Braze Inc (BRZE) 2024 Q3 法說會逐字稿

Welcome to the Braze third quarter fiscal year 2024 earnings conference call.

My name is Christine, and I'll be your operator for today's call.

(Operator Instructions)

I'll now turn the call over to Christopher Ferris, Head of Braze Investor Relations.

Thank you, operator.

Good afternoon, and thank you for joining us today to review Braze's results for the fiscal third quarter 2024.

I'm joined by our Co-Founder and Chief Executive Officer, Bill Magnuson, and our Chief Financial Officer, Isabelle Winkles.

We announced our results in a press release issued after the market close today.

Please refer to the Investor Relations section of our website at investors.braze.com for more information and a supplemental presentation related to today's earnings announcement.

During this call, we will make statements related to our business that are forward-looking under federal securities laws and the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These statements include, but are not limited to statements regarding our financial outlook for the fourth quarter and the fiscal year ended January 31, 2024 and the fiscal year ended January 31, 2025.

Our planned product and feature development and the benefits to us and our customers there from including our AI features, the potential impact, and duration of current macroeconomic trends are anticipated customer behaviors, including vendor consolidation trends and their impact on Braze.

The anticipated benefits of our partnerships, the expected effects of our social impact initiatives in our long-term financial targets and goals, including the anticipated period in which we may generate positive non-GAAP operating income and positive free cash flow.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today.

We assume no obligation to update any such forward-looking statements.

For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks identified in today's press release and our SEC filings, both available on the Investor Relations section of our website.

I'd also like to remind you that today's call will include certain non-GAAP financial measures used by management to evaluate our ongoing operations and to aid investors in further understanding the company's fiscal third quarter 2024 performance.

In addition to the impact these items have on the financial results.

Please refer to the reconciliations of our non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with US GAAP, included in our earnings release under the Investor Relations section of our website.

The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with US GAAP.

And now I'd like to turn the call over to Bill.

Thank you, Chris.

And good afternoon, everyone.

We delivered another strong quarter, generating $124 million in revenue, up 33% versus the prior year.

Despite a macroeconomic environment that remains challenging.

Our execution was strong and we continue to drive operating efficiency in the business, improving non-GAAP gross margin by 170 basis points year over year and non-GAAP operating margin by over 1,100 basis points compared to the third quarter of last year.

We were pleased with the strength of our enterprise business.

The continued rapid pace of R&D and the resulting customer excitement about new product launches and announcements, as well as the continued expansion of the global Braze partner and customer ecosystem.

In October, we also hosted Forge, our annual flagship customer conference, which brought together leading marketing growth and engagement teams to learn best practices for delivering brilliant customer experiences, including incredible stage sessions from brands, including Activision Blizzard, e.l.f. Cosmetics, McDonald's, The Walt Disney Company, and Wyze Labs.

It was an inspiring capstone for what has been an exciting year for Braze's own global events, including the newly introduced City by City series.

In total, we hosted events across 21 major global cities and welcomed nearly 4,000 attendees through our doors.

Looking ahead, into next year.

We're already excited to be hosting Forge again in the US and bringing City by City to five continents as our customer community and partner ecosystem continues to prosper.

Across our global footprint, Braze is scaled by methodically building a customer base across a wide array of industry verticals, business models and company sizes.

And today, I'm proud to announce that during the month of November, we passed $500 million of committed annual recurring revenue, nearly doubling since our IPO just over two years ago.

A huge thank you to our dedicated team across the globe who helped us achieve this milestone.

I'm excited to keep building on the success with you, as we continue on our journey to make Braze the standard for customer engagements.

Brands continue to recognize the significant ROI that can be achieved through personalized cross-channel customer engagement enabled by the Braze platform.

New business wins and upsells included FabFitFun, Mythical Games, Ouro, formerly Netspend, Papa John's UK, and Sonos, among others.

Enterprise new business was strong as we continued to capitalize on the legacy vendor replacement cycle and the consolidation trend that we've highlighted in prior quarters.

During the quarter, we added to our growing list of major QSR customers with a competitive takeaway from a legacy marketing cloud, and we're excited to consolidate away a number of other vendors as we begin work with a top news organization looking to simplify their complex technology ecosystem and drive better outcomes for their customers through higher quality engagement.

We also continue to win against both start-up competitors and legacy point solutions as they struggle to deliver high quality customer engagement seamlessly coordinated across the many channels that matter to the modern B2C marketer.

We are excited by our competitive position amongst the category of customer engagement, especially as we reflect on what hasn't changed in our space.

And that's the top brands continue to invest heavily in order to deliver increased value and relevance to their consumers, both by understanding the real-time contacts that surrounds every marketing and product interaction and by leveraging their growing first-party data assets to harness the gains available from real-time stream processing, combined with AI-driven orchestration and personalization.

As marketers chart the course of their business goals and customer engagement initiatives in our visual campus environment, they can increasingly rely on AI, ML, and other forms of automated decision-making to manage the complexity of the modern customer engagement environment, while delivering relevance and personalization to their customers at scale.

While the macro environment remains uncertain as we head into next year.

We are confident that customer engagement will remain a business imperative for brands.

In tough times, brand shift their focus to high return initiatives like lifecycle optimization and retention and to standout marketers need powerful customer engagement tools.

Sophisticated brands continue to invest in their customer engagement efforts, finding opportunities to initiate new relationships efficiently, and strengthening those bonds over time by staying relevant in their customers' lives and delivering value in critical moments.

Especially as consumers continue navigating an environment with high interest rates and inflation, the period from Black Friday to Cyber Monday was a particularly important time for brands to break through the early noise of the holiday season.

And stand out in their customers' minds.

At Braze, this year against our record-breaking send volumes as we sent over 37 billion messages in the four-day period from Black Friday through Cyber Monday.

More importantly, we also saw increases in the sophistication of messages, campaigns, and canvases.

On Black Friday alone, we processed nearly 25 billion inbound API calls.

And during that day's peak activity periods, our outbound packet throughput more than doubled compared to last year.

That rise was driven by more send time API calls and advanced personalization being used by more customers.

Brands also leaned further into cross-channel messaging this year with great supporting a wide array of established and emerging messaging channels, including significant increases in the use of WhatsApp, e-mail, SMS MMS, content cards, Roku messages, and web push.

Zooming out to the orchestration layer, we saw 67% increase in messages sent using Canvas, our visual development environment, which reflects how marketers are orchestrating multistep, cross-channel messaging flows and relying on differentiated Braze capabilities during this critical time.

In order to stay on the leading edge of customer engagement, we are relentlessly focused on product innovation that can accelerate the legacy replacement cycle and compel more brands to upgrade their customer engagements.

