#1HubSpot Analyst Day HubSpot's 2022 Analyst Day Chuck MacGlashing Investor Relations Di#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; our product plans, strategies, and trends; our ability to expand our total addressable market; our position to execute on our growth strategy and related growth drivers; our opportunities in international markets; and our ability to expand our leadership position and market opportunity for our CRM 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 our history of losses; our ability to retain existing customers and add new customers; the continued growth of the market for a CRM 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; the impact of geopolitical conflicts, inflation, macroeconomic instability, and the COVID-19 pandemic on our business, the broader economy, our workforce and operations, and our ability to forecast our future financial performance; and other risks set forth under the caption "Risk Factors" in our 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. HubSpot#3HubSpot Today's Agenda Wednesday, Sep 7, 2022 9:45 a.m. 9:50 a.m. 10:30 a.m. 12:25 p.m. 12:50 p.m. 1:20 p.m. Safe Harbor Chuck MacGlashing | Investor Relations Fireside Chat | Moderator: Chuck MacGlashing Brian Halligan | Co-Founder & Executive Chairperson Short Break INBOUND Spotlight Yamini Rangan | Chief Executive Officer Dharmesh Shah | Co-Founder & Chief Technology Officer Stephanie Cuthbertson | Chief Product Officer Lunch Break Strategy for Durable, Profitable Growth Yamini Rangan Short-Term Resilient, Long-Term Durable Kate Bueker | Chief Financial Officer Short Break Executive Q&A | Moderator: Chuck MacGlashing Yamini Rangan Brian Halligan Dharmesh Shah Kate Bueker#4Thank You#5Fireside Chat with Brian Halligan Brian Halligan Co-Founder + Executive Chairperson Chuck MacGlashing VP, Investor Relations HubSpot#6Executive Q&A Session Brian Halligan Co-Founder + Executive Chairperson Yamini Rangan CEO Chuck MacGlashing Moderator Dharmesh Shah Co-Founder + CTO Kate Bueker CFO HubSpot#7HubSpot Analyst Day Strategy for Durable, Profitable Growth Yamini Rangan Chief Executive Officer#8Our discussion today ill 1 HubSpot Momentum 2 Expanding Market Opportunity 3 Strategy for Durable Growth HubSpot#9HubSpot: Clear momentum at scale $1.69B revenue 36% YOY growth $200M free cash flow 12% margin 150K+ customers 25% YOY growth 7K+ employees 41% YOY growth Revenue and free cash flow represent the current midpoint of HubSpot's FY'22 guidance on an as-reported basis. YoY Revenue growth rate based on mid-point of 2022 guidance, adjusted for the impact of foreign currency. Customer and employee count as of the end of Q2'22. Free cash flow is a non-GAAP metric. HubSpot#10Rule of 40+ at scale "Rule of 40" defined as 2022 revenue growth based on the mid-point of HubSpot's guidance plus 2022e FCF margin, both provided with Q2 2022 guidance. HubSpot#11What's behind our results Solving for the customer Pace of innovation Breadth of distribution HubSpot#12Our growth has exceeded market growth by 3X 35% Hubs Revenue Growth¹ 11% Market Growth 1. Based on HubSpot's expected revenue CAGR of 35% from 2018 through the midpoint of HubSpot's 2022 revenue guidance provided with Q2 2022 earnings. "Market" defined as addressable IDC technology segments for Marketing Hub, Sales Hub, Service Hub. 12% Market growth is a CAGR from 2018 - 2022 and based on historical IDC Data and IDC estimates for Market Growth in 2022. HubSpot#13Our TAM is large and expanding $45 3n¹ 2022 10% CAGR 1000 - 2000 100 - 999 employees 1 - 99 Software TAM for Marketing, Sales, Service, CMS, and Ops 1. Includes Total Addressable Market for software in HubSpot's core product groups including Marketing Hub, Sales Hub, Service Hub, Operations