HUBS Q2 Earnings Call Highlights AI Pivot and Budget Pressure

HUBS Resets the AI Buying Motion

Chief executive officer Yamini Rangan said customers want to test AI agents with their own data and workflows before committing. HubSpot responded by expanding trials for its agents and answer engine optimization product.

Rangan said the company also lowered entry prices, introduced outcome-based pricing and added controls that let customers set usage thresholds. Those changes address concern about unpredictable token costs but created near-term pressure.

The other headwind was broader budget sensitivity. New deals faced larger buying committees and more C-suite or board approvals, while existing customers optimized spending and created downgrade pressure.

HubSpot Plans for Slower Second-Half Growth

Chief financial officer Kathryn Bueker said HubSpot expects the second-quarter pressures to persist through the remainder of 2026. Quarterly net customer additions are now expected at 5,000 to 6,000, versus 7,000 in the quarter.

Bueker said net revenue retention should be roughly flat year over year, with customer dollar retention remaining in the high 80s. Net upgrade rates are expected to stay pressured by customer budget optimization.

Third-quarter revenues are projected to be $924 million to $925 million. Full-year revenues are expected between $3.678 billion and $3.686 billion, while the full-year non-GAAP operating margin is forecast at about 21%.

HUBS Sees Broader AI Adoption

Rangan said more than 55% of Pro+ customers use HubSpot agents or Breeze Assistant. Monthly agentic actions have more than tripled since the start of the year, indicating deeper use beyond experimentation.

Data Agent had more than 16,000 activated customers, Prospecting Agent approached 17,000 and Customer Agent exceeded 10,000. Customer Agent resolved 72% of support tickets without human escalation.

HubSpot also launched Agent Builder and Agent Hub in July. More than 2,700 customers had activated the beta, supporting management’s strategy of letting customers and partners build custom agents around CRM data and governance.

HubSpot Faces Longer Upmarket Sales Cycles

A Raymond James analyst asked how demand differed by customer size. Rangan said down-market buyers were more cautious, while upmarket deals involved more decision-makers and longer approval processes.

Despite longer cycles, deals above $120,000 in annual recurring revenues grew 38% year over year. Rangan said larger customers continued to value platform consolidation, lower total cost of ownership and a unified AI roadmap.

A Goldman Sachs analyst asked when buying conditions could normalize. Rangan did not provide a timetable and said guidance assumes the second-quarter environment continues through the second half.

HUBS Balances Margin Gains and Buybacks

Revenues of $911.7 million exceeded the Zacks Consensus Estimate of $897.8 million. Non-GAAP earnings of $3.26 per share topped the consensus estimate of $3.02.

Non-GAAP operating margin reached 20.3%, up from 17% a year earlier. Bueker attributed the expansion to disciplined headcount spending, partly offset by AI costs.

HubSpot repurchased $531.9 million of stock during the quarter, and its board authorized an additional program of up to $1 billion. Bueker expects two to three points of non-GAAP operating margin expansion in 2027.

HubSpot Keeps Its Focus on AI Execution

Management’s tone was cautious on demand timing but firm on strategy. Rangan emphasized reducing friction early in the AI journey to support broader usage and expansion later.

Management’s priorities are improving conversion, limiting renewal downgrades and turning higher agent usage into credit expansion. Bueker said demand pressure continued into July, reinforcing the assumptions used in second-half guidance.

HUBS Zacks Rank and Style Score Signals

HUBS carries a Zacks Rank #2 (Buy), a top-ranked category associated with favorable earnings estimate revision trends. Its Growth Score of A and VGM Score of B strengthen the near-term profile, while the Value Score of D and Momentum Score of C temper the signal. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Style Scores complement the Zacks Rank, with A and B grades indicating stronger characteristics than lower grades. The Zacks Rank can change as earnings estimates are revised after the latest results, so the current signal is not fixed.

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