At Forge, we unveiled new low-code and AI driven product innovations designed to more effectively personalize brands, customer engagement efforts, and drive more agile and productive marketing teams.

We're always looking for ways to allow our customers to test and iterate more quickly on customer experience, both in and outside of the products.

Building on the strong and product foundation provided by our SDKs, we were excited to promote feature flags to general availability in October.

Major flags allows marketers to quickly launch tests and optimize features on mobile apps or websites, providing flexibility to test varying expressions of their product and promoting an agile and experimental method of product delivery that results in better experiences for customers.

These types of experiments are particularly impactful when coordinated with customer messaging and optimized by the AI and testing features native to canvas.

One brand putting this all into action is a Immobiliare.it, a leading player in the EU real estate industry who used feature flags to test release of dark mode to a segment of customers who are very active in the evening.

After turning on dark mode for that segment and targeting those same users with an in-app message about the new feature.

They allowed the test users to experiment for two weeks and then subsequently collected qualitative feedback from them via an in-app search.

After validating both the survey feedback and the conversion data Immobiliare gradually extended feature to all of their registered users.

Normally, a launch like this would have required multiple platforms and complex crossing coordination by bringing complementary product and messaging workflows together.

One person coordinated this entire launch in Braze and did it in half the time of similar past experiments.

At Forge, we also announced several tools in development that we anticipate adding to our Sage AI suite, including an AI recommendation engine that is designed to use machine learning to match relevant items from Braze catalogs with customers most likely to buy them.

The addition of a large language model or LLM Canvas step to our visual programming language and channel-specific message content recommendations paired with performance prediction.

The Canvas LLM step uses GenAI to interpret user provided input, such as survey feedback or reply to a WhatsApp conversation, and then provides a contextual response that can be templated into subsequent Canvas actions or massive steps.

We are actively testing multiple underlying models for this LLM step, including our own custom trade models built on top of LAMA 2 as well as OpenAI hosted models such as GPT 4 Turbo.

Extending on our experimentation with custom trained models.

We're also very excited by our work in channel-specific message content recommendations, paired with a growing ability to automatically predict which variants are likely to perform best using custom trained predictive transformer models.

By providing these predictions before launching a canvas or campaign, we intend to further increase market velocity, encourage more creative risk-taking and free up time that can be spent on further experimentation with deeper personalization techniques.

This is just a small portion of our exciting AI related product roadmap, which we are designing to push the boundaries to deliver the most personalized brand experiences for our customers.

As the legacy clouds continue to be held back by antiquated architectures and decades of unpaid complexity that we believe our modern foundations, combined with relentless focus on innovation, will accelerate the legacy replacement cycle, compel more brands to upgrade their customer engagement strategies with the Braze platform.

As we zoom out and look at our broader ecosystem, I'm also excited to share an update on our strengthening relationship with AWS.

Just last week, we shared Braze's achievement of AWS advertising and marketing technology competency in the category of digital customer experience.

And in October, we announced the availability of raise through the AWS marketplace.

These recent announcements build on our broader partnership, which includes AWS, retail competency, travel and hospitality competency, and digital customer experience competency.

We look forward to growing our relationship with Amazon and other partners as we improve the depth and capabilities of our solutions.

Before turning the call over to Isabelle, I'd like to update you on our latest social impact initiative, 'Tech for Equitable Future' announced just yesterday.

This program aims to remove barriers for underrepresented founders by providing introductory free access to the Braze platform.

We are also excited to share that Braze recently made our first commitment to a virtual power purchase agreement, an important step for our overall climate commitment, and we look forward to sharing more climate related updates next year.

Thank you to all our stakeholders for your continued interest in Braze.

We are excited about our future meeting customers where they are on their customer journey and empowering them to achieve world-class customer engagement while delivering efficient growth at scale for our shareholders.

We look forward to continuing this journey to becoming the de facto standard for customer engagement with you in the coming months and years.

And now I'll turn the call over to Isabelle.

Thank you, Bill, and thank you, everyone, for joining us today.

As Bill stated, we reported a strong third quarter with revenue up 33% year over year to $124 million, which includes an approximately $3.5 million contribution from our North Star acquisition, which closed on June 1 of this year.

Growth was driven by a combination of existing customer contract expansions, renewals, and new business.

Our subscription revenue remains the primary component of our total top line, contributing 95% of our third quarter revenue, the remaining 5% represents a combination of recurring professional services and one-time configuration and onboarding fees.

Total customer count increased 17% year over year to 2011 customers as of October 31, up 296 from the same period last year and up 53 from the prior quarter.

Our total number of large customers, which we define as though spending at least $500,000 annually, grew 28% year over year to 189.

And as of October 31, contributed 58% to our total ARR.

This compares to a 56% contribution as of the same quarter last year.

Measured across all customers, dollar-based net retention was 118%, while dollar-based net retention for our large customers was 121%.

Expansion was again broadly distributed across industries and geographic regions.

Revenue outside the US contributed 44% of our total revenue in the third quarter compared to 43% in the prior year quarter and 43% in the second quarter of this year.

In the third quarter, our total remaining performance obligation was $560 million, up 37% year over year and up 7% sequentially.

Current RPO was $370 million, up 31% year over year and up 5% sequentially.

The year-over-year.

Increases were driven by contract renewals and upsells and the signing of new customer contracts.

Overall dollar-weighted contract length remains at approximately two years.

The North Star acquisition contributed approximately 3-percentage-points of year-over-year CRPO growth, and we will lap the impact of this acquisition on June one of FY25.

Non-GAAP gross profit in the quarter was $88.5 million, representing a non-GAAP gross margin of 71.4%.

This compares to a non-GAAP gross profit of $64.9 million, a non-GAAP gross margin of 69.7% in the third quarter of last year.

The 170 basis point year-over-year margin improvement was driven by ongoing personnel efficiencies and the continued cost optimization of our technologies stack.

Non-GAAP sales and marketing expense was $58.3 million or 47% of revenue compared to $46.2 million or 50% of revenue in the prior year quarter.

While the dollar increase reflects our year-over-year investment in headcount costs to support our ongoing growth and global expansion, the improved efficiency reflects our disciplined investment approach to resource deployment across our go-to-market organization.

Non-GAAP R&D expense was $20.2 million or 16% of revenue compared to $17.5 million or 19% of revenue in the prior year quarter.

The dollar increase was primarily driven by increased head count cost to support the expansion of our existing offerings as well as to develop new products and features to drive growth.