Hub and CMS Hub. Does not include Commerce and Payments TAM. Source: IDC and HubSpot estimates. $72 Bn¹ 2027 HubSpot#14Websites Sales Productivity Marketing Automation Data Sync Service Ticketing Reporting Disconnected point solutions The SMB market is underserved Reporting Acquisition Data Acquisition Service Acquisition Analytics Acquisition Messaging Acquisition Marketing Automation Acquisition Cobbled enterprise solutions HubSpot#15The SMB market is underserved Websites Sales Productivity Marketing Automation Data Sync Service Ticketing Reporting Disconnected point solutions $ Reporting Acquisition Data Acquisition Service Acquisition Analytics Acquisition Messaging Acquisition Marketing Automation Acquisition Cobbled Enterprise Solutions HubSpot#16We help customers scale across all stages of their digital journey Newer to digital VIE MANN Industrials Marketing Hub 15% increase in revenue 57% conversion rate increase 16% increase in leads Early to digital :: PayPlug Software Marketing, Sales, CMS Hubs 30% increase in leads 5x increase in blog traffic 15% increase to web traffic Digitally Mature WyreSt>rm Electronics Manufacturing Marketing, Sales, Service Hubs 75% cost savings 5 tools eliminated 95% user adoption rate HubSpot#17Our customers are challenged by a crisis of disconnection Disconnected systems Disconnected people Disconnected customers Disconnected point solutions are not the solution People need more than software to thrive and crave community Old GTM strategies will NOT work in this new world#18Connected Applications Connected Platform Connected Community Marketing Hub™ Sales Hub™ Network Service Hub™ $ Commerce-Powered CRM Data Reporting Automation Content Messaging CMS Hub® Marketplace Operations Hub™ Payments Academy HubSpot#19Connected Applications Connected Platform Connected Community #1 Market share leader for scaling companies HubSpot#20Marketing Hub Innovation Scale 48B emails delivered 50B website sessions $8B ad spend managed Time period for all metrics is last twelve months. Ad Spend with third party vendors from HubSpot connected accounts. Focus Omni-channel Behavioral analytics Privacy first HubSpot#21Sales Hub Innovation Momentum $450M in IB ARR 100% growth > 100 seat customers 12M meetings scheduled by customers Growth in larger than 100 seat customers is year over year as of 6/30/22. Meetings scheduled metric is over last twelve months. Install Base ARR as of Q2 2022. See definition for ARR in appendix. Focus Enterprise grade Sales rep effectiveness HubSpot#22Service Hub Innovation Momentum Crossed $100M in ARR Over 400M conversations Active users up 80% YoY Conversations defined as the number of customer conversations over messaging or emails sent out of the HubSpot Conversations inbox over the last 12 months as of 6/30/22. Active users metric is as of 6/30/22. Install Base ARR as of August 2022. See definition for ARR in appendix. Focus Modern, easy-to-use help desk Omni-channel support Service rep productivity HubSpot#23Connected Applications Connected Platform Connected Community Deliver a world-class flexible and extensible CRM platform HubSpot#24Connected Platform For Customers: • Continuous improvement Consolidated data • Easy adoption For HubSpot: • Fast pace of innovation Messaging Data Primary Colors Payments Content Reporting Automation HubSpot#25We're sowing seeds for future growth with commerce. HubSpot#26Commerce momentum since launch Q1'22 • Payment links • Payments on Quotes • Recurring payments • Checkout optimizations . Line-item discounts • Payment link descriptions Q2'22 • Recurring ACH • Payments CRM object • QBO integration • Customizable quantities • Custom quote templates Q3'22 • Embedded payments: forms, meetings, CMS, marketing email • Payment schedules (beta) • Open amounts • Failed payments automation Onboarding improvements 2023+ • Invoicing • Payment Scheduling • Tax Integrations . Additional CRM Objects Consumer-grade onboarding HubSpot#27Commerce vision Simple commerce Customer problem: Want to sell touchlessly online Solution: Payments as a primary color Complex commerce Customer problem: Want to streamline quote to cash Solution: Crafted QTC solution in the CRM Commerce-powered CRM Customer problem: Want a single source of customer and commerce data Solution: Commerce data embedded in the CRM HubSpot#28Connected Applications Connected Platform Connected Community Become the leading community for growth professionals to connect HubSpot#29Transforming to a connected platform Single App Marketing Hub™ To Connected Platform Marketing Hub™ Data Network Sales Hub™ Service Hub™ CMS Hub Marketplace Operations Hub™ $ Commerce-Powered CRM Reporting Automation Content Messaging Payments ✪ Academy HubSpot#30Product led Breadth of distribution Partner led Direct led ↑ HubSpot#31Diverse levers for durable growth Land Expand New Product Categories HubSpot#32Winning combination for growth Large, expanding TAM Strong culture & team Pace of innovation + Breadth of distribution HubSpot#33Thank You#34HubSpot Analyst Day Short-Term Resilient, Long-Term Durable Kate Bueker Chief Financial Officer#35Agenda III 1 Strong Business Performance 2 Diverse Levers for Durable Growth $ 3 Balancing Growth and Profitability HubSpot#36Agenda III 1 Strong Business Performance 2 Diverse Levers for Durable Growth $ 3 Balancing Growth and Profitability HubSpot#37Strong Revenue Growth $513m 2018 $1,693m 2022e 2022e: based on midpoint of 2022 full year revenue guidance of $1.6925 billion. CAGR: compound annual growth rate; based on as-reported revenue from 2018 to 2022e. 35% CAGR 2018 2022e HubSpot#38Strong Profitability, FCF + Cash $32m 2018 45% CAGR $144m 2022e Operating Profit 2022e: based on midpoint of 2022 full year operating profit and free cash flow guidance of $143.5 million and $200 million, respectively. See definitions and reconciliations of non-GAAP operating income and free cash flow in appendix. CAGR: compound annual growth rate; based on operating profit from 2018 to 2022e. $200 million FCF, 2022e $1.4+ billion in cash, Q2'22 HubSpot#39Strong Customer Growth 57k 2018 I 150k+ Q2'22 Dotted box: The dotted lines are an estimated illustration of the net new customers we expect to add in the second half of 2022 and is not to scale. CAGR: compound annual growth rate; based on customer count from 2018 to 2022e. See definition of Customers in appendix. 32% CAGR 2018 Q2'22 HubSpot#40Balanced Growth Drivers 54% International 43% Solutions Partners 46% U.S. 57% Direct 50% New U.S. vs. International; Direct vs. Solutions Partners; New vs. Install Base are calculated based on a % Net New ARR from end of December 2021 to end of June 2022. See definition of Net New ARR appendix. 50% IB HubSpot#41Marketing Hub $1.1b IB ARR World-Class Connected Apps 30% YOY Growth $70m IB ARR Anchor Hubs $450m IB ARR CMS Hub Sales Hub Emerging Hubs mid-50s% YOY Growth Install Base ARR and year-over-year growth rates as of Q2 2022. See definition for ARR in appendix. mid-50s% YOY Growth $95m IB ARR Operations Hub $35m IB ARR Service Hub Growing... fast high-50s% YOY Growth HubSpot#42Agenda III 1 Strong Business Performance 2 Diverse Levers for Durable Growth $ 3 Balancing Growth and Profitability HubSpot#43Multiple levers to drive growth Land Expand New Categories HubSpot#44Land Multiple Paths to Land on HubSpot's Platform + +. Ja HubSpot#45Early Stages of Significant TAM Opportunity HubSpot Share: 4% $45b 2022 $72b 2027 Includes Total Addressable Market for software in HubSpot's core