HubSpot Inc (HUBS) 2014 Q4 法說會逐字稿

I would like to welcome everyone to the HubSpot fourth-quarter and full-year 2014 earnings call.

(Operator Instructions)

Lisa Mullan, Director of Investor Relations, you may begin your conference.

Thanks, Courtney. Good afternoon, and welcome to HubSpot's fourth-quarter and full-year 2014 earnings call. Today we'll be discussing the results announced in our press release issued after the market closed. With me on the call this afternoon is Brian Halligan, our Chief Executive Officer and Chairman; John Kinzer, our Chief Financial Officer; and JD Sherman, our President and Chief Operating Officer.

Before we start, I'd like to draw your attention to the Safe Harbor statement included in today's press release. During the call, we will make statements related to our business that may be considered forward-looking, including statements concerning our financial guidance for the first quarter FY15 and the full year of 2015, our position to execute on our growth strategy, and our ability to maintain existing and acquire new customers.

These statements reflect our views only as of today and should not be considered our views as of any subsequent date. Please refer to our cautionary language in today's press release and to our Form 10-Q filed with the SEC on November 13, 2014, for a discussion on the risks and uncertainties that could cause actual results to differ materially from expectations.

Finally, during the course of today's call, we will refer to certain non-GAAP financial measures. There is a reconciliation schedule showing GAAP versus non-GAAP results currently available on our press release announcing financial results for the fourth quarter and full year ended December 31, 2014, which is located on our investor relations website at www.hubspot.com.

What that, it's my pleasure to turn the call over to HubSpot's CEO and Chairman, Brian Halligan.

Thanks, Lisa, and welcome everyone to our fourth-quarter 2014 call. Let me start by apologizing for my voice. I'm a bit under the weather, not sure why, but it might have something to do with all the snow we've gotten here in Boston. 2014 was big for HubSpot, and our Q4 performance was a great cap to the year. We're really pleased and really proud of the results.

HubSpot had a Board meeting a couple weeks ago, and we kick off our Board meetings with a session we call Chairman's remarks, which is a chance for me to give the Board a view of what's going on inside of my head. I thought I'd basically just replay those Chairman remarks for you today on this call. By pretty much every measure I feel like 2014 was a great year for HubSpot. I have a habit of dealing through mounds of data on a monthly, quarterly and yearly basis, and pretty much every number is heading in the right direction.

Here are a few of the highlights, first, revenue growth accelerated all year. Revenue growth started 2014 at 44% in Q1, accelerating to 48% in Q2, 51% in Q3, and 53% in Q4. Next, our operating leverage improved all year. Non-GAAP operating margins in 2014 started at a loss of 34% in Q1 and finished the year with a non-GAAP operating margin loss of 21% in Q4. That's 13 percentage points of improvement through the year.

Our retention rates really improved throughout the year. Our dollar retention rate have growth in the high-80%s in Q1 to the high-90%s in Q4. Finally, our customer acquisition machine is really cranking. Customer count started 2014 at 10,111. By the end of 2014, our customer count had grown to 13,607, a 35% increase. I think much of our success in 2014 is actually a result of decisions we made in 2012 and 2013.

As the great philosopher Warren Buffett likes to say, someone's sitting in the shade today because someone planted a tree a long time ago. I think that applies to HubSpot's 2014 results. I'd like to highlight some of those seeds we planted over the last couple years that caused the 2014 results to happen.

The first seed was an explicit decision to make big R&D investments and become a product-centric company, like so many of the West Coast firms we admire like Google, LinkedIn and others. When your product improves it helps you across virtually every metric, like what is happening with HubSpot. New customer adds, retention, gross margin, operating margin, et cetera, are all improving at the same time.

The second seed we planted was the new pricing model we put in place three years ago on our core marketing product where pricing increases along two axis. We had addition basic, pro, and enterprise as our first axis, and then added contact list side as a second axis. This change allowed us to align in census with our customers and grow right alongside them. We grandfathered all our existing customers in, so it took a while for the new model to really take effect, but we're seeing improved overall retention rates driven especially by better upsell and our post-pricing change cohorts.