Non-GAAP G&A expense was $19 million or 15% of revenue compared to $18.6 million or 20% of revenue in the prior year quarter.

The dollar increase was driven by investments to support our overall company growth, including headcount costs, and increases in software subscription and licenses.

Non-GAAP operating loss was $8.9 million compared to a non-GAAP operating loss of $17.3 million in the prior year quarter.

Non-GAAP net loss attributable to Braze shareholders in the quarter was $4.5 million or a loss of $0.05 per share compared to a loss of $13.8 million or a loss of $0.15 per share in the prior year quarter.

Now, turning to the balance sheet and cash flow statement.

We ended the quarter with $471.9 million in cash, cash equivalents, restricted cash, and marketable securities.

Cash used in operations during the quarter was $2 million compared to $23.9 million in the prior year quarter, including the cash impact of capitalized costs, free cash flow was negative $5.9 million compared to negative free cash flow of $28.1 million in the prior year quarter.

As we have stated before, we expect our free cash flow to fluctuate from quarter to quarter, given timing of customer and vendor payments.

And now turning to our forecast.

Demand for customer engagement solutions is solid.

Our team's execution has been strong and our pipeline remains healthy.

However, we continue to experience macroeconomic headwinds that manifest in elongated sales cycles, constrain marketing budgets, and slower new business growth.

We approach our guidance with a prudent and risk adjusted methodology and assume current macroeconomic conditions remain unchanged going forward.

For the fourth quarter, we expect revenue to be in the range of $124 million to $125 million, which represents a year-over-year growth rate of approximately 26% of the midpoint.

While we're not providing specific gross margin guidance, we expect gross margin will be negatively impacted by higher seasonal activity during the fourth quarter.

As a reminder, our long-term non-GAAP gross margin forecast is 67% to 72%.

Fourth quarter non-GAAP operating loss is expected to be in the range of $7 million to $8 million at the midpoint.

This implies an operating margin of approximately negative 6%, an improvement compared to the better than negative 7% guide that we had provided earlier this year.

Fourth quarter non-GAAP net loss is expected to be $4.5 million to $5.5 million and fourth quarter non-GAAP net loss per share in the range of $0.04 to $0.05 per share based on approximately $99 million weighted average basic shares outstanding during the period.

For the full fiscal year 2024, we expect total revenue to be in the range of $465 million to $466 million, which represents a year-over-year growth rate of approximately 31% at the midpoint.

This includes an estimated $9 million in your contribution from North Star or approximately 2.5-percentage-points of growth over FY23, which once again, we will lap on June 1 of this year.

Fiscal year 2024 non-GAAP operating loss is expected to be in the range of $39.5 million to $40.5 million.

Non-GAAP net loss for the same period is expected to be in the range of $25.5 million to $26.5 million.

Fiscal year 2024 non-GAAP net loss per share is expected to be $0.26 to $0.27 per share based on a full year weighted average basic share count of approximately 98 million shares.

In addition, we believe we are on track to meet the profitability goals we have previously communicated for fiscal 2025.

We expect Braze will achieve positive quarterly non-GAAP operating income and positive quarterly free cash flow by the end of fiscal year ended January 31, 2025.

I'll wrap my remarks by reiterating our commitment to driving product innovation while consistently executing against our financial targets.

We remain confident in our ability to grow our top line while maintaining cost discipline and delivering on the financial targets that we have set for fiscal 2025.

And with that, we'll now open the call for questions.

Operator, please begin the Q&A.

(Operator Instructions) Arjun Bhatia, William Blair.

All right.

Perfect.

Thank you, guys.

Congrats on a great quarter here.

If I could just start with new customer demand, it seemed like you called out some competitive takeaways and strong traction in general.

But I did notice that net new customer adds slowed a little bit.

So can you just talk about what's happening with deal sizes and enterprise traction, new deal and how that pipeline might look going into Q4 here?

Hey, Arjun.

It's Isabelle.

I'm just going to address specifically your question on the net new customer adds.

Actually, where we're seeing kind of more challenges is down at the SMB segment, and that's on sort of two fronts.

One is the new customer adds and our ability to kind of get new new logos in that segment.

And then also some challenges, obviously, from a loss perspective, logo loss in that segment.

That segment of the market is really experiencing of the toughest environment in terms of access to capital and liquidity, ability to kind of spend out their budgets, and we're seeing more business failures down at that at that level.

But we are rest assured this is -- it's not really a competitive issue, net competitive flows were actually positive to Braze during the quarter.

So we're very happy in terms of how we're behaving and realizing our reward during the quarter relative to the competitive environment is really what you're seeing is just -- is more reaction of elements happening at the SMB level.

I would also note that while we saw more elevated losses of logos at the SMB level, the dollar level was relatively low in that segment, specifically and overall, the dollars of losses, it was well within our sort of budget tolerances.

So we -- this was not unexpected.

Yeah.

And as we mentioned, we are seeing relative strength in the enterprise.

And we think that's primarily because enterprises are used to planning and operating on longer time horizons.

They operate with more stable foundations.

And those are the key decision-making ingredients that drive both the legacy replacement cycle and the vendor consolidation trends.

And we're seeing those factors play out in our favor, even as budgets have remained constrained.

Inefficiency is being prioritized over growth in most of those companies.

However, it's definitely still an opportunity constrained environment, and those sentiments don't exist across our entire addressable market, which really just brings us back to the imperative for us to continue executing the strength and investing in the underlying improvements that are in our own efficiency, in our own productivity, and our own velocity.

So that we can continue to grow even as the macro persists.

All right.

Perfect.

That's very helpful.

And the, when we think about some of the Black Friday, Cyber Monday trends look very strong.

Obviously, the throughput consumption was pretty robust this year.

What does that mean for Braze customers longer-term, like, especially as we think about our customers coming up [through] renewal, or should that be an indicator of upsell and Isabelle, I think you touched on this a little bit, but I assume that is the gross margin impact that you're talking about where it may not be an immediate bump to revenue, but you're recognized in cost in Q4?

That's exactly right.

Revenue is recognized ratably over the contract term, whereas the cost component is definitely based on utilization and usage.

So that's the compression that you see in Q4.

Yeah.

And I would say that you shouldn't see that as a forward indicator of consumption-based upsells because marketers certainly plan for Black Friday, Cyber Monday to be higher volume.

I mean that is incorporated into their purchasing.

However, I do take it as a positive indicator that I think increased usage of Canvas in particular as well as our more advanced features means that broader and broader percentage of our customer base is utilizing the parts of Braze that are differentiated and the drive differentiated value.

And we know that customers that use Canvas are stickier and they get -- they drive more value from Braze.

