Thanks, operator. Good afternoon, and welcome to HubSpot's First Quarter 2020 Earnings Conference Call. Today, we'll be discussing the results announced in the press release that was issued after the market closed. With me on the call this afternoon is Brian Halligan, our Chief Executive Officer and Chairman; and Kate Bueker, our Chief Financial Officer. Before we start, I'd like to draw your attention to the safe harbor statement included in today's press release. During this call, we'll make statements related to our business that may be considered forward-looking within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts are forward-looking statements, including those regarding management's expectations of future financial and operational performance and operational expenditures, expected growth, and business outlook, including our financial guidance for the second fiscal quarter and full year 2020. Forward-looking statements reflect our view only as of today and, except as required by law, we undertake no obligation to update or revise these forward-looking statements. Please refer to the cautionary language in today's press release and our Form 10-Q, which will be filed with the SEC this afternoon for discussion of the risks and uncertainties that could cause actual results to differ materially from expectations. During the course of today's call, we'll refer to certain non-GAAP financial measures as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between such measures, can be found within our first quarter 2020 earnings press release in the Investor Relations section of our website. Now my pleasure to turn over the call to HubSpot's CEO and Chairman, Brian Halligan.

Thanks, Chuck. Good afternoon, folks. Thank you for joining us today. We're on this call to talk about HubSpot's business, but I want to take a moment to recognize the toll this pandemic has taken on so many people around the globe and closer to home right here in the HubSpot community. These are tough times. I hope all of you on the call are staying healthy and managing through this as well as you can. Now let's talk about HubSpot's first quarter earnings results. We came into this year with strong tailwinds. Constant currency revenue growth was 33% in Q1, and non-GAAP operating margins were just over 7%. Total customers grew 30% year-over-year, surpassing 78,000, while multiproduct adoption continued to grow nicely, representing nearly 32,000 customers. On the product front, we kicked off the year with an exciting relaunch of the enterprise tier for Marketing Hub. Marketing Hub Enterprise has always been easy to use, but the relaunch made it more powerful than ever before, with better attribution reporting, account-based marketing, advanced chat targeting and much more. We have an excellent offering that delivers great value to our enterprise segment now, and that's borne out by customer use. This product is number one in six separate enterprise categories from G2, the main peer-based software review set. Now those tailwinds continued through much of the first quarter. However, in the middle of March, they were met by strong headwinds as the world felt the impact of the pandemic. Now rather than fight against that wind, we're trying to move with it through a series of plays designed to help our customers and partners weather the storm until better times. When the health crisis hit, our immediate focus turned to helping our customers and partners navigate this sudden economic downturn. With that in mind, we expedited Q1 commissions to all solutions partners, and we offered a six-month commission prepayment to platinum, diamond and elite partners. To help customers and prospects meaning, to rapidly move their go-to-market strategies online, we took several steps. We lifted email and calling limits and added a collection of features, including meetings, bots and one-on-one video into our free CRM. We also reduced the price of our starter growth suite by over 50% late in the quarter. We did this to alleviate the financial strain for our customers on the starter products and to enable more companies under financial strain to get started with HubSpot. This resulted in a fivefold increase in the run rate of that offering at the end of the quarter. Finally, we gave our team a lot of leeway to offer discounts and flexible payment terms to certain customers under more severe short-term financial strain. The way I like to think about the pandemic for HubSpot is that it's like a big storm that blew into our business in the middle of March. The first few weeks, it was largely a big 200-mile-an-hour headwind that hit the new business and retention side of our business at the same time, but over the last few weeks of April, the winds have shifted. I'd say we have a 150-mile-an-hour headwind now, but that's coupled with a 100-mile-an-hour tailwind as business has been picking up. And when I take a step back, that tailwind makes sense. The world is seeing a surge of companies with historically offline, old-school go-to-market models leaning into new school online go-to-market models for the first time. The very platform we sell and methodology we teach was designed to help companies make this shift. These trends represent a long-term tailwind for HubSpot, and I think it's one that will outlast the near-term volatility that we're all experiencing in the current downturn. We have not stopped building for the future. In April, we introduced a new product line, CMS Hub. Similar to Marketing Hub Enterprise, we wanted to combine the ease of use growing companies want with the power they need. The result was the content management system designed to help growing businesses overcome the notoriously painful experience of managing websites at scale. Many companies think they only have two options for managing their websites: a basic CMS with very limited functionality or a technically complicated one with tons of administrative pains. CMS Hub is a better fit for growing companies that need features like dynamic content, adaptive testing and 24/7 security monitoring. We've been really pleased to see the positive reception that CMS has had with our customers and our partners despite the macro environment. In fact, given this rare moment in history when humans are shifted into creating digital experiences that rival in-person ones, CMS Hub might have come along at just the right time. As I said before, these are indeed tough times. Having said that, HubSpot is in a good position to help our customers in the market weather these tough times and come out stronger on the other side. To that end, we're continuing to invest and innovate, and we expect to be in an even stronger position when we come out the other side. Now before I hand it over, I want to share some news that our longtime President and Chief Operating Officer, JD Sherman, has decided to leave HubSpot. JD has been instrumental in driving HubSpot's global growth over the last eight years and has left an indelible imprint on our customers, partners and employees. JD will stay on until July 1 and will continue as an adviser until the end of the year. He will leave behind a well-oiled operating system and a world-class team that will serve us exceptionally well in the years to come. While I'm sad to see him go, I'm proud of the work we've done and eager to see him become a great CEO wherever he lands. So on behalf of HubSpot, the Board of Directors and our employees around the world, I want to say thank you, JD. We've all grown better because of you. Okay. With that, I'll turn it over to Kate now to take us through the financials and our guidance.