The third seed was a go-wide instead of go-high decision. We made a big call to build a very broad solution for the mid-market instead of a relatively narrow solution for the enterprise. The alternative to HubSpot is to buy a website from one vendor, search engine optimization tools from another, social media tools from a third, marketing automation tools from yet another, and then sales tools from somewhere else. If you're a big company, you might be able to pull this off, but in our part of the market there is tremendous value to having all these systems together with one user interface, one login, one bill to pay, and one number to call if you get stuck.

A great example of the mid-market company leveraging HubSpot is Engrave It Houston. They are a Texas-based company that sells industrial engraving products and services to big-league equipment manufacturers, like Caterpillar and Baker Hughes, all the way down to small manufacturing and fabricating shops.

Engrave It adopted the entire HubSpot platform for their website, blogs, search-engine optimization, analytics, soup to nuts. In fact, they are also a customer of our new sales tools. Since adopting HubSpot in the summer of 2013, Engrave It has seen their revenues increase by 85%. I love stories like this. Can't get enough of them.

A final seed was the sister decision to the wide instead of high choice, to craft a go-to-market strategy that was custom fit for our target market as opposed to trying to shrink down the old enterprise sales model. Specifically we go to market through two channels, partners and then through a direct inbound model. Our partner channel's a really powerful way to reach this mid-market. We have over 2,200 partners who use HubSpot to deliver marketing services to their mid-market clients. In many cases, these clients are completely outsourcing their marketing to our partners.

The great example of a partner I absolutely love is SmartBug Media. They've really been growing with us. They generated revenue growth of 1,691% over the last three years with HubSpot. At the same time, they've transformed from a project-based agency with typical margins to a retainer-based agency with really high margins. In fact 83% of SmartBug's revenue now comes from long-term contracts as opposed to short-term project work. They're up to 22 people and plan to add another 11 this year. What I love about this is that HubSpot goes to market arm in arm with hundreds of firms like these that help us unlock the mid-market in a uniquely powerful way.

Now, those are some of the seeds we planted over the last few years. You might be asking about seeds we're planting today that will provide a shade in the coming years. One big one is our new sales product, Sidekick. Still early days, but we're getting excellent traction with that product. In December, we had over 300,000 monthly active users. Today, there's a free edition and a $10 edition.

You can expect us to add a new more powerful version of Sidekick at a higher price point, but we're not ready to talk about those details quite yet. We look forward to enjoying some shade in 2016 and 2017 from our sales products.

Now, before I hand the call over to John, I'd like to point out a few recognitions HubSpot received in the fourth quarter. HubSpot was ranked number 15 out of all US SMBs by Glassdoor in their employee choice awards in 2015. What I love about this award is it is determined by our own employees and not by a third-party evaluation.

Glassdoor is to employees' company reviews as Yelp is to eaters' restaurant reviews. HubSpot was also recognized as the top marketing automation suite for customer satisfaction by G2 Crowd. Like Glassdoor, this award is determined by thousands of our customers, not by a single analyst like at Gartner or Forrester. G2 Crowd is to software reviews as Yelp is to restaurant reviews.

Now to conclude, you can see from today's results that our business is going great. You can also see from Glassdoor and G2 Crowd's recent awards that our employees are happy and our customers are delighted. At this time, I'd like to turn the call over to John Kinzer, who will dive deeper into our results. John?

Thanks, Brian. We were extremely pleased with HubSpot's results this quarter. As Brian mentioned, we saw fourth-quarter revenue growth accelerate year over year to 53%, and full-year revenue grew 49%. This marks the third straight quarter of accelerating revenue growth. This strong top-line performance was driven by record customer additions and record revenue retention in the quarter.

HubSpot ended the quarter with 13,607 customers, up 35% year over year. Customer growth is coming from both our direct and partner channels, as prospective customers have moved from asking what is inbound marketing, to where can they buy an all-in-one inbound marketing and sales platform. Average subscription revenue per customer increased to $9,530, up 14% from the fourth quarter of last year. This increase continues to be primarily driven by customers upgrading their subscriptions.

