#1HubSpot Analyst Day Welcome & Safe Harbor Chuck MacGlashing VP of Investor Relations, Corporate Treasury Ja#2Safe Harbor Statement This presentation includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding management's expectations for future financial and operational performance and operating expenditures, expected growth, and business outlook, including our long-term financial framework; our focus on profitable growth; cash flow and margin improvement expectations; the anticipated benefits of our product and feature launches and plans and timelines for developing and expanding those offerings; the anticipated benefits of our investments on our revenue growth, profitability and cash flow; our product plans, strategies, and trends; our ability to expand our ecosystem and total addressable market; our position to execute on our growth strategy and related growth drivers; our evolution to a platform model; our opportunities in international markets; and our ability to expand our leadership position and market opportunity for our inbound platform. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reas asonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, our history of losses, our ability to retain existing customers and add new customers, the continued growth of the market for an inbound platform; our ability to differentiate our platform from competing products and technologies; our ability to manage our growth effectively to maintain our high level of service; our ability to maintain and expand relationships with our agency partners; our ability to successfully recruit and retain highly-qualified personnel; the price volatility of our common stock, and other risks set forth under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed on August 5, 2020 and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. ga#3TIME 10:00a - 10:05a 10:05a - 10:25a 10:30a - 11:20a 11:25a - 12:00p 12:00p - 12:20p 12:30p - 1:00p Agenda September 22, 2020 | 10:00 a.m. - 1:00 p.m. ET SUBJECT Welcome & Safe Harbor Introduction Go-To-Market Update Founders & Product Spotlight Product GM Panel Financial Overview Q&A PRESENTER(S) Chuck MacGlashing | VP of IR, Corporate Treasury Yamini Rangan | Chief Customer Officer SHORT BREAK Brian Halligan | Co-Founder & Chief Executive Officer Dharmesh Shah | Co-Founder & Chief Technology Officer Christopher O'Donnell | Chief Product Officer SHORT BREAK Ying Chen | GM, Service Hub Nicholas Holland | GM, Marketing Hub & CMS Hub Lou Orfanos | GM, Sales Hub Nancy Riley | GM, Ecosystem Moderator: Meghan Anderson | VP of Marketing Kate Bueker | Chief Financial Officer SHORT BREAK HubSpot Executive Team ga#4Three short breaks between sessions Housekeeping ? Submit questions starting at 12:00 p.m. Eastern using Q&A field below Non-GAAP reconciliations for financials we discuss posted on ir.hubspot.com ga#520,COR INBOUND'20 Registered Attendees 2,800 2012 26,000 2019 VIRTUAL 65,000 2020 ga#6Thank you 59#7HubSpot Analyst Day Introduction & GTM Update Yamini Rangan Chief Customer Officer Ja#8Engineer by trade and GTM professional by practice My journey to HubSpot -|||- A decade in on-premise B2B and a decade in cloud B2B //// || Experience across enterprise and freemium playbooks EX ||| Passionate about customer experience ga#91 How do we drive resilient growth? хот ++ 2 Who do we serve and how do they grow better with HubSpot? $ $ 3 Where are we investing in the next 3 years? ga#101 How do we drive resilient growth? + 2 Who do we serve and how do they grow better with HubSpot? $ $ 3 Where are we investing in the next 3 years? 29#11Driving resilient growth C ← Solve for the customer 888 ** Invest in two products: Platform and Culture Support digital transformation acceleration za#12HubSpot's opportunity ahead M Upmarket growth Market penetration Product expansion ga#13+ J 1 How do we drive resilient growth? хос ++ 2 Who do we serve and how do they grow better with HubSpot? $ $ 3 Where are we investing in the next 3 years? 