Thanks, Brian. Let's turn to our first quarter financial results and our guidance for the second quarter and full year 2020. The first quarter revenue grew 33% year-over-year in constant currency and 31% as reported. Q1 subscription revenue grew 33% year-over-year, while services revenue grew 2% year-over-year, both on an as-reported basis. Domestic revenue grew 25% in Q1, while international revenue growth was 45% year-over-year in constant currency and 41% as reported. International revenue represented 42% of total revenue in Q1, up 3 points year-over-year. Deferred revenue as of the end of March was $242 million, a 25% increase year-over-year. Calculated billings was $207 million, up 30% year-over-year on an as-reported basis and 32% in constant currency. HubSpot ended the first quarter with 78,776 total customers, which was up 30% year-over-year. Customer net additions exceeded 5,000 for the first time, driven by strength at the low end of our product portfolio, particularly in our starter suite. Average subscription revenue per customer in Q1 was $10,018 and up slightly, both sequentially and year-over-year. In addition to the proactive product changes Brian highlighted, we have also taken some important steps to help alleviate the near-term impact of COVID-19 for our customers and our partners. These include extending flexible payment terms, offering customer-friendly downgrade alternatives and prepaying some partner commissions. As a result of these actions and the challenged economic environment, we saw a headwind to revenue retention beginning in mid-March. To give you some additional color, we saw our net revenue retention rate fall from over 100% through the first two months of the year to the low 90s in March, with the majority of the decline coming from customer downgrades versus cancellations. As you would expect, we saw a larger uptick in churn from customers in our 1 to 25 employee segment relative to our mid-market customers. Given the uncertain economic environment, and the continued impact of our customer-friendly programs, we anticipate our retention rates will trend lower in Q2. The remainder of my comments will refer to non-GAAP measures. First quarter gross margin was 82%, flat year-over-year. Subscription gross margin was 85%, while services gross margin was minus 3%. For the first quarter, operating margin was 7.3%, down slightly compared to the same period last year. Operating margins in the quarter exceeded our expectations as a result of strong revenue performance, higher software capitalization and some expense savings related to COVID-19. At the end of the first quarter, we had 3,578 employees, up 30% year-over-year. Like many businesses, in mid-March, we moved quickly to shift our entire workforce to a remote working environment to protect our employees and our communities. Prior to the pandemic, remote was already our third largest office, and I believe our systems and employees have adapted well. As a reminder, we plan for higher headcount growth in the first half of 2020 as a result of our strong hiring last fall. We continue to expect our headcount growth to begin to slow in the second half of the year. We plan to maintain high levels of investment in R&D in order to deliver on a robust product roadmap while slowing hiring in G&A and targeted sales and marketing functions to ensure continued financial flexibility. Net income in the first quarter was $16.7 million or $0.35 per diluted share. CapEx, including capitalized software development costs, was $16 million or 8% of revenue in the quarter, driven by the completion of our Dublin facility buildout and higher capitalized software development costs related to product innovation. We continue to expect CapEx as a percentage of revenue to be about 7% in 2020. Free cash flow in the first quarter was $7 million or 4% of revenue. Free cash flow was negatively impacted by our $11 million partner commissions prepayment and the extended payment terms we offered to impacted customers. Given these factors, we now expect free cash flow of approximately $30 million for 2020. HubSpot ended the quarter with over $1 billion of cash and marketable securities, and is well positioned to weather this economic downturn. As we look to the future, we remain committed to our disciplined approach to managing expenses while continuing to invest for the long term. With that, let's dive into guidance for the second quarter and full year of 2020. For the second quarter, total revenue is expected to be in the range of $195 million to $196 million, up 20% year-over-year. Non-GAAP operating income is expected to be between $10.5 million and $11.5 million. Non-GAAP diluted net income per share is expected to be between $0.23 and $0.25. This assumes approximately 47.2 million fully diluted shares outstanding. And for the full year of 2020, total revenue is now expected to be in the range of $800 million to $810 million, up 19% year-over-year. Non-GAAP operating income is now expected to be between $40 million and $42 million. Non-GAAP diluted net income per share is now expected to be between $0.88 and $0.92. This assumes approximately 47.4 million fully diluted shares outstanding. Our guidance reflects a view of the business that we are comfortable with, given current economic conditions. Our outlook assumes a challenging economic environment through the second quarter and incorporates a wider range of outcomes to the second half of the year. As you adjust your models, keep in mind the following: we expect an increased foreign exchange headwind to as-reported revenue; at current spot rates, we're now expecting a headwind of two points in both Q2 and the full year 2020. With that, I'll hand the call back over to Brian for his closing remarks.