Revenue retention continued to improve, and we achieved retention in the high-90%s in the current quarter. This compares to the low-90%s we saw in the third quarter of 2014. The increase was driven by strong upsells and also from improvements in customer revenue renewal rates. Renewal rates continue to benefit from improvements we have made to the products, how we onboard our customers, and how we support our customers.

Populated billings, defined as revenue plus the change in deferred revenue, for fourth quarter 2014, came in at $40.8 million, up 66% versus the fourth quarter of 2013. Now, keep in mind that billings growth will vary from revenue growth due to factors such as change in billing terms and based on the timing of revenue recognition versus billing.

From a billing standpoint, we did see a small increase in the number of months paid upfront in the quarter, which slightly benefited calculated billings. In summary, we were very pleased with the metrics in the quarter. As you think about how these metrics will trend going forward, please note that we had a seasonally strong fourth quarter especially for our billings and revenue retention.

International was also a bright spot in fourth quarter. International represented 22% of our revenue in the quarter and grew 77% year over year. At the end of 2014, we had over 100 employees outside the United States and a total of 785 employees at HubSpot.

Let's now look at margins. Non-GAAP operating margin continued to expand even as we continued to invest in growth, coming in at just under a negative 21% for the fourth quarter. This is an 11-point improvement year over year, and a 2-point improvement from the 23% negative margin we achieved in third quarter 2014, after removing the seasonal impact of inbound expenses.

Turning to the balance sheet, we ended 2014 with a cash and cash equivalents balance of $123.7 million, and we had no outstanding debt on our balance sheet. Our credit facility of $35 million remains undrawn.

Now, turning to guidance, for the first quarter of 2015, total revenue is expected to be in the range of $34.8 million to $35.8 million, representing year-over-year growth of 46% when using the midpoint of the forecasted range.

Non-GAAP operating loss is expected to be in the range of a loss of $7.9 million to $6.9 million. Non-GAAP net loss per share is expected to be in the range of $0.26 to $0.22. This assumes approximately 31.5 million basic shares outstanding.

For the full year 2015, total revenue is expected to be in the range of $159 million to $163 million, representing year-over-year growth of 39% when using the midpoint of the forecasted range. Non-GAAP operating loss is expected to be in the range of a loss of $36 million to $32 million. Non-GAAP net loss per share is expected to be in the range of $1.13 to $0.97. This assumes approximately 32.3 million basic shares outstanding.

Finally, a couple of items to keep in mind as you model out the quarters of our business. As we mentioned on our third-quarter call, like other companies, we experience a seasonal increase in costs during our first quarter from higher FICA expenses from employee wage resets. Also, the first quarter is two days shorter than our fourth quarter, which has a slight impact on revenue, which in turn, creates a slight headwind for our average subscription revenue per customer.

In addition, in the third quarter of 2015, we will have higher marketing expenses associated with our annual INBOUND conference, which impacts our operating margins the same as it does every year. That said, we expect to continue to see operating margin improvement throughout 2015, as you can see in our full-year 2015 guidance.

In closing, we are pleased with the sales momentum and how the business is executing. We expect to see strong growth next year as we realize the benefit of the demand for our products and the leverage in the business. All said, we are excited about our future. With that, let me turn the call back over to Brian.

Thanks, John. To wrap up, Q4 was a solid end to a great year for HubSpot. As I said at the beginning, we are really happy with the trends on every metric, accelerating revenue growth, improving margins and operating leverage, and great traction in our sales model.

Looking ahead, I'm even more excited about 2015 and beyond. Our marketing products are still in the early innings and growing fast in a giant market. Our sales products are just in the top of the first inning and off to a great start. I'm confident that the seeds we are planting now are going to help us build a really great business over the long, long term.

I want to thank all of our customers, partners, and especially all the HubSpotters for making 2014 such a memorable year. I look forward to even greater success to come. At this time, I'll turn the call over to our operator to start the Q&A.