29#14Segment Overview Small Business 1-25 employees Typically product-led sale High velocity and high volume • Balance between Starter + Professional tiers Mid Market 26-200 employees Rep-driven sale Medium velocity and medium ASP ^ • Skews toward Professional + Enterprise tiers Corporate 201-2,000 employees • Rep-driven sale Low velocity and high ASP • Skews toward Professional and Enterprise tiers ga#15Small Business deep dive M CORE CHALLENGES WHAT HUBSPOT REPLACES Company USE CASE Subpar digital presence Manual or lightweight system of record Growing online presence PERSONA Buyer HOW THEY FIND HUBSPOT HOW THEY BUY Owner/CEO or first employee in Marketing or Sales Review sites and word of mouth Starts on free product, upgrades to paid product ga#16Case Study: GetAccept Startup to Scaleup with HubSpot WHY HUBSPOT? First front-office system • Growing online presence • Lead management Get Accept HOW THEY USE HUBSPOT • Marketing, Sales, CRM, Reporting Add-On 40+ integrations Lead scoring and nurturing Content planning Reporting/dashboards HOW THEY GROW BETTER • Scaling on HubSpot A • 25X employee growth +4 new offices • 50X increase in MRR A ga#17Mid Market deep dive CORE CHALLENGES WHAT HUBSPOT REPLACES Company USE CASE Need to optimize to grow Front office platform OR point solutions Visibility across customer-facing activities PERSONA Buyer HOW THEY FIND HUBSPOT HOW THEY BUY Department lead looking to improve efficiency Review sites and referrals Rep-driven purchase with multiple decision makers ga#18Case Study: Cloud Technology Solutions Consolidating Systems on HubSpot WHY HUBSPOT? Consolidated system for growth Improve Marketing and Sales automation Ease of use and quick time to value HOW THEY USE HUBSPOT • Marketing, Sales, CRM, Reporting Add-On 16 integrations • HubSpot Academy Assigning ROI to marketing activities Cloud Technology Solutions HOW THEY GROW BETTER Conversion rate 10%+ • Leads 30%+ ▲ ● Traffic 80% + A MRR 100% A ga#19Corporate Segment deep dive CORE CHALLENGE WHAT HUBSPOT REPLACES USE CASE Company Complex, friction-filled customer experience Custom system or enterprise CRM Need a system of record and engagement to unify go to market PERSONA Buyer HOW THEY FIND HUBSPOT HOW THEY BUY C-Suite; multiple departmental leaders External market research Rep-driven purchase assisted by internal champions za#20Case Study: Casio UK Reducing Complexity with HubSpot Growth Suite WHY HUBSPOT? Reduce complexity • Join disparate systems • Unify B2B and B2C sales motions CASIO HOW THEY USE HUBSPOT • Marketing, Sales, CMS, Reporting Add-On 18 integrations Gain visibility across entire customer journey HOW THEY GROW BETTER . Traffic 10% + A • Leads 450%+ • MRR 55% + A ga#21+ J 1 How do we drive resilient growth? + 2 Who do we serve and how do they grow better with HubSpot? $ $ 3 Where are we investing in the next 3 years? 29#22Increase efficiency in Small Business and Mid Market Product touch Human touch ga#23Drive seat and suite penetration in Mid Market and Corporate Upsell Tiers + Seats MARKETING SALES Enterprise Professional Starter Free SERVICE Cross-Sell Hubs CMS FUTURE HUBS I I I ga#24Tilting the Partner Services ecosystem Future service opportunity 2020 service opportunity Solution Partner Program Investments ● Partner Enablement • Certifications ● Training ga#251 2 3 Key Takeaways Convergence of 3 big opportunities Alignment of Product and GTM strategy Multi-year investments to grow better ga#26Thank you 59#27HubSpot Analyst Day Financial Overview Kate Bueker Chief Financial Officer Ja#28Safe Harbor Statement This presentation includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding management's expectations for future financial and operational performance and operating expenditures, expected growth, and business outlook, including our long-term financial framework; our focus on profitable growth; cash flow and margin improvement expectations; the anticipated benefits of our product and feature launches and plans and timelines for developing and expanding those offerings; the anticipated benefits of our investments on our revenue growth, profitability and cash flow; our product plans, strategies, and trends; our expected customer growth; our ability to expand our ecosystem, market penetration, and total addressable market; our position to execute on our growth strategy and related growth drivers; our evolution to a platform model; our opportunities in international markets; and our ability to expand our leadership position and market opportunity for our inbound platform. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, risks associated with the impact of COVID-19 on our business, the broader economy, and our ability to forecast our future financial performance as a result of COVID-19; our history of losses, our ability to retain existing customers and add new customers, the continued growth of the market for an inbound platform; our ability to differentiate our platform from competing products and technologies; our ability to manage our growth effectively to maintain our high level of service; our ability to maintain and expand relationships with our solutions partners; our ability to successfully recruit and retain highly-qualified personnel; the price volatility of our common stock, and other risks set forth under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed on August 5, 2020 and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. za#291 2 3 What We'll Cover Today HubSpot's strong and durable business 2020 deep dive Future opportunity ga#30Business Review ga#31Customers 28,000 Strong Customer and Revenue Growth 2016 42,000 2017 57,000 2018 73,000 2019 38% CAGR | 2016 → 2020 86,000 Q2'20 2020e: Represents current mid-point of FY'20 guidance. CAGR: compound annual growth rate. CAGR based off of Q2 2016 to Q2 2020. Revenue ($m) $271 2016 $376 2017 $513 2018 $675 2019 32% CAGR | 2016 → 2020 Dotted box: We expect to continue to add net new customers in 2H'20. The dotted lines are an estimated illustration of these additional customers and is not to scale. See definition of Customers in appendix. $830 2020 e ga#32International 46% Diverse Growth Drivers U.S. 54% Solutions Partners 39% All Other Hubs 27% OOO Direct 61% U.S. vs. International; Direct vs. Solutions Partners; and Marketing vs. Sales, Service and CMS Hub are calculated based on a % of Install Base as of the end of Q2'20. See definition of Install Base in appendix. Marketing Hub 73% ga#33Framing HubSpot's Customer Base Customer Size | % of IB < 25 Employees 35% > 25 Employees 65% Enterprise 36% Edition Tier | % of IB Starter 5% Pro* 59% Customer size, Edition tier and Industry are calculated on a % of Install Base as of the end of Q2'20. Customer size range is estimated based on data from our internal marketing leads team. Industry is determined using available LinkedIn data. *Pro includes the % of our Install Base that is on a Pro or legacy Basic edition. Industry | % of IB Not identified 40% ga#34Significant Adoption of HubSpot as a Platform Multi-Product Traction Customer Breakdown 100% 0% Q4 Q1 Q2 Q4 Q1 Q2 Q1 Q2 Q3 Q3 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 3+ Products 2 Products Single Product App Install Traction 94% of Install Base has at least 1 App Installed 57% of Install Base has > 5 Apps Installed, a number which has been steadily increasing over time Customer Dollar Retention is higher for customers with > 5 Apps Installed Multi-product customers are customers who have subscriptions to any product on two or more distinct product hubs. (Marketing Hub, Sales Hub, Service Hub, CMS Hub). Data as of 6/30/20. See definitions for Install Base and Customer Dollar Retention in appendix. ga#35$75 -$25 Strong Profitability, FCF and Balance Sheet ■ Operating Profit ($m) 2016 Operating Profit Margin 2020 e 15% -5% $75 2020e: Represents current mid-point of FY'20 guidance. See definition and reconciliation of non-GAAP operating income and free cash flow in appendix. -$25 2016 Free Cash Flow ($m) Ended Q2'20 with $1+ billion in cash and investments FCF Margin 2020 e 15% -5% ga#36Average: 5.6x 2014 | LTV: CAC unit economics continue to be strong I See definition of LTV:CAC in appendix. Average is calculated arithmetically by quarter from Q1'14 through Q2'20. COVID impact 2019 1H'20 H 2020 ga#372020 Focus ga#38Customers Enabled contract flexibility for most impacted customers. Moved select paid features to free tier. Reduced cost of our Starter Growth Suite. COVID Response Plays Solutions Partners Expedited Q1 commissions for all solutions partners. Offered commissions advance to top-tiered partners. Donated to World Health Organization COVID response fund in the name of partners. Employees Remote was already our third largest office, so we adapted quickly. Added support for parents and those affected by the crisis. Using employee choice as first principle for return-to-work plans. %#39% of total COVID