product groups including Marketing Hub, Sales Hub, Service Hub, Operations Hub and CMS Hub. Does not include Commerce and Payments TAM. Source: IDC, US Census Bureau and HubSpot estimates. HubSpot share based on mid-point of 2022 full-year revenue guidance of $1.6925 billion. HubSpot#46Land: Adding Value with Free Products 60%+ of Customers Try a Free Product First 100% 0% New Customers by Channel 2018 H122 Free sign-up before purchase: Customers that signed up on a free product before purchasing a paid version as of June 30, 2022. See definition of Customers in appendix. No free sign-up before purchase Free sign-up before purchase HubSpot#47Land: Fueling Customer Acquisition with Starter Suite 25% of Customers First Land with the Starter CRM Suite 100% 0% New Customers by Tier 2018 H122 Pro + Ent Starter (Non-Suite) Starter (Suite) Starter (Suite) = Customers who bought MHS+SHS+SVHS or MHS+SHS+SvHS+OHS or MHS+SHS+SvHS+CHS or MHS+SHS+SVHS+OHS+CHS upfront. Starter (Non-Suite) = Customers who bought any other single or combination of Starter-only products upfront. Pro + Ent=Customers who bought any combination of products as long as one of the products was a Professional or Enterprise edition. See definition of Customers in appendix. HubSpot#48Land: Increasing Share of P + E Multi-Hub Customers 50%+ of New Upmarket Customers Land with Two or More Hubs 100% 0% New Pro + Ent Customers 2018 H122 3+ Hubs 2 Hubs Sales Hub Only Marketing Hub Only Marketing Hub Only = New Customers who bought Marketing Hub Professional or Enterprise edition. Sales Hub Only = New Customers who bought Sales Hub Professional or Enterprise edition. 2 Hubs = Customers who bought Professional or Enterprise editions of any 2 Hubs. 3+ Hubs = Customers who bought Professional or Enterprise editions of any 3 or more Hubs. See definition of Customers in appendix. HubSpot#49Expand✔ Innovation Driving Greater Expansion Opportunity HubSpot#50Growing Diversity of Expansion Motions 2015: App Marketing Contacts 2017: Suite Edition Upgrades Cross-Sell H1'22: Platform Seat Upgrades Percentage of upgrades by category. Calculated for 2015, 2017, and H1'22 (December 31, 2021 - June 30, 2022). Additional URLs are included in the Edition Upgrades category. Excludes "Other" upgrades including: discount changes, list price changes, add ons, and partner margin changes. HubSpot#51Expand: Growing Customers Upgrading to Pro + Ent 100% 0% IB ARR by Edition H122 Customers by Edition Install Base ARR and Customers as of June 30, 2022. See definitions for ARR and Customers in the appendix. Ent Pro Pro + Ent Starter HubSpot#52Expand: Value of Multi-Hub Fueling Cross-Sell 100% 0% Pro + Ent Customers H122 3+ Hubs 2 Hubs Single Hub +10pt improvement in deals closed for MH, SH, SVH + CMS customers Professional and Enterprise Customers as of June 30, 2022. See definition of Customers in appendix. +50% improvement in website traffic for MH + CMS customers vs. single-Hub customers +5pt improvement in tickets closed for SH + SvH customers HubSpot#53Expand: Growing Opportunity for Seat Expansion 1.2m active users Jan 2019 850k paid seats 100k Sales or Service Hub customers Jun 2022 Active User is defined as any user taking specific actions in a given time period in a portal that has either a Sales Hub or Service Hub subscription. Paid seats is defined as a paid Sales or Service seat. HubSpot#54Strong ASRPC Growth + Retention Performance Pro + Ent ASRPC Growth 2018 13% CAGR H122 CAGR: compound annual growth rate; based on customer growth rate from 2018 to 2022e. See definitions of Net Revenue Retention and ASRPC in appendix. Long-Term Net Revenue Retention 110%+ HubSpot#55New Categories B2B Commerce and Payments HubSpot#56Initial Target Payments Customers 33% User percentages expressed as as of Q2 2022. Who's Using it? • <100 EES 90+% Small Business or Mid Market Pro + Ent 80+% on Pro/Ent Editions Multi-Hub 60+% on 3+ Hubs HubSpot#57Common Payments Use Cases 31% ACH 46% Payments Link 69% Credit Card 54% Quotes 22% Recurring ACH vs. Credit Card, Payments Link vs. Quotes, and Recurring vs. Non-Recurring are all based on a percentage of Gross Payment volume from December 31, 2021 to June 30, 2022. 