Thanks, Kate. Like many of you, I've spent a lot of time over the past couple of months thinking about resilience. I'm privileged beyond bounds to be part of a business that can still operate, keeping our team employed and our customers moving. I'm grateful for that every day. That feeling of gratitude also comes with a sense of drive and purpose. The only thing we can count on is that the world will look different on the other side of this. And when it does, I want our company to have been part of helping as many businesses as possible bend, not break. That's why we made the decisions we made over the last couple of months, and it's why we continue to invest and why I wake up every day with conviction. To our customers, our partners, our investors and all the HubSpotters around the globe who are in this fight with us, thank you. Operator, can we please open up the call for a few questions.

I'm glad to see everybody is staying safe and healthy. And JD, you will certainly be missed. So maybe just diving into the results, I think the biggest surprise that we're hearing thus far from investors is that you guys provided guidance for the full year. I don't think people were really expecting that. What gives you the confidence to provide that guidance considering that so many other companies have pulled full year guidance? And then I have a quick follow-up.

Kate, you want to take that one?

Sure. Yes, obviously, the current environment is a significant headwind for us. It's a significant headwind for everyone. It's frankly a bit unprecedented, and that was not lost on us as we were thinking through how to approach guidance and what scenarios we were running. For Q2, we are assuming that the economic environment remains weak throughout the quarter. We took a bunch of actions early on to help our customers and partners, and those will have impacts on our Q2 results specifically. And while Brian alluded to the fact that new business has stabilized towards the end of April, we still expect continued pressure on the net new bookings from customer downgrades and to a lesser extent, some cancellations. As for the full year, we always consider a range of outcomes for our full year guidance. In this environment, that range of outcomes is obviously wider than it has been in the past. And I am not an economist; no one frankly knows when the recovery will happen and what it will look like. But our guidance reflects a view of the business that we're comfortable with today, even if it takes a while for the recovery to start to materialize.