relief requests March 2020 Customer Relief Requests March → April 65% I | I I I 2/1/2020 March → June 90% 3/1/2020 Declining relief requests Chart represents the % of total customer relief requests received. Total customer relief requests are based on number of customers requesting relief from March - August of 2020. I I | August 2020 ga#40Customer Breakdown 100% 0% Q2'17 Starter Q2'18 See definition of Install Base ASP in appendix. Customer Mix Impacting KPIs Non-Starter Q2'19 Q2'20 Install Base ASP $14,000 $9,000 Q1'17 Total Non-Starter Q2'20 ga#41Customer Retention Remains Solid 88% 84% 80% 2017 Hub View - Hub View (ex-Starter) Customer View 118 02 See definitions for Customer Dollar Retention rate by Hub View, Hub View ex-Starter and Customer View in appendix. 0319 I COVID-19 I Q1'20 2020 ga#42Looking ahead... ga#43Aligned to tackle 3 year opportunity Product expansion Upmarket growth Market penetration GTM Strategy Increase efficiency in Small Business ● Drive seat and suite penetration • Tilt the Partner Services ecosystem Product Strategy Create powerful, easy-to-use products Leverage shared components Build CRM of choice for the mid-market 29#44Marketing Hub ARR >$600m Install Base ~20% YoY growth See definition for ARR in appendix. Excludes historical CMS add-on ARR. Recent Milestones Revenue attribution Partitioning Marketing contacts Custom objects Advanced automation Free landing pages Future Opportunity Digital transformation increasing adoption Traction with upmarket customers Eliminated key friction point in suite adoption with marketing contacts Grow with new Starter cohorts ga#45Sales Hub ARR >$160m Install Base ~60% YoY growth See definition for ARR in appendix. Recent Milestones Enterprise-grade CRM Al-powered sales acceleration Robust configure, price quote (including Proposal tool and Accounting integrations) tools Rich sales reporting, analytics and forecasting Account-based marketing (ABM) Future Opportunity Unlock upmarket CRM opportunity Install base seat expansion Digital transformation moving more sales inside and online drives higher adoption ga#46Service Hub ARR >$30m Install Base ~100% YoY growth See definition for ARR in appendix. Recent Milestones In-app chat Turnkey automation Jira integration Multilingual Knowledge Base Team management features Future Opportunity Address service needs of mid-market organizations Focus on agent's experience through intelligent automation Grow and upgrade new Starter cohorts ga#47CMS Hub ARR >$25m Install Base ~45% YoY growth See definition for ARR in appendix. Recent Milestones 24/7 security Flexible themes Multi-language content creation Drag-and-drop editor Adaptive testing Web applications & memberships Future Opportunity Digital transformation driving increased adoption Address additional use case for core marketing persona Strong benefits in combining CMS + CRM 29#48Big Opportunity with Low Current Penetration I 86,000 Total Customers 3,000,000 SMBs with a website Levers for Future Growth: Increase the value of existing Hubs Introduction of new Hubs in Front Office Grow Ecosystem around HubSpot platform 3.0M is US, CAN, and Europe. 1.6M mid-market businesses with a web presence in United States and Canada. 1.4M mid-market businesses with a web presence in Europe. AMI Partners data, 2014. ga#49Gross Margin R&D % of revenue S&M % of revenue G&A % of revenue Operating Margin Long Term Financial Target 2016 78% 14% 55% 14% -4% 2017 81% 15% 52% 12% 2% 2018 82% 18% 46% 11% 6% 2019 82% 18% 45% 11% 8% 1H'20 82% 19% 45% 10% 8% UPDATED Long Term Target Model 81% - 83% 18% -20% 30% -35% 8% -9% 20%-25% Long Term Target Model: These estimates reflect our current operating plan as of 9/22/2020 and are subject to change as future events and opportunities arise. All percentages are non-GAAP and exclude expenses associated with stock based compensation, amortization of acquired intangibles and acquisition related expenses. Please refer to appendix for a reconciliation of GAAP to non-GAAP figures. za#501 2 3 Key Takeaways Digital transformation driving increased adoption of cloud-based, front-office solutions Delivering strong financial performance despite macroeconomic downturn Significant future opportunity ahead to increase market penetration, expand product offering and drive upmarket growth