(Operator Instructions)

Richard Davis, Canaccord

Thanks very much. So you guys -- kind of the old phrase is eat your own dog food, so to speak. Have you been able to calculate how much customer additions in the year have come from your inbound marketing, because that would be a good reference point for your customers and stuff like that. How do you think about that? How do you quantify it, and how do you help people think about that? Thanks?

Thanks, Richard. This is Brian. Apologies again for the rough voice. Just to sort of take a step back, we very much eat our own dog food here. We really match the way we market and the way our product works and our methodology. It all fits nicely together. And so in any given quarter, any given month, let's say, we get 40,000-plus inbound leads, and we hand those inbound leads to over 100 inside sales reps that pull them through the sales process. So almost all of our deals now are really inbound. There may be a little outbound in there, but well over 90% are through our own inbound efforts. It works. We're a great case study for it. We grew 53% last quarter, and we are a great beneficiary of the inbound model and of HubSpot software

Got it. That's helpful. Thanks so much

Terry Tillman, Raymond James

Hey, thanks for taking my questions. I guess, Brian, the first question is it sounds like you caught a cold. Couldn't get [Kendra] to get out there and shovel the snow?

There is five feet of it. Kendra is buried underneath it.

He couldn't handle all that. Sorry I had to get that one out of the way. I guess the first question relates to in 2014 there was a lot going on the R&D side, product innovation side, but also in terms of evolving your go-to-market strategies. You brought in some seasoned sales executives that have a lot of strong credentials and past track record. What kind of changes did they make that may have helped in 2014, or is that more of a forward-looking opportunity in terms of some of the changes in evolution that can have on the go-to-market?

That's a really good question, Terry. We did bring in -- we brought in two very senior folks from salesforce.com that are doing great about a year ago, Hunter Madeley and David McNeill. They mostly took the playbook we had and enhanced it, is the way I would look at it. They didn't come in and sort of rip the playbook up and start over from scratch, but they made lots of little incremental improvements last year. We put some more incremental improvements into the model this year, and I think they'll continue to do so.

There wasn't a wholesale change in go-to-market or anything like that. And just to sort of refresh everyone's memory, our go-to-market is pretty unique. We get about 40% of our new business through our reseller partner channel through bars, and 60% of our business is through inbound direct business, which we use inside salespeople out of Boston and Dublin, and now a small office in Australia. So it's a very unique model relative to the typical SaaS model you might see. And it really works. We're getting a lot of leverage on the partner side and a lot of leverage on the direct side.

Those guys have added some tremendous leadership. They've hired well. They've improved the way we hire, improved the metrics around ramp-up time. They have improved the productivity per rep, and I think you can see continued good things from them. But it'll be more incremental than radical change out of that crew.

Got it. Thank you on that. And I guess, John, just a question in terms of your all's guidance for 2015. It's materially above my estimates. Is there anything I should think about in terms of any kind of positive change in your assumptions around maybe revenue retention or customer acquisition or maybe some embedding of some CRM success? Just trying to understand maybe such a drastic [elf] of what I had. And it's a good problem, I guess, but I just want to get more color on assumptions, maybe what's different

Yes, obviously, Terry, I don't have access to everything that you did. But, I mean, as I think about what's changed in the business, we did have record retention in the quarter. We're seeing great upsell rates. Brian talked about some of the seeds that were planted in the past. That pricing is really working. We're really seeing the upsell from people adding contact to their database.

We're also seeing improvements in the underlying renewal rates as well, just some of the things we did on the product side, on the support side as well. So we're seeing that, and then we had a great billings quarter, you'll see. We actually on the new sales front, to Brian's point, we're seeing some improvement in productivity, and we're able to actually get ahead of some of our sales hiring. Given that we were ahead, we invested that back into the business. So all of that tailwind is actually coming out of 2014 that's leading us to increase our guidance for 2015.

Okay, thank you.

Brendan Barnicle, Pacific Crest.

Thanks so much. Brian, I wanted to follow back up on the improvement in the customer-retention rates. You mentioned those three seeds that were attributing to the growth this year. Are those things that are in particular driving that, or is there anything in particular we can call out and look to on that customer-retention improvement?