We have less competitors when customer is more sophisticated and we maintain our premium price point much more easily in those circumstances.

And so that's why we're so focused on continuing to drive that more differentiated and more sophisticated usage.

And I think that and some of the non-volume stats that you saw in our Black Friday, Cyber Monday read out were very much in support of that.

All right.

Very helpful.

Thank you, both.

Yep.

Brent Bracelin.

Brent, we can't hear if you're talking.

I think maybe we can go to the next question, operator.

Ryan MacWilliams, Barclays.

(Operator Instructions)

Hey guys.

Thanks for the question.

Great to see the CRPO growth improvement.

Bill, how are your existing enterprise customers broadly thinking about next year's budget at this point?

Like are you seeing customers more willing to make growth investments after being maybe more profitability focused in the last year?

Yeah.

I mean, I would say with what we're experiencing right now, we don't have reason to believe that the macro impacts and the buying environment are going to meaningfully change through next year.

Marketing budgets and team sizes are still flat or otherwise constrain CFOs are still scrutinizing every dollar that goes out the door.

And we also see many businesses still struggling to adapt to the new macro.

In the SMB segment, wasn't your question, but many of them are also watching the runway shrink month over month, waiting for the VC environment to normalize a bit more, which so far has not really happened.

And so we've been really happy with the execution of the team.

We're controlling what we can, and we're very happy with the creativity, dedication, innovation from the global Braze team, but we're not anticipating an improvement in the buyer environment.

As I mentioned before, we still consider it to be an opportunity constrained environment, but we're doing everything we can to control, we can to execute as well as we can, and we're doing it at the same time that we're making foundational investments, both in the product, in our efficiency, in our velocity, and our plan is to be far ahead of the competition on all of those fundamentals when conditions eventually do loosen up again.

Perfect.

And just on the holiday season traffic, we saw a continued share shift towards mobile purchasing during the Cyber Week and Black Friday period.

And this is a trend that Braze was built on and you guys have been playing for a long time.

But just given like that significant gain, I think that was more -- that was bigger than people expected.

But do you think this can finally maybe wake up some more non-mobile first enterprises or customers outside your traditional target zones that could engage Braze going forward?

Yeah, absolutely.

And I think that it's not just the mobile side of it, waking them up to the opportunity that exists in mobile, and that is obviously a strength for Braze, but it's also another reason for more brands to break down the silos that exist between their teams.

We see, in particular in the traditional enterprise, especially in some of the slower moving categories that there is still huge silos and walls up between e-mail teams, the web teams, the mobile teams.

And that's something that we saw play out over the course of the last five or six years and some of the faster-moving categories are -- and in some of the digital-first businesses that really broke down those walls.

They started to focus on the more coherent cross-channel, experienced delivery instead of just delivering messages and silos.

And those are kind of strategy and organizational shifts that really play into Braze's favor.

And so I think more than just the shift to mobile and obviously, Braze's mobile strength is really that focus on cross-channel execution, cross-channel orchestration, and businesses evolving themselves to be more ideal customers of Braze.

Appreciate the color.

Thanks, guys.

For sure.

Thank you.

Taylor McGinnis, UBS.

(Operator Instructions)

Yeah.

Hey team.

Thank you for taking my question.

Isabelle maybe for you.

If we look at CRPO growth on quarter over quarter, excluding North Star, it seems to be trending similar to sequential growth that we saw last year.

So just as we look into 4Q, any differences in the renewal base this 4Q versus last year.

Could some of the recent trends that we're seeing in sequential growth hold.

And just given that, this is such a big bookings quarter for you guys.

I'm curious what you're seeing so far in terms of our deal activity and renewal conversations.

Yeah.

So I'll address your question about North Star first on the sequential.

So the North Star impact, I would think about that more as impacting the year over year versus the sequential because once it's in the number, it's just sort of it's in it, right.

And it just sort of persists and then we'll lap it June 1 of next year.

So I would look at -- actually, if you look at the sequential but that's not really impacted by North Star specifically.

So think of that as kind of a more normalized outlook on the company.

What we're seeing in terms of Q4, there are more renewal dollars to happen in Q4.

That's fairly typical.

And so, we do have that for Q4.

And what we're seeing in terms of bookings so far, we've talked about linearity this year, being better than expected.

And when I say better than expected, it just means that sort of returning to levels that were trends, that were consistent before the market fell apart about 18 months ago.

And I'd broadly expect to actually see that in Q4 of this year as well.

Awesome.

Thanks for answering my questions.

Thanks, Taylor.

Tyler Radke, Citi.

(Operator Instructions)

Yeah.

Thanks for the question.

So wanted to double-click on the enterprise strength that you saw in the quarter, pretty big pickup in 500k additions.

Can you talk to the trends that you're seeing there?

Is this primarily sales force displacements?

Is this just success with upsells?

Just help us understand what was driving the strength there or if there was any timing in terms of pulling deals out of Q4 as well.

Thank you.

Yes, I think when you look at the 500k cohort for Braze, just a reminder that new business can enter that right out of the gate.

But also we can achieve that through upselling smaller logos into that category over time.

And so certainly both of those things are at play in the sequential growth in that number.

I think across the enterprise, as I articulated earlier, we're seeing both the legacy replacement cycle at work.

I think that as Braze's awareness and our prominence and some of the pressure on these enterprises to really transform themselves to stay more competitive in markets where many of them are experiencing challenges from digital-first companies, and they're looking at how those digital-first companies operate.

And the answer in many of those cases is that they use Braze, right?

Or they operate with the agility that only Braze can deliver, especially when you're trying to coordinate across the complex challenges of our cross-channel customer engagement and delivering to global audiences, which more and more businesses are doing these days.

It's not just the Fortune 500 that needs to tackle the complexity of the global environment.

And it's also a lot of digital-first start-ups that take advantage of the app stores in order to have that reach.

And so Braze, I think, is well-positioned for those changes in the environment and where we're doing everything we can to be able to execute even as those businesses are facing constrained budgets and teams that are driving toward efficiency.

Another part goes back to something I've mentioned for probably five or six quarters now, which is just that during times where brands are focused on efficiency, working on retention, on leveraging first-party relationships, and first-party data assets and ensuring that you're retaining the customers that you've spent a lot to acquire in the first place at higher and higher rates is of the utmost importance.

And there's an opportunity to focus on that, once acquisition gets a little bit more deemphasized as it has through these macro conditions.

And so it's a little bit of a lot of those different things, but it's still uneven in terms of how we're seeing enterprises lean into new investments, there's still a lot of pending pension going on.

There's a lot of scrutiny on every dollar.