Okay. Perfect. And then a follow-up for Brian. Equally surprising was the commentary that you're seeing a tailwind from COVID impact because it's really forcing some customers to abandon their old traditional ways of marketing and really move to digital marketing with everything that's happening in the physical world. Where are you seeing that coming from? And really what's pushing customers to make that commitment now versus, hey, let's wait it out, let's wait six months until things stabilize and then try to reassess?

Thank you for the question, Stan. Looking at the broader picture, there have been significant changes. For the first two and a half months at HubSpot, we were performing exceptionally well. However, starting mid-March, we faced a severe challenge on the new business front, which lasted about three weeks, along with a considerable decline in retention. By the second week of April, things began to stabilize a bit, and cancellations and downgrades began to return to a more typical pattern. Then we started to experience some positive momentum. This momentum comes from two main factors. First, as I mentioned earlier, there is a shift from offline marketing to online marketing, making traditional methods less effective. Companies are moving from outbound to inbound marketing and transitioning from outside sales to inside sales. Our offerings align very well with these evolving market demands. The second factor is that certain sectors, like e-learning and healthcare, have thrived during the COVID-19 pandemic. I remember just before the end of April; I reviewed our daily order list and noticed two significant orders from Europe—one from a company offering remote MBA programs and the other from a manufacturer of temperature scanners. This highlights the fact that while some industries are struggling, others are thriving. Back in mid-March, we experienced significant headwinds, but over the past few weeks, those challenges have diminished and positive trends have emerged, leaving me feeling cautiously optimistic.

It's Dylan Reider filling in for Alex. Can you share some insights on the customers experiencing a significant impact? Is there any quantifiable data regarding the percentage of your customers in those affected industries? Additionally, could you discuss some of the trends and details you’ve observed in terms of supporting customers and offering them flexibility, as well as trends in converting new prospects?

Great. I guess what I want you all to think about HubSpot, we have three segments. We have two to 20 employees, 20 to 200 employees, and 200 to 2,000 employees. People bucket it as same as SMB. I kind of think of it as more M than S. Our biggest segment is that 20 to 200 segment. That's kind of one thing to keep in mind as you think about small businesses and the impact. In terms of the industries, given what's going on, I've taken a new interest in what industries we're in and started to peel into it. We have very little exposure to some of the hardest-hit industries like restaurants and stores; in fact, a very small percentage of our business is in kind of very small restaurants and stores. Airlines and cruises on the larger end, we have very little exposure to that. So one of the things that's always been good about HubSpot, and people always ask me, what are your big verticals? What vertical are you in? I always chuckle and say, if you had a pie chart, you would look at verticals, but the other section of the pie chart would be the biggest. It's actually serving us pretty well in these tough times.

Got it. That's helpful. And then earlier in the call, you guys spoke to the multiproduct customers. Could you maybe speak to some of the differences that you're seeing among your multiproduct customers and within your single-product customers as well?

Sure. Our multiproduct customer total ticked up again this quarter. We're close to 32,000 multiproduct customers. I think we've talked about in the past; the core retention statistics for multiproduct customers tend to be a little bit better than for our single-product customers. We have seen that as it relates to the churn characteristics continuing in the last couple of months.

A quick one for me. It sounded like, Brian, you alluded to the first two and a half months of the year going extremely well. Can you maybe just flesh out a little bit what was driving the acceleration in those first two and a half months? And then the second part of the question is, as you look at April, is there any way to break down the trends between what's happening in Marketing Hub, which is not seat-based necessarily, versus Sales Hub and Service Hub, which are priced more on a per-seat basis?

Maybe I take the first one, you take the second one, Kate?

Sure. If we look at retention characteristics across the hubs, what you're seeing is that the trends are relatively consistent across the hubs in our portfolio. If you again sort of take a step back and look at retention in that first period of time that Brian talked about from late March, what we saw was an increase in both cancellations and downgrades over that period. It was maybe a little bit more downgrade specific, but both components were pretty significant. What we've seen going into April is that the trend is a little bit different. Retention statistics have fallen a little bit further than they were in March. But the composition of that is different. There are many more downgrades relative to cancellations. The seat rightsizing is one of those things that we are seeing among others. Many of them are of the downgrades are a result of the customer-friendly plays that we kicked off as we saw things unfold. So in Q2, we will see heavier downgrades versus cancellations. Hopefully, over time, a good portion of those customers will be able to grow back with us again.