Very good question, Brendan. There's a couple things, if you unpack that. We went from the high 80%s renewal retention rates a year ago to the high 90%s retention rates last quarter, and part of that is improved retention on the customer level. So we're retaining more of the customers, a higher percentage of the customers. And part of that is the upsell rate is improving.

And a lot of that upsell rate you can see, as we changed our pricing model about 2 1/2 years ago we went from a pricing model that really had one access, Basic, Pro and Enterprise, that you could upgrade along. We've always been getting upgrades along that axis, to one with two axes or pricing increases, Basic, Pro and Enterprise, plus contact [here] increases. So the more contacts you have in your database, the more leads you're getting, the better you're doing, the more you pay us.

And what I like about that is our incentives are really nicely aligned. So we're seeing in those new cohorts really nice increase in pricing over time as they improve their productivity. As they grow, we grow. It's really along both those lines. A little bit of the productivity is customer attention, and a little bit of it is better upsell rates. And I think underlying both of that is just the product's better. I look at the product today versus two years ago. It's awesome. It is incredibly powerful. It's easy to use. Our R&D organization has really stepped up over the last couple of years, and our product is just -- it works. That's sort of at the heart of it.

Great. And, John, on services gross margins, that almost -- services almost came to breakeven this quarter. How should we be thinking about those services gross margins going forward?

Yes, Brendan. We've talked about it in the past. We think ultimately we can get that to breakeven. I think we're still a little bit away from that. We're still incurring some cost as we move customers over from the old content management system to the new COS, and that continues to run through it. But I think you should see lower losses on the services and then trending to breakeven in the coming quarters.

Terrific. Thanks, guys.

Jennifer Lowe, Morgan Stanley.

Great, thank you. It's been a pretty impressive trend the last few quarters with the accelerating revenue growth, accelerating customer growth. And I know these things are hard to break out discretely, but I'd be curious to get your thoughts on how much of that acceleration is coming from metrics that you arguably have some degree of control over to the extent that anyone does around the pricing model transition, improved execution and sales, your own operations growing more smoothly versus factors that might be a little bit more market-driven, specifically more interest in just inbound marketing in general

Jen, that's an excellent question. It's okay if I'll take that, John. I think it's a combination, to be very honest with you. In my mind there's four things going on that are helping us. One is the market's definitely good. Marketing -- the way people shop for stuff has radically changed in all of our lives here on the phone, and the way marketers need to market needs to equally radically change over the next couple years. And I would guess 3% of the companies in the world have really woken up to that reality and changed the way they marketed to match that new reality and put in a marketing platform to help with that.

So the market is good. Secondly, the market itself is sort of crossing the chasm. People land in our funnel, and they've heard of us, and they've heard of Inbound marketing, and things are moving relatively quickly. Then more just on the execution side, there's the short-term execution, the long-term execution. The short-term execution, John hit on some of these things, but I think we executed really well in the last year.

One of the things that I think we are really get at is on a daily, weekly, monthly, quarterly, yearly basis, there's just tons of data available to anyone who works inside of HubSpot. And we're data geeks, we pore over the data. Whenever we find a problem where -- we call them a pothole -- we just dive right in, and we fix problems very early. We have very good discipline around that, and I think that's helped us over the last year or two as we built that muscle group.

We brought in new sales leadership, two brand-new leaders into sales. We brought in new leadership into engineering. DIdn't see a hiccup with either one of those leadership transitions. We went through the IPO transition super-smooth. The short-term execution during the year was really good. And then some of that longer term execution, some of those bigger investments we work we're seeing pay off, like big product investments over the last three years, nice long-term packaging decisions where we grandfather in our old customers and get packaging benefits from our new customers.

