is there anything in terms of the fourth quarter booking that could impact the timing, Kate, of when you expect that net new piece to be kind of large enough to accelerate growth as head into '26. And then also, I think we're getting into the heart of the pricing renewals for some of your larger customers.
And so just curious whether the pricing how those larger customers are handling the pricing increases, whether it's firmer or softer than you expected? Thank you.
Kathryn A. Bueker: Yeah. Thanks for the question. Look, I think that Q4 is always our most important quarter of the year in terms of being the largest net new ARR quarter. With November and obviously December being pretty critical. We do see a lot of the migrated customers coming up for renewal at the end of this year, and so that will impact Q4 a bit. And so far, they are performing as reported over the last couple of quarters.
Operator: Thank you. This concludes the HubSpot Q3 2025 earnings call. Thank you to everyone who was able to join us today. You may now disconnect your lines.