My first question, just on the new bookings side. I'm curious how new bookings, how that shape has been from late March now into early May. And for the customers that are still booking HubSpot, is there any characteristics that are shared? Are they larger on the larger side, the smaller side? Any thoughts on new bookings would be helpful.

Kate, do you want to take that?

Sure. I think Brian kind of alluded to this in March, like kind of the shutdown. The first of the segments of the business that picked up was that sort of smaller customer base, so that kind of sub two to 20 segment of our business. And I think it was just they were sort of faster to action, whereas that mid-market segment of our population was much more in a holding pattern. It wasn't until, call it the back half of April, where we started to see some movement in that part of our customer base. I think the one thing that I would note, and you'll see it as we potentially get into other areas is a lot of the customers that we're adding are smaller in terms of just sheer volume of new customer adds. We're seeing really healthy adds in that starter component. And we are adding customers with some much more flexible payment terms than we are used to seeing.

Great. And then, Kate, maybe a follow-up. If it's difficult to determine whether the inbound interest from customers wanting to downgrade is due to what HubSpot proactively offered or the flexible payment terms you provided, how should we think about that?

We've been closely examining the situation. When we assess the volume of downgrades in relation to the usual run rate and look deeper into the types of downgrades, I would estimate that slightly over half of the increased downgrades are directly linked to the proactive initiatives we are implementing, while the rest are more influenced by customer actions.

Let me add to that, Kate. One of our strategies, Samad, is that we prefer customers to downgrade rather than cancel, as it keeps them in our system longer. This way, as time goes on, they may choose to upgrade again. We decided to ease the downgrade process by enhancing our free CRM product with new features such as one-on-one meetings, videos, and bots, helping users get started without cost. For those who purchased the starter suite, we made it more affordable and simpler to downgrade. We also empowered our front-line managers and sales and service teams to offer temporary discounts and downgrades to customers. Our goal is to retain these customers in our system. We experienced a significant wave of downgrades initially, which created a substantial challenge for three weeks. While downgrades are still higher than usual, the situation has calmed somewhat in comparison to the previous weeks. This approach is part of our strategy to remain resilient. As we navigate this, we aim to support our partners and customers, ensuring they come through successfully and can grow alongside us. Additionally, we have gained many new customers, including new free CRM users and starter customers, which should position us favorably once this situation has ended.

I just wanted to ask you about the new CMS Hub. I was just looking at the site, and I didn't see a starter price there, but obviously, you've got pro and enterprise. So just thinking about who this is maybe geared toward and who some of those early adopters might be? Are the users slightly larger customers? Just curious. Anything you can say about the initial traction there?

Sure. Let's talk a little bit about the CMS for a sec. We've had a content management system since the very early days of HubSpot. It's always been an add-on product. It's always done okay. It's had investment. About a year ago, we said, let's turn this add-on into a fully baked product. So we really ramped up our investment over the last year. And so what we did was turn this add-on and sort of lightly funded into a full hub. The existing add-on now is CMS Hub Pro, really much better than that add-on was, and then we added a CMS Hub Enterprise product that's really good. We're very excited about this. Now when I think about the CMS industry, it's actually a funny industry. You've got a choice. You can either buy very light, very easy-to-use SaaS content management systems. There are a few of those on the market; one or two of them are public, so you probably know about them. Or you can buy a very heavy, pretty hard to use often open-source content management system where you're managing a lot of plug-ins, and you've got a lot of security concerns and you need a lot of developers. And it's been like the tiering of four. You can have one or the other historically. We just don't like that trade-off. We felt like it was a false trade-off. So what we've created is a content management system that has the ease of use with the rest of HubSpot's products but layers in that real power and capabilities of some of the heavier products. And so far, it's so good. We're getting really good reception on the product. Our partners and customers are buying it. I think it's going to be a big business for us down the road.

Great. And maybe just one follow-up for Kate. Just as it relates to that second half implied guidance. Anything you can say about some of the more specific assumptions you're making, I guess, maybe in particular, as it relates to gross revenue retention? I think you called out what that might be in or what it was in Q1, but just thinking through what that might look like in the context of your guidance for the second half of the year.