The wide versus high strategy on the go-to-market, where we built a very broad sort of growth stacked platform. We help people with their website, their search, their blogging, as well as marketing automation and sales. And then our unique go-to-market strategies. I think it's a combination of market factors, markets coming alive, and I think the Company's executed really well

Thank you. John, just a quick one for you, or maybe not so quick. Looking at the revenue guidance and almost 40% growth this year for calendar 2015. It's certainly better than what we forecasted, and it seems like everything is moving along nicely on the top line. Looking at the operating margin guidance that suggests that from an operating loss perspective that will be more flat, so expenses growing roughly consistent with the revenue side. And I'm just curious where the investment focus for this year is going to be for you.

Yes, Jen, good question. We've talked a lot about the huge opportunity we have in front of us, and we laid out on the road show how we look at it internally. We look at our unit economics, the lifetime value to the customer, acquisition costs. That ratio is really strong for us, and it's continued at those strong levels, gotten a little better actually. So we feel -- we see the returns in making these investments, so we'll continue to invest heavily in sales and marketing, given that we see those returns.

At the same time to Brian's point, we are seeing the investments we've made in R&D really play out. We really improved the product, and now we have opportunity to continue to build new products like we have on the sales side and some other things down the line. Obviously those are the areas we will invest heavily in. Having said that, we expect to get margin expansion throughout the year, and I'll reiterate that we plan on being cash-flow positive in early 2016.

It's really a balancing act for us. As long as our unit economics are as strong as they are, we will continue to invest, because we know the returns are there over time.

Thank you

Brent Thill, UBS.

Hi, guys. This is [Ian Stragar] calling in for Brent Thill. Thanks for taking my question. So net new customer adds saw a material acceleration from 2013. I was just wondering if there was any particular factor that was different this year than last year that played into this?

This is JD here. Couple things on the net new customer adds and obviously that impacts the overall revenue growth as well. One of the things that really helps net new customers is when your retention rates get better. And we saw retention rates get better all throughout the year, continually better from Q1 right on through Q4, so that sort of helps. Obviously a smaller hole in the bucket that you have to fill in with new hires are new customer acquisition.

And secondly we have just done a great job on customer acquisition in the sales channel. We've seen really great customer acquisition costs there. It's sort of stayed where we like to see it in that sort of range or where we're comfortable. So we've added a lot of sales reps, and that's helped drive our customer retentions or our customer acquisition.

Also, as Brian talked about a little bit, there's a bit of a tailwind in the marketplace. We're seeing customers sort of -- they come into the funnel. They know us already. It's less about explaining how inbound marketing works and why they might even consider that type of approach and more about showing them how they can grow their business with HubSpot and how we can help. And that's been a real positive.

I think Q4 was an exceptional quarter, great execution on our part and on the sales teams' part, as well as our services team. But also we probably got some tailwinds there with -- we had the IPO tailwind. We just had our awesome Inbound conference with 10,000 people there. So there's a little bit of tail -- yea- end tailwinds even in the mid-market you get some of that. So I think we probably had some sort of unfair tailwinds in Q4, but, overall, I feel really good about the traction we've gotten there.

Great. And just one more quick one. Are you guys seeing any change in the size of prospects? Is SMB still kind of the sweet spot, or are you guys seeing more interest from mid-market or larger prospects?

Want to take that, JD?

Yes, sure. Pretty much we're still seeing roughly the same size of prospects. We're really focused on that mid-market, and that's a great market for us. Our go-to-market strategy is geared towards going after that segment of the market. We have an inside sales force that targets inbound leads that come to us largely from mid-market companies between 20 and 2,000 employees. And we have an awesome partner channel that helps us reach out to those mid-market customers. So that's really our sweet spot. We haven't seen a dramatic change in that at all.

We have seen our ARPU go up over time, but that's mostly driven by the upgrades in the upsells that we've gotten into -- in our install base. As Brian mentioned, we've change the pricing model on that and we've kind of grown into that model, and we've started to have additional things to -- additional products, et cetera, to sell into those customers. I would say the short answer is no, we're not really seeing a big change there.

Thanks a lot, guys

Sure.

(Operator Instructions)

Mark Murphy, JPMorgan.

Yes, thank you very much. John, I wanted to ask you how would you model the spread between customer growth and revenue growth going forward? It was almost a 20-point spread this quarter, favorable on the revenue side. I'm curious at a high-level, how are you balancing your efforts between new customer acquisition and upsell activity? And how do you think this is going to net out going forward?