We're certainly seeing and we've spoken about this before a more stable environment this year than we did in the back half of last year.

But I wouldn't say that we've seen any sort of material or improvement from from Q1 to Q3 through this year.

It's very much a lot of enterprises living in the same budget realities as they have, the same teams like us they have, the same push for efficiency throughout the entire year.

We don't see strong evidence that those factors are going to change in the near term.

We're certainly on the lookout for them because as I mentioned before, as the environment loosens up again, we want to be far ahead of the competition and leveraging that great execution that we have to get even further out ahead.

But we are seeing that strength in the enterprise right now, and we're adapting accordingly.

That's helpful.

And just on the environment, maybe this for Isabelle, but if I look at your revenue beat, this was one of the strongest you've had all year and I think last quarter you benefited from linearity and the North Star acquisition this quarter that was already in the numbers.

And then you also raised-- Q4 was guided 5 million above the Street, which was stronger than the guidance you gave, last quarter.

So it feels like you're actually flowing through some operational upside, I guess.

What was the biggest driver of that upside in the quarter?

Was it these larger enterprise wins, or maybe did the environment play out a little bit better than you're expecting in terms of macro impacts?

Thank you.

Yeah.

So I think we're the macro continues to be challenging.

I think we're executing well in the context of this macro and Q3 yes, there is definitely when I say the impacts from linearity, again, not better than normal, but we haven't been normal for a long time.

So we're back to a more normalized linearity, which is helpful relative to even rewind the clock back to kind of the beginning of the year and how we set our guidance.

Yes, North Star wasn't in there.

We were baking in quite a bit of kind of back-end loaded deal flow in the context of quarter over quarter.

So while gas that we've now had the benefit of a few quarters of that.

And so I could take some of that into consideration in the context of the new guides.

With the uncertainty that continues to plague us that don't take all of that into consideration.

And so we -- you are seeing some of the upside here.

I -- it's been, you know, 2.5 quarters of some of this better linearity here.

I wouldn't necessarily --we will continue to take a risk-adjusted approach as we forecast out further into the future.

And I would suggest, you know, analyst teams do the same thing.

Thank you.

Brent Bracelin, Piper Sandler.

Thank you. [Airport logistics] here.

Thanks for bearing with me, Bill, I wanted to go back to the replacement cycle.

You did mention several vendor consolidation deals in the quarter.

Do you get any sense of an increasing appetite of some of these large enterprises that they're now maybe more willing, so look at consolidation than they were maybe two years ago?

And if so, maybe why?

And then one quick follow-up for Isabelle.

Yeah, I think that there's a couple of things from a consolidation standpoint.

One is that the pace that a lot of businesses slowed a little bit, right?

There was a breakneck pace through the highly expansionary period that led into the end of 2021.

And that led to a lot of software getting deployed in a lot of places.

As we're all aware, a lot of that software was utilized to different levels of effectiveness.

And I think that there's just a lot of scrutiny being placed on what are in many businesses, super complex technology environments.

And so picking the ability to kind of pick your head up plan in this environment that is relatively calmer than it was when you assembled the complexity and be able to look for the ability to consolidate effectively is really part of what drives that attitudinally.

And then from a financial perspective, I think that the total cost of ownership of a complex technology landscape because of the number of people that are required to manage it, the amount of overhead that goes into play with communication across all the different tools and coordination there.

The example that I cited in the prepared remarks of a customer being able to use a combination of feature flags in product surveys and reporting on an experiment that they rolled out all as a single person in the same tool.

If you think about how that translates into organizational productivity and agility and what that means from a total cost of ownership and savings perspective, those are all aspects of consolidation that are I'm really pointed in the direction of efficiency.

And so when you combine those two things together.

I think that creates a good environment where both attitudinally people are open to taking another look at what got assembled well, they were going through that period leading into late 2021.

And there's just a lot of great rationale to simplifying an ecosystem, especially when you have as many moving parts in some of these marketing technology ecosystems as we see it some of these prospects.

Helpful color.

And then just Isabelle, on the demand environment, three straight quarters of 30% plus growth, I get by just remain constrained.

Again, there's a little bit of acquisition benefit there, but through three trends or three quarters do make a trend.

Do you feel like the environment at least stable enough in a demand perspective for you to continue to kind of control what you can control or would you say there still outliers that we should be aware of?

Thanks.

Yeah.

So I wouldn't point to any specific outliers that we should be aware of.

But there is just continued uncertainty generally in the market.

And so I would say I said two quarters is not a trend make.

Yes, it's been three quarters.

Yes, there are tailwinds from the North Star acquisition.

So we are -- goint to be continue to be prudent with on the profitability side, some of these overachieved, we have actually opened up some additional spend capacity, particularly in R&D.

That is a longer term play for us, obviously.

But we are we are trying to take some of this benefit and kind of reinvest in the business in ways that are going to pay out dividends over the longer term.

That's so helpful.

Thank you.

Brian Peterson, Raymond James.

Hi, this is Johnathan McCary in for Brian.

Thanks for taking the question.

So I'm curious, coming off of Forge, you know, how did that event performed versus expectations in terms of pipeline generation and then maybe give us some context in terms of what the conversations have been like around the new product announcements you had there?

Yeah, absolutely.

So as I mentioned, Forge was actually a capstone on a full year of owned events, and we've been happy with how that's been able to activate our global customer community.

The goals of these events vary depending on the event series and Forge is really the flagship customer event where we bring in primarily existing customers.

We do a lot of certifications that our partnership landscape is on display.

There's a lot of learning that can really help with deal acceleration and it can help [cement] on relationships and improving the sophistication.

We don't look for that test specifically create a lot of net new pipeline.

Our city by city and kind of get real with Braze and grow with Braze, events series that make up the rest of those that I cited in the prepared remarks are more oriented towards the prospects of new business pipeline generation, and those have a steady drumbeat on their schedule throughout the year.

And with respect to the conversation and what we're seeing in terms of customer excitement and trends.

I think that AI continues to be the center point of a lot of that.

As I mentioned in the prepared remarks, in addition to working with Open AI proprietary models, we've also been doing our own training a number of models, including on various sizes of LAMA 2 And we've been really excited to see the results of those tests so far, and we're excited about what that means, both for copilot as well as around automated decision-making.

We've shared a little bit we shared a bit at Forge, and we've shared some of the constituent components of stage AI, that we're ready to talk about right now, both with our customers as well as with all of you through these earnings call.

But there's a lot more that's underway across our teams.

On the copilot side of the house, I think that the whole community is excited for this near term future where JNI embrace is going to make it feel like you're using a tool and more like you're working with, frankly, a whole team of specialists and consultants to help you tackle your business challenges.