Sure. We obviously talked about March as being in the low 90s. We talked about Q2 as going down from there. I think we would assume that our retention statistics remain under pressure for a good part of the year, probably with Q2 being the low point and some modest improvement from there.

You got Michael Berg here on for Siti. Just a quick question also on the growth starter suite. You noted that was five times what it was previously. What can we think of as a general rule of thumb for how much of the general starter population is on the full suite now?

Yes. It's a good question. Historically, what we've seen is that the strength of starter ads has really been in that marketing starter product. And I think what you saw with the new price for the growth suite that we introduced in mid-month is like a material shift toward the new customer adoption of the growth suite. I'm sure I'm going to hit the numbers exactly wrong, but it edged closer over the last months to being more of a 50/50 ad across the suite and the marketing starter.

So just for clarification, customers don't typically adjust the starter of sales or service; they either do marketing or the full suite at this point?

The marketing starter product has been a particularly popular product with a lot of real strong value, and that's where we've seen the highest volume of ads over the recent history.

Okay. And then a quick follow-up on a similar note. When you're talking about the downgrades, obviously, there's a significant price reduction right now for the growth suite. Do you see people who are downgrading, I mean, I guess, for any hub flow through the full suite? Or do they typically downgrade to the singular product?

So the downgrade can take a bunch of forms. I think the one that you're thinking about is, right, where you can have somebody who is on enterprise or professional edition downgrade their addition to from enterprise to professional or professional to starter; you can also have people reduce the sort of volume of seats or contacts. There are other ways of downgrading as well like we've been helping with some customers with sort of near-term price points.

I can take that. We're talking about that now. It's gone really well. We're kind of finding a new piece of the supply and demand curve. We haven't made decisions on it. So we'll keep you posted.

JD, I just want to say thanks for everything, all the best, and I hope you get in some great bonus fishing here over the summer. Brian, I wanted to ask you the comment about the headwind turning into a combo of a headwind and a tailwind in recent weeks. Are you kind of interpreting that as the worst is behind us? And also, if you could just clarify, are you conveying that bookings are getting all the way back to the original plan? Or does it feel more like more of a partial step on the way to recovery?

Yes, it's more like a partial step. I think of it in terms of new business and the installed base. There is definitely a positive trend in new business. We were concerned for a few weeks, but it's rebounding. What’s interesting is that our marketing departments are performing exceptionally well; our content marketing, inbound marketing strategy, and premium strategy are yielding great results, leading to strong lead flow. The leads from the free CRM have been excellent, and our academy has been thriving. Overall, new deal creation has improved significantly and bounced back well. On the customer side, the numbers may appear a bit unusual because we've made downgrades quite attractive. The volume of downgrades during that peak period was notably high for three weeks. While it's still above pre-COVID steady levels, it has decreased from the peaks. That summarizes my perspective.

Look, I think the true trough will reveal itself as the economy turns around. But I would say you should estimate that you would see declines over the next couple of quarters.

Brian, can you maybe talk about the appetite of your customers to attach new hubs in this particular environment? Is that something that you guys are still able to move forward? Or is that something we have to wait maybe until we clear this COVID fog?

I haven't noticed anything particularly strange there. I would say that based on what I'm seeing, the CMS Hub attach has been pretty good. That new CMS Hub Enterprise product; people are buying it. So there's a desire to do it. I think companies are realizing that there are several things going on. One, they're coming to the conclusion that they knew they needed to do inbound marketing, they needed to do inside sales, they needed to do online marketing, and they needed to get great at it. They are planning on doing it sometime in the next few years, and they are having to do it now. So there's just some urgency around that. Combined with a couple of these industries are really growing and their budgets are increasing and they're moving a little more proactively. That's kind of how what we're seeing out in the market.

A couple of thoughts there. So we've always talked about billings growth and revenue growth in constant currency should kind of track each other. You saw that happen in Q1. I think one of the things that drives the wedge between the growth in billings and the growth in revenue in constant currency is either expansion or contraction of billing terms, of payment terms. We are definitely seeing a reduction in billing terms. And so I would expect that in the next couple of quarters, you would see billings growth lag revenue growth in constant currency.