ga#51Thank you 59#52Appendix ga#53GAAP to Non-GAAP Reconciliation ga#54GAAP to Non-GAAP Reconciliation Cost of Revenue Subscription Stock-based compensation Amortization of acquired intangibles Acquisition related expenses Non-GAAP subscription Professional services and other Stock-based compensation Amortization of acquired intangibles Acquisition related expenses Non-GAAP professional services and other Gross Margin Gross margin Stock-based compensation Amortization of acquired intangible assets Acquisition related expenses Non-GAAP gross margin Operating Expenses Research and development Stock-based compensation Amortization of acquired intangible assets Acquisition related expenses Non-GAAP research and development Sales and marketing Stock-based compensation Amortization of acquired intangible assets Acquisition related expenses Non-GAAP sales and marketing General and administrative Stock-based compensation Amortization of acquired intangible assets Acquisition related expenses Non-GAAP general and administrative Loss from Operations Loss from operations Stock-based compensation Amortization of acquired intangible assets Acquisition related expenses Non-GAAP (loss) income from operations $'000s 2016 41,182 (512) (57) 40,613 20,683 (1,640) 19,043 209,102 2,152 57 211,311 45,997 (8,828) 37,169 162,647 (13,352) (27) 149,268 45,120 (8,343) 36,777 (44,662) 32,675 84 (11,903) % of Revenues 15% 0% 0% 0% 15% 8% -1% 0% 0% 7% 77% 1% 0% 0% 78% 17% -3% 0% 0% 14% 60% -5% 0% 0% 55% 17% -3% 0% 0% 14% -16% 12% 0% 0% -4% $ '000s 2017 51,563 (658) (96) 50,809 24,166 (2,327) 21,839 299,883 2,985 96 302,964 70,373 (12,816) (1,266) 56,291 212,859 (19,016) (7) 193,836 56,787 (12,500) 44,287 (40,136) 47,317 103 1,266 8,550 % of Revenues 14% 0% 0% 0% 14% 6% -1% 0% 0% 6% 80% 1% 0% 0% 81% 19% -3% 0% 0% 15% 57% -5% 0% 0% 52% 15% -3% 0% 0% 12% -11% 13% 0% 0% 2% $ '000s 69,718 (1,476) (1,394) 66,848 2018 30,639 (2,924) 27,715 412,623 4,400 1,394 418,417 117,603 (23,328) (2,696) 91,579 267,444 (31,099) 236,345 75,834 (17,434) 58,400 (48,258) 76,261 1,394 2,696 32,093 % of Revenues 14% 0% 0% 0% 13% 6% -1% 0% 0% 5% 80% 1% 0% 0% 82% % of $'000s Revenues 98,510 (3,127) (3,201) 92,182 31,448 (2,829) 28,619 544,902 5,956 3,201 554,059 (33,748) 23% 158,237 -5% 0% -1% 18% (357) 124,132 52% 340,685 -6% (36,599) 0% 0% 46% 304,086 15% 92,971 -3% (21,451) 0% 0% 11% 2019 (552) 70,968 -9% (46,991) 15% 97,754 3,201 0% 1% 6% 909 54,873 15% 0% 0% 0% 14% 5% 0% 0% 0% 4% 81% 1% 0% 0% 82% 23% -5% 0% 0% 18% 50% -5% 0% 0% 45% 14% -3% 0% 0% 11% -7% 14% 0% 0% 8% Six months ended June 30, 2020 % of Revenues $ '000s 60,134 (1,973) (1,759) 56,402 16,927 (1,235) 15,692 325,514 3,208 1,759 330,481 95,573 (18,819) (657) 76,097 204,928 (23,684) (39) 181,205 52,741 (13,126) (194) 39,421 (27,728) 58,837 1,798 851 33,758 15% 0% 0% 0% 14% 4% 0% 0% 0% 4% 81% 1% 0% 0% 82% 24% -5% 0% 0% 19% 51% -6% 0% 0% 45% 13% -3% 0% 0% 10% -7% 15% 0% 0% 8% ga#55GAAP to Non-GAAP Reconciliation Loss from Operations Loss from operations Stock-based compensation Amortization of acquired intangible assets Acquisition related expenses Non-GAAP (loss) income from operations 2016 $'000s (44,662) 32,675 84 (11,903) % of Revenues -16% 12% 0% 0% -4% $'000s 2017 (40,136) 47,317 103 1,266 8,550 % of Revenues -11% 13% 0% 0% 2% 2018 % of $'000s Revenues (48,258) 76,261 1,394 2,696 32,093 -9% 15% 0% 1% 6% 2019 % of $'000s Revenues (46,991) 97,754 3,201 909 54,873 -7% 14% 0% 0% 8% Forecast 2020 $'000s (69,825) 119,100 2,405 1,320 53,000 % of Revenues -17% 30% 1% 0% 13% ga#56GAAP to Non-GAAP Reconciliation GAAP net cash and cash equivalents provided by operating activites Purchases of property & equipment and capitalization of software development costs Repayment of 2022 Convertible Notes attributable to the debt discount Free cash flow See definition of Free Cash Flow at the end of this presentation 2016 $ '000s 19,366 (21,538) (2,172) % of Revenues 7% -8% 0% -1% $ '000s 2017 49,614 (27,347) 22,267 % of Revenues 13% -7% 0% 6% 2018 $ '000s 84,851 (33,473) 51,378 % of Revenues 17% -7% 0% 10% 2019 $ '000s 118,973 (53,846) 65,127 Revenue S 18% -8% 0% 10% As of June 30, 2020 % of Revenues $ '000s (10,679) (30,060) 48,675 7,936 -3% -7% 12% 2% ga#57Definitions Total Customers: We define our Total Customers at the end of a particular period as the