We're thinking about this as being like, having a brand strategist, a copy strategist, a developer, and data analysts all close at hand and ready to improve and accelerate customer engagement initiatives for our customers.

When we talk to a lot of people at Forge, there's a lot about operational efficiency.

There's a lot about helping marketers do more with less.

And I think that copilot features like this are particularly helpful in a platform like Braze, where we can deliver differentiated capability to people, but only when they have certain technical and data skills.

When we're talking about various parts of the feature set.

And when we can lower the barrier to entry to leverage those capabilities, people get really excited about that because it means that they can compound the kind of skills that they are acquiring in their own role along with new features that Braze continues to rollout.

I think similarly, continued progress on Gen AI and the creative production realm is going to make it easier to leverage Braze's experimentation capabilities.

One of the key competitive differentiators about Braze's versus many of our less sophisticated or lower-cost competitors has always been that we enable agility and we enable experimentation across all the different strategies that a marketer right might run.

But that's unfortunately not a way of working that all teams and businesses or resources take advantage of today.

And so we're excited and we heard a lot of conversations from customers that are experiencing with these new Gen AI capabilities to lower cost of production, to speed iteration cycles for new content and creative assets.

And in doing so, we're excited that more companies are going to be able to work in a way that they find the advanced capabilities of Braze to be indispensable and going back to the conversation on Black Friday, Cyber Monday, and seeing more advanced features being used there.

And what that means is that there's more realized differentiation for Braze across a larger community of marketers because more of them are able to use our more sophisticated capabilities.

That's great.

Thanks, Bill.

Yep, absolutely.

Michael Berg, Wells Fargo.

Hi.

Thanks for taking my questions.

And congrats on the quarter.

Wanted to ask something more philosophically in the market, you guys are very well positioned to leverage first-party data.

And given the current macro and budgets being constrained, it seems that there is an ongoing shift from paid advertising to platforms such as Braze.

Can you talk about that trend is -- that's something that's real and how is Braze up potentially banning people talk about.

Thank you.

Yeah.

So this is something we've been talking about for a long time, which is that I think a lot of the focus and the dollars in marketing organizations were primarily an acquisition, which meant in a lot of cases, performance, marketing and advertising.

And over time, we've seen that even as there's been a capability to use first-party data to make those strategies more efficient and more effective, that the internal silos that existed and a lot of marketing teams between the performance, marketing, and the CRM or the customer engagement teams, I just kept them from being able to utilize those.

And so going back to some of the analysis I just gave about what's driving vendor consolidation I think part of this is a mindset, which is that in the kind of [quest] to get additional efficiency when there's more scrutiny and when these businesses are able to kind of slow down a little bit and rethink the way that they've been working.

They realize that actually there's been this low hanging fruit there for years now for them to be able to incorporate first-party data and to be able to incorporate first party channels into their acquisition and their performance marketing strategies in order to drive additional efficiency.

And so we've responded to that by increasing investment in especially over the last 12 to 18 months to make those and integrations that we have into that ecosystem more comprehensive and make them easier to use.

And that in turn has been then driving additional collaboration between the CRM and customer engagement teams with their performance marketing or their acquisition teams.

We think that's a -- those are teams that should work in harmony over the long term.

And it was really just needed to have a catalyst in order to make that happen.

And so we very much think that trend is real.

I think that it's been happening for years now.

There's definitely more focus on it as brands are pushing toward more efficiency and it's something that we think is going to continue.

Awesome.

Helpful.

And one quick follow-up.

There's been a lot of discussion on the call around displacements of legacy vendors and something we have heard in the channel a fair bit recently.

Has there been more maturity in both your go-to-market as well as alignment between your sales organization and the partner ecosystem to capitalize on the low hanging fruit and the legacy displacement opportunity?

Thank you.

Yeah.

So we have a highly diversified customer base, and we've always had a great ability to flex both our sales capacity, our marketing investment, and our partner focus into both regions, I guess all of regions, verticals and account classifications or account sizes that we see the most potential in.

And so when I kind of look at those different dimensions today, we're seeing the world experiencing pretty similar macro conditions.

We've obviously mentioned the enterprise is in the near term at least, I'd performing better than SMB.

But in the long term, we're investing across the range of customer sizes that we sell to today, and we're excited about the potential, although from SMB all the way up to the world's largest enterprises.

And we're cultivating partnership, partner relationships across that whole spectrum as well, inclusive of smaller marketing and growth agencies that work through our partner-led onboarding programs to deliver to our SMBs all the way up to the global systems integrators, the big marketing -- marketing holding companies that are the agency holding companies that work with us in the world's largest enterprise businesses.

And as we see opportunities to break into whether it's particular verticals or maybe customer profiles that are characterized by changes to their regulatory landscape or maybe to their competitive landscape or places where we're able to look at the competitive installed base, whether it's a legacy Marketing Cloud or legacy Marketing Cloud with a collection of point solutions.

Those are all data points that our sales team and our partners use in order to pursue strategies, whether it's around just creating those opportunities, doing targeted account-based marketing, and or being able to do that in a more automated demand gen way and then all the way through the rest of the funnel.

So very much we are tailoring and per and kind of targeting strategies around those types of considerations.

But I would zoom out a little bit and realize that because of how diverse Braze's customer base is.

That is very much a muscle that exists across multiple dimensions.

Helpful.

Thank you.

Matt VanVliet, BTIG.

Yeah, good evening.

Thanks for taking the question.

Maybe just following on the last topic around the partner community, especially around the consulting and agency types.

How do you feel about sort of who you have in the portfolio?

Do you have the right partners?

Do you need to continue to build that and number out there?

Is it just really about driving home more business with the key partners that you're already aligned with.

I think we're still so early in building strong relationships across the services ecosystem that the answer to that is very vehemently all of the above mean it continues to be a major priority for investment.

We've been super encouraged by the progress that we have achieved with those partners who have leaned into their relationship with Braze, because it validates the fundamentals of the flywheel that I've spoken about in past quarters, it's win-win-win when we can bring business to the services ecosystem when they can then build their bench, a Braze certified marketers.

They can bring more finely tailored services to our customers, which helps them achieve more differentiated value at a Braze.

And that just spins, the flywheel of our community and our services ecosystem.

And so when we look ahead, Braze continuing to grow to orders of magnitude larger than it is today, our services footprint is both going to be deeper and broader.

And you know, it's going to be more global, and it's going to be across more areas of service when you look at the entire lifecycle of production of campaigns all the way through the execution, the data analysis, and continuing to reach into more of the product surface area as well and so there's a lot of opportunity for our services partners to continue to partner with Braze across a lot of different dimensions.

