HubSpot Q2 Earnings Call Highlights

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HubSpot (NYSE:HUBS) reported second-quarter 2026 revenue growth of 20% year over year on a reported basis, or 17% in constant currency, as the company navigated slower customer acquisition and greater budget scrutiny tied to the transition toward artificial intelligence products.

Chief Executive Officer Yamini Rangan said April began slowly and that the quarter did not develop as the company had expected. She attributed the performance to deliberate changes in product, pricing and go-to-market strategy, as well as a demand environment in which customers showed increased caution around technology budgets.

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“Customers adopting AI want proof of value before they commit and predictability in what it costs,” Rangan said. HubSpot introduced trials that allow customers to test agents and its AEO offering in their own environments, while also lowering certain entry prices, adding outcome-based pricing for several agents and providing spending controls.

Rangan said the moves were expected to extend buying cycles in the near term but were intended to lower adoption barriers and support longer-term AI usage. She added that the trial approach has been most effective with larger customers that can receive additional support from HubSpot teams and partners.

Customer Growth Misses Internal Expectations

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HubSpot added 7,000 net new customers during the quarter, ending the period with more than 306,000 customers globally. The customer total grew 14% from a year earlier, but Chief Financial Officer Kate Bueker said the quarterly additions were below the company’s expectation of 9,000 to 10,000 net adds, primarily because of weaker conversion rates and increased buyer hesitation.

Domestic revenue increased 17% year over year. International revenue rose 23% on a reported basis and 18% in constant currency, accounting for 49% of total revenue. Subscription revenue grew 20%, while services and other revenue increased 8%.

Average subscription revenue per customer was $11,800, up 4% on a reported basis and 2% in constant currency. Customer dollar retention remained in the high 80% range, while net revenue retention was 102%, down one percentage point year over year. Bueker said expansion in seats and credits was offset by pressure from other upgrade motions as customers optimized budgets.

Management said prospects are involving larger buying committees, with more transactions requiring approval from chief executives, boards or private-equity firms. Rangan said larger opportunities are still closing and up-market win rates remain solid, but approvals are taking longer.

Deals worth more than $120,000 in annual recurring revenue increased 38% year over year. Meanwhile, 64% of new Professional and Enterprise customers adopted multiple product hubs, up three percentage points from the prior year.

AI Adoption and Product Expansion

HubSpot highlighted increased adoption of its AI products. Data Agent had more than 16,000 activated customers, up 80% sequentially, while Prospecting Agent had nearly 17,000 activated customers, up 28%. Customer Agent reached more than 10,000 customers.

The company launched HubSpot AEO in April through Marketing Hub and as a standalone product. Since launch, 32% of Marketing Hub Professional and Enterprise customers have activated AEO, and nearly 16,000 customers activated standalone AEO trials during the quarter, according to Rangan.

More than 55% of HubSpot’s Professional and Enterprise customers now use either its agents or Breeze Assistant, Rangan said. Monthly agentic actions across the customer base have increased more than threefold since the beginning of the year. Breeze Assistant weekly active usage has doubled since the start of 2026.

HubSpot also launched Agent Builder and Agent Hub in July. Agent Builder enables customers to create custom agents and workflows connected to HubSpot CRM data and external systems, while Agent Hub provides a central management location for HubSpot-built, customer-built and partner-built agents. More than 2,700 customers had activated the products in beta, Rangan said.

Management said it is focusing on helping customers move beyond experimentation, particularly for customer-facing AI products. Rangan said customers often begin with internal uses, such as data enrichment and sales productivity, before adopting agents that directly interact with prospects or customers.

Profitability, Cash Flow and Capital Returns

Non-GAAP operating margin was 20% in the second quarter, expanding three percentage points from a year earlier. GAAP operating margin was 5%, compared with a negative 3% margin in the prior-year period.

Non-GAAP net income totaled $165 million, or $3.26 per diluted share, representing year-over-year increases of 40% and 49%, respectively. GAAP net income was $43 million, or $0.86 per share.

The company generated $168 million in free cash flow, equal to 18% of revenue, and ended June with $1.4 billion in cash and marketable securities. It repurchased more than $500 million of stock under its existing $1 billion authorization during the quarter. The board authorized an additional repurchase program of up to $1 billion.

Bueker said HubSpot expects two percentage points of non-GAAP operating-margin expansion in 2026 and anticipates an additional two to three percentage points of expansion in 2027 as it applies AI internally and maintains discipline in headcount spending.

Third-Quarter and Full-Year Outlook

For the third quarter, HubSpot expects reported revenue of $924 million to $925 million, representing 14% reported growth and 15% constant-currency growth. The company forecast non-GAAP operating income of $187 million to $188 million, or a 20% margin, and non-GAAP diluted earnings per share of $3.25 to $3.27.

For full-year 2026, HubSpot expects revenue of $3.678 billion to $3.686 billion, up 18% on a reported basis and 16% in constant currency. It maintained its forecast for non-GAAP operating income of $762 million to $766 million, representing a 21% margin, while projecting non-GAAP diluted earnings per share of $13.23 to $13.31.

The company expects the headwinds observed in the second quarter to continue through the remainder of the year. It projects quarterly net customer additions of approximately 5,000 to 6,000, low- to mid-single-digit constant-currency growth in average subscription revenue per customer, and roughly flat full-year net revenue retention.

Bueker said budget pressure appeared consistent through the second quarter and continued into July.

About HubSpot (NYSE:HUBS)

HubSpot, Inc is a software company that develops a cloud-based customer relationship management (CRM) platform designed to help organizations attract, engage and delight customers. Its primary business activities center on providing integrated marketing, sales and customer service tools that support inbound marketing strategies, content management, lead nurturing, sales automation and customer support workflows.

The company's product suite is organized around modular “hubs” built on a central CRM: Marketing Hub, Sales Hub, Service Hub, CMS Hub and Operations Hub.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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