This is actually Nick on for Terry. I was just hoping you guys could dig a little deeper on the net customer add in the quarter. I know you said it was primarily driven by the starter suite. But just any other color you could provide there would be helpful.

Yes. Sure. Q1 was a record quarter for us for new customer additions. It was almost 5,300. It's a high watermark for us. It was really driven by that starter products. So we saw very strong additions in the marketing starter. We saw strong additions in the starter suite. We're continuing to see that happen through April. So we're anticipating that we'll see another strong quarter of customer new adds in Q2. I think with that, I'd just caution us to look at the ASRPC and think about what's going to happen there. Given the strong growth at that low end, we would expect to see that be under pressure in the next quarter.

So Kate, can we just talk for a second about contract duration? And maybe what the mix of your customers looks like? I noticed on your website, you've put a formal offer out there for, I think, what was a 20% discount for paying annually upfront. Could you give us a sense as to how many of your customers pay quarterly versus annually versus monthly? And then as we break that apart, for those customers that are downticking, I guess the thought behind the question is how soon do your sales reps get a chance to kind of get back in front of them and try to uptick them again once things get better?

So you're asking a contract duration question. The reality is that most of our contracts are annual contracts outside of that starter tier. The difference is the billing terms. So we have customers that pay us for the full annual contract upfront. We have some that pay us quarterly. We have some that pay us monthly; those are typically those starter customers. What we saw was that marketing billing has been this annual upfront payment. As we have gotten into the sales and service hub, those were typically more quarterly payment term products. As our mix has shifted from marketing into sales and service, we've seen that payment duration come down. That's why you've seen the billings growth in constant currency kind of lag our revenue growth in constant currency over the last, I don't know, year to 18 months. We are seeing - we are proactively being more flexible with payment terms during this period of economic pressure. You're going to see that on not just the Sales and Service Hub, but also in the Marketing Hub in the near term.

Sure. It's like Kate is saying earlier, no one knows what's going to happen with the economy. We're planning for a U-shaped recovery. As part of that, we're continuing to hire. We want to hire. So we are really in good shape on the other side of this thing. Most of our decisions have been made with that in mind. Maybe, if our foot is all the way down on the gas pedal on the sales and marketing and G&A side, we got a little, think about the gas a little on hiring. But the foot is all the way down on the gas pedal on the R&D side. That R&D organization made great progress last year, and we are feeling like our vision of the value we can deliver for our customers is still early in the flight cycle. There's a lot more wood to chop there. We want to continue to invest. Hopefully, we're in great shape when we're on the other side of this thing.

I don't want to get too far ahead of myself here. But in terms of the downgrades and sort of the favorable terms to help customers proactively downgrade and help them out, is there anything built into those terms that offers more favorable terms for them when they're ready to upgrade again?

Not really. The way we're structuring those is if you come to us and say, 'Hey, we're having a hard time.' We'd say, 'Okay, let's structure a deal for you where we can discount you down X percent.' Most of them are structured that that lasts for 90 days, and some are structured that it's more like 180 days. At the end of that, you come back to your price. If it's 90 days, and someone comes back to it, so we get into 90 days and they say, 'Hey, we're really still struggling. Give us another 90 days, and we'll be in good shape.' I'm quite sure we'll be flexible in that type of environment. Yes, when I think about the different segments of two to 20, 20 to 200, and 200 to 2,000, the two to 20 segment reacted very quickly to events in mid-March. They significantly reduced their spending, and many of them wanted to downgrade or cancel their services. The mid-market and corporate segments mostly paused their activities; they didn't increase their purchases and also didn't downgrade or cancel as frequently. Over the last three weeks, the small segment, two to 20, has begun to make purchases again and is starting to engage more. Although they are still canceling at a higher rate than before COVID, that trend has definitely slowed. The mid-market and corporate segments, which include 20 to 200 and 200 to 2,000, have been more reflective and are starting to make purchases again. There is some downgrading and cancellation happening, but it's not as significant as what's occurring in the small business sector. I want to emphasize that among these three segments, the 20 to 200 is our most substantial segment and represents the largest portion of our annual recurring revenue.