We're going to meet them with additional investment on our side and ensure that the services ecosystem continues to grow in partnership with us.

And then Isabelle, just quickly on, do you have any metrics you can share around the mix of business that is influenced by some of those partners or maybe and conversely, can you give us a target that maybe we should think about over the next five years or say how much of the business could be influenced?

Yeah.

So we don't have specific metrics that we disclose or discuss.

Certainly, we expect it to continue to increase.

I think the way Bill characterized it is exactly right.

We are in the early stages of this.

A few quarters ago, President Myles was like, wow, we have made more progress with these guys in the last couple of months than we have in the last like five years, which is right.

But we are still in the early stages of this and so to be at a point yet where we are not only assigning but also publicizing the attribution of our bookings, our top line to the partners, it's just too early to do that.

Okay.

Thank you.

Jake Titleman, Goldman Sachs.

Thanks for taking the question.

Can you guys please give us an update on sales rep productivity.

How that's trended over the last few quarters?

And Bill, you also mentioned that you want to be ahead of the curve when the macro improves.

So what would it take for you to start hiring again?

Yes.

As we've said, we've been very happy with our team's execution and the productivity of our sales team is absolutely a part of that.

Looking ahead into next year, we're focused on first closing out a strong Q4, and we're -- while we're doing that, we're hard at work preparing for our next sales kickoff in early February.

We don't have details to share on this specifically today, but that kickoff will include some evolve pricing and packaging, how we're going to be deploying more sophisticated territory carbs and account planning mechanisms.

And we hope that's going to continue to support improvements in velocity and productivity for our sales teams.

And you also heard Isabelle mentioned a little bit earlier that we've authorized additional hiring in this year, specifically focused in R&D in order to help support additional revenue and additional -- just product feature sets more sell, more stickiness, more usability, et cetera, are further into the future.

As we look into next year and increasing the size of the sales team.

We, as I mentioned before, with a highly diversified customer base, we do have an ability to flex new sales capacity and marketing investment into areas where we see strength and we are expecting an uneven recovery when we look at that from a global perspective.

And so we're ready to adapt to that as it presents itself.

And we're hard at work trying to read the tea leaves in the many regions that we operate in around the world.

So we can deploy capacity when we have confidence that those regions can support it.

I think that we're also going to look at account segmentation with respect to enterprise versus SMB as well as in particular at the high end within our global strategic accounts program with the largest customers looking at new categories and verticals that we could potentially continue to expand into.

And so I think that seeing opportunities along those dimensions is what's going to give us the competence to continue to build new sales capacity.

And then along the way, we're going to continue to invest in the broad-based productivity improvements that we've been hard at work on for the last year.

And to some extent, that's a job that's never done.

But we've certainly been really happy with what that has meant from an execution standpoint.

Thank you.

That's helpful.

And then just a quick follow-up for Isabelle.

So you're guiding to 26% growth in 4Q.

How should we think about that as a potential starting point for fiscal 2025?

Yeah.

So I'll speak for a high level about 2025.

But specifically for Q4, just remember both Q4 and Q1 are seasonally low from a sequential growth rate perspective.

So that is not unexpected.

And all analysts and anyone doing models should incorporate that fact into any forecasting.

And you can look historically, that is a pattern that repeats itself.

I think that as we look out into the future, we are going to continue to take a risk-adjusted posture when it comes to guidance and keep in mind that what I said this earlier in the call,. some of the results that happened over the back two-thirds of this year were as a result of North Star, which obviously we will lap in the early part of next year.

And so I would take that into consideration when not only thinking through what the guidance might look like, but then what the results might look like on the what we're planning for in terms of results on the other side of that guidance.

And just remember that Q1 will still have a bit of a tailwind from the North Star acquisition, but that is pretty much the last quarter that will have a year-over-year tailwind.

And so we will get to FY25 in more fulsome detail in March.

Once we have more visibility, given the results of Q4.

But hopefully that's helpful from at least a [Telus] philosophy perspective.

Thank you.

Appreciate it.

(Operator Instructions) Pinjalim Bora, JP Morgan.

Great.

Congrats on the quarter and thanks for the questions.

Seems like macro continues to be a bit challenging is about?

Is there a way to think about MDR going forward because you are reaching out getting easier comps starting in Q4, but that macro continues to be challenging.

So I was thinking if it would you say troughed at a point in Q4 or Q1?

Or do you feel like you might continue to slide in?

Yeah.

So I think that it is a lagging indicator, especially given that it is a 12-month trailing.

And so I would not while we don't guide on it specifically, our own internal models and forecasting, we'll assume that from a risk-adjusted perspective that there's going to be more to come out there.

So I don't think we have fully called the bottom yet, and that's mostly just because it is a lagging indicator, -- mostly because it's a 12-month trailing statistic.

So I would incorporate that fact pattern in when thinking about the future on this thing.

Understood.

Thank you.

Scott Berg, Needham.

Hey, everyone.

Great quarter.

Thanks for taking my questions.

Bill, in your prescripted remarks, you talked about passing the $500 million in committed AR threshold.

Congrats, obviously big number, but how do you think about $1 billion or more than $1 billion?

Do you have -- can you get there with your current product set?

Or do you feel like you need some additional, whether it's modules, functionalities, channels, et cetera, to help achieve that goal?

Yes, I think that, when we look out toward doubling again and then growing orders of magnitude after that, there will absolutely continue to be meaningful expansion of our product surface area.

You already see us making [forays] into new buyer personas as we've as we've expanded into selling things like feature flags to more of a Chief Product Officer, a Chief Technology Officer kind of a budget, and then CMOs, I and we've obviously been doing a lot of investment into our data platform along the way, is going to be continued expansion into different channels, continuing to expand our orchestration and personalization capability.

And so I think you should expect to continue to see a broad base of investment, which we're excited about how all of those new product expansions compound themselves into in our existing customer growth.

It provides us with additional landing points and starting points for new customers.

And it continues to just add more differentiated value for Braze over time, which obviously encourages stickiness and community growth.

I think also one of the things that I come back to, when I think about our future growth is that Braze still is right around 2000 customers today, even as we're at 500 million in car.

And so as we expand to 1 billion in ARR, we'll expect to be somewhere around 4,000 to 5,000 customers.

And as we continue to grow from there, we're preparing as an organization for having orders of magnitude more than that.

So as we look at upgrading our own internal processes right now, every time we look at, whether it's a new PO sales motion a new way that we're continuing to add automation to things like product-led sales or product-led growth motions, et cetera.