78% Non-Recurring HubSpot#58Payment Links Driving Higher Sales Simple Commerce Make it easy for B2B companies to sell touchlessly online APPS WITHOUT CODE Apps Without Code Marketing, Sales and Service Hub Customer Previously using cobbled payments solution involving five different vendors Consolidated on HubSpot Payments and placed payment links on sales page Saw 33% increase in monthly revenue Significant time savings from reduction of manual tasks HubSpot#59Quotes Enabling Shorter Payment Cycle Complex Commerce Streamline quote to cash process for more sophisticated customers Web Canopy Studio HubSpot Diamond Partner Previously used manual QTC process Average time from signing to payment ~2 weeks Moved to HubSpot Sales Quotes Clients sign and pay directly from quote 36% increase in revenue Reduced average time to payment from ~2 weeks to ~1 day. HubSpot#60Payments Business Priorities 2023 North Star: Increasing Active merchants Discovery • Improve discovery points in navigation "Getting Started" checklists Deeply embed payments across platform Activation Create consumer grade onboarding process Faster time to transaction for low-risk merchants • Build simple payment use cases for less sophisticated customers Adoption Add invoicing flexibility... discounts, payment schedules • Enhance subscription functionality Expand integrations with accounting and tax HubSpot#61Agenda III 1 Strong Business Performance 2 Diverse Levers for Durable Growth $ 3 Balancing Growth and Profitability HubSpot#62Philosophy on Balancing Growth and Profitability tit $ Drive durable revenue growth at scale Generate operating leverage as we scale toward long-term margin targets HubSpot#63Track Record of Delivering Growth and Profitability Revenue Revenue Growth* Operating Profit Operating Margin 2018 $513m 35% $32m 6% 2022e $1,693m 36% $144m 8% Revenue growth rates in 2018 and 2022e are adjusted for the impact of foreign currency. 2022e: represents the current midpoint of HubSpot's full year 2022 guidance. HubSpot#64Long Term Financial Targets Remain Unchanged Long Term Target Model Gross Margin R&D % of revenue S&M % of revenue G&A % of revenue Operating Margin 2018 82% 18% 46% 11% 6% 2022e 82% 20% 45% 9% 8% ↑ 81% - 83% 18% - 20% 30% -35% 8% -9% 20% - 25% Long-Term Target Model: These estimates reflect our current operating plan as of September 7, 2022 and are subject to change as future events and opportunities arise. 2022e: represents the current midpoint of HubSpot's full year 2022 guidance. All percentages are non-GAAP and exclude expenses associated with stock based compensation, amortization of acquired intangibles and acquisition related expenses. Percentages are based on actual values. Totals may not sum due to rounding. Please refer to appendix for a reconciliation of GAAP to non-GAAP figures. HubSpot#65Driving Long-Term Margin Expansion Via S&M Leverage Long Term Target Model Gross Margin R&D % of revenue S&M % of revenue G&A % of revenue Operating Margin 2018 82% 18% 46% 11% 6% 2022e 82% 20% 45% 9% 8% 81% - 83% 18% - 20% 30% -35% 8% -9% 20% - 25% S&M Leverage • Invest in data and systems to improve rep efficiency Grow freemium acquisition • Non-linear growth with Commerce Long-Term Target Model: These estimates reflect our current operating plan as of September 7, 2022 and are subject to change as future events and opportunities arise. 