I don't want to jump ahead, but regarding the downgrades and the favorable terms designed to assist customers in proactively downgrading, is there anything in those terms that provides additional benefits for them when they are ready to upgrade again?

Thank you for addressing my question. I would like to explore a few different perspectives. We have observed several companies making significant changes to their marketing budgets due to COVID. With regard to the Marketing Hub, are there any features being developed that could help mitigate some of the reduced marketing expenditures? Additionally, could you share how customer needs are evolving and how this is affecting the expansion model for small business customers?

Yes. People are definitely buying our Marketing Hub now. They definitely slowed down for a few weeks, but they started buying again. Our marketing product really fits the times where we netted this idea of doing inbound marketing versus outbound marketing. Inbound marketing, we upgraded content, getting found on Google and social media and pulling people in, in a very low-cost way. They are spending tons of money on advertising on TV or billboards or wherever you're advertising. Your success in inbound is much more about the width of your brain than the width of your wallet. Our value proposition, I think, is very strongly based and fits the times. I mean, is it the same as it was before? Probably not. But I think people are going to be buying our marketing product as a cure for what's going on, not the other way around.

Brian, I guess, are you seeing any differences with your customer base in terms of how they've reacted internationally versus the U.S.? Or even when you're looking at it on sort of a size range, is it pretty similar across different geographies? And maybe just how are you thinking about that going forward, if at all, if it's at all different?

I believe I should address the situation. The impact was felt across the board, including the U.S., and Asia may have experienced it slightly earlier. It seems to have come in two waves, as I've mentioned. The area that appears to have been affected the most severely, and where recovery may take longer, is in emerging markets, particularly in Latin America and smaller emerging regions. Our exposure in these markets is limited, making it especially challenging for us, and they haven't shown a swift rebound like some of the larger markets.

Great. First, I wanted to ask, so you mentioned that you were working to expedite commissions in the quarter to partners and giving them a six-month advance if they ask for it. And just the natural question on that, can you just comment on sort of the health of your partner channel? I know HubSpot is a relatively small mix of their revenue overall. So is this something they're asking for? Are they concerned about their businesses? Or is this just a gesture of goodwill? Can you just talk a little bit about that?

Yes. I think it was more proactive on our part in mid-March. We thought partners and small businesses. Most of our partners are relatively small firms. We've got some bigger ones, but the vast majority are relatively small. We just wanted to make sure they have the cash flow, so they felt confident and could plow through what's going on. We want them to continue to hire at least not lay off and continue to invest in their business. And we felt like that was very good for them. Over the long haul, I think that will be good for us. You lose us to have a healthy, cooperative, growing partner channel.

Yes, it was very well received by our partners. We offered the commissions prepayment to our platinum members and above, and the vast majority accepted it.

Yes. Initially when I looked at this, I thought we'd see a big surge in marketing and the others would stay flat. But it's been kind of across the board where they all kind of went down at the same time, and they're all kind of coming up at the same time. The one that's coming up nicely that you would hope would come up nicely is the CMS; the new hub is getting nice reception. But it's been consistent across all of them, there wasn't an outlier in one direction or the other.

Just one quick one here on the guidance. I was wondering if you could dig into a little bit more on the full year on what you commented on the wider range of outcomes. I guess, how should we be thinking about the outcomes on the bookends of that guidance range? I mean, more specifically on the low end. Does the low end assume the macro bottoms in the second quarter and begins to recover from there? Or is the low end of the full year guide more like the macro bottom somewhere beyond the second quarter?

Yes. I think Brian talked a bit about the scenarios that we are running internally, bridging from this V-shape scenario where there is a really sharp recovery, a U-shape scenario which is our current operating assumption that says it takes just a bit longer to have the economy to get back on track. We are considering the L-shape, which envisions a longer period of economic recession. We looked at all of those when we were thinking through and setting our guidance to make sure that we felt comfortable across a variety of outcomes.

I hope all of you stay safe and stay healthy, and thanks for joining us on the call, and we'll talk to you next quarter.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.