number of business entities or individuals with one or more paid subscriptions to our Sales Hub, Marketing Hub, CMS Hub or Service Hub products, either paid directly or through a Solutions Partner. We do not include in Total Customers business entities or individuals with one or more paid subscriptions solely for our legacy Sales Hub ($10) product or any PieSync product. A single customer may have separate paid subscriptions for separate websites, sales licenses or seats, or our Sales Hub, Marketing Hub, CMS Hub or Service Hub products, but we count these as one customer if certain customer-provided information such as company name, URL, or email address indicate that these subscriptions are managed by the same business entity or individual. Install Base: Refer to definition of Annual Recurring Revenue below. Customer Dollar Retention (C$R): is a measure of what percentage of our customers we retain, weighted by ARR dollars. We calculate by summing the total dollars that were canceled in a given period and divide that by the beginning of period ARR Install Base. We then express the calculated churn inversely as retention and then annualize. Customer Dollar Retention Hub View: Cancellation dollars are defined as any dollars associated with a Customer for a particular Hub where the Customer is cancelling all subscriptions associated with that Hub on all of their paid portals (whether one or more). Customer may still maintain a subscription to another Hub. Example: Customer cancels Sales Hub but remains a Marketing Customer, the dollars cancelled from the Sales Hub would count in this calculation. The denominator is all of the beginning of period ARR Install Base. Customer Dollar Retention Hub View ex-Starter: Cancellation dollars calculated the same as above, but exclude any dollars associated with Starter Editions across any Hub. Customer Dollar Retention Customer View: Cancellation dollars are defined as any dollars associated with a Customer that is cancelling all HubSpot subscriptions. A customer may pay for multiple hubs, but must cancel all hubs for those $ to count towards this definition of C$R. The denominator is all of the beginning of period ARR Install Base. Non-GAAP Operating Income: We define as GAAP operating income or loss plus stock-based compensation, amortization of acquired intangible assets and acquisition related expenses. Free Cash Flow (FCF): We define as cash and cash equivalents provided by or used in operating activities less purchases of property and equipment, capitalization of software development costs, plus repayments of convertible notes attributable to debt discount. LTV: CAC*: LTV: Initial ARR from New Customers multiplied by the expected lifetime of our customers, while compounding expected upgrade rates over that lifetime. That "Gross LTV" is net against a margin which represents the ongoing costs of hosting, supporting, retaining and expanding our Customer revenues. All data points are in-period based on ARR Install Base changes, including Expected Lifetime (1/Churn) and Lifetime Upgrade Multiplier. CAC: Sum of our Sales, Marketing, and Service costs dedicated to acquiring New Customers divided over the number of New Customers acquired within that period. Install Base Average Sales Price (ASP): Total Install Base divided by the total number of paying customers as of the end of a given period (i.e. average ARR per customer). Install Base ASP non-Starter excludes Starter only customers. Annual Recurring Revenue: We define "ARR" as the annual value of our customer subscription contracts as of the specified point in time excluding any commissions owed to our partners. For each Hub, this is the sum of customer ARR for the Starter, Basic, Professional and Enterprise subscriptions, plus applicable Contacts (Marketing Only) or Add-Ons (e.g. Reporting or Ads). For multi-product customers, their ARR would be distributed across based on the value of each SKU/Hub for which they pay. ARR can differ from Revenue due to several factors. ARR is converted into USD at fixed rates that are held consistent over time and may vary from those used for Revenue or Deferred Revenue. ARR would exclude any impact for Bad Debt and Partner Commissions (as noted above) and would also differ from Revenue due to timing of revenue recognition. ४