When diginomica looked at HubSpot’s plans for its Hustle acquisition last month, Barb cast an eye over its ambitious content plans. The firm has other ambitions, not least a bold aspiration from CEO Yamini Rangan “to be the Number 1 CRM platform for scaling companies”. She argues:

Since HubSpot's inception, we have evangelized the shift towards digital transformation. That shift accelerated as small and medium businesses around the world have had to quickly pivot to doing business online. In this world of rapid digital transformation, providing a remarkable customer experience has gone from being a competitive advantage to being a necessity. Now more than ever, businesses need a modern and powerful CRM that helps them create those experiences. And HubSpot is becoming a CRM provider of choice for these SMBs as they navigate this journey.

The firm turned in its latest numbers last week and Rangan pointed to those as a sign that progress his being made towards this goal. Higher operating expenses bumped up the Q4 net loss - $16.4 million vs  $15.4 million for the same period last year - but for full year the net loss was $77.8 million against $85 million last year. Q4 revenues were up 46.5% year-on-year to $369.3 million, while full year revenues were $1.3 billion.

Customers

Emerging into the Vaccine Economy has helped solidify pipeline, said Rangan:

At the beginning of the pandemic, customers were looking for digital solutions to help them get connected to their customers. That's inbound marketing, inside sales, omni-channel support, and HubSpot was a perfect solution for that. I think now as we are slowly getting out of the pandemic, small/medium businesses are looking to grow, and they're looking to increase front-office productivity. So when I talk to customers, they are continuing to lean in on technology investment. They are looking to get marketing, sales, service on the same platform so that there is keener visibility in terms of customer trends that can drive growth.

Customer numbers are up 30% year-on-year to 135,442, delivering around $1.5 billion in Annual Recurring Revenue. Those customers are on different stages of the HubSpot journey, according to Rangan:

We certainly saw in 2020, 2021, a whole wave of customers that were thinking about 'digital first' and thinking about being digital-ready, and they all needed to be able to connect with their customers. We saw that wave. I think what we're seeing now is just this continued digitization of the front office.

Specifically, customers still have very disparate systems. Their front-office tools and the tech stack is really fragmented. And it's like trying to stitch all of these pieces together to get the kind of visibility that they need. We're seeing customers that continue to have growth as a priority, and they don't have the visibility across the whole marketing, sales, service.

If you look at these customers, they look at the tech stack, they look at how they need to drive front-office productivity and they're like, 'OK, we need something that is just this beautiful, seamless customer experience that we can deliver to be able to drive growth'. And so that's maybe a slight shift. But in both cases, I think we have invested from a product innovation perspective over the last 12 to 18 months

Innovation

In terms of that innovation, Rangan pointed to the firm’s Operation Hub, launched last April, as a particular success story with 15,000 customers up-and-running, up from 10,000 in October:

This new hub meets the needs of operations teams struggling to get clean data, automate that data, report on that data and drive insights to help their businesses grow. Through Operations Hub, revenue operations teams have access to more than 100 native integrations that bring even more data into HubSpot to make it very powerful. Operations Hub supercharges the HubSpot CRM and drives more value, and we are seeing that in the numbers.

It is a different proposition to many of HubSpot’s other hubs, she noted:

We think of Marketing and Sales as the front store. Operations Hub is like the supercharger. You go to a nice restaurant, and you have a great meal. There's main course, but then there's a song that makes the whole meal just tastier. Operations Hubs like that for us. It just makes the whole CRM platform sing in terms of the value. 

The firm’s commerce play, HubSpot Payments, is also finding traction with US customers, she added, although it’s still a nascent offering:

Customer feedback is validating our hypothesis that a commerce solution is much more powerful when it's natively built inside of a CRM. We know that native payments are widely important for SMBs to grow their businesses online, particularly when it comes to having commerce context embedded in CRM. This actually ensures that all front-office teams have visibility into their interactions with the customer. While it's very early days, we're encouraged by the momentum we're seeing with our payments offering.

And the firm’s marketplace is booming, said Rangan, recently passing the 1000 apps mark:

Almost 18 months ago, we went to the partners and we said, ‘We have a clear strategy for the partner ecosystem, which is we want to scale selling and servicing with partners’. Why? Because [when] the partners get involved, our customers get onboarded the right way. They get a lot more value, and therefore, they stay longer with us. It's good for our customers, and therefore, it's good for HubSpot.

If you step back, we had a lot of these marketing agencies that were working on a retainer basis. Over the last couple of years, we have invested in training, enablement, joint selling, so that they not only do that, but are able to meet the entire breadth of the product portfolio and the service needs there. So now we have partners that do more complex CRM implementations, much more integrations, deal with complex use cases as we go upmarket. And there's just a nice development and momentum of partners who can provide the full set of services.

My take

HubSpot is a company well worth keeping a close eye on in 2022 and beyond.