Those are all investments that we're making to prepare for a meaningful scale differences as we continue to grow -- Braze to achieve our community goals.

We obviously need to have much larger reach, but we think that's also emotion that will compound on itself.

You know, speaking of that, there's also obviously the agencies and the ecosystem on the partnership side, which also will help to compound our way to $1 billion ARR and beyond.

And so, you're seeing investment across a lot of different dimensions for Braze to be able to support that.

We feel really good about the very diverse customer base we have today.

You hear me talk about that all the time.

I mean, Braze is very much not a business that went and like highly penetrated and concentrated itself into a specific vertical or a specific channel or specific geo.

We have a very diverse foundation upon which continue to build a very, very large business and build into a very large opportunity.

It's obviously more challenging to start building a business that way than it is to start in a niche and be able to kind of build directly into it.

But we also see it as being less risky as we look out to big bigger numbers and kind of more long term targets because we've already proven that we can sell into those verticals that we can satisfy those use cases that we can deliver on the product to companies of those sizes and that we can solve not just regional local use cases around the world, but also the unique nature of global businesses as well.

Excellent.

Thank you.

Brian Schwartz, Oppenheimer.

Yeah.

Thank you for taking my question and great quarter.

Still the commentary that you've been giving on the call, but what you're seeing with the macro.

I'm wondering if that is you're seeing a similar environment all around the world specifically, you know me I'm a [packed] in North America are there any differences or is there any stability or maybe somewhat improvement in any of the international markets?

Thanks.

No, we're not seeing any sort of meaningful improvement.

I think everybody is suffering under the same high interest rate environment, the same volatility, the same drive sort of toward efficiency over growth, the same inflationary environments.

I would say that we also we saw different timing in terms of -- some of the venture world, just because a lot of the companies the United States were had very recently raised large amounts of money and so their runways weren't coming up on them quite as quickly.

So we are actually, to some extent anticipating that could become more of a problem in the venture-backed world in America -- in the Americas and EMEA coming into next year as some of those runways start to run out.

And I think we've already been seeing that in APAC over the last year where a lot of those start-up businesses where I'm a little bit less well capitalized heading into this environment.

And so that part of it, I would say is uneven, but it's more like uneven timing on badness.

All that said, we are also expecting the recovery and eventual loosening of conditions to similarly be uneven.

We're certainly seeing different responses from governments and different currency performance and different paces of progress in terms of inflation, stabilization in different markets around the world.

And so for us, what that adds up to is that we need to continue to be really paying close attention to data to evolving conditions and making sure that we're deploying sales capacity and marketing investments in the places where we start to see early signs of recovery because well, I think we're seeing similarly subdued negative macro conditions all around the world right now.

We are expecting the eventual recovery to be uneven and we want to make sure that we're quick to those markets that are early to it.

Thank you.

D J Hynes, Canaccord.

Hey, thank you, guys.

So Bill, we've seen some other marketing or CDP companies recently initiate or talk about rolling out mobile channel to complement their existing e-mail, SMS, and other activation channels.

You guys obviously went the other way, right, starting in mobile and then initiating other channels.

Can you just speak to the benefit or challenges of going one way versus the other?

Do you think there's a material difference that I'd love to hear your take?

Yeah.

I'd first correct history a little bit and note that we actually started across four separate channels and the very first version of our product that we launched included e-mail.

And so Braze dating all the way back to our beta release in 2012 has been building on mobile and e-mail experience as well as in-product messaging, which included both a persistent and product message through our news feed as well as a slight up message that was interactive with the customer.

And so our first version launch with four different channels, which included some that were pushed by their nature, some that were pulled by their nature, some that was integrated into a product and e-mail, obviously being outside of the product and the pressures that having that multi-dimensional channel set up place on the segmentation and the orchestration and the personalization capabilities as well as the nature of being able to maintain the variant of keeping everything interactive in real time across all those different channel types meant that it was definitely harder for us to build in the early days because every time we rolled out a new targeting feature, we had to make sure it works across all those different channels.

But now we find ourselves in a position where as we've gone from four to five to six a dozen or more channels, depending on how you want to count them, that are foundations, anticipated all those different dimensions that message types would have.

And so I think when you compare that then to a lot of our competitors that they either started in a single channel or they started in channels that were not integrated into the products.

We have a lot of competitors who are focused on things like email or SMS, which doesn't require any integration into a code base where you're actually living inside of a product.

And that means that they don't have pre-existing relationships with the with the engineering and the product teams.

And that's a really big goal for them to get over being able to do push base or broadcast voice messaging and switch that to an individual customer, opening up a product experience and needing to interactively load a personalized feed inside their product.

Just very different demands on even on just like the database and being able to deliver that ability to personalize.

And so when we look at the competitive set and we see any any competitor that really grew up on a single channel or they grew up outside of the product or and they grew up tied to a specific vertical over time.

We just know that there's some pretty big chasm that they're going to have to get over and they're going to be even harder to cross because they painted themselves into corners that they don't even realize right now.

And so I think that Braze chose to build a really diversified business.

I talked about all the dimensions of that across the customer base with the same thing is true across our platform and channel set as well.

And I would just reiterate that while I think that's harder in the early days, that it creates more opportunity in the long term, and we're excited about what that means for our enduring differentiation.

Yeah, I appreciate the color.

Thank you.

(Operator Instructions) Andrew Sherman, Cowen.

Okay, thanks.

It's Andrew from

[Cowen].

Is about the sort of growth trends in MA use.

I think business about half of the contract structure for customers.

What are you seeing there from your larger customers and if the consumer improves and that's a growth driver here over the next couple of quarters?

Yeah.

So we don't really buyers were future view of economic performance to specifically to be the MAU.

If you look at the MAU growth, actually, it's been more slow than our overall revenue growth.

And I know people are focused on this number.

We generally tried to pull people away from it.

And what we've noticed in terms of just general buying patterns today versus pre when the market started to fall apart, people used to buy search reports for growth expectations, you're seeing some of this play out actually in the dollar-based net retention and people would buy based on expectations of growth and just knowing that they would grow into what they had purchased and we are definitely seeing renewals and purchases come in more in line with where they actually think they're going to be using in the near term and then they will upsell over time as the growth, warrants it.

So maybe you're seeing some of that in the monthly active user.

But we are very happy with the overall coming to the business, but not really overly scrutinizing the monthly evolution of the quarterly evolution of the MAU.

Thank you.

I will now pass the call back to Bill for closing remarks.

Thank you, operator.

And I just want to thank everyone for joining the call today.

We appreciate your continued support and are looking forward to seeing you at a conference around the road soon.