2022e: represents the current midpoint of HubSpot's full year 2022 guidance. All percentages are non-GAAP and exclude expenses associated with stock based compensation, amortization of acquired intangibles and acquisition related expenses. Percentages are based on actual values. Totals may not sum due to rounding. Please refer to appendix for a reconciliation of GAAP to non-GAAP figures. HubSpot#66Early thoughts on 2023 Profitability Gross Margin R&D % of revenue S&M % of revenue G&A % of revenue Operating Margin 2023 Continued investment in platform resilience and efficiency Long-Term Target Model: These estimates reflect our current operating plan as of September 7, 2022 and are subject to change as future events and opportunities arise. 2022e: represents the current midpoint of HubSpot's full year 2022 guidance. All percentages are non-GAAP and exclude expenses associated with stock based compensation, amortization of acquired intangibles and acquisition related expenses. Percentages are based on actual values. Totals may not sum due to rounding. Please refer to appendix for a reconciliation of GAAP to non-GAAP figures. HubSpot#67Early thoughts on 2023 Profitability Gross Margin R&D % of revenue S&M % of revenue G&A % of revenue Operating Margin 2023 Continued investment in platform resilience and efficiency Sustain investments in product innovation to drive future growth Long-Term Target Model: These estimates reflect our current operating plan as of September 7, 2022 and are subject to change as future events and opportunities arise. 2022e: represents the current midpoint of HubSpot's full year 2022 guidance. All percentages are non-GAAP and exclude expenses associated with stock based compensation, amortization of acquired intangibles and acquisition related expenses. Percentages are based on actual values. Totals may not sum due to rounding. Please refer to appendix for a reconciliation of GAAP to non-GAAP figures. HubSpot#68Early thoughts on 2023 Profitability Gross Margin R&D % of revenue S&M % of revenue G&A % of revenue Operating Margin 2023 Continued investment in platform resilience and efficiency Sustain investments in product innovation to drive future growth Ensure sales capacity, while driving efficiencies in discretionary areas Long-Term Target Model: These estimates reflect our current operating plan as of September 7, 2022 and are subject to change as future events and opportunities arise. 2022e: represents the current midpoint of HubSpot's full year 2022 guidance. All percentages are non-GAAP and exclude expenses associated with stock based compensation, amortization of acquired intangibles and acquisition related expenses. Percentages are based on actual values. Totals may not sum due to rounding. Please refer to appendix for a reconciliation of GAAP to non-GAAP figures. HubSpot#69Early thoughts on 2023 Profitability Gross Margin R&D % of revenue S&M % of revenue G&A % of revenue Operating Margin 2023 Continued investment in platform resilience and efficiency Sustain investments in product innovation to drive future growth Ensure sales capacity, while driving efficiencies in discretionary areas Leverage through automation and scrutinizing discretionary expenses Long-Term Target Model: These estimates reflect our current operating plan as of September 7, 2022 and are subject to change as future events and opportunities arise. 