Hubspot Investor Day Presentation Deck
Definitions
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.
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