Kate Bueker: Yes, maybe I’ll just start with the last one, because it’s a super straightforward. There was a very little amount of impact to the deferred revenue from Clearbit. The way that it’s measured and reported is just the change from December until year end. So it was very small in terms of the net Ads and ASRPC. I would just say, Brad, over the time that I’ve been here, we have consistently gone through waves where we see outsized growth on net customer additions, followed by periods where we see outsized growth in the expansion of existing customers. I think we’re at a point here where there’s a lot of things happening, particularly with the seats model change, that are going to fuel a short-term focus on growth in that net adds number. But if you think about the way that Yamini talked about the impacts of that seats model over time that will drive an expansion motion that can become a tailwind to ASRPC.
Operator: Thank you for your question. Next question is from the line of Alex Zukin with Wolfe Research. Your line is now open.
Unidentified Analyst: This is Ryan on for Alex. Just had a quick question on the potential uplift from the monetization opportunity of core seats from the CRM module, or just kind of put another way for a typical customer. Now that you’re monetizing that and you weren’t know what’s the kind of uplift to a typical contract from that specifically? Thanks.
Kate Bueker: Yes, I think it’s important to understand that this impact will happen for new customers only through largely 2024 and that after the migration we start to see renewals. You will see some similar growth trends out of the install base. The addition of the core seat, as you heard from Yamini, is really our ability or opportunity to monetize the CRM. And in our model, every active user on the platform will need to have a paid seat. The data points that we have are really from the pilot and what we saw in the pilot was very strong assignment of core seats across the set of customers on the new model, which indicates to us that there is real value here and we should see a meaningful uplift in the percentage of users who will be on a paid seat.
Operator: Thank you for your question. Next question is from the line of Brian Peterson with Raymond James. Your line is now open.
Brian Peterson: Hi. And also my congrats on the strong results. So we’ve heard from some of your partners that Service Hub was stronger this quarter. I know you mentioned that the multiproduct deals and Sales Hub increasingly being a front door, but is Service Hub maybe another potential front door that you guys can walk through? And has that created any more prospects or TAM on the B2C side? We’d love to get your thoughts there. Thanks guys.
Yamini Rangan: Yes, that’s a great question. We are definitely pleased with the momentum in Service Hub, both from a product perspective as well as customer adoption perspective. As you know, last year was a pretty big year for Service Hub Pro. We did a ton of work to make the pro tier very, very powerful and we also added some differentiating features on the enterprise tiers. And based on the work that the team did, we saw a lot more adoption upmarket. When we talk about multi-hub wins, there are more customers now, starting with two, three hubs. And when we see that the power of having all of your customer information in one platform and therefore including Service Hub there has become pattern. So we’re very, very happy about that.
I think we’re not done yet. I think there’s just a tremendous amount of work that we’re going to be doing in the Service Hub area this year to make it even more competitive. AI is a pretty big lever in terms of Service Hub, the kinds of use cases that we’re seeing and attraction of use cases that we’re seeing. I talked about summarizing conversations, highlighting commands for content generation, and editing answers. All of that is driving a lot more effectiveness within our Service Hub customers and also driving engagement. So we’re very excited about the trajectory. Now, stepping back, we have a playbook with Sales Hub and you can see it’s working. When we focus the product organization, when we align the go to market teams, we know how to get that to a front door.
I think we can apply the same kind of playbook for Service Hub. It will get into the same trajectory as Sales Hub as we continue to innovate for our customers.
Operator: Thank you for your question. The next question is from the line of Terry Tillman with Truist. Your line is now open.
Unidentified Analyst: Great. Thanks so much for taking the question. This is Bobby Dion for Terry, curious to get an update on the health and strength of partner channels. Are you seeing more partners adept at doing platform selling versus single hub specializations? Thanks and congratulations.
Yamini Rangan: Yes, thank you so much. The partner momentum continues to grow I just spent a bunch of time with partners this week and we’re all doing the kickoffs ready for 2024 and there continues to be good momentum and excitement within the partner channel. As you know, partners contribute to about 40% of our ARR and that has continued to grow as we have scaled maybe to step back. We have a very, very clear strategy with partners. We’ve gone to our partners and we said we want to scale selling, co-selling and servicing with you and we want you to become experts of the entire customer platform. And this journey is something that has been on the making for the past three years and partners have enrolled in that journey. More partners are now well versed in overall CRM, the entire customer platform.
They know the value proposition of multiple hubs. They’re able to get our customers started with greater onboarding, better engagement and then continue to drive multiple hub adoption. And so I think you’re seeing partners gain even more traction with us upmarket and you’re seeing partners drive multi-hub momentum as well as larger deals upmarket. And so it’s become a really nice growth lever to continue to grow the ecosystem for us.
Operator: Thank you for your question. Next question is from the line of Arjun Bhatia with William Blair. Your line is now open.
Arjun Bhatia: Perfect. Thank you and I’ll add my congrats. Maybe sticking on the pricing changes, I’m curious if when you think about the new customers since that’s going to go into effect first, does it actually change the incentive structures for new customers to buy the suite more or do you anticipate there could be more single product adoption from new customers as a landing point going forward and then eventually growing into multi-hub customers over time?
Kate Bueker: Yes, maybe. The way I would think about it is that in the lower end of the market and when customers are thinking about Starter absolutely removes all friction. We’ve always had a great momentum in Starter. Now that we’ve removed the seat minimums, it encourages starter customers to start with the suite and I’d say that the value proposition is exceptionally compelling. There is almost nothing out there with the value that we provide for the price per seed and it has become such a compelling starting point and it is all sweet at the lower end and the lower tier. Now upmarket, I don’t think necessarily this pricing change is going to make everybody think about suite, and that’s really not the motion. What we want people to do is to start with a couple of hubs and then continue to drive adoption and then continue to get value over a period of time.
What it does is it removes that friction point for the upgrade. So when we get a lot more customers, the Starter tier, when we remove the friction, then more folks are going to go into the Pro tier and the Enterprise tier. And over a period of time, this sets up the foundation for accelerating customer acquisition and then continuing to show the value for those customers so that they continue to go upmarket with us and so that’s probably the way to think about it.
Operator: Thank you for your question. The next question is from the line of David Hynes with Canaccord Genuity. Your line is now open.
David Hynes: Hey, thanks guys. Yamini, can we just go back to the large deal activity? I think you characterized it as urgency, which is a term we haven’t heard much of in software lately. Can you talk about does it feel like there’s a sign maybe at the high end of your customer base? Was it just a year end phenomenon? Has there been any durability in those trends? Any color of what you’re seeing on the large deal front would be interesting.
