Operator: The next question comes from the line of Brad Sills with Bank of America.
Bradley Sills: Great. I wanted to ask a question around the net add strength. Clearly, Starter has been holding up real nicely through the challenging macro. The question is, why is that, do you think? Is it just simply larger customers that might be starting with a higher-priced offering like Pro are starting with Starter in a challenging environment, with plans to go to Pro. And then what do you think about that cohort of customer? It’s been three or four quarters since you’ve cited strength here, in Starter net adds. Is there a cohort of customer in there that you think coming out of the macro, we could see some nice acceleration. Maybe it’s just from a better macro or some of the uptake on AI features that might be going into the Pro and enterprise version.
Kathryn Bueker: Yes, maybe I will start. Brad, thank you very much. We were very happy with the level of new customer additions for the quarter. You are also right, the increase in the new customer additions quarter-over-quarter is very much driven by the Starter addition. You heard Yamini talk about the bimodal strategy as being one of the things that’s really working for us. And as we talked about at Analyst Day, the goal of the low end of the bimodal strategy is really to maximize the volume of customers that we can bring on to the platform. And so as a result, we are constantly running experiments to try to drive volume into our Starter tier. We certainly watch the characteristics of those cohorts to make sure that we feel really good about their ability to retain an upgrade.
This quarter was no different. There were a number of experiments that we ran across pricing and packaging as well as a number of plays that we ran to really lean into activation and conversion of free users into starter customers. So we’re feeling really good about it.
Operator: The next question comes from the line of Gabriela Board with Goldman Sachs.
Jacob Titleman: This is Jake Titleman on for Gabriela. Congrats on a great quarter. I want to ask the net adds question slightly differently. Before the pandemic, HubSpot was adding closer to 15,000 new customers each year. Since then, net adds have trended over 30,000 annually. Do you view this shift as cyclical? Or are there structural drivers that lead you to believe HubSpot can sustain this level of net adds going forward?
Kathryn Bueker: Thanks for the question. I think that it is very purposeful. So we have — you’ve heard us talk about the fact that when we entered the early stages of the pandemic, we made a change from a pricing and packaging perspective to really dramatically lower the price point for Starter. And we were frankly surprised at how sensitive to that pricing potential customers work. And so we have taken that learning and really leaned into it through what we’ve been referring to as the bimodal strategy, but we are getting better and better at running experiments at that low end to drive volume, and we feel good about our ability to continue to deliver that customer adds, call it at the high end of that 7,000 to 8,000 range that we’ve been talking about for the last couple of quarters.
Yamini Rangan: And maybe the point to add here is that the success that we see is a testament to us becoming a platform of choice for SMBs. Part of the strategy is to get companies started early in their digital journey with us, continue to deliver value as they scale. And so that clear strategy and value proposition of making it easy to buy and easy to use and easy to scale, that is what resonates. And so we’re pleased with it. And I think we’ll continue with that bimodal strategy into next year.
Operator: The next question comes from the line of Derrick Wood with Cowen.
James Wood: Yamini, at the upper end of the CRM market in the enterprise, there are a lot of different sales tools being used for things like prospecting, sales enablement, revenue intelligence. I’m curious, do you see that kind of fragmentation in the SMB mid-market? And when you talk about a focus on prospecting and deal management, is this more of a consolidation play? Or is this more of a greenfield and replacing manual efforts.
Yamini Rangan: Derrick, I like that. It’s all of those. I think in the market that we see, it’s certainly, there are customers who’ve gone through the route of point solutions and they want to be able to consolidate on a single platform to get better visibility. And the fact that we not only have a market-leading sales solution, but it is tightly integrated with a market-leading, marketing solution plays well within the segments that we serve. And so it’s point solution consolidation. The other part of it is that when we look at the environment right now, it is one where people are looking to optimize their spend while improving productivity. And our sales solution does exactly that. We’ve been able to integrate it obviously deeply with marketing, but also make prospecting deal management, forecasting much more sophisticated over the past few quarters, and it resonates.
And there’s pretty clear momentum in terms of Sales Hub. And in fact, Sales Hub as a percentage of 3-plus hubs jumped from 49% last year to 56% this year. So clear momentum based on the leadership that we have within the market.
Operator: The next question comes from the line of Keith Weiss with Morgan Stanley.