2022e: represents the current midpoint of HubSpot's full year 2022 guidance. All percentages are non-GAAP and exclude expenses associated with stock based compensation, amortization of acquired intangibles and acquisition related expenses. Percentages are based on actual values. Totals may not sum due to rounding. Please refer to appendix for a reconciliation of GAAP to non-GAAP figures. HubSpot#70Early thoughts on 2023 Profitability Gross Margin R&D % of revenue S&M % of revenue G&A % of revenue Operating Margin 2022e 82% 20% 45% 9% 8% 2023 Continued investment in platform resilience and efficiency Sustain investments in product innovation to drive future growth Ensure sales capacity, while driving efficiencies in discretionary areas Leverage through automation and scrutinizing discretionary expenses Flat at 8% Long-Term Target Model: These estimates reflect our current operating plan as of September 7, 2022 and are subject to change as future events and opportunities arise. 2022e: represents the current midpoint of HubSpot's full year 2022 guidance. All percentages are non-GAAP and exclude expenses associated with stock based compensation, amortization of acquired intangibles and acquisition related expenses. Percentages are based on actual values. Totals may not sum due to rounding. Please refer to appendix for a reconciliation of GAAP to non-GAAP figures. HubSpot#71Key Takeaways 1. Strong foundational business model 2. Still early in massive opportunity 3. Diverse levers for growth 4. Balanced growth and profitability over short- and long-term 50 HubSpot#72Thank You HubSpot#73GAAP to Non-GAAP Reconciliations HubSpot#74GAAP to Non-GAAP Reconciliation Cost of Revenue Subscription Stock-based compensation Amortization of acquired intangibles Gain on termination of operating leases Loss on disposal of fixed assets Non-GAAP subscription Professional services and other Stock-based compensation Gain on termination of operating leases Loss on disposal of fixed assets Non-GAAP professional services and other Gross Margin Gross margin Stock-based compensation Amortization of acquired intangible assets Gain on termination of operating leases Loss on disposal of fixed assets Non-GAAP gross margin Operating Expenses Research and development Stock-based compensation Acquisition/disposition related income (expenses) Gain on termination of operating leases Loss on disposal of fixed assets Non-GAAP research and development Sales and marketing Stock-based compensation Amortization of acquired intangible assets Acquisition related expenses Gain on termination of operating leases Loss on disposal of fixed assets Non-GAAP sales and marketing General and administrative Stock-based compensation Acquisition related expenses Gain on termination of operating leases Loss on disposal of fixed assets Non-GAAP general and administrative Loss from Operations Loss from operations Stock-based compensation Amortization of acquired intangible assets Acquisition related expenses Gain on termination of operating leases Loss on disposal of fixed assets Non-GAAP (loss) income from operations $'000s 2018 69,718 (1,476) (1,394) 66,848 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% 0% 13% 6% -1% 0% 0% 5% 2019 % of $'000s Revenues 0% 0% 0% 82% 98,510 (3,127) (3,201) 92,182 31,448 (2,829) 28,619 80% 544,902 1% 5,956 3,201 554,059 23% 158,237 -5% (33,748) -1% (357) 0% 0% 18% 124,132 52% 340,685 -6% (36,599) 0% 0% 0% 0% 46% 304,086 15% 92,971 -3% (21,451) 0% (552) 0% 0% 11% 70,968 i -9% (46,991) 15% 0% 1% 97,754 3,201 909 0% 0% 6% 54,873 15% 0% 0% 0% 0% 14% 5% 0% 0% 0% 4% 81% 1% 0% 0% 0% 82% 23% -5% 0% 0% 0% 18% 50% -5% 0% 0% 0% 0% 45% 14% -3% 0% 0% 0% 11% -7% 14% 0% 0% 0% 0% 8% $'000s 2020 130,685 (4,408) (2,340) 123,937 36,274 (2,536) 33,738 716,067 6,944 2,340 725,351 205,589 (39,366) (1,287) 164,936 452,081 (50,552) (79) 401,450 109,225 (24,626) (545) 84,054 (50,828) 121,488 2,419 1,832 74.911 % of Revenues 15% 0% 0% 0% 0% 14% 4% 0% 0% 0% 4% 2021 % of $'000s Revenues 211,132 (6,297) (937) 395 (600) 203,693 47,725 (3,092) 275 (415) 44,493 81% 