Mark, as we've looked at recently, we've been growing customers anywhere from 30% to 35% a quarter over the last four quarters. At the same time, the size of our customers has been growing in the mid-teens. So I still expect the customer growth to outpace the install base growth or the size of the customers. There's a ton of opportunity out there to continue to add customers, not just in the US but as we go internationally as well.

Longer-term, there's an opportunity to build new products and add new things that we can sell back into that base. But right now, we'll continue to really add the new customers and then upsell those customers once they come in.

Okay, and as a follow-up, Brian, I wanted to ask you, in terms of the sales platform, do you have any feeling for the ultimate attach rate or uptake rate of Sidekick and free CRM? Do you have a feeling that that provided any material uplift in terms of your ARPU, which did rise pretty nicely this quarter?

No, not a big material uplift on that one. When I think of Sidekick, that we started before this year. I'm really excited about it. We feel like we've built a hyper-growth startup inside of HubSpot there. We are really excited about 300,000 monthly active users of that last month; super, super excited about it. We're testing out some new features under a new price point. If you search around you can see some the tests going on there, but some tests going on in new price point.

There's a [zero dollar] version; a $10 version. We're playing with some higher-priced versions. That can get really big and super excited about Sidekick. It is very early, and it's getting great, great, great traction. The CRM came along a little later. It's still in beta. We're only opening that beta up to our existing customers. There's a few thousand in there. Reception has been very, very good. They're very happy with it. We are really targeted that CRM -- with that CRM product, non-consumers of CRM.

So if I look at our install base, most of our customers don't have a CRM system today, so it's for those folks that are using it, and they're really happy with it so far. Stay tuned to this channel for more news on CRM, packaging of CRM, and when we will open it up to non-existing customers of ours. But it is very exciting. It's early, early innings of both the stories, and, hopefully, we're sitting in the shade of those stories in 2016, 2017 and 2018

I would just add quickly on that that we are really thinking about that Sidekick business as kind of almost like a totally different business. We're building a different type of a model for that, a product-driven, premium model. It's even interesting how we've run that team inside of HubSpot. We kind of carved that whole team out. We gave them their own [pospital] part of the office, and they are kind of cranking away.

So, I think we're still in the early stages of that where we're trying to build that funnel and trying to build the users of that product, rather than heavily thinking about cross-selling it into the install base.

Yes, so, JD, just building off of that, do you have this goal of becoming a broader platform company? So the concept of rather than going up the triangle into the Enterprise arena, trying to go to the right and into new product areas such as sales? And so I'm just curious, what are your latest thoughts in terms of how far you can ultimately move in that direction, and maybe what might be on the drawing board after sales, whether it's service or some other area?

Okay, I'll take that. It's Brian. Our initial observation, why Dharmesh and I started the Company, was this very simple observation: Humans are radically changing the way they shop and buy stuff. And our first chapter of it was, Boy, marketers need to change the way they market to match the way people shop. And the chapter 2 is, Boy, people need to change the way they sell to match the way people buy. And we are so, so early into that second chapter that it's too early to talk about chapter 3. We are really locked into the first few chapters of that book before we start talking about chapter 3. Really excited about where we are today. Super, super early, though, to be thinking about that

Thank you

There are no further questions at this time. I will turn the call back over to the presenters for closing remarks.

Can I make one more comment? Is it okay, Lisa?

Yes.

We have our inbound conference -- sorry, I'm just looking at my notes. Our inbound conference is great. Last year we had 10,000 partners and customers there, and this year it's from September 8 to 11. I'd love everyone on the call, if you get a chance to register for that and come. I think you'd really enjoy it. Get a really good peek inside the way HubSpot works and how the community around HubSpot works. I think it would be a great use of your time

I can't think of a better ending. Thanks, everyone, for joining our call, and we look forward to seeing many of you at the upcoming spring conferences. Have a good night.

This concludes today's conference call. You may now disconnect.