1,041,801 1% 0% -6% 14% 0% 0% 0% 0% 8% 9,389 937 (670) 0% 0% 82% 1,052,472 1,015 23% 301,970 -4% (61,614) 0% (1,152) 0% 1,346 0% (2,036) 19% 238,514 51% 649,681 -6% (67,413) 0% (389) 0% (367) 0% 0% 45% 12% -3% 0% 0% 0% 10% 1,839 (2,781) 580,570 144,949 (28,345) (568) 421 (636) 115,821 (54,799) 166,761 1,326 2,087 (4,276) 6,468 117,567 16% 0% 0% 0% 0% 16% 4% 0% 0% 0% 3% 80% 1% 0% 0% 0% 81% 23% -5% 0% 0% 0% 18% 50% -5% 0% 0% 0% 0% 45% 11% -2% 0% 0% 0% 9% -4% 13% 0% 0% 0% 0% 9% Six months ended June 30, 2022 % of $'000s Revenues 123,815 (4,206) (627) 118,982 28,052 (2,083) 25,969 665,487 6,289 627 672,403 211,650 (48,684) 300 113,252 421,396 (49,052) (535) 265,642 95,845 (22,844) (19) 54,067 (63,404) 126,869 1,162 (281) 64,346 15% -1% 0% 0% 0% 15% 3% 0% 0% 0% 3% 81% 1% 0% 0% 0% 82% 26% -6% 0% 0% 0% 14% 52% -6% 0% 0% 0% 0% 33% 12% -3% 0% 0% 0% 7% -8% 16% 0% 0% 0% 0% 8% HubSpot#75GAAP to Non-GAAP Reconciliation Loss from Operations Loss from operations Stock-based compensation Amortization of acquired intangible assets Acquisition/disposition related income (expenses) Gain on termination of operating leases Loss on disposal of fixed assets Non-GAAP (loss) income from operations $ '000s 2018 (48,258) 76,261 1,394 2,696 32,093 % of Revenues -9% 15% 0% 1% 0% 0% 6% $ '000s (46,991) 97,754 3,201 909 54,873 2019 % of Revenues -7% 14% 0% 0% 0% 0% 8% $ '000s 2020 (50,828) 121,488 2,419 1,832 74.911 % of Revenues -6% 14% 0% 0% 0% 0% 8% $ '000s 2021 (54,799) 166,761 1,326 2,087 (4,276) 6,468 117,567 % of Revenues -4% 13% 0% 0% 0% 0% 9% Forecast 2022 $ '000s (136,877) 278,025 2,640 (288) 143,500 % of Revenues -8% 16% 0% 0% 0% 0% 8% HubSpot#76GAAP 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 $ '000s 2018 84,851 (33,473) 51,378 % of Revenues 17% -7% 0% 10% $ '000s 2019 118,973 (53,846) 65,127 % of Revenues 18% -8% 0% 10% $ '000s 2020 88,913 (58,917) 49,048 79,044 % of Revenues 10% -7% 6% 9% $ '000s 2021 238,728 (61,865) 26,428 203,291 % of Revenues 18% -5% 2% 16% HubSpot#77Definitions Customers: We define our Customers at the end of a particular period as the number of business entities with one or more paid subscriptions to our CRM Platform either purchased directly with us or purchased from a Solutions Partner. We do not include in Customers business entities 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 to our CRM Platform, 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. Install Base: Refer to definition of Annual Recurring Revenue below. Net Revenue Retention: Net Revenue Retention is a measure of the percentage of recurring revenue retained from customers over a given period of time. Our Net Revenue Retention for a given period is calculated by first dividing Retained Subscription Revenue by Retention Base Revenue in the given period, calculating the weighted average of these rates using the Retention Base Revenue for the period, and then annualizing the resulting rates. A definition of each of the key terms used to calculate Net Revenue Retention is included below. Average Subscription Revenue per Customer: We define "ASRPC" during a particular period as subscription revenue, excluding revenue from our legacy Sales Hub ($10) and PieSync products, from our Total Customers during the period divided by the average Total Customers during the same period. Non-GAAP Operating Income: We define as GAAP operating income or loss plus stock-based compensation, amortization of acquired intangible assets, gain on termination of operating leases, loss on disposal of fixed assets, and acquisition related expenses. Free Cash Flow: We define "FCF" 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 convertible notes attributable